The opinion of the court was delivered by: Judge Conner
Plaintiff Lactona Corporation ("Lactona") brings this antitrust action under § 2 of the Sherman Act, 15 U.S.C. § 2, alleging that defendant Dentsply International ("Dentsply") monopolized the market for artificial teeth. Dentsply has filed a motion to dismiss (Doc. 45), alleging that Lactona's claim is barred by the statute of limitations and fails to allege an antitrust injury. For the reasons that follow, the motion will be denied.
I. Statement of Facts*fn1
Lactona and Dentsply are manufacturers of prefabricated artificial teeth.*fn2
(Doc. 53 ¶¶ 3, 10, 13-14.) Dentsply controls approximately seventy-five percent of the market. (Id. ¶ 20.) The complaint does not specify the size of Lactona's market share. The present suit arises from Dentsply's alleged attempts to exercise monopolistic power in the market during the early- and mid-1990s. (Id. ¶¶ 9, 15-24.)
Artificial teeth are principally distributed through wholesale dealers, which resell them to dental laboratories that assemble consumer dental products. (Id. ¶ 7-8.) In 1987, Dentsply began imposing a series of inventory restrictions on its dealers. (Id. ¶ 15.) These restrictions culminated in 1993 with the imposition of "Dealer Criteria" for all distributors of Dentsply teeth. (Id.) One of these Criteria, Dealer Criterion No. 6, prohibited dealers from "add[ing] further tooth lines to their product offering" and was designed to "block competitive distribution points" in the market for artificial teeth. (Id.)
Dentsply also allegedly engaged in a variety of anticompetitive conduct associated with implementation of Dealer Criterion No. 6. (Id. ¶ 16.) For example, Dentsply threatened to end its relationship with a dealer that ordered $25,000 of teeth from Lactona, and it exchanged another dealer's Lactona inventory worth $50,000 for Dentsply teeth valued at $100,000. (Id. ¶¶ 17, 19.) At Dentsply's request, a third dealer sold its entire supply of Lactona teeth to Dentsply, which destroyed the teeth. (Id. ¶ 18.) Dentsply also threatened to terminate its business relationship with many dealers who stocked teeth manufactured by Dentsply's competitors. (Id. ¶ 20.) This threat was particularly poignant because terminated dealers were removed from Dentsply's exchange account program, which allowed them to returned unused and surplus inventory to Dentsply for credit toward future teeth purchases. (Id. ¶ 22.) Dealers terminated by Dentsply forfeited credit accumulated under the program. (Id.) Such actions, coupled with market expectation that dealers stock Dentsply teeth, caused numerous dealers to cease carrying teeth produced by Lactona and Dentsply's other competitors. (Id. ¶¶ 21-24, 31, 33.)
In January 1999, the U.S. Department of Justice instituted an antitrust action against Dentsply, alleging that its conduct violated the Sherman Act's prohibition on monopolization, 15 U.S.C. § 2. See (id. ¶ 25); United States v. Dentsply Int'l, Inc., 277 F. Supp. 2d 387, 390 (D. Del. 2003). The district court found that Dentsply had not violated the Sherman Act, and an appeal to the United States Court of Appeals for the Third Circuit followed. See (Doc. 53 ¶¶ 25-26); United States v. Dentsply Int'l, Inc., 399 F.3d 181 (3d Cir. 2005). The Third Circuit reversed, finding that Dentsply's aggressive market-control strategies, including Dealer Criterion No. 6, violated § 2 of the Sherman Act. See (Doc. 53 ¶ 26); Dentsply, 399 F.3d at 196. The proceedings brought by the government closed on April 26, 2006, when the district court entered final judgment against Dentsply. See (Doc. 53 ¶ 27); United States v. Dentsply Int'l, Inc., No. Civ. A. 99-005, 2006 WL 2612167, at *5 (D. Del. Apr. 26, 2006).
Lactona commenced the instant action on April 25, 2007, demanding recovery for antitrust injuries suffered as a result of Dentsply's anticompetitive conduct and contending that the Clayton Act, 15 U.S.C. § 16(I) tolled the four-year statute of limitations during the pendency of the government proceedings. Dentsply filed a motion to dismiss, arguing that Lactona's complaint is time-barred and fails to allege a substantive antitrust claim. The parties have fully briefed these issues, and Dentsply's motion is ripe for disposition.
Rule 12(b)(6) of the Federal Rules of Civil Procedure provides for the dismissal of complaints that fail to state a claim upon which relief can be granted. FED. R. CIV. P. 12(b)(6). When ruling on a motion to dismiss under Rule 12(b)(6), the court must "accept as true all factual allegations in the complaint and all reasonable inferences that can be drawn therefrom, and view them in the light most favorable to the plaintiff." Kanter v. Barella, 489 F.3d 170, 177 (3d Cir. 2007) (quoting Evancho v. Fisher, 423 F.3d 347, 350 (3d Cir. 2005)). Although the court is generally limited in its review to the facts in the complaint, it "may also consider matters of public record, orders, exhibits attached to the complaint and items appearing in the record of the case." Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 n. 2 (3d Cir. 1994); see also In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997).
Federal notice pleading rules require the complaint to "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Sershen v. Cholish, No. 3:07-CV-1011, 2007 WL 3146357, at *4 (M.D. Pa. Oct. 26, 2007) (quoting Erickson v. Pardus, --- U.S. ---, 127 S.Ct. 2197, 2200 (2007)). The plaintiff must present facts that, if true, demonstrate a plausible right to relief. See FED. R. CIV. P. 8(a) (stating that the complaint should include "a short and plain statement of the claim showing that the pleader is entitled to relief"); Bell Atl. Corp. v. Twombly, ---U.S. ---, 127 S.Ct. 1955, 1965 (2007) (requiring plaintiffs to allege facts sufficient to "raise a right to relief above the speculative level"); Victaulic Co. v. Tieman, 499 F.3d 227, 234 (3d Cir. 2007). Thus, courts should not dismiss a complaint for failure to state a claim if it "contain[s] either direct or inferential allegations respecting all the material elements necessary to sustain recovery under some viable legal theory." Montville Twp. v. Woodmont Builders LLC, No. 05-4888, 2007 WL 2261567, at *2 (3d Cir. 2007) (quoting Twombly, --- U.S. at ---, 127 S.Ct. at 1969). Under this liberal pleading standard, courts should generally grant plaintiffs leave to amend their claims before dismissing a complaint that is merely deficient. See Grayson v. Mayview State Hosp., 293 F.3d 103, 108 (3d Cir. 2002); Shane v. Fauver, 213 F.3d 113, 116-17 (3d Cir. 2000).
Dentsply moves for dismissal of Lactona's complaint on two grounds. It contends that Lactona filed its complaint after expiration of the limitations period applicable to its federal and state claims. Alternatively, it argues that the complaint inadequately pleads an antitrust injury ...