Western District Of Kentucky Upholds Complaint Challenging Franchise No-Poach Agreements As Horizontal Restraints Of Trade
On October 21, 2019, Judge Joseph H. McKinley Jr. of the United State District Court for the Western District of Kentucky issued a mixed order and opinion that denied Defendants Papa John’s International, Inc. and Papa John’s USA’s (“Papa John’s” or “Defendants”) motion to dismiss Plaintiffs’ class claims, but granted Defendants’ motion to compel one of the named plaintiffs to arbitrate. In Re Papa John’s Employee and Franchisee Employee Antitrust Litigation, NO: 3:18-CV-00825-JHM (W.D. Ky. 2019). The case involves three consolidated putative class actions filed by current and former employees against defendants, alleging no-poach, or no-hire, clauses in the company’s franchise agreements are a horizontal restraint on trade and a per se violation of Section 1 of the Sherman Act. The Court ruled that plaintiffs adequately alleged a per se violation, but that discovery would be necessary to determine what standard of review would apply moving forward.
Southern District Of New York Dismisses “Truly Novel” Restraint Of Trade Theory In Pharmaceutical Antitrust Action
On October 8, 2019, United States District Judge for the Southern District of New York Ronnie Abrams dismissed all but one claim in a putative antitrust class action brought against Takeda Pharmaceutical Company Ltd. and various Takeda entities, as well as generic manufacturers Teva Pharmaceuticals, Ranbaxy Pharmaceutical Industries Ltd., Actavis PLC, and Mylan Inc. In re: Actos Direct Purchaser Antitrust Litigation, No. 1:15-cv-03278 (S.D.N.Y. Oct. 8, 2019). The class complaint alleged that Takeda illegally conspired with the other defendants to delay generic competition for its blockbuster diabetes drug Actos through a series of patent settlement agreements, which granted the other defendants non-exclusive licenses to produce generic Actos at a future date prior to the expiration of Takeda’s patents. The Court dismissed these conspiracy claims, finding that plaintiffs’ “truly novel” theory for why the settlement agreements between Takeda and the other defendants violated the antitrust laws lacked “even a colorable basis” of support. The Court’s decision left in place one remaining claim against Takeda for monopolization.
Southern District of New York Dismisses Putative Antitrust Class Action Finding Plaintiffs Failed To Plead Defendants Transacted Business Of A “Substantial Character” In New York
On October 4, 2019, District Judge Edgardo Ramos of the United States District Court for the Southern District of New York dismissed a putative antitrust class action against certain defendants, foreign banks, and individuals for lack of personal jurisdiction and improper venue. In re SSA Bonds Antitrust Litig., No. 16 CIV. 3711 (ER) 2019 WL 4917608 (S.D.N.Y. Oct. 4, 2019). Plaintiffs alleged that the defendant financial institutions and certain employees operating as dealers in the U.S. dollar SSA bond market conspired to fix the price of SSA bonds in violation of Section 1 of the Sherman Act. Several dealer defendants (the “Foreign Dealer Defendants”) and four of their employees (the “Individual Defendants”) moved to dismiss for lack of personal jurisdiction and venue. The Court granted the motion, finding that plaintiffs had not satisfied the venue provision of the Clayton Act because plaintiffs failed to show that the Foreign Dealer Defendants transacted business of a “substantial character” in New York and failed to establish a nexus for purposes of personal jurisdiction “between the alleged business transactions in New York and the claims of this antitrust case.”
Southern District Of New York Dismisses Claims In Mexican Government Bonds Antitrust Suit
On September 30, 2019, Judge Paul Oetken of the United States District Court for the Southern District of New York dismissed claims that defendants, a group of ten financial institutions and related entities, had conspired to manipulate the market for certain debt securities issued by the Mexican government. In re Mexican Government Bonds Antitrust Litigation, 18-CV-2830 (S.D.N.Y. Sept. 30, 2019). Plaintiffs, a group of pension funds, alleged that defendants rigged the auction process used by the Mexican government to issue bonds and conspired to manipulate the pricing of the bonds on the secondary market, in violation of Section 1 of the Sherman Act. According to plaintiffs, the conspiracy artificially depressed auction prices, artificially inflated secondary market prices, and fixed bid-ask spreads, resulting in harm to the pension funds in the United States.
Second Circuit Finds District Court Failed To Properly Consider Two-Sided Markets In Travel Platform Suit, Voids $15M Antitrust Verdict
On September 11, 2019, the United States Court of Appeals for the Second Circuit, in a panel consisting of Judges Robert D. Sack, Debra Ann Livingston and Denny Chin, affirmed in part, reversed in part and vacated in part a lower court’s decision in an antitrust action related to contracts for a travel technology platform. US Airways, Inc., for American v. Sabre Holdings Corporation, No. 17-960 (2d Cir. Sept. 11, 2019). The Second Circuit held that the district court had erred in failing to find the relevant market to be two-sided as a matter of law. The case was remanded for a new trial on the substantive question of whether certain contractual provisions in the business agreements between the parties were unlawful restraints of trade in violation of Sections 1 and 2 of the Sherman Act.
