[00:00:21] Speaker 02:
Counsel, may we proceed?

[00:00:25] Speaker 02:
OK.

[00:00:25] Speaker 02:
Thank you.

[00:00:27] Speaker 02:
Go ahead, please.

[00:00:28] Speaker 04:
Good morning.

[00:00:29] Speaker 04:
May it please the court?

[00:00:32] Speaker 04:
Richard Seibert from Gordon & Reese for the appellant, the defendant below, legit script.

[00:00:40] Speaker 04:
Judge Koh, nice to see you again.

[00:00:42] Speaker 04:
I swear I'm not following you.

[00:00:44] Speaker 04:
The appellee's entire brief.

[00:00:49] Speaker 04:
The plaintiff below is premised on two points, and each one is completely wrong.

[00:00:58] Speaker 04:
First, they say over and over again that their business is legal.

[00:01:05] Speaker 04:
No, it's not.

[00:01:06] Speaker 04:
It's completely illegal.

[00:01:08] Speaker 04:
Of course it's not illegal to operate a website.

[00:01:12] Speaker 04:
And they've taken excerpts out of context from both Judge Simons and Judge Karras' decisions to that effect.

[00:01:20] Speaker 04:
But their website, the way they operate it, the purposes to which it is put and to which it is intended to be put, very much is illegal.

[00:01:31] Speaker 04:
I won't belabor it, but fully 10 pages of our opening brief.

[00:01:37] Speaker 02:
Can I ask you a question?

[00:01:38] Speaker 02:
Yes.

[00:01:38] Speaker 02:
Is it illegal to tell a US customer what the price is for a drug at a foreign pharmacy if that US customer doesn't purchase and import the drug?

[00:01:51] Speaker 02:
Is that illegal?

[00:01:52] Speaker 04:
In and of itself, it may not be illegal, but that is not this case.

[00:01:59] Speaker 04:
This case is, in addition to providing that information, the website also provides a direct link to the foreign pharmacy and customer assistance in dealing with that foreign pharmacy.

[00:02:17] Speaker 02:
But the numbers that are in the record

[00:02:20] Speaker 02:
of how many times that happens seems relatively small, right?

[00:02:25] Speaker 02:
There's the one instance of the foreign pharmacy having what, just 3.97% of click-throughs actually resulting in drug purchase and import.

[00:02:36] Speaker 02:
And then you have a handful of instances where pharmacy checkers is helping a U.S.

[00:02:42] Speaker 02:
customer deal with the foreign pharmacy following through on a purchase.

[00:02:48] Speaker 02:
That data seems relatively small.

[00:02:52] Speaker 04:
Please let me address each of those.

[00:02:55] Speaker 04:
First of all, the one instance presented in the appellee's brief of one pharmacy saying 3.47% of their inquiries resulted in click throughs is highly misleading.

[00:03:11] Speaker 04:
There are 64 foreign pharmacies.

[00:03:15] Speaker 04:
that had click-throughs out of 71 total.

[00:03:20] Speaker 04:
So the vast majority were foreign pharmacies.

[00:03:23] Speaker 04:
And what the appellee did in their brief was take one of those 64 and say, oh, they testified in the New York trial, or the New York proceeding, that 3.47 percent.

[00:03:35] Speaker 02:
We don't have another percentage, though.

[00:03:37] Speaker 02:
We do.

[00:03:38] Speaker 02:
Or the other 63 foreign pharmacies, do we?

[00:03:41] Speaker 02:
We do, Your Honor.

[00:03:41] Speaker 02:
I don't see one in the record.

[00:03:42] Speaker 02:
What is the percentage of the click-throughs that result in a purchase and importation of a drug?

[00:03:49] Speaker 04:
85% of the inquiries about foreign pharmacies resulted in a click-through, and 69.4%, or 70%, if you will,

[00:04:03] Speaker 04:
of those consumers were U.S.

[00:04:05] Speaker 04:
consumers.

[00:04:07] Speaker 04:
So you multiply those numbers, 70% times 85%, and what you get is almost 60%.

[00:04:16] Speaker 04:
of the revenue and the click-throughs for this website were U.S.

[00:04:24] Speaker 04:
consumers illegally content?

[00:04:28] Speaker 02:
I'm sorry.

[00:04:29] Speaker 02:
I don't think that answers my question, though, because you just told me that just clicking through is not in and of itself illegal.

[00:04:36] Speaker 02:
It's illegal if you buy the drug from a foreign pharmacy and import it.

[00:04:42] Speaker 02:
And those numbers don't tell me the number of purchases.

[00:04:46] Speaker 04:
Forgive me, Your Honor, that's not what I said.

[00:04:49] Speaker 04:
What I said was the appellee providing price comparison information in and of itself is not illegal.

[00:04:59] Speaker 04:
But when they go farther, when they provide a link on their website to provide a connection to that foreign pharmacy,

[00:05:07] Speaker 04:
That raises an inescapable inference that their website is not only intended to but does facilitate the illegal importation of drugs.

[00:05:21] Speaker 04:
The summary judgment standards don't require this court to check its common sense at the door.

[00:05:27] Speaker 04:
It's plain.

[00:05:28] Speaker 04:
If you look at the website, how it's set up, how it's operated, and the figures

[00:05:34] Speaker 04:
that both Judge Karras and Judge Simon dealt with show that the very purpose of this website is to facilitate illegal importation.

[00:05:43] Speaker 04:
They're not some benevolent charity providing information.

[00:05:47] Speaker 00:
So what?

[00:05:47] Speaker 00:
Pardon?

[00:05:48] Speaker 00:
Under Chapter 4 or Section 4 of the Clayton Act, so what?

