Monday, June 22, 2015 - More than half a dozen class action lawsuits against Alcon Laboratories Inc., Johnson & Johnson Vision Care Inc. and additional companies allegedly involved in a price-fixing scheme were transferred into multidistrict litigation in early June. The cases were transferred to the Middle District of Florida, where they will be heard by U.S. District Judge Harvey E. Schlesinger.
Plaintiffs in the MDL claim that five companies, ABB Optical, Alcon Laboratories, Bausch & Lomb, CooperVision Inc. and Johnson & Johnson, conspired to artificially raise the minimum price of contact lenses they manufactured. The manufacturers did not agree with retailers on what the pricing for their products should be, but simply gave a minimum amount that the contact lenses would be sold at or above.
The suits claim that professional eyewear retailers pressured manufacturers to create a uniform pricing model that would assist them in focusing on profit margins when selling contact lenses at the risk of providing unsatisfactory vision care for patients. One of the plaintiffs, Costco, claimed that when it pushed back against the minimum pricing mandates, Johnson & Johnson threatened to withhold contact lenses from the retailer. Plaintiffs are claiming that this process violated many retailers‘ retail contract.
The claims state that the eyewear manufacturers set the minimum pricing guidelines in an effort to promote the sales of eyewear from doctors. Since larger retailers may have been able to price their products lower than eyewear professionals, the manufacturers added the minimum pricing guidelines so patients would be discouraged from shopping around for the best prices. This resulted in increased profits for the manufacturers as they stifled potential competition from the larger retailers.
Plaintiffs have also complained that the pricing guidelines makes it more difficult for patients to afford contacts if they cannot buy them in bulk. The minimum pricing boosts costs across the board, and if someone can only afford to purchase their contacts monthly, that price was ballooned well over the price for a year‘s worth of lenses. The minimum pricing guidelines contributed to that disparity.
The pricing guidelines used were called unilateral pricing policies (UPP). The UPPs were instituted out of an awareness that the lenses could be sold at a sizable discount through retailers such as Costco and 1-800-Contacts. However, the UPPs in nature violated antitrust laws as the competition from those large retailers makes the pricing more fair for consumers. The efforts by the manufacturers to circumvent that competition led to the lawsuits.
The Judicial Panel on Multidistrict Litigation made its decision to centralize the lawsuits before Judge Schlesinger given his past experience dealing with antitrust litigation and his familiarity with the contact lens industry. Only one of the original lawsuits reviewed by the JPML was filed in Florida, with five of the seven file in California. The remaining lawsuit was filed in Kansas. In addition to the judge‘s familiarity with antitrust litigation and the contact lens industry, both APP Optical Group and Johnson & Johnson have headquarters in Florida, making the centralization of the lawsuits their convenient for witness and discovery procedures that will involve those institutions.