-
Ninth Circuit Panel Affirms Ruling That “Unclean Hands” Does Not Bar Antitrust Standing
06/17/2025On May 23, 2025, a panel for the United States Court of Appeals for the Ninth Circuit addressed the application of the “unclean hands” doctrine to antitrust standing. PharmacyChecker.com LLC v. LegitScript LLC, No. 24-2697 (9th Cir. May 23, 2025). The Ninth Circuit affirmed a lower court decision to deny defendant’s motion for summary judgment. Defendant, which asserted a “unclean hands” defense, contended that plaintiff facilitated illegal conduct and thus lacked standing to raise an antitrust claim. In affirming the decision of the United States District Court for the District of Oregon, the Court rejected the use of the “unclean hands” doctrine as a bar to standing. The Circuit Court’s ruling held that a plaintiff’s tangential connection to unlawful conduct does not necessarily bar antitrust claims. Succinctly summarizing its opinion, the Ninth Circuit stated that “[t]wo wrongs don't make a right [] nor do they necessarily cancel each other out.”
Plaintiff operates a website that accredits online pharmacies worldwide and publishes comparative drug-price information. Plaintiff’s revenue comes largely from verification fees paid by accredited pharmacies and click-through fees triggered when users follow hyperlinks from plaintiff’s site to those pharmacies. Defendant offers competing online-pharmacy verification and monitoring services.
Plaintiff alleges that defendant, together with several trade-association allies (“Trade Association Defendants”), engaged in exclusionary tactics—including a concerted refusal to deal, public disparagement, and search-engine suppression campaign—that drove traffic and customers away from plaintiff in violation of the Sherman Act’s prohibitions on group boycotts. Defendant has defended its conduct, highlighting that plaintiff’s business model encourages—or at least facilitates—unlawful personal importation of prescription drugs into the United States, conduct generally prohibited by the Federal Food, Drug, and Cosmetic Act, and therefore any injury plaintiff claims is not a legally cognizable antitrust injury.
Plaintiff initially filed suit against both defendant and the Trade Association Defendants in the United States District Court for the Southern District of New York. The Southern District of New York transferred the claim against defendant to the District of Oregon for lack of personal jurisdiction. Subsequently, the Southern District of New York granted summary judgment to the Trade Association Defendants, holding that plaintiff lacked antitrust standing because its business was “completely or almost completely geared towards facilitating illegality.” Importantly, that decision was not certified for immediate appeal. In the District of Oregon, defendant moved for summary judgment on two grounds: (1) issue preclusion—in light of the New York ruling—and (2) lack of antitrust standing on the basis of “unclean hands.” The District of Oregon rejected both arguments, finding (1) that the Southern District of New York’s decision was not preclusive and (2) an antitrust plaintiff may sue even if portions of its business involve wrongdoing by others, so long as the plaintiff itself is not a direct violator and competes in a legitimate market (see, e.g., Calnetics Corp. v. Volkswagen, Memorex Corp. v. IBM). The District of Oregon certified its order for interlocutory appeal, and the Ninth Circuit accepted review.
On appeal, defendant asserted the doctrines of both “unclean hands” and in pari delicto, claiming that plaintiff’s revenue stream necessarily depends on clicks by U.S. consumers that lead to unlawful drug imports and thus represents an “illegitimate” business interest unprotected by Section 4 of the Clayton Act. Defendant asserted that plaintiff’s claims ought to be dismissed because the enterprise was illegal. Defendant further argued that it lacked a cognizable counterclaim to offset damages, leaving it without an adequate remedy if plaintiff were to ultimately prevail on the merits. Finally, defendant claimed that a plaintiff lacking legal authority to engage in a regulated activity cannot suffer antitrust injury from being excluded from that activity.
Plaintiff responded that it does not itself traffic in prescription drugs. Rather, the bulk of its activity—accrediting pharmacies and publishing price data—is lawful speech fully protected by the First Amendment. Even assuming some users ultimately purchase drugs abroad, only a small fraction of click-throughs lead to sales, and many such transactions (e.g., purchases by foreign visitors or importation of non-FDA-approved medicines for which no U.S. alternative exists) may be lawful. Plaintiff contended that private antitrust enforcement should not be barred merely because plaintiff’s business tangentially facilitates third-party misconduct. Further, plaintiff emphasized that allowing this suit to proceed also had a public benefit, as burgeoning markets, such as online-pharmacy verification, are strengthened by litigation that combats and eliminates anticompetitive exclusionary conduct.
The Ninth Circuit affirmed the district court’s denial of summary judgment. The panel held that a plaintiff may have antitrust standing when competing in a legitimate market even if portions of its business are tangentially connected to unlawful conduct by third parties. The Ninth Circuit held that circuit precedent foreclosed the argument that facilitation of illegality automatically negates antitrust injury. Moreover, the Court noted that the Supreme Court’s deterrence-focused rationale controlled. The Court stated that the facts at issue were distinguishable from cases cited by defendant, as plaintiff’s business operations were not entirely illegal. Furthermore, defendant failed to identify an independent legal barrier that would have eliminated plaintiff’s business absent the alleged boycott. Therefore, the Court found a triable issue of antitrust injury.
As such, the panel affirmed the denial of summary judgment.
