Omnicare, Inc. v. Unitedhealth Group, Inc. , 629 F.3d 697 ( 2011 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 09-1152
O MNICARE, INC.,
Plaintiff-Appellant,
v.
U NITEDH EALTH G ROUP, INC.,
P ACIFIC ARE H EALTH S YSTEMS, INC.,
and R XS OLUTIONS, INC., d/b/a
P RESCRIPTION S OLUTIONS,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 06 C 6235—Rebecca R. Pallmeyer, Judge.
A RGUED N OVEMBER 13, 2009—D ECIDED JANUARY 10, 2011
BeforeK ANNE and T INDER, Circuit Judges, and
G RIESBACH, District Judge.Œ
Œ
The Honorable William C. Griesbach, United States District
Judge for the Eastern District of Wisconsin, sitting by designa-
tion.
2 No. 09-1152
T INDER, Circuit Judge. In the months leading up to the
2006 launch of Medicare Part D, institutional pharmacy
Omnicare entered into separate service contracts with
merging Medicare Part D plan sponsors UnitedHealth
Group and PacifiCare. The terms of the UnitedHealth
Group contract were favorable to Omnicare; the terms
of the PacifiCare contract, which Omnicare signed with-
out negotiation, were significantly less so. Shortly after
the UnitedHealth Group-PacifiCare merger was finalized,
UnitedHealth Group abandoned its contract with Omni-
care and joined PacifiCare’s. Omnicare cried foul and
filed a Sherman Act claim, alleging that UnitedHealth
Group and PacifiCare conspired to depress the rate of
reimbursement it would receive. It also raised a host of
additional claims, including state antitrust claims and
common law fraud, conspiracy to commit fraud and
unjust enrichment claims. The district court granted
summary judgment to the insurers and denied Omnicare’s
cross motion for partial summary judgment. Omnicare
appeals, and we affirm.
I. Background
Plaintiff-appellant Omnicare is the nation’s largest
institutional pharmacy. It provides pharmaceutical
services to long-term care facilities, such as nursing
homes, in 47 states. Defendant-appellee UnitedHealth
Group (“United”) is a large national provider of health
insurance. It acquired defendant-appellee PacifiCare, a
smaller, California-based health insurer, on December 20,
2005. As part of that acquisition, United also became the
No. 09-1152 3
owner of PacifiCare’s wholly owned subsidiary, defendant-
appellee RxSolutions, a “pharmacy benefits manager”
(“PBM”) that negotiates contracts with pharmacies and
processes claims from plan members. See In re Pharmacy
Benefits Managers Antitrust Litig., 582 F.3d 432, 434 (3d
Cir. 2009) (describing PBMs).
United and PacifiCare began their merger talks in
early 2005, while each was developing an individual
Medicare Part D plan proposal. Medicare Part D, a new
government-subsidized prescription drug program for
seniors and disabled individuals, was scheduled to
“go live” on January 1, 2006, and the Centers for Medi-
care and Medicaid Services (“CMS”) required private
insurers to submit their plan proposals for consideration
by August 1, 2005. Insurers whose plans were approved
would be permitted to enter into contracts with CMS
and begin providing benefits to Medicare Part D enrollees
in January 2006. Before their plans could be approved,
plan sponsors had to demonstrate to CMS that they had
in place pharmacy networks capable of serving their
anticipated enrollees. To assemble these networks, which
had to include enough retail and institutional pharmacies
to provide “convenient access” for enrollees, including
Medicaid-eligible individuals who would be randomly
assigned to Part D plans in late 2005, plan sponsors had
to negotiate reimbursement contracts with numerous
pharmacies. Both United and PacifiCare were negotiating
contracts with Omnicare during the period of due dili-
gence preceding their merger.
PacifiCare employed its in-house PBM RxSolutions
to conduct its negotiations with Omnicare. By all
4 No. 09-1152
accounts the negotiations did not proceed smoothly. In
early June 2005, RxSolutions sent to Omnicare a copy of
PacifiCare’s “any willing provider” contract, a form
contract that CMS required Part D plan sponsors to
develop and make available to any pharmacy willing to
sign it. Omnicare in turn sent RxSolutions its own form
contract, which included eighteen “Patient Protections”
that Omnicare developed to address the special needs
of long-term care patients. Omnicare and RxSolutions
attempted to negotiate, but because each insisted on
using its own form contract as the starting point they
never made it out of the gate. By mid-July, eight days
after United and PacifiCare signed their formal merger
agreement, negotiations between Omnicare and Pacifi-
Care broke down completely when PacifiCare, citing
price concerns, walked away from the table. Omnicare
assured PacifiCare that it would “stand ready to negoti-
ate,” but PacifiCare eschewed Omnicare’s overtures
and submitted its Part D bid to CMS without Omnicare
in its pharmacy network. After its application was
rejected, PacifiCare reopened negotiations with other
pharmaceutical service providers, including Omnicare’s
competitor Managed Healthcare Associates, Inc., to
remedy deficiencies in its pharmacy network. PacifiCare
secured CMS approval for its Part D plan in Septem-
ber 2005 without Omnicare in its network.
United also enlisted the assistance of a PBM, Walgreens
Health Initiatives (“WHI”), to negotiate with Omnicare
on its behalf. After some back-and-forth over reimburse-
ment rates, WHI and Omnicare were able to agree on a
contract under which Omnicare would provide pharma-
No. 09-1152 5
ceutical services to United’s Part D enrollees who lived
in Omnicare-contracted long-term care facilities. United,
to whom the enrollees would pay their premiums, would
then reimburse Omnicare at a rate of AWP-12% plus a
fixed dispensing fee per prescription filled.1 This reim-
bursement rate was comparable to the rates Omnicare
negotiated with most other health insurers. The United-
Omnicare contract, which was executed on July 29, 2005,
included Omnicare’s eighteen “Patient Protections.”
United submitted its bid to CMS, with Omnicare in
its pharmacy network, and received approval to operate
an extensive Part D plan. Shortly after signing its con-
tract with Omnicare and securing CMS approval, how-
1
“AWP” stands for “average wholesale price,” which is the
published price a pharmacy is supposed to pay when it
acquires a drug from a wholesaler. The actual prices phar-
macies pay are typically lower than AWP, which has been
characterized as a suggested retail price and likened to a
“sticker price” on a new car. See, e.g., In re Pharm. Indus. Average
Wholesale Price Litig., 582 F.3d 156, 165 (1st Cir. 2009). Appellees
report that the average pharmacy actually pays wholesalers
AWP-22% for prescription drugs. Assuming this number is
accurate for the sake of example, Omnicare would pay $78 to
get a drug with an AWP of $100, but would be reimbursed
$88, plus a per-transaction dispensing fee, when it sold the
drug to a United Part D plan enrollee. It is in Omnicare’s inter-
est to maximize its reimbursement rate by negotiating a low
percentage discount from AWP and a high dispensing fee. It
contrast, it is in United’s (and other insurers’) interest to
minimize the rate it pays to Omnicare by negotiating a high
percentage discount from AWP and a low dispensing fee.
6 No. 09-1152
ever, United enlisted outside counsel to advise it on the
legality of the “Patient Protections” and other Omnicare-
engineered provisions in the contract. It did not apprise
Omnicare of its concerns and expressly forbade its
PBM from doing so.
While the Part D network negotiations and proposal
developments were winding down, the merger between
United and PacifiCare was picking up. Both insurers
had due diligence teams in place, and by early
June 2005, the teams were meeting regularly to discuss a
variety of topics, including PacifiCare’s plans for its
Part D program. United tried to assuage its concerns
about PacifiCare’s Part D readiness by giving PacifiCare
a list of “Part D Questions” to answer. In its responses,
PacifiCare revealed that its expected reimbursement rate
for network pharmacies was AWP-16%. PacifiCare
also provided United with a copy of its standard “any
willing provider” form contract.
An actuary employed by a United affiliate met with
PacifiCare representatives in early July 2005 to discuss the
potential financial risks associated with Part D. At the
meeting, PacifiCare disclosed its projected national
average bids for its Part D plans. The actuary in turn
provided, in a sealed envelope that was addressed to a
PacifiCare executive who was not present, corresponding
information concerning United’s projected Part D plans.
Following the meeting, the actuary prepared a writ-
ten summary of the actuarial risks associated with
PacifiCare’s projected Part D strategy and then disquali-
fied himself from further Part D involvement. United’s
No. 09-1152 7
board approved the acquisition in short order after
being briefed on the actuary’s summary, and PacifiCare
and United executed a formal merger agreement on
July 6, 2005. The merger agreement included a provision
barring PacifiCare from entering contracts under which
it would incur liabilities of more than $3 million prior
to the consummation of the merger; a contemporaneous
“company disclosure letter” also in the record (and re-
ferred to in the merger agreement) explicitly exempted Part
D contracts from that prohibition.
After the merger agreement was signed, but before
the deal closed, United and PacifiCare discussed how
they might integrate their operations if the merger were
approved by the Department of Justice’s Antitrust Divi-
sion. (The merger was ultimately approved on Decem-
ber 20, 2005, after United and PacfiCare divested them-
selves of some overlapping holdings.) In Septem-
ber 2005, PacifiCare and United executives began colla-
borating on a memorandum (the “strategic options
memo” or “SOM”) entitled “United Health Group’s
Pharmacy Management Options.” The SOM outlined
various “strategic options” that the merged entities
could eventually take with regard to RxSolutions, Pacifi-
Care’s in-house PBM. One of the suggestions made in
the SOM was to use RxSolutions “as a stalking horse to
obtain the best service and contracts.” Several iterations
of the SOM were circulated among United and Pacifi-
Care executives from September 2005 until at least
January 2006. Although the “stalking horse” language
was present in all the drafts, it was used in connection
with different strategic options as the SOM evolved. The
8 No. 09-1152
very first circulated draft of the SOM was attached to
a lengthy e-mail in which a PacifiCare executive pro-
posed discussing unspecified “sensitive items voice to
voice” with a United executive.
United and PacifiCare’s internal communications were
not known to Omnicare at the time, but their merger was
widely publicized. See, e.g., Milt Freudenheim, United-
Health to Buy PacifiCare in Push into Medicare, N.Y. Times,
July 7, 2005, at C1; Vanessa Fuhrmans, Dennis K. Berman
& Rhonda Rundle, Two Health Plans Agree on a Deal for $8.1
Billion—UnitedHealth Adds Heft in California and Medicare
with move on PacifiCare, Wall St. J., July 7, 2005, at A1.