Seventh Circuit Allows Beer Conspiracy Allegations One More Shot
On September 5, 2019, Judge Kenneth Ripple, writing for a unanimous panel of the U.S. Court of Appeals for the Seventh Circuit, partially reversed a lower court’s dismissal of antitrust claims alleging that two brewers conspired to restrict a competitor’s exports of beer to Ontario, Canada. Mountain Crest SRL, LLC v. Anheuser-Busch InBev SA/NV, No. 18-2327, 2019 WL 4198809 (7th Cir. Sept. 5, 2019). The Seventh Circuit held that agreements with a Canadian government-controlled entity (the Liquor Control Board of Ontario, or “LCBO”) were immune from antitrust scrutiny under the act of state doctrine. However, the Court held that claims of an alleged conspiracy between competitors to strong-arm the LCBO into entering into the agreements did not implicate the act of state doctrine and were improperly dismissed.
Second Circuit Affirms Dismissal Of Price Fixing Claims Against Oil Companies
On August 29, 2019, the United States Court of Appeals for the Second Circuit issued an Opinion and Summary Order affirming the dismissal of plaintiffs-appellant derivatives traders’ Sherman Act and Commodities Exchange Act claims against defendant-appellees oil companies. Prime International Trading, Ltd., et al. v. BP PLC, et al., No. 1:17-cv-2233 (2d Cir. 2019).
Second Circuit Reverses District Court’s Dismissal Of Metal Purchasers’ Antitrust Claims
On August 27, 2019, the Second Circuit Court of Appeals vacated a grant of summary judgment by the United States District Court for the Southern District of New York, which had dismissed the claims of a group of aluminum buyers on grounds they did not have standing in an antitrust suit alleging a conspiracy to artificially inflate aluminum prices. Judge Pierre N. Leval, writing for the panel, disagreed with the District Court’s dismissal, ruled that plaintiffs had adequately pleaded antitrust injury, and remanded the case for further proceedings. Eastman Kodak Co. v. Henry Bath LLC, 16-4230, 2019 WL 4018285 (2d Cir. Aug. 27, 2019).
District of Columbia Circuit Pulls The Brake On Class Certification Bid In Railroad Price-Fixing Suit
On August 16, 2019, the United States Court of Appeals for the District of Columbia Circuit affirmed a lower court’s decision to deny class certification in an antitrust action involving some of the country’s largest freight railroad companies. In Re: Rail Freight Fuel Surcharge Antitrust Litigation, MDL No. 1869, (D.C. Cir. Aug. 16, 2019). Plaintiffs alleged that defendants conspired to fix rate-based fuel surcharges in violation of Section 1 of the Sherman Act, Section 4 of the Clayton Act and various state laws. The panel, which consisted of Chief Judge Merrick Garland and Judges Judith Rogers and Gregory Katsas, held that class certification was inappropriate because plaintiffs’ regression analysis did not establish predominance.
Eastern District Of Michigan Slices No-Poach Antitrust Claims Against Pizza Franchise
On July 29, 2019, Judge David M. Lawson of the U.S. District Court for the Eastern District of Michigan dismissed, with prejudice, antitrust claims stemming from a fast-food pizza franchise’s use of “no-poach” hiring agreements in its standard franchise contracts. Judge Lawson determined that plaintiff, who did not attempt to advance a rule of reason antitrust claim, had not pled a viable per se or quick look antitrust violation. Moreover, plaintiff did not plausibly allege that the no-poach agreements caused him a cognizable antitrust injury. Ogden v. Little Caesar Enterprises, Inc., No. 18-12792, 2019 WL 3425266 (E.D. Mich. July 29, 2019).
Central District Of California Gives Poor Review To Movie Rental Antitrust Claims
On July 17, 2019, Judge Dean D. Pregerson of the U.S. District Court for the Central District of California dismissed antitrust claims alleging that a major media and entertainment conglomerate unlawfully restrained trade in the nationwide market for rentals and sales of movies on DVD, Blu-ray and digital platforms. Judge Pregerson determined that plaintiff had not met its pleading burden; specifically, it did not adequately allege market power or anticompetitive effects in the relevant market. Redbox Automated Retail, LLC v. Buena Vista Home Entertainment, Inc., CV 18-00677-DDP (AGRx), 2019 WL 3237376 (C.D. Cal. July 17, 2019).
Seventh Circuit Extinguishes Antitrust Conspiracy Claims About Local Fire Alarm Laws
On July 15, 2019, the Seventh Circuit Court of Appeals dismissed claims alleging an antitrust conspiracy between a local municipality, an intergovernmental cooperation association and a private provider of commercial fire-alarm services. Alarm Detection Sys., Inc. v. Vill. of Schaumburg, No. 18-3316, 2019 WL 3071744 (7th Cir. July 15, 2019). The Court held that plaintiffs failed to plausibly plead the existence of an underlying agreement between defendants as required to plead an antitrust conspiracy claim.
Eastern District Of Pennsylvania Dismisses Claims Against Generic Drug Distributor In Multi-District Price-Fixing Suit
On June 26, 2019, Judge Cynthia M. Rufe of the Eastern District of Pennsylvania dismissed claims that McKesson Corporation and McKesson Medical Surgical, Inc. (collectively the “Company”) engaged in a conspiracy to fix prices of generic pharmaceuticals. Marion Diagnostic Center, LLC, et al. v. McKesson Corporation, et al., No. 16-MD-2724 (June 26, 2019). The Court held that the plaintiffs had not plausibly alleged that the Company’s conduct as a generic drug distributor was the result of an agreement with co-defendant generic drug manufacturers.