[00:05:53] Speaker 00:
Even if they're facilitating illegal importations, we have cases in the Ninth Circuit that say that the revenue from illegal transactions can be the basis of a Clayton Act trouble damages.

[00:06:07] Speaker 04:
I would distinguish those cases, Your Honor, if I may.

[00:06:10] Speaker 04:
First of all, a number of the cases simply say that the unclean hands defense is not available.

[00:06:17] Speaker 04:
If the defendant says, oh, well, you're doing it too, you plaintiff are also involved in an anti-competitive conspiracy.

[00:06:25] Speaker 00:
In the Volkswagen case, it was pretty clear what was happening.

[00:06:28] Speaker 00:
He was getting a kickback.

[00:06:30] Speaker 00:
That was illegal.

[00:06:33] Speaker 04:
It was a private wrong directed against the defendant.

[00:06:38] Speaker 04:
The Ninth Circuit case is due.

[00:06:40] Speaker 00:
Are we saying that the United States government can't prosecute public wrongs?

[00:06:46] Speaker 04:
The government can, but this is not a case where the government did.

[00:06:49] Speaker 00:
This is a private antitrust suit.

[00:06:51] Speaker 00:
You should bring this up with the government.

[00:06:53] Speaker 00:
They're not enforcing the law.

[00:06:55] Speaker 00:
But why make a private person enforce the law?

[00:07:01] Speaker 04:
Your Honor, if I may, those Ninth Circuit cases are either unclean hands or, well, defendant, you should bring a counterclaim.

[00:07:12] Speaker 04:
That is not the issue in this case.

[00:07:14] Speaker 04:
What is the issue in this case?

[00:07:16] Speaker 04:
The issue here is antitrust injury.

[00:07:19] Speaker 04:
There is no right, and the cases hold this, there is no right to operate an illegal business.

[00:07:26] Speaker 04:
There's no protected right.

[00:07:28] Speaker 04:
And if there's no right to operate an illegal business, then you cannot have antitrust injury.

[00:07:35] Speaker 00:
In Calnetics versus Volkswagen, the court refused to give an instruction

[00:07:41] Speaker 00:
that the income from the illegal business was to be considered as damages.

[00:07:48] Speaker 00:
That was reversed by the Ninth Circuit unanimously.

[00:07:53] Speaker 04:
That was in the context of an evidentiary instruction.

[00:07:58] Speaker 04:
Of course.

[00:07:58] Speaker 04:
Against the background of an unclean hands defense.

[00:08:02] Speaker 04:
Again, that is not this case.

[00:08:04] Speaker 00:
Why is not this case?

[00:08:06] Speaker 04:
Because this case, Your Honor,

[00:08:12] Speaker 04:
This is the same legal issue as in Pearl Music from the Central District of California and the Modesto Irrigation District case from this circuit, where the plaintiff had no legal right to engage in the first place in the business which it claimed was damaged.

[00:08:32] Speaker 00:
Both of those district court cases?

[00:08:33] Speaker 00:
I'm sorry, sir?

[00:08:35] Speaker 00:
Both of those are district court cases, sir?

[00:08:37] Speaker 04:
I believe the Modesto Irrigation District case was the Ninth Circuit.

[00:08:42] Speaker 02:
Let me ask your point about it has to be a private wrong against the defendant.

[00:08:46] Speaker 02:
It looked like in the two U.S.

[00:08:48] Speaker 02:
Supreme Court cases, Kiefer, Stewart, and Permalife, and the Ninth Circuit's Calnetics, there were antitrust violations.

[00:08:54] Speaker 02:
So those were public wrongs, right?

[00:08:56] Speaker 02:
Those were harms to competition.

[00:08:58] Speaker 04:
Arguably, Your Honor, but they were both in the context, first of all, they were both in the context of private suits, not public suits.

[00:09:09] Speaker 04:
So what was being claimed was a private wrong.

[00:09:15] Speaker 04:
Secondly, they were both explicitly in the context of an unclean hands defense, where the defendant was saying, oh, well, you're doing it too, and therefore you don't have the right to accuse me of it.

[00:09:29] Speaker 04:
Again, I would put to the court that this is a different issue.

[00:09:34] Speaker 04:
This is a threshold issue of antitrust injury, and therefore antitrust standard.

[00:09:40] Speaker 02:
You would agree that the verification for US pharmacies, that's legitimate business, right?

[00:09:44] Speaker 04:
I'm sorry, Erin, I couldn't hear you.

[00:09:45] Speaker 02:
The verification for US pharmacies, that's legitimate business, right?

[00:09:50] Speaker 04:
Yes.

[00:09:50] Speaker 02:
OK, so why can't they at least get damages for that if there's any component of their business that's legal?

[00:09:58] Speaker 02:
Well, arguably they could.

[00:09:59] Speaker 04:
Why would you deny them?

[00:10:00] Speaker 04:
Arguably they could.

[00:10:00] Speaker 04:
And in fact, the second part of the question, which Judge Simon certified to this court, and by the way, thank you very much for accepting this interlocutory review.

[00:10:14] Speaker 04:
The second part of the question, which Judge Simon certified to this court said, well, theoretically, if you don't have standing for the facilitation of illegal conduct, what proportion of the plaintiff's business has to be illegal before they're cut off?

[00:10:34] Speaker 04:
And Judge Simon also alluded to that in the arguments on summary judgment from the bench, where he said, well, maybe any damages that they could claim from the illegal conduct wouldn't count.

[00:10:49] Speaker 04:
So that is one of the questions he has put to this court, I would argue.

[00:10:54] Speaker 04:
that were the majority of the... What is that in the record?

[00:10:59] Speaker 02:
I mean, I'm still kind of struggling with the same question.

[00:11:02] Speaker 02:
I just don't see in the record.

