Justia Antitrust & Trade Regulation Opinion Summaries

Advocate Health Care and NorthShore University HealthSystem operate hospital networks in Chicago’s northern suburbs. They propose to merge. The Clayton Act forbids asset acquisitions that may lessen competition in any “section of the country,” 15 U.S.C. 18. The Federal Trade Commission and the state sought an injunction, pending the Commission’s consideration of the issue. To identify a relevant geographic market where anticompetitive effects of the merger would be felt, plaintiffs relied on the “hypothetical monopolist test,” which asks what would happen if a single firm became the sole seller in a proposed region. If such a firm could profitably raise prices above competitive levels, that region is a relevant geographic market. The Commission’s expert economist chose an 11-hospital candidate region and determined that it passed the hypothetical monopolist test. The district court denied a preliminary injunction, finding that the plaintiffs had not demonstrated a likelihood of success on the merits, but stayed the merger pending appeal. The Seventh Circuit reversed; the geographic market finding was clearly erroneous. The evidence was not equivocal: most patients prefer to receive hospital care close to home and insurers cannot market healthcare plans to employers with employees in Chicago’s northern suburbs without including some of the merging hospitals in their networks. The district court rejected that evidence because of some patients’ willingness to travel for care; its analysis erred by overlooking the market power created by the remaining patients’ preferences (the “silent majority” fallacy). View "FTC v. Advocate Health Care Network" on Justia Law

Nearly ten years ago, U-Haul Co. of California (UHC) sued Robinson, one of UHC’s independent dealers, for breach of contract and unfair competition after he terminated their contract and began renting Budget trucks from the former UHC dealership. UHC alleged a covenant not to compete in its dealer contract prohibited Robinson from offering the products of UHC’s competitors while a Yellow Pages ad, running at UHC’s expense, was still promoting Robinson’s business. Robinson sought a judicial declaration that the covenant was void due to fraud in the inducement. After UHC lost its request for a preliminary injunction and dismissed its complaint, Robinson filed a separate action alleging malicious prosecution by UHC in the prior lawsuit and violation of Business and Professions Code section 17200, the unfair competition law (UCL). A jury awarded Robinson $195,000 in compensatory damages for malicious prosecution. The trial court issued a permanent injunction prohibiting U-Haul from initiating or threatening judicial proceedings to enforce the noncompetition covenant. It awarded Robinson $800,000 in attorney’s fees as a private attorney general on his UCL cause of action. The court of appeal affirmed, holding that the injunction was proper and the court did not abuse its discretion in allowing Robinson to file a late motion for attorney’s fees. View "Robinson v. U-Haul Co. of Cal." on Justia Law

From 1992-2013, a Milwaukee ordinance limited taxicab permits to those in existence on January 1, 1992 that were renewed. The ordinance lowered the ceiling over time by virtue of the nonrenewals. By 2013 the number of permits had diminished from 370 to 320. The price of permits on the open market soared as high as $150,000. In 2013, after a successful equal protection and substantive due process challenge, the city conducted a lottery, which attracted 1700 permit seekers. Milwaukee had only one taxicab per 1850 city residents, a much lower ratio than comparable cities. The city eliminated the cap in 2014. In the meantime, “ridesharing” companies such as Uber, had diminished the profitability of the existing taxi companies. Plaintiffs, cab companies, alleged that the increased number of permits has taken property without compensation. The Seventh Circuit affirmed dismissal. The taxi companies were aware that there was no guarantee that the ordinance would remain in force indefinitely, and that, were it repealed, they would be faced with new competition that would threaten their profits. The ordinance gave them no property right; its repeal invaded no right conferred by the Constitution. The court similarly rejected state-law claims of breach of contract, promissory estoppel, and equitable estoppel. View "Joe Sanfelippo Cabs, Inc. v. City of Milwaukee" on Justia Law

