Northern District Of California Dismisses Class Action Suit Against Social Networking Company Without Prejudice, Rejecting An Argument That Failing To Share Data Constitutes Anticompetitive Conduct
On March 8, 2023, Judge Haywood S. Gilliam, Jr. of the United States District Court for the Northern District of California granted a motion to dismiss a proposed antitrust class action lawsuit alleging that social networking company (the “Company”) has a monopoly in the professional social networking market, which it protects through a barrier to entry comprising the Company’s “data centralization and aggregation, its machine learning and AI infrastructure, and the inferred data it produce[s].” Crowder et al. v. LinkedIn Corporation, No. 22-cv-00237-HSG (N.D. Cal., Mar. 8, 2023). Plaintiffs alleged the Company violated Sections 1 and 2 of the Sherman Act by engaging in a “monopoly broth” of anticompetitive conduct, ranging from exclusive data sharing agreements to an alleged agreement with Facebook to divide markets. Granting the motion to dismiss, the Court ruled that none of the alleged activities amounted to anticompetitive conduct, either individually or on aggregate.
Generic Drug Manufacturer Barred From Bringing “Sham” Litigation Claim By Previous Settlement
On July 21, 2022, the United States Court of Appeals for the Third Circuit unanimously affirmed a district court judge’s conclusion that a prior settlement released a claim by plaintiff, a generic pharmaceutical manufacturer (the “Company”), that defendants engaged in “sham” patent litigation to block it from launching a generic version of defendants’ brand-name drug. Perrigo Co, et al. v. AbbVie Inc, et al., No. 21-3026 (3d Cir. Jul. 21, 2022).
Ninth Circuit Reverses Certification Of A Nationwide Indirect Purchaser Class Due To State Law Differences And Its Prior Decision In FTC v. Qualcomm
On September 29, 2021, the United States Court of Appeals for the Ninth Circuit reversed a district court’s order certifying a nationwide class of up to 250 million people. The Ninth Circuit concluded that a common issue of law does not predominate because the laws of other several states apply, not just California’s Cartwright Act and Unfair Competition Law. In re Qualcomm Antitrust Litig., No. 19-15159, 2021 WL 4448713 (9th Cir. Sept. 29, 2021). The indirect purchaser plaintiffs are consumers who allege that Qualcomm Incorporated (“Qualcomm”) violated federal antitrust laws and California’s Cartwright Act and Unfair Competition Law by engaging in certain corporate policies regarding their licensing of standard essential patents (“SEPs”) and related sales of modem chips. The Ninth Circuit held that California’s choice of law rules precluded class certification because states without an Illinois Brick repealer statute, which often authorize indirect purchasers to bring antitrust damages suits, “have a clear interest in applying their laws to class members” and to apply only California law would “allow California to set antitrust enforcement policy for the entire country.”
Ninth Circuit Rejects Sherman Act Challenge To Non-Solicitation Provision In Contract Between Traveling Nurse Staffing Firms
On July 19, 2021, the United State Court of Appeals for the Ninth Circuit affirmed summary judgment in favor of defendant/appellee healthcare staffing firm, holding that the non-solicitation provision in defendant’s contract with plaintiff/appellant to provide traveling nurse services did not amount to a naked restraint on trade because it was ancillary to the overall pro-competitive agreement between the parties and plaintiff had not shown harm to competition. Aya Healthcare Servs., Inc. v. AMN Healthcare, Inc., No. 20-55679, 2021 WL 3671384 (9th Cir. Aug. 19, 2021).
Court Upholds Narrow Interpretation Of “Sham Suit” Exception To Noerr-Pennington Doctrine
On July 26, 2021, Chief Judge Freda L. Wolfson of the United States District Court for the District of New Jersey dismissed “sham litigation” monopolization counterclaims against a pharmaceutical patent holder, finding that the patent holder conducted a reasonable investigation before filing the underlying infringement suit and did not unreasonably delay the proceedings before determining that the counterclaim plaintiff’s generic substitute for the patent holder’s drug did not infringe its patent and voluntarily dismissing its infringement claims. Takeda Pharmaceutical Co. Ltd., et al. v. Zydus Pharmaceuticals (USA) Inc., et al., No. CV 18-1994 (FLW), 2021 WL 3144897 (D.N.J. July 26, 2021). Because the generic manufacturer could not establish that the patent holder’s infringement lawsuit was either objectively or subjectively baseless, the Court granted summary judgment for the patent holder.
Monopolization Complaint Dismissed For Failure To Adequately Define The Relevant Product Market Or Plead Anticompetitive Conduct
On May 13, 2021, U.S. District Judge Beth Labson Freeman of the Northern District of California dismissed, with leave, to amend a monopolization claim against Google and its parent company for failure to properly define the relevant product market or to adequately plead anticompetitive conduct. In re Google Digital Advertising Antitrust Litigation, No. 20-CV-03556-BLF (N.D. Cal. May 13, 2021).
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).
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.