[00:11:05] Speaker 02:
If you're saying price comparison itself is not illegal, where is it in the record of how many of those price comparisons lead to an illegal foreign import?

[00:11:17] Speaker 04:
May I just grab my

[00:11:24] Speaker 04:
I know you're not reviewing Judge Karas's decision, but his decision from the Southern District of New York had an extensive discussion of that.

[00:11:36] Speaker 02:
With all due respect, Judge Simon's order had way more analysis than Judge Karas's.

[00:11:41] Speaker 02:
I did look at his summary judgment and motion to dismiss opinions in New York.

[00:11:47] Speaker 02:
And I didn't see a lot of the same.

[00:11:51] Speaker 02:
And obviously, there are probably other issues, but I didn't see the same extent of analysis as in Judge Simon's opinion.

[00:11:57] Speaker 04:
Your Honor, I'm very sorry.

[00:11:57] Speaker 04:
I'm having a problem hearing you.

[00:11:59] Speaker 02:
Oh, I'm sorry.

[00:12:00] Speaker 02:
I'm just saying, looking at Judge Karas's motion for summary judgment and motion to dismiss opinion, I don't quite see the extensive analysis that you're referring to.

[00:12:10] Speaker 02:
So maybe you can point me to a specific page.

[00:12:13] Speaker 04:
Sure.

[00:12:32] Speaker 04:
I would point you to one excerpt of the record, 93 through 97.

[00:12:43] Speaker 04:
Judge Karas engaged in an analysis where he found that the largest share of pharmacy checkers' revenue was from click-through fees from US consumers to foreign pharmacies.

[00:12:57] Speaker 02:
Right.

[00:12:57] Speaker 02:
But you agree that that in and of itself is not inherently illegal.

[00:13:02] Speaker 02:
I mean, you're not entitled, right, to stop people from just getting information, right?

[00:13:09] Speaker 04:
I'm not sure I would agree with that, Your Honor, if in fact the operation of the website demonstrably

[00:13:17] Speaker 04:
leads to connections with foreign pharmacies, I would argue that the logic is inescapable if the website is in fact being used not just for information, but to make those connections and to order those

[00:13:33] Speaker 04:
illegal importations.

[00:13:35] Speaker 04:
As I said, the plaintiff, the appellee, is not some benevolent charity.

[00:13:41] Speaker 04:
If they didn't get click-throughs from foreign pharmacies because of those illegal purchases, they'd be out of business in a month.

[00:13:51] Speaker 02:
So you're asking us to speculate that the only reason a foreign pharmacy would pay for click-throughs is that they must be doing enough sales to justify the marketing expense.

[00:14:00] Speaker 02:
Is that what this rests on?

[00:14:02] Speaker 04:
I'm not asking you to speculate.

[00:14:04] Speaker 04:
I'm asking you to use logic and common sense.

[00:14:08] Speaker 04:
There is no reason, and certainly none has been offered for foreign pharmacies to pay the appellee money for click-throughs unless it results in sales.

[00:14:20] Speaker 04:
Why would they?

[00:14:21] Speaker 04:
There's no reason.

[00:14:26] Speaker 02:
A lot of people pay for eyeballs, right?

[00:14:30] Speaker 02:
And a lot of those eyeballs do not result in sales.

[00:14:34] Speaker 02:
So what percentage result in sales?

[00:14:36] Speaker 02:
That's really my question because you're asking us to make an assessment of what is the percentage of illegality of this business.

[00:14:45] Speaker 04:
Businesses pay for eyeballs because those eyeballs result in revenue.

[00:14:51] Speaker 04:
And revenue occurs only from sales.

[00:14:55] Speaker 04:
That is inescapable logic.

[00:14:57] Speaker 04:
And I would respectfully submit that that's not speculation.

[00:15:01] Speaker 04:
That's common sense and logic.

[00:15:04] Speaker 04:
The sort of common sense and logic that the Supreme Court in Iqbal, for example, said has to be exercised at the pleading stage.

[00:15:12] Speaker 03:
Council I have a little bit of concern because I think your argument about illegality here would have pretty potentially significant consequences for a lot of websites where you know third parties use information and

[00:15:29] Speaker 03:
you know, use the information and links that they provide to engage in illegal activity.

[00:15:33] Speaker 03:
But putting that aside, I think there is also a question in my mind about whether there seem to be some

[00:15:43] Speaker 03:
give in the question of whether purchasing drugs from a foreign pharmacy is necessarily illegal.

[00:15:55] Speaker 03:
There seem to be some circumstances under which that wouldn't be considered a violation.

[00:16:01] Speaker 04:
They're de minimis, your honor.

[00:16:04] Speaker 03:
Exists, though, right?

[00:16:05] Speaker 04:
They exist.

[00:16:06] Speaker 04:
But they absolutely are de minimis.

[00:16:09] Speaker 04:
And if I may respond.

[00:16:10] Speaker 03:
So do you have, I mean, other than your word for it, is there evidence in the record saying that doesn't count for a significant portion of the transactions that are happening?

[00:16:19] Speaker 04:
There is no evidence of the record to indicate that it accounted for anything in terms of revenue to the appellee.

[00:16:28] Speaker 04:
And perhaps that's one thing.

[00:16:29] Speaker 03:
Well, whose burden is it to show?

[00:16:30] Speaker 04:
Sorry?

[00:16:31] Speaker 03:
Whose burden is it to show that this business is

[00:16:36] Speaker 04:
It is fully illegal.

[00:16:37] Speaker 04:
It is the appellees, the plaintiffs below, burdened to show antitrust standing.

[00:16:44] Speaker 04:
And they cannot do so because there's no antitrust injury here.

[00:16:49] Speaker 04:
And if I may respectfully, Your Honor, this is not a case where the website merely provides information.

