Preview
FILED
DALLAS COUNTY
1/27/2016 11:11:58 PM
FELICIA PITRE
DISTRICT CLERK
David Hernandez
CAUSE NUMBER DC-15-08587
LOW T CENTER, L.L.C. § IN THE DISTRICT COURT
Plaintiff §
§
v. §
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BECKMAN COULTER, INC. § 191st JUDICIAL DISTRICT
Defendant/Counterplaintiff §
§
v. §
§
LOW T CENTER, L.L.C. AND §
HER KARE HOLDINGS, L.L.C. §
Counterdefendants § DALLAS COUNTY, TEXAS
PLAINTIFF'S THIRD AMENDED PETITION
COUNTERDEFENDANTS' FIRST AMENDED ANSWER
TO THE HONORABLE JUDGE OF SAID COURT:
COMES NOW PLAINTIFF LOW T CENTER, L.L.C. and makes and file this Third
Amended Petition and also come now COUNTERDEFENDANTS LOW T CENTER, L.L.C.
and HER KARE HOLDINGS, L.L.C., who file this their First Amended Answer to
Defendant's Counterclaim and in support thereof, each respectfully shows as follows:
(i) Pursuant to Rule 47 of the Texas Rules of Civil Procedure, this suit seeks
monetary monetary relief within the jurisdictional limits of this Court over $1,000,000.00,
together with all other relief to which Plaintiff may be entitled, and is governed by a Level 3
Discovery Control Plan. Plaintiff has not completed its calculation of economic damages but
will supplement with the maximum amount of actual and exemplary damages it seeks in this suit
at the time of such calculation. At this time, subject to Plaintiff's right to amend under the Texas
Rules of Civil Procedure, Plaintiff states that the maximum damages that it seeks to recover is
$15,000,000.00 in economic damages, plus costs of court and attorneys fees. Plaintiff further
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seeks exemplary damages in an amount determined by the trier of fact, but not more than twice
the economic damages sought by Plaintiff.
(ii) Defendant is requested to disclose that information required to be disclosed
pursuant to Texas Rule of Civil Procedure Rule 194.2 within thirty days of the date of service
hereof, with respect to each Counterdefendant named above.
(iii) The Texas Attorney General is a notice party pursuant to Texas Business and
Commerce Code Sec. 15.21(c). Service on the Texas Attorney General Antitrust Division can be
effected by serving a copy of this pleading at Office of the Attorney General, 300 W. 15th Street
Austin, Texas 78701.
(iv) The Attorney General of the State of California is a notice party pursuant to
Calfornia Business & Professions Code Sec. 16750.2. Service on the Attorney General in the
State of California can be effected by serving Office of the Attorney General, 1300 "I" Street,
Sacaramento, California 95814-2919.
PARTIES
1. Plaintiff Low T Center, L.L.C. is a Texas limited liability company which may be
served by and through its attorney of record, David J. Moraine, 60 Village Lane, Suite 110,
Colleyville, Texas 76034.
2. Defendant Beckman Coulter, Inc. (Beckman) is a Delaware chartered corporation
based in California, but registered and doing business in Texas, with entity privileges in this
state. Beckman's offices in the State of California are located at 250 S Kraemer Blvd, Brea,
California 92821. Defendant's principal place of business in this state is located in this county at
Beckman Coulter, Inc., Irving Campus, 3131 W. Royal Lane, Irving, Texas 75063. Each of the
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employees and agents of Beckman named herein are located at Beckman's offices in California,
and each at all times material hereto, were acting as the agents of Beckman in the course and
scope of their employment with Beckman. Beckman is liable for the acts and omissions of its
agents and employees under the doctrine of respondeat superior. Defendant is represented by
Sidley Austin LLP, 2001 Ross Avenue, Suite 3600, Dallas, Texas 75201, and has appeared herein
by and through a general appearance.
3. Counterdefendant Her Kare Holdings, L.L.C. is a Texas limited liability company
which may be served by and through its attorney of record, David J. Moraine, 60 Village Lane,
Suite 110, Colleyville, Texas.
LONG ARM JURISDICTION
4. Texas has jurisdiction over the parties to this suit, and this court has subject matter
jurisdiction over the claims made the basis of this suit. This Court further has jurisdiction under
the Texas long-arm statute. This is because the defendant engages in business in this state and
the causes of action asserted herein arise from business done in this state and this county.
Defendant directs its marketing and advertising to this state for the purpose of soliciting business
in this state. Defendant contracts with Texas residents and performance of the contracts was to
occur and did occur in this state. Defendants are parties to agreements, and the agreements were
to be performed in part in this state.
5. Texas has specific jurisdiction over the defendant because there is a substantial
connection between Defendant's contacts with this state and the operative facts of this litigation.
Defendant employed and contracted Texas residents in this state in connection with Defendant's
business in this state. Defendant is a party to agreements made the basis of this suit, and the
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agreements were to be performed in part in this state.
6. Defendant has purposefully availed itself of the privilege of conducting business
in this state.
7. The assumption of jurisdiction by the court over the defendant does not offend
traditional notions of fair play and substantial justice, and does not deprive Defendant of due
process as guaranteed by the Constitution of the United States.
GOVERNING LAW
8. The claims made by and between Plaintiff and Defendant are governed by
California substantive law. The contract sued upon by Counterplaintiff is called the Master
Pricing Agreement (MPA) and states that it is a confidential "sole source agreement." Under
this sole source agreement, Beckman claims benefits in this suit. The MPA contains a choice of
law provision stating, "This Agreement shall be governed by, and construed in accordance with,
the laws of the State of California without reference to the conflict of law provisions."
9. Beckman stipulates in paragraph 20 of its live Third Party Petition, "The Master
Pricing Agreement is governed by, and to be construed in accordance with, California state law,
without reference to conflict of law provisions." California is the place where the relationship of
the parties is centered.
10. Beckman's address for performance and notice under the MPA is listed as "200
South Kraemer Boulevard, Brea California 92821-6208." Acceptance of goods under the MPA
occurs when Beckman "has certified that the Product conforms to [Beckman's] published
manufacturing specifications." This certification occurs at Beckman's headquarters in California.
11. The principal claims in this suit arise from Beckman's acts and omissions
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following the closure of Plaintiff's "Eligible Member" locations in California, specifically,
locations at (i) 8820 Wilshire Blvd #110, Beverly Hills, California 90211, (ii) 4968 Booth Circle
Suite 110 Irvine, California 92604, (iii) 11879 Sebastian Way #105, Rancho Cucamonga,
California 91730, (iv) 23653 El Toro Rd Suite B, Lake Forest, California 92630, and a to be
opened center in Cedar Creek, California. In these locations, Beckman delivered and installed
products. In these locations, Plaintiff ordered and Beckman delivered reagents, supplies, and
consummables under the MPA. In these locations, Beckman and Plaintiff's representatives
personally appeared to permit Beckman to remove its products after Beckman issued RMAs
from its office in California to each location in California.
12. In California, and in interstate commerce, Beckman sought to restrain competition
through the sole source agreement.
13. The MPA also required Plaintiff's agents to travel to California, where Beckman
was designated to perform its training obligations under the MPA. See Exhibit F, at Exhibit F.
14. Beckman cites the closing of the California locations as the root of the parties'
core disputes. See Exhibit E attached hereto titled "RE: Center closings in California." Plaintiff
alleges that Beckman's conduct in California regard to these California locations, and its resultant
acts and omissions derived therefrom, form the basis of Plaintiffs' claims in this case and the
crux of the disputes between the parties in this case.
15. California is also the place where Beckman decided to terminate the contract,
terminated the contract, issued the offending demands, made the determinations not to service
Plaintiff's locations or supply Plaintiff with reagents and supplies, and where it otherwise
engaged in the acts and omissions made the basis of Plaintiff's claims herein. See e.g. Exhibits E
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Plaintiff's Third Amended Petition and Counterdefendant's First Amended Answer
Low T Center, L.L.C. v. Beckman Coulter, Inc., Cause Number DC-15-08587 Page 5 of 39
and G in addition to the facts set forth below. The persons assigned by Beckman to service
Plaintiffs' account include Chris White, Ph.D., Hugh Mazzei, Tiffany H. Murphy, and Michelle
Armand. Each of these individuals office or maintain offices in Beckman's California
headquarters.
16. Her Kare Holdings, L.L.C. is not in contractual privity with Counterplaintiff
Beckman, and does not license its brand in California. Consequently, Texas law applies to the
claims involving Her Kare Holdings, L.L.C.
JURISDICTION AND VENUE
17. This Court has personal jurisdiction over the parties, and subject matter
jurisdiction. This Court is a Court of proper venue because a substantial portion of the acts and
omissions made the basis of this petition occurred in this county, and the contracts and
agreements by and between the parties required performance in part in this county. Defendant
further maintains a principal place of business in this state where the decision makers for the
organization within this state conduct the daily affairs of the organization, at Beckman Coulter,
Inc., Irving Campus, 3131 W. Royal Lane, Irving, Texas 75063.
FACTS
18. Plaintiff is a medical management services organization providing laboratory
operations and ancillary support services to clients in the clinical health market. These
laboratories employ testing performed on an immunoassay analyzer.
19. Counterdefendant Her Kare Holdings, L.L.C. is an intellectual property holding
company that owns certain trademarks. It has no relationship with Counterplaintiff.
20. Defendant Beckman is a manufacturer of laboratory analyzers, reagents and
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supplies. Beckman is a wholly owned subsidiary of Danaher Corporation, a global multinational
corporation. In 2015 Danaher generated $20.6 billion in revenue and its market capitalization
exceeded $60 billion. Defendant Beckman accounted for $4.7 billion of this revenue in 2015.
