In Food Lion LLC et al. v. Dean Foods Co et al., Eastern District ofTennessee Judge J. Ronnie Greer, granted defendants’ Dean Foods Co., Dairy Farmers of America, Inc., and others’, motion for summary judgment, thereby dismissing a direct purchaser multidistrict antitrust litigation over milk prices. In their suit, the retail sellers of processed milk, led by Food Lion LLC, and Family Foods, accused Dean Foods and its co-defendants of (1) implementing agreements to control and threaten southeast dairy farmers’ access to milk bottling plants; (2) required independent dairy farmers to advertise through DFA; and (3) fixed Grade A raw milk prices. In granting defendants’ motion for summary judgment, the court held that the direct purchasers’ claim was not one of horizontal, per se conspiracy, but a claim of an illegal conspiracy involving companies at different levels of distribution, such as between a bottler of processed milk and a supplier of raw milk. The vertical nature of the case required the plaintiffs to satisfy the rule-of-reason, which they could not do because they failed to establish the relevant geographic market.
Direct Purchaser Multidistrict Antitrust Litigation Over Milk Prices Dismissed
March 30, 2012 – 9:51 am
Per Se Antitrust Claim Dismissed In Nurses’ Wage-Fixing Suit
March 23, 2012 – 8:27 pm
In Cason-Merendo et al. v. Detroit Medical Center et al., Eastern District ofMichigan Judge Gerald E. Rosen, in a class action suit filed by nurses who claim they were underpaid by hundreds of millions of dollars, granted summary judgment on plaintiffs’ per se antitrust claim that the hospitals conspired to fix wages. In their suit, the nurses claimed that the defendants and their alleged co-conspirators violated the antitrust laws by agreeing not to compete with each other with respect to nurses’ wages, paying nurses at the same or similar rates and jointly recruiting new nurses to avoid competing for new hires. In dismissing the per se claim, the court held that the hospitals used wage data in a series of discrete, individualized compensation decisions, varying in their processes by degree of sponsorship of and participation in surveys, reliance on direct contracts to obtain wage-related information, and selection of surveys and market information when considering and setting compensation. None of this evidence showed that the hospitals acted with a unity of purpose. The court, however, refused to toss the plaintiffs’ “rule of reason” allegation that the hospitals conspired to exchange wage information in a manner that harmed competition by depressing resident nurses’ wages, holding that the question of whether the plaintiffs had failed to show a causal link between the alleged antitrust violation and the antitrust injury was a close one, leaning in the plaintiffs’ favor.
Non-Compete Agreement That Restricts Competitor’s Entry Into the Market Violates Antitrust Laws
March 23, 2012 – 10:11 am
In C-E Mineral Inc. v. Carbo Ceramic Inc., Northern District ofGeorgia Judge J. Owen Forrester granted C-E Mineral Inc.’s motion for a preliminary injunction barring Carbo Ceramics Inc. from enforcing an eight-year-old non-compete provision in a supply contract to restrict C-E’s sales of rival ceramic proppants. The injunction is part of a C-E’s declaratory suit seeking a court order that the non-compete provision violates the Sherman Act, as well as Georgia and Alabama antitrust laws. In granting C-E’s injunction, the court held that although the supply agreement, on its own, was a vertical agreement, the non-compete provision is a horizontal allocation of at least the proppant market because it bars C-E, a potential competitor of Carbo, from entering the market.
Mainframe Resale Suit Tossed by the Court For Lack of Showing of Harm to the Mainframe Market
March 20, 2012 – 8:42 pm
In QGSI Inc. v. IBM Global Financing et al., Southern District of Florida Judge Kenneth L. Ryskamp, granted a motion to dismiss a case filed by a reseller of computer mainframes. QSGI Inc. sued IBM Corp. alleging that IBM violated Florida’s Antitrust and Deceptive and Unfair Trade Practices Acts by engaging in monopolistic business practices that drove QSGI into bankruptcy. In its suit, QSGI alleged that IBM instituted a “six-month rule” by which it stopped freely selling to QSGI the parts and microcode necessary to modify a mainframe for customer use. Instead, IBM refused to sell these components until six months after the used mainframe was installed and set up. This drove QSGI out of the market while an IBM affiliate and co-defendant IBM Global Financing, which did not have to abide by the six-month rule, emerged as the leader of the industry, selling its products at uncompetitive prices.
In granting IBM’s motion to dismiss, the court held that (1) even though QSGI adequately alleged the structure of the market for new mainframe computers, it failed to allege the structure of the alleged market for used IBM mainframe computers; and (2) QSGI failed to allege its own market share before and after IBM’s adoption of its monopolistic policies. The court further held that QSGI failed to allege that IBM acted deceptively in adopting the six-month rule. QSGI plans to amend its complaint.
Class Certification Denied In Pineapple Sham Patent Suit
March 20, 2012 – 3:50 pm
In Conroy v. Fresh Del Monte Produce Inc. et al., California First District Court of Appeal upheld the denial of class certification in a case filed by direct and indirect purchasers, accusing Fresh Del Monte Produce Inc. of securing a patent for a variety of pineapple that it knew to be unpatentable and subsequently using patent litigation to gain a stranglehold and raise prices in the market for extra-sweet pineapple violating California’s Unfair Competition Law. In upholding the lower court’s decision, the appeals court ruled that the indirect purchaser plaintiffs had failed to show that the trial court abused its discretion in denying class certification. The lower court had adequately determined that (1) individual questions would need to be resolved to establish injury to proposed class members who purchased pineapples from different direct purchasers in different competitive markets, and (2) class members could not be notified in a cost-effective manner.
