Central District Of California Allows Sherman Act Claims Against Performing Rights Organization To Proceed But Strikes Claims For Monetary Relief
On February 13, 2020, Judge Terry Hatter of the United States District Court for the Central District of California issued an order denying Defendant Global Music Rights LLC (GMR)’s motion to dismiss antitrust claims based on its licensing practices, but striking all claims for restitution or disgorgement of profits. Radio Music License Committee Inc. v. Global Music Rights LLC, 19-cv-03957 (C.D. Cal. February 13, 2020).
FTC And State Regulators Bring Enforcement Action In Southern District Of New York Against “Pharma Bro” Martin Shkreli
On Monday, January 27, 2020, the Federal Trade Commission (“FTC” or “the Commission”) and the New York Attorney General filed suit in federal court in the Southern District of New York against Martin Shkreli and Vyera Pharmaceuticals based on allegations of market monopolization. FTC v. Vyera Pharmaceuticals, LLC, No. 1:20-cv-00706 (S.D.N.Y. filed Jan. 27, 2020). The case has been assigned to U.S. District Judge Denise L. Cote. Shkreli, commonly referred to in the media as “pharma bro,” gained notoriety for behavior that led to his federal incarceration for securities fraud in 2017. The Complaint alleges that Shkreli and others engaged in an unlawful scheme to block low-cost generic competition and maintain a monopoly on Daraprim, an essential drug used to treat the potentially fatal parasitic infection toxoplasmosis, in violation of the Sherman Act and New York state law. The case is a notable example of close collaboration between federal antitrust enforcers and a state attorney general’s office.
D.C. District Court Denies Motion To Dismiss FTC Monopolization Claim Based On Loyalty Discount Program And Exclusive Dealing Arrangements
On January 17, 2020, District Judge John D. Bates of the United States District Court for the District of Columbia denied defendant’s motion to dismiss an FTC complaint alleging monopolization in violation of Section 2 of the Sherman Act against a health information technology company (the “Company”), rejecting the Company’s arguments that the Court lacked subject matter jurisdiction under Section 13(b) of the FTC Act, and finding that FTC had adequately pleaded a Section 2 violation. FTC v. Surescripts LLC, 19-1090 (D.D.C. Jan. 17, 2020).
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.
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.
In Case Against Major Technology Corporation, United States Supreme Court Holds Mobile Phone Owners Have Antitrust Standing To Bring Claims Against Operator Of Application Store
On May 13, 2019, the Supreme Court of the United States affirmed a Ninth Circuit decision reversing a California District Court’s dismissal of plaintiffs’ antitrust claims on grounds that plaintiffs could not sue defendant because they were not direct purchasers from defendant. The 5-4 majority opinion written by Justice Kavanaugh held that plaintiffs—owners of mobile phones produced and sold by defendant—were direct purchasers because they bought applications directly from defendant’s application store. Thus, as injured buyers under Section 4 of the Clayton Act, plaintiffs were not barred from suing defendant on claims that defendant monopolized the retail market for the sale of its phone applications and exploited this position to overcharge consumers. Apple Inc. v. Pepper, No. 17-204 (U.S. May 13, 2019).
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.
United States District Court For The District Of Delaware Dismisses Allegations Of Anticompetitive Drone Pricing
On March 18, 2019, Judge Leonard P. Stark of the U.S. District Court for the District of Delaware dismissed allegations of predatory pricing in the “prosumer” drones market by DJI Technology Co., Ltd. and DJI Europe B.V. (collectively “DJI”). SZ DJI Technology Co., Ltd. v. Autel Robotics USA LLC, No. 16-706-LPS (D. Del. Mar. 18, 2019). The Court ruled in favor of the DJI plaintiffs, who were defendants in the antitrust counterclaims in the suit, finding that defendants Autel Robotics USA LLC and Autel Aerial Technology Co., Ltd. (collectively “Autel”) did not allege sufficient facts for a plausible predatory pricing claim. In particular, the Court found that Autel failed to show that DJI’s prices were below cost.
Ninth Circuit Reinstates $53 Million Jury Award Against Supplier In “Refusal to Deal” Monopolization Action
On February 8, 2019, a three-judge panel of the United States Court of Appeals for the Ninth Circuit reversed the district court and reinstated a jury verdict that found a cigar manufacturer liable for attempted monopolization under Section Two of the Sherman Act for various actions it took or refused to take in connection a contract manufacturing relationship with a competitor. Trendsettah USA, Inc. v. Swisher Int’l, Inc., No. 16-56823 (9th Cir. Feb. 8, 2019). The decision is notable in allowing the imposition of Sherman Act liability for conduct that amounted largely to alleged breaches of, and a refusal to renew, a supply contract, and illustrates that potential claims under Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985), still pose litigation risks for firms with significant market shares that terminate profitable relationships with their competitors.
District Court Rejects Motion To Dismiss Antitrust Claims In Data Analytics Joint Venture
On December 12, 2018, Judge William H. Orrick of the United States District Court for the Northern District of California issued an order granting in part and denying in part defendants’ motion to dismiss on a variety of trade secret, antitrust, and copyright claims. Teradata Corporation, et al., v. SAP SE, et al., Case No. 3:18-cv-03670 (N.D. Cal. Dec. 12, 2018). The Court agreed with defendants that the trade secret claims required additional specificity, but found the remaining claims, including those based on copyright and antitrust grounds, to be sufficiently pled.
