Justia Antitrust & Trade Regulation Opinion Summaries

Articles Posted in California Courts of Appeal
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Quidel Corporation (Quidel) petitioned for a writ of mandate and/or prohibition to direct the trial court to vacate its order granting summary adjudication. Quidel contended the trial court incorrectly concluded a provision in its contract with Beckman Coulter, Inc. (Beckman) was an invalid restraint on trade in violation of Business and Professions Code, section 16600. Quidel argued the trial court improperly extended the holding from Edwards v. Arthur Andersen LLP, 44 Cal.4th 937 (2008) beyond the employment context to a provision in the parties’ 2003 BNP Assay Agreement (the Agreement). In its original, published opinion, the Court of Appeal concluded it was not, granted the petition and issued a writ instructing the trial court to vacate the December 2018 order granting summary judgment on the first cause of action. The California Supreme Court then granted review of the Court of Appeal's opinion and ordered briefing deferred pending its decision in Ixchel Pharma, LLC v. Biogen, Inc., S256927. On August 3, 2020, the Supreme Court issued Ixchel Pharma, LLC v. Biogen, Inc., 9 Cal.5th 1130 (2020), which held “a rule of reason applies to determine the validity of a contractual provision by which a business is restrained from engaging in a lawful trade or business with another business.” The Quidel matter was transferred back to the Court of Appeals with directions to vacate its previous opinion and reconsider the case in light of Ixchel. The appellate court issued a new opinion in which it concluded the trial court’s decision was incorrect. The trial court was directed to vacate the December 7, 2018 order granting summary adjudication on the first cause of action. View "Quidel Corporation v. Super. Ct." on Justia Law

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In this antitrust dispute involving licensing of motion pictures to movie theaters for public exhibition, Flagship obtained a jury verdict against Century. Flagship owned the Palme d'Or theater and Century owned The River theater. The jury found true Flagship's allegations that Century had engaged in "circuit dealing" by entering into licensing agreements with film distributors that covered licenses to play films not just at The River, but at multiple other Century-owned theaters as well, and using these agreements to pressure distributors into refusing to license films to Palme d'Or.The Court of Appeal agreed with Century that Flagship did not present substantial evidence of anticompetitive effects in the relevant market. The court also agreed with Century that this failure of proof warrants reversal, as circuit dealing based on multi-theater licensing agreements is not per se illegal under the Cartwright Act. Therefore, the court reversed the judgment and need not reach Century's remaining arguments on appeal. The court also did not need to address Flagship's case from the court's postjudgment order awarding Flagship attorney fees in an amount lower than Flagship had requested. View "Flagship Theatres of Palm Desert, LLC v. Century Theatres, Inc." on Justia Law

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Porter Scott, P.C. (hereafter, “Porter Scott”) defended The Johnson Group Staffing Company, Inc. (hereafter, “TJG” or “Johnson Group”) through two rounds of litigation with its chief competitor, Aerotek, Inc. (hereafter, “Aerotek”). Aerotek first sued TJG after TJG’s founder, Chris Johnson, left Aerotek to form TJG. In the lawsuit, Aerotek alleged that TJG and Johnson, among other things, misappropriated trade secrets by soliciting Aerotek’s customers. TJG and Johnson settled with Aerotek a little over a year later. The issue presented for the Court of Appeal's review concerned the ownership of fees awarded under Civil Code 3426.4, and whether the prevailing litigant (here, The Johnson Group Staffing Company, Inc.) or the prevailing litigant’s attorney (here, Porter Scott, P.C.) were entitled to the fees awarded to the “prevailing party.” The Court concluded that, absent an enforceable agreement to the contrary, these fees belonged to the attorney to the extent they exceeded the fees the litigant already paid. Furthermore, the Court concluded that, although the parties here entered into a fee agreement, that agreement did not alter the default disposition of fees in favor of the attorney. Because the trial court reached the same conclusion, the Court of Appeal affirmed its judgment. View "Aerotek v. Johnson Group Staffing Co." on Justia Law

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In an antitrust dispute involving the licensing of motion pictures to movie theaters for public exhibition, Flagship obtained a jury verdict against Century. The jury found true Flagship's allegations that Century had engaged in a practice known as "circuit dealing" by entering into licensing agreements with film distributors that covered licenses to play films not just at The River, a theater located two miles away from the Palme d'Or, but at multiple other Century-owned theaters as well, and using these agreements to pressure distributors into refusing to license films to the Palme d'Or.The Court of Appeal held that a Cartwright Act plaintiff asserting a non-monopoly circuit-dealing claim must prove not only that a theater-circuit owner entered into film licensing agreements covering more than one of its theaters, but that such agreements caused net harm to competition, as determined by the balancing of anti and procompetitive effects under the rule of reason. In this case, the court held that substantial evidence does not support the jury's finding of anticompetitive effects in the relevant market. Furthermore, this failure of proof warrants reversal, as circuit dealing based on multi-theater licensing agreements is not per se illegal under the Cartwright Act. The court reversed the judgment and concluded that it need not address Century's remaining arguments, as well as Flagship's separate appeal challenging the amount of attorney fees awarded. View "Flagship Theatres of Palm Desert, LLC v. Century Theatres, Inc." on Justia Law

