Medtronic finally escapes Lenox MacLaren bone mill suit

A federal judge in Colorado dismissed an anti-trust lawsuit filed against Medtronic (NYSE:MDT) by bone mill maker Lenox MacLaren Surgical, ruling that Lenox failed to name the correct Medtronic subsidiary in the suit.

Louisville, Colo.-based Lenox MacLaren 1st inked a distribution deal with Medtronic subsidiary Medtronic Sofamor Danek USA in 2000, hoping the pact would provide the scale to put the devices in every orthopedic surgical suite in the world, according to court documents.

The deal allegedly came to naught after Med USA only bought the 500 mills the contract called for, using a loaner program to create a thriving demand even as it worked to develop its own mill to usurp the Lenox MacLaren device, Lenox alleged.

Bone mills are used to grind bone samples taken from patients into uniform pieces, which are then packed into a bone void or fracture during spinal fusion procedures to help the damaged vertebrae heal. Lenox maintained that its hand-cranked device was an advance because it created uniform pieces, no matter how fast it was cranked, leaving the individual bone cells intact, according to court documents.

Lenox accused Medtronic of luring Lenox into the distribution deal to create a market for bone mills, planning to supplant her device via a false recall and replace it with its own Midas Rex mill. That case was settled in arbitration, with Lenox prevailing on a single claim: “Intentional interference with prospective business relations by the issuance of a voluntary recall of the Lenox product in October 2006, to clear it out of the marketplace and replace it with the Midas Rex,” according to court documents.

Lenox sued again after the discovery process in the 1st lawsuit revealed collusion among other Medtronic subsidiaries not named in the original suit, according to the U.S. Court of Appeals for the 10th Circuit. Medtronic argued that the arbitration clause in the contract with Lenox should be enforced. Judge Richard Matsch of the U.S. District Court for Colorado disagreed, denying the motion, and a 3-judge 10th Circuit panel upheld that decision.

Yesterday Judge Marcia Krieger, also of the Colorado federal court, ruled that Lenox lumped the various Medtronic entities together but failed to name the correct subsidiary in the lawsuit.

“Having canvassed the entirety of Lenox’s summary judgment response, the court finds that the defendants adequately demonstrated that the actions giving rise to Lenox’s monopoly claims – entry into the distribution agreement, initiation of the loaner program, and declaring the recall of the Lenox bone mills – were each conducted by Med USA. Lenox fails to present any evidence creating a genuine dispute of fact as to whether any of the named defendants here were meaningfully involved, be it individually or in concert with Med USA, with any of these actions, much less that they entered into any conspiratorial agreement with Med USA to take such actions with the specific intent of 1 of the defendants obtaining monopoly power. This precludes Lenox from maintaining, as a factual matter, a contention that the individual defendants are liable under a monopoly theory for their own individual actions or for having acted in concert with Med USA,” Krieger wrote.

In September, lawyers for Lenox MacLaren were sanctioned for not heeding prior warnings about forthrightness during discovery.

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