Approximately 81% of that revenue came from anticompetitive sole source reagent rental
agreements such as those described herein. Beckman develops, manufactures and markets
products, including its Access 2 Immunoassay Analyzer, and immunoassay reagents and
supplies. Beckman presently provides supplies to more than 275,000 Beckman Coulter systems
in operations globally. It is the world's largest company devoted solely to biomedical testing.
Beckman exerts significant market dominance and influence in the Immunoassay Market where
it maintains a "top 5" market share. It manufactures and sells analyzers, reagents and supplies in
California, and ships its reagents, supplies, and analyzers to Texas (and other states) and engages
in substantial interstate commerce in those states.
21. In 2011, Beckman learned that Plaintiff was potentially investigating different
analyzers. It approached Plaintiff, and offered to place its Access 2 Analyzers in certain future
locations to be designated by Plaintiff. The parties negotiated terms throughout 2012. At the
time Plaintiff was utilizing analyzers and purchasing Fastpack® reagent kits supplied by
Beckman's competitor, Qualigen, Inc. Beckman desired to acquire Plaintiff's business, and
exclude competitors from supplying Plaintiff with reagents and supplies in the markets where
Plaintiff maintains locations. Qualigen is also based in California, and its address is 2042 Corte
Del Nogal, Carlsbad, California 92011. Qualigen is a Beckman competitor in the Immunossay
Market. At the time, Plaintiff was among Qualigen's largest customers.
22. Plaintiff's affiliates engage in testing for testosterone deficiency, and perform
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laboratory analyses measuring testosterone, PSA, Prolactin, TSH, FSH, LH and SHBG 1 (as
herein used, the "tests.") During several meetings, representatives of Defendant who were trying
to convince Plaintiff to utilize Defendant's Access 2 Immunoassay system, made representations
regarding the average "cost per test" for each of these tests and promised that the Access 2 could
perform the testing required by Plaintiff in a cost-efficient manner in conformance with
Defendant's representations. Defendant's agents cited internal tests and studies and represented
that these were accurate and reliable, and that the Access 2 would perform at the economic levels
represented. In October 2012, the above named individuals on behalf of Beckman represented to
Plaintiff that it had performed several sample studies, and that the cost to perform the above
referenced testing using the Access 2 Analyzer would be "15-20%" lower than the cost to
perform the same testing on the Qualigen analyzers. Beckman provided a spreadsheet showing
the amount of reagent that would be used "per test" and what the cost of the reagent would be on
a "per test" basis. They also made representations regarding "controls cost" for each of Plaintiff's
locations. In order to function, an immunoassay analyzer must be calibrated and must
periodically run controls. These procedures utilize great deals of reagents and supplies, and the
costs associated with controls and calibrations are a major expense of using an analyzer.
Beckman provided written materials and orally represented to Plaintiff that its would only
require one calibration ever two weeks for testosterone, and once per month for all other tests. It
provided representations regarding "controls costs per test." At the time it provided these
"studies" and figures, it knew them to be false. In truth, the Access 2 Analyzer required controls
1 Testosterone is a naturally occurring hormone found in men and women. Normal testosterone levels are an
important part of maintaining normal cognitive function, physical health, and wellness. "PSA" is Prostate-
specific antigen. Prolactin is a hormone made by the pituitary gland. "TSH" stands for Fhyroid stimulating
hormone. "FSH" is Follicle stimulating hormone. "LH" is Luteinizing hormone. "SHBG" stands for Sex
hormone-binding globulin.
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and calibrations to be run frequently, and far in excess of the numbers represented by Beckman.
These excessive controls and calibrations would substantially increase the costs of reagents and
supplies, which in turn, would create additional revenue for Beckman (who sold the reagents and
supplies necessary to perform these procedures.)
23. Beckman also did not have the capability to supply the reagents and supplies.
Beckman attempted to seduce Plaintiff with false claims of excellent customer service, timely
support, and reliable and cost effective equipment, however, contrary to what Beckman
represented to Plaintiff, its own internal materials summarize its true state of affairs during this
time as being plagued with:
· 2,000 past-due scheduled maintenance calls
· On-time delivery less than 80%
· Last among peers in customer satisfaction
· Limited and ineffective investment in innovation
· 3 FDA warning letters
· Troponin off the market for high-volume DxI and to new Access II
customers
· 75% of R&D resources used to remediate quality issues
· Profitability below peers
Source: Donaher Corp., "Investor Day at Beckman Coulter," June 16, 2015
24. According to Donaher, during this time Beckman struggled heavily with
"technical and regulatory issues" and "customer satisfaction." It lists several "typical" customer
complaints such as:
· “I love my sales rep and my service rep, but if they don't have the reagents
in stock when I need them, I will have to leave Beckman.”
· “Beckman has lost sight of customer needs. Instrument reliability and
product availability need to be fixed if you want to keep our business.”
Source: Donaher Corp., "Investor Day at Beckman Coulter," June 16, 2015
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25. Beckman knew this but concealed these facts from Plaintiff to induce Plaintiff into
entering into a business relationship with Beckman. Beckman also knew that the controls,
calibrations, and internal testing required by the Access 2 would make the performance figures
cited by Defendant highly unlikely, if not impossible to achieve, however it failed to advise
Plaintiff of this fact. Defendant was further aware of other internal studies which negated the
performance figures cited by Defendant, but failed to disclose the existence of those studies or
the results thereof. By choosing to make a partial disclosure of information, Beckman became
obligated to fully disclose all material information, and it failed to do so, in order to mislead
Plaintiff and paint a false picture of the Access 2 Analyzer and Beckman's service and support
capabilities. Beckman affirmatively represented in the MPA that it believed all of the
information provided to Plaintiff "to be reliable and correct," however this representation was
also fraudulent. Beckman knew that the information it had provided Plaintiff was false.
26. Beckman also failed to inform Plaintiff that in June 2010 it had received several
FDA warning letters, prohibiting the sale of the Access 2. In April 2012, Beckman submitted a
510(k) application to be able to sell the Access 2. A 501(k) application is a submission made to
FDA to demonstrate that the device to be marketed is at least as safe and effective, that is,
substantially equivalent, to a legally marketed device. That application was not granted in 2012.
27. Beckman also made false claims about its service and support ability, delivery
capability, and repair ability. Indeed, because the Access 2 was so unreliable, over 75% of
Beckman's R&D budget was dedicated in 2012 - 2013 to attempting to solve quality control
issues with Beckman products. Source: Donaher Corp., "Investor Day at Beckman Coulter,"
June 16, 2015. To induce Plaintiff, Beckman promised service turnaround times that it could not
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deliver, and comitted to supplying inventory that it could not supply. During this time, Beckman
had a past-due reagent backlog of over 8,000 orders. Source: Donaher Corp., "Investor Day at
Beckman Coulter," June 16, 2015. It failed to disclose this fact to Plaintiff. It met its target
installation dates in less than 65% of orders. Source: Donaher Corp., "Investor Day at Beckman
Coulter," June 16, 2015. It failed to disclose this fact to Plaintiff. From 2011 to the time that
Beckman goaded Plaintiff into signing the MPA, Beckman was averaging 2,000 past due
preventative maintenance calls, a 34 hour average response time to service calls, and less than
50% on-time installation. Source: Donaher Corp., "Investor Day at Beckman Coulter," June 16,
2015. It failed to disclose these facts to Plaintiff. Since 2011, Danaher reports that Beckman's
"service quality" has increased a scant 10%. It knew these facts and failed to disclose any of
them to Plaintiff, instead promising "on site same day" service, timely installation, and that it
would supply an adequate of reagents and supplies on a timely basis. It promised performance
targets for its analyzers that it knew were impossible or next-to-impossible to achieve, and
misrepresented the extent and costs of controls and calibrations required to attempt to keep the
analyzers operational.
28. Relying on Beckman's representations, Plaintiff first executed an order form in
late 2012 after Beckman's representatives presented Beckman's materially misleading case
studies. Plaintiff was told that a "national contract" was being drafted and would be forthcoming
once it "cleared" Beckman's legal department. No analyzers were delivered, and each time
inquiry was made, Beckman responded that the delay was the result of delays in the legal
department drafting the contract. That representation was also false. Beckman could not deliver
the Access 2 Analyzers because the FDA had not lifted the sale ban, another material fact which
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Beckman concealed from Plaintiff. Finally, in late June 2013, the FDA cleared the Access 2 for
sale in the United States. Beckman immediately presented the contract, and Plaintiff executed
the MPA on July 1, 2013. Beckman executed the contract on August 7, 2013.
29. The MPA executed by Beckman is a "sole source agreement" which requires the
customer to purchase all of its reagents and supplies solely from Beckman or its designee,
inexchange for a no-cost rental agreement. The MPA provides, "Despite anything contrary in
this Agreement, Customer (i) will order and purchase the Consumables and other supply items
directly from the Distributor in accordance with Distributor's instructions, (ii) agrees to be
invoiced by and pay the Distributor directly for those purchases, and (iii) agrees to any payment,
delivery, shipping and pricing terms reasonably established by the Distributor to the extent that
those terms conflict with this Agreement." Consistent with Beckman's requirement that the MPA
be a "sole source agreement," prohibiting Plaintiff from dealing with other vendors of reagents
and supplies, Beckman would later clarify the wording of this provision to, "Customer agrees to
purchase all Immunoassay reagents, supplies and consumables in this Agreement from [Beckman
Coulter]2 with minimum annual commitment of $38,611.40 per year." See Exhibits A and C.
[Emphasis added]. In exchange for Plaintiffs' commitment to purchase reagents and supplies
only from Beckman, and refrain from dealing with Beckman's competitors, Beckman agreed to
provide Plaintiff a $3,760.00 incentive payment per analyzer (See Exhibit F, at Exhibit E), free
(below cost) training, free (below cost) service, and free (below cost) "rental" of the Access 2.
