Howard Hess Dental Laboratories Inc v. Dentsply International, Inc.

516 F. Supp. 2d 324, 2007 U.S. Dist. LEXIS 71563
CourtDistrict Court, D. Delaware
DecidedSeptember 26, 2007
DocketCiv. 99-255-SLR, 01-267-SLR
StatusPublished
Cited by6 cases

This text of 516 F. Supp. 2d 324 (Howard Hess Dental Laboratories Inc v. Dentsply International, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Howard Hess Dental Laboratories Inc v. Dentsply International, Inc., 516 F. Supp. 2d 324, 2007 U.S. Dist. LEXIS 71563 (D. Del. 2007).

Opinion

*327 MEMORANDUM OPINION

SUE L. ROBINSON, District Judge.

I. INTRODUCTION

Currently pending before the court are several motions in two related cases. Plaintiffs Howard Hess Dental Laboratories, Inc. (“Hess”) and Philip Guttierez d/b/a Dentures Plus (“Dentures Plus”) filed an antitrust class action against Dentsply International, Inc. (“Dentsply”) on April 21, 1999. Hess Dental Laboratories, et. al v. Dentsply International Inc. (“the Hess action”), Civ. No. 99-255 (D.I.1). Hess subsequently became Jersey Dental Laboratories (“Jersey Dental”) and, on April 24, 2001, the same plaintiffs filed an antitrust class action against Dentsply and twenty-six dental dealers. 1 Jersey Dental Laboratories jf/k/a Howard Hess Dental Laboratories, Inc. and Philip Guttierez d/b/a Denhvres Plus v. Dentsply et. al (“the Jersey Dental action”), Civ. No. 01-267 (D.I.1). An amended complaint was filed in the Jersey Dental action on October 10, 2006, wherein plaintiffs allege that defendants have conspired to maintain a purported monopoly on the manufacture of artificial teeth for sale in the United States, to restrain trade by the implementation of exclusive dealing arrangements, and to sell such teeth at anticompetitive prices. (Civ. No. 01-267, D.I. 259 at ¶ 45) Plaintiffs seek damages, equitable relief, and costs.

Currently before the court is plaintiffs’ motion for summary judgment in the Hess action. (Civ. No. 99-255, D.I.256) For the reasons that follow, the court denies plaintiffs’ motion. In the Jersey Dental action, several motions to dismiss have been filed: (1) motions to dismiss for lack of personal jurisdiction and improper venue pursuant to Federal Rules of Civil Procedure 12(b)(2) and (b)(3), brought by nine nonresident defendants (D.I.266) 2 and by defendant Nowak Dental Supplies, Inc. (“No-wak”) (D.I.274) (collectively, the “non-Delaware defendants”); (2) certain dental dealer defendants’ motion to dismiss counts II and IV of the amended complaint (D.I.264); 3 and (3) Dentsply’s motion to *328 dismiss counts III and V of the amended complaint (D.I.279). For the reasons that follow, the court grants each of these motions.

II. BACKGROUND

A. The Parties

Plaintiffs Jersey Dental and Dentures Plus are dental laboratories that purchase Dentsply products, including Dentsply’s “Trubyte” brand of artificial teeth, indirectly through dental dealers. They bring this action on behalf of themselves and other similarly situated dental laboratories that have purchased and regularly purchase Dentsply’s Trubyte brand of artificial teeth. According to the amended complaint, the class includes “thousands of other similarly situated dental laboratories.” (Civ. No. 01-267, D.I. 259 at ¶¶ 2, 3)

Defendant Dentsply is a leading manufacturer and worldwide distributor of products and equipment for the dental market. Through its Trubyte Division, Dentsply manufactures and markets products used by dental laboratories to make dentures and other removable dental prosthetics. {Id. at ¶ 4)

The remaining defendants are dental dealers that distribute Dentsply’s products, including Trubyte brand teeth, through direct sales to dental laboratories. {Id. at ¶¶ 5-26) The dental dealers are the primary source of distribution of artificial teeth to dental laboratories. {Id. at ¶¶ 55, 59) Dental dealers stock a “full array” of products needed to make dentures, including artificial teeth, and generally employ skilled sales and service people to provide services to dental laboratory customers. {Id. at ¶ 60)

B. History of this Antitrust Litigation

For more than fifteen years, Dentsply operated under a policy that discouraged the dental dealers from carrying competitors’ artificial teeth. U.S. v. Dentsply Int’l, 399 F.3d 181, 185 (3d Cir.2005), cert. denied, 546 U.S. 1089, 126 S.Ct. 1023, 163 L.Ed.2d 853(2006). In 1993, Dentsply adopted “Dealer Criterion 6,” which provided that dental dealers promoting Dents-ply’s products “may not add further tooth lines to their product offering.” Id. Dents-ply’s relationship with the dealers is “especially terminable at will” because Dentsply operates on a purchase order basis. Id. Dealer Criterion 6 was enforced against dealers that were not “grandfathered” for sales of competing products, i.e., that had carried competing products before 1993. Id. “[I]n the recent past, none of [the dental dealers] have given up the popular Dentsply teeth to take on a competitive line.” Id. Dentsply also “rebuffed attempts by [the grandfathered dealers] to expand their lines of competing products beyond the grandfathered ones.” Id.

1. The government action

The first suit to be filed regarding Dealer Criterion 6 was an antitrust action filed by the United States(“the government action”) on January 5, 1999. (Civ. No. 99-005, D.I.l) In its suit, the government alleged that Dentsply: (1) acted unlawfully to maintain a monopoly in violation of § 2 of the Sherman Act, 15 U.S.C. § 2; (2) entered into unlawful restrictive dealing agreements that substantially lessened competition in violation of § 3 of the Clayton Act, 15 U.S.C. § 14; and (3) entered into unlawful agreements in unreasonable restraint of interstate trade and commerce in violation of § 1 of the Sherman Act, 15 U.S.C. § 1. (Id.) Following a bench trial, this court entered judgment in favor of Dentsply on August 12, 2003. (Id., D.I. 517) This court found that Dealer Criterion 6 did not preclude Dentsply’s main rivals from marketing their teeth directly *329 to the dental laboratories and, therefore, Dentsply had no power to control prices or exclude competitors from the consumers. (Id., D.I. 514 at 157-59) The Third Circuit reversed, finding that Dealer Criterion 6 functionally excluded competitors from the dealers’ network, “a narrow, but heavily traveled channel to the dental laboratories,” and ultimately was “a solid pillar of harm to competition.” U.S. v. Dentsply, 399 F.3d at 190-91.

Following the Third Circuit’s mandate (Civ. No. 99-005, D.I.534), the court entered injunctive relief in favor of the government (Id., D.I. 559). The injunction was entered on April 26, 2006 and directed, inter alia,

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516 F. Supp. 2d 324, 2007 U.S. Dist. LEXIS 71563, Counsel Stack Legal Research, https://law.counselstack.com/opinion/howard-hess-dental-laboratories-inc-v-dentsply-international-inc-ded-2007.