The Supreme Court Of California Clarifies The Legal Standards For Economic Torts And For California Business & Professions Code Section 16600 Claims
On August 3, 2020, a unanimous California Supreme Court clarified the legal standards for claims alleging tortious interference with contracts that are terminable at will and the substantive standard for review of alleged violations of California Business and Professions Code section 16600’s prohibition against restraints on the freedom to engage in a business. Ixchel Pharma, LLC v. Biogen, Inc., No. S256927, 2020 WL 4432623 (Cal. Aug. 3, 2020). On appeal from the Eastern District of California, the Ninth Circuit (Ixchel Pharma, LLC v. Biogen, Inc., 930 F.3d 1031 (9th Cir. 2019)) asked the California Supreme Court to answer two certified questions on unresolved issues of California law: (1) whether a plaintiff must plead an independently wrongful act to state a claim for tortious interference with a contract that is terminable at will; and (2) whether a contract is void under section 16600 where it restrains one entity from engaging in lawful business or trade with another entity.
California Appeals Court Reverses Denial Of Class Certification In Anheuser-Busch Pricing Suit
On May 29, 2020, the Court of Appeal for the Fifth Appellate District of California (Judge Brad Hill) reversed the lower court’s denial of certification for a class of convenience store owners pursuing a price discrimination claim under California law. Dhillon, et al. v. Anheuser-Busch, LLC, et al., No. F074952, 2020 WL 2786837 (Cal. Ct. App. May 29, 2020). Plaintiffs alleged that defendants, a major brewer and its distributor, violated California law requiring wholesalers to sell to retailers on a nondiscriminatory basis and charge only the prices filed with the Department of Alcoholic Beverage Control. Specifically, plaintiffs alleged that defendants engaged in a systematic scheme to favor certain retailers over others in the pricing of beer by issuing a disproportionately large number of consumer coupons to favored retailers. Those retailers, in turn, allegedly redeemed the coupons themselves rather than issuing them to customers to use in connection with a particular beer sale. Based on this scheme, plaintiffs alleged, the favored retailers effectively received wholesale prices, below the prices paid by “disfavored” retailers.
Texas Court Of Appeals Gives Plaintiff Second Take In Conspiracy Suit Against Major Movie Theater Chain
On December 5, 2019, the Court of Appeals for the First District of Texas held that a movie theater chain presented sufficient evidence suggesting two national competitors conspired to prevent the chain’s entry to withstand summary judgment. This ruling reversed the trial court’s decision, which granted summary judgment to the remaining defendant and dismissed antitrust restraint-of-trade claims. iPic-Gold Class Entm’t LLC, et al. v. AMC Entm’t Holdings Inc., et al., No. 01-17-00805-CV (Tex. App. Dec. 5, 2019). Justice Peter Kelly, writing for a unanimous panel, ruled that evidence of parallel actions by the two competitors and communication lines between them raised genuine issues of material fact as to the existence of a conspiracy in violation of The Texas Free Enterprise and Antitrust Act (“TFEAA”).
Seventh Circuit Closes Chapter On Creditor Price Fixing Claims Against Bankruptcy Software Provider
On September 5, 2019, the U.S. Court of Appeals for the Seventh Circuit affirmed a decision by the Northern District of Illinois dismissing Illinois state antitrust claims brought by a bankruptcy creditor against the bankruptcy trustee’s software services provider. McGarry & McGarry, LLC v. Bankr. Mgt. Sols., Inc., 18-2619, 2019 WL 4197546 (7th Cir. Sept. 5, 2019). Plaintiff alleged that defendant entered into a price-fixing conspiracy with other bankruptcy software providers. Judge Diane S. Sykes, writing for a unanimous panel, ruled that plaintiff lacked antitrust standing because it did not meaningfully participate in the relevant market for bankruptcy software services and, accordingly, its alleged injury was too remote from the claimed price-fixing violation.
United States District Court For The Southern District Of California Certifies Big Tuna Classes
On July 30, 2019, U.S. District Court Judge Janis Sammartino of the Southern District of California certified three separate classes of tuna purchasers alleging price-fixing by producers of packaged tuna: (1) direct-purchaser plaintiffs, (2) commercial-food-preparer plaintiffs, and (3) end-payer plaintiffs. In re Packaged Seafood Products Antitrust Litigation, No. 15-MD-2670, July 30, 2019.
Central District Of California Finds Clothing Rental Company’s Antitrust Claims All Style, No Substance
On June 24, 2019, Judge George H. Wu of the United States District Court for the Central District of California granted a defendant clothing rental company’s motion to dismiss antitrust claims brought under California’s Cartwright Act, as well as other state-law claims brought by a competing clothing rental company. FashionPass, Inc. v. Rent the Runway, Inc., No. 19-cv-3537-CG(JCx) (June 24, 2019). Plaintiff alleged that defendant interfered with and intentionally caused certain clothing suppliers to cancel their contracts with, and refuse to supply, plaintiff in violation of the Cartwright Act and California’s Unfair Competition Law (“UCL”). Plaintiff also brought tort claims for intentional interference with contract and intentional interference with prospective economic advantage based on the same alleged conduct. The Court dismissed the complaint in full, finding that plaintiff failed to plead a primary violation of the Cartwright Act, because the complaint did not identify any harm to the market or to competition generally, but instead pleaded only harm to plaintiff itself.
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.
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.
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).
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.
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.
District Of New Jersey Finds State Antitrust And Consumer Protection Claims Based On Allegedly Fraudulent Procurement And Enforcement Of Patents And Related Reverse-Payment Agreement Not Preempted By Federal Patent Law
On September 18, 2018, Judge Peter G. Sheridan of the U.S. District Court for the District of New Jersey granted in part and denied in part a defense motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) seeking dismissal of state antitrust and consumer protection claims based on the allegedly fraudulent procurement and enforcement of certain pharmaceutical patents and a related alleged pay-for-delay scheme. In re Effexor Antitrust Litig., No. 3:11-cv-05661 (D.N.J. Sept. 18, 2018).CATEGORY: State Antitrust and Competition Law
District Of Massachusetts Certifies Direct And Indirect Purchaser Classes In Alleged Pay-For-Delay Action Relating To Solodyn
On October 16, 2017, Judge Denise J. Casper of the United States District Court for the District of Massachusetts granted class certification to two classes of purchasers allegedly injured by a pay-for-delay scheme relating to prescription drug Solodyn: a Direct Purchaser Plaintiff class (“DPPs”) and an End-Payor Plaintiff class (“EPPs”). In Re Solodyn (Minocycline Hydrochloride) Antitrust Litig., No. 14-md-02503 (D. Mass. Oct. 16, 2017). In certifying the DPP class, the Court rejected the argument that affiliated corporate entities should be consolidated in evaluating the numerosity requirement of Federal Rule of Civil Procedure 23(a). In certifying both classes, the Court accepted the plaintiffs’ experts’ proffered methodologies to establish common or class-wide impact as adequate for Rule 23 purposes over a variety of defense challenges.