Indeed, when Omnicare “became concerned that
PacifiCare-insured patients in [long-term care facilities]
serviced exclusively by Omnicare would be unable to
obtain their medications after January 1, 2006” because
Omnicare and PacifiCare still lacked a contract, it
reached out to United, not PacifiCare. In mid-October,
Omnicare’s Senior Vice President of Professional Services
and Purchasing, Tim Bien, sent an e-mail to United, asking,
“When the deal closes, will PacifiCare be contracted
with Omnicare as a result of the acquisition?” Craig
Stephens, Vice President of Industry Relations and Net-
works at United, received the e-mail and forwarded
it to United’s in-house counsel, commenting, “Inter-
esting—should we assume PacifiCare has not agreed
with Omnicare?” Stephens also conferred with some
United executives, two of whom Omnicare alleges had
access to PacifiCare’s Part D pricing information and
contracting strategy, before sending Bien a reply e-mail
on October 31. The reply stated in its entirety, “Pacifi-
No. 09-1152 9
Care’s Part D offering for 2006 is a unique contract
with CMS. If and when the deal closes, PacifiCare will
follow their own Part D product strategy throughout the
2006 calendar year.” Bien forwarded this reply to
Omnicare’s CEO, adding, “PacifiCare will not be in-
cluded with the United Part D offering.”
Omnicare concluded from Stephens’s response that it
would need a separate contract with PacifiCare if it
wanted to serve PacifiCare’s Part D enrollees. It then
took the unusual step of approaching PacifiCare,
through its agent RxSolutions, to reopen negotiations
in November 2005. (Most other insurers who did not
initially contract with Omnicare later approached
Omnicare if they wanted to add Omnicare to their phar-
macy networks.) Omnicare asked PacifiCare for its best
offer. PacifiCare, whose pharmacy network had already
been approved by CMS, told Omnicare that its
negotiating position had not changed and responded by
sending Omnicare another copy of its “any willing pro-
vider” contract. Omnicare did not send PacifiCare its
own form contract, make a counteroffer, propose the
addition of any of its eighteen “Patient Protections,” or
otherwise seek to negotiate any contractual terms with
PacifiCare. Its CEO instead simply signed PacifiCare’s
“any willing provider” contract on December 6, 2005,
two weeks before the United-PacifiCare merger formally
closed. Under this contract, Omnicare’s reimburse-
ment rate was fixed at AWP-16% plus a relatively low
dispensing fee; this reimbursement rate was the lowest
rate Omnicare contracted for with any national
pharmacy but was higher than the rates it contracted
for with at least three small pharmacies.
10 No. 09-1152
Two days after Omnicare signed the PacifiCare
contract, United, at a scheduled meeting, finally informed
Omnicare of its concerns about the “Patient Protections”
contained in its contract. United—without the aid of
WHI—then reopened negotiations with Omnicare in an
attempt to get the “Patient Protections” excised from
the contract. The negotiations reached an impasse in
January 2006, several weeks after the United-PacifiCare
merger was complete. At that point, United’s Craig
Stephens e-mailed a PacifiCare employee, asking, “Quick
question— do you have a Part D network with Omnicare
for [institutional] pharmacy?” The PacifiCare employee
responded affirmatively, and the two met to discuss
the matter. After that discussion, Stephens e-mailed
United’s in-house counsel: “I learned . . . yesterday that
[PacifiCare] has a favorable agreement in place with
Omnicare. We need to understand if we can utilize the
agreement for our business—this may offer a different
approach we can take with Omnicare.”
The PacifiCare-Omnicare agreement contained a pro-
vision that allowed PBM RxSolutions to add new clients
to the agreement without obtaining consent from
Omnicare. It also lacked Omnicare’s “Patient Protections”
and included a far lower reimbursement rate than the
one United was presently required to pay Omnicare
under the WHI-negotiated contract. (It did, however,
include a provision that allowed Omnicare to terminate
the contract with or without cause upon 180 days’
written notice.) United informed Omnicare in late Feb-
ruary 2006 that, as a newly minted RxSolutions client,
it was going to join the PacifiCare-Omnicare contract,
effective April 1, 2006.
No. 09-1152 11
Omnicare was dissatisfied with this turn of events,
which would place more than one-third of its Part D
business under the governance of a pro-insurer contract.
It threatened United with legal action. United expressed
its desire to cultivate a “long-lasting relationship with
Omnicare” and agreed to provide Omnicare with a
higher reimbursement rate through April while the
parties tried to reach a contractual middle ground. Never-
theless, the parties’ negotiations over future reimburse-
ment rates and other contract terms quickly soured.
Omnicare followed through on its threat of legal action
by filing this suit in May 2006.
In its complaint, originally filed in the Eastern District
of Kentucky, where its corporate headquarters are
located, Omnicare alleged that United, PacifiCare, and
RxSolutions (collectively “Defendants”) violated the
Sherman Antitrust Act, 15 U.S.C. § 1, and a parallel state
statute, the Kentucky Consumer Protection Act, Ky.
Rev. Stat. Ann. § 367.175. Omnicare alleged that Defen-
dants formed a “buyers’ cartel” in which they shared
information and conspired to gain a competitive ad-
vantage over Omnicare, the seller of pharmaceutical
services. Omnicare also alleged that Defendants com-
mitted fraud, conspired to do so, and unjustly enriched
themselves at Omnicare’s expense by switching United
to PacifiCare’s more favorable contract. Defendants
successfully moved to transfer the action to the Northern
District of Illinois. (The contract United originally signed
with Omnicare provided that Illinois courts were to
have exclusive jurisdiction over disputes “arising under
or in connection with” it.) The transfer was treated as
12 No. 09-1152
change of venue under 28 U.S.C. § 1404(a), see Kerobo v.
Sw. Clean Fuels Corp., 285 F.3d 531, 535 (6th Cir. 2002),
and no party now contests its validity.
Once the case was relocated to the Northern District
of Illinois, Defendants moved to dismiss Omnicare’s
antitrust claims pursuant to Federal Rule of Civil Pro-
cedure 12(b)(6). The district court allowed the claims to
go forward, concluding that Omnicare had “pleaded facts
which plausibly suggest that the merger agreement
constituted a contract, combination, or conspiracy
between UnitedHealth and PacifiCare under section 1 of
the Sherman Act.” Omnicare, Inc. v. UnitedHealth Group,
Inc., 524 F. Supp. 2d 1031, 1039 (N.D. Ill. 2007). After
extensive discovery, Defendants moved for summary
judgment on all of Omnicare’s claims. Omnicare cross-
moved for partial summary judgment, arguing that De-
fendants’ five affirmative defenses failed as a matter
of law. The district court fully granted Defendants’
motion and denied Omnicare’s. Omnicare challenges
these outcomes.
II. Discussion
A. Sherman Act Claims
1. Overview & Standard of Review
Omnicare alleges that United and PacifiCare coordi-
nated their negotiations with Omnicare to avoid
Omnicare’s “Patient Protections” and depress the reim-
bursement rates they paid to Omnicare beneath the com-
petitive level. Their alleged agreement had its genesis in
No. 09-1152 13
their pre-merger due diligence, during which Omnicare
contends United learned competitively sensitive infor-
mation about PacifiCare’s Part D plans. United, armed
with the knowledge that PacifiCare’s anticipated Part D
reimbursement rates were significantly lower than its
own, allegedly agreed with PacifiCare that United
would enter into a contract with Omnicare while
PacifiCare played hardball, offering Omnicare only
its “any willing provider” contract that had a low reim-
bursement rate and lacked Omnicare’s “Patient
Protections.” Omnicare alleges that this plan unfolded
precisely as described in the strategic options memo;
PacifiCare acted as a “stalking horse,” while United lay
patiently in wait. When Omnicare inquired about
PacifiCare’s contracting plans some months later,
United seized its opportunity and provided Omnicare
with an intentionally misleading response that induced
Omnicare to sign PacifiCare’s “any willing provider”
contract without negotiation. Shortly thereafter, the
allegations continue, United completed its end of the
agreement by concocting pretextual reasons to exit
its contract with Omnicare and then joining PacifiCare’s.
Omnicare contends that these actions constitute a
buyers’ cartel that is per se violative of the Sherman Act.
It disputes the district court’s conclusion that it failed
to produce sufficient evidence to create a genuine issue
of material fact as to the existence of an anticompeti-
tive agreement between United and PacifiCare.
Omnicare also challenges the district court’s analytical
methods and evaluation of its evidence. It claims that the
district court evaluated its evidence in a piecemeal
14 No. 09-1152
rather than in the proper holistic fashion, see Kochert v.
Greater Lafayette Health Servs., Inc., 463 F.3d 710, 717
(7th Cir. 2006); In re High Fructose Corn Syrup Antitrust
Litig., 295 F.3d 651, 655-56 (7th Cir. 2002); ignored, dis-
counted, and failed to draw favorable inferences from
evidence it presented; usurped the role of the jury by
inappropriately weighing evidence; and drew inferences
in Defendants’ favor.
We find no merit in Omnicare’s claims that the
district court bungled its analysis in its thorough
opinion and order. Even on summary judgment,
district courts are not required to draw every requested
inference; they must only draw reasonable ones that
are supported by the record. See Omosegbon v. Wells,
335 F.3d 668, 677 (7th Cir. 2003). The district court’s
refusal to infer collusion from evidence put forth by
Omnicare is in accordance with this general principle,
and, importantly, does not amount to inappropriately
drawing inferences in favor of Defendants. District
courts are also not bound to discuss in detail every
single factual allegation put forth at the summary judg-
ment stage. Fresenius USA, Inc. v. Baxter Int’l Inc., 582
F.3d 1288, 1303 (Fed. Cir. 2009) (“[T]here is no require-
ment that the district court’s opinion discuss every
single fact alleged.”). Omnicare is correct that district
courts presiding over summary judgment proceedings
may not “weigh conflicting evidence,” High Fructose
Corn Syrup, 295 F.3d at 655, or make credibility deter-
minations, see Washington v. Haupert, 481 F.3d 543, 550
(7th Cir. 2007), both of which are the province of the
jury. But the district court here did not make credibility
No. 09-1152 15
determinations, and it did not inappropriately weigh
evidence. It instead scrutinized the evidence in what
was substantively a holistic fashion, adhering closely to
the governing law we outline below.
We review the district court’s grant of summary judg-
ment de novo. See, e.g., Tri-Gen Inc. v. Int’l Union of Oper-
ating Eng’rs, Local 150, 433 F.3d 1024, 1030 (7th Cir.
2006). In doing so, we construe all facts and reasonable
inferences in favor of the nonmoving party, id., and take
care not to weigh any conflicting evidence, McCann v.
