LENOX MACLAREN SURGICAL CORPORATION, Plaintiff - Appellant / Cross-Appellee,
MEDTRONIC, INC.; MEDTRONIC SOFAMOR DANEK, INC.; MEDTRONIC PS MEDICAL, INC., d/b/a Medtronic Neurologic Technologies; MEDTRONIC SOFAMOR DANEK CO., LTD., Defendants-Appellees / Cross-Appellants.
from the United States District Court for the District of
Colorado (D.C. No. 1:10-CV-02139-MSK-NYW)
T. Ho, Kellogg, Huber, Hansen, Todd, Evans & Figel,
P.L.L.C., Washington, D.C. (G. Stephen Long, Nicole A.
Westbrook, Jones & Keller, Denver, Colorado, with him on
the briefs), for Plaintiff-Appellant/Cross-Appellee.
C. Fleming, Wilmer Cutler Pickering Hale and Dorr, LLP,
Boston, Massachusetts (Ari Holtzblatt, Ryan McCarl, Wilmer
Cutler Pickering Hale and Dorr, LLP, Washington, D.C., and
Steven Zager, Akin Gump Strauss Hauer & Feld LLP, New
York, New York, with him on the briefs), for
LUCERO, HARTZ, and McHUGH, Circuit Judges.
McHUGH, Circuit Judge.
2010, Lenox MacLaren Surgical Corporation ("Lenox")
sued several related corporations-Medtronic, Inc.; Medtronic
PS Medical, Inc. ("PS Medical"); Medtronic Sofamor
Danek, Inc. ("MSD, Inc."); and Medtronic Sofamor
Danek Co. Ltd. ("MSD Japan") (collectively,
"Defendants")-for monopolization and attempted
monopolization in violation of § 2 of the Sherman Act.
15 U.S.C. § 2. Lenox alleged that Defendants engaged in
illegal activity to advance a coordinated, anticompetitive
scheme in which a related non-party, Medtronic Sofamor Danek
USA, Inc. ("MSD USA"), also participated. Lenox had
sued MSD USA in 2007 on claims arising from the same set of
appeal, the third in this case, challenges the district
court's disposition of Defendants' second motion for
summary judgment, which claimed that Lenox could not prove
the elements of its antitrust claims against any of the named
Defendants individually, and that Defendants cannot be
charged collectively with the conduct of MSD USA or of each
other. They also argued that the doctrine of claim preclusion
bars Lenox's claims, in light of the prior proceeding
against MSD USA. The district court granted summary judgment,
holding that because Lenox could not establish each of the
elements of an antitrust claim against any one defendant, or
establish a conspiracy among them, Lenox's claims fail as
a matter of law.
now appeals, alleging several errors in the district
court's substantive analysis of Lenox's § 2
claims. Defendants cross-appeal to preserve their argument
that, even if the district court erred in resolving
Lenox's antitrust claims, we should affirm on the
alternative basis of claim preclusion.
reasons set forth below, we conclude that Lenox raised a
viable antitrust theory, but we decline to address the merits
of Lenox's antitrust claims because to the extent
Defendants can be held liable under Lenox's theory of
antitrust liability, they are in privity with MSD USA. As a
result, Lenox's claims are barred by the claim preclusion
arm of res judicata. We therefore affirm the district
court's grant of summary judgment for Defendants on that
parties' dispute traces back to 2000, when Lenox entered
into an agreement to sell bone mills-surgical tools that
Lenox manufactures-through MSD USA. The arrangement with MSD
USA did not go as Lenox had hoped: MSD USA initiated a recall
of Lenox's bone mills, and one of the present defendants,
PS Medical, began to manufacture and sell its own bone mills
to former users of Lenox's product. As we explain in
greater detail below, it is this failed arrangement that
forms the factual nucleus of this case.
proceeding further into the background recitation, we pause
to clarify the identities of, and relationships among, the
several Medtronic entities involved in this dispute. In our
decisions resolving the two prior appeals in this case, and
in Lenox's various filings in the district court, the
four named defendants often are referenced as one: in
Lenox MacLaren Surgical Corp. v. Medtronic, Inc.
(Lenox I), 449 F.App'x 704 (10th Cir. 2011)
(unpublished), they are "the Medtronic Defendants";
and in Lenox MacLaren Surgical Corp. v. Medtronic, Inc.
(Lenox II), 762 F.3d 1114 (10th Cir. 2014), and many of
Lenox's filings, they are "Medtronic." For
purposes of assessing the district court's order and the
issues raised in this appeal, however, it is important to
keep the actions of the various entities separate.
The Medtronic Entities
Inc. is the highest-tier Medtronic entity named as a
defendant in this case and is the parent or grandparent
corporation of the other three defendants, as well as
non-party MSD USA, the Medtronic entity Lenox sued in the
prior litigation and arbitration. PS Medical and MSD, Inc.
are wholly owned subsidiaries of Medtronic, Inc.; and MSD
Japan and MSD USA are wholly owned subsidiaries of MSD, Inc.