See generally Exhibit F. Beckman stated in the MPA that the value of the free rental alone cost
Beckman $67,285.20 per analyzer. In this suit, Beckman has pleaded that the actual value of the
2 In some instances, the designee was changed to McKesson, who was Beckman's designated Distributor.
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free (below cost) rental was $150,000.00 per analyzer. The MPA, as amended, is designed to
prohibit Plaintiff from purchasing reagents and supplies from Defendant's competitors. In
exchange for the promise of exclusivity, it also gave Plaintiff the right to purchase reagents and
supplies from Beckman at an approximate 60% discounted rate off list, and gave Plaintiff that
right for five years. Beckman characterized these discounts and concessions as confidential.
Beckman, a dominant force in the Immunoassay Market with market power, offered these
predatory concessions for the purpose of precluding competition for immunoassay reagents and
supplies products through tying and the exclusive dealing transactions described herein.
30. The MPA (as amended, the Agreement) provides that Beckman will place an
Access 2 Analyzer in facilities designated by Low T Center, L.L.C. (designated as "the
Customer.") These analyzers remain the property of Beckman during the term of the Agreement,
and no analyzer is ever acquired by the Customer (designated as "Low T Center, L.L.C."). The
Agreement provides for the purchase of "the minimum number of Reagents and Supply Items by
dollar amount" (rather than by facility.) Since the intial agreement was executed in 2013, it has
been amended 20 times, changing or clarifying several material terms of the Agreement. The
latest amendment occurred on October 6, 2014, and is attached as Exhibit A. Since 2013,
Plaintiff has placed more than 15,000 orders under the Agreement. Plaintiff has paid over
$2,256,055.70 under the Agreement during the three years prior to filing this action. Its average
annualized order volume was in excess of $1,500,000.00 prior to Defendant's breach and
termination of the Agreement.
31. As Plaintiff utilized the Beckman equipment, it became clear that the
representations and warranties made by Beckman regarding controls and calibrations, cost per
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test, and serviceability of the equipment were false. The true cost of reagents and supplies was
substantially more than what Beckman represented, and the cost per test figures nearly doubled
what was previously represented by Beckman. Controls and calibrations had to be frequently
run, because the Access 2 failed its internal testing and controls approximately 40% of the time.
Beckman was aware of these failures and frequently corresponded with Plaintiff about "known"
issues, and software and hardware updates which allegedly would be released sometime in the
future to remedy same. Further, Beckman charged for items and service calls which were
supposed to be included under the all-inclusive service contract. Beckman further failed to
adequately maintain the equipment, frequently missing its appointments for service, and in some
instances, refusing to provide service whatsoever.
32. The Agreement specifically incorporates the Beckman RMA (Return Materials
Authorization) policy. The Beckman RMA policy states that if Beckman issues an RMA, it
"shall issue" a credit for products returned pursuant to the RMA.
33. In late 2014 - January 2015, Eligible Members, as defined in the Agreement, in
California closed those locations. Beckman issued RMAs for each analyzer, delivered Plaintiff
decontamination instructions, and then sent its technicians to take possession of the analyzers.
Although required under the Agreement, Beckman refused to credit Plaintiff for the RMA'd
analyzers. While the initial policy stated that RMAs would not be issued for analyzers covered
by a reagent rental agreement, when Beckman offered the RMA to Plaintiff, and Plaintiff
accepted the RMA by preparing the instruments for return, implementing decontamination
procedures, de-installing the instruments, and turning same over to Beckman in return for the
RMA, Beckman became bound to credit Plaintiff for the return of the instruments. The contract
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was evidenced by the actions of the parties. See e.g. Cal. Com. Code Ann. § 2207. Beckman's
failure to credit Plaintiff's account for the RMA'd analyzers was a breach of the parties contract.
When Beckman was placed on notice of its breach, Kunal Patel, its Senior Counsel, advised on
February 4, 2015 that Beckman would be "invoicing" Plaintiff for $1,437,812 for lost gross
rental revenue in the future. Of course, Beckman had its instruments back, it was relieved of the
obligation to service, provide parts for, or the machines, it did not have to manufacture, purchase
or provide supplies for these machines or incurs costs, distributor fees, commissions, or other
overhead, and generally the demand made no sense. The Agreement, which was drafted solely
by Beckman, specifically provides that "Neither party shall be liable to the other party for
incidental or consequential damages, or losses . . . or for lost profits or revenues of the other
party." See Exhibit F, page 26, paragraph 6.3. Beckman's wrongful invoice for charges
precluded by the Agremeent was further evidence of Beckman's breach, and repudiation.
34. On March 10, 2015 Beckman delivered a fabricated set of invoices to Plaintiff's
accounting department seeking payment for over $1,400,000 in estimated charges for "future"
supplies which it speculated "will not be ordered" over the subsequent four years. It charged
California sales tax on each of the non-existent products and fraudulently invoiced Plaintiff for
same (although it never remitted same to the State of California). Beckman did not furnish or
deliver any of these reagents or supplies. The invoice included centers that never opened and
instruments never placed in service, nor was Plaintiff under any duty to purchase four years
worth of supplies in a single day. The invoices fraudulently cited "Purchase Orders" dated
February 15, 2015. Plaintiff never issued such purchase orders. The invoice did not come from
McKesson, from whom Plaintiff regularly ordered and was ordering reagents and supplies, but
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from Beckman itself.
35. At the time, Plaintiff was still ordering reagents and supplies. Under the
Agreement, Plaintiff had exceeded the commitment amount of reagents even though at least
three more years were left in the term of the Agreement within which Plaintiff had the right to
order additional reagents and supplies. When Plaintiff received the invoice and confirmed with
Beckman that Beckman was insisting that Plaintiff purchase four years worth of unusable
reagents and supplies at once, Plaintiff filed this suit seeking a resolution of the contractual issue
with Beckman, and seeking declaratory relief regarding the legality of Beckman's conduct and
the Agreement itself. Plaintiff sought a determination that the Agreement constituted an illegal
tying agreement or was otherwise unlawful. Beckman hired external counsel to represent it in
this litigation and in respect to the parties' disputes.
36. Thereafter, Plaintiff learned that Beckman was refusing to permit McKesson to fill
orders for reagents or supplies placed by Plaintiff, and was refusing to provide service under the
Agreement, leaving many analyzers out of service and unusable. After multiple rounds of
inquiries, on June 15, 2015 Bill Smith at McKesson contacted Plaintiff and informed Plaintiff
that Patel, on behalf of Beckman, instructed McKesson to "hold" all orders placed by Plaintiff for
any Low T Center facilities, and not to ship supplies (in violation of the Agreement). Beckman
further refused to respond to Plaintiff's service calls, or maintain the equipment in the field.
37. Smith suggested obtaining necessary reagents and supplies by shipping same to
HerKare facilities. When Patel learned that supplies were being shipped to HerKare locations,
he, on behalf of Beckman, instructed McKesson not to service any of the analyzers, and not to
fill any orders placed by Plaintiff or HerKare, regardless of the facility, all in violation of the
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Agreement. At all times herein, Patel was acting in the course and scope of his employment with
Beckman.
38. On September 28, 2015 Plaintiff confirmed with Patel that Beckman would not
service the analyzers in the field, and would no longer permit Plaintiff to purchase reagents or
supplies. Without reagents and supplies, the analyzers were useless. Beckman's refusal to
provide reagents and supplies made it impossible for Plaintiff to continue to purchase reagents
and supplies. Without service, the unreliable Access 2 analyzers were worthless. The refusal to
service the equipment, and the refusal to provide reagents and supplies, were each repudiations
of and material breaches of the Agreement. Beckman then issued RMAs for every analyzer in
service, and from October 2015-December 2015 Plaintiff decontaminated and uninstalled the
instruments at Beckman's instruction. Plaintiff cooperated with Beckman's requests in relation to
returning the instruments, and each was returned in good working order. Although it had
repudiated the contract and breached same, on October 29, 2015 Patel delivered another set of
fictitious invoices for reagents and supplies "not furnished" in the amount of $5,845,145.68 and
demanded immediate payment of same.
39. The invoices and demand from Patel sought collection of usurious interest
charges. Patel demanded payment of "interest at the rate of one and a half percent (1 1/2%) per
month from the due date of the invoices, as set out in the Agreement." Beckman again refused to
issue a credit for the analyzers returned pursuant to the RMAs.
40. The foregoing paragraphs are incorporated into each of the preceding and
following paragraphs of this pleading as if fully set forth therein. Each cause of action is pleaded
in the alternative with all facts in support of such cause of action deemed incorporated therein.
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Low T Center, L.L.C. v. Beckman Coulter, Inc., Cause Number DC-15-08587 Page 17 of 39
TYING VIOLATIONS OF CARTWRIGHT ACT AND
TEXAS FREE ENTERPRISE AND ANTITRUST ACT OF 1983
41. The U.S. Immunoassay Market is a multi-billion dollar major medical market that
is expected to grow from 2012 to 2017 at a combined annual growth rate in excess of 9%.
Beckman Coulter is a major player in the Immunoassay Market, and exerts market power
through its high market share, as well as the unique characteristics of the market described
herein. Beckman's instruments are very expensive, and typically require investments in
infrastructure and planning as they are implemented into customer labs. The market has a very
limited number of major competitors, namely Beckman Coulter, Abbott, Roche, Siemens, and
Alere. Beckman reported in its most recent financial filings that at the time it entered a
relationship with Plaintiff, these top 5 companies in the industry accounted "for over 70%" of the
market. Before being acquired by Danaher Corp., Beckman stated in its public filings, "We have
significant market positions in the three largest fields . . . immunoassay (18% United States; 8%
worldwide) . . . " which is consistent with its status as a "Top 5" industry dominator.