Iroquois Mem. Hosp., 622 F.3d 745, 752 (7th Cir. 2010);
High Fructose Corn Syrup, 295 F.3d at 655 (describing
the weighing of evidence as a “trap” to avoid when
“deciding whether there is enough evidence of price
fixing to create a jury issue”). But Omnicare cannot
merely rest on its pleadings; it must affirmatively dem-
onstrate, by producing evidence that is more than
“merely colorable,” that there is a genuine issue for trial.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).
2. Governing Law
Section 1 of the Sherman Act (“§ 1”), 15 U.S.C. § 1,
is designed to prevent businesses from entering into
collusive agreements, and section 4 of the Clayton Act,
15 U.S.C. § 15, provides a private cause of action for the
enforcement of § 1. (Section 4 also provides treble dam-
ages and attorneys’ fees to successful antitrust plaintiffs.)
By its terms, § 1 prohibits “[e]very contract, combina-
tion . . . or conspiracy, in restraint of trade or commerce,”
15 U.S.C. § 1, though courts have long restricted its
16 No. 09-1152
reach to agreements that unreasonably restrain trade,
see State Oil Co. v. Khan, 522 U.S. 3, 10 (1997). Agreements
to fix prices unambiguously fall within the ambit of § 1.
United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 223
(1940).
Ordinarily, price-fixing agreements exist between
sellers who collude to set their prices above or below
prevailing market prices. But buyers may also violate
§ 1 by forming what is sometimes known as a “buyers’
cartel.” See Sanner v. Bd. of Trade of City of Chi., 62 F.3d
918, 927-28 (7th Cir. 1995) (conspiracy to depress
soybean prices, intended to benefit soybean buyers,
created cause of action in soybean sellers); Vogel v. Am.
Soc. of Appraisers, 744 F.2d 598, 601 (7th Cir. 1984) (“[B]uyer
cartels, the object of which is to force the prices that
suppliers charge the members of the cartel below the
competitive level, are illegal per se. Just as a sellers’
cartel enables the charging of monopoly prices, a buyers’
cartel enables the charging of monopsony prices; and
monopoly and monopsony are symmetrical distortions
of competition from an economic standpoint.” (citations
omitted)). That is what Omnicare alleges happened here.
To prevail under § 1 under any theory, plaintiffs gener-
ally must prove three things: (1) that defendants had
a contract, combination, or conspiracy (“an agreement”);
(2) that as a result, trade in the relevant market was
unreasonably restrained; and (3) that they were injured.
Denny’s Marina, Inc. v. Renfro Prods., Inc., 8 F.3d 1217,
1220 (7th Cir. 1993); cf. Matsushita Elec. Indus. Co. v. Zenith
Radio Corp., 475 U.S. 574, 585-86 (1986) (“To survive peti-
No. 09-1152 17
tioners’ motion for summary judgment, respondents
must establish that there is a genuine issue of material
fact as to whether petitioners entered into an illegal
conspiracy that caused respondents to suffer a cog-
nizable injury.”). Sometimes the second element is con-
clusively presumed once the first is proved; certain
types of trade-restraining agreements, such as horizontal
price-fixing ones like Omnicare alleges here, are con-
sidered per se unreasonable. See, e.g., Tri-Gen, 433
F.3d at 1032. Omnicare was unable to reap the benefit of
the presumption, however, because the district court
concluded that Omnicare’s case faltered at the first
stage. It granted Defendants’ motion for summary judg-
ment after finding that “Omnicare has failed to produce
evidence of action by UnitedHealth and PacifiCare that
is inconsistent with lawful conduct on the part of
two competing entities engaged in legitimate merger
discussions and planning.” Omnicare, Inc. v. UnitedHealth
Group, Inc., 594 F. Supp. 2d 945, 974 (N.D. Ill. 2009); see
also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (noting
that summary judgment must be entered “against a
party who fails to make a showing sufficient to establish
the existence of an element essential to that party’s case,
and on which that party will bear the burden of proof
at trial”).
To show concerted action, antitrust plaintiffs must
produce evidence that would allow a jury to infer that
the alleged conspirators “had a conscious commitment
to a common scheme designed to achieve an unlawful
objective.” Monsanto Co. v. Spray-Rite Serv. Corp., 465
U.S. 752, 764 (1984). That is, the circumstances of the
18 No. 09-1152
case must reveal “a unity of purpose or a common
design and understanding, or a meeting of minds in an
unlawful arrangement.” Am. Tobacco Co. v. United States,
328 U.S. 781, 810 (1946). Two separate economic
decisionmakers must be joined, “depriv[ing] the market-
place of independent centers of decisionmaking and
therefore of a diversity of entrepreneurial interests.” Am.
Needle, Inc. v. Nat’l Football League, 130 S. Ct. 2201, 2212
(2010) (quotation and citation omitted); see also Copper-
weld Corp. v. Independence Tube Corp., 467 U.S. 752, 769
(1984) (noting that in an anticompetitive agreement,
“two or more entities that previously pursued their own
interests separately . . . combin[e] to act as one for
their common benefit” in the restraint of trade); cf.
Kartell v. Blue Shield of Mass., Inc., 749 F.2d 922, 930 (1st
Cir. 1984) (Breyer, J.) (“Competitors cannot agree, for
example, to insist that their contracts . . . contain arbitra-
tion clauses, even though each individual competitor
can make up his own mind to insist upon such a term
in any, or all, of his contracts.”). Essentially, Omnicare
must demonstrate that there is a genuine issue of
material fact as to whether PacifiCare’s decision to
insist upon its “any willing provider” contract in its
negotiations with Omnicare was made not by PacifiCare
alone but rather by PacifiCare acting in concert with
United while the two were horizontal competitors.
Omnicare’s task—and ours—would be much easier if
there were a smoking gun buried in the voluminous
record. See High Fructose Corn Syrup, 295 F.3d at 654 (“[A]n
admission by the defendants that they agreed to fix
their prices is all the proof a plaintiff needs.”); see also
No. 09-1152 19
In re Baby Food Antitrust Litig., 166 F.3d 112, 118 (3d Cir.
1999) (“[W]ith direct evidence the fact finder is not re-
quired to make inferences to establish facts.” (quotation
omitted)). But Omnicare’s case, like most in this vein,
is “constructed out of a tissue of [ambiguous] statements
and other circumstantial evidence.” High Fructose Corn
Syrup, 295 F.3d at 662. It therefore must present evi-
dence from which we can infer that United and Pacifi-
Care had an anticompetitive agreement. Id. at 654. That
is, Omnicare “must show that the inference of conspiracy
is reasonable in light of the competing inferences of
independent action or collusive action that could not
have harmed” it. Matsushita, 475 U.S. at 588; see also Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 554 (2007) (“[A]t
the summary judgment stage a § 1 plaintiff’s offer of
conspiracy evidence must tend to rule out the pos-
sibility that the defendants were acting independently.”);
Miles Distribs., Inc. v. Specialty Constr. Brands, Inc., 476
F.3d 442, 449 (7th Cir. 2007) (“When a plaintiff attempts
to defeat summary judgment by highlighting circum-
stantial evidence of a conspiracy, some of the evidence
must tend to exclude the possibility that the alleged
conspirators acted independently rather than in con-
cert.”). This does not mean that Omnicare must over-
come a heightened burden to defeat summary judgment,
see Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S.
451, 468 (1992); it simply means that “conduct as con-
sistent with permissible competition as with illegal con-
spiracy does not, standing alone, support an inference
of antitrust conspiracy,” Matsushita, 475 U.S. at 588.
20 No. 09-1152
Omnicare has produced an extraordinary amount of
evidence that in its view carries it over this threshold.
But the mere production of evidence, even, as
Defendants allege and we have no reason to doubt after
poring through the dozen boxes constituting the ap-
pellate record in this case, millions of pages of docu-
ments and nearly sixty depositions, provides insufficient
grounds for us to reverse a grant of summary judg-
ment. Instead, we must determine whether summary
judgment is appropriate using the two-part inquiry we
set forth in Market Force Inc. v. Wauwatosa Realty Co., 906
F.2d 1167, 1171 (7th Cir. 1990); see also Serfecz v. Jewel
Food Stores, 67 F.3d 591, 599 (7th Cir. 1995); Res. Supply
Corp. v. Owens-Corning Fiberglas Corp., 971 F.2d 37, 49
(7th Cir. 1992). Under that framework, we first assess
whether Omnicare’s evidence of agreement is ambigu-
ous—that is, whether it is equally consistent with the
Defendants’ permissible independent interests as it is
with improper activity. Market Force, 906 F.2d at 1171.
If we conclude that the evidence could support the con-
clusion that Defendants were acting independently, we
then look for any evidence that tends to exclude the
possibility that Defendants were pursuing independent
interests. Id. In other words, Omnicare must “show that
the inference of conspiracy is reasonable in light of
the competing inference of independent action.” Valley
Liquors, Inc. v. Renfield Imps., Ltd., 822 F.2d 656, 660-61
(7th Cir. 1987); see also Matsushita, 475 U.S. at 597 n.21
(“[C]onduct that is as consistent with permissible com-
petition as with illegal conspiracy does not, without
more, support even an inference of conspiracy.”).
No. 09-1152 21
3. Evidence of Agreement
Omnicare’s theory is that United and PacifiCare con-
spired to coordinate their negotiation strategies,
thereby reducing the price they paid Omnicare for its
institutional pharmacy services. Thus, to survive summary
judgment on the first prong of the Denny’s Marina test,
Omnicare must show that it has produced evidence
that, when considered collectively, would permit a rea-
sonable jury to conclude that United and PacifiCare
agreed to work together to fix prices. We discuss its
proffered evidence below.
a. The Strategic Options Memo &
Accompanying E-mail
Because Omnicare claims that the strategic options
memo (SOM) served as a “blueprint for the collusion,”
Appellant’s Br. 41, we begin there. On September 1,
2005—about three months after United and Pacifi-
Care’s first alleged illicit information exchange, about
two months after the formal merger agreement
was signed, and about a month after United inked
its contract with Omnicare—a PacifiCare executive sent
an e-mail to a United executive. In that e-mail, which
was by its terms “intended as an update” and referred
back to a past memorandum that is not part of the
record, the PacifiCare executive indicated that she had
spoken with a different United executive and was “in
agreement” that an unspecified “Part D readiness item . . .
can and should be done.” She also noted that she
would schedule a teleconference so the two could “discuss
22 No. 09-1152
more sensitive items voice to voice,” and attached “a
draft of a think piece on the PBM”—the first draft of the
SOM, which proposed, among other PBM strategies,
using RxSolutions “as a stalking horse to obtain the
best service and contracts.”
