Justia Antitrust & Trade Regulation Opinion Summaries

Apple sells iPhone applications (apps) directly to iPhone owners through its App Store—the only place where iPhone owners may lawfully buy apps. Most apps are created by independent developers under contracts with Apple. Apple charges the developers a $99 annual membership fee, allows them to set the retail price of the apps, and charges a 30% commission on every app sale. Four iPhone owners sued, alleging that Apple has unlawfully monopolized the aftermarket for iPhone apps. The Ninth Circuit reversed the dismissal of the suit concluding that the owners were direct purchasers under the Supreme Court’s “Illinois Brick” precedent.The Supreme Court affirmed. The Clayton Act provides that “any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue,” 15 U.S.C. 15(a), and readily covers consumers who purchase goods or services at higher-than-competitive prices from an allegedly monopolistic retailer. While indirect purchasers who are two or more steps removed from the violator in a distribution chain may not sue, the iPhone owners are not consumers at the bottom of a vertical distribution chain who are attempting to sue manufacturers at the top of the chain. The absence of an intermediary in the distribution chain between Apple and the consumer is dispositive. The Court rejected an argument that Illinois Brick allows consumers to sue only the party who sets the retail price. Apple’s interpretation would contradict the long-standing goal of effective private enforcement and consumer protection in antitrust cases. Illinois Brick is not a get-out-of-court-free card for monopolistic retailers any time that a damages calculation might be complicated. View "Apple, Inc. v. Pepper" on Justia Law

The Court of Chancery granted in part Defendant's motion to dismiss as to the count alleging a violation of the federal Computer Fraud and Abuse Act (CFAA) but denied Defendant's motion as to the remainder of the non-contractual claims against him, holding that Plaintiff's CFAA claim was legally viable only as to Defendant's post-resignation conduct and that the dismissal of Plaintiffs' other claims was inappropriate.Defendant was the managing partner of Plaintiffs' Paris office and was a party to a limited liability partnership agreement that contained confidentiality obligations. Shortly before his resignation and then shortly after his resignation, Defendant accessed Plaintiffs' business files. Plaintiffs later sued for breach of the confidentiality provisions of the limited liability partnership agreement, asserting violations of the Delaware Uniform Trade Secrets Act (DUTSA), for common law conversion, and for violating CFAA. Defendant filed a motion to dismiss. The Court of Chancery granted the motion in part as to the CFAA claims but denied it as to the remaining claims, holding that under the narrow approach set forth in LVRC Holdings LLC v. Brekka, 581 F.3d 1127 (9th Cir. 2009), Defendant's actions while he was employed by Plaintiffs did not support a claim under the CFAA. View "AlixPartners, LLP v. Benichou" on Justia Law

IQ filed suit against three large dental supply distributors, alleging that defendants violated federal and state antitrust laws, as well as common law tort claims. The Second Circuit affirmed the district court's dismissal of IQ's claim that it has antitrust standing to challenge the boycott of SourceOne and the state dental associations (SDAs) that had partnered with SourceOne. However, the court found that IQ's antitrust and tort claims may go forward on the direct boycott allegations. In this case, IQ was an efficient enforcer of the antitrust laws solely with respect to its allegations that it has been directly boycotted by the actions of defendants. Accordingly, the court vacated in part and remanded for further proceedings. Finally, IQ's state law antitrust claims and common law tort claims were also vacated and remanded, but only to the extent that they relied on IQ's allegations that it suffered harm as a result of the direct boycott. View "IQ Dental Supply, Inc. v. Henry Schein, Inc." on Justia Law

The Second Circuit affirmed the district court's dismissal of LBE's action alleging claims under the Sherman Act and the Racketeer Influenced and Corrupt Organizations Act (RICO). LBE alleged that Barbri and law schools entered into agreements whereby Barbri donates money to the schools, bribes their administrators, and hires their faculty to teach bar review courses. LBE further alleged that, in exchange, the law school gives Barbri direct access to promote and sell its products on campus.The court adopted the district court's well-reasoned and thorough analysis of LBE's allegations and held that the district court properly dismissed the complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a plausible claim of relief. The district court concluded that internal contradictions and conclusory assertions in the complaint did not plausibly support LBE's claim that Barbri and the law schools conspired to enable Barbri to gain a monopoly. View "LLM Bar Exam, LLC v. Barbri, Inc." on Justia Law