42. Beckman reports in its promotional materials that in the United States, "clinical
diagnostic testing informs over 60-70% of critical health care decisions." Immunoassay
analyzers performing this testing require reagents and supplies to function. Other companies sell
the reagents and supplies used in immunoassay analyzers, and which may include reagents,
antibodies, sample diluents, conjugate stabilizer/diluents, coating buffers, wash buffers,
substrates, and other disposable medical supplies (e.g. "Reagents and Supplies").
43. Beckman rents or leases its Immunoassay instruments to customers in low or no-
cost arrangements in over 81% of customer applications, in exchange for the execution of a "sole
source agreement" sometimes referred to by Beckman as a "Reagent Rental Agreement." Once
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Low T Center, L.L.C. v. Beckman Coulter, Inc., Cause Number DC-15-08587 Page 18 of 39
installed, that agreement requires the customer to purchase all of its Reagents and Supplies from
Beckman, or a distributor designated by Beckman. The "sole source agreement" forecloses
competition for the purchase of Reagents and Supplies by requiring customers to use Beckman
or its designee as a "sole source" for these Reagents and Supplies.
44. Because of the infrastructure and planning necessary to install a Beckman device,
there is a high switching cost for customers once a Beckman system has been implemented,
which limits competition and holds customers captive. One industry analyst comments that "it is
nigh impossible for customers to switch away from [Beckman's] clinical diagnostic products . . ."
By requiring a customer to purchase Reagents and Supplies solely from Beckman as a condition
of keeping the analyzer, Beckman can effectively limit competition in the Immunoassay Market
once its analyzer is installed. Beckman itself reports in financial filings, "Approximately 81%
of our total revenue is generated by recurring revenue from consumable supplies (including
reagent test kits), services and operating type lease ('OTL') payments." At $4.8 billion in current
annual revenue, Beckman generates illegal tied revenue from these arrangements in the amount
of $3.89 billion every year.
45. In this case, Beckman tied the reagent rental agreement to a requirement that
Plaintiff purchase Beckman supplies and reagents from Beckman exclusively through it or its
designated distributor McKesson. As Plaintiff pleaded in its original petition in this cause, when
a lease or rental agreement is made conditioned on the purchase of another product, the
transaction constitutes an illegal tying agreement. Hamro v. Shell Oil Co., 674 F.2d 784, 787
(9th Cir. 1982). Since 1936, the antitrust laws have held that tying the provision of a lease or
rental agreement, to the purchase of supplies for the equipment covered by the lease, constitutes
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Low T Center, L.L.C. v. Beckman Coulter, Inc., Cause Number DC-15-08587 Page 19 of 39
a per se illegal tying arrangement. Intl. Bus. Machines Corp. v. U.S., 298 U.S. 131, 137 (1936).
See also U.S. v. Microsoft Corp., 253 F.3d 34, 90 (D.C. Cir. 2001) - conditioning lease of one
product on the purchase of a supply per se tying violation. Accord, Fortner Enterprises, Inc. v.
U.S. Steel Corp., 394 U.S. 495, 509 (1969). The Cartwright Act (Cal. Bus. & Prof. Code, §
16720), and the Texas Free Enterprise and Antitrust Act of 1983, §15.05(c), each prohibit tying.
“A tying arrangement under antitrust laws exists when a party agrees to sell one product (the
tying product) on the condition that the buyer also purchases a different product (the tied
product), thereby curbing competition in the sale of the tied product.” Freeman v. San Diego
Assn. of Realtors, 77 Cal.App.4th 171, 183–184, 91 Cal.Rptr.2d 534 (1999), citing Northern
Pac. R. Co. v. United States, 356 U.S. 1, 5–6, 78 S.Ct. 514, 2 L.Ed.2d 545 ((1958); see also
Belton v. Comcast Cable Holdings, LLC, 60 Cal. Rptr. 3d 631, 640 (Cal. App. 1st Dist. 2007).
Where such an arrangement is found, it is illegal per se; that is, the seller's justifications for the
arrangement are not measured by a rule of reasonableness. An illegal tying arrangement has five
elements: (1) a tying; (2) actual coercion by the seller that forced the buyer to purchase the tied
product; (3) the seller must have sufficient market power in the tying product market to force the
buyer to accept the tied product; (4) there are anticompetitive effects in the tied market; and (5)
the seller's activity in the tied product must involve a substantial amount of interstate commerce.
MJR Corp. v. B & B Vending Co., 760 S.W.2d 4, 22 (Tex. App. --Dallas 1988, writ denied);
accord Logic Process Corp. v. Bell & Howell Publ'ns Sys. Co., 162 F.Supp.2d 533, 539 (N.D.
Tex. 2001). Coercion means that the seller requires the buyer to purchase the tied product
(reagents and supplies) in order to obtain the tying product (analyzer). RTLC AG Products, Inc.
v. Treatment Equip. Co., 195 S.W.3d 824, 831 (Tex. App. --Dallas 2006). $3.89 billion annually
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Plaintiff's Third Amended Petition and Counterdefendant's First Amended Answer
Low T Center, L.L.C. v. Beckman Coulter, Inc., Cause Number DC-15-08587 Page 20 of 39
is a substantial amount of interstate commerce.
46. A tying arrangement can be simply described as an arragement where a seller
agrees to sell one product on the condition that the buyer also agrees to purchase a different
product, or the buyer agrees that he will not purchase the same product from another supplier.
See Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 462, 112 S.Ct. 2072, 119
L.Ed.2d 265 (1992); Apani Sw., Inc. v. Coca–Cola Enters., Inc., 300 F.3d 620, 625 (5th Cir.
2002). The product which is the inducement for the arrangement is called the “tying product”
(here, Defendant's Immunoassay Analyzer) and the product or service that the buyer is required
to purchase is the “tied" product (here, Reagents and Supplies). Tying arrangements usually
involve circumstances where the purchaser must buy the tying and tied product from the same
seller. However, an illegal tying also exists where the purchaser is required to buy the tied
product from a third party (in this case, McKesson). In such situations, the third party is
designated by the seller (in this case, in the sole source agreement). Suburban Mobile Homes,
Inc. v. AMFAC Communities, Inc. 101 Cal.App.3d 532, 547, 161 Cal.Rptr. 811 (1980); Sports
Racing Serv. v. Sports Car Club of Amer., 131 F.3d 874, 887 (10th Cir. 1997; Abraham v.
Intermountain Health Care, Inc., 461 F.3d 1249, 1265 (10th Cir. 2006); SC Manufactured
Homes, Inc. v. Liebert, 76 Cal. Rptr. 3d 73, 86 (Cal. App. 2d Dist. 2008), as modified on denial
of reh'g (May 19, 2008).
47. In this case, Plaintiff was forced to purchase millions of dollars in Reagents and
Supplies under the illegal agreement which it would not have otherwise purchased, or would
have obtained from competitors. Plaintiff asserts a claim for illegal tying, and shows that the
Agreement constitutes an illegal arrangement because the provision of the Access 2 Analyzer
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Low T Center, L.L.C. v. Beckman Coulter, Inc., Cause Number DC-15-08587 Page 21 of 39
was linked to the sale of Reagents and Supplies. Defendant has sufficient economic power in the
Immunoassay Market to coerce the purchase of the tied product; a substantial amount of sale was
effected in the tied product; and Plaintiff sustained pecuniary loss as a consequence of the
unlawful act. Plaintiff further shows that a total amount of business, substantial enough in terms
of dollar-volume so as not to be merely de minimis, is foreclosed to competitors by the tie. The
illegal conduct of the Defendant is the legal cause of the damages incurred by the Plaintiff.
48. Plaintiff's damages include monies it was forced to expend under the illegal
agreement, costs of instrument removal and decontamination, return expenses, and other related
economic damages all in excess of the minimum jurisdictional limits of this Court. Plaintiff
seeks disgorgement and restitution of the illegally obtained funds, and shows that Defendant
Beckman has been unjustly enriched as the result of its illegal conduct. Plaintiff further seeks
treble damages and recovery of its attorneys fees and costs of court pursuant to the Cartwright
Act, as well as the Texas Free Enterprise and Antitrust Act of 1983.