Omnicare asserts that the district court erred in failing
to “permit[ ] a jury to draw the inference that these dis-
cussions were collusive.” Appellant’s Br. 42. The
district court had before it, however, the entirety of the
e-mail and accompanying memo, as do we, and as
would the jury. When viewed in context, the statements
about “agreements” and “sensitive items” are decidedly
ambiguous. The “agreement” about “Part D readiness”
appears only to have resulted in the scheduling of a
meeting between the due diligence teams to further
discuss risk management. And the unspecified “sensitive
items” could, as Defendants posit, just as easily be
related to legitimate business matters such as personnel
concerns as they could be to an illicit agreement. See
Market Force, 906 F.2d at 1173 (considering defendants’
legitimate business explanations for the alleged collusive
conduct). At best, reasonable jurors could find that the
statements contained in the e-mail are ambiguous evi-
dence of vaguely directed joint conduct. See id. (“[I]t is
well established that evidence of informal communica-
tions among several parties does not unambiguously
support an inference of a conspiracy.”).
The strategic options memo, despite its use of the
loaded “stalking horse” phrase, is equally ambiguous
evidence of the existence of a price-fixing, negotiation-
No. 09-1152 23
coordinating agreement between United and PacifiCare.
Unquestionably, the SOM shows that United and
PacifiCare were communicating about their future plans.
It likewise shows that some of their discussions may
have concerned RxSolutions and a potential plan to use
it “to obtain the best service and contracts.” Yet Omnicare
has not demonstrated how these two features of the
SOM, even when considered with all its other evidence,
could lead a reasonable jury to infer a price-fixing con-
spiracy directed at Omnicare. Given the document’s
prospective language—all versions of the SOM invariably
discuss options that “need to be considered,” not
options that are actively being (or have been) pursued—
a reasonable jury would be hard-pressed to conclude
that the SOM was drafted to guide PacifiCare’s late-
2005 dealings with Omnicare. Moreover, the record
indicates that the SOM continued to be circulated, and
even distributed at meetings, well after the Part D
contracts were inked and the merger was finalized; the
undisputed chronology of the SOM’s distribution under-
cuts Omnicare’s assertion that it was a “blueprint” for
conspiracy, particularly where it was not circulated
until well after the plan as Omnicare envisions it
would have had to have been underway. Cf. In re Brand
Name Prescription Drugs Antitrust Litig., 288 F.3d 1028,
1034 (7th Cir. 2002) (noting that drawing an inference
of knowledge would be “shaky” where the alleged con-
spiratorial system was adopted before the alleged collu-
sion began). The SOM’s usefulness as a blueprint—and
the reasonableness of any inference in that direc-
tion—is further called into question by its shifting place-
ment of the “stalking horse” language.
24 No. 09-1152
b. Pre-Merger Information Exchange
Notwithstanding its contention that the SOM was the
cornerstone of the conspiracy, Omnicare alleges that
United and PacifiCare began coordinating their negotia-
tion strategies when they improperly exchanged Part D
pricing information during the period of due diligence
preceding their merger.2 Information exchange can
help support an inference of a price-fixing agree-
ment, Todd v. Exxon Corp., 275 F.3d 191, 198 (2d Cir.
2001) (Sotomayor, J.), but, like all circumstantial evidence
2
Omnicare asserts that the district court erred by not consider-
ing this contention as a stand-alone Sherman Act claim. See
Appellant’s Br. 47-50; Todd v. Exxon Corp., 275 F.3d 191, 198-99
(2d Cir. 2001) (Sotomayor, J.) (discussing information ex-
change as an “analytically distinct” type of claim based on the
Sherman Act). Yet Omnicare did not allege a distinct “informa-
tion exchange” claim in its amended complaint, see First Suppl.
& Am. Compl. ¶¶ 69-78; Burks v. Wis. Dep’t of Transp., 464
F.3d 744, 758 n.15 (7th Cir. 2006); Grayson v. O’Neill, 308 F.3d
808, 817 (7th Cir. 2002) (“[A] plaintiff may not amend his
complaint through arguments in his brief in opposition to a
motion for summary judgment.”), and, perhaps more impor-
tantly, it did allege an agreement to fix prices, not merely an
exchange of information, see Todd, 275 F.3d at 199. In any event,
the district court devoted roughly six pages of its opinion to
“Premerger Communications and Information Exchange” and
“Communications Subsequent to Execution of Merger Agree-
ment.” See Omnicare, 594 F. Supp. 2d at 968-74. We have no
doubt that the court considered this facet of Omnicare’s
claim, even if it failed to do so as explicitly as Omnicare
would have liked.
No. 09-1152 25
of conspiracy, it is not on its own demonstrative of
anticompetitive behavior, even when pricing data is
what is exchanged, see Mitchael v. Intracorp, Inc., 179
F.3d 847, 859 (10th Cir. 1999) (citing Baby Food, 166 F.3d
at 118; City of Long Beach v. Standard Oil Co., 872 F.2d
1401, 1406 (9th Cir. 1989) (noting that competitors may
exchange price information for legitimate business rea-
sons); cf. Todd, 275 F.3d at 199 (applying the rule of
reason to analyze Todd’s information exchange claim).
Omnicare argues that the exchanges here amount
to something sinister, particularly because United
may have breached its confidentiality agreements. See
Omnicare, 594 F. Supp. 2d at 969-71. In support of its
contentions, Omnicare points to several specific infor-
mation exchanges: “Part D Questions” that Pacifi-
Care answered at United’s request in June 2005; a “Due
Diligence Summary,” including a table of Part D bid
comparisons, prepared sometime between June 28
and July 2, 2005; a Part D risk assessment created by a
United-affiliated actuary after he met with four Pacifi-
Care representatives on July 2, 2005; some average
pricing information about United’s Part D plans that the
actuary delivered, in a sealed envelope, to a PacifiCare
representative not present at the meeting; and deposition
testimony regarding a conversation about the mutual
difficulties United and PacifiCare were experiencing in
their negotiations with Omnicare.3
3
We note that many of these documents are under seal. We
therefore discuss them using general, descriptive terms where
(continued...)
26 No. 09-1152
We agree with the district court that the nature of
Omnicare’s information-exchange contentions requires
us to walk a fine line:
On the one hand, courts should not allow plaintiffs
to pursue Sherman Act claims merely because con-
versations concerning business took place between
competitors during merger talks; such a standard
could chill business activity by companies that
would merge but for a concern over potential litiga-
tion. On the other hand, the mere possibility of a
merger cannot permit business rivals to freely ex-
change competitively sensitive information. This
standard could lead to “sham” merger negotiations,
or at least allow for periods of cartel behavior when,
as here, there is a substantial period of time between
the signing of the merger agreement and the closing
of the deal.
Omnicare, 594 F. Supp. 2d at 968. Looking at the pricing
information that was exchanged, however, we cannot
see how a reasonable jury could conclude that it is
more consistent with action on the conspiratorial side of
the line than with action on the innocuous due diligence
side. PacifiCare answered the “Part D Questions” in
general terms, and sometimes disclosed less informa-
tion than was requested because that was “what
3
(...continued)
possible, excerpting only information that does not appear to
be particularly sensitive. We do the same as the need arises
elsewhere.
No. 09-1152 27
the attorneys permitted.” The Due Diligence Sum-
mary—which discusses information gathered in the
final month preceding the merger agreement—provides
more detailed information, but it too is restricted to
“sample regions,” “high level review,” and “estimates.”
Even the Summary’s comparison of PacifiCare’s and
United’s pricing and benefits is restricted to general
terms—“consistent,” “higher,” “roughly,” and the like.
The purpose of the meeting the actuary attended
and summarized was to determine the impact of
PacifiCare’s Part D offerings on United’s valuation of
the company for merger purposes. Not only is accurate
valuation a critical component of the merger process,
but, like the other pricing information, the valuation
information was shared among a small number of execu-
tives on the eve of the merger agreement. Moreover,
there is no evidence that the actuary relayed the infor-
mation gleaned from the meeting directly to any
United executives, let alone those who were not cleared
to receive it. The record instead shows that he sent the
report first to PacifiCare’s outside counsel, who re-
viewed it and excised what he believed to be “competi-
tively sensitive” details before sending it along to
United’s outside counsel, who in turn reviewed it
before sending it to a handful of United executives.
Even more notably, the individual Omnicare identifies
as the overseer of United’s Part D-related pharmaceutical
contracting was not included among the report’s recipi-
ents.
The report itself recognizes that its ability to assess
risk is limited “without knowing the specific regions
28 No. 09-1152
or [PacifiCare’s] estimate of results by region” and
delivers its conclusions in general terms. For instance, it
merely notes that PacifiCare “appears to have appropri-
ately priced the benefit differences” without divulging
the nature of the benefits or their prices, and similarly
opines that PacifiCare has in some instances “taken
a conservative approach” without providing the
specific bases for that conclusion. E-mails circulated
contemporaneously among the United executives who
received the report place a further damper on a jury’s
ability to infer long-planned concerted action between
United and PacifiCare. In particular, one of United’s
Part D financial executives noted that one factor con-
tributing to his increasing comfort with PacifiCare’s
Part D plans was that “in year 2, we can move them
to our contracts”—the complete opposite of the collusive
outcome toward which United and PacifiCare were
allegedly working.
The conversation between a United executive and a
PacifiCare executive did not involve price but rather
concerned the parties’ mutual difficulties reaching
timely contracts with Omnicare. (Recall that United
did not sign its contract with Omnicare until late
July 2005, and pharmacy network proposals were due
to CMS on August 1.) The extent of the evidence of the
conversation is six lines of a United executive’s deposi-
tion, wherein he stated, “I do recall a conversation with
Jaqueline Kosecoff in the context of difficulties that
we were having reaching a timely contract with—
with Omnicare, and I believe that she told me that
[PacifiCare] was also having difficulties reaching an
No. 09-1152 29
agreement with the contract.” Phanstiel Dep. 93:22-94:2,
Feb. 5, 2008. No reasonable jury could conclude that the
conversation—which is mentioned only once in the
record—gives rise to an inference of illicit agreement. The
mere mention of contracting difficulty in the course of a
merger and development of new Part D plans does
not indicate the existence of a conspiracy to fix prices,
nor does it indicate coordination of any pricing, con-
tracting, or negotiation strategy whatsoever. Moreover,
it would have had to have taken place sometime
before United signed its contract with Omnicare,
which was at least a month before the SOM outlining
the alleged plan of attack was drafted.