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Plaintiff Michael Hanna was declared to be a vexatious litigant under several subparts of the California Code of Civil Procedure section 391(b). As a result, and the trial court's determination that Hanna was not reasonably likely to succeed on the merits of this action, Hanna was ordered to furnish a $100,000 security bond. The trial court also imposed a prefiling restriction on Hanna in future litigation, requiring Hanna to seek permission from the presiding justice or presiding judge of the court if he brought a civil action as a pro se litigant. The underlying dispute arose from a 2017 complaint Hanna filed against Little League Baseball, Inc., alleging trade libel and unfair and fraudulent business practices. Hanna alleged he was the president of a youth sports organization known as Team Hemet Baseball and Softball (Team Hemet), and in that capacity, he “executed an agreement” with Little League “for the individual ‘. . . right to conduct a baseball and softball program under the name “Little League”’” for one year. In July 2017, Little League “purportedly” placed Team Hemet on a regional hold, which “prevent[ed] any operations by [Team Hemet] until satisfied.” Hanna alleged that Little League “ha[d] improperly obtained money from [Hanna], and continue[d] to improperly obtain money from the general public.” The trial court dismissed the trade libel claim on demurrer. Little League moved for an order finding Hanna to be a vexatious litigant and requiring him to furnish security, and requested the court judicially notice 14 different civil actions filed from 2009 through 2018 involving Hanna as a pro se plaintiff and a defendant. Hanna challenged the vexatious litigant determination and the determination that he was not likely to succeed on the merits of the action. Hanna further contends that the trial court lacked authority to rule on discovery motions and to impose discovery sanctions after the filing of the motion under section 391.1 to declare Hanna a vexatious litigant and to have him furnish security. The Court of Appeal affirmed the prefiling restriction placed on Hanna’s filing of future actions as a pro se litigant. In the published portion of its opinion, the Court agreed the trial court was without authority to rule on the discovery motions or to impose sanctions. "Under the plain language of section 391.6, all further proceedings in the action should have been stayed once the vexatious litigant motion under section 391.1 was filed." The Court therefore reversed the orders imposing discovery sanctions. Judgment was affirmed in all other respects. View "Hanna v. Little League Baseball" on Justia Law

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Ben-E-Lect, a third-party insurance claim administrator, developed a medical expense reimbursement plan; employers could buy a group policy of medical insurance with a high deductible and self-fund to pay for the healthcare expenses employees incurred within the annual deductible or any copay requirement. The practice of employers’ using such plans in conjunction with a high-deductible health plan is called “wrapping.” Ben-E-Lect was the state’s largest third-party administrator for small group employers who wrapped their employee medical policies. Anthem provides fully insured health plans to the California small group employer market. Beginning in 2006, Anthem announced a series of policies that limited wrapping. In 2014, Anthem prohibited wrapping all Anthem plans. Employer groups who used Anthem plans certified they would not wrap Anthem policies, and agents certified they would not advise employers to enter into any employer-sponsored wrapping plan. Ben-E-Lect sued Anthem.The court of appeal affirmed that Anthem’s policy to prohibit wrapping its health insurance products violated the Cartwright Act (Bus. & Prof. Code, 16700); interfered with Ben-E-Lect’s prospective business relationships; and was an illegal, coercive, vertical group boycott under the antitrust rule of reason (Bus. & Prof. Code, 17200), because Anthem told its insurance agents that if they wrapped any Anthem policies they would be subject to termination loss of sales commissions. The court affirmed an award of $7.38 million and an injunction. The trial court considered sufficient evidence of market power and market injury. View "Ben-E-Lect v. Anthem Blue Cross Life and Health Insurance Co." on Justia Law

