News from the Safety Equipment Distributors Association

monopoly power, was unlawful because they substantially lessened competition in the artificial teeth market. (U.S. v. Dentsply International, Inc., Del. Dist. Ct., No. 99-005).

Following a district court bench trial, judgment was entered in favor of the manufacturer. In finding the absence of the necessary level of anticompetitive effect, the court noted that rival manufacturers were not prevented from competing with Dentsply because hundreds of dealers, other than the 23 exclusive dealers used by Dentsply, were available to market competing product lines. The court added that even these 23 exclusive dealers were free to leave Dentsply at any time and go with another manufacturer who offered the dealer a more financially attractive product line. In addition, the court found that direct distribution by a manufacturer was an optional market channel for the sale of artificial teeth.

The Justice Department appealed the district court’s ruling on the monopolization charge to the U.S. Court of Appeals for the Third Circuit. The appeal court reversed, and found Dentsply had monopoly power and had engaged in conduct to foreclose competition that is impermissibly exclusionary when practiced by a monopolist. (U.S. v. Dentsply International, Inc., No. 03-4097, 3rd Cir.)

Dentsply possessed monopoly power because it had 80% market share based on revenue, 67% on a unit basis, it was 15 times larger than its next closest competitor, and it had held this dominant position for over 10 years. It also exercised that power with aggressive price increases and growing profit margins, showing little concern with its competitors’ pricing.

According to the court, Dentsply’s monopoly power was maintained in large part by its exclusive dealing arrangements with its dealer network. Although not illegal in themselves, such exclusive dealing arrangements, when orchestrated by a monopolist, can be an unlawful means to maintain a monopoly. The same type of arrangement with dealers may pass antitrust scrutiny where the manufacturer does not have monopoly power.

Finally, the appeals court opinion was quite generous in acknowledging the benefits of marketing through wholesaler-distributors. For example:

The Americans With Disabilities Act (“ADA”) contains three provisions which explicitly limit the ability of employers to use “medical tests” as a condition of employment: (1) a prohibition against using pre-employment medical tests, (2) a prohibition against the use of medical tests that lack job-relatedness and business necessity, and (3) a prohibition against the use of medical tests which screen out (or tend to screen out) people with disabilities. The ADA is not limited to physical impairments, but also includes mental impairments.

A medical test administered to an existing employee is considered a pre-employment test for ADA purposes if it is required for an employee seeking a new position within the company.

May a personality test administered by a lay person constitute a “medical test” for ADA purposes? A federal appeals court recently said, Yes. (Karraker v. Rent-A-Center, Inc., No. 04-2881, 7th Circuit).

In this case the employer required any employee seeking a promotion to take the APT Management Trainee-Executive Profile which is made up of 9 tests measuring math and language skills, personal interests and personality traits. This testing also includes the Minnesota Multiphasic Personality Inventory (“MMPI”), a test that gauges where an individual falls on scales measuring traits such as depression, hypochondria, hysteria, paranoia and mania.

The plaintiffs took the MMPI and were denied promotions based in part upon the test results. They then filed suit, claiming the employer’s use of the MMPI as part of the testing program violated the ADA because it was a “medical test”. The suit was allowed to go forward as a class action on behalf of all employees in the employer’s Illinois locations.

The appeals court ruled for the plaintiffs, finding that the MMPI was a “medical test” under the ADA. Psychological tests that are designed to identify a mental disorder or impairment qualify as a medical test; however, psychological tests that simply measure personality traits (e.g., honesty, preferences, habits) do not. According to the court, the MMPI identified mental impairments. Therefore, it was a medical test and its use is limited by the ADA—even though the test was not conducted or analyzed by a health care professional, it was not given in a medical setting and no medical equipment was used.

An employee who is not disabled may nevertheless be disabled for purposes of the ADA where the employer regards that employee as disabled. Recently, in Kelly v Metallics West, Inc. the Tenth Circuit concluded that ADA requires employers to provide a reasonable accommodation to employees who are regarded as having a disability. The decision puts the Tenth Circuit in line with the First and Third Circuit but in an opposite position with the Fifth, Sixth, Eighth and Ninth Circuits.

The case involved a receptionist for Metallics West who was hospitalized with a pulmonary embolism. She was cleared to return to work and attempted at first to work without supplemental oxygen. However, she experienced shortness of breath, became lightheaded and got a headache. Her doctor provided her with a note stating that she needed to use supplemental oxygen at work. She provided the note to someone at the company and followed that up by contacting the Chairman of the Board. The board chairman made the following comments to her:

After being out on leave she approached the chairman again about using supplemental oxygen at which time he refused because “he did not want the responsibility” and was afraid “she might fall over dead”.

The jury awarded her $50,000 in compensatory damages and the Tenth Circuit affirmed the judgment. In doing so the Court stated that the ADA protects individuals (1) regarded as disabled but (2) who, with a reasonable accommodation, can perform the essential functions of the position. As noted above the decision is in conflict with several of the other circuits and this issue will ultimately have to be resolved by the U.S. Supreme Court.

The Chicago law firm of Keeley, Kuenn & Reid, practices in the areas of corporate law, antitrust and trade association law, employment law and regulatory matters. George Keeley serves as SEDA General Counsel. He has written numerous articles on topics such as antitrust compliance, employment law, strategic alliances and other business related matters.

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