On November 19, 2009, the New York Attorney General’s motion to dismiss the charges arising from alleged bid rigging of insurance policies against Thomas T. Green, Jr. and William L. Burnie (former Marsh executives) and Geri Mandel (a former Zurich executive) was granted by Justice James Yates. New York Attorney General Andrew Cuomo sought dismissal in light of the acquittals of Joseph Peiser, Greg Doherty and Kathleen Drake, former Marsh executives, after an 11-month bench trial before Justice Yates, who was to preside at the upcoming trial. These acquittals were reported in the October 26, 2009 Post. As you may recall (and discussed in the February 22, 2008 Post), two Marsh executives were convicted of Donnelly Act violations after a 10-month bench trial. These cases were brought by then New York Attorney General Elliot Spitzer. Marsh paid $850 million to settle and another Marsh executive pleaded guilty.
Dec
10
Posted by : | On : December 10, 2009
Dec
09
Posted by : | On : December 9, 2009
On November 25, 2009, the court in In re Static Random Access Memory Antitrust Litig., No. C 07-01819 CW, 2009 WL 4263524 (N.D. Cal. Nov. 25, 2009), certified 28 indirect purchaser classes – one nationwide class for injunctive relief under section 16 of the Clayton Act and 27 separate indirect purchaser damages classes under the laws of Arizona, Arkansas, California, Florida, Hawaii, Iowa, Kansas, Maine, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Mexico, New York, North Carolina, North Dakota, Pennsylvania, Rhode Island, South Dakota, Tennessee, Utah, Washington, West Virginia, Wisconsin, Puerto Rico and the District of Columbia.
Injunction: the court certified the class under Rule 23(b)(2). It rejected the standing challenge holding “Plaintiffs have alleged sufficient facts to establish Article III standing for their nation-wide injunctive relief class. IP Plaintiffs allege that Defendants and their co-conspirators entered into a continuing conspiracy in restraint of trade artificially to raise prices for SRAM in the United States. They further allege that these market-wide overcharges were then passed through the chains of distribution, and that they were injured by paying supra-competitive prices when they indirectly purchased Defendants’ products.” The court also rejected defendants’ argument “because IP Plaintiffs seek to certify a nation-wide injunctive class from November 1, 1996 through December 31, 2006, they have impliedly alleged that the conspiracy ended in 2006. However, a finite proposed class period does not defeat certification of a class under Rule 23(b)(2). See, e.g., Jaffe v. Morgan Stanley & Co., 2008 WL 346417, at *3 (N.D.Cal.) (certifying injunctive-relief class for settlement affecting persons employed by the defendants “at any time between October 12, 2002 and December 3, 2007). Further, IP Plaintiffs allege that the same market conditions that facilitated the conspiracy from 1996 to 2006 continue today. They allege that Defendants’ price-fixing resulted from a systematic, repeated pattern of sharing sensitive competitive information which was greatly facilitated by the cross-competitor business relationships that still exist. Thus, there is alleged a significant risk that the conspiracy will persist or reform in the future.”
Individual state damages classes: the court certified 27 different classes based on individual state law. The court rejected “Defendants[’] … concern[] that [it] will be unable to manage state-law claims from twenty-seven state classes” holding “there is no qualitative difference between a federal district court considering class certification of state claims under that state law and a federal court serving as a multi-district litigation forum performing the same task for many federal courts. Moreover, courts frequently certify classes under the laws of multiple jurisdictions. See, e.g., Norvir Anti-Trust Litig., 2007 WL 1689899, at *8 (N.D.Cal.) (certifying class under the common law of forty-eight states); In re Pharm. Indus. Average Wholesale Price Litig., 233 F.R.D. 229, 230-31 (D.Mass.2006) (certifying multi-state defendant subclasses under the consumer protection laws of forty-one states).” In holding that the individual issues predominated over the individual issues, the court held that “there [wa]s a reasonable method for determining on a class-wide basis whether and to what extent that overcharge was passed on to each of the IP Plaintiffs at all levels of the distribution chain.”
Experts: the court rejected each parties’ challenge to the other parties’ expert holding that the appropriate standard is “whether the expert evidence is sufficiently probative to be useful in evaluating whether class certification requirements have been met.” The court made short shrift of the challenges holding “Although each side presents myriad valid challenges to the other’s expert, the Court concludes that these challenges are of the type that go to the weight of the evidence, not the admissibility. … The parties’ motions to exclude reflect disagreement with the opposing parties’ position; however, this disagreement does not warrant exclusion.”
Oct
29
Posted by : | On : October 29, 2009
In letters dated October 27, 2009 (State AG Letter re HR 3190; State AG Letter re S 148), 41 state attorneys general wrote to Congress asking them to overrule Leegin Creative Leather Product, Inc. v. PSKS, Inc., 551 U.S. 877 (2007). In Leegin, the Supreme Court held that resale price maintenance — the practice in which a manufacturer requires a retailer to sell its products at a certain price — was subject to the rule of reason. In doing so, the Court overruled Dr. Miles Medical Co. v. John D. Park & Sons, Co., 220 U.S. 373 (1911), which held that resale maintenance is a per se violation of section 1 of the Sherman Act. The state attorneys general urge passage of H.R. 3190, which provides that “[a]ny contract, combination, conspiracy or agreement setting a minimum price below which a product or service cannot be sold by a retailer, wholesaler or distributor shall violate section 1 of the Sherman Act.” As reported in the May 23, 2008 Post, 35 state attorneys general wrote to Congress on May 8, 2008 asking that it enact nearly identical legislation (S. 2261).