[00:16:57] Speaker 04:
Even though arguendo, you could use logic on that one, too.

[00:17:01] Speaker 04:
This is a case where the website provides information

[00:17:06] Speaker 04:
then provides a link, and the website operator then gets revenues because of those links and because of those click-throughs, and where they actively assist the customers who have problems in effecting those links.

[00:17:21] Speaker 04:
This is far more than a website that merely provides information.

[00:17:28] Speaker 04:
If I may, Your Honors, I'm not sure I have any time to reserve.

[00:17:33] Speaker 02:
You're two minutes over, but I'll give you a minute.

[00:17:36] Speaker 04:
I'd like to reserve it for a rebuttal, please.

[00:17:39] Speaker 02:
Sure.

[00:17:39] Speaker 04:
Thank you very much.

[00:17:40] Speaker 02:
All right.

[00:17:41] Speaker 02:
Thank you.

[00:17:42] Speaker 02:
And if my colleagues have more questions, you can go over a minute.

[00:17:45] Speaker 02:
And if my colleagues have more questions, you can go over a minute to answer their questions.

[00:17:50] Speaker 02:
Thank you.

[00:18:05] Speaker 01:
Good morning, Your Honors, and may it please the Court.

[00:18:08] Speaker 01:
My name is Aaron Gott, and I represent Pharmacy Checker, the plaintiff and appellee in this matter.

[00:18:14] Speaker 01:
It would contravene Supreme Court and Ninth Circuit precedent for this Court to fashion a new rule that deprives a plaintiff of an antitrust cause of action and immunizes an antitrust defendant when the plaintiff's business is entirely legal.

[00:18:30] Speaker 01:
That's what Judge Simon, the district court, said.

[00:18:32] Speaker 02:
How is your business entirely legal?

[00:18:36] Speaker 02:
I'm looking at these web pages.

[00:18:38] Speaker 02:
It's so clear that you are trying to make foreign pharmaceuticals that are prohibited to be imported into the United States available to U.S.

[00:18:47] Speaker 02:
customers.

[00:18:48] Speaker 01:
Respectfully your honor.

[00:18:49] Speaker 01:
That's incorrect Pharmacy checkers business is entirely legal pharmacy checker is not involved in any drug transactions And it is not illegal Like you said before and like your honors were saying before so when you facilitate the sale and then a US customer has problems with their foreign pharmacy and you Facilitate that sale by following up with that foreign pharmacy.

[00:19:15] Speaker 02:
You're saying that's not involvement in illegal activity and

[00:19:18] Speaker 01:
That's correct, Your Honor.

[00:19:20] Speaker 01:
There's big F facilitation and then there's little F facilitation.

[00:19:26] Speaker 01:
Pharmacy checker has never been found to engage in any sort of big F facilitation, for one thing.

[00:19:35] Speaker 02:
And by big F, you mean what?

[00:19:37] Speaker 01:
There is actually criminal facilitation of drug importation.

[00:19:43] Speaker 01:
And if I could back up and talk a little bit about what is and is not illegal, it's actually not illegal to import drugs.

[00:19:51] Speaker 01:
Most drugs, most prescription drugs in the United States are manufactured abroad and imported usually by the manufacturer before they're sold.

[00:20:04] Speaker 01:
So it is illegal to import unapproved or misbranded drugs.

[00:20:10] Speaker 01:
There are exceptions to importing misbranded drugs, and it's actually really easy to qualify for an exception to importing misbranded drugs.

[00:20:19] Speaker 01:
The biggest one is that you have to have a prescription.

[00:20:23] Speaker 01:
It's supervision by a licensed physician is the biggest exception to it.

[00:20:29] Speaker 01:
We never got to this in the district court below.

[00:20:33] Speaker 01:
We did get to this question in the Southern District of New York.

[00:20:38] Speaker 01:
It's in the briefing there.

[00:20:40] Speaker 01:
It's a regulatory exemption, and a lot of the

[00:20:48] Speaker 01:
A lot of exceptions, as you were just discussing with my colleague, a lot of the exceptions to importation fall under that particular exception.

[00:21:00] Speaker 01:
And it's not inescapable logic.

[00:21:04] Speaker 02:
But you're saying this was not before the Oregon District Court?

[00:21:07] Speaker 01:
Correct.

[00:21:08] Speaker 02:
So then why is it appropriate to be raising it now?

[00:21:11] Speaker 01:
Well, it just didn't come up because Judge Simon never got to that question.

[00:21:15] Speaker 01:
It was in the briefing in New York.

[00:21:19] Speaker 00:
If Judge Simon didn't rule on that question, why should we get to it?

[00:21:25] Speaker 01:
You shouldn't get to it because that's just not before the court.

[00:21:28] Speaker 01:
There's no question about whether or not pharmacy checkers' business was legal.

[00:21:33] Speaker 00:
This is an interlocutory appeal of what Judge Simon ruled on.

[00:21:38] Speaker 00:
Right.

[00:21:39] Speaker 00:
So I can just stick with that.

[00:21:40] Speaker 01:
Right, Your Honor.

[00:21:41] Speaker 01:
That is correct.

[00:21:42] Speaker 01:
And based on the record below, there is no basis to find that pharmacy checkers' business was operating illegally.

[00:21:52] Speaker 01:
Judge Simon found.

[00:21:53] Speaker 03:
So I can understand.

[00:21:55] Speaker 03:
So technically, the question that Judge Simon certified is if a business is

[00:22:03] Speaker 03:
partly legal, maybe partly illegal, does it have any trust standing?

[00:22:11] Speaker 03:
So your opposing counsel is arguing, well, that's the wrong question because it's 100% illegal.

[00:22:19] Speaker 03:
And is your position that we can't accept that because Judge Simon didn't find that?

