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A federal appeals court on Monday upheld a lower-court decision that denied three contact lens manufacturers' request to prohibit enforcement of a state law governing the retail pricing of lens.
The 10th Circuit Court of Appeals turned back an appeal from manufacturers' lawsuits over a 2015 Utah law that prohibited lens makers from enforcing their minimum retail pricing policies in this state.
The law is known as the 1-800 Contacts law because the online retailer is located in Utah and its representatives lobbied for its passage.
Three of the largest contact lens manufacturers — Johnson & Johnson Vision Care Inc., Alcon Laboratories Inc. and Bausch & Lomb Inc. — sued Utah after passage of the law, alleging it violates the Commerce Clause of the U.S. Constitution by regulating interstate business transactions. 1-800 Contacts and Costco Wholesale Corp. joined the case on the side of the state.
U.S. District Judge Dee Benson denied a motion for a preliminary injunction that would have prohibited Utah from enforcing the law while the consolidated lawsuits were pending.
Benson found the contact-lens industry's practice of instituting minimum pricing levels for retailers was anti-competitive because it didn't allow retailers to sell at below those prices if they wished.
The lens makers appealed to the 10th Circuit.
The panel of judges found that Benson did not err when he found that the manufacturers were unlikely to prevail on their claims. It declined to overturn the ruling on the grounds that the Utah law does not discriminate against interstate commerce.
"If retailers or eye-care professionals selling contact lenses outside of Utah can't compete with the lower price available from retailers in Utah, that's not Utah's fault," the decision said.
Justices also agreed with Benson that "manufacturers likely cannot establish that the Utah statute is a price control or price affirmation regulation."
Parker Douglas, federal solicitor for the Utah Attorney General's Office, expressed satisfaction with the ruling and said the case was not about picking marketplace winners but "doing what's best for Utah's consumers and defending the laws passed by Utah Legislature."
Laura Schmidt, spokeswoman for 1-800 Contacts, said the decision will "help insure a free market that produces the lowest prices for consumers."
Johnson & Johnson spokeswoman Donna Lorenson said the company had discontinued its minimum pricing policy.
"We strongly believe in the right of manufacturers to decide how to price products in a competitive marketplace and we are considering our legal options," she said.
Roslyn Patterson, a spokeswoman for Alcon, said the company was disappointed in the ruling, but added that it is "important to note that the decision expresses no opinion about the ultimate merits of the challenge to the Utah statute and contains a strong dissenting opinion."