Fed. Trade Comm'n v. Surescripts, LLC

FEDERAL TRADE COMMISSION, Plaintiff, v. SURESCRIPTS, LLC, Defendant.

Civil Action No. 19-1080 (JDB)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

May 21, 2020

MEMORANDUM OPINION

On April 17, 2019, the Federal Trade Commission filed this action against Surescripts, LLC, seeking equitable relief, including a permanent injunction, and monetary relief under Section 13(b) of the FTC Act. See Compl. for Injunctive & Other Equitable Relief [ECF No. 1] at 1, 54. Surescripts moved to dismiss the complaint, see Surescripts, LLC's Mot. to Dismiss Compl. ("Mot. to Dismiss") [ECF No. 31], and on January 17, 2020, the Court denied the motion, see FTC v. Surescripts, LLC, 424 F. Supp. 3d 92, 94-95 (D.D.C. 2020). Surescripts now moves for the Court to amend its previous decision and certify two aspects of that decision for interlocutory review under 28 U.S.C. § 1292(b). See Surescripts' Mot. to Amend the Court's Order Denying Surescripts' Mot. to Dismiss in Order to Certify It for Interlocutory Appeal ("Mot. to Certify") [ECF No. 56] at 1. For the reasons explained herein, the Court concludes that this litigation does not present exceptional circumstances justifying deviation from the standard rule postponing appellate review until after entry of final judgment. The Court will therefore deny Surescripts's motion.

Background

The Court previously described in full the underlying facts in this case in its opinion denying Surescripts's motion to dismiss, see Surescripts, 424 F. Supp. 3d at 95-96, and will thus reiterate only those facts most relevant to the present motion. Surescripts is a health information technology company operating in two complementary markets, electronic prescription routing ("routing") and eligibility, collectively known as "e-prescribing." Compl. ¶ 1. Routing involves the transmission of prescription-related data from a prescriber to a pharmacy via the prescriber's electronic health record ("EHR") system, while eligibility involves the transmission of a patient's formulary and benefit information from a payer (normally the patient's pharmacy benefit manager ("PBM")) to a prescriber's EHR. Id. According to the FTC, Surescripts employs various anticompetitive measures to maintain its at least 95% share (by transaction volume) in each market. Id. ¶¶ 2-3.

Around 2009, Surescripts began offering loyalty bonuses to customers in both markets who exclusively used its information systems. Id. Pharmacies and PBMs would pay a reduced fee if they dealt exclusively with Surescripts, meaning that they routed "100% of [their] transactions through and only through the Surescripts network." Id. ¶¶ 66-67. And EHR providers received gradated incentive payments based on exclusivity in one or both markets. Id. ¶ 77.

The FTC contends that these loyalty programs have had the effect of foreclosing "at least 70% of each market, eliminating multiple competitive attempts from other companies . . . that offered lower prices and greater innovation." Id. ¶ 3. In particular, the FTC claims that Surescripts's dominant position in the market makes these loyalty contracts especially effective at excluding competition because almost all market entrants must compete for customers who already use Surescripts. Id. ¶ 32. The FTC also alleges that Surescripts has used other anticompetitive tactics, like "threats and other non-merits based competition," to keep its customers from working with its competitors. Id. ¶ 4.

Based on these allegations, the FTC sued Surescripts under Section 13(b) of the FTC Act, alleging that Surescripts's loyalty program, in combination with other anticompetitive measures, violated Section 2 of the Sherman Act. Id. ¶¶ 222-31. FTC accordingly sought equitable relief, including monetary relief and a permanent injunction preventing such practices in the future. Id. at 54.

Surescripts moved to dismiss the FTC's complaint on two grounds. Mot. to Dismiss ¶¶ 1-3. First, Surescripts argued that the Court lacked subject matter jurisdiction over the request for a permanent injunction because the FTC could not establish that this case is "proper" under Section 13(b) of the FTC Act. Id. ¶ 1; see 15 U.S.C. § 53(b) (providing that "in proper cases the Commission may seek, and after proper proof, the court may issue, a permanent injunction" (emphasis added)). Second, Surescripts argued that the FTC's complaint failed to state a claim under Section 2 of the Sherman Act because it did not allege that the prices offered by Surescripts were predatory and failed under the rule of reason. See Mot. to Dismiss ¶¶ 2-3.

