Justia Antitrust & Trade Regulation Opinion Summaries

OJ Commerce and Naomi Home sued KidKraft and MidOcean. OJ Commerce and Naomi Home alleged that “KidKraft control[led] over 70% of the wooden play kitchen market in the continental United States.” They asserted that “KidKraft’s termination of its relationship with OJ[] [Commerce] had no legitimate business justification or procompetitive benefit” and violated section two of the Sherman Act. They asserted that, alternatively, the termination was a form of attempted monopolization, a separate violation of section two.  The district court entered summary judgment in favor of KidKraft and MidOcean.   The Eleventh Circuit affirmed the summary judgment order. The court held that the district court correctly entered a summary judgment in favor of MidOcean and KidKraft on the section-one claim. The court reasoned that a company ordinarily cannot conspire with an entity it owns and controls and with which it does not compete. Here, MidOcean owns nothing other than its interest in KidKraft that sells toys of any type. And as noncompetitors, MidOcean and KidKraft are incapable of conspiring for purposes of section one because the evidence establishes that MidOcean has majority ownership of and controls KidKraft. It is undisputed that, during the relevant period, MidOcean owned approximately 57 percent of the membership interests in the company that wholly owns KidKraft.Further, the court held that the district court correctly entered a summary judgment against the section-two claim because OJ Commerce and Naomi Home failed to present substantial evidence to support a viable theory of monopolization. View "OJ Commerce, LLC, et al. v. KidKraft, Inc., et al." on Justia Law

Plaintiffs, investors in 22nd Century Group, alleged on behalf of an investor class that (1) Defendants engaged in an illegal stock promotion scheme in which they paid authors to write promotional articles about the company while concealing the fact that they paid the authors for the articles; and (2) Defendants failed to disclose an investigation by the Securities and Exchange Commission (“SEC”) into the company’s financial control weaknesses. Plaintiffs alleged they were harmed after public articles revealed the promotion scheme and stock prices fell. The district court dismissed the complaint for failing to state a claim.   On appeal, Plaintiffs argued (1) they adequately alleged material misrepresentations sufficient to sustain claims under SEC Rule 10b-5; (2) their claim under Section 20(a) of the Securities Exchange Act was premised on a valid predicate violation of Section 10(b); and (3) the district court erred in dismissing the complaint with prejudice.   The Second Circuit affirmed in part and vacated in part. On the first and second points, the court agreed that the allegation that Defendants failed to disclose the SEC investigation states a material misrepresentation and could also support Section 20(a) liability. However, the court found no merit in the remaining challenges. The court reasoned that because the complaint does not adequately allege that Defendants had a duty to disclose that they paid for the articles’ publication, Plaintiffs fail to state a claim that the existence of the stock promotion scheme constituted a materially misleading omission. View "Noto v. 22nd Century Grp." on Justia Law

The San Diego City Attorney brought an enforcement action under the California Unfair Competition Law, Business and Professions Code sections 17200, et seq. (UCL), on behalf of the People of California against Maplebear Inc. DBA Instacart (Instacart). In their complaint, the State alleged Instacart unlawfully misclassified its employees as independent contractors in order to deny workers employee protections, harming its alleged employees and the public at large through a loss of significant payroll tax revenue, and giving Instacart an unfair advantage against its competitors. In response to the complaint, Instacart brought a motion to compel arbitration of a portion of the City’s action based on its agreements with the individuals it hired (called "Shoppers"). The trial court denied the motion, concluding Instacart failed to meet its burden to show a valid agreement to arbitrate between it and the State. Instacart appealed, arguing that even though the State was not a party to its Shopper agreements, it was bound by its arbitration provision to the extent the State sought injunctive relief and restitution because these remedies were “primarily for the benefit of” the Shoppers. The Court of Appeal rejected this argument and affirmed the trial court’s order. View "California v. Maplebear Inc." on Justia Law

