Legal Document: LOW T CENTER LLC vs. BECKMAN COULTER INC

On July 30, 2015 a AMENDED PETITION - 3RD was filed involving a dispute between Low T Center Llc, and Beckman Coulter Inc, for OTHER (CIVIL) in the District Court of Dallas County.

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CAUSE NUMBER DC-15-08587

LOW T CENTER, L.L.C. IN THE DISTRICT COURT
Plaintiff

BECKMAN COULTER, INC. 191st JUDICIAL DISTRICT
Defendant/Counterplaintiff

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 of
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

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.

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 of
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.

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

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.

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 of
agreements were to be performed in part in this state.

Defendant has purposefully availed itself of the privilege of conducting business

in this state.

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

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."

Beckman stipulates in paragraph 20 of itslive 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.

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 of
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.

In California, and in interstate commerce, Beckman sought to restrain competition

through the sole source agreement.

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.

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.

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 of
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.

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

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

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.

Counterdefendant Her Kare Holdings, L.L.C. is an intellectual property holding

company that owns certain trademarks. It has no relationship with Counterplaintiff.

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 of
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.

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.

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 of
laboratory analyses measuring testosterone, PSA, Prolactin, TSH, FSH, LH and SHBG (as

herein used, the "tests.") uring 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

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 of
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.)

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

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 of
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 itfailed 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.

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.

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 of
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.

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 11 of
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.

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] 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

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 of
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.

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.

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 of
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.

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.

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 itstechnicians 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 of
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.

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. Itcharged

California sales tax on each of the non-existent products and fraudulently invoiced Plaintiff for

same (although itnever 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 of
from Beckman itself.

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 itin

this litigation and in respect to the parties' disputes.

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.

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 of
Agreement. At all times herein, Patel was acting in the course and scope of his employment with

Beckman.

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.

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.

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 of
TYING VIOLATIONS OF CARTWRIGHT ACT AND
TEXAS FREE ENTERPRISE AND ANTITRUST ACT OF 1983

The U.S. Immunoassay Market is a multi-billion dollar major medical market that

is expected to grow from 2012 to 2

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SLAUGHTER, GENA Track Judge’s New Case

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Document Filed Date

January 27, 2016

Case Filing Date

July 30, 2015

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Document for LOW T CENTER LLC vs. BECKMAN COULTER INC

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