In January 2009, the United States Court of Appeals for the Second Circuit affirmed a district decision granting a motion to dismiss an action alleging that defendants “conspired to influence the FCC.” The Court held that such activity cannot give rise to antitrust liability under the Noerr-Pennington doctrine. Kahn v. iBiquity Digital Corp., No. 07-0475-cv, 2009 WL 102810 (2d Cir. Jan. 15, 2009). That doctrine provides immunity for, among other things, lobbying the government including agencies which is precisely what the defendants were alleged to have done. In another case, the United States Court of Appeals for the Ninth Circuit upheld application of the Noerr-Pennington doctrine in Kaiser Health Foundation, Inc. v. Abbott Laboratories, Inc., Nos. 06-55687, 06-55748, 2009 WL 69269 (Jan. 13, 2009). This time defendant’s commencement of litigation against generic drug manufacturers was protected. The Noerr-Pennington doctrine also shields litigation as a basis for antitrust liability unless it is “sham” litigation. The Ninth Circuit affirmed dismissal of the monopolization claims based on Abbott’s seventeen patent infringement lawsuits against generic drug manufacturers noting that it could hardly be sham litigation when Abbott prevailed in seven of them and Abbott “had a plausible argument on which it could have prevailed” in the other ten suits. Id. at *13. In Wolfe v. City of Anaheim, No. 07-56031, 2008 WL 542079 (9th Cir. Dec. 31, 2008), the Ninth Circuit affirmed dismissal on summary judgment based on the Local Government Antitrust Act of 1984, 15 U.S.C. section 35(a). That statute immunizes municipalities from antitrust damages. Plaintiff had sought to recover damages from the City of Anaheim for alleged wrongful denial of a taxicab franchise under, inter alia, the Sherman Act. The statute clearly precluded such liability.
Feb
17
Posted by : | On : February 17, 2009
Jan
13
Posted by : | On : January 13, 2009
On January 12, 2009, the FTC sought a hold separate order against Whole Foods on remand from the D.C. Circuit’s reversal of the lower court’s denial of a preliminary injunction. During the pendency of its administrative proceeding, the FTC seeks an order that enjoins Whole Foods from further integration of Wild Oats’ assets, rebranding of former Wild Oats stores and appointment of an independent trustee and management team to run the former Wild Oats stores. (Whole Foods Remand) It is questionable whether such relief would be effective to restore competition if for example, Wild Oats lost key employees, a loyal customer base and a distribution network. Prior coverage of the Whole Foods litigation appears on the July 29, 2008, December 1, 2008 and December 11, 2008 Posts. This remand proposal is likely to spark Whole Foods to seek expedited relief in its lawsuit against the FTC challenging the fairness and integrity of the FTC’s administrative process. (See December 11, 2008 Post) On December 12, 2008, the FTC has moved to dismiss the Complaint in that action contending that only a U.S. Court of Appeals has subject matter jurisdiction because Congress only granted those courts the power to review the FTC’s actions. (FTC Motion to Dismiss)
Dec
11
Posted by : | On : December 11, 2008
On December 8, 2008, Whole Foods brought an action in federal court claiming that the FTC’s administrative process is unconstitutional as applied to it. (Whole Foods Complaint) Whole Foods claims that the FTC has prejudged the FTC’s challenge to its merger with Wild Oats. Whole Foods also claims that the Scheduling Order entered in the administrative proceedings is so expedited that it is impossible for it to complete discovery and be ready for trial and therefore represents a denial of due process. Whole Foods seeks to have the FTC’s challenge heard in federal court and bypass the administrative process. One would think that Whole Foods is ensured of due process because it can file a petition for review of an adverse administrative decision before any United States Court of Appeals and if it was denied due process, the administrative decision would be vacated. This is the latest saga in the Whole Foods litigation. While Whole Foods defeated the FTC’s federal court action for a preliminary injunction in aid of the administrative process to enjoin consummation of the merger, the D.C. Circuit reversed. The transaction had closed but the D.C. Circuit remanded to the action to the district court to inquire whether there was any way to restore competition notwithstanding consummation. After Whole Foods sought reharing en banc, the original panel amended its decision to make it on behalf of a single judge with one judge concurring in the result and the other judge dissenting. This effectively mooted any need for en banc review because there was no decision of the Court which would have been binding on future panels. See Posts of December 1 and July 29, 2008 for more coverage of FTC v. Whole Foods.