The Supreme Court affirmed the judgment of the trial court granting a company using registered trade names (Plaintiff) a permanent injunction, statutory damages, and attorney fees against a corporation using a similar name (Defendant), holding that that Plaintiff was entitled to relief, and this relief is unaffected by the Court's determination that Plaintiff proved only two of its three causes of action.Specifically, the Court held (1) the denial of Defendant's motion to dismiss under Neb. Rev. Stat. 6-1112(b)(6) is moot; (2) Defendant's argument that the trial court erred in denying its motion under section 6-1112 lacked merit; (3) Plaintiff met its burden of proof regarding its claims for trade name infringement and deceptive trade practices, but it did not establish tortious interference with a business relationship or expectancy; and (4) the relief ultimately granted was supported by Plaintiff's claims for trade name infringement and deceptive trade practices. View "Denali Real Estate, LLC v. Denali Custom Builders, Inc." on Justia Law

In an action filed by the government to enjoin the vertical merger between AT&T and Time Warner under Section 7 of the Clayton Act, the DC Circuit affirmed the district court's denial of the government's request for a permanent injunction. At issue on appeal was the district court's findings on its increased leverage theory whereby costs for Turner Broadcasting System's content would increase after the merger, principally through threats of long-term "blackouts" during affiliate negotiations.The court held that the government failed to clear the first hurdle in meeting its burden of showing that the proposed merger was likely to increase Turner Broadcasting's bargaining leverage. Furthermore, the government's objections that the district court misunderstood and misapplied economic principles and clearly erred in rejecting the quantitative model were unpersuasive. In this case, the government offered no comparable analysis of data for prior vertical mergers in the industry that showed "no statistically significant effect on content prices" as defendants had. Additionally, the government's expert opinion and modeling predicting such increases failed to take into account Turner Broadcasting System's post-litigation irrevocable offers of no-blackout arbitration agreements, which a government expert acknowledged would require a new model. The court also held that the evidence indicated that the industry had become dynamic in recent years with the emergence of distributors of only on-demand content, such as Netflix and Hulu. View "United States v. AT&T, Inc." on Justia Law

Shire manufactured and marketed the lucrative drug Vancocin, which is used to treat a life-threatening gastrointestinal infection. After Shire learned that manufacturers were considering making generic equivalents to Vancocin, it inundated the Food and Drug Administration (FDA) with allegedly meritless filings to delay approval of those generics. The FDA eventually rejected Shire’s filings and approved generic equivalents to Vancocin. The filings resulted in a high cost to consumers. Shire had delayed generic entry for years and reaped hundreds of millions of dollars in profits. Nearly five years later, after Shire had divested itself of Vancocin, the Federal Trade Commission (FTC) filed suit against Shire under Section 13(b) of the Federal Trade Commission Act, 15 U.S.C. 53(b), seeking a permanent injunction and restitution, and alleging that Shire’s petitioning was an unfair method of competition. The district court dismissed, finding that the FTC’s allegations of long-past petitioning activity failed to satisfy Section 13(b)’s requirement that Shire “is violating” or “is about to violate” the law. The Third Circuit affirmed, rejecting “the FTC’s invitation to stretch Section 13(b) beyond its clear text.” The FTC admits that Shire is not currently violating the law and did not allege that Shire is about to violate the law. View "Federal Trade Commission v. Shire ViroPharma Inc" on Justia Law