Viewed separately and collectively, Omnicare’s evi-
dence of information exchange would not enable rea-
sonable jurors to infer that United and PacifiCare inap-
propriately shared information damaging to competi-
tion in and of itself (Omnicare’s alleged standalone
claim), nor that the information exchanged facilitated
the development or advancement of a coordinated negoti-
ating and pricing strategy. It similarly does not tend to
exclude the possibility that United and PacifiCare were
acting to advance their own legitimate interests. It
may illuminate other evidence, however, so we keep it
in mind as we work toward completing the evidentiary
picture.
c. Merger Agreement & Carve-Out
United and PacifiCare executed their formal merger
agreement on July 6, 2005. Section 5.01 of the agreement
30 No. 09-1152
prohibited PacifiCare from incurring any contract
liability of $3 million or more before the consummation
of the merger without United’s written approval. Sec-
tion 5.01 would thus on its face effectively prevent
PacifiCare from entering into any Part D agreements
without United’s review and approval. But section 5.01
also created an exception to its blanket prohibition: a
“company disclosure letter,” referred to by the parties as
the “carve-out.” The carve-out provided that Pacifi-
Care (and its subsidiaries, including PBM RxSolutions)
“may enter into or amend any Contracts relating to
their Part D standalone business that are variable cost or
based on sales production” without permission from
United. Omnicare contends that the carve-out was a
consequence of the illicit information exchange that
occurred during the Defendants’ due diligence. See
Part II.A.3.b, supra. It also presents an expert opinion
that the proper inference to be drawn from the existence
of the carve-out is that “United had become com-
fortable with PacifiCare’s Part D contracting strategy
based upon the confidential information it had obtained.”
Omnicare directs our attention to testimony from a
United Rule 30(b)(6) witness, who stated that United
agreed to the carve-out because it had reviewed
PacifiCare’s pricing information. That testimony could
support the reasonable inference that PacifiCare and
United were cooperating illicitly. But it must be con-
sidered not only in light of the information exchanged,
which was not on its face improper, but also in light of
the remainder of the witness’s testimony, wherein
he stated, in the very same sentence, that United re-
No. 09-1152 31
viewed the information only at a “very high level” of
generality. He further explained that United and Pacifi-
Care recognized the impropriety of sharing “specific
Part D information with each other . . . between signing
and close.” If jurors were to find that witness credible,
his uncontested statements about the scope of United’s
review, as well as the evidence of the information
United actually received, would limit their ability to
draw an inference of collusion from the mere existence
of the carve-out.
The inference advocated by Omnicares expert is a
reasonable one jurors could make. It is supported both
by the context of the merger regardless of the level
of detail of the information United received, it received
it in confidence during due diligence and by the testi-
mony of the Rule 30(b)(6) witness. The problem for
Omnicare is that jurors would have to draw additional
inferences from the expert’s suggested inference to con-
clude that the carve-out was demonstrative of an agree-
ment related not to the merger but rather to Part D negoti-
ating and contracting strategy. Such inferences might
be reasonable; after all, the carve-out specifically
addresses Part D. There is countervailing evidence,
namely that the carve-out by its terms excuses PacifiCare
from involving United in its Part D plans, but weighing
evidence is a task for the jury, not for this court.
We are tasked, however, with considering Defendants’
assertions that the carve-out was as compatible with
their legitimate business activity as it is with Omnicare’s
theory. Market Force, 906 F.2d at 1171. Here, Defendants
32 No. 09-1152
point to the Rule 30(b)(6) witness’s testimony, which
they assert demonstrates United’s recognition that “it
was clearly inappropriate to share specific Part D infor-
mation with each other between signing and close.” This
recognition, they contend, leads to an inference that the
carve-out operated to ensure the independence of the
parties’ Part D dealings. This inference is grounded in
the record; reasonable jurors could find it as persuasive
as Omnicare’s contentions that the carve-out proved
just the opposite. We are therefore confronted with an
ambiguity that can be resolved in Omnicare’s favor only
if it produces some evidence that tends to exclude the
possibility that United and PacifiCare were pursuing
independent interests. See id. at 1173. Because we con-
sider Omnicare’s evidence holistically, the absence of a
specific piece of exclusionary evidence at this juncture
does not necessarily undermine Omnicare’s case.
d. PacifiCare’s Negotiating Tactics
Negotiations between Omnicare and RxSolutions
(on behalf of PacifiCare) started off well enough in spring
2005, with a cordial exchange of e-mails and telephone
calls that eventually resulted in an exchange of form
contracts. A few friendly but firm e-mails followed, in
which each expressed a preference for its own form
contract. RxSolutions explained that PacifiCare expected
to enter into agreements with nearly 2000 pharmacies
and therefore could not take the time to modify Omni-
care’s proposed contract to its liking. Omnicare acknowl-
edged PacifiCare’s concerns but nonetheless urged
No. 09-1152 33
PacifiCare to look over its contract and inform Omnicare
of its most salient objections to provide a starting
point for negotiations. The record contains a document in-
dicating that RxSolutions and PacifiCare may have
made at least some effort to comply with Omnicare’s
request, but Omnicare claims that it first received this
document during discovery, and we draw the inference
in Omnicare’s favor. E.g., Miles, 476 F.3d at 448. At any
rate, by July 6, the day of PacifiCare’s merger with
United, negotiations between Omnicare and RxSolutions
had deteriorated significantly. Omnicare’s negotiations
log indicates that the parties were “[w]ay off on price” and
had a phone call that did not go well. Roughly one
week later, on July 14, RxSolutions informed Omnicare
that PacifiCare had decided to walk away from the
table. RxSolutions cited Omnicare’s proposed reimburse-
ment rate as the basis for PacifiCare’s exit from negotia-
tions. Omnicare did not propose a lower rate, but it
assured RxSolutions that it would “stand ready to negoti-
ate” if PacifiCare chose to do so.
PacifiCare instead submitted its Part D bid to CMS
without Omnicare in its network. CMS rejected the bid,
but gave PacifiCare a three-day window in which to
shore up its institutional pharmacy network. To do so,
PacifiCare reopened its negotiations with Managed
Health Care Associates, a large institutional pharmacy
that competes with Omnicare, and struck a deal to get
Managed Health Care Associates in its network.
PacifiCare promptly resubmitted its bid and received
CMS approval in September 2005.
34 No. 09-1152
On November 8, 2005, CMS issued a statement
regarding its “convenient access” standard. The state-
ment encouraged Part D plan sponsors to contract with
long-term-care pharmacies to ensure that their plan
members residing in institutional facilities could easily
access their necessary medications. The statement
also informed pharmacies that it was “imperative” for
them to “not withhold contracts” to similarly foster
access for the most fragile Part D participants, and it
emphasized at least twice that the contracting process
should be “ongoing” and could continue “before and after
the benefit begins on January 1, 2006.” Shortly after
this statement was issued, and two weeks after it
received an e-mail from United regarding PacifiCare’s
future Part D plans, see infra Part II.A.3.e, Omnicare
contacted RxSolutions to reopen negotiations with
PacifiCare. PacifiCare responded by offering Omnicare
the same “any willing provider” contract Omnicare
had previously rejected. This time, however, Omnicare
did not ask PacifiCare to look at its own form contract or
to consider an alternative reimbursement structure or
other contractual provisions. It instead informed Pacifi-
Care on December 5 that it was “prepared to sign”
PacifiCare’s “any willing provider” contract and did so
the next day.
Omnicare contends that this sequence of events only
makes sense if PacifiCare was coordinating its negotia-
tions strategy with United. It points to PacifiCare’s
“abrupt” termination of negotiations in July and its lack
of a contingency plan to provide medication to its Part D
enrollees residing in Omnicare-serviced facilities as
No. 09-1152 35
evidence of PacifiCare’s irrational behavior. It also
points to expert testimony that PacifiCare should
have been more risk averse in the face of an impending
acquisition that would net it $1.2 billion in market capital-
ization, and in light of the possibility that CMS could
revoke its Part D contract if it could not provide medica-
tion to its enrollees. Omnicare also claims that Pacifi-
Care was the only Part D plan that steadfastly refused
to negotiate with it, particularly after CMS assigned
plans their Medicaid-eligible participants.
Validating Omnicare’s contentions would require
reasonable jurors to draw inferences beyond those
possible even within the pro-nonmovant confines of
summary judgment. First, Omnicare’s characterization
of PacifiCare’s withdrawal from negotiations as “abrupt”
is a stretch in light of the evidence detailing the parties’
negotiations process. Omnicare’s own log of its negotia-
tions with PacifiCare reveals that fissures began
emerging in the parties’ relationship shortly after they
exchanged form contracts. The log notes that a phone
conversation the week prior to PacifiCare’s withdrawal
“did not go well” because the parties were “[w]ay off on
price.” It also reveals that Omnicare was aware that
PacifiCare was “talking to [Omnicare’s] competitors” from
the time of the parties’ very first conference call in early
April 2005. Perhaps PacifiCare’s decision to end negotia-
tions nonetheless came as a surprise to Omnicare, but
the record does not support the inference that it was
irrational and therefore entered at the behest of United.
Second, Omnicare relies on PacifiCare’s failure to
craft a “contingency plan” as evidence that United was
36 No. 09-1152
acting covertly as its safety net. Yet the November state-
ment from CMS made clear that the contracting phase
of the Part D launch could, and likely should, continue
past the formal launch date of January 1, 2006. No evi-
dence supports the conclusion that CMS required Part D
plans to develop contingency plans if they were unable
to enter into satisfactory contracts with every pharmacy
with which they engaged in negotiations.
Omnicare did introduce evidence showing that
many long-term care facilities enter into exclusive con-
tracts with institutional pharmacies, and that it is costly
for the facilities to switch or add providers. It argues
that PacifiCare must have known, given Omnicare’s
substantial market share, that some of its randomly
assigned Part D participants would reside in Omnicare-
contracted facilities; it was therefore irrational for
PacifiCare not to contract with Omnicare unless Pacifi-
Care was acting in concert with United. This argument
has some persuasive force, though it ignores record
evidence from CMS explaining that the Part D convenient
access standards were designed to “promote competi-
tion” and “give each facility access to a broader range of
potential [long-term care] pharmacies than is the case
today.” In light of the statements from CMS, both about
increased competition and continued contracting, and
against the uncertain landscape of a completely new
program, PacifiCare’s behavior would not necessarily
be contrary to its economic interest and thus exclusive of
independent conduct. Indeed, PacifiCare succeeded in
securing CMS approval of its Part D pharmacy network
without Omnicare, and the record shows that it was not
No. 09-1152 37
the only Part D plan sponsor that was able to get
approval under such conditions.
To rebut this evidence tending to show that PacifiCare
acted rationally and independently, see Market Force, 906
F.2d at 1173, Omnicare asserts that PacifiCare’s behavior
was particularly suspect in two crucial respects. First,
Omnicare contends that PacifiCare was the only large
Part D plan sponsor that did not take the initiative to
reopen negotiations with Omnicare after receiving its
list of randomly assigned Medicaid-eligible enrollees.
Second, it argues that because PacifiCare was in the
midst of being acquired, it should have been particularly
risk-averse so as to ensure the consummation of the
merger.