The SEC brought an enforcement action within the agency against Petitioners for securities fraud. An SEC administrative law judge adjudged Petitioners liable and ordered various remedies, and the SEC affirmed on appeal over several constitutional arguments that Petitioners raised.   The Fifth Circuit held that (1) the SEC’s in-house adjudication of Petitioners’ case violated their Seventh Amendment right to a jury trial; (2) Congress unconstitutionally delegated legislative power to the SEC by failing to provide an intelligible principle by which the SEC would exercise the delegated power, in violation of Article I’s vesting of “all” legislative power in Congress; and (3) statutory removal restrictions on SEC ALJs violate the Take Care Clause of Article II.   The court reasoned that the Seventh Amendment guarantees Petitioners a jury trial because the SEC’s enforcement action is akin to traditional actions at law to which the jury-trial right attaches. Further, the SEC proceedings at issue suffered from another constitutional infirmity: the statutory removal restrictions for SEC ALJs are unconstitutional. View "Jarkesy v. SEC" on Justia Law

Freight shippers (“Plaintiffs”) alleged that the nation’s four largest freight railroads (“Defendants” or “Railroads”) have violated the Sherman Act, 15 U.S.C. Section 1, by engaging in a price-fixing conspiracy to coordinate their fuel surcharge programs as a means to impose supra-competitive total price increases on their shipping customers. Before hearing summary judgment motions, the District Court considered Defendants’ motions to exclude certain evidence on which Plaintiffs rely. Defendants argued the challenged documents were inadmissible under 49 U.S.C. Section 10706(a)(3)(B)(ii)(II) (“Section 10706”) as evidence of the Railroads’ discussions or agreements concerning “interline” traffic.   The D.C. Circuit affirmed in part and reversed in part the District Court’s interpretation of Section 10706, vacated the District Court’s order and remanded for the court to reconsider the evidence at issue. The court held that the District Court’s interpretation of Section 10706 sometimes strays from the literal terms of the statute.  The court reasoned that a discussion or agreement “concern[s] an interline movement” only if Defendants meet their burden of showing that the movements at issue are the participating rail carriers’ shared interline traffic. A discussion or agreement need not identify a specific shipper, shipments, or destinations to qualify for exclusion; more general discussions or agreements may suffice. Further, the court held that a carrier’s internal documents need not convey the substance of a discussion or agreement concerning interline movements to qualify for exclusion under the statute. View "In re: Rail Freight Fuel Surcharge Antitrust Litigation" on Justia Law

Vermont National Telephone Company filed a qui tam action against Northstar, SNR, DISH, and several affiliated companies (collectively, “Defendants”), alleging they violated the False Claims Act (“FCA”) by making false certifications and manipulating the Commission’s auction rules to secure fraudulent bidding credits on spectrum licenses. The district court dismissed the suit, resting its decision on the FCA’s “government-action bar” and its “demanding materiality standard.”   The D.C. Circuit reversed the district court’s dismissal finding that neither basis the district court invoked warranted dismissal.  Defendants argued that the Commission levied civil money penalties by subjecting Northstar and SNR to default payment.  The court reasoned that even assuming that these default payments are civil money penalties, they have no bearing on whether the Commission’s licensing proceeding is a “civil money penalty proceeding” because the default payments were not assessed during the licensing proceeding.   Second, Defendants pointed out that the Commission may assess forfeiture penalties for willful failure to comply with any FCC rule or regulation. Commission regulations, however, authorize assessment of forfeiture penalties only in forfeiture proceedings.   Third, Defendants alluded to "other penalties” that the Commission may impose, however, because the Commission had no authority to assess civil money penalties during its licensing proceeding, which evaluated only Northstar’s and SNR’s long-form applications and the petitions to deny them, the licensing proceeding was not an “administrative civil money penalty proceeding.”  Finally, the court held that Vermont Telephone also satisfied Rule 9(b) by setting forth detailed allegations regarding the “time, place, and manner” of the fraudulent scheme. View "USA, ex rel. Vermont National Telephone Company v. Northstar Spectrum, LLC" on Justia Law

In the Automotive Parts Antitrust multi-district litigation, a subset of consumers and businesses (End-Payor Plaintiffs), alleged that automotive-part manufacturers fixed prices in violation of antitrust laws and that they paid elevated prices for defendants’ parts or purchased or leased vehicles containing those parts. After eight years of motions, negotiations, approval hearings, and objections, the district court granted final approval to settlements between End-Payor Plaintiffs and defendants. The settlement agreements, the class notices, and plans of allocation for each settlement agreement defined the classes of plaintiffs to include consumers and businesses that bought or leased certain qualifying vehicles or paid to replace certain qualifying vehicle parts during designated time periods. The class definitions did not include insurers, assignees, or subrogees.FRS, a third-party company that manages and files claims for clients, later submitted claims on behalf of insurers that purchased or leased eligible vehicles for company use (Fleet Vehicles) and claims that are based on its clients’ claimed “subrogation rights” to class members’ claims. The district court denied FRS’s motion to intervene as untimely. The Sixth Circuit affirmed. FRS offers no legitimate excuse for failing to intervene after End-Payor Plaintiffs repeatedly expressed their adverse position; the district court alerted FRS to a deficient filing. End-Payor Plaintiffs would have suffered delay-related prejudice had the district court allowed intervention. View "Automotive Parts Antitrust Litig." on Justia Law

