The Third Circuit, through a panel including retired U.S. Supreme Court Justice Sandra Day O’Connor, relied on the filed-rate doctrine to hold that a rate-setting agency need not closely scrutinize a rate application in order to trigger an exemption from the antitrust laws. The homeowner plaintiffs had argued that New Jersey and Delaware title insurers engaged in price fixing. But the court found the activity exempt from the antitrust laws because the filed-rate doctrine prohibits challenges to rates filed with regulators.
The plaintiffs argued that the court should follow the Ninth Circuit, which held that a regulatory regime that permits a rate to go into force if not affirmatively rejected by regulators was insufficient to trigger the filed-rate examption. This precendent, they contended, was more consistent with the antitrust state-action exemption, which requires active state supervision.
But the Third Circuit refused, explaining that “Appellants would have this court disregard a decision of the United States Supreme Court and the numerous cases that have relied on it,” which require only that the rate be filed. “[N]either this court nor the Supreme Court has suggested,” the court explained, “that a distinction should exist between agency authorization through ‘approval’ or ‘nondisapproval’ of filed rates.”
In two matters pending before the U.S. International Trade Commission (ITC), Matter of Certain Wireless Devices, Portable Music and Data Processing Devices, Computers and Components Thereof and In re: Certain Gaming and Entertainment Consoles, Related Software and Components Thereof, the Federal Trade Commission (FTC) and a group of major technology companies have joined forces seeking an end to injunctive relief in infringement cases involving standard-essential patents. With technology so critical, they argued, injunctions restrain competition and innovation. Threatened injunctions also lead to unreasonably high royalties that increase prices.
The FTC, supported by the technology companies, argued to the ITC that it should refrain from enjoining imported Xbox and iPhone products that have been found to infringe standard-essential patents. The holders of these patents, the agency and firms argued, should be required to license them on a fair, reasonable, and nondiscriminatory (FRAND) basis. Firms agreeing to FRAND as part of a standard setting process should be held to give up their ability to enjoin infringers. If participants cannot rely on FRAND commitments, they will be less likely to support beneficial standard setting processes.
Because the ITC cannot issue monetary damages, Verizon argued that it should require “the patent holder to [seek] remedies in federal court, where [it] should be limited to monetary damages as measured by the value of the patented invention.”
The ITC must decide whether to impose exclusion orders on the Xbox and iPhone. Whatever it decides, the issue will likely go to the Federal Circuit.
In In re: Refrigerant Compressors Antitrust Litigation, Eastern District of Michigan Judge Sean F. Cox dismissed many of the indirect purchaser claims in multidistrict litigation alleging a price-fixing conspiracy in the market for refrigerant compressors. Indirect purchase claims against Panasonic and Embraco North America Inc., a Whirlpool subsidiary, were retained. After reports of a government investigation, the plaintiffs filed the 2009 case alleging that they paid supra-competitive prices for gas compressors for use in air conditioners and refrigerators. The court’s decision rested on the plaintiffs failure to meet Twombly’s heightened pleading standard.
Judge Cox also agreed to permit the direct purchaser plaintiffs to file a second amended complaint, including allegations concerning recent guilty pleas by two defendants and factual allegations about the alleged conspiracy.
In December, the European Commission fined Panasonic, Embraco, Danfoss A/S and Appliance Components Companies SPA a combined €161.2 million ($201.9 million) for operating a cartel from April 2004 until October 2007 in the EU.
The DOJ’s investigation resulted in 2010 guilty pleas from Panasonic and Embraco North America Inc. The companies were fined $49.1 million and $91.8 million, respectively.
In IBEW-NECA Local 505 Health & Welfare Plan et al. v. SmithKline Beecham Corp., Eastern District of Pennsylvania Judge Anita Brody certified a class of indirect purchasers of Flonase in five states. In their suit, plaintiffs accuse GlaxoSmithKline PLC of improperly blocking rivals from bringing generic versions of the nasal spray to market by filing multiple “citizen petitions” with the FDA right before the company’s exclusive rights for Flonase were due to expire. In their class certification motion, plaintiffs sought to include consumers of Flonase throughout the U.S. However, the court held that the class could only incorporate members in the same states as the case’s named plaintiffs because although generally, named plaintiffs may represent other plaintiffs with common but not identical claims, indirect purchasers cannot attempt to expand their class to include states in which no named plaintiff has demonstrated injury.
In In re: Hypodermic Products Antitrust Litigation, the Third Circuit held that the direct purchasers of Becton Dickinson & Co.’s hypodermic products are the company’s distributors and not health care providers. The providers therefore lack standing to pursue federal class action antitrust damages claims against the medical technology company.