Northern District Of California Holds That Commitments Made In Industry Standard Setting Required Chipmaker To License Standard-Essential Patents To “All Comers,” Including Competitors
On November 6, 2018, Judge Lucy H. Koh of the U.S. District Court for the Northern District of California sided with the Federal Trade Commission (“FTC”) and granted a motion for partial summary judgment, holding that contractual commitments it agreed to in the standards-setting process required the defendant chipmaker to license certain essential patents to competing modem chip suppliers. Federal Trade Comm’n v. Qualcomm Inc., No. 17-CV-00220 (N.D. Cal. Nov. 6, 2018).
District Of New Jersey Denies Class Certification Based On Presence Of Uninjured Class Members In Proposed Class
On October 30, 2018, Judge Madeline C. Arleo of the United States District Court for the District of New Jersey declined to certify a proposed consumer class in litigation accusing a pharmaceutical manufacturer (the “Company”) of maintaining a monopoly for two of its drugs. Judge Arleo held that, under Federal Rule of Civil Procedure 23, a class cannot be certified when a non-trivial portion of class members were not injured, absent some “reasonable and workable plan” to segregate those members from the rest of the class. In re Thalomid and Revlimid Antitrust Litig., No. 2:14-cv-06997, at *26, *29 (D.N.J. Oct. 30, 2018) (“Opinion”). In so holding, Judge Arleo relied heavily on the First Circuit’s recent decision in In re Asacol Antitrust Litig., which reversed a district court’s approval of a class on similar grounds. No. 18-1065, 2018 WL 4958856, at *11 (1st Cir. Oct. 15, 2018); https://www.lit-antitrust.shearman.com/first-circuit-reverses-class-certification-based.
First Circuit Reverses Class Certification Based On Presence Of Uninjured Class Members In Certified Class
On October 15, 2018, the United Stated Court of Appeals for the First Circuit, in an opinion by Judge William J. Kayatta, reversed a district court’s certification of a class of indirect purchasers of the drug Asacol, holding that, under Federal Rule of Civil Procedure 23, a class cannot be certified when a non-trivial portion of class members were not injured in fact, absent some “reasonable and workable plan” to segregate those members from the rest of the class. In re Asacol Antitrust Litig., No. 18-1065, 2018 WL 4958856, at *11 (1st Cir. Oct. 15, 2018).
United States District Court For the Eastern District Of Pennsylvania Finds Violation Of FTC Act Section 5 By Pharmaceutical Companies And Orders $448 Million Disgorgement
On June 29, 2018, Judge Harvey Bartle III of the U.S. District Court for the Eastern District of Pennsylvania issued a decision ruling that AbbVie Inc., Abbott Laboratories, and Unimed Pharmaceuticals LLC (together, “AbbVie”), along with Besins Healthcare, Inc. (“Besins”), violated Section 5(a) of the FTC Act by engaging in sham litigation to delay entry of competition to its testosterone replacement drug, and ordered disgorgement of $448 million. Federal Trade Commission v. AbbVie Inc., No. 2:14-cv-05151-HB (E.D. Pa. June 29, 2018). This represents the largest monetary award that the Federal Trade Commission (“FTC”) has achieved in a litigated antitrust case.
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.
Third Circuit Upholds Dismissal Of Attempted Monopolization Claims For Failure To Allege An Antitrust Violation Or Antitrust Injury
On March 27, 2018, the United States Court of Appeals for the Third Circuit upheld a March 2017 order by Judge Sanchez of the Eastern District of Pennsylvania dismissing an attempted monopolization claim asserted by the Philadelphia Taxi Association (“PTA”) and 80 individual taxicab companies against a leading ride-hailing company. Phila. Taxi Ass’n v. Uber Tech., Inc., No. 17-1871 (3d Cir. Mar. 27, 2018). The Court held that plaintiffs had failed to state a claim under Section 2 of the Sherman Act and had failed to allege antitrust injury.
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”).
Eastern District Of Pennsylvania Holds That Monopoly Power And Anti-Competitive Conduct By One Subsidiary Cannot Be Imputed To Another Subsidiary Of The Same Parent
On October 17, 2017, Judge Mitchell S. Goldberg of the United States District Court for the Eastern District of Pennsylvania dismissed monopolization claims brought by the Attorneys General of several states against Reckitt Benckiser Healthcare (UK) Ltd. (“RBH”) premised on an alleged “product hopping” scheme designed to prevent or delay less expensive generic versions of the drug Suboxone from entering the market. In re Suboxone (Buphrenorphine and Naloxone) Antitrust Litigation, No. 13-MD-2445, 2017 WL 4642285 (E.D. Pa. Oct. 17, 2017). In so doing, the Court held that the mere fact that two subsidiaries are owned by a common parent is not sufficient either to consolidate the alleged market power of the two firms for the purpose of assessing monopoly power or to attribute the actions of one subsidiary to the other in evaluating allegations of exclusionary conduct.