The first contention is not supported by the record.
Omnicare points to a single e-mail from Humana, a
large insurer and Part D plan sponsor, in which
Humana expressed its post-CMS-approval willingness to
reach an agreement with Omnicare. We must infer that
this e-mail, which is presented in isolation, was a sua
sponte undertaking on the part of Humana. But Omni-
care produces no other evidence showing that
other insurers in fact took the first steps toward post-
approval negotiations. Perhaps Humana’s overtures, and
not PacifiCare’s lack thereof, were the aberration; we
cannot tell from the record, and we therefore cannot
conclude that the Humana e-mail tends to exclude
the possibility that PacifiCare was acting in its own
independent interest.
Support for the second contention is somewhat more
salient. Omnicare has submitted an expert report from
38 No. 09-1152
Professor John Coates in which he opines that acquisi-
tion targets generally behave conservatively. In his
view, PacifiCare would not have pursued a “risky
strategy of offering Omnicare nothing but an
‘any willing provider’ contract” absent an agreement on
negotiation strategy with United. Appellant’s Br. 35.
Assuming that Coates’ report is admissible, cf. Brooke
Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S.
209, 242 (1993), it supports Omnicare’s theory of the
case. Yet its ultimate relevance hinges on the determina-
tion that what PacifiCare did was, in fact, risky. Omnicare
has produced evidence showing that Part D was critical
to the United-PacifiCare merger and that PacifiCare
stood to gain over $1 billion if the merger panned out.
This evidence supports the inference that PacifiCare’s
behavior, even if rational, was not without its share of
risk. Defendants, on the other hand, suggest that Pacifi-
Care executives were simply “anxious to impress their
new owners with their negotiating skills” and bar-
gained hard to achieve that end. Appellees’ Br. 31. In
light of these competing inferences, we ask whether
there is any evidence that tends to exclude the possi-
bility that PacifiCare was acting in accordance with its
independent aims. Market Force, 906 F.2d at 1171.
Here, Omnicare comes up short, at least with respect
to the issue of negotiation in isolation. Omnicare’s
theory is that PacifiCare acted the way it did because
it knew that if its strategy failed, it could join United’s
contract with Omnicare or at the very least that United
would not abandon the merger given its complicity.
But the contract governing United’s relationship with
No. 09-1152 39
Omnicare provided that no modifications could be made
to the list of contracted plans without Omnicare’s
written consent, which was to be awarded in Omnicare’s
sole discretion. Regardless of any conspiracy, Omnicare
had full power over which insurers could become
parties to the United contract. This renders the existence
of a fall-back plan between United and PacifiCare es-
sentially useless; the parties “ ‘must make a substantial
investment with no assurance that it will pay off.’ ”
Matsushita, 475 U.S. at 588 (quoting Frank H. Easterbrook,
Predatory Strategies and Counterstrategies, 48 U. Chi. L. Rev.
263, 268 (1981)). We thus find it difficult to conclude
that inferring anticompetitive agreement from Pacifi-
Care’s negotiation tactics, though perhaps reasonable, is
as reasonable as inferring it acted independently. See
Matsushita, 475 U.S. at 588. Again, however, we will
reevaluate the import of PacifiCare’s hard-line bar-
gaining as part of our holistic assessment of the evi-
dence. See infra Part II.A.3.h.
e. The October E-mails
In mid-October 2005, Omnicare’s Tim Bien became
concerned that PacifiCare Part D enrollees who resided
in Omnicare-serviced institutions would be unable to
get their medications once Part D went live because
PacifiCare had no agreement in place with Omnicare.
To determine if United intended to add PacifiCare en-
rollees to its pre-existing contract with Omnicare,
and thus put his concerns to rest, Bien sent an informal
e-mail to United’s Craig Stephens on October 17. That
40 No. 09-1152
e-mail read, “Craig, Is there a sense of when United
will close the acquisition of PacifiCare? When the deal
closes, will PacifiCare be contracted with Omnicare as
a result of the acquisition? Thanks for your help on this.
Tim Bien.” After a week passed with no response
from Stephens, Bien sent a follow-up e-mail in which
he reproduced the first e-mail and asked, “Can you
give me anything on this?” Before responding to Bien,
Stephens consulted with two of his superiors, both of
whom had learned some information about PacifiCare
during due diligence. He also forwarded the e-mail to
United’s in-house counsel, adding, “Interesting—should
we assume Pacificare has not agreed with Omnicare?” In-
house counsel’s response is not included in the record,
though in-house counsel recalled reviewing a draft of
Stephens’s response e-mail, which was sent to Bien on
October 31. In that e-mail, Stephens stated, “PacifiCare’s
Part D offering for 2008 is a unique contract with CMS.
If and when the deal closes, PacifiCare will follow their
own Part D product strategy throughout the 2006
calendar year.”
Bien forwarded this reply to Omnicare’s CEO, adding,
“PacifiCare will not be included with the United Part D
offering.” The CEO later stated at his deposition that
he took the e-mail to mean that PacifiCare “would be
an independent, freestanding, unique contract in 2006,
having nothing to do with United, and that on that basis
it would be all right for us to cover those few percent
of our patients in the PacifiCare plans through an [’any
willing provider’] agreement since they wouldn’t give
us anything else.” One week after Stephens sent his
No. 09-1152 41
reply e-mail, CMS issued a statement encouraging Part D
plans and pharmacies to continue their negotiations.
The week after that, Omnicare contacted PacifiCare to
reopen negotiations and received PacifiCare’s “any
willing provider” contract in return.
Omnicare identifies Stephens’s October 31 e-mail as
the primary catalyst for its future dealings with Pacifi-
Care. It contends that because the e-mail was drafted
after consultation with individuals who had access to
PacifiCare’s pricing data, and was sent “with knowledge
that Omnicare was deciding whether to seek a separate
contract with PacifiCare,” Appellant’s Br. 39, it supports
an inference “that United wanted to deceive Omnicare
into entering an ‘any willing provider’ contract with
PacifiCare,” id. at 40. Indeed, Omnicare asserts that
Bien’s inquiry gave United the opportunity to set its
collusive plan with PacifiCare in motion.
Omnicare’s suggested inferences may be a bit of a
stretch for reasonable jurors. Though United was able to
offer Omnicare an answer on PacifiCare’s behalf, there
is no evidence that the answer was based on any
improper information. See supra Part II.A.3.b (discussing
Omnicare’s evidence of pre-merger information ex-
change). Similarly, the record contains no evidence that
United consulted with PacifiCare about the response,
which would be expected if the two were working
together to elicit action from Omnicare. There is also
no evidence indicating whether or how United knew
Omnicare’s motivation for sending the e-mail; it is not
clear how United would know what Omnicare’s negotia-
42 No. 09-1152
tions plans were, or could predict the extent to which a
two-line e-mail might influence the sophisticated com-
pany’s behavior. Even if we assume, generously, that
Omnicare reopened negotiations with PacifiCare on
the basis of this e-mail, it’s not clear how United could
have reasonably expected, or even intended, the e-mail
to dictate Omnicare’s subsequent decision to contract
with PacifiCare without negotiation.
The e-mails therefore do little to demonstrate that
United and PacifiCare had any sort of agreement. They
are, however, consistent with independent action. Omni-
care unilaterally initiated the communications that
precipated the e-mail; PacifiCare had not been acting
like a “stalking horse,” seeking out a contract with
Omnicare. United responded to Omnicare’s e-mails
without consulting alleged partner PacifiCare. Moreover,
it responded to the question Omnicare asked, that is,
whether United planned to add PacifiCare onto its con-
tract. Though United did not respond immediately,
sending a response after consulting with a legal depart-
ment is well within the norms of independent behav-
ior. And United’s response was truthful: PacifiCare
did have its own contract with CMS, and the carve-out
to the merger agreement gave it free rein to conduct
its Part D negotiations independently. Nothing about
United’s response to Omnicare’s e-mails tends to ex-
clude independent action.
f. The Contract Rate
The penultimate step in the alleged conspiracy be-
tween United and PacifiCare was Omnicare’s signing of
No. 09-1152 43
PacifiCare “any willing provider” contract, which con-
tained a reimbursement rate below that which Omnicare
received in connection with most other Part D plans.
Omnicare contends that the rate is so far below that
which would be expected in a competitive market that
an inference that United and PacifiCare colluded to
generate it is reasonable on the basis of the rate alone.
In support of its contention, Omnicare points to a
report from its economics expert, Professor Daniel
Rubinfeld, which shows that the rate in the PacifiCare
contract was significantly lower than both the rates
Omnicare negotiated with other Part D plan sponsors
and the ones that PacifiCare negotiated with other phar-
macies. Omnicare also asserts that PacifiCare was the
only Part D plan to “demand from the largest institu-
tional pharmacy a sub-competitive rate on a non-
negotiable basis, a fact that tends to exclude indep-
endent action.” Appellant’s Br. 44. Omnicare also raises
a host of challenges to the district court’s handling of its
contention about the rate and the evidence it put forth
to support it; it claims that the district court usurped
the role of the jury; ignored evidence, including Profes-
sor Rubinfeld’s regression analysis; and overstated
the significance of PacifiCare’s CMS approval.
We proceed directly to Omnicare’s contention that
the district court substantively erred in its assessment of
the contract rate. (If the district court did misstep in
its treatment of the evidence, which we do not believe
it did, see supra Part II.A.1, our de novo review should
go far toward rectifying any errors.) The district court
concluded that the contract rate was largely the result
44 No. 09-1152
of Omnicare’s failure to engage PacifiCare in negotia-
tions. Indeed, Omnicare conceded at oral argument that
the alleged “stalking horse” strategy would have im-
ploded if it had simply declined to sign PacifiCare’s
“any willing provider” contract. “If the contract really
made no economic sense, as Omnicare now contends, one
would not have expected Omnicare to enter into that
contract so readily.” Omnicare, 594 F. Supp. 2d at 967. But
that is what Omnicare did, and we cannot ignore the
impact that a lack of negotiation had on the agreed-
upon rate. Professor Rubinfeld, whose regression analysis
Omnicare characterizes as supportive of its claim that
the rate should have been higher, specifically noted that
his analysis “assumed that the bargaining process be-
tween PacifiCare and Omnicare is similar to the bar-
gaining process between other [insurers] and Omnicare.”
Omnicare has not produced any evidence that any of
its other contracts, providing for rates within the fair
market norm, were signed without negotiation. To the
contrary, it notes that other large Part D plan sponsors
with whom it signed contracts late in the game “agreed to”
rates in line with what Omnicare generally expected,
indicating that at least some back-and-forth occurred.
Appellant’s Br. 45 (emphasis added).
