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”).
Third Circuit Affirms Dismissal In Favor Of Defendant Internet Service Provider By Disconnecting Monopsony And Conspiracy Claims
On April 19, 2019, the Third Circuit Court of Appeals affirmed the Middle District of Pennsylvania’s dismissal of monopsony, antitrust conspiracy, and race discrimination claims by two plaintiff cable installer contractors against defendant, a dominant provider of internet services. Cable Line, Inc. v. Comcast Cable Communications of Pennsylvania, Inc., No. 18-2316 (3d Cir. Apr. 19, 2019). On the antitrust claims, the Third Circuit held that plaintiffs did not adequately allege facts to show that they suffered antitrust injury from the allegedly anticompetitive conduct, that defendant held monopsony power and used it to exclude other buyers of cable installation services, or that defendant had any agreement with the installers it chose as part of its RFP process to restrain trade in the cable installation market. The Third Circuit did, however, suggest that plaintiffs consider a retooled complaint alleging that defendant ties cable installation to its cable services, which may cause higher installation prices and reduce downstream competition.
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.
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).
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.
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).
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.
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).
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.
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.
Second Circuit Revives Schwab’s Claims Flowing From Alleged LIBOR Manipulation
On February 23, 2018, the United States Court of Appeals for the Second Circuit vacated portions of Judge Buchwald’s 2015 opinion that had dismissed claims brought by Charles Schwab Corp. and affiliates against over a dozen banks alleged to have manipulated U.S. Dollar LIBOR for lack of personal jurisdiction for state-law claims and a failure to link the alleged manipulation to damages for Securities Exchange Act claims. Charles Schwab Corp., et al. v. Bank of America Corp., et al., 16-1189-cv (2d Cir. Feb. 23, 2018). Schwab had been among the many plaintiffs to pursue claims against LIBOR panel banks under the antitrust laws, but—while the dismissal of those claims was pending appeal before the Second Circuit—Schwab initiated a parallel action against LIBOR panel banks, alleging California common law fraud and unjust enrichment claims, statutory claims under California’s Business and Professions Code, and claims under the Securities Exchange Act. The district court dismissed the complaint in its entirety, holding that (i) personal jurisdiction was lacking for the state law claims because the alleged manipulation took place outside of the U.S.; and (ii) the complaint failed to allege facts in support of a Securities Exchange Act claim because it failed to connect the suppression of LIBOR to any damages suffered by Schwab. In re LIBOR-based Financial Instruments Antitrust Litig., 2015 WL 6243526, *70 (Oct. 20, 2015 S.D.N.Y.). The Second Circuit vacated these rulings, directing the district court to grant Schwab leave to amend its complaint to address a number of issues identified in the opinion.
U.S. District Court For The District Of New Jersey Dismisses Class Action For Failure To Identify Concerted Action And Relevant Market
01/23/2018On January 9, 2018, Judge William J. Martini of the United States District Court for the District of New Jersey dismissed with prejudice a putative class action brought by a purchaser of Jaguar vehicles against Jaguar Land Rover North America LLC, Jaguar Land Rover Limited (collectively, the “manufacturer defendants”), their dealers, and a third-party consulting company. Baar v. Jaguar Land Rover North Am., LLC, et al., No. 2:17-04142 (D.N.J. Jan. 9, 2018). Plaintiff alleged that defendants unreasonably restrained trade by implementing and enforcing a no-export agreement that prohibited purchasers from reselling Jaguar’s vehicles abroad for at least one year. The Court held that the plaintiff’s complaint failed to state a violation of federal or state antitrust laws because it did not adequately allege (1) concerted action among the defendants, or (2) that Jaguar’s no-export policy produced anticompetitive effects within a cognizable antitrust product and geographic market.
Northern District Of California Dismisses Monopolization Claims By Hospital Operators For Failure To State A Claim
On December 7, 2017, Magistrate Judge Laurel Beeler of the United States District Court for the Northern District of California dismissed a conspiracy to monopolize claim brought by two local hospital operators against Kaiser Foundation Health Plan, Inc., Kaiser Foundation Hospitals, Inc., and Permanente Medical Group, Inc. Northbay Healthcare Grp., Inc., et al. v. Kaiser Found. Health Plan, Inc., et al., No. 17-cv-05005-LB, 2017 WL 6059299 (N.D. Cal. Dec. 7, 2017). The plaintiffs, who operate two hospitals in Solano County, California, alleged that defendants conspired to monopolize the healthcare insurance and services market in Solano County by (1) terminating their rate agreements with plaintiffs, and (2) steering patients to or away from defendants’ hospital emergency rooms based on the defendants’ financial incentives. The Court dismissed the complaint, holding that plaintiffs did not adequately allege (1) a combination or conspiracy to monopolize, (2) specific intent to monopolize, or (3) a causal antitrust injury. Finding these elements lacking, the Court did not address whether plaintiffs alleged an overt act in furtherance of the alleged conspiracy, the fourth element of the claim.