Plaintiffs own and operate Chicago taxicabs or livery vehicles or provide services to such companies, such as loans and insurance. Taxi and livery companies are tightly regulated by the city regarding driver and vehicle qualifications, licensing, fares, and insurance. Ride-share services, such as Uber, are less heavily regulated and have a different business model. Chicago’s 2014 ride-share ordinance allows the companies to set their own fares. The plaintiffs challenged the ordinance on four Constitutional and three Illinois-law grounds. The district judge dismissed all but the two claims that accuse the city of denying the equal protection of the laws by allowing the ride-shares to compete with taxi and livery services without being subject to the same regulations. The Seventh Circuit ordered dismissal of all seven claims. There are enough differences between taxi service and ride-share service to justify different regulatory schemes. Chicago has legally chosen deregulation and competition over preserving the traditional taxicab monopolies. A legislature, having created a statutory entitlement, is not precluded from altering or even eliminating the entitlement by later legislation. View "Ill. Transp. Trade Ass'n v. City of Chicago" on Justia Law

A large communications equipment manufacturer, Avaya, and its dealer and service provider, TLI had a falling out. Avaya subsequently aggressively acted to block TLI from providing independent maintenance services for Avaya equipment. Meanwhile, the newly-independent TLI took various “legally dubious actions” to gain access to Avaya communications systems used by clients the parties once shared. Avaya filed suit, alleging several business torts and breach of contract; TLI counter-sued for antitrust violations. After years of pre-trial litigation, and in the midst of a months-long trial, the district court granted TLI’s motion for judgment as a matter of law on all of Avaya’s affirmative claims. The court later instructed the jury that none of TLI’s actions could be considered unlawful. The jury found Avaya liable for two antitrust violations and awarded substantial damages. The Third Circuit vacated. Given how intertwined the two sides’ claims are, and given that Avaya’s antitrust defense relied in large part on justifying Avaya’s conduct as a response to TLI’s conduct, the erroneous Rule 50 judgment infected the jury’s verdict. View "Avaya Inc v. Telecom Labs Inc" on Justia Law

Generic drug manufacturers (plaintiffs) originally sued name-brand drug companies (defendants) that manufacture and sell “Doryx,” the delayed-release doxycycline hyclate, an oral antibiotic of the tetracycline class used to treat severe acne. Tetracyclines are a broad category of antibiotics, the most common being doxycycline monohydrate and minocycline, which vary in their use and efficacy. Plaintiffs claimed that defendants conspired to protect their position in the market through “product hopping,” by making four critical changes to Doryx, all of which required generics to go through a cumbersome regulatory approval process if they wanted to continue to benefit from state substitution laws. Several plaintiffs settled their cases and the district court rejected, on summary judgment, remaining claims of unlawful monopoly and attempted monopolization under section 2 of the Sherman Act; agreement in restraint of trade under section 1 of the Sherman Act; and tortious interference with prospective contractual relationships under Pennsylvania law. The Third Circuit affirmed, finding that defendants’ conduct was not anticompetitive, and that, even if it was, it was not established that defendants had the requisite market power in the relevant product market. Adoption of plaintiffs’ theory of “anticompetitive product redesign” could have adverse, unintended consequences, including slowing innovation. View "Mylan Pharma. Inc v. Warner Chilcott Pub. Ltd. Co." on Justia Law