[00:22:28] Speaker 03:
At this stage of the proceedings, there was no finding by Judge Simon of a hundred percent illegal out illegality.

[00:22:33] Speaker 03:
So that's just not the question before us.

[00:22:36] Speaker 01:
No, that's I'm sorry, your honor.

[00:22:37] Speaker 01:
That's that's not what I'm saying.

[00:22:39] Speaker 03:
Can we reach the question?

[00:22:40] Speaker 03:
Like, can we decide that threshold question on this record?

[00:22:44] Speaker 03:
Or do we need more evidence if we thought that made a difference?

[00:22:48] Speaker 03:
Would we have to remand?

[00:22:50] Speaker 01:
I think if you thought it made a difference, I think remand would be appropriate.

[00:22:53] Speaker 01:
But you could, you do have jurisdiction on a 1292 appeal, an interlocutor appeal.

[00:23:00] Speaker 01:
It's supposed to be for controlling questions of law.

[00:23:04] Speaker 01:
And I think the idea is you should decide the controlling question of law.

[00:23:11] Speaker 01:
But you do have jurisdictions.

[00:23:12] Speaker 01:
So you could review a summary judgment decision.

[00:23:15] Speaker 03:
I guess putting aside, yes, we have

[00:23:17] Speaker 03:
Technical jurisdiction.

[00:23:19] Speaker 03:
I guess the question is the record Yeah, so if is the question of whether pharmacy checker is a hundred percent illegal or partially illegal Turn on facts that are not yet developed in the record are still disputed I think judge Simon lamented the fact that that legit script didn't present sufficient facts Well, their argument is that it's your burden to prove that

[00:23:43] Speaker 03:
standing, statutory standing here, and that's your burden to prove that you're not 100% illegal, if I understand their position correctly.

[00:23:55] Speaker 01:
Yes, Your Honor.

[00:23:56] Speaker 01:
Legitscript does have, on summary judgment, is the movement does have the burden of initial production, and we have the burden of persuasion, because it is an element.

[00:24:05] Speaker 03:
It's a little bit, because they were the moving party, so the burden is a little bit.

[00:24:09] Speaker 01:
Right.

[00:24:09] Speaker 01:
And we did produce, or we did, as part of our opposition, did produce our statement, our statement opposing, our statement of material facts,

[00:24:24] Speaker 01:
can't remember what the title of the document was, on summary judgment in New York.

[00:24:29] Speaker 01:
So we did produce sufficient documents to oppose summary judgment.

[00:24:35] Speaker 01:
So we do have a factual record.

[00:24:37] Speaker 01:
I don't think LegitScript produced sufficient documents to meet its burden, if that answers the question.

[00:24:45] Speaker 03:
Can you drill down on what you would say shows that at least a portion of the activity is legal?

[00:24:53] Speaker 01:
I'm sorry, could you ask a question?

[00:24:55] Speaker 03:
What would you point to in the record to prove that at least a portion of the activity is legal?

[00:25:02] Speaker 01:
All of Pharmacy Checker's activity is legal, because Pharmacy Checker is not involved in any drug transaction, period, Your Honor.

[00:25:09] Speaker 01:
Pharmacy Checker provides links to websites.

[00:25:12] Speaker 01:
Pharmacy Checker does not... Once a customer

[00:25:16] Speaker 01:
a user of its website clicks on a link, it goes to that website, pharmacy checker has no visibility into what happens after that.

[00:25:27] Speaker 01:
It's gone.

[00:25:27] Speaker 03:
What about the assertion that pharmacy checker will facilitate if there's a problem, if the person clicking through has a problem with their transaction with the foreign pharmacy?

[00:25:39] Speaker 01:
As Judge Simon observed in his opinion, there are, I think, three examples over a 15 or 20 year period that were identified in the record where somebody had contacted Pharmacy Checker customer service and had said, can you help me with this?

[00:25:57] Speaker 01:
And Pharmacy Checker doesn't verify whether or not that person actually clicked from a Pharmacy Checker link.

[00:26:03] Speaker 01:
They will contact that pharmacy that's credited through pharmacy checkers program and say, hey, this person says that they ordered something from you.

[00:26:15] Speaker 01:
Can you help remedy the problem?

[00:26:17] Speaker 01:
Because pharmacy checker doesn't want the pharmacies that it credits as a safe pharmacy that's responsive to the people that order things from them to be ripping people off.

[00:26:27] Speaker 01:
It doesn't want people to be ripped off.

[00:26:30] Speaker 02:
You're not challenging that those three examples involve foreign drug sales facilitated by pharmacy checkers, are you?

[00:26:37] Speaker 01:
Uh, not challenging that they, I mean, it's, it's hearsay.

[00:26:43] Speaker 01:
I mean, we assume that that probably happened, but we don't know whether or not it did.

[00:26:47] Speaker 01:
We didn't verify any of it.

[00:26:49] Speaker 01:
We know that the customer contacted pharmacy checker and we contacted the pharmacy to say, can you take care of this person?

[00:26:55] Speaker 01:
We don't know what the ultimate result was, whether or not

[00:26:58] Speaker 01:
whether or not the importation actually occurred, whether or not a subsequent importation occurred, or whether or not that importation was illegal, because it could have been that that drug was not imported.

[00:27:10] Speaker 02:
But you know that that sale happened through the connection made by pharmacy checkers, right?

[00:27:15] Speaker 01:
We don't know that, Your Honor.

[00:27:16] Speaker 01:
We know that it's likely that it did, but we don't know that it actually did.

[00:27:20] Speaker 01:
All we know is that we got contacted.

[00:27:21] Speaker 02:
You just help anybody.

[00:27:23] Speaker 01:
Well, there's no way to verify.