The relevant corporate structure thus looks like this:
. Medtronic, Inc. (defendant)
o MSD, Inc. (defendant)
■ MSD Japan (defendant)
■ MSD USA (non-party)
o PS Medical (defendant)
Factual History 
was one of the first companies to design and produce a bone
mill, which is a medical tool that grinds bone into fragments
for use in spinal-fusion surgeries. In April 2000, Lenox
entered into a five-year Exclusive Supply and License
Agreement (the "license agreement" or the
"agreement") with MSD USA. The agreement granted
MSD USA the exclusive right to purchase Lenox's bone
mills, rebrand them, and distribute them. In exchange, MSD
USA promised to "refrain from purchasing [bone mills]
from any third party or from producing [bone mills] itself,
" and agreed to certain minimum purchase requirements.
Specifically, the agreement required MSD USA to purchase 500
bone mills in the first year and to purchase 100 bone mills
per quarter thereafter to maintain the exclusivity of its
distribution rights. Among other additional provisions, the
agreement contained a dispute resolution clause under which
the parties agreed to arbitrate "any dispute arising out
of or relating to" the agreement.
made the initial purchase of 500 bone mills in the first year
but did not purchase any bone mills after that. Lenox
therefore notified MSD USA in 2001 that its distribution
rights were no longer exclusive.
sold some of the 500 Lenox bone mills but distributed the
rest through a "loaner program, " whereby doctors
and hospitals could use the bone mills for free while MSD USA
retained ownership of them. Under this program, the bone
mills were returned to MSD USA after each surgery to be
sterilized and redistributed for reuse. MSD USA sold or
loaned some of the bone mills to MSD Japan, which marketed
them to doctors and hospitals in Japan.
November 2002, after MSD USA had purchased the 500 Lenox bone
mills, PS Medical began developing a pneumatic bone mill of
its own. This device proved commercially unsuccessful, and in
2006, PS Medical began developing a new electric bone mill
called the Midas Rex.
Between 2000 and 2006, Lenox and MSD USA received only one
complaint about Lenox's bone mill-an April 2003 report
from an MSD Japan representative stating that a piece of
metal was found in the ground bone fragments produced by the
device. Lenox reviewed the report, determined the malfunction
was caused by user error, advised MSD USA of its
determination, and did not hear anything further about the
incident from MSD USA.
on September 4, 2006, an MSD Japan representative generated
three new complaints. Each complaint was logged on a
"Reported Event Form, " and included an identical
event description: "Metal fragments were mixed with bone
fragments (New product)." The reported complaints
allegedly came from three Japanese surgeons, but when Lenox
located these surgeons they denied lodging the
complaints. The Reported Event Form, which appears to
be a standard, fill-in-the-blank document, contains the
following stock instruction: "Please complete all
applicable sections and return to MSD Global." There is
no Medtronic entity known as MSD Global.
received these complaints and, in October 2006, initiated a
recall of Lenox's bone mill. But even before it initiated
the recall, in mid-to-late September, MSD USA employees began
taking steps to replace Lenox's bone mills loaned to
physicians with PS Medical's Midas Rex bone mill. PS
Medical started selling the Midas Rex in January 2007. It
specifically targeted prior users of the Lenox bone mill,
USA's customer list. As we detailed in Lenox II,
PS Medical went on to attain a monopoly in the market for
surgical bone mills. 762 F.3d at 1123-24.
Prior Proceeding Against MSD USA
sued MSD USA in 2007, alleging that MSD USA entered into the
license agreement, engaged in the loaner program, and
initiated the recall, all for the purpose of creating market
demand for a mechanical bone mill, clearing the market of
Lenox's competing bone mill, and then filling that market
vacuum with the Midas Rex bone mill. Specifically, Lenox
asserted claims for patent infringement, violation of the
Colorado Consumer Protection Act, and trade libel. MSD USA
moved to compel arbitration under the terms of the license
agreement. The district court granted the motion, and the
lawsuit was administratively closed and stayed pending the
outcome of the arbitration.
arbitration, Lenox filed an Amended Arbitration Demand
Statement, adding, among others, a claim for intentional
interference with Lenox's prospective economic relations.
After an evidentiary hearing, the arbitral panel rejected
most of Lenox's claims, concluding, among other things,
that the loaner program and production of the Midas Rex bone
mill did not breach the license agreement, that MSD USA did
not breach the covenant of good faith and fair dealing, and
that the loaner program did not infringe Lenox's patent.
The arbitrators did determine, however, that MSD USA's
recall of the bone mills was "intentional and wrongful,
" and that MSD USA thereby intentionally interfered with
Lenox's prospective business relations. The arbitrators
concluded MSD USA was liable to Lenox for $246, 000 in
damages, plus prejudgment interest, and issued an award to
paid Lenox the damages owed, and the parties thereafter
agreed to administratively reopen the district court
proceeding and to dismiss the case with prejudice.
September 2010, Lenox filed the present case against
Defendants, alleging monopolization and attempted
monopolization in violation of § 2 of the Sherman Act,
as well as ...