Justia Antitrust & Trade Regulation Opinion Summaries

Articles Posted in US Court of Appeals for the Seventh Circuit
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For nearly 30 years, Chicago Studio operated the only film studio in Chicago. In 2010, Cinespace opened a new studio. Cinespace rapidly expanded its studio to include 26 more stages and 24 times more floor space than Chicago Studio’s facility. Chicago Studio subsequently failed to attract business and stopped making a profit. Chicago Studio sued the Illinois Department of Commerce and Economic Opportunity, Illinois Film Office, and Steinberg (state actors responsible for promoting the Illinois film industry), alleging that the Defendants unlawfully steered state incentives and business to Cinespace in violation of the Sherman Act and equal protection and due process protections. The Seventh Circuit affirmed the rejection of those claims. The Sherman Act claim was properly dismissed because Chicago Studio failed to adequately plead an antitrust injury but merely alleged injuries to Chicago Studio, not to competition. The complaint does not plausibly allege that Defendants conspired to monopolize or attempted to monopolize the Chicago market for operating film studios. The district court properly granted summary judgment on the equal protection claim. Chicago Studio and Cinespace are not similarly situated, and there was a rational basis for Steinberg’s conduct. Cinespace consistently reached out to Steinberg for marketing support; Chicago Studio rarely did and it was rational for Steinberg to promote the studios based on production needs. View "Chicago Studio Rental, Inc. v. Illinois Department of Commerce & Economic Opportunity" on Justia Law

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Mountain Crest filed suit alleging that Anheuser-Busch and Molson Coors had conspired to damage Mountain Crest's beer exports in violation of the Sherman Antitrust Act. Mountain Crest also alleged that defendants were enriched unjustly in violation of Wisconsin law. At issue was an agreement in 2000 between two Canadian entities, BRI and LCBO, and another agreement in 2015 between defendants, BRI, LCBO, and the government of Ontario. The district court ruled that the act of state doctrine required dismissal of the federal claims and granted defendants' motion to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6). The Seventh Circuit held that the first prong of the act of state doctrine analysis was met because the agreements establishing the six-pack rule were acts of state for the purposes of the doctrine. The court also held that to the extent Mountain Crest attacks the six-pack rule under Section 1 of the Sherman Act, the act of state doctrine was applicable. Furthermore, to the extent Mountain Crest seeks relief under Section 2 of the Sherman Act predicated solely on the six-pack rule, the act of state doctrine clearly precludes the action. However, the Second Amended Complaint also sets out allegations that Anheuser-Busch and Molson Coors, acting through their officers and employees, violated the same provisions of the Sherman Act by conspiring to bring about the Ontario government's approval of the six-pack rule. The court held that these allegations did not implicate the act of state doctrine. The court affirmed in part, vacated in part, and remanded for the district court to further consider issues it has not addressed. View "Mountain Crest SRL, LLC v. Anheuser-Busch InBev SA/NV" on Justia Law

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After a creditor in a closed Chapter 7 bankruptcy case tried for a third time to bring a price-fixing claim against BMS, the district court granted BMS's motion to dismiss. The Seventh Circuit affirmed, holding that the creditor did not participate in the market for bankruptcy software services in any way that would make it a proper plaintiff to bring an antitrust claim against a firm that provides those services to bankruptcy trustees. Therefore, the creditor's injury was entirely derivative of the estate's injury and merely derivative injuries sustained by creditors of an injured company did not constitute antitrust injury sufficient to confer antitrust standing. View "McGarry & McGarry, LLC v. Bankruptcy Management Solutions, Inc." on Justia Law

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In 2005 Paramount leased a parcel of highway-adjacent property in Bellwood, Illinois, planning to erect a billboard. Paramount never applied for a local permit. When Bellwood enacted a ban on new billboard permits in 2009, Paramount lost the opportunity to build its sign. Paramount later sought to take advantage of an exception to the ban for village-owned property, offering to lease a different parcel of highway-adjacent property directly from Bellwood. Bellwood accepted an offer from Image, one of Paramount’s competitors. Paramount sued Bellwood and Image, alleging First Amendment, equal-protection, due-process, Sherman Act, and state-law violations. The Seventh Circuit affirmed summary judgment in favor of the defendants. Paramount lost its lease while the suit was pending, which mooted its claim for injunctive relief from the sign ban. The claim for damages was time-barred, except for an alleged equal-protection violation. That claim failed because Paramount was not similarly situated to Image; Paramount offered Bellwood $1,140,000 in increasing installments over 40 years while Image offered a lump sum of $800,000. Bellwood and Image are immune from Paramount’s antitrust claims. The court did not consider whether a market-participant exception to that immunity exists because Paramount failed to support its antitrust claims. View "Paramount Media Group, Inc. v. Village of Bellwood" on Justia Law