Plaintiffs’ No Poach Class Claims Run Off The Rails
On June 20, 2019, Judge Joy Flowers Conti of the Western District of Pennsylvania dismissed plaintiffs’ class claims that defendant employers colluded to suppress market wages by agreeing not to hire each other’s employees. The Court found that the complaint failed to adequately plead that all or nearly all employees in the proposed class were harmed by the alleged collusion. In re Railway Industry Employee No-Poach Antitrust Litigation, No. 18-798 (W.D. Pa. June 20, 2019). The Court, however, acknowledged plaintiffs had sufficiently pled the existence of an overarching conspiracy among defendants from 2014 to 2016 and individual agreements among each of the three defendants beginning at different times since 2009. Since the class claims were dismissed without prejudice, plaintiffs have the opportunity to remedy their class-related pleading defects.
Northern District Of Georgia Rules On Antitrust State Action Immunity
On May 8, 2019, Judge William M. Ray II of the United States District Court for the Northern District of Georgia issued an order granting in part and denying in part defendants’ motion to dismiss. SmileDirectClub, LLC, v. Georgia Board of Dentistry, et al., No. 1:18-cv-02328-WMR (D.N.G. 2019). Plaintiff alleged that the Georgia Board of Dentistry (the “Board”) and its individual members (collectively, “defendants”) conspired to exclude non-dentists from participating in the market for orthodontic aligner treatment services in Georgia. The Court found that claims against the Board were barred by sovereign immunity, while claims against individual members of the Board were adequately pled and survived dismissal.
Eastern District Of Michigan Allows Sherman Act Suit Based On Employee No-Poach Agreement To Proceed
On May 24, 2019, Judge Victoria A. Roberts of the United States District Court for the Eastern District of Michigan denied defendant Domino’s Pizza Franchising LLC’s and other related Domino’s corporate entities’ motion to dismiss, finding that plaintiff, an employee of one of defendants’ franchisees, had adequately alleged a no-poach agreement in violation of Section 1 of the Sherman Act. Blanton v. Domino’s Pizza Franchising LLC, No. 18-13207 (E.D. Mich. May 24, 2019). The Court also found that plaintiff plausibly pleaded that defendants’ fraudulently concealed their conduct such that the Sherman Act’s four-year statute of limitations was tolled.
Second Circuit Revives Direct Injury Claims In Group Boycott Lawsuit
On May 10, 2019, the Second Circuit Court of Appeals, in a panel consisting of Judges John M. Walker, Jr., Dennis Jacobs, and Rosemary S. Pooler, affirmed in part and vacated in part a decision by Judge Brian M. Cogan of the United States District Court for the Eastern District of New York on antitrust standing. IQ Dental Supply, Inc. v. Henry Schein, Inc., 18-175-cv (2d Cir. May 10, 2019). The court agreed with Judge Cogan that plaintiff, IQ Dental Supply, Inc. (“IQ”), had failed to establish antitrust standing to challenge the alleged boycott of an online distribution portal, SourceOne, Inc. (“SourceOne”), which it used to distribute dental supplies to dental practices nationwide. However, the court found that IQ had pled sufficient facts to establish antitrust standing regarding a boycott of its own business and vacated the district court’s judgment.
Second Circuit Rejects Bid To Revive Libor Antitrust Suit By Plaintiff Whose Bonds Were Not Tied To Libor
On April 30, 2019, the Second Circuit Court of Appeals, in a panel consisting of Judges Rosemary S. Pooler, Denny Chin, and Eric N. Vitaliano, affirmed a decision by Judge Paul G. Gardephe of the United States District Court for the Southern District of New York denying plaintiff’s request for leave to amend its complaint alleging that various banks conspired to manipulate LIBOR. 7 West 57th Street Realty Company, LLC v. Citigroup, Inc., 18-1102-cv (2d Cir. April 30, 2019). The Court agreed with Judge Gardephe that plaintiff, the successor in interest to a real estate developer, lacked antitrust standing to bring suit because it was not an efficient enforcer and that amending the complaint would be futile. The Court also agreed that plaintiff did not allege facts sufficient to state a claim under the Racketeer Influenced and Corrupt Organizations Act (“RICO”).
United States District Court For The Northern District Of California Focuses On Information Sharing To Magnify Anticompetitive Conspiracy In Antitrust Suit Against Telescope Manufacturers
On March 29, 2019, Judge Edward J. Davila of the U.S. District Court for the Northern District of California denied a motion to dismiss, finding that plaintiff Orion Telescopes & Binoculars (“Orion”) had sufficiently pled that defendants Ningbo Sunny Electronic Co., Ltd. (“Ningbo”) and Celestron, LLC (“Celestron”) had conspired to divide the market for low- to medium-end telescopes and block a competing manufacturer’s acquisition that would have enabled expansion and broader supply-side competition. Optronic Technologies, Inc., v. Ningbo Sunny Electronic Co., Ltd., No. 16-CV-6370 (N.D. Cal. Mar. 29, 2019). Judge Davila cited plaintiff’s specific allegations of: (a) a division among competitors of the low-end (to Ningbo) and high-end (to Celestron) telescope markets (facilitated in part by a transfer of intellectual property to Ningbo); and (b) Celestron’s advance knowledge of Ningbo’s interest in the merger. Celestron settled prior to the litigation, but Orion and Ningbo will continue into discovery.