EXCLUSIVE DEALING VIOLATIONS OF CARTWRIGHT ACT
49. Plaintiff asserts a claim under the
Preview
FILED DALLAS COUNTY 1/27/2016 11:11:58 PM FELICIA PITRE DISTRICT CLERK David Hernandez CAUSE NUMBER DC-15-08587 LOW T CENTER, L.L.C. § IN THE DISTRICT COURT Plaintiff § § v. § § BECKMAN COULTER, INC. § 191st JUDICIAL DISTRICT Defendant/Counterplaintiff § § v. § § LOW T CENTER, L.L.C. AND § HER KARE HOLDINGS, L.L.C. § Counterdefendants § DALLAS COUNTY, TEXAS PLAINTIFF'S THIRD AMENDED PETITION COUNTERDEFENDANTS' FIRST AMENDED ANSWER TO THE HONORABLE JUDGE OF SAID COURT: COMES NOW PLAINTIFF LOW T CENTER, L.L.C. and makes and file this Third Amended Petition and also come now COUNTERDEFENDANTS LOW T CENTER, L.L.C. and HER KARE HOLDINGS, L.L.C., who file this their First Amended Answer to Defendant's Counterclaim and in support thereof, each respectfully shows as follows: (i) Pursuant to Rule 47 of the Texas Rules of Civil Procedure, this suit seeks monetary monetary relief within the jurisdictional limits of this Court over $1,000,000.00, together with all other relief to which Plaintiff may be entitled, and is governed by a Level 3 Discovery Control Plan. Plaintiff has not completed its calculation of economic damages but will supplement with the maximum amount of actual and exemplary damages it seeks in this suit at the time of such calculation. At this time, subject to Plaintiff's right to amend under the Texas Rules of Civil Procedure, Plaintiff states that the maximum damages that it seeks to recover is $15,000,000.00 in economic damages, plus costs of court and attorneys fees. Plaintiff further ______________________________________________________________________________ Plaintiff's Third Amended Petition and Counterdefendant's First Amended Answer Low T Center, L.L.C. v. Beckman Coulter, Inc., Cause Number DC-15-08587 Page 1 of 39 seeks exemplary damages in an amount determined by the trier of fact, but not more than twice the economic damages sought by Plaintiff. (ii) Defendant is requested to disclose that information required to be disclosed pursuant to Texas Rule of Civil Procedure Rule 194.2 within thirty days of the date of service hereof, with respect to each Counterdefendant named above. (iii) The Texas Attorney General is a notice party pursuant to Texas Business and Commerce Code Sec. 15.21(c). Service on the Texas Attorney General Antitrust Division can be effected by serving a copy of this pleading at Office of the Attorney General, 300 W. 15th Street Austin, Texas 78701. (iv) The Attorney General of the State of California is a notice party pursuant to Calfornia Business & Professions Code Sec. 16750.2. Service on the Attorney General in the State of California can be effected by serving Office of the Attorney General, 1300 "I" Street, Sacaramento, California 95814-2919. PARTIES 1. Plaintiff Low T Center, L.L.C. is a Texas limited liability company which may be served by and through its attorney of record, David J. Moraine, 60 Village Lane, Suite 110, Colleyville, Texas 76034. 2. Defendant Beckman Coulter, Inc. (Beckman) is a Delaware chartered corporation based in California, but registered and doing business in Texas, with entity privileges in this state. Beckman's offices in the State of California are located at 250 S Kraemer Blvd, Brea, California 92821. Defendant's principal place of business in this state is located in this county at Beckman Coulter, Inc., Irving Campus, 3131 W. Royal Lane, Irving, Texas 75063. Each of the ______________________________________________________________________________ Plaintiff's Third Amended Petition and Counterdefendant's First Amended Answer Low T Center, L.L.C. v. Beckman Coulter, Inc., Cause Number DC-15-08587 Page 2 of 39 employees and agents of Beckman named herein are located at Beckman's offices in California, and each at all times material hereto, were acting as the agents of Beckman in the course and scope of their employment with Beckman. Beckman is liable for the acts and omissions of its agents and employees under the doctrine of respondeat superior. Defendant is represented by Sidley Austin LLP, 2001 Ross Avenue, Suite 3600, Dallas, Texas 75201, and has appeared herein by and through a general appearance. 3. Counterdefendant Her Kare Holdings, L.L.C. is a Texas limited liability company which may be served by and through its attorney of record, David J. Moraine, 60 Village Lane, Suite 110, Colleyville, Texas. LONG ARM JURISDICTION 4. Texas has jurisdiction over the parties to this suit, and this court has subject matter jurisdiction over the claims made the basis of this suit. This Court further has jurisdiction under the Texas long-arm statute. This is because the defendant engages in business in this state and the causes of action asserted herein arise from business done in this state and this county. Defendant directs its marketing and advertising to this state for the purpose of soliciting business in this state. Defendant contracts with Texas residents and performance of the contracts was to occur and did occur in this state. Defendants are parties to agreements, and the agreements were to be performed in part in this state. 5. Texas has specific jurisdiction over the defendant because there is a substantial connection between Defendant's contacts with this state and the operative facts of this litigation. Defendant employed and contracted Texas residents in this state in connection with Defendant's business in this state. Defendant is a party to agreements made the basis of this suit, and the ______________________________________________________________________________ Plaintiff's Third Amended Petition and Counterdefendant's First Amended Answer Low T Center, L.L.C. v. Beckman Coulter, Inc., Cause Number DC-15-08587 Page 3 of 39 agreements were to be performed in part in this state. 6. Defendant has purposefully availed itself of the privilege of conducting business in this state. 7. The assumption of jurisdiction by the court over the defendant does not offend traditional notions of fair play and substantial justice, and does not deprive Defendant of due process as guaranteed by the Constitution of the United States. GOVERNING LAW 8. The claims made by and between Plaintiff and Defendant are governed by California substantive law. The contract sued upon by Counterplaintiff is called the Master Pricing Agreement (MPA) and states that it is a confidential "sole source agreement." Under this sole source agreement, Beckman claims benefits in this suit. The MPA contains a choice of law provision stating, "This Agreement shall be governed by, and construed in accordance with, the laws of the State of California without reference to the conflict of law provisions." 9. Beckman stipulates in paragraph 20 of its live Third Party Petition, "The Master Pricing Agreement is governed by, and to be construed in accordance with, California state law, without reference to conflict of law provisions." California is the place where the relationship of the parties is centered. 10. Beckman's address for performance and notice under the MPA is listed as "200 South Kraemer Boulevard, Brea California 92821-6208." Acceptance of goods under the MPA occurs when Beckman "has certified that the Product conforms to [Beckman's] published manufacturing specifications." This certification occurs at Beckman's headquarters in California. 11. The principal claims in this suit arise from Beckman's acts and omissions ______________________________________________________________________________ Plaintiff's Third Amended Petition and Counterdefendant's First Amended Answer Low T Center, L.L.C. v. Beckman Coulter, Inc., Cause Number DC-15-08587 Page 4 of 39 following the closure of Plaintiff's "Eligible Member" locations in California, specifically, locations at (i) 8820 Wilshire Blvd #110, Beverly Hills, California 90211, (ii) 4968 Booth Circle Suite 110 Irvine, California 92604, (iii) 11879 Sebastian Way #105, Rancho Cucamonga, California 91730, (iv) 23653 El Toro Rd Suite B, Lake Forest, California 92630, and a to be opened center in Cedar Creek, California. In these locations, Beckman delivered and installed products. In these locations, Plaintiff ordered and Beckman delivered reagents, supplies, and consummables under the MPA. In these locations, Beckman and Plaintiff's representatives personally appeared to permit Beckman to remove its products after Beckman issued RMAs from its office in California to each location in California. 12. In California, and in interstate commerce, Beckman sought to restrain competition through the sole source agreement. 13. The MPA also required Plaintiff's agents to travel to California, where Beckman was designated to perform its training obligations under the MPA. See Exhibit F, at Exhibit F. 14. Beckman cites the closing of the California locations as the root of the parties' core disputes. See Exhibit E attached hereto titled "RE: Center closings in California." Plaintiff alleges that Beckman's conduct in California regard to these California locations, and its resultant acts and omissions derived therefrom, form the basis of Plaintiffs' claims in this case and the crux of the disputes between the parties in this case. 15. California is also the place where Beckman decided to terminate the contract, terminated the contract, issued the offending demands, made the determinations not to service Plaintiff's locations or supply Plaintiff with reagents and supplies, and where it otherwise engaged in the acts and omissions made the basis of Plaintiff's claims herein. See e.g. Exhibits E ______________________________________________________________________________ Plaintiff's Third Amended Petition and Counterdefendant's First Amended Answer Low T Center, L.L.C. v. Beckman Coulter, Inc., Cause Number DC-15-08587 Page 5 of 39 and G in addition to the facts set forth below. The persons assigned by Beckman to service Plaintiffs' account include Chris White, Ph.D., Hugh Mazzei, Tiffany H. Murphy, and Michelle Armand. Each of these individuals office or maintain offices in Beckman's California headquarters. 16. Her Kare Holdings, L.L.C. is not in contractual privity with Counterplaintiff Beckman, and does not license its brand in California. Consequently, Texas law applies to the claims involving Her Kare Holdings, L.L.C. JURISDICTION AND VENUE 17. This Court has personal jurisdiction over the parties, and subject matter jurisdiction. This Court is a Court of proper venue because a substantial portion of the acts and omissions made the basis of this petition occurred in this county, and the contracts and agreements by and between the parties required performance in part in this county. Defendant further maintains a principal place of business in this state where the decision makers for the organization within this state conduct the daily affairs of the organization, at Beckman Coulter, Inc., Irving Campus, 3131 W. Royal Lane, Irving, Texas 75063. FACTS 18. Plaintiff is a medical management services organization providing laboratory operations and ancillary support services to clients in the clinical health market. These laboratories employ testing performed on an immunoassay analyzer. 19. Counterdefendant Her Kare Holdings, L.L.C. is an intellectual property holding company that owns certain trademarks. It has no relationship with Counterplaintiff. 