Dec
08
Posted by : | On : December 8, 2008
On December 2, 2008, three Marsh executives went on trial in the Supreme Court of the State of New York (New York County) on charges of violating the Donnelly Act in connection with bid rigging of insurance policies. As you may recall (and discussed on the February 22, 2008 Post), two Marsh executives were convicted on Donnelly Act violations after a 10 month trial. These cases have been brought by the New York Attorney General. Marsh paid $850 million to settle and another Marsh executive pleaded guilty.
Dec
01
Posted by : | On : December 1, 2008
On November 21, 2008, the United States Court of Appeals for the D.C. Circuit denied rehearing and rehearing en banc in FTC v. Whole Foods with Judge Kavanaugh dissenting. Judge Kavanaugh had dissenting in the original decision. The original opinion is linked to the July 29, 2008 Post, which also analyzes it. On November 21, the court also issued a revised and amended decision. The revision and amended decision is particularly interesting because it clarifies that Judge Tatel concurred only in the judgment and not in Judge Brown’s opinion. (Whole Food’s Amended Decision ) As a result, it has become clear that Judge Brown’s opinion has no binding affect on the rest of the Court. Judges Ginsburg and Sentelle voted against rehearing en banc “because, there being no opinion for the Court, that judgment sets no precedent beyond the precise facts of this case. See King v. Palmer, 950 F.2d 771, 783 (D.C. Cir. 1991) (en banc) (‘without implicit agreement’ among a majority of the judges ‘we are left without a controlling opinion’).” (Whole Food’s Rehearing Denial)
Nov
30
Posted by : | On : November 30, 2008
On November 25, 2008, the FTC issued an administrative complaint challenging the proposed merger between CCC Information Services and Mitchell International. The FTC alleges that “the merger would hinder competition in the market for electronic systems used to estimate the cost of collision repairs, known as “estimatics,” and the market for software systems used to value passenger vehicles that have been totaled, known as total loss valuation (TLV) systems. The FTC’s administrative complaint alleges that the merger, which is valued at $1.4 billion, would harm insurers, repair shops and, ultimately, U.S. car owners by reducing from three to two the number of competitors in the two related businesses.” FTC CCC-Mitchell Press Release The FTC claims that with the existence of high barriers to entry, the merger would allow the combined firm to raise prices to its customers unilaterally as well as allow the remaining two firms to collude and raise prices. Absent extraordinary circumstances, the agencies will challenge mergers to duopoly. The posture of this challenge is interesting. The FTC issued the administrative complaint and approved commencement of action in federal court to seek a temporary restraining order and preliminary injunction but has not commenced such an action. The parties must have consented to delay closing or the HSR waiting must not have yet expired. These actions are usually brought at the very end of the waiting period and parties do not routinely consent to delay their mergers. It would be interesting to know what happened here.
Nov
30
Posted by : | On : November 30, 2008
In November 2008, the United States District Court for the District of Maryland sentenced two defense contractors to probation who had pleaded guilty in connection with a conspiracy to steal confidential bidding information from a competitor. The conspiracy concerned contracts to supply the Department of Defense with jet fuel abroad. In its press release announcing the guilty pleas (attached Cartwright Press Release), the Antitrust Division’s Criminal Section noted that the defendants pleaded guilty to offenses that had maximum prison sentences of 20 years — conspiracy to commit wire fraud by one defendant and conspiracy to commit wire fraud, defraud the United States and steal trade secrets by the other defendant. The court rejected the government’s requests for prison time. It noted that the defendants had otherwise been exemplary businessman and citizens and were pioneers in supplying fuel to newly opened routes in Eastern Europe. They were responsible for opening aviation from throughout the world in these far flung areas. The defendants were represented by Richard Levitt, Esq. of Levitt & Kaizer, Ray Granger, Esq. of Granger & Associates and Gordon Mehler, Esq. of Law Offices of Gordon Mehler.