Last week, the Court of Appeals for the Seventh Circuit issued an opinion clarifying the distinction between two distinct, but often closely related concepts: Article III standing and the more prudential doctrine known as “antitrust standing.”
The case, Marion Diagnostic Center, LLC v. Becton Dickinson & Co., centered on allegations of two vertical conspiracies to raise prices of syringes between the nation’s largest syringe maker on the one hand and two of its key distributors, Cardinal Health and McKesson, on the other. Healthcare providers brought the suit, alleging that the manufacturer used its market power to lock them into long-term contracts negotiated with group purchasing organizations, which both Cardinal and McKesson then enforced through various coercive tactics. In exchange for special incentives from the manufacturer, the two distributors allegedly monitored the providers’ compliance with the long-term contracts and coerced them into buying all their syringes from the manufacturer through misrepresentations about quality and availability. The net effect: inflated prices, more safety issues, and a lower quality product.
Cardinal Health moved to dismiss for lack of standing because it never sold syringes to the provider plaintiffs; only McKesson did. The district court granted the motion. The providers, the court found, lacked both Article III standing and antitrust standing because they failed to state a “sufficient nexus” between their injuries and Cardinal’s actions. In the district court’s view, Cardinal’s alleged conduct was too attenuated from the providers’ harm to supply the required “nexus.” The providers appealed, arguing the district court “hopelessly confused Article III standing and ‘antitrust standing.’”
Criticizing the district court’s opinion as “imprecise,” the Seventh Circuit agreed with its conclusion but not with its reasoning. Although both standing doctrines produced the same outcome, the court cautioned that their “inquiries remain distinct and serve different purposes.” As the court explained, Article III standing has three elements: the plaintiff must have “(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct, and (3) that is likely to be redressed by a favorable judicial decision.” The second element doomed the provider’s claim against Cardinal. The providers lacked Article III standing, the court reasoned, because their injury was not fairly traceable to Cardinal’s conduct.
But the inquiry for antitrust standing is different and potentially more demanding. That doctrine, the Seventh Circuit explained, requires plaintiffs to “show that they have suffered an antitrust injury and that they are the proper parties to bring suit.” Antitrust injury ensures the plaintiff’s loss “stems from a competition-reducing aspect or effect of the defendant’s behavior.” In Marion, everyone agreed the providers alleged antitrust injury. The fight centered on the other requirement—that the providers were the proper parties to bring suit.
The Supreme Court’s decision in Illinois Brick Co. v. Illinois provides the backdrop here. There, the Supreme Court held that a direct purchaser from an antitrust violator is the proper party to bring suit; indirect purchasers further down the supply chain are barred from bringing claims for damages. While acknowledging that they did not purchase directly from Cardinal, the plaintiffs sought to invoke a line of Seventh Circuit cases holding that a direct purchaser from one member of the conspiracy may sue any other member of the conspiracy.But the Seventh Circuit rebuffed this effort. Though the alleged vertical conspiracies were similar in form, they were in fact separate.Thus, the court held the direct-purchaser rule of Illinois Brick was unsatisfied here because the providers bought only from McKesson (with whom the manufacturer allegedly conspired), and not from Cardinal (with whom the manufacturer also allegedly conspired, but separately). The plaintiffs lacked antitrust standing to sue Cardinal as a result.
This is a straightforward conclusion. The “so-called conspirator exception” to Illinois Brick greenlights suits against other participants in the same conspiracy only, not merely related or similar conspiracies. Yet the Seventh Circuit’s opinion offers value for defendants beyond that limited holding, highlighting in clear terms the distinction between Article III standing and antitrust standing. While Article III standing guarantees a plaintiff with a personal stake in the lawsuit, antitrust standing goes further. By ensuring the plaintiff suffered a direct injury stemming from the defendant’s anticompetitive conduct, it verges on proximate causation. And as this case makes clear, both doctrines can be powerful tools even at the pleadings stage. Defendants are on firm ground to stress the care that should be taken to keep the doctrines separate and avoid conflating their overlapping but distinct inquiries.
1. Marion Diagnostic Center, LLC v. Becton & Dickinson & Co., No. 21-1513, 2022 WL 818751 (7th Cir. Mar. 18, 2022).
11. Id. at *4 (quoting Spokeo, Inc. v. Robins, 578 U.S. 330, 338 (2016)).
14. Id. at *5 n.7 (quoting Atl. Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 344 (1990)).
19. Marion, 2022 WL 818751, at *6-7.
24. See Bogosian v. Gulf Oil Corp., 561 F.2d 434, 447 n.6 (3d Cir. 1977).