Northern District Of California Grants NCAA Athletes Partial Victory In Antitrust Challenge To NCAA Rules
On March 8, 2019, after a bench trial, Judge Claudia Wilkin of the United States District Court for the Northern District of California found that the NCAA’s restrictions on the amount of grants-in-aid and other benefits that universities can provide to student-athletes constitute anticompetitive restraints of trade. In re: National Collegiate Athletic Association Athletic Grant-in-Aid Cap Antitrust Litigation, No. 4:14-md-02541-CW (N.D. Cal. Mar. 8, 2019). Based on this finding, the Court abrogated the NCAA’s limits on “education-related benefits” that its member colleges may provide the student-athletes. However, the Court did not eliminate all restrictions on the benefits that schools may provide to athletes. Instead, using a “less restrictive alternatives” analysis, the Court permitted the NCAA to continue to limit non-education related benefits and compensation, as well as cash payments, to student-athletes.
Southern District Of New York Dismisses CDOR Benchmark Manipulation Complaint In Its Entirety
On March 14, 2019, Judge Analisa Torres of the United States District Court for the Southern District of New York granted defendants’ motion to dismiss a complaint alleging they improperly manipulated the Canadian Dollar Offered Rate (“CDOR”) benchmark. Fire & Police Pension Association of Colorado v. Bank of Montreal, et al., Case No. 1:18-cv-00342 (S.D.N.Y Mar. 14, 2019).
Reversing Prior Order, Utah District Court Holds Per Se Rule Applies To Customer Allocation Agreement
On February 21, 2019, Judge David Sam of the U.S. District Court for the District of Utah reversed course and found that a per se standard applies to a market allocation agreement among competitors in the heir location services market. Judge Sam initially found that the more lenient rule of reason standard should apply. However, following a recent Tenth Circuit ruling, Judge Sam held it is the form of the agreement—not the type of industry—that compels the appropriate standard of review. United States of America, v. Kemp & Associates, Inc. and Daniel J. Mannix, No. 2:16CR403 DS, 2019 WL 763796 (D. Utah Feb. 21, 2019).
Delaware District Court Dismisses Antitrust Suit Against Lab Testing Company Alleging Conspiracy To Exclude Smaller Lab From Market
On February 14, 2019, Judge Maryellen Noreika of the United States District Court for the District of Delaware dismissed a complaint alleging violations of Sections 1 and 2 of the Sherman Act. Prescient Medicine Holdings, LLC v. Laboratory Corporation of America Holdings et al, No. 1:18-cv-00600 (D. Del. Feb 14. 2019). The complaint was filed by Prescient Medicine Holdings, LLC, a provider of laboratory testing services. Plaintiff alleged that an agreement between a competitor laboratory testing service—Laboratory Corporation of America and Laboratory Corporation of America Holdings (“LabCorp”)—and a managed care organization—AmeriHealth, Inc. and AmeriHealth Caritas Delaware Inc. (“AmeriHealth”) was a collusive scheme to monopolize the in-network Medicaid market and exclude plaintiff from that market. Judge Noreika held that plaintiff failed to adequately plead antitrust standing and failed to define a relevant market.
The Eastern District Of Michigan Holds That An Arbitration Clause Does Not Apply To Direct Purchasers In A Private Suit Alleging Price-Fixing
On January 29, 2019, the Honorable Judge Marianne O. Battani of the United States District Court for the Eastern District of Michigan denied without a hearing Defendant KYB Corporation’s and KYB America’s (collectively, the “Company”) motion to dismiss all federal antitrust claims because those claims were subject to an arbitration clause. In re Shock Absorbers, Master File No. 12-md-02311 (E.D. Mich. Jan. 29, 2019). In so finding, the Court denied the Company’s 30(b)(1) motion and concluded that the Court had subject matter jurisdiction.
Department Of Justice Seeks To Intervene In No-Poach Class Action To Counter Arguments That Such Agreements Are Per Se Illegal
On January 25, 2019, the Justice Department’s Antitrust Division filed a Notice of Intent to File a Statement of Interest in Myrriah Richmond et al. v. Bergey Pullman Inc., et al., No. 2:18-cv-00246, in the United States District Court for the Eastern District of Washington. The Notice follows a barrage of settlements between fast-food chains and state antitrust enforcers involving the chains’ “no-poach” agreements—that is, agreements between a franchisor and franchisees that restrict the hiring of one franchisee’s employees by another franchisee. The Justice Department’s decision to involve itself in Myrriah Richmond is significant. By emphasizing—as its Notice did—that such franchisor-franchisee no-poach agreements are “vertical restraints” subject to the rule-of-reason (rather than illegal per se, or subject to only a “quick look” analysis of legality), the Justice Department provides analytic clarity and useful guidance as courts address the growing number of actions challenging different variations of no-poach agreements in different factual scenarios.
