In Mike Madani et al. v. Shell Oil Co. et al., Ninth Circuit Court of Appeals affirmed the dismissal of a putative class action filed by gas station owners in California accusing Shell Oil Co., Chevron Corp., and Saudi Refining Inc. of engaging in a scheme to fix fuel prices for U.S. franchise owners during monthly closed-door meetings between the chairmen of the three companies. The suit further accused executives of destroying records and claimed that once-existing joint ventures trampled on federal antitrust laws and led to inflated wholesale gas prices in almost every U.S. state between 1999 and 2001. In dismissing plaintiffs’ suit as being time-barred, the court rejected plaintiffs’ argument that the statute of limitations for the suit should be tolled while a separate class action filed by Shell and Texaco Inc. retailers over the same alleged scheme, but with a different legal theory was pending. The court held that according to the current suit, defendants violated the Sherman Act under the rule of reason and since the plaintiffs in the previous case expressly waived the rule of reason, plaintiffs in the new suit were effectively trying to get a “second bite at the apple.”
Price-Fixing Action Against Oil Companies Dismissed by Ninth Circuit As Time-Barred
December 16, 2009 – 12:13 am
IBM Acused of Monopolizing Mainframe Market
December 15, 2009 – 10:57 am
Neon Enterprise Software has sued IBM in the Western District of Texas arguing that the mainframe computer giant has engaged in unfair competition in telling customers that they may not use a Neon software product. According to the complaint, mainframe customers with legacy systems are effectively locked into paying IBM large licensing fees. In recent years, IBM has sold newer systems purportedly without licensing fees. Neon claims that its software allow IBM mainframe users to shift legacy systems from the fee-bearing IBM systems to the newer, non-fee bearing systems. Neon claims that no intellectual property or contractual right justifies IBM in telling customers that they may not lawfully use the Neon software. IBM claims that Neon’s software offers no useful innovation and is equivalent to a homeowner tampering with the electric meter to lower its bill.
Thermostat Class Action Gets Certified
December 15, 2009 – 10:28 am
In Wright et al. v. Honeywell International Inc., Vermont’s highest court has reversed and remanded a lower state court’s denial of class certification to a consumer collective action alleging Honeywell International Inc. abused its dominant position in the thermostat market. Vermont Supreme Court held that the trial court applied too rigorous a standard in denying the class certification by requiring the plaintiff’s expert to prove plaintiff’s case at the certification stage and by moving from fact of injury to amount of damages, which can be proven in class actions on an individual basis if necessary. The court further held that the lower court’s responsibility at this stage of the litigation was limited to determining whether plaintiff’s evidence would use generalized proof common to the class, thereby demonstrating that issues of law and fact common to the class would predominate.
Sixth Company Pleads Guilty For Conspiracy To Fix Liquid Crystal Display Panel Prices
December 14, 2009 – 12:13 pm
In U.S. v. Chi Mei Optoelectronics, Chi Mei Optoelectronics has pled guilty and agreed to pay $220 million in criminal fines for its role in a conspiracy to fix prices of liquid crystal display panels. The U.S. Department of Justice alleged that Chi Mei and five other co-conspirators agreed during meetings, conversations and other communications to set prices for TFT-LCD panels and issued price quotations based on those agreements. As part of the conspiracy, Chi Mei exchanged sales data with other conspirators to monitor and enforce the agreed-upon prices. Chi Mei is the sixth company to plead guilty to related charges in the case. In addition, nine company executives have also been charged in the government’s on-going investigation. Chi Mei and many of the companies that have pled guilty are also defendants in an ongoing multidistrict antitrust litigation brought by direct and indirect purchasers of the panels.
EC Conducts Surprise Raids of Pharmaceutical Companies On Suspicion of Anticompetitive Practices
December 14, 2009 – 11:31 am
The European Commission conducted surprise raids of several pharmaceutical companies, including Lundbeck A/S as part of the investigation into suspected anti-competitive practices. In raiding the companies, EC had reason to believe that prohibitions on restrictive business practices or the abuse of a dominant position may have been infringed.