The Court denied Surescripts's motion. In terms of Section 13(b), the Court concluded that the statutory reference to a "proper case" was not a jurisdictional requirement, but that even if it was, the FTC had pled sufficient facts to demonstrate that their lawsuit is "proper." Surescripts, 424 F. Supp. 3d at 96-98. The Court explained that, although Surescripts is likely correct "that 'proper cases' is not synonymous with 'all cases'" within the FTC's administrative purview, "this case is proper" because its theory is grounded in D.C. Circuit precedent "and does not seek to rely on [the FTC's] expertise to develop the law." Id. at 98. As for the merits, the Court determined that, under the D.C. Circuit's decision in United States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001) (en banc), "Surescripts's alleged practice of charging loyal pharmacies and PBMs less, and paying loyal EHRs greater incentives, do not need to constitute predatory pricing for Surescripts'sexclusionary practices to constitute illegal maintenance of a monopoly." Surescripts, 424 F. Supp. 3d at 102. In alleging that Surescripts's loyalty program and other anticompetitive practices foreclosed at least 70% of each market, the FTC made out a plausible violation of Section 2 of the Sherman Act. Id. at 102-04.

Surescripts now asks the Court to amend its previous decision, for interlocutory appellate review under § 1292(b), to certify two questions for interlocutory appellate review: "(1) whether the language and structure of Section 13(b) of the FTC Act preclude the FTC's lawsuit, and (2) whether Supreme Court precedent forecloses the FTC's argument that Surescripts'[s] low, but not 'predatory,' pricing is anticompetitive." Mot. to Certify at 1. Both parties have briefed the matter, and it is now ripe for resolution.

Legal Standard

Section 1291 of Title 28 of the U.S. Code grants the courts of appeals "jurisdiction of appeals from all final decisions of the district courts." This finality requirement "embodies a strong congressional policy against piecemeal reviews, and against obstructing or impeding an ongoing judicial proceeding by interlocutory appeals." United States v. Nixon, 418 U.S. 683, 690 (1974). The narrow exception to this finality requirement in 28 U.S.C. § 1292(b) permits an interlocutory appeal when the district court "shall be of the opinion [(1)] that [a nonfinal] order involves a controlling question of law as to which there is substantial ground for difference of opinion and [(2)] that an immediate appeal from the order may materially advance the ultimate termination of the litigation." 28 U.S.C. § 1292(b). If the district court certifies a question for interlocutory review, the relevant court of appeals retains the "discretion" to determine whether to permit the appeal or not. Id. Courts of appeals construe such statutory grants of interlocutory review narrowly, "applying them only when a district court's challenged ruling might be of 'serious,perhaps irreparable, consequence' to a litigant and therefore merit immediate review." Banks v. Office of Senate Sergeant-At-Arms & Doorkeeper of U.S. Senate, 471 F.3d 1341, 1345 (D.C. Cir. 2006) (quoting Cobell v. Kempthorne, 455 F.3d 317, 321 (D.C. Cir. 2006)). Absent a certification by the district court, however, the court of appeals is without jurisdiction to consider the matter. See Kahl v. Bureau of Nat'l Affairs, 856 F.3d 106, 118 n.2 (D.C. Cir. 2017).

Collateral review under § 1292(b) "is meant to be applied in relatively few situations," Tolson v. United States, 732 F.2d 998, 1002 (D.C. Cir. 1984) (quotation omitted), and it is the movant's burden to demonstrate that such review is necessary, see Vantage Commodities Fin. Servs. I, LLC v. Assured Risk Transfer PCC, No. 1:17-cv-01451 (TNM), 2019 WL 250125, at *2 (D.D.C. Jan. 17, 2019).

"A controlling question of law is one that would require reversal if decided incorrectly or that could materially affect the course of litigation with resulting savings of the court's or the parties' resources." Doe 1 v. Howard Univ., Civil Action No. 17-cv-870 (TSC), 2019 WL 4860717, at *3 (D.D.C. Oct. 1, 2019) (internal quotation marks omitted). "[A] question is controlling, even though its decision might not lead to reversal on appeal, if interlocutory reversal might save time for the district court, and time and expense for the litigants." Johnson v. Burken, 930 F.2d 1202, 1206 (7th Cir. 1991).

"The threshold for establishing the 'substantial ground for difference of opinion' with respect to a 'controlling question of law' required for certification pursuant to § 1292(b) is a high one." Judicial Watch, Inc. v. Nat'l Energy Policy Dev. Grp., 233 F. Supp. 2d 16, 19 (D.D.C. 2002). A party's "[m]ere disagreement, even if vehement, with a court's ruling on a motion to dismiss does not" clear that threshold. Id. at 20 (internal quotation marks omitted). Instead, "[a] substantial ground for difference of opinion is often established by a dearth of precedent withinthe controlling jurisdiction and conflicting decisions in other circuits." APCC Servs., Inc. v. Sprint Commc'ns Co., 297 F. Supp. 2d 90, 97 (D.D.C. 2003); see also Gov't of Guam v. United States, 950 F.3d 104, 110 (D.C. Cir. 2020) (granting the certified request for interlocutory review where "the courts of appeals [had] diverge[d]" over "at least one controlling issue of law," the...