Middle District Of Florida Limits Statute Of Limitations Tolling Arguments For Alleged Output Restrictions In Milk Market
On January 16, 2019, Judge Brian J. Davis of the United States District Court for the Middle District of Florida issued an order granting in part and denying in part defendants’ motion for summary judgment. Winn-Dixie Stores, Inc. v. Southeast Milk, Inc. et al., Case No. 3:15-cv-01143 (M.D. Fla. Jan. 16, 2019). The Court ruled that plaintiffs should not receive equitable tolling of the statute of limitations for fraudulent concealment, that only a limited subset of claims were eligible for class action tolling, and that other theories for the timeliness of plaintiffs’ claims depended on the jury’s determination of the facts.
United States District Court For The Eastern District of New York Rejects One-Sided Market And Single-Brand Market Definitions In Credit Card Antitrust Litigation
On January 14, 2019, Judge Nicholas G. Garaufis of the U.S. District Court for the Eastern District of New York granted defendant American Express’ motion for summary judgment as to three of the four relevant markets proposed by the plaintiffs in their antitrust challenge to the “anti-steering” provisions in American Express’s merchant contracts. In re American Express Anti-Steering Rules Antitrust Litigation, No. 11-MD-2221 (NGG) (RER) (E.D.N.Y. Jan. 15, 2019). Following the U.S. Supreme Court’s 2018 decision in a parallel challenge to the same contractual provisions by the U.S. Department of Justice (“DOJ”) and several states, Ohio v. American Express Company, 138 S. Ct. 2274 (2018), Judge Garaufis rejected the retail merchant plaintiffs’ proposed product market definitions that were limited to the merchant side of card transactions, i.e., the “one-sided” markets, finding that the Supreme Court’s decision required an examination of competition on both sides of the credit card platform – the cardholder side and the merchant side – i.e., the “two-sided” market. The court also rejected the plaintiffs’ attempt to limit the relevant product market to American Express card transactions (the “Amex-only market”) because other general purpose credit and charge cards are reasonably interchangeable with American Express cards and therefore in the same relevant product market. American Express did not move for summary judgment on the plaintiffs’ two-sided, all general purpose credit card market definition, and the case will proceed to trial on that theory.
Northern District Of California Rejects Claim Of Bi-Coastal Conspiracy To Eliminate Restaurant Tipping
On January 7, 2019, Judge Jeffrey S. White of the Northern District of California ruled on a motion to dismiss allegations that certain high-end restaurant groups in New York and California had conspired to terminate the practice of tipping in restaurants, in violation of Section 1 of the Sherman Act and various state laws. Judge White held that plaintiff’s claims were too speculative to sustain an inference that defendants could — or had any reason to — conspire, and dismissed all claims. Brown v. 140 NM LLC et al., No. 4:17-cv-05782 (N.D. Cal. Jan. 7, 2019).
Seventh Circuit Affirms District Court’s Grant Of Summary Judgment Of Class Action Case Alleging Price-Fixing In Containerboard Market
On December 7, 2018, the United Stated Court of Appeals for the Seventh Circuit, in an opinion by Chief Judge Diane P. Wood, affirmed a district court’s decision to grant summary judgment in favor of two defendants remaining in a class action alleging price-fixing by manufacturers of containerboard. Kleen Products LLC, et al. v. Georgia-Pacific LLC, et al., No. 17-2808 (7th Cir. Dec. 7, 2018). The Court rejected plaintiffs’ contention that the existence of an anticompetitive agreement between manufacturers could be inferred based primarily on allegedly correlated price increases and reductions in supply.
Oregon District Court Allows Claim Against Association Of Colleges And Universities To Proceed And Accepts Harm To Defendant’s Members As Evidence Of Antitrust Injury
On November 28, 2018, Judge Marco A. Hernández of the United States District Court for the District of Oregon, on remand from the Ninth Circuit, reversed its prior grant of a motion to dismiss and held that plaintiff — which brought antitrust conspiracy claims against a non-profit corporation made up of 549 member colleges — sufficiently demonstrated antitrust injury by alleging harm to the member colleges. CollegeNET, Inc. v. The Common Application, Inc., No. 3:14-CV-00771-HZ (D. Or. Nov. 28, 2018).
Western District Of Washington Rejects Per Se Rule, But Allows Cinnabon Worker’s No-Poach Class Action To Proceed After “Quick Look” Analysis
On November 13, 2018, Judge Robert J. Bryan of the United States District Court for the Western District of Washington denied a motion to dismiss a class action complaint by a former fast-food worker alleging that the company’s agreement to prohibit the re-hiring of one franchisee’s employees by another franchisee violates the Sherman Antitrust Act. Yi v. SK Bakeries LLC, et al., No. 3:18-cv-05627, Dkt. No. 33 (W.D. Wa. Nov. 13, 2018). Judge Bryan did, however, caution plaintiff against relying solely on a “quick look” theory, and suggested that whether franchisees are, in fact, a “single entity” incapable of conspiring with one another is a fact-specific question that did not merit a pleading-stage dismissal.