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Schaumburg’s 2016 ordinance requires commercial buildings to send fire‐alarm signals directly to the local 911 dispatch center, NWCDS, which has an exclusive arrangement with Tyco. To send signals to NWCDS, local buildings must use Tyco equipment. Schaumburg’s notice of the ordinance referred to connection through Tyco and stated that accounts would be charged $81 per month to rent Tyco’s radio transmitters and for the monitoring service. Tyco pays NWCDS an administrative fee of $23 per month for each account it connects to the NWCDS equipment. Tyco’s competitors filed suit charging violations of constitutional, antitrust, and state tort law. The district court dismissed the case. The Seventh Circuit reversed the dismissal of the Contracts Clause claim against Schaumburg. The complaint alleges a potentially significant impairment, the early cancellation of the competitors’ contracts, and Schaumburg’s self‐interest, $300,000 it stands to gain. The court otherwise affirmed, noting that entities not alleged to have taken legislative action cannot be liable under the Contracts Clause. WIth respect to constitutional claims, the court noted the government’s important interest in fire safety. Rejecting antitrust claims, the court stated that the complaint did not allege a prohibited agreement, as opposed to an independent, legislative decision. View "Alarm Detection Systems, Inc. v. Village of Schaumburg" on Justia Law

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Four Illinois Villages passed ordinances that require commercial buildings to send fire-alarm signals directly to the local 911 dispatch center through one alarm-system provider, Tyco, which services the area pursuant to an exclusive agreement with the dispatch center. An alarm-system competitor, ADS, sued, citing the Illinois Fire Protection District Act, the Sherman Act, and the Fourteenth Amendment. The district court granted the defendants summary judgment. The Seventh Circuit affirmed. The Sherman Act claims fail because they are premised on the unilateral actions of the Villages, which ADS did not sue. The court noted that ADS can compete for the contract now held by Tyco. ADS’s substantive due process claim asserted that the district acted arbitrarily and irrationally by going with an exclusive provider rather than entertaining ADS’s efforts at alternative, methods. The ordinances effectively require the district to work with an exclusive provider and there was thus a rational basis to choose an exclusive provider. View "Alarm Detection Systems, Inc. v. Orland Fire Protection District" on Justia Law

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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

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In 2008, Standard sued, on behalf of itself and “all others similarly situated," alleging that was injured when it “purchased several items of steel tubing [at an inflated price] indirectly … for end use," claiming that eight U.S. steel producers colluded to slash output to drive up the price of steel so that plaintiffs overpaid for steel sheets, rods, and tubing. Eight years later, the plaintiffs amended their complaint, asserting that they overpaid for end-use consumer goods, including vehicles, washing machines, and refrigerators, that were manufactured by third parties using steel. The district court dismissed the suit as time-barred because it redefines “steel products” to give rise to an entirely different, and exponentially larger, universe of plaintiffs, and, in the alternative, for not plausibly pleading a causal connection between the alleged antitrust conspiracy and plaintiffs’ own injuries. The Seventh Circuit affirmed. No reasonable defendant, reading the original complaint, would have imagined that plaintiffs were actually suing over the thousands of end-use household and commercial goods manufactured by third parties—a reading so broad that it would make nearly every person in the country a potential class member. The court further noted that it was unclear how to trace the effect of an alleged overcharge on steel through the complex supply and production chains that gave rise to consumer products. View "Supreme Auto Transport, LLC v. Arcelor Mittal USA, Inc." on Justia Law

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Deppe, a punter, enrolled at Northern Illinois University (NIU), a National Collegiate Athletic Association Division I school, in 2014 without an athletic scholarship. Deppe decided to “red shirt” his first year; he practiced with the team but did not compete, so the clock did not run on his four years of NCAA athletic eligibility. In 2015 NIU signed another punter, so he looked for a new program. Coaches at the University of Iowa, another Division I school, told Deppe they wanted him if he would be eligible to compete during the 2016–2017 season. The NCAA indicated that under its year-in-residence rule, Deppe would be ineligible to compete for one year following his transfer. An exception permitting a one-time transfer with immediate athletic eligibility in limited circumstances was unavailable to Deppe. A player who transfers under extenuating circumstances may obtain a waiver of the NCAA’s requirement that a student’s four years of playing time be completed in five calendar years; the school to which he transfers must initiate the process. Iowa's football staff notified Deppe that the team had decided to pursue another punter who had immediate eligibility and would not initiate the process for him. Deppe sued the NCAA on behalf of himself and a proposed class alleging violations of the Sherman Act. The Seventh Circuit affirmed dismissal. The year-in-residence requirement is an eligibility rule clearly meant to preserve the amateur character of college athletics, is therefore presumptively procompetitive, and need not be tested for anticompetitive effect under a full rule-of-reason analysis. View "Deppe v. National Collegiate Athletic Association" on Justia Law

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In this action challenging an insurance company’s doubling of Plaintiff’s insurance premium, the Seventh Circuit reversed the district court’s dismissal of Plaintiff’s complaint for failure to state a claim, holding that Plaintiff was entitled to relief on her contract claim and that the allegations Plaintiff raised were enough to permit her to go forward on her other theories. When Plaintiff was sixty-seven years old, she discovered that Metropolitan Life Insurance Company (MetLife) more than doubled her insurance premium. Plaintiff brought this lawsuit against MetLife on behalf of herself and a proposed class, alleging breach of contract, deceptive and unfair business practices, and common-law fraud. The district court granted MetLife’s motion to dismiss for failure to state a claim, concluding that the insurance policy unambiguously permitted MetLife to raise Plaintiff’s premium. The First Circuit disagreed, holding that the allegations raised in the complaint were enough to entitle Plaintiff to prevail on the liability phase of her contract claim and to go forward on her remaining claims. View "Newman v. Metropolitan Life Insurance Co." on Justia Law