Penn State Hershey Medical Center is a leading academic medical center, with 551 beds and more than 800 physicians. Hershey offers all levels of care, but specializes in more complex, specialized services, unavailable at most other hospitals. Hershey draws patients from a broad area. PinnacleHealth System has three hospital campuses, two in Harrisburg, and another in Mechanicsburg, focusing on cost-effective primary and secondary services, with only a limited range of more complex services. It employs fewer than 300 physicians and provides 646 beds. In 2014, Hershey and Pinnacle signed a letter of intent for a proposed merger. Their respective boards subsequently approved the merger; the Hospitals notified the Federal Trade Commission (FTC), and, in 2015, executed a “Strategic Affiliation Agreement.” The FTC opposed the merger and filed suit under the Clayton Act and the FTC Act. The district court denied a preliminary injunction pending the FTC’s adjudication on the merits, finding that the opponents of the merger did not properly define the relevant geographic market, a necessary prerequisite to determining whether a proposed combination is sufficiently likely to be anticompetitive as to warrant injunctive relief. The Third Circuit reversed after determining the government’s likelihood of success and weighing the equities, finding that a preliminary injunction would be in the public interest. The Hospitals did not rebut the government’s prima facie case that the merger is likely to be anticompetitive. View "Fed. Trade Comm'n v. Penn State Hershey Med. Ctr." on Justia Law

Amex appealed from the district court's decision finding that it unreasonably restrained trade in violation of section 1 of the Sherman Act, 15 U.S.C. 1, by entering into agreements containing nondiscriminatory provisions (NDPs). The district court held that Amex was liable for violating section 1 and enjoined Amex from enforcing its NDPs. The court concluded that the district court erred here in focusing entirely on the interests of merchants while discounting the interests of cardholders. Plaintiffs bore the burden in this case to prove net harm to Amex consumers as a whole - that is, both cardholders and merchants - by showing that Amex’s nondiscriminatory provisions have reduced the quality or quantity of credit‐card purchases. The court concluded that, given the district court’s explicit finding that neither party provided reliable evidence of Amex’s costs or profit margins accounting for consumers on both sides of the platform, and given evidence showing that the quality and output of credit cards across the entire industry continues to increase, plaintiffs failed to carry their burden to prove a section 1 violation. Accordingly, the court reversed and remanded. View "United States v. American Express Co." on Justia Law

The FTC and the State filed suit seeking to hold LeadClick liable for its role in the use of deceptive websites to market weight loss products in violation of Section 5 of the Federal Trade Commission Act (FTC Act), 15 U.S.C. 45(a)(1), and the Connecticut Unfair Trade Practices Act (CUTPA), C.G.S.A. 42‐110b(a). The FTC also filed a claim against CoreLogic, LeadClick's parent company, as a relief defendant. The district court granted summary judgment in favor of the FTC and the State. The court affirmed the district courtʹs grant of summary judgment for the FTC and the State with respect to the claims against LeadClick where LeadClick is an information content provider with respect to the content at issue and where LeadClick is liable for its own content and not merely because it was the ʺpublisher or speakerʺ of deceptive content provided by its affiliates; reversed as to the claim against CoreLogic where CoreLogic's advances to LeadClick constituted "valuable consideration" entitling it to repayment from LeadClick; and remanded with instructions to the district court to enter judgment in favor of CoreLogic. View "FTC v. LeadClick Media, LLC" on Justia Law

A multi-district antitrust class action was brought by plaintiffs against defendants, entities incorporated under the laws of China, alleging that defendants conspired to fix the price and supply of vitamin C sold to U.S. companies on the international market in violation of Section 1 of the Sherman Act, 15 U.S.C. 1, and Sections 4 and 16 of the Clayton Act, 15 U.S.C. 4, 16. Defendants challenge the district court's denial of their initial motion to dismiss, denial of a subsequent motion for summary judgment, and, after a jury trial, an entry of judgment awarding plaintiffs $147 million in damages and enjoining defendants from engaging in future anti-competitive behavior. The court held that the district court erred in denying defendants' motion to dismiss. In this case, because the Chinese Government filed a formal statement in the district court asserting that Chinese law required defendants to set prices and reduce quantities of vitamin C sold abroad, and because defendants could not simultaneously comply with Chinese law and U.S. antitrust laws, the principles of international comity required the district court to abstain from exercising jurisdiction in this case. Accordingly, the court vacated the judgment, reversed the district court's order denying defendants' motion to dismiss, and remanded for further proceedings. View "In Re: Vitamin C Antitrust Litig." on Justia Law