Eastern District Of Pennsylvania Dismisses Antitrust Suit Against Lab Testing Company Alleging Unfair Competition In Specialized Testing Services
On October 9, 2018, Judge Gerald J. Pappert of the U.S. District Court for the Eastern District of Pennsylvania granted defendant Independence Blue Cross’s (“IBC”) and defendant Laboratory Corporation of America Holdings’s (“LabCorp”) motions for summary judgment on an unfair competition claim filed by Medical Diagnostic Laboratories, LLC (“MDL”). MDL is a lab testing company that provides specialized testing services for sexually transmitted infections. MDL alleged that defendants violated Sherman Act Section 1 and Pennsylvania state unfair competition law, and tortiously interfered with existing and prospective relationships with healthcare providers, by requiring IBC in-network providers to exclusively refer patients needing lab work to LabCorp. The Court granted defendants’ motions to dismiss the Section 1 and tortious interference with existing business relationships claims on August 30, 2017, but allowed MDL to take discovery on its claims of tortious interference with prospective contractual relations and unfair competition. In his summary judgment opinion, Judge Pappert rejected these remaining claims.
Southern District Of New York Dismisses Benchmark Manipulation Claims Against Banks Not Involved In Setting Benchmark, But Allows Claims To Proceed Against Panel Banks
On October 4, 2018, Judge Alvin K. Hellerstein of the United States District Court for the Southern District of New York dismissed, with prejudice, claims that certain banks engaged in an industry-wide conspiracy to manipulate various Singapore financial benchmarks in violation of Section 1 of the Sherman Act, while simultaneously ruling that claims against other defendants that were involved in setting the benchmark could proceed. The Court also found that it did not have jurisdiction over defendant banks that were not members of the panel that set the financial benchmark at issue, and therefore dismissed plaintiffs’ claims against those defendants. Frontpoint Asian Event Driven Fund v. Citibank, 16 Civ. 5263 (S.D.N.Y. Oct. 4, 2018).
Northern District Of California Applies FTAIA To Price-Fixing Claims Based On Various Extraterritorial Purchasing Scenarios
On September 20, 2018, Judge James Donato of the United States District Court for the Northern District of California issued an order granting in part and denying in part defendants’ motion for summary judgment on the issue of the applicability of the Foreign Trade Antitrust Improvements Act, 15 U.S.C. § 6a (“FTAIA”) to specific categories of claims. Judge Donato also addressed a question left open in a prior order regarding whether a state antitrust or consumer protection law might apply less broadly than the FTAIA. In re Capacitors Antitrust Litig. (No.III), Case No. 17-md-02801-JD (N.D. Cal. Sept. 20, 2018). Judge Donato’s decision clarifies the application of the FTAIA to various categories of extraterritorial transactions allegedly affected by a price-fixing conspiracy.
Illinois District Court Denies Sandwich Franchisor’s Motion To Dismiss Sherman Act Claim Alleging Damages From No-Poach Agreement
On July 31, 2018, Judge Michael J. Reagan of the United States District Court for the Southern District of Illinois granted in part and denied in part defendant-franchisor’s motion to dismiss an antitrust claim filed by a purported class of former employees of defendant’s franchisees. Butler v. Jimmy John’s Franchise, LLC, No. 18-CV-0133-MJR-RJD, 2018 WL 3631577 (S.D. Ill. July 31, 2018). Plaintiffs alleged that provisions included in defendant’s franchise agreements with its franchisees in which the franchisees agreed not to hire each other’s employees—commonly known as “no-poach” agreements—violated Section 1 of the Sherman Act and various state antitrust laws by suppressing employee wages and mobility in the labor market. Defendants moved to dismiss all claims, arguing that plaintiffs failed to allege an injury that would confer Article III standing, and that plaintiffs failed to plausibly allege an antitrust conspiracy under Section 1 of the Sherman Act.
The Ninth Circuit Affirms Implied Antitrust Immunity For USA Track & Field And The United States Olympic Committee
On August 7, 2018, the Ninth Circuit Court of Appeals affirmed a district court holding that USA Track & Field and the United States Olympic Committee were immune to antitrust liability for imposing advertising restrictions during the Olympic Trials for track and field athletes. Gold Medal LLC v. USA Track & Field, No. 6:16-cv-00092-MC (9th Cir. Aug. 7, 2018). The Court held that defendants were entitled to implied antitrust immunity because the advertising restriction was integral to performance of their statutory duties under the Ted Stevens Olympic and Amateur Sports Act (“ASA”) to fund the U.S. Olympic Team. Plaintiff alleged that the defendants’ anticompetitive conspiracy imposing advertising restrictions that excluded certain sponsors from the Olympic Trials for track and field athletes violated Section 1 of the Sherman Act.