[00:27:25] Speaker 01:
There's no way to verify it.

[00:27:26] Speaker 01:
Pharmacy Checker, well, anybody that contacts Pharmacy Checker since there's a problem with a website that you're accredited by, Pharmacy Checker is happy to help that person out because they stand by the accreditations that they make.

[00:27:39] Speaker 02:
And again, it is not- So what are the damages that you're seeking?

[00:27:42] Speaker 02:
Are you seeking lost revenue tied to these illegal sales?

[00:27:46] Speaker 02:
No, Pharmacy Checker's seeking- What damages are you seeking?

[00:27:47] Speaker 02:
What percentage is it legal?

[00:27:49] Speaker 02:
What percentage is illegal?

[00:27:51] Speaker 01:
There's nothing that's illegal, Your Honor.

[00:27:53] Speaker 01:
Pharmacy checkers revenue is based on click-throughs to pharmacies.

[00:27:59] Speaker 01:
Click-throughs to all pharmacies, whether that's U.S., foreign, or whatever.

[00:28:05] Speaker 01:
And by the way, there's no inescapable logic.

[00:28:09] Speaker 02:
If your connection to a foreign pharmacy with a U.S.

[00:28:14] Speaker 02:
customer resulted in illegal importation of a drug, you still want damages on that sale.

[00:28:21] Speaker 01:
absolutely your honor absolutely and by the way that

[00:28:25] Speaker 01:
The click-throughs, we only have numbers for one or two pharmacies.

[00:28:29] Speaker 01:
And those were numbers from pharmacies that were third-party subpoenas by the defendants.

[00:28:36] Speaker 01:
And those numbers show that maybe 3% of click-throughs result in a transaction.

[00:28:41] Speaker 01:
Now, by the way, only about 60% of pharmacy checkers' website visitors are US-based users.

[00:28:53] Speaker 01:
We don't know whether those click-throughs lead to purchases that lead to imports, whether they could be buying drugs for shipping to their kids that are studying abroad.

[00:29:03] Speaker 01:
There's a lot of inferences and assumptions that are being made, and we're talking about summary judgment.

[00:29:08] Speaker 02:
So were third-party subpoenas made to the 64 foreign pharmacies?

[00:29:12] Speaker 01:
I don't know if they were all 64.

[00:29:15] Speaker 01:
These were the defendant's subpoenas.

[00:29:18] Speaker 01:
There were subpoenas or letters of rogatory made to a number of them.

[00:29:25] Speaker 00:
Mr. Gottman, I have a sort of preliminary question to you.

[00:29:29] Speaker 00:
Sure.

[00:29:30] Speaker 00:
It seems that you're arguing an issue that Judge Simon did not consider, whether there is any facilitation of illegal importation.

[00:29:43] Speaker 00:
His question was whether plaintiffs alleged facilitation of unlawful activities by others bars its antitrust standing.

[00:29:53] Speaker 00:
not whether your business did not facilitate illegal importation.

[00:30:01] Speaker 00:
So why don't you discuss the basis of Judge Simon's ruling?

[00:30:07] Speaker 00:
Well, the basis of Judge Simon's ruling is that they're assuming your business is facilitating illegal importation, you still have antitrust standing.

[00:30:19] Speaker 00:
You don't want to take that position?

[00:30:21] Speaker 01:
Absolutely want to take that position well, I thought so And that's the point here your honor if I could I'm going to engage a little show-and-tell here.

[00:30:31] Speaker 01:
This is my son Harrison Harrison was not born when this case was filed He was born in September of 2019 this case was filed in August of 2019 I've missed the first hearing in this case

[00:30:45] Speaker 01:
September 10th, 2019, because that was Harrison's birthday.

[00:30:49] Speaker 01:
He came about two weeks early.

[00:30:52] Speaker 01:
We're here today on a summary judgment.

[00:30:56] Speaker 01:
And we have yet to get into discovery on a defendant's anticompetitive conduct.

[00:31:04] Speaker 01:
Five years later, I just submitted his kindergarten enrollment.

[00:31:08] Speaker 01:
And we have yet to litigate antitrust issues in this antitrust case because we've been focused on the alleged wrongful conduct of not even the plaintiff, but parties at the plaintiff.

[00:31:22] Speaker 03:
Okay, I'm sorry, counsel, but on the question, the legal question, the argument is that if your business is 100% illegal,

[00:31:32] Speaker 03:
that that would distinguish this case from all the other cases decided by the Supreme Court and this court that said some illegality does not affect antitrust standing.

[00:31:45] Speaker 03:
Or that the nature of the illegality here is different because it's not a private

[00:31:53] Speaker 03:
illegality between the defendant and the plaintiff or it's not in itself the antitrust illegality but it's a whole your business just cannot be.

[00:32:03] Speaker 03:
That's the argument and they're saying if a business cannot be there's no antitrust injury.

[00:32:08] Speaker 03:
So can you address that argument?

[00:32:12] Speaker 01:
Well, I don't think you have to reach that question here, Your Honor, because that's not the case here.

[00:32:18] Speaker 01:
Now, I know the court, this court has reserved the question for the possibility where there's completely illegal enterprise, where there's no saving grace whatsoever, whether or not that might be the one case where there's no antitrust cause of action.

[00:32:38] Speaker 01:
But here, pharmacy checker has plenty of lawful business, even if you were to assume that it's engaged in big F facilitation and that mere practice of providing links was illegal.

[00:32:51] Speaker 01:
Pharmacy checker is used by, its price comparisons are used by

[00:32:56] Speaker 01:
by policymakers, by journalists.

[00:32:59] Speaker 01:
There are First Amendment concerns there.

[00:33:01] Speaker 01:
It has a U.S.