Total Wine challenged provisions of Connecticut’s Liquor Control Act and regulations as preempted by the Sherman Act, 15 U.S.C. 1. Connecticut’s “post and hold” provisions require state-licensed manufacturers, wholesalers, and out-of-state permittees to post a “bottle price” or “can price” and a “case price” each month with the Department of Consumer Protection for each alcoholic product that the wholesaler intends to sell during the following month; they may “amend” their posted prices to “match” competitors’ lower prices but are obligated to “hold” their prices at the posted price (amended or not) for a month. Connecticut’s minimum-retail-price provisions require that retailers sell to customers at or above a statutorily defined “[c]ost,” which is not defined as the retailer’s actual cost. The post-and-hold number supplies the central component of “[c]ost” and largely dictates the price at which Connecticut retailers must sell their alcoholic products. The Second Circuit affirmed dismissal of the complaint. Connecticut’s minimum-retail-price provisions, compelling only vertical pricing arrangements among private actors, are not preempted. The post-and-hold provisions were not preempted because they “do not compel any agreement” among wholesalers, but only individual action. The court also upheld a price discrimination prohibition as falling outside the scope of the Sherman Act. View "Connecticut Fine Wine and Spirits LLC v. Seagull" on Justia Law

Innovation sold 5-Hour Energy. In 2004, it contracted with CN to manufacture and package 5-Hour. Jones, CN's President and CEO, had previously manufactured an energy shot. When the business relationship ended, CN had extra ingredients and packaging, which Jones used to continue manufacturing 5-Hour, allegedly as mitigation of damages. The companies sued one another, asserting breach of contract, stolen trade secrets or intellectual property, and torts, then entered into the Settlement, which contains an admission that CN and Jones “wrongfully manufactured” 5-Hour products and forbids CN from manufacturing any new “Energy Liquid” that “contain[s] anything in the Choline Family.” CN received $1.85 million. CN was sold to a new corporation, NSL. Under the Purchase Agreement, NSL acquired CN's assets but is not “responsible for any liabilities ... obligations, or encumbrances” of CN except for bank debt. The Agreement includes one reference to the Settlement. NSL, with Jones representing himself as its President, took on CN’s orders and customers, selling energy shots containing substances listed in the Choline Family definition. Innovation sued. Innovation was awarded nominal damages for breach of contract. The Sixth Circuit affirmed the rejection of defendants’ antitrust counterclaim, that NSL is bound by the Settlement, and that reasonable royalty and disgorgement of profits are not appropriate measures of damages. Jones is not personally bound by the Agreement. Upon remand, Innovation may introduce testimony that uses market share to quantify its lost profits. The rule of reason provides the proper standard for evaluating the restrictive covenants; Defendants have the burden of showing an unreasonable restraint on trade. View "Innovation Ventures, LLC v. Nutrition Science Laboratories, LLC" on Justia Law

Direct purchasers of containerboard charged manufacturers with conspiring to increase prices and reduce output from 2004-2010. The Seventh Circuit affirmed the certification of a nationwide class of buyers. Most of the defendants settled. Georgia‐Pacific and WestRock did not settle but persuaded the court that there was not enough evidence of a conspiracy to proceed to trial. The Seventh Circuit affirmed the dismissal; the Purchasers’ evidence does not tend to exclude the possibility that the companies engaged only in tacit collusion. Without something that can be called an agreement, oligopolies elude scrutiny under section 1 of the Sherman Act, 15 U.S.C. 1, while no individual firm has enough market power to be subject to section 2. Tacit collusion is easy in those markets; firms have little incentive to compete, “preferring to share the profits [rather] than to fight with each other.” Because competing inferences can be drawn from the containerboard market structure, the economic evidence did not exclude the possibility of independent action. No evidence supported the Purchasers’ accusation that the defendants lied in claiming to have independently explored a possible price increase. The supposedly coordinated reductions of output through mill closures and slowdowns do not necessarily suggest conspiracy. Conduct that is easily reversed may be consistent with self‐interested decision‐making. There is no evidence that the executives discussed illicit price‐fixing or output restriction deals during their frequent calls and meetings. View "Kleen Products LLC v. Georgia-Pacific LLC" on Justia Law