Southern District Of New York Dismisses Silver Benchmark Manipulation And Silver Trading Conspiracy Claims
On July 25, 2018, Judge Valerie E. Caproni of the United States District Court for the Southern District of New York dismissed with prejudice claims that certain banks participated in a conspiracy to (a) manipulate the London Silver Fixing, and (b) engage in manipulation of silver spot markets and futures markets in violation of Section 1 of the Sherman Act. The Court held that plaintiffs failed to plausibly allege that these banks—which did not participate in the London Silver Fixing—were part of the alleged conspiracy to manipulate that benchmark. The Court also dismissed other conspiracy claims on antitrust standing grounds, based on the remoteness of the injuries allegedly suffered by plaintiffs and the dangers of disproportionate recovery that this remoteness would present. The Court also dismissed claims that the alleged conduct violated the Commodity Exchange Act (“CEA”) and justified recovery under an unjust enrichment theory.
Georgia District Court Denies Class Certification To Plaintiffs Alleging Conspiracy To Delay Release of Generic Versions Of Testosterone Replacement Drug
On July 16, 2018, in the latest development in the litigation over the “reverse payment” settlements relating to the pharmaceutical testosterone replacement AndroGel that the Supreme Court addressed in FTC v. Actavis, Inc., 570 U.S. 136 (2013), Judge Thomas W. Thrash, Jr. of the United States District Court for the Northern District of Georgia denied class certification to a proposed class of direct purchaser plaintiffs. In re AndroGel Antitrust Litigation (No. II), No. 2084, 2018 WL 3424612 (N.D. Ga. July 15, 2018).
Illinois District Court Dismisses Complaint Alleging Conspiracy To Restrict Supply And Increase The Price Of Intravenous Saline Solution
On July 5, 2018, Judge John J. Tharp, Jr. of the United States District Court for the Northern District of Illinois granted defendant intravenous saline (“IV saline”) bag manufacturers’ motion to dismiss a complaint filed by a purported class of IV saline purchasers alleging that defendants conspired to restrict the output and raise the price of IV saline solution in violation of Section 1 of the Sherman Act. Washington County Health Care Auth., Inc., et al. v. Baxter Int’l Inc., et al., No. 16 CV 10324 (N.D. Ill. July 5, 2018). Plaintiffs alleged that defendants conspired to create an artificial shortage of IV saline solution by initiating a series of bogus voluntary recalls to deplete inventories of health care facilities in an effort to increase prices. Defendants moved to dismiss the claims, arguing the complaint did not adequately allege the existence of an agreement to restrain the supply and increase the price of IV saline.
Eighth Circuit Dismisses Federal Antitrust Claims In Propane Action, Finding Plaintiffs Failed To Allege Injury Or Ongoing Conspiracy By Defendants
On June 22, 2018, a three-judge panel on the Eighth Circuit Court of Appeals affirmed in part a district court decision granting summary judgment for defendants and dismissing antitrust claims under Section 1 of the Sherman Act, as well as the antitrust laws of 23 states and the District of Columbia, against two propane gas companies. Mario Ortiz et al. v. Ferrellgas Partners et al., No. 16-4086 (8th Cir. June 22, 2018).
United States Supreme Court Upholds Rejection Of The Government’s Antitrust Challenge To American Express’s Merchant Contracts
On June 25, 2018, the U.S. Supreme Court, in a 5-4 decision by Justice Thomas, held that provisions in American Express Company’s (“American Express” or “Amex”) and its operating subsidiary’s contracts with merchants that restricted the ability of these merchants to steer customers to other credit or charge cards did not violate the Sherman Act. Ohio v. Am. Express Co., 585 U.S. __, slip op. at 1 (2018). The Court held that plaintiffs—the United States Department of Justice and the Attorneys General of several states—failed to satisfy their burden of proving anticompetitive effects in the relevant market under the rule of reason. Id. at 10. The ruling has important implications for antitrust analysis, not only for the credit card industry, but for other industries that operate in two-sided markets where firms must compete simultaneously for different groups of customers whose demands are distinct but deeply interrelated.
Jury In The Eastern District Of Pennsylvania Finds No Liability For Egg Producers In Alleged Price Fixing Suit
06/26/2018On June 14, 2018, a jury in the Eastern District of Pennsylvania found three egg producers not liable for violating Section 1 of the Sherman Act based on an alleged conspiracy to restrict the supply of egg-laying hens and artificially inflate the price of eggs. In re Processed Eggs Prods. Antitrust Litig., 2:08-md-02002 (E.D. Pa. June 14, 2018).
Utah District Court Denies Defendants’ Motion To Dismiss Complaint Alleging Restraint Of Trade In Online Lens Retail Market
On May 17, 2018, Judge Tena Campbell of the United States District Court for the District of Utah denied three leading contact lens retailer defendants’ motion to dismiss a putative class action complaint alleging violations of Section 1 of the Sherman Act. J. Thompson, et al. v. 1-800 Contacts, et al., Case No. 2:16-CV-1183-TC (D. Utah May 17, 2018). Plaintiffs, who purchased contact lenses online from defendants, alleged that they paid artificially-inflated prices for those contact lenses due to defendants’ anticompetitive trademark litigation settlement agreements. Defendants moved to dismiss the claims because the plaintiffs lacked antitrust standing, failed to properly plead a relevant product market, did not allege a single overarching conspiracy, and with respect to damages claims prior to 2012, failed to file a lawsuit within the Clayton Act’s four-year statute of limitations.