[00:33:03] Speaker 01:
pharmacy discount card that's used that helps patients save money.

[00:33:08] Speaker 01:
Its entire mission is driven towards helping people save money on pharmacy products.

[00:33:13] Speaker 00:
Mr. Gutt, you're arguing a case that Judge Simon hasn't certified to this court.

[00:33:21] Speaker 01:
I'm sorry, Your Honor, but I believe you.

[00:33:22] Speaker 00:
If you don't win, then you have to go back.

[00:33:25] Speaker 00:
Why did you argue the case that we have before us?

[00:33:29] Speaker 01:
I believe I am, Your Honor.

[00:33:31] Speaker 01:
I think it's right in the introduction of Judge Simon's opinion.

[00:33:34] Speaker 03:
So I understand your argument about that your strong position is that pharmacy checkers not 100% illegal from the get-go.

[00:33:45] Speaker 03:
Let's put that aside for a second, assuming that it is.

[00:33:49] Speaker 03:
How does that affect the antitrust scanning?

[00:33:51] Speaker 03:
And I understand you're acknowledging that that remains an open question in this circuit.

[00:33:56] Speaker 03:
How should we answer it?

[00:33:57] Speaker 01:
Well, Your Honor, I think that you should answer that the antitrust laws, the drug laws address the drug laws.

[00:34:04] Speaker 01:
The antitrust laws address the problem of competition.

[00:34:09] Speaker 01:
And competition is

[00:34:13] Speaker 01:
public is a competition under under this court's precedent and Supreme Court precedent the antitrust for laws reign supreme there's no consideration for unsafe goods compliance with other laws or anything else under Kiefer Stewart Calnetics Memorex and

[00:34:40] Speaker 01:
And all of the other cases that are cited in our brief from the Ninth Circuit and the Supreme Court, there is no place for a new rule that deprives a plaintiff of an antitrust cause of action or that immunizes an antitrust defendant.

[00:35:01] Speaker 01:
when based on the plaintiff's conduct or based on the conduct of a third party, regardless of whether that conduct is entirely legal, entirely illegal or not.

[00:35:17] Speaker 01:
Thank you, Your Honors.

[00:35:21] Speaker 02:
All right.

[00:35:21] Speaker 02:
Go ahead, please, with your rebuttal.

[00:35:25] Speaker 04:
go ahead please with your rebuttal uh... thank you very briefly i'll just make two points in rebuttal your honors thank you for the opportunity

[00:35:35] Speaker 04:
First of all, I can't believe I heard my esteemed opponents say that it's not illegal to import foreign drugs.

[00:35:43] Speaker 04:
It most certainly is.

[00:35:45] Speaker 04:
That's the Canadian antitrust litigation from the Eighth Circuit, and it's by statute as well, 21 U.S.

[00:35:53] Speaker 04:
Code, 333, the Federal Food, Drug, and Cosmetic Act.

[00:35:58] Speaker 04:
And under 18 U.S.

[00:36:00] Speaker 04:
Code, Section 2, aiding and abetting the Commission of Criminal Conduct, the aider and abetter is just as liable as the direct defendant.

[00:36:14] Speaker 04:
I mean, this is a case like the movie Casablanca.

[00:36:17] Speaker 02:
But Judge Karras.

[00:36:18] Speaker 02:
Sorry?

[00:36:18] Speaker 02:
Judge Karras in New York specifically found there was no criminal facilitation here, right?

[00:36:24] Speaker 02:
He didn't get to the— No, he specifically said he was not making that finding.

[00:36:28] Speaker 04:
Your Honor, first of all, you're not reviewing Judge Karras.

[00:36:33] Speaker 04:
Second of all, this is de novo review.

[00:36:36] Speaker 04:
This panel is perfectly entitled to examine that question and reach whatever conclusion it wishes.

[00:36:41] Speaker 02:
This is Judge Karras.

[00:36:41] Speaker 02:
Semantic similarity aside, the Court at no point decided that pharmacy checkers itself violated federal law or that PCC engaged in something akin to criminal facilitation.

[00:36:51] Speaker 04:
It didn't reach the issue, in other words.

[00:36:55] Speaker 04:
If this court enunciates the correct standard, you can send the case back to Judge Simon and examine that.

[00:37:05] Speaker 04:
This is an instance like the movie Casablanca where you're shocked, just shocked to find out that there's gambling going on at the cafe.

[00:37:15] Speaker 04:
Of course, that's the purpose of the website.

[00:37:18] Speaker 04:
The second point I would make is nobody has suggested, and we're not suggesting... Do you have a case suggesting that

[00:37:28] Speaker 03:
Because Judge Simon found that the business was legal, at least from what I am looking here.

[00:37:37] Speaker 03:
And let's assume some of the transactions are legal and some of them are illegal.

[00:37:44] Speaker 03:
You're saying because the purpose, far more than the alleged purpose, is illegal.

[00:37:49] Speaker 03:
It doesn't matter that some of the transactions it facilitates are legal.

[00:37:54] Speaker 03:
Do you have a case for that proposition?

[00:37:57] Speaker 04:
I do.

[00:37:58] Speaker 04:
The Wiley case, W-Y-L-E, that we have cited, I think it was our reply brief, said that basically in any event, an antitrust plaintiff could not recover damages from activities that are illegal.

[00:38:17] Speaker 04:
And Judge Simon himself alluded to this possibility

[00:38:22] Speaker 04:
in his comments from the bench.

[00:38:25] Speaker 04:
We cited to that in a footnote, the excerpts of record, a footnote in our opening brief.

[00:38:31] Speaker 04:
And also, Judge Simon's certification of the question to this panel itself raises that possibility.

[00:38:39] Speaker 04:
Because the second part of his question said, OK, if illegality is a metric, what proportion

[00:38:49] Speaker 04:
the plaintiff's business has to be illegal before they have no standing.