20. Defendant Beckman is a manufacturer of laboratory analyzers, reagents and ______________________________________________________________________________ Plaintiff's Third Amended Petition and Counterdefendant's First Amended Answer Low T Center, L.L.C. v. Beckman Coulter, Inc., Cause Number DC-15-08587 Page 6 of 39 supplies. Beckman is a wholly owned subsidiary of Danaher Corporation, a global multinational corporation. In 2015 Danaher generated $20.6 billion in revenue and its market capitalization exceeded $60 billion. Defendant Beckman accounted for $4.7 billion of this revenue in 2015. Approximately 81% of that revenue came from anticompetitive sole source reagent rental agreements such as those described herein. Beckman develops, manufactures and markets products, including its Access 2 Immunoassay Analyzer, and immunoassay reagents and supplies. Beckman presently provides supplies to more than 275,000 Beckman Coulter systems in operations globally. It is the world's largest company devoted solely to biomedical testing. Beckman exerts significant market dominance and influence in the Immunoassay Market where it maintains a "top 5" market share. It manufactures and sells analyzers, reagents and supplies in California, and ships its reagents, supplies, and analyzers to Texas (and other states) and engages in substantial interstate commerce in those states. 21. In 2011, Beckman learned that Plaintiff was potentially investigating different analyzers. It approached Plaintiff, and offered to place its Access 2 Analyzers in certain future locations to be designated by Plaintiff. The parties negotiated terms throughout 2012. At the time Plaintiff was utilizing analyzers and purchasing Fastpack® reagent kits supplied by Beckman's competitor, Qualigen, Inc. Beckman desired to acquire Plaintiff's business, and exclude competitors from supplying Plaintiff with reagents and supplies in the markets where Plaintiff maintains locations. Qualigen is also based in California, and its address is 2042 Corte Del Nogal, Carlsbad, California 92011. Qualigen is a Beckman competitor in the Immunossay Market. At the time, Plaintiff was among Qualigen's largest customers. 22. Plaintiff's affiliates engage in testing for testosterone deficiency, and perform ______________________________________________________________________________ Plaintiff's Third Amended Petition and Counterdefendant's First Amended Answer Low T Center, L.L.C. v. Beckman Coulter, Inc., Cause Number DC-15-08587 Page 7 of 39 laboratory analyses measuring testosterone, PSA, Prolactin, TSH, FSH, LH and SHBG 1 (as herein used, the "tests.") During several meetings, representatives of Defendant who were trying to convince Plaintiff to utilize Defendant's Access 2 Immunoassay system, made representations regarding the average "cost per test" for each of these tests and promised that the Access 2 could perform the testing required by Plaintiff in a cost-efficient manner in conformance with Defendant's representations. Defendant's agents cited internal tests and studies and represented that these were accurate and reliable, and that the Access 2 would perform at the economic levels represented. In October 2012, the above named individuals on behalf of Beckman represented to Plaintiff that it had performed several sample studies, and that the cost to perform the above referenced testing using the Access 2 Analyzer would be "15-20%" lower than the cost to perform the same testing on the Qualigen analyzers. Beckman provided a spreadsheet showing the amount of reagent that would be used "per test" and what the cost of the reagent would be on a "per test" basis. They also made representations regarding "controls cost" for each of Plaintiff's locations. In order to function, an immunoassay analyzer must be calibrated and must periodically run controls. These procedures utilize great deals of reagents and supplies, and the costs associated with controls and calibrations are a major expense of using an analyzer. Beckman provided written materials and orally represented to Plaintiff that its would only require one calibration ever two weeks for testosterone, and once per month for all other tests. It provided representations regarding "controls costs per test." At the time it provided these "studies" and figures, it knew them to be false. In truth, the Access 2 Analyzer required controls 1 Testosterone is a naturally occurring hormone found in men and women. Normal testosterone levels are an important part of maintaining normal cognitive function, physical health, and wellness. "PSA" is Prostate- specific antigen. Prolactin is a hormone made by the pituitary gland. "TSH" stands for Fhyroid stimulating hormone. "FSH" is Follicle stimulating hormone. "LH" is Luteinizing hormone. "SHBG" stands for Sex hormone-binding globulin. ______________________________________________________________________________ Plaintiff's Third Amended Petition and Counterdefendant's First Amended Answer Low T Center, L.L.C. v. Beckman Coulter, Inc., Cause Number DC-15-08587 Page 8 of 39 and calibrations to be run frequently, and far in excess of the numbers represented by Beckman. These excessive controls and calibrations would substantially increase the costs of reagents and supplies, which in turn, would create additional revenue for Beckman (who sold the reagents and supplies necessary to perform these procedures.) 23. Beckman also did not have the capability to supply the reagents and supplies. Beckman attempted to seduce Plaintiff with false claims of excellent customer service, timely support, and reliable and cost effective equipment, however, contrary to what Beckman represented to Plaintiff, its own internal materials summarize its true state of affairs during this time as being plagued with: · 2,000 past-due scheduled maintenance calls · On-time delivery less than 80% · Last among peers in customer satisfaction · Limited and ineffective investment in innovation · 3 FDA warning letters · Troponin off the market for high-volume DxI and to new Access II customers · 75% of R&D resources used to remediate quality issues · Profitability below peers Source: Donaher Corp., "Investor Day at Beckman Coulter," June 16, 2015 24. According to Donaher, during this time Beckman struggled heavily with "technical and regulatory issues" and "customer satisfaction." It lists several "typical" customer complaints such as: · “I love my sales rep and my service rep, but if they don't have the reagents in stock when I need them, I will have to leave Beckman.” · “Beckman has lost sight of customer needs. Instrument reliability and product availability need to be fixed if you want to keep our business.” Source: Donaher Corp., "Investor Day at Beckman Coulter," June 16, 2015 ______________________________________________________________________________ Plaintiff's Third Amended Petition and Counterdefendant's First Amended Answer Low T Center, L.L.C. v. Beckman Coulter, Inc., Cause Number DC-15-08587 Page 9 of 39 25. Beckman knew this but concealed these facts from Plaintiff to induce Plaintiff into entering into a business relationship with Beckman. Beckman also knew that the controls, calibrations, and internal testing required by the Access 2 would make the performance figures cited by Defendant highly unlikely, if not impossible to achieve, however it failed to advise Plaintiff of this fact. Defendant was further aware of other internal studies which negated the performance figures cited by Defendant, but failed to disclose the existence of those studies or the results thereof. By choosing to make a partial disclosure of information, Beckman became obligated to fully disclose all material information, and it failed to do so, in order to mislead Plaintiff and paint a false picture of the Access 2 Analyzer and Beckman's service and support capabilities. Beckman affirmatively represented in the MPA that it believed all of the information provided to Plaintiff "to be reliable and correct," however this representation was also fraudulent. Beckman knew that the information it had provided Plaintiff was false. 26. Beckman also failed to inform Plaintiff that in June 2010 it had received several FDA warning letters, prohibiting the sale of the Access 2. In April 2012, Beckman submitted a 510(k) application to be able to sell the Access 2. A 501(k) application is a submission made to FDA to demonstrate that the device to be marketed is at least as safe and effective, that is, substantially equivalent, to a legally marketed device. That application was not granted in 2012. 27. Beckman also made false claims about its service and support ability, delivery capability, and repair ability. Indeed, because the Access 2 was so unreliable, over 75% of Beckman's R&D budget was dedicated in 2012 - 2013 to attempting to solve quality control issues with Beckman products. Source: Donaher Corp., "Investor Day at Beckman Coulter," June 16, 2015. To induce Plaintiff, Beckman promised service turnaround times that it could not ______________________________________________________________________________ Plaintiff's Third Amended Petition and Counterdefendant's First Amended Answer Low T Center, L.L.C. v. Beckman Coulter, Inc., Cause Number DC-15-08587 Page 10 of 39 deliver, and comitted to supplying inventory that it could not supply. During this time, Beckman had a past-due reagent backlog of over 8,000 orders. Source: Donaher Corp., "Investor Day at Beckman Coulter," June 16, 2015. It failed to disclose this fact to Plaintiff. It met its target installation dates in less than 65% of orders. Source: Donaher Corp., "Investor Day at Beckman Coulter," June 16, 2015. It failed to disclose this fact to Plaintiff. From 2011 to the time that Beckman goaded Plaintiff into signing the MPA, Beckman was averaging 2,000 past due preventative maintenance calls, a 34 hour average response time to service calls, and less than 50% on-time installation. Source: Donaher Corp., "Investor Day at Beckman Coulter," June 16, 2015. It failed to disclose these facts to Plaintiff. Since 2011, Danaher reports that Beckman's "service quality" has increased a scant 10%. It knew these facts and failed to disclose any of them to Plaintiff, instead promising "on site same day" service, timely installation, and that it would supply an adequate of reagents and supplies on a timely basis. It promised performance targets for its analyzers that it knew were impossible or next-to-impossible to achieve, and misrepresented the extent and costs of controls and calibrations required to attempt to keep the analyzers operational. 28. Relying on Beckman's representations, Plaintiff first executed an order form in late 2012 after Beckman's representatives presented Beckman's materially misleading case studies. Plaintiff was told that a "national contract" was being drafted and would be forthcoming once it "cleared" Beckman's legal department. No analyzers were delivered, and each time inquiry was made, Beckman responded that the delay was the result of delays in the legal department drafting the contract. That representation was also false. Beckman could not deliver the Access 2 Analyzers because the FDA had not lifted the sale ban, another material fact which ______________________________________________________________________________ Plaintiff's Third Amended Petition and Counterdefendant's First Amended Answer Low T Center, L.L.C. v. Beckman Coulter, Inc., Cause Number DC-15-08587 Page 11 of 39 Beckman concealed from Plaintiff. Finally, in late June 2013, the FDA cleared the Access 2 for sale in the United States. Beckman immediately presented the contract, and Plaintiff executed the MPA on July 1, 2013. Beckman executed the contract on August 7, 2013. 