Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Pemberton v. Anderson

United States District Court, D. Minnesota

September 10, 2019

SALLY PEMBERTON, derivatively and on behalf of Patterson Companies, Inc., Plaintiff,
v.
SCOTT P. ANDERSON; ANN B. GUGINO; MARK S. WALCHIRK; JOHN D. BUCK; ALEX N. BLANCO; JODY H. FERAGEN; SARENA S. LIN; ELLEN A. RUDNICK; NEAL A. SCHRIMSHER; LES C. VINNEY; JAMES W. WILTZ; PAUL GUGGENHEIM; DAVID MISIAK; TIM ROGAN; Defendants, and PATTERSON COMPANIES, INC., Nominal Defendant.

          Phillip Kim, THE ROSEN LAW FIRM, P.A.; Mark E. Czuchry, CZUCHRY LAW FIRM, LLC; Timothy W. Brown, THE BROWN LAW FIRM, P.C., for plaintiff.

          Patrick S. Williams, Aaron G. Thomas, and Jordan L. Weber, BRIGGS AND MORGAN, P.A., for defendants.

          ORDER

          Patrick J. Schiltz United States District Judge

         Plaintiff Sally Pemberton, on behalf of nominal defendant Patterson Companies, Inc. (“Patterson”), brings this shareholder-derivative action against 14 current and former officers and directors of Patterson, alleging violations of federal securities law, breaches of fiduciary duty, unjust enrichment, and waste of corporate assets arising out of Patterson's alleged participation in an antitrust conspiracy. Defendants have moved to dismiss, arguing that Pemberton failed to make a pre-suit demand on Patterson's board of directors. For the reasons that follow, the Court grants defendants' motion and dismisses the complaint without prejudice.

         I. BACKGROUND

         Patterson is a Minnesota corporation with its principal executive offices in St. Paul, Minnesota. Compl. ¶ 25. Patterson operates Patterson Dental, which sells supplies, equipment, and services to dental practitioners. Compl. ¶ 2. Patterson is the second-largest distributor of dental supplies and equipment in the United States. Compl. ¶ 2. Patterson and its chief competitors, Benco Dental Supply Co. (“Benco”) and Henry Schein, Inc. (“Schein”), together control about 85 percent of the “sale of all dental products and services made through distributors in the United States.” Compl. ¶ 3.

         Pemberton alleges that Patterson, Benco, and Schein engaged in a long-running and wide-ranging antitrust conspiracy. One aspect of the alleged conspiracy involved a boycott of group purchasing organizations (“GPOs”). In recent years, independent dentists have formed GPOs to combine purchasing power and gain leverage to negotiate lower prices from distributors. Compl. ¶ 4. Pemberton alleges that Patterson, Benco, and Schein conspired to refuse to offer discounted prices or otherwise negotiate with GPOs. Compl. ¶ 5. Pemberton also alleges that these distributors engaged in other anticompetitive conduct pursuant to the conspiracy, including fixing margins on dental supplies and equipment, blocking the entry of rival distributors into the market, and agreeing not to poach one another's customers or sales representatives. Compl. ¶ 5. Pemberton alleges that, as a result of the individual defendants' participation in or failure to prevent this misconduct, Patterson has been damaged in multiple ways, including by being exposed to investigations, legal fees, lawsuits, and settlements. Compl. ¶¶ 214-21.

         On February 12, 2018, the Federal Trade Commission (“FTC”) filed an administrative complaint against the distributors, accusing them of antitrust violations. Compl. ¶ 6. The FTC complaint alleges that the distributors have conspired since at least 2013 to fix the prices of dental-supply products and refuse to sell to GPOs. Compl. ¶ 6.

         II. ANALYSIS

         A. Standard of Review

         In reviewing a motion to dismiss for failure to state a claim under Fed.R.Civ.P. 12(b)(6), a court must accept as true all of the factual allegations in the complaint and draw all reasonable inferences in the plaintiff's favor. Aten v. Scottsdale Ins. Co., 511 F.3d 818, 820 (8th Cir. 2008). Although the factual allegations need not be detailed, they must be sufficient to “raise a right to relief above the speculative level . . . .” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The complaint must “state a claim to relief that is plausible on its face.” Id. at 570.

         B. Demand Futility

         “A shareholder derivative suit is a creation of equity in which a shareholder may, in effect, ‘step into the corporation's shoes and . . . seek in its right the restitution he could not demand in his own.'” In re UnitedHealth Grp. Inc. S'holder Derivative Litig., 754 N.W.2d 544, 550 (Minn. 2008) (quoting Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 548 (1949)). “A derivative action actually belongs to the corporation, but the shareholders are permitted to bring the action where the corporation has failed to take action for itself.” Janssen v. Best & Flanagan, 662 N.W.2d 876, 882 (Minn. 2003).

         Before filing a derivative suit, a shareholder must ordinarily make a demand on the corporation's board of directors. Winter v. Farmers Educ. Coop. ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.