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Taxi companies and taxi medallion owners sued Uber, alleging violations of the Unfair Practices Act’s (UPA) prohibition against below-cost sales (Bus & Prof. Code, 17043) and of the Unfair Competition Law (section 17200). The UPA makes it unlawful “for any person engaged in business within this State to sell any article or product at less than the cost thereof to such vendor, or to give away any article or product, for the purpose of injuring competitors or destroying competition” but does not apply “[t]o any service, article or product for which rates are established under the jurisdiction of the [California] Public Utilities Commission [(CPUC)] . . . and sold or furnished by any public utility corporation.” Uber is a “public utility corporation” under section 17024 and is subject to CPUC’s jurisdiction. CPUC has conducted extensive regulatory proceedings in connection with Uber’s business but has not yet established the rates for any Uber service or product.The trial court ruled the exemption applies when the CPUC has jurisdiction to set rates, regardless of whether it has yet done so, and dismissed the case. The court of appeal affirmed, reaching “the same conclusion as to the applicability of section 17024(1) as have three California federal district courts, two within the last year, in cases alleging identical UPA claims against Uber.” View "Uber Technologies Pricing Cases" on Justia Law

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John H. Donboli, JL Sean Slattery, and Del Mar Law Group LLP (collectively the Del Mar Attorneys) filed a mislabeling lawsuit on behalf of a putative class of consumers who claimed they were misled by "Made in the U.S.A." labels on designer jeans manufactured by Citizens of Humanity (Citizens). Citizens's jeans were allegedly made with imported fabrics and other components. The focus of the purported class action was that the "Made in the U.S.A." labels violated former Business and Professions Code section 17533.7. However, a new law was passed after the complaint was filed that relaxed the previous restrictions and, ultimately, the lawsuit was dismissed with prejudice. Citizens then filed this malicious prosecution action against the named plaintiff in the prior case (Coni Hass), a predecessor plaintiff (Louise Clark), and the Del Mar Attorneys. Each defendant filed a motion to strike the complaint under the anti-SLAPP (Strategic Lawsuit Against Public Participation) statute, Code of Civil Procedure section 425.16. Finding that Citizens met its burden to establish a probability of prevailing on the merits, the trial court denied defendants' motions. Appellants Hass and the Del Mar Attorneys appealed, contending Citizens failed to make a prima facie showing that it would prevail on its claims. The Court of Appeal disagreed, finding: (1) there were no undisputed fact on which it could determine, as a matter of law, whether the Del Mar Attorneys and Clark had probable cause to pursue the underlying actions; (2) there was evidence which would have supported a reasonable inference the Appellants were pursuing the litigation against Citizens with an improper purpose; and (3) the district court's dismissal of the underlying action, with prejudice, constituted a favorable termination in the context of a malicious prosecution suit. View "Citizens of Humanity, LLC v. Hass" on Justia Law

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Wanke, Industrial, Commercial, Residential, Inc. (Wanke) was a company that installed waterproofing systems. It sued Scott Keck and another of its former employees in 2008 for trade secret misappropriation after they left Wanke to form a competing business, WP Solutions. The parties entered into a stipulated settlement and later litigated Keck's alleged breach of that settlement agreement. To collect, Wanke filed a creditor's suit against third party AV Builder Corp. (AVB) to recover $109,327 that AVB owed WP Solutions in relation to five construction subcontracts. Following a bench trial, the court entered judgment in Wanke's favor for $83,418.94 after largely rejecting AVB's setoff claims. Invoking assignment principles, AVB contended: (1) Wanke lacked the ability to sue given judgment debtor WP Solutions's corporate suspension; (2) Wanke's suit was untimely under section 708.230 of the Code of Civil Procedure; and (3) the trial court erred in denying its request for warranty setoffs under section 431.70. Rejecting each of these contentions, the Court of Appeal affirmed the judgment View "Wanke, Industrial, Commercial, etc. v. AV Builder Corp." on Justia Law

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The San Francisco Examiner sued the San Francisco Chronicle, claiming that the defendant sold a certain type of print advertising in the Chronicle at prices that violated California’s Unfair Practices Act (UPA, Bus. & Prof. Code, 17000) and Unfair Competition Law (UCL, 17200). The trial court granted the defendant summary judgment. The court of appeal affirmed. The trial court properly rejected the claim of below-cost sales under the UPA after excluding the opinion of the plaintiff’s expert on costs. The plaintiff had disclaimed reliance on specific transactions to prove the Chronicle’s alleged underpricing of its print advertising, leaving only the aggregate cost analysis prepared by that expert to establish the occurrence of alleged below-cost sales. The plaintiff’s expert lacked the foundational knowledge to conduct the requisite cost analysis and based his analysis on another individual’s non-UPA-related pricing analysis without understanding its foundations, such as some of the included cost components. Summary judgment was proper as to the claim for unlawful use or sale of loss leaders under the UPA because the plaintiff failed to identify the loss leader sales on which this claim was based. The trial court did not err in granting summary judgment on the causes of action for secret and unearned discounts under the UPA. View "San Francisco Print Media Co. v. The Hearst Corp." on Justia Law