29. The MPA executed by Beckman is a "sole source agreement" which requires the customer to purchase all of its reagents and supplies solely from Beckman or its designee, inexchange for a no-cost rental agreement. The MPA provides, "Despite anything contrary in this Agreement, Customer (i) will order and purchase the Consumables and other supply items directly from the Distributor in accordance with Distributor's instructions, (ii) agrees to be invoiced by and pay the Distributor directly for those purchases, and (iii) agrees to any payment, delivery, shipping and pricing terms reasonably established by the Distributor to the extent that those terms conflict with this Agreement." Consistent with Beckman's requirement that the MPA be a "sole source agreement," prohibiting Plaintiff from dealing with other vendors of reagents and supplies, Beckman would later clarify the wording of this provision to, "Customer agrees to purchase all Immunoassay reagents, supplies and consumables in this Agreement from [Beckman Coulter]2 with minimum annual commitment of $38,611.40 per year." See Exhibits A and C. [Emphasis added]. In exchange for Plaintiffs' commitment to purchase reagents and supplies only from Beckman, and refrain from dealing with Beckman's competitors, Beckman agreed to provide Plaintiff a $3,760.00 incentive payment per analyzer (See Exhibit F, at Exhibit E), free (below cost) training, free (below cost) service, and free (below cost) "rental" of the Access 2. See generally Exhibit F. Beckman stated in the MPA that the value of the free rental alone cost Beckman $67,285.20 per analyzer. In this suit, Beckman has pleaded that the actual value of the 2 In some instances, the designee was changed to McKesson, who was Beckman's designated Distributor. ______________________________________________________________________________ Plaintiff's Third Amended Petition and Counterdefendant's First Amended Answer Low T Center, L.L.C. v. Beckman Coulter, Inc., Cause Number DC-15-08587 Page 12 of 39 free (below cost) rental was $150,000.00 per analyzer. The MPA, as amended, is designed to prohibit Plaintiff from purchasing reagents and supplies from Defendant's competitors. In exchange for the promise of exclusivity, it also gave Plaintiff the right to purchase reagents and supplies from Beckman at an approximate 60% discounted rate off list, and gave Plaintiff that right for five years. Beckman characterized these discounts and concessions as confidential. Beckman, a dominant force in the Immunoassay Market with market power, offered these predatory concessions for the purpose of precluding competition for immunoassay reagents and supplies products through tying and the exclusive dealing transactions described herein. 30. The MPA (as amended, the Agreement) provides that Beckman will place an Access 2 Analyzer in facilities designated by Low T Center, L.L.C. (designated as "the Customer.") These analyzers remain the property of Beckman during the term of the Agreement, and no analyzer is ever acquired by the Customer (designated as "Low T Center, L.L.C."). The Agreement provides for the purchase of "the minimum number of Reagents and Supply Items by dollar amount" (rather than by facility.) Since the intial agreement was executed in 2013, it has been amended 20 times, changing or clarifying several material terms of the Agreement. The latest amendment occurred on October 6, 2014, and is attached as Exhibit A. Since 2013, Plaintiff has placed more than 15,000 orders under the Agreement. Plaintiff has paid over $2,256,055.70 under the Agreement during the three years prior to filing this action. Its average annualized order volume was in excess of $1,500,000.00 prior to Defendant's breach and termination of the Agreement. 31. As Plaintiff utilized the Beckman equipment, it became clear that the representations and warranties made by Beckman regarding controls and calibrations, cost per ______________________________________________________________________________ Plaintiff's Third Amended Petition and Counterdefendant's First Amended Answer Low T Center, L.L.C. v. Beckman Coulter, Inc., Cause Number DC-15-08587 Page 13 of 39 test, and serviceability of the equipment were false. The true cost of reagents and supplies was substantially more than what Beckman represented, and the cost per test figures nearly doubled what was previously represented by Beckman. Controls and calibrations had to be frequently run, because the Access 2 failed its internal testing and controls approximately 40% of the time. Beckman was aware of these failures and frequently corresponded with Plaintiff about "known" issues, and software and hardware updates which allegedly would be released sometime in the future to remedy same. Further, Beckman charged for items and service calls which were supposed to be included under the all-inclusive service contract. Beckman further failed to adequately maintain the equipment, frequently missing its appointments for service, and in some instances, refusing to provide service whatsoever. 32. The Agreement specifically incorporates the Beckman RMA (Return Materials Authorization) policy. The Beckman RMA policy states that if Beckman issues an RMA, it "shall issue" a credit for products returned pursuant to the RMA. 33. In late 2014 - January 2015, Eligible Members, as defined in the Agreement, in California closed those locations. Beckman issued RMAs for each analyzer, delivered Plaintiff decontamination instructions, and then sent its technicians to take possession of the analyzers. Although required under the Agreement, Beckman refused to credit Plaintiff for the RMA'd analyzers. While the initial policy stated that RMAs would not be issued for analyzers covered by a reagent rental agreement, when Beckman offered the RMA to Plaintiff, and Plaintiff accepted the RMA by preparing the instruments for return, implementing decontamination procedures, de-installing the instruments, and turning same over to Beckman in return for the RMA, Beckman became bound to credit Plaintiff for the return of the instruments. The contract ______________________________________________________________________________ Plaintiff's Third Amended Petition and Counterdefendant's First Amended Answer Low T Center, L.L.C. v. Beckman Coulter, Inc., Cause Number DC-15-08587 Page 14 of 39 was evidenced by the actions of the parties. See e.g. Cal. Com. Code Ann. § 2207. Beckman's failure to credit Plaintiff's account for the RMA'd analyzers was a breach of the parties contract. When Beckman was placed on notice of its breach, Kunal Patel, its Senior Counsel, advised on February 4, 2015 that Beckman would be "invoicing" Plaintiff for $1,437,812 for lost gross rental revenue in the future. Of course, Beckman had its instruments back, it was relieved of the obligation to service, provide parts for, or the machines, it did not have to manufacture, purchase or provide supplies for these machines or incurs costs, distributor fees, commissions, or other overhead, and generally the demand made no sense. The Agreement, which was drafted solely by Beckman, specifically provides that "Neither party shall be liable to the other party for incidental or consequential damages, or losses . . . or for lost profits or revenues of the other party." See Exhibit F, page 26, paragraph 6.3. Beckman's wrongful invoice for charges precluded by the Agremeent was further evidence of Beckman's breach, and repudiation. 34. On March 10, 2015 Beckman delivered a fabricated set of invoices to Plaintiff's accounting department seeking payment for over $1,400,000 in estimated charges for "future" supplies which it speculated "will not be ordered" over the subsequent four years. It charged California sales tax on each of the non-existent products and fraudulently invoiced Plaintiff for same (although it never remitted same to the State of California). Beckman did not furnish or deliver any of these reagents or supplies. The invoice included centers that never opened and instruments never placed in service, nor was Plaintiff under any duty to purchase four years worth of supplies in a single day. The invoices fraudulently cited "Purchase Orders" dated February 15, 2015. Plaintiff never issued such purchase orders. The invoice did not come from McKesson, from whom Plaintiff regularly ordered and was ordering reagents and supplies, but ______________________________________________________________________________ Plaintiff's Third Amended Petition and Counterdefendant's First Amended Answer Low T Center, L.L.C. v. Beckman Coulter, Inc., Cause Number DC-15-08587 Page 15 of 39 from Beckman itself. 35. At the time, Plaintiff was still ordering reagents and supplies. Under the Agreement, Plaintiff had exceeded the commitment amount of reagents even though at least three more years were left in the term of the Agreement within which Plaintiff had the right to order additional reagents and supplies. When Plaintiff received the invoice and confirmed with Beckman that Beckman was insisting that Plaintiff purchase four years worth of unusable reagents and supplies at once, Plaintiff filed this suit seeking a resolution of the contractual issue with Beckman, and seeking declaratory relief regarding the legality of Beckman's conduct and the Agreement itself. Plaintiff sought a determination that the Agreement constituted an illegal tying agreement or was otherwise unlawful. Beckman hired external counsel to represent it in this litigation and in respect to the parties' disputes. 36. Thereafter, Plaintiff learned that Beckman was refusing to permit McKesson to fill orders for reagents or supplies placed by Plaintiff, and was refusing to provide service under the Agreement, leaving many analyzers out of service and unusable. After multiple rounds of inquiries, on June 15, 2015 Bill Smith at McKesson contacted Plaintiff and informed Plaintiff that Patel, on behalf of Beckman, instructed McKesson to "hold" all orders placed by Plaintiff for any Low T Center facilities, and not to ship supplies (in violation of the Agreement). Beckman further refused to respond to Plaintiff's service calls, or maintain the equipment in the field. 37. Smith suggested obtaining necessary reagents and supplies by shipping same to HerKare facilities. When Patel learned that supplies were being shipped to HerKare locations, he, on behalf of Beckman, instructed McKesson not to service any of the analyzers, and not to fill any orders placed by Plaintiff or HerKare, regardless of the facility, all in violation of the ______________________________________________________________________________ Plaintiff's Third Amended Petition and Counterdefendant's First Amended Answer Low T Center, L.L.C. v. Beckman Coulter, Inc., Cause Number DC-15-08587 Page 16 of 39 Agreement. At all times herein, Patel was acting in the course and scope of his employment with Beckman. 