Omnicare has produced some evidence from which
reasonable jurors could infer that PacifiCare rebuffed
its good-faith negotiating efforts, including PacifiCare’s
assertion that its “any willing provider” contract was
its “best offer,” and deposition testimony from a Pacifi-
Care employee stating that he would not have recom-
mended that PacifiCare go back to Omnicare if it refused
No. 09-1152 45
the “any willing provider” contract. Yet, as discussed
above, PacifiCare’s hard-line negotiating and attempts
to get the lowest rates possible were not inconsistent
with its independent economic interest and therefore
do not give rise to a material issue regarding the ex-
istence of a conspiracy. That is particularly true given
PacifiCare’s approval by CMS. Omnicare attempts to
minimize the significance of this fact (and indeed claims
that the district court overemphasized it), but Omnicare
characterizes the January 1, 2006, Part D launch date as
a hard-and-fast negotiating deadline after which ap-
proval would be immediately revoked if problems
arose. This characterization is belied by statements
from CMS that Omnicare itself placed in the record.
Omnicare also attempts to de-emphasize the existence
of other contracts it entered at similarly unfavorable
rates. Those contracts, made with a few small Part D
plans, indicate that the rate contained in PacifiCare’s
contract is not per se anticompetitive on its face. Omni-
care asserts that its “transactions costs in negotiating
with either of these two [insurers] would outweigh any
benefit gained through negotiating a competitive rate.”
Appellant’s Br. 47. The testimony from Omnciare’s CEO
indicates that it may have made a similar calculus
with PacifiCare, despite having full knowledge of Pacifi-
Care’s impending merger with United and presumable
awareness that the “any willing provider” contract gave
PacifiCare the ability to add parties at will. (Omnicare
conceded as much at oral argument, asserting, “It was a
rational economic decision to sign the PacifiCare con-
tract on PacifiCare’s terms” to “pick up additional reve-
46 No. 09-1152
nue” after it had contracted with “everyone else.”) The
mere fact that Omnicare opted not to negotiate
the rate provision in PacifiCare’s proffered contract
does not render it “non-negotiable” or “sub-competitive.”
Nor does it support an inference of collusion.
g. United’s Behavior Toward Omnicare
United executed its WHI-negotiated contract with
Omnicare in late July 2005. According to Omnicare,
United began trying to exit the contract after (inappro-
priately) learning in due diligence that PacifiCare
planned to get Omnicare to sign its “any willing provider”
contract. To that end, United concocted some pretextual
legal concerns about Omnicare’s “Patient Protections,”
which may have actually been “business concerns,” and
withheld those concerns from Omnicare until it con-
tracted with PacifiCare in December 2005. United also
instructed WHI, its PBM and negotiator of the contract,
to remain tight-lipped about its contractual concerns.
Mere days after the PacifiCare-Omnicare contract was
in place, United voiced its concerns to Omnicare. It
then abandoned its contract in favor of PacifiCare’s two
months later. Omnicare points to the “suspicious timing”
of all these events as indicative of collusion.
For its part, United contends that its concerns about
the “Patient Protections”—namely, that they were viola-
tive of Medicare Part D regulations—were genuine,
arose earlier, and were shared by other Part D plan spon-
sors. (Omnicare concedes the latter point.) It also main-
tains that it did not know about PacifiCare’s contract
No. 09-1152 47
when it brought its concerns to Omnicare’s attention,
and the record shows that it attempted to allay its con-
cerns and preserve its relationship with Omnicare by
trying to renegotiate its own contract. United offers no
explanation for the timing of its initial discussion with
Omnicare, or for instructing WHI not to contact Omnicare.
Both parties omit some important details from their
discussion of United’s behavior. Fortunately, the well-
developed record fills in many of the gaps. According
to documents in the record, United’s inside counsel was
exploring the possibility of having WHI renegotiate
its contract with Omnicare in early September 2005.
United also enlisted outside counsel to review the con-
tract at that time. Outside counsel provided United with
its opinion that the Patient Protections were suspect
two months later, on November 9, 2005. (Counsel at
WHI also independently concluded that there were
potential legal issues with the Patient Protections, at
least as they related to United.) United was unable to
personally approach Omnicare, however, until later
in November; its contract with WHI forbade it from
conducting its own negotiations without permission
from WHI, which was not orally granted until Novem-
ber 22, 2005. In early December, United specifically in-
structed WHI not to “discuss the details with Omni-
care until further notice;” it wanted “NO communication
to Omnicare that we will be removing ourselves from
the WHI contract.” United also told WHI, however, that
it “believe[d] Omnicare is looking for common ground
to implement” and had decided to “not be aggressive
on the call unless they shoot first.”
48 No. 09-1152
United and Omnicare reopened negotiations with
a phone conference on December 8, 2005. The record
indicates that the call was scheduled in advance, as
e-mails sent on December 7 mention it, but it is
unclear when the date was set. (If the call was planned
prior to December 6, it would significantly undermine
any inferences that could be drawn from the “suspicious
timing” of United’s behavior, because Omnicare would
have known United had contractual concerns prior to
signing PacifiCare’s contract on December 6.) Notes
from the call indicate that Omnicare was amenable to
renegotiating directly with United, though the record
shows that WHI proposed a revised agreement in late
December, in which the reimbursement rates paid to
Omnicare remained at their original levels but from
which the Patient Protections were excised. Notes from
the December 8 call also show that Omnicare mentioned
the possibility of adding PacifiCare to any renegotiated
United contract.
When Omnicare’s narrative is supplemented with
record evidence omitted from its original timeline, the
inference of “suspicious timing” becomes more difficult
for a reasonable jury to make. United was unable to
raise its concerns with Omnicare prior to November 22,
2005. And it raised its concerns before the merger had
been fully approved by the Department of Justice; if
talks with Omnicare went poorly and the merger fell
through, United would not have had any PacifiCare
contract option available to fall back on. There is no
evidence showing that either United or PacifiCare had
any influence over Omnicare’s decision whether—or
No. 09-1152 49
when—to sign PacifiCare’s “any willing provider” con-
tract. The December 8 conference call was scheduled at
least a day in advance, presumably at a mutually agree-
able time, and it resulted in efforts by United to revise
the contract. Only United’s instructions to WHI remain
arguably “suspicious.”
United’s behavior toward Omnicare cannot on the
whole be construed as indicative of its involvement in
an anticompetitive agreement with PacifiCare. United’s
stated concerns about the “Patient Protections” were
sufficiently prevalent that CMS later addressed them
in an “FAQ” format. Perhaps most tellingly, over the
course of a few months, United, occasionally with the
aid of WHI, worked toward a new contract with
Omnicare, though Omnicare rejected the revisions. If
United planned all along to abandon its contract to
join PacifiCare’s, it would be irrational for it to invest
significant time and resources into negotiating a new,
less favorable contract from which it only intended to
extricate itself. Outside of United’s strongly worded
instructions to WHI, which themselves tell us nothing
about United’s consortium with PacifiCare, there is
little about United’s behavior that excludes the possi-
bility that it was acting independently.
h. The Big Picture
The bulk of Omnicare’s evidence, when viewed
alone, does not satisfy the Market Force test. However, we
must look at it all together before closing the door on
Omnicare’s Sherman Act claim. See High Fructose Corn
50 No. 09-1152
Syrup, 295 F.3d at 655; supra Part II.A.1. To recap,
Omnicare’s theory is that United and PacifiCare col-
luded, before and during their 2005 merger, to depress
the prices they would pay for Omnicare’s pharmaceu-
tical services. The alleged conspiracy achieved its
ultimate goal in February 2006, when United switched
its Part D enrollees serviced by Omnicare to PacifiCare’s
much more favorable contract. Omnicare contends that
the design of the “evolving scheme,” Appellant’s Br. 23,
was set forth in the strategic options memo and was
furthered by continual exchanges of sensitive pricing
information. These exchanges of information formed
the backbone of the collusion. They resulted in a carve-
out to the United-PacifiCare merger agreement, permitted
both PacifiCare and United to behave irrationally
in their dealings with Omnicare, and even underlay
United’s inducement of Omnicare to sign PacifiCare’s
“any willing provider” contract, which it then joined.
Omnicare claims that the rate at which it is now reim-
bursed by both United and PacifiCare is far below what
it should be.
Omnicare’s richly detailed narrative is complex and
compelling. But Omnicare cannot get to trial based on the
elegance of its theory alone. To survive summary judg-
ment, it “must show that the inference of conspiracy
is reasonable in light of the competing inferences of
independent action or collusive action that could not
have harmed” it. Matsushita, 475 U.S. at 588. Not only
that, its “offer of conspiracy evidence must tend to rule
out the possibility that the defendants were acting inde-
pendently.” Bell Atl. Corp., 550 U.S. at 554. When consid-
No. 09-1152 51
ered alongside the competing inference of independent
action, the inference of conspiracy is the less reasonable
of the two. Likewise, the ample evidence offered by
Omnicare does not on the whole tend to negate the rea-
sonable inference of independent action.
Much of Omnicare’s theory is predicated on an imper-
missible flow of competitively sensitive information
between United and PacifiCare. But Omnicare’s evi-
dence purporting to show this illicit exchange demon-
strates only a circulation of generalized and averaged high-
level pricing data, policed by outside counsel, that is
more consistent with independent than collusive action.
Without evidentiary support for a conspiratorial infor-
mation exchange, Omnicare’s claims detailing how
United and PacifiCare put this information to use
become less plausible as well. For instance, if executives
did not possess inappropriate information, the strategic
options memo loses some of its inculpatory value, as
does the merger agreement carve-out.
The conspiracy theory is further impugned when all the
actions composing the alleged conspiracy are mapped
sequentially, and superimposed upon a chronological
timeline of Part D launch events and other events omitted
from the collusion narrative. The information exchange
allegedly began in spring 2005, but the evidence to
which Omnicare points (the Part D questions, the Due
Diligence Summary, etc.) did not come into existence
until the last few weeks of the months-long due diligence
process. Candid e-mails circulated among United ex-
ecutives immediately before the merger indicate that
52 No. 09-1152
the long-range plan at that time was to let PacifiCare
hash out its own contracts while working to move it to
United’s contract for 2007; they were consistent with
Stephens’s representations in the October e-mail. The
strategic options memo, which Omnicare presents as a
“blueprint,” was not drafted until the alleged collusion
was well underway, after United already had a contract
with Omnicare, and before Omnicare took the initiative
to reopen negotiations with PacifiCare. It is difficult to
reconcile the theory of an affirmative, ongoing con-
spiracy aimed at using RxSolutions as a stalking horse
with evidence showing that the very target of the con-
spiracy, Omnicare, was the party that made overtures
toward RxSolutions. Even if PacifiCare and United
were privy to one another’s information, there is no
evidence or even allegation that they were steering
Omnicare’s behavior.