Ninth Circuit Overturns Dismissal Of Antitrust Suit Against City’s Ordinance Allowing App-Based Drivers To Collectively Bargain
On May 11, 2018, the United States Court of Appeals for the Ninth Circuit Court partially reversed the district court’s dismissal of claims brought by the U.S. Chamber of Commerce, on behalf of ride-share app companies, that a Seattle ordinance allowing for-hire drivers to bargain collectively violated and was preempted by the antitrust laws. In an opinion by Circuit Judge Milan D. Smith, the Ninth Circuit held that the state-action defense did not protect the ordinance from preemption by the Sherman Act because: (1) the State of Washington had not clearly articulated and affirmatively expressed a state policy authorizing for-hire drivers to fix the prices of their service fees when using a ride-share app; and (2) the active-supervision requirement of the state-action defense was not met.
Federal Judge Reverses Course, Will Consider Volume Of Commerce In Sentencing For Criminal Antitrust Convictions
On May 7, 2018, Judge Charles Breyer of the United States District Court for the Northern District of California affirmed that volume of commerce (“VOC”) is a necessary factor in determining the appropriate sentence for criminal antitrust convictions. This represents a reversal from his earlier comments at an April 26, 2018 hearing, where Judge Breyer said he would ignore the VOC in sentencing 23 individuals for their roles in a conspiracy to rig bids at public real estate foreclosure auctions.
Northern District Of California Rejects Motion To Dismiss Sherman Act Claims Against Parties To A Joint Venture In The Vanity Mobile Dial Code Market
On April 19, 2018, Judge Beth L. Freeman of the United States District Court for the Northern District of California denied defendants’ motion to dismiss antitrust claims under Sections 1 and 2 of the Sherman Act, rejecting defense arguments that the complaint alleged no more than permissible unilateral conduct by a legitimate joint venture.
Eastern District Of New York Holds That Group Boycott Of Online Dental Marketplace Must Go To Trial
On April 13, 2018, Judge Brian M. Cogan of the United States District Court for the Eastern District of New York denied defendants’—two leading dental supply distributors—motions for summary judgement. Plaintiff SourceOne, a nascent competitor in the dental supply distribution market, partnered with the Texas Dental Association (TDA) to launch an online marketplace in competition with the larger distributors, including defendants. Plaintiff alleged that the two defendants and a third leading dental supply distributor (who settled early in the case), which collectively controlled 80 percent of the dental supply distribution in the United States, conspired to boycott the TDA and Arizona Dental Association trade shows in an effort to harm plaintiff.
DOJ Enters Into Settlement Ending No-Poach Agreements In The Rail Equipment Supplier Industry
On April 3, 2018, the U.S. Department of Justice (“DOJ”) filed a simultaneous Complaint and Stipulation in its investigation into no-poach agreements—defined as agreements between competitors not to compete for employees—between Knorr-Bremse AG (“Knorr”) and Westinghouse Air Brake Technologies Corporation (“Wabtec”) in the rail equipment supplier industry. DOJ took a broad view of the scope of such agreements to include both the solicitation and hiring of employees, and to include both the hiring of employees located domestically and those located internationally and hired to work in the United States. Prior enforcement actions of no-poach cases had brought only civil charges; however, DOJ has recently announced its intent to seek criminal charges in policy guidance published in October 2016. In this action, DOJ exercised its prosecutorial discretion in deciding not to bring criminal charges. Nevertheless, this appears to be the first step in DOJ’s efforts to step-up enforcement consistent with the recent public statements of Makan Delrahim, Assistant Attorney General for the Antitrust Division.
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U.S. District Court For The Northern District Of California Rejects Class Certification Of Indirect Purchasers In Lithium Ion Battery Price-Fixing Litigation Based On Plaintiffs’ Failure To Address Focal Point Pricing
On March 5, 2018, Judge Yvonne Gonzalez Rogers of the U.S. District Court for the Northern District of California denied class certification for a group of indirect purchasers alleging price fixing in the sale of lithium batteries, holding that the plaintiffs failed to demonstrate that they had a reliable method of proving pass-through of the alleged overcharges on a class-wide basis. In so holding, the Court relied primarily on the plaintiffs’ expert’s failure to account for the effects of “focal point pricing,” the practice of pricing consumer products at certain attractive retail price points, for example, $799 or $1299.
District Of Delaware Denies Building Supply Company’s Motion To Dismiss Claims That It Monopolized And Unlawfully Restrained Trade In The Ceiling Tile Market Through Exclusive Agreements
On February 9, 2018, Judge Mark A. Kearney of the United States District Court for the District of Delaware denied in part Armstrong World Industries Inc.’s (“Armstrong”) motion to dismiss a lawsuit filed by rival ceiling tile manufacturer Roxul USA Inc. (“Roxul”), finding that Roxul alleged facts plausibly demonstrating monopolization and attempted monopolization in violation of Sherman Act Section 2, and concerted action in restraint of trade in violation of Sherman Act Section 1 and Clayton Act Section 3. However, Judge Kearney granted Armstrong’s motion to dismiss Roxul’s claims relating to the sale of ceiling tiles in Canada because Roxul failed to allege how reduced competition in Canada had a “direct, substantial and reasonably foreseeable effect” on U.S. commerce, as required by the Foreign Trade Antitrust Improvements Act (“FTAIA”).