38. On September 28, 2015 Plaintiff confirmed with Patel that Beckman would not service the analyzers in the field, and would no longer permit Plaintiff to purchase reagents or supplies. Without reagents and supplies, the analyzers were useless. Beckman's refusal to provide reagents and supplies made it impossible for Plaintiff to continue to purchase reagents and supplies. Without service, the unreliable Access 2 analyzers were worthless. The refusal to service the equipment, and the refusal to provide reagents and supplies, were each repudiations of and material breaches of the Agreement. Beckman then issued RMAs for every analyzer in service, and from October 2015-December 2015 Plaintiff decontaminated and uninstalled the instruments at Beckman's instruction. Plaintiff cooperated with Beckman's requests in relation to returning the instruments, and each was returned in good working order. Although it had repudiated the contract and breached same, on October 29, 2015 Patel delivered another set of fictitious invoices for reagents and supplies "not furnished" in the amount of $5,845,145.68 and demanded immediate payment of same. 39. The invoices and demand from Patel sought collection of usurious interest charges. Patel demanded payment of "interest at the rate of one and a half percent (1 1/2%) per month from the due date of the invoices, as set out in the Agreement." Beckman again refused to issue a credit for the analyzers returned pursuant to the RMAs. 40. The foregoing paragraphs are incorporated into each of the preceding and following paragraphs of this pleading as if fully set forth therein. Each cause of action is pleaded in the alternative with all facts in support of such cause of action deemed incorporated therein. ______________________________________________________________________________ Plaintiff's Third Amended Petition and Counterdefendant's First Amended Answer Low T Center, L.L.C. v. Beckman Coulter, Inc., Cause Number DC-15-08587 Page 17 of 39 TYING VIOLATIONS OF CARTWRIGHT ACT AND TEXAS FREE ENTERPRISE AND ANTITRUST ACT OF 1983 41. The U.S. Immunoassay Market is a multi-billion dollar major medical market that is expected to grow from 2012 to 2017 at a combined annual growth rate in excess of 9%. Beckman Coulter is a major player in the Immunoassay Market, and exerts market power through its high market share, as well as the unique characteristics of the market described herein. Beckman's instruments are very expensive, and typically require investments in infrastructure and planning as they are implemented into customer labs. The market has a very limited number of major competitors, namely Beckman Coulter, Abbott, Roche, Siemens, and Alere. Beckman reported in its most recent financial filings that at the time it entered a relationship with Plaintiff, these top 5 companies in the industry accounted "for over 70%" of the market. Before being acquired by Danaher Corp., Beckman stated in its public filings, "We have significant market positions in the three largest fields . . . immunoassay (18% United States; 8% worldwide) . . . " which is consistent with its status as a "Top 5" industry dominator. 42. Beckman reports in its promotional materials that in the United States, "clinical diagnostic testing informs over 60-70% of critical health care decisions." Immunoassay analyzers performing this testing require reagents and supplies to function. Other companies sell the reagents and supplies used in immunoassay analyzers, and which may include reagents, antibodies, sample diluents, conjugate stabilizer/diluents, coating buffers, wash buffers, substrates, and other disposable medical supplies (e.g. "Reagents and Supplies"). 43. Beckman rents or leases its Immunoassay instruments to customers in low or no- cost arrangements in over 81% of customer applications, in exchange for the execution of a "sole source agreement" sometimes referred to by Beckman as a "Reagent Rental Agreement." Once ______________________________________________________________________________ Plaintiff's Third Amended Petition and Counterdefendant's First Amended Answer Low T Center, L.L.C. v. Beckman Coulter, Inc., Cause Number DC-15-08587 Page 18 of 39 installed, that agreement requires the customer to purchase all of its Reagents and Supplies from Beckman, or a distributor designated by Beckman. The "sole source agreement" forecloses competition for the purchase of Reagents and Supplies by requiring customers to use Beckman or its designee as a "sole source" for these Reagents and Supplies. 44. Because of the infrastructure and planning necessary to install a Beckman device, there is a high switching cost for customers once a Beckman system has been implemented, which limits competition and holds customers captive. One industry analyst comments that "it is nigh impossible for customers to switch away from [Beckman's] clinical diagnostic products . . ." By requiring a customer to purchase Reagents and Supplies solely from Beckman as a condition of keeping the analyzer, Beckman can effectively limit competition in the Immunoassay Market once its analyzer is installed. Beckman itself reports in financial filings, "Approximately 81% of our total revenue is generated by recurring revenue from consumable supplies (including reagent test kits), services and operating type lease ('OTL') payments." At $4.8 billion in current annual revenue, Beckman generates illegal tied revenue from these arrangements in the amount of $3.89 billion every year. 45. In this case, Beckman tied the reagent rental agreement to a requirement that Plaintiff purchase Beckman supplies and reagents from Beckman exclusively through it or its designated distributor McKesson. As Plaintiff pleaded in its original petition in this cause, when a lease or rental agreement is made conditioned on the purchase of another product, the transaction constitutes an illegal tying agreement. Hamro v. Shell Oil Co., 674 F.2d 784, 787 (9th Cir. 1982). Since 1936, the antitrust laws have held that tying the provision of a lease or rental agreement, to the purchase of supplies for the equipment covered by the lease, constitutes ______________________________________________________________________________ Plaintiff's Third Amended Petition and Counterdefendant's First Amended Answer Low T Center, L.L.C. v. Beckman Coulter, Inc., Cause Number DC-15-08587 Page 19 of 39 a per se illegal tying arrangement. Intl. Bus. Machines Corp. v. U.S., 298 U.S. 131, 137 (1936). See also U.S. v. Microsoft Corp., 253 F.3d 34, 90 (D.C. Cir. 2001) - conditioning lease of one product on the purchase of a supply per se tying violation. Accord, Fortner Enterprises, Inc. v. U.S. Steel Corp., 394 U.S. 495, 509 (1969). The Cartwright Act (Cal. Bus. & Prof. Code, § 16720), and the Texas Free Enterprise and Antitrust Act of 1983, §15.05(c), each prohibit tying. “A tying arrangement under antitrust laws exists when a party agrees to sell one product (the tying product) on the condition that the buyer also purchases a different product (the tied product), thereby curbing competition in the sale of the tied product.” Freeman v. San Diego Assn. of Realtors, 77 Cal.App.4th 171, 183–184, 91 Cal.Rptr.2d 534 (1999), citing Northern Pac. R. Co. v. United States, 356 U.S. 1, 5–6, 78 S.Ct. 514, 2 L.Ed.2d 545 ((1958); see also Belton v. Comcast Cable Holdings, LLC, 60 Cal. Rptr. 3d 631, 640 (Cal. App. 1st Dist. 2007). Where such an arrangement is found, it is illegal per se; that is, the seller's justifications for the arrangement are not measured by a rule of reasonableness. An illegal tying arrangement has five elements: (1) a tying; (2) actual coercion by the seller that forced the buyer to purchase the tied product; (3) the seller must have sufficient market power in the tying product market to force the buyer to accept the tied product; (4) there are anticompetitive effects in the tied market; and (5) the seller's activity in the tied product must involve a substantial amount of interstate commerce. MJR Corp. v. B & B Vending Co., 760 S.W.2d 4, 22 (Tex. App. --Dallas 1988, writ denied); accord Logic Process Corp. v. Bell & Howell Publ'ns Sys. Co., 162 F.Supp.2d 533, 539 (N.D. Tex. 2001). Coercion means that the seller requires the buyer to purchase the tied product (reagents and supplies) in order to obtain the tying product (analyzer). RTLC AG Products, Inc. v. Treatment Equip. Co., 195 S.W.3d 824, 831 (Tex. App. --Dallas 2006). $3.89 billion annually ______________________________________________________________________________ Plaintiff's Third Amended Petition and Counterdefendant's First Amended Answer Low T Center, L.L.C. v. Beckman Coulter, Inc., Cause Number DC-15-08587 Page 20 of 39 is a substantial amount of interstate commerce. 46. A tying arrangement can be simply described as an arragement where a seller agrees to sell one product on the condition that the buyer also agrees to purchase a different product, or the buyer agrees that he will not purchase the same product from another supplier. See Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 462, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992); Apani Sw., Inc. v. Coca–Cola Enters., Inc., 300 F.3d 620, 625 (5th Cir. 2002). The product which is the inducement for the arrangement is called the “tying product” (here, Defendant's Immunoassay Analyzer) and the product or service that the buyer is required to purchase is the “tied" product (here, Reagents and Supplies). Tying arrangements usually involve circumstances where the purchaser must buy the tying and tied product from the same seller. However, an illegal tying also exists where the purchaser is required to buy the tied product from a third party (in this case, McKesson). In such situations, the third party is designated by the seller (in this case, in the sole source agreement). Suburban Mobile Homes, Inc. v. AMFAC Communities, Inc. 101 Cal.App.3d 532, 547, 161 Cal.Rptr. 811 (1980); Sports Racing Serv. v. Sports Car Club of Amer., 131 F.3d 874, 887 (10th Cir. 1997; Abraham v. Intermountain Health Care, Inc., 461 F.3d 1249, 1265 (10th Cir. 2006); SC Manufactured Homes, Inc. v. Liebert, 76 Cal. Rptr. 3d 73, 86 (Cal. App. 2d Dist. 2008), as modified on denial of reh'g (May 19, 2008). 47. In this case, Plaintiff was forced to purchase millions of dollars in Reagents and Supplies under the illegal agreement which it would not have otherwise purchased, or would have obtained from competitors. Plaintiff asserts a claim for illegal tying, and shows that the Agreement constitutes an illegal arrangement because the provision of the Access 2 Analyzer ______________________________________________________________________________ Plaintiff's Third Amended Petition and Counterdefendant's First Amended Answer Low T Center, L.L.C. v. Beckman Coulter, Inc., Cause Number DC-15-08587 Page 21 of 39 was linked to the sale of Reagents and Supplies. Defendant has sufficient economic power in the Immunoassay Market to coerce the purchase of the tied product; a substantial amount of sale was effected in the tied product; and Plaintiff sustained pecuniary loss as a consequence of the unlawful act. Plaintiff further shows that a total amount of business, substantial enough in terms of dollar-volume so as not to be merely de minimis, is foreclosed to competitors by the tie. The illegal conduct of the Defendant is the legal cause of the damages incurred by the Plaintiff. 48. Plaintiff's damages include monies it was forced to expend under the illegal agreement, costs of instrument removal and decontamination, return expenses, and other related economic damages all in excess of the minimum jurisdictional limits of this Court. Plaintiff seeks disgorgement and restitution of the illegally obtained funds, and shows that Defendant Beckman has been unjustly enriched as the result of its illegal conduct. Plaintiff further seeks treble damages and recovery of its attorneys fees and costs of court pursuant to the Cartwright Act, as well as the Texas Free Enterprise and Antitrust Act of 1983. EXCLUSIVE DEALING VIOLATIONS OF CARTWRIGHT ACT 49. Plaintiff asserts a claim under the