Egg-Sharing RICO And Antitrust Violations Claims Dismissed As “Quite Far-Fetched”
December 10, 2009 – 10:25 am
In Options National Fertility Registry et al. v. American Society for Reproductive Medicine et al., Northern District Court of California Judge Jeremy Fogel dismissed for the third time a proposed class action brought by an organization representing human egg donors who say the American Society for Reproductive Medicine and the Society for Assisted Reproductive Technology engaged in “egg-sharing” without donor consent. In their second amended complaint, plaintiffs accused defendants of racketeering, saying they violated its and the donors’ rights and property interests and committed antitrust violations, driving the plaintiff out of business and forcing it to file for bankruptcy as a result of defendants’ slanderous statements. In dismissing plaintiffs’ complaint with prejudice, the court held that “Options’ RICO and antitrust claims are utterly lacking and indeed appear to be quite far-fetched.”
Labor Part of Union Subsidies Case Is Affirmed, Antitrust Part Will Go To Trial
December 10, 2009 – 10:04 am
In American Erectors Inc. et al. v. Local Union No. 7, Massachusetts District Court Judge Richard G. Stearns handed down an order denying Local No. 7 of the International Association of Bridge, Structural, Ornamental & Reinforcing Iron Workers’ motion for judgment notwithstanding the verdict, largely affirming the jury verdict in the labor portion of a suit accusing the union of using dues-based subsidies to give union companies an illegal edge. The order paves the way for a trial to begin on antitrust claims against the union. In their suit, plaintiffs alleged that the union took funds from workers’ paychecks for a “job target fund” and used the money to subsidize union contractors’ bids for construction contracts for which nonunion companies, such as plaintiffs were also competing, thus undermining the market.
Second Circuit Holds NYC Immune From Antitrust Challenge on Pay Phone Restrictions
December 9, 2009 – 11:46 am
The Second Circuit has upheld a trial court decision rejecting The New Phone Co.’s challenge to a New York City ordinance that regulates pay phone installation on public property. (The city claims no authority to regulate pay phone installation on private property.) The plaintiff alleged that because Verizon had locked up all of the good locations, the city’s ordinance eliminated competition in violation of the Telecommunications Act and the antitrust laws. The Second Circuit held that the Act created safe harbors for state and local regulatory efforts and that the city was immune from antitrust liability under the state action doctrine.
US Supreme Court Denies Cert in FTC v. Rambus
December 8, 2009 – 5:16 pm
Update December 2009: The EC has agreed to close its investigation of Rambus in exchange for Rambus’s agreement to issue royalty free licenses for its SDR and DDR chips and to charge 1.5% for patents necessary for later chip standards, a percentage point reduction from the company’s current royalties for DDR chips. Ramus is not required to pay any fine, but a fine would be triggered if it fails to live up to its commitments under the agreement. The company has stated that the EC did not find any wrong doing.
Update June 2009: The EC confirmed that its investigation of Rambus was moving toward a settlement that would entail Rambus lowering royalties for five years to its chip-technology customers.
Update May 2009: While expressing continued concern about anticompetitive activity in the standard setting process, the FTC upon remand decided that continued litigation against Rambus would not serve the public interest.
The U.S. Supreme Court let stand a DC Circuit decision holding that Rambus did not violate Section 2 of the Sherman Act by failing to disclose certain patents to a standard setting organization. The DC Circuit held broadly that such a failure to disclose is not anticompetitive because a standard necessarily prevents competition on the relevant technology that it standardized. Given that there were factual questions as to whether Rambus violated the standard setting body’s rules, the denial of certiorari may indicate only that the court did not believe that this case presented the issue appropriately.
Auto Filter Price-Fixing Suit To Move Forward
December 2, 2009 – 10:21 am
In In Re: Alftermarket Filters Antitrust Litigation, MDL, Northern District of Illinois Judge Robert W. Gettleman has rejected a request by manufacturers including Honeywell International Inc., Wix Filtration Corp., and United Components Inc. to dismiss consolidated putative class action suits alleging price-fixing in the market for automotive filters under heightened pleading standards of Bell Atlantic Corp. v. Twombly. The court held that plaintiffs’ claims, which are based on eyewitness accounts, are more than sufficient to proceed. In their suit, plaintiffs allege a number of specific instances of price-fixing conversations, based on “an actual agreement initiated by specified persons, witnessed in its inception and on several later occasions by an actual participant in the price-fixing scheme.” In rejecting defendants’ motion to dismiss, the court held that “although the series of alleged price-fixing arrangements among the defendants was followed by parallel rises in prices, the complaint does not rely on only the alleged parallel conduct to imply a conspiracy… . The plausibility of conspiracy is buttressed by the allegations concerning the concentration of the filters industry, the maturity of the market, the fungibility of the products, the lack of brand loyalty, and the importance of the price in determining consumer purchasing decisions.”