Defendant appealed a judgment entered in district court following a jury trial, convicting him of conspiracy to restrain trade in violation of Section 1 of the Sherman Act. On appeal, Defendant argued that the district court erred by failing to consider his proffered evidence that the illegal trading activity lacked anticompetitive effects and had procompetitive benefits and by refusing to conduct a pre-trial assessment as to whether the per se rule or the rule of reason applies. He further contended that the district court abused its discretion in precluding his competitive effects evidence from admission at trial and in conducting only a limited post-trial inquiry into juror misconduct.   The Second Circuit affirmed the ruling, concluding that the district court was not required to make a threshold pre-trial determination as to whether the per se rule or the rule of reason applies to the alleged misconduct in this case. The court reasoned that the grand jury indicted Defendant for a per se antitrust violation and the government was entitled to present its case to the jury. The district court properly assessed the sufficiency of the evidence of the alleged per se violation and the sufficiency decision upholding the verdict is not challenged on appeal. In addition, the district court acted within its broad discretion in strictly limiting the admission of Defendant’s competitive effects evidence at trial. Finally, the district court did not abuse its discretion in ending its post-trial investigation into alleged juror misconduct. View "United States v. Aiyer" on Justia Law

Host operates airport concessions. MarketPlace is the landlord at Philadelphia International Airport (PHL). After competitive bidding, Host won PHL concession spots, planning to open a coffee shop and a restaurant. MarketPlace insisted on a lease term allowing it to grant “third-parties exclusive or semi-exclusive rights to be sole providers" of certain foods and beverages, including a “pouring-rights agreement” (PRA), “granting a beverage manufacturer, bottler, distributor or other company (e.g., Pepsi or Coca-Cola) the exclusive control over beverage products advertised, sold and served at [PHL].”Host abandoned the deal and sued, alleging that MarketPlace would receive payoffs from a “big soda company” courtesy of an exclusive PRA. The complaint alleged an unlawful tying arrangement and an illegal conspiracy and agreement in restraint of trade, in violation of Section 1 of the Sherman Act. The district court dismissed the case with prejudice, finding Host failed to adequately plead a relevant geographic market. The Third Circuit affirmed. Host lacks antitrust standing and has not adequately pled a violation of the Sherman Act. Host alleged harm only to itself; failure to secure preferred contractual terms is not an antitrust injury. Host was not being forced to purchase any product. MarketPlace’s control over the non-alcoholic beverage suppliers at PHL does not stem from market power but from its role as a landlord. View "Host International Inc v. MarketPlace PHL LLC" on Justia Law

The Supreme Court granted a writ of prohibition sought by Thornhill Motor Care, Inc. to prevent the Circuit Court of Mingo County from enforcing its order denying Petitioner's motion to dismiss based on improper venue, holding that Thornhill established that it was entitled to the writ.Moore Chrysler, Inc. brought this action against Thornhill in Mingo County, alleging violations of W. Va. Code 17A-6A-1 to -18 and seeking declaratory and injunctive relief. Thornhill moved to dismiss the complaint pursuant to W. Va. R. Civ. P. 12(b)(3) on the basis of improper venue, asserting that the proper venue for this lawsuit was in Logan County pursuant to the general venue statute, W. Va. Code 56-1-1. The circuit court denied the motion, basing its ruling on a specific venue statute, W. Va. Code 17A-6A-12(3), which governs declaratory judgment actions brought by new motor vehicle dealers against manufacturers or distributors. Thornhill then sought the writ of prohibition at issue. The Supreme Court granted the writ, holding that the circuit court committed clear legal error in applying section 17A-6A-12(3) rather than section 56-1-1. View "Thornhill Motor Car, Inc. v. Honorable Miki Thompson" on Justia Law