The court relied on several factors in reaching its conclusion. Health care providers placed orders through the distributors, and the distributors negotiated prices and shipped the products to the health care providers. The providers also paid the distributors, not the manufacturer. “Because the hypodermic products pass through at least one other stage in the chain of distribution before reaching health care providers,” the court concluded, “the distributors, not health care providers, are the direct purchasers in contract sales.”
In 2010, the distributors agreed to settle their claims with Becton Dickinson & Co. for
$45 million, but the district court refused to sign off on the settlement because it was opposed by the health care providers. The district court had held that the providers were the real direct purchasers and thus entitled to see damage under federal antitrust laws. By reversing that decision, the Third Circuit’s ruling will likely facilitate the implementation of the agreed settlement.
In Smith v. eBay Inc. et al, Northern District of California Judge Jeffrey White denied E-bay’s motion to remove the plaintiffs’ tying claims from a putative class action accusing eBay of precluding sellers from using alternatives to PayPal.
The plaintiffs allege that eBay effectively precluded them from using Google’s checkout system, which charges lower merchant fees, as an alternative to Paypal. Although the court described the case as close, it found sufficient allegations that the tie impacted competition in the on-line payment market.
Southern District of New York Judge Alison J. Nathan dismissed the plaintiffs’ unfair competition claim in a suit by TV broadcasters seeking to stop Aereo Inc. from streaming video in WNET et al. v. Aereo Inc. The court held that the federal Copyright Act’s express preemption provision bars unfair competition claims under state law. The broadcasters’ two copyright infringement claims against Aereo remain to be litigated.
Aereo’s service, currently limited to New York, enables customers for a $12 per month fee to watch broadcast programming on mobile devices or Internet-enabled televisions through the use of a small remote antenna connected to a digital video recorder. Aereo argues that its service merely enables access to signals already freely available to consumers. The broadcasters allege, however, that Aereo’s retransmitting their programming violates the Copyright Act and entitles them to damages and attorneys’ fees as well as an injunction.
In re: NCAA Student-Athlete Name & Likeness Licensing Litigation, Northern District of California Judge Claudia Wilken denied Electronic Arts Inc. motion to dismiss multidistrict antitrust litigation alleging that it conspired to deny compensation to former college athletes for use of their likenesses in video games.
Plaintiffs claim that the NCAA wrongly prohibits college players from licensing their images and likenesses for commercial purposes and that Electronic Arts has wrongfully extended that prohibition to former college players.
The court acknowledged that the defendant’s licensing agreements with Collegiate Licensing Co. (CLC) didn’t expressly prohibit payments to former college players. But it found that the conspiracy claims could go forward nonetheless. “Reading antitrust plaintiffs’ allegations . . . in the context of their overall complaint, rather than in isolation,” the court explained, demonstrated “that the actual terms of the licensing agreements do not refute antitrust plaintiffs’ allegations.” The plaintiffs contend that Electronic Arts, CLC and the NCAA have interpreted the prohibition on payment to college athletes as persisting “in perpetuity” and allowing them to enter licensing agreements to use the student-athletes’ images, likenesses and names without ever paying the athletes. A tacit agreement is no less a violation of the antitrust laws than an explicit one.
The Fourth Circuit has upheld the district court’s refusal to dismiss Robertson v. Sea Pines Real Estate. The case involves putative class actions alleging that South Carolina real estate listing services and brokerages conspired by enacting and enforcing rules that prohibited cost-saving innovative brokerage practices and thereby increased prices. In particular, the complaint attacks rules prohibiting arrangements that provide less than “the full array of services that brokerages traditionally have provided” and that prohibit members from agreeing to forego a commission “if the seller finds the buyer.”
The defendants sought dismissal on two grounds. First, that the MLS services were single entities incapable of conspiring under Section 1 of the Sherman Act, and second, that the plaintiffs failed to sufficiently allege a conspiracy under the standards announced in Twombly.
“Appellants have failed to point to a single court of appeals decision,” the panel explained, that held an MLS beyond the scope of Section 1 on the ground that an MLS is a single entity.
The court also held that the plaintiffs alleged sufficient facts to establish a conspiracy. “The complaints identify the defendants as individual brokerages serving together on the MLS board of trustees,” the panel explained, and the allegations charge that the individual brokerages “’agreed … to develop, implement, enact and facilitate the enforcement of [the allegedly] unlawful rules’ . . .”
The United States Department of Justice is investigating whether Visa violated the antitrust laws when it responded to the debit card fee regulations imposed by the Dodd-Frank Wall Street Reform and Consumer Protection Act by increasing fees on merchants.
In response to the legislation limiting per transaction debit card fees to about half their former level, Visa enacted a fixed fee on businesses accepting its debit cards based on the number of merchant locations.