[00:38:54] Speaker 03:
That was a little bit of a different question you're answering, not quite answering my question.

[00:38:59] Speaker 03:
My question was, if the website facilitates some transactions that are legal and some that are illegal, you're saying the fact that it

[00:39:12] Speaker 03:
Some percentage of its business illegal means the entire business from the get-go, its purpose must be illegal, that it essentially has no right to exist.

[00:39:22] Speaker 03:
That's what I understand your argument to be.

[00:39:25] Speaker 04:
Respectfully, Your Honor, there's a little bit beyond that.

[00:39:30] Speaker 04:
And again, I recognize that you are not reviewing Judge Karras's decision.

[00:39:36] Speaker 04:
But nevertheless, it's instructive.

[00:39:39] Speaker 04:
Judge Karras said the best metric, the best tracking metric, first of all, he posited the standard is largely or entirely geared towards facilitating illegal conduct.

[00:39:53] Speaker 04:
That's what he posited as the test.

[00:39:56] Speaker 04:
And he said the best metric is tracking where the revenue comes from.

[00:40:01] Speaker 04:
And he found that the vast majority

[00:40:04] Speaker 04:
of pharmacy checkers revenue came from these click-throughs and the payments from foreign pharmacies.

[00:40:11] Speaker 04:
And plainly, the foreign pharmacies wouldn't be paying money unless they got something out of it.

[00:40:15] Speaker 04:
What they get is the sales.

[00:40:18] Speaker 04:
So no one has ever said that the standard is it has to be 100% illegal.

[00:40:25] Speaker 02:
But what you keep saying

[00:40:27] Speaker 02:
Well, any corporation or company would not pay for advertising unless it resulted in a sale.

[00:40:35] Speaker 02:
But what percentage of sales is resulting here?

[00:40:40] Speaker 02:
That is a different standard for every company.

[00:40:43] Speaker 02:
No one is saying,

[00:40:45] Speaker 02:
For every click through there must be 100% sale and importation of a drug.

[00:40:50] Speaker 02:
Otherwise, I'm not going to spend the money to get the eyeballs.

[00:40:53] Speaker 02:
So what is the percentage here?

[00:40:55] Speaker 02:
Because you're asking us to make an assessment of the percentage of illegality of this enterprise.

[00:41:02] Speaker 04:
What is the sale?

[00:41:03] Speaker 04:
We or any court?

[00:41:05] Speaker 02:
No, but you keep saying rely on common sense earlier.

[00:41:07] Speaker 02:
So what does common sense dictate in terms of the percentage of sales that results from the click throughs?

[00:41:14] Speaker 04:
I would argue that logic and common sense track what Judge Karras said.

[00:41:22] Speaker 04:
He said the best way to measure that is where the revenue comes from.

[00:41:26] Speaker 04:
And if the revenue comes from foreign pharmacies, if x percent of the revenue comes from... So what is the percentage of sales that result from the foreign pharmacy click-throughs?

[00:41:36] Speaker 02:
What does common sense tell us is that number?

[00:41:38] Speaker 04:
60 percent, 59.6 percent.

[00:41:40] Speaker 04:
And where do you get that from?

[00:41:43] Speaker 04:
85% of, I may be getting this inverted, but 70% of the payments to pharmacy checker from pharmacies come from foreign pharmacies.

[00:42:01] Speaker 04:
64 out of 71 of the pharmacies that pay the money are foreign.

[00:42:06] Speaker 03:
So as you are, there's a difference here between damages and standing.

[00:42:12] Speaker 03:
you're trying to rely on standing.

[00:42:15] Speaker 03:
So my understanding of your standing argument is that there's no standing here because pharmacy checker as an entity is an illegal business and that even though some of its transactions and some of its activities would be entirely legal,

[00:42:35] Speaker 03:
just providing information on the internet, just providing links to websites, technically all legal.

[00:42:42] Speaker 03:
That because it has an illegal purpose, we should find that the business should not exist as a lawful matter.

[00:42:49] Speaker 03:
Therefore, it has no possible legal injury for purposes of antitrust.

[00:42:57] Speaker 03:
That's your argument.

[00:42:58] Speaker 03:
Is that correct?

[00:42:59] Speaker 04:
That's one of my arguments.

[00:43:00] Speaker 03:
OK, that's the argument I'm focusing on.

[00:43:02] Speaker 03:
Do you have a case that says a business that does some legal activity and some illegal activity should be deemed entirely illegal under somewhat analogous facts here?

[00:43:20] Speaker 04:
The first case that comes to mind is, in fact, Judge Karras's decision.

[00:43:25] Speaker 03:
It's something binding on this court.

[00:43:29] Speaker 04:
I'd have to go back and look, and I'd be happy to submit a bench memo if that would be helpful.

[00:43:35] Speaker 02:
I don't think that would be helpful.

[00:43:36] Speaker 02:
But I'll ask my colleagues if they disagree.

[00:43:40] Speaker 02:
No?

[00:43:41] Speaker 02:
Judge Song, would you like?

[00:43:42] Speaker 02:
No.

[00:43:42] Speaker 02:
No, thank you.

[00:43:43] Speaker 02:
Thank you for the offer, though.

[00:43:44] Speaker 02:
All right.

[00:43:44] Speaker 02:
You've gone more than nine minutes over your time.

[00:43:46] Speaker 02:
Thank you very much for your arguments.

[00:43:48] Speaker 02:
Thanks to both counsels for your arguments today.

[00:43:51] Speaker 02:
This matter is now submitted, and we're adjourned for the day.

[00:43:55] Speaker 02:
Thank you all.

[00:43:56] Speaker 03:
All rise.