Abbott Laboratories v. Portland Retail Druggists Assn., Inc.

425 U.S. 1, 96 S. Ct. 1305, 47 L. Ed. 2d 537, 1976 U.S. LEXIS 94
CourtSupreme Court of the United States
DecidedMarch 24, 1976
Docket74-1274
StatusPublished
Cited by152 cases

This text of 425 U.S. 1 (Abbott Laboratories v. Portland Retail Druggists Assn., Inc.) is published on Counsel Stack Legal Research, covering Supreme Court of the United States primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Abbott Laboratories v. Portland Retail Druggists Assn., Inc., 425 U.S. 1, 96 S. Ct. 1305, 47 L. Ed. 2d 537, 1976 U.S. LEXIS 94 (1976).

Opinions

Mr. Justice Blackmun

delivered the opinion of the Court.

The Robinson-Patman Price Discrimination Act (Robinson-Patman), adopted in 1936, 49 Stat. 1526, amending § 2 of the Clayton Act, 38 Stat. 730, in general makes it unlawful for one engaged in commerce to dis[4]*4criminate in price between different purchasers of like commodities where, among other things, “the effect of such discrimination may be substantially to lessen competition.” 15 U. S. C. § 13 (a). The Nonprofit Institutions Act, adopted only two years later, in 1938, c. 283, 52 Stat. 446, exempts from the application of Robinson-Pat-man “purchases of their supplies for their own use by schools . . . hospitals, and charitable institutions not operated for profit.” 15 U. S. C. § 13c.1

This case concerns nonprofit hospitals' purchases of products at favored prices from pharmaceutical companies. The issue is the proper construction of the phrase “purchases of their supplies for their own use,” as it appears in the Nonprofit Institutions Act, and the consequent extent the hospitals’ purchases are exempt from the proscription of Robinson-Patman.

I

Petitioners are 12 manufacturers of pharmaceutical products. Respondent, an Oregon nonprofit corporation and assignee of more than 60 commercial pharmacies doing business in the metropolitan Portland, Ore., area, instituted this action against petitioners in the United States District Court for the District of Oregon for violations of the federal antitrust laws. Treble damages and injunctive relief were sought.

The amended complaint asserted five causes of action. Only one of the five (the second) is presently before us.2 [5]*5In this claim the respondent alleged that in selling pharmaceutical products petitioners discriminated between nonprofit hospitals, on the one hand, and commercial pharmacies (regular drugstores), including respondent’s assignors, on the other. As an affirmative defense, petitioners pleaded that their sales of pharmaceutical products to nonprofit hospitals were exempt from Robinson-Patman under the Nonprofit Institutions Act.

The parties engaged in discovery as to the nonprofit status and drug-dispensing practices of 14 designated metropolitan Portland area institutions that operate as nonprofit hospitals. Affidavits were obtained and filed. Petitioners, as defendants, pursuant to Fed. Rule Civ. Proc. 56 (b), then moved for summary judgment on the amended complaint’s second cause of action. App. 68.

The District Court, by an opinion delivered orally, ruled that all the designated institutions were nonprofit hospitals, and that their purchases of pharmaceutical products from petitioners were purchases of supplies “for their own use,” within the language of 15 U. S. C. § 13c, and thus were exempt from the restrictions of Robinson-Patman. The court concluded, accordingly, that there was no issue as to any material fact with respect to the hospitals’ nonprofit status or their use of the pharmaceutical products they purchased, and granted summary judgment in favor of the petitioners on the respondent’s second cause of action. App. 278-288, 290-292.

The District Court, id., at 292, certified its judgment under 28 U. S. C. § 1292 (b), and the United States Court of Appeals for the Ninth Circuit permitted the interlocutory appeal to be taken. The Court of Appeals, while [6]*6rejecting respondent's contentions that the designated hospitals did not qualify for exemption under § 13c,3 nevertheless vacated the District Court's judgment and remanded the case for further proceedings. 510 F. 2d 486 (1974).

Because of the importance of the issue in the context of the modern nonprofit hospital, with its expanding service to the community, as compared with hospital operations of some years ago, and because of the obvious need for a definitive construction of language in the Nonprofit Institutions Act,4 we granted certiorari. 422 U. S. 1040 (1975).

II

The pertinent facts are not really in dispute. The petitioners, admittedly, sell their pharmaceutical products to the designated Portland hospitals at prices less than those that govern petitioners' sales of like products to the respondent’s assignors who are commercial pharmacists in Portland. The respective hospitals in turn dispense the pharmaceutical products they have so purchased from the petitioners. The application of Robinson-Patman to this situation is conceded except to the extent the exemption provision of the Nonprofit Institutions Act applies. The controversy, thus, comes into clear focus.

[7]*7Each of the designated hospitals has a pharmacy. It is a separate department of the hospital. Its operation produces revenue in excess of costs. The net accrues to the hospital's benefit, is utilized for the institution’s general purposes, and thus supports other activities of the hospital.

The District Court, App. 283-285, and the Court of Appeals, 510 F. 2d, at 489, each perceived various categories of dispensations by the hospital pharmacies of the pharmaceutical products purchased from petitioners. But the District Court, in sustaining petitioners’ motion for summary judgment, observed that “the vast majority” of the products purchased (85% to 95%), namely, those for the bed patient and for the patient receiving treatment in the hospitals’ emergency facilities, were “clearly” for the hospitals’ use, within the meaning of the Nonprofit Institutions Act, App. 283; that “out-patient treatment,” whether “initial or repeated,” was not outside that Act merely because there has been a “change in the distribution of health care” whereby the percentage of outpatient treatment increased since the statute was passed in 1938, id., at 284; that “take-home drugs” were within the “clear meaning” of the statute, ibid.; that drugs furnished to employees, staff physicians, and other members of the staff, while presenting “some mild degree of question,” nevertheless were “for the use of the hospital,” id., at 285; and that the situation with respect to walk-in patients was insufficient in amount to “justify withdrawing” the statute’s exemption, ibid.

The Court of Appeals agreed that the inpatient and emergency facility situations “cover by far the greater part of hospital distribution,” and that “such dispensing of drugs in the course of treatment in the hospital is the hospitals’ [sic] own use.” 510 F. 2d, at 489. The court recited petitioners’ asserted justifications for the other types of sales “as proper hospital functions”: the need [8]

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Cite This Page — Counsel Stack

Bluebook (online)
425 U.S. 1, 96 S. Ct. 1305, 47 L. Ed. 2d 537, 1976 U.S. LEXIS 94, Counsel Stack Legal Research, https://law.counselstack.com/opinion/abbott-laboratories-v-portland-retail-druggists-assn-inc-scotus-1976.