Other critical links in the conspiracy narrative lose
much of their force when Omnicare’s independence is
factored in. First, Stephens’s e-mail, which in Omni-
care’s view set the stage for the final acts of the con-
spiracy, was precipitated by e-mails sent by Omnicare.
Second, United’s “suspicious” withholding of its con-
cerns is only suspicious in light of Omnicare’s execution
of PacifiCare’s “any willing provider” contract mere days
earlier. And even then, when the fact that the merger
had not yet been approved is added to the narrative,
United’s timing appears even more likely to have
been independently motivated, an inference bolstered
further by its subsequent attempts to renegotiate its
contract with Omnicare. (The timing of its disclosure
No. 09-1152 53
was also affected by its outside counsel and contract with
WHI, two facts Omnicare omitted from its allegations.)
Third, Omnicare was the party that refused to sign
United’s revised version of the contract, with knowl-
edge that PacifiCare’s contract did not have any sort of
restrictions on who could join it. Of course, this is not
to say that Omnicare made its proverbial bed and is
barred from recovery. (Though we note that “[t]he anti-
trust laws are not panaceas for all business affronts
which seem to fit nowhere else.” ECOS Elecs. Corp. v.
Underwriters Labs., 743 F.2d 498, 501 (7th Cir. 1984).) Yet
many key events in the alleged conspiracy could not
have happened without the specific inputs provided by
Omnicare, and that makes the competing inference of
independent action on the parts of Defendants more
difficult for Omnicare to overcome.
After considering the totality of Omnicare’s evidence,
both separately and holistically, we cannot conclude
that it would permit a reasonable jury to dismiss the
inference that United and PacifiCare were acting in
their independent interests. Omnicare thus cannot
satisfy the first requirement of its Sherman Act claim,
the existence of a contract, combination, or conspiracy.
We therefore affirm the district court’s grant of summary
judgment in Defendants’ favor on this claim.
B. State Law Claims
In addition to its federal Sherman Act claim, Omnicare
also alleged that Defendants violated an antitrust provi-
sion of Kentucky’s Consumer Protection Act, Ky. Rev.
54 No. 09-1152
Stat. § 367.175, committed (and conspired to commit)
common law fraud, and were unjustly enriched by their
actions. The district court properly invoked its supple-
mental jurisdiction over these claims, see 28 U.S.C. § 1367,
and ultimately granted Defendants’ motion for sum-
mary judgment on all of them.
Omnicare challenges only the dismissal of its fraud and
unjust enrichment claims. Though it asserted in its brief
that the district court improperly applied Illinois rather
than Kentucky law to these claims, at oral argument
Omnicare conceded that it did not “matter at all” which
law applied because both lead to substantially similar
results. “We routinely permit parties to voluntarily aban-
don previously briefed issues at oral argument as a
means of focusing the issues on appeal.” Anchor Glass
Container Corp. v. Buschmeier, 426 F.3d 872, 877 (7th Cir.
2005). We therefore take Omnicare at its word and
accept without further investigation the district court’s
conclusion that Illinois law applies to the state law
claims. Id.
1. Fraud
Omnicare’s fraud claim implicates a far smaller
universe of evidence than does its Sherman Act claim.
Indeed, it rests on a single document, Craig Stephens’s
October 31, 2005, e-mail to Tim Bien, and a single sentence
within that document, the second one. In that e-mail,
Stephens, of United, told Bien, of Omnicare, that
“PacifiCare’s Part D offering for 2006 is a unique contract
with CMS. If and when the deal closes, PacifiCare
No. 09-1152 55
will follow their own Part D product strategy through-
out the 2006 calendar year.” The two-sentence e-mail
was sent in response to Bien’s even briefer query, “When
the deal closes, will PacifiCare be contracted with
Omnicare as a result of the acquisition?”
For Omnicare to prove at trial that Stephens’s e-mail
constituted fraud under Illinois law, it would have to
demonstrate that United, acting through Stephens,
made a false statement of material fact, with knowledge
or belief that the statement was false, and with the
intent to induce Omnicare to reasonably rely and act on
the statement. It would also have to show that United
actually achieved such reliance, and caused injury to
Omnicare. Reger Dev., LLC v. Nat’l City Bank, 592 F.3d
759, 766 (7th Cir. 2010) (reciting Illinois law and citing
Redarowicz v. Ohlendorf, 441 N.E.2d 324, 331 (Ill. 1982)).
Omnicare contends it could do just that. It asserts that
the second sentence of the e-mail was literally false or
at least misleading because United and PacifiCare em-
ployed a concurrent Part D strategy after April 1, 2006,
the date when United officially joined PacifiCare’s con-
tract. It also alleges that United knew that the statement
was false, that the e-mail was part of a broader scheme
to induce Omnicare to sign PacifiCare’s “any willing
provider” contract and eventually move United’s Part D’s
enrollees to it, and that Omnicare was injured by the
noncompetitive rate that it agreed to when it did in fact
sign the contract.
The district court concluded that Omnicare was unable
to demonstrate a genuine issue of material fact as to
56 No. 09-1152
the first element, falsity of the statement, and granted
Defendants’ motion for summary judgment. See Celotex
Corp., 477 U.S. at 322. Omnicare disputes that conclu-
sion. It likewise takes issue with the district court’s
related conclusion that Omnicare failed to establish that
United and PacifiCare coordinated their Part D plans.
We review the district court’s grant of summary judg-
ment de novo, making all reasonable inferences in
Omnicare’s favor. See, e.g., Tri-Gen, 433 F.3d at 1030.
Omnicare contends that Stephens’s representation was
literally false, or, in the alternative, that it has raised a
material issue of fact as to whether United and Pacifi-
Care pursued separate Part D strategies throughout
2006. Omnicare fails to recognize, however, that
Stephens’s statement, even if false, was at best “a false
statement of intent regarding future conduct rather than
present or past facts.” Trade Fin. Partners, LLC v. AAR Corp.,
573 F.3d 401, 413 (7th Cir. 2009). Such statements are
considered “promissory fraud,” which as a general rule
is “not actionable under Illinois law unless the plaintiff
also proves that the act was a part of a scheme to de-
fraud.” Id. (quoting Ass’n Benefit Servs., Inc. v. Caremark
Rx, Inc., 493 F.3d 841, 853 (7th Cir. 2007)); HPI Health Care
Servs., Inc. v. Mt. Vernon Hosp., Inc., 545 N.E.2d 672, 682
(Ill. 1989). As discussed at length above, Omnicare has
not put forth sufficient evidence to prove that Pacifi-
Care and United were engaged in a scheme to defraud
it, and consequently it cannot demonstrate that
Stephens’s e-mail was part of any broader scheme. Thus,
even if the district court was wrong in concluding that
Stephens’s statement was a true response to Bien’s
No. 09-1152 57
query, it properly prevented Omnicare’s fraud claim
from moving forward. By virtue of our de novo review,
we may affirm summary judgment on any basis sup-
ported in the record, Holmes v. Vill. of Hoffman Estates,
511 F.3d 673, 681 (7th Cir. 2007), and we do so here.
2. Unjust Enrichment
Omnicare also contends that United and PacifiCare
have been unjustly enriched as a result of their illegal
conspiracy against it. The district court granted summary
judgment to Defendants on this claim, reasoning that
Omnicare could not demonstrate an illegal conspiracy
and thus could not possibly demonstrate that De-
fendants were thereby enriched. The district court also
noted, in the alternative, that plaintiffs proceeding
under Illinois law cannot raise unjust enrichment claims
when “there is a specific contract that governs the rela-
tionship of the parties.” Omnicare, 594 F. Supp. 2d at 980(quoting Stathis v. Geldermann, Inc., 692 N.E.2d 798, 812
(Ill. App. Ct. 1998)).
Omnicare challenges the district court’s second ratio-
nale. It asserts that a case decided after the Stathis
case cited by the district court clarified that unjust en-
richment claims are sustainable even where a contract
exists if the plaintiff alleges that it was fraudulently
induced into entering the contract. Appellant’s Br. 54.
Omnicare does not challenge, however, the district court’s
“fundamental[ ]” reason, Omnicare, 594 F. Supp. 2d. at 981,
for granting Defendants’ summary judgment motion on
its unjust enrichment claim.
58 No. 09-1152
Omnicare’s unjust enrichment claim unambiguously
(and fatally) rests upon the existence of a scheme
among Defendants. “[W]hen the plaintiff’s particular
theory of unjust enrichment is based on alleged fraud-
ulent dealings and we reject the plaintiff’s claims that
those dealings, indeed, were fraudulent, the theory of
unjust enrichment that the plaintiff has pursued is no
longer viable.” Ass’n Ben. Servs., Inc. v. Caremark Rx, Inc.,
493 F.3d 841, 855 (7th Cir. 2007). As Omnicare cannot
prove the existence of a conspiracy, it follows that it
cannot demonstrate that Defendants were enriched
thereby. We therefore affirm the district court’s grant
of summary judgment on Omnicare’s unjust enrichment
claim.
C. Motion for Partial Summary Judgment
Omnicare filed a motion for partial summary judg-
ment (alternatively denominated as a motion to strike)
as to five of Defendants’ affirmative defenses that it
contended could not succeed as a matter of law. The
district court denied the motion without explanation in
the concluding paragraph of its opinion and order. See
Omnicare, 594 F. Supp. 2d at 981. We review a district
court’s denial of a motion for partial summary judg-
ment the same way we review its grant of a motion for
summary judgment: de novo, with all inferences
construed in favor of the nonmoving party. Belcher v.
Norton, 497 F.3d 742, 747 (7th Cir. 2007). There is no need
to undertake such a review here, however, in light of our
resolution of Defendants’ motion for summary judgment
No. 09-1152 59
in their favor. Omnicare’s allegations have been resolved
and it is no longer necessary for Defendants to affirma-
tively defend themselves against them. Omnicare’s
motion challenging these defenses is consequently ren-
dered moot and its dismissal warrants no further con-
sideration.
III. Conclusion
The evidence in the record before us does not create
a genuine issue of material fact as to the existence of an
anticompetitive agreement among Defendants. Omnicare
therefore cannot prove that Defendants violated section 1
of the Sherman Act, and the district court properly
granted summary judgment in Defendants’ favor on
that claim. The lack of an agreement between PacifiCare
and United necessarily undermines Omnicare’s re-
maining state law claims, which were also properly
dismissed at the summary judgment stage. In light of
the dismissal of Omnicare’s claims, Omnicare’s motion
for partial summary judgment on the issue of Defen-
dants’ affirmative defenses cannot proceed either. We
thus A FFIRM the judgment of the district court.
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