Vehicle Lights Pricing Conspiracy Suit Gets the Green Light
March 20, 2012 – 3:31 pm
In U.S. v. Hsu, Northern District of California Judge Richard Seeborg, denied a motion brought by defendants Eagle Eyes, E-Lite Automotive, Inc., and two top Eagle Eyes’ executives, to dismiss an indictment against them for conspiring to fix prices for replacement vehicle lights. According to the indictment, defendants participated in the conspiracy to set rates for aftermarket auto lights in the U.S. and elsewhere. In their motion to dismiss, the defendants maintained that the indictment should be dismissed because it didn’t sufficiently allege the defendants’ intent to participate in the long-running conspiracy. The court disagreed, and held that in United States v. Alston, the Ninth Circuit had previously refused to dismiss a Sherman Act indictment that also did not specifically contain the words “knowingly” or “intentionally” because the language of the Sherman Act implied criminal intent. Therefore, based on the Alston case, the conspiracy charges in the present case were held to be valid.
Botox Rival Barred From Selling Its Products After Employees’ Trade Secret Theft
March 20, 2012 – 3:06 pm
In Allergan Inc. v. Merz Pharmaceuticals LLC et al., Central District of California Judge Andrew J. Guilford barred Botox competitor, Merz Pharmaceuticals LLC, from selling wrinkle-reducing drug Xeomin. Botox maker, Allergan Inc., filed the case accusing seven of its former employees and Merz, of misappropriating trade secrets and violating the Lanham Act. In its suit, Allergan claimed that the former Allergan sales staff who left to join Merz pilfered customer ordering information and spreadsheets with details about approximately 24,000 Botox customers in the U.S. Merz claims that the information that was taken was either publicly available or posed no threat to Allergan. The court issued an order after closing arguments in court, with the final written order to follow setting out the terms and duration of the injunction.
Copper Tubing Cartel Action to Move Forward
March 19, 2012 – 3:16 pm
In Carrier Corporation et al. v. Outokumpu Oyj et al., the Sixth Circuit Court of Appeals reinstated a suit filed by an air conditioner and refrigeration company, Carrier Corporation, accusing copper tubing manufacturer, Outokumpu Oyj, of engaging in a long-running conspiracy to strangle the U.S. market for “ACR” copper tubes. The Sixth Circuit held that Carrier’s suit presented valid arguments, despite largely drawing from the results of a European investigation into the alleged cartel activity, and “[t]he mere fact that the complaint borrows its substance from the [European Commission] decision and then builds on the EC’s findings does not render its allegations any less valid. … [E]ven if all of the facts taken from the EC decisions were stripped from the complaint, Carrier’s complaint still offers additional allegations.” The court also rejected Outokumpu’s argument that Carrier failed to state a claim, holding that Carrier was not required to explicitly detail how each of the defendant’s various branches participated in the alleged cartel conspiracy.
Multimedia Messaging Antitrust Suit Dismissed for Lack of Standing
March 19, 2012 – 3:13 pm
In Bruce Max Davis et al. v. AT&T Wireless Services, Inc. et al., California federal judge Dean D. Pregerson, tossed a putative antitrust conspiracy class action under the Sherman Act and California Cartwright Act. The complaint alleged price-fixing and unfair competition, and was filed by multimedia content owners and producers against AT&T Mobility LLC, Verizon Wireless, Sprint Spectrum LP, T-Mobile USA Inc., and TracFone Wireless Inc. The plaintiffs claimed that the carriers collectively decided to ignore recommendations to implement digital rights management measures that would have protected third-party copyrighted materials when they created the Multimedia Messaging Service (MMS). The court granted defendants’ motion to dismiss, holding that the plaintiffs lacked standing to bring antitrust claims against participants in a different market. Judge Pregerson’s March 2011 dismissal of a separate, similar case, Luvdarts LLC et al. v. AT&T Mobility LLC et al., on the grounds that the companies didn’t have the right and the ability to prevent infringement barred this case.
Predatory Pricing Claims Could Not Be Supported in the Army Camouflage Monopoly Suit
March 19, 2012 – 3:12 pm
In GMA Cover Corp. v. Saab Barracuda LLC, U.S. District Court for the Eastern District of Michigan Judge Mark A. Goldsmith adopted U.S. Magistrate Judge Paul J. Komives’ report, tossing a suit that accused Saab Barracuda LLC of manipulating prices of camouflage nets it sold the U.S. Army. In its suit, Saab’s rival, GMA Cover Corp., accused Saab of trying to monopolize the market for the camouflage system – for which the only buyer was the federal government – by slashing its prices and forcing GMA out of business after the government accepted GMA’s bid for these systems. The court held that “[i]n a case such as this, where the buyer is the ultimate consumer, the monopoly supplier will not be able to extract a supracompetitive price to recoup its investment in the below-cost pricing,” because a consumer like the government has substantial bargaining power and could refuse to accept any offer.