Practitioners should know that resale price maintenance can still be a per se violation of state antitrust laws. As reported in the May 4, 2009 Post, Maryland enacted such a law. And as reported in the March 31, 2008 Post, the New York, Michigan and Illinois attorneys general brought an action against Herman Miller in which they alleged that Herman Miller’s resale price maintenance program was a per se violation of their state antitrust laws. Herman Miller entered into a consent decree.
Oct
26
Posted by : | On : October 26, 2009
Joseph Peiser, Greg Doherty and Kathleen Drake, former Marsh executives, were acquitted after an 11-month bench trial before Justice James Yates of violating New York’s antitrust law — the Donnelly Act. They were acquitted of bid-rigging in connection with the sale of insurance policies. As you may recall (and discussed in the February 22, 2008 Post), two Marsh executives were convicted of Donnelly Act violations after a 10-month bench trial. These cases were brought by then New York Attorney General Elliot Spitzer. Marsh paid $850 million to settle and another Marsh executive pleaded guilty.
May
04
Posted by : | On : May 4, 2009
Maryland has amended its antitrust law to make resale price maintenance agreements per se illegal, thus overruling Leegin Creative Leather Products v. PSKS, 127 S.Ct. 2705 (2007). In Leegin, the Supreme Court overruled Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U. S. 373 (1911), and held that a resale price maintenance agreement in which the manufacturer requires a reseller to sell at a certain price is no longer a per se violation of Section 1 of the Sherman Act but instead is subject to rule of reason analysis. Application of the rule of reason creates a burden on plaintiffs because they have to show that the restraint had an adverse effect on the relevant market and not just the price of the manufacturer’s goods that were subject to restraint. This abrupt change in the law has been poorly received by state antitrust authorities. As reported in the May 23, 2008 Post, 35 state attorneys general petitioned Congress to amend the Sherman Act to overrule Leegin. And as reported in the March 31, 2009 Post, the state attorneys general of New York, Illinois and Michigan obtained a consent decree against Herman Miller in the United States District Court for the Southern District of New York for resale price maintenance involving the Aeron chair. Their position was that their state antitrust law do not recognize the departure by Leegin and still provide that resale price maintenance is a per se offense.
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.
Aug
11
Posted by : | On : August 11, 2008
The United States Court for the District of Columbia affirmed summary judgment dismissing a class action brought by wholesalers of brand name drugs, which alleged that Biovail misused its patent for Tiazac – a hypertension drug – to keep a generic version from the market. Meijer, Inc. v. Biovail Corp., Nos. 05-7066, 05-7069, 06-7118, 2008 WL 2853281 (D.C. Cir. July 25, 2008) (attached Meijer v. Biovail). Plaintiffs claimed that Biovail falsely asserted to the FDA its newly acquired patent protected Tiazac from generic competition. After Andrx – the first-to-file generic manufacturer — advised the FDA that it disagreed with Biovail’s claim, Biovail brought an action for patent infringement action. Under the Hatch-Waxman Act scheme, commencement of the patent infringement action barred Andrx from bringing a generic to market for either 30 months from the date that Andrx certified to the FDA that its generic did not infringe Biovail’s patent or when it prevailed in the litigation. While the litigation was pending, Andrx encountered difficulty sourcing its generic. The D.C. Circuit affirmed summary judgment holding that plaintiffs lacked antitrust injury because they failed to demonstrate but-for Biovail’s conduct, Andrx would have been able to enter the market with its generic. Id. at *6.
Jul
18
Posted by : | On : July 18, 2008
The Tenth Circuit affirmed summary judgment dismissing a Complaint brought by an owner of a windshield repair shop alleging State Farm’s policy that advises its insureds to replace (rather than repair) windshields with cracks longer than six inches violates Sections 1 and 2 of the Sherman Act and the Colorado Consumer Protection Act. Campfield v. State Farm Mutual Automobile Insurance Co., Nos. 06-1442, 06-1467, 06-1469, 2008 WL 2736656 (10th Cir. July 15, 2008). The Court rejected plaintiff’s Section 1 and 2 claims because he could not establish a relevant product market — a necessary element of both claims. The Court noted that plaintiff alleged State Farm’s misuse of its monopsony power over its insured and therefore the relevant market “is not the market of competing sellers but of competing buyers. This market is comprised of buyers who are seen by sellers as being reasonably good substitutes.” Id. at *4 (citation omitted). Plaintiff alleged a “State Farm insured repairable windshield market, in the geographic area of the United States of America.” Id. The Tenth Circuit rejected this market definition as underinclusive because plaintiff offered no basis why sellers would not view other buyers of repairable windshields as reasonable substitutes. The Tenth Circuit made clear that the rule of reason applied to the Section 1 claim notwithstanding plaintiff’s characterization of State Farm’s conduct as a group boycott. The restraint was vertical in nature and not the classic horizontal group boycott that triggers per se condemnation. The Tenth Circuit rejected the Consumer Protection Act claim because the recommendations to insureds to replace rather than repair windshields were not knowing and intentional concealment or misrepresentations as required under the Act. This opinion is useful for its discussion of limitations on pleading relevant markets as well as the relevant market inquiry in monopsony cases.
May
23
Posted by : | On : May 23, 2008
The state attorneys general continue to be hostile to the Supreme Court’s decision in Leegin Creative Leather Products, Inc. v. PSKS, Inc., 127 S.Ct. 2705 (2007), which overruled Dr. Miles Medical Co. v. John D. Parke & Sons. Co., 220 U.S. 373 (1911), and made resale price maintenance subject to the rule of reason under Section 1 of the Sherman Act. 35 state attorneys general have written to Congress asking that it pass S. 2261 which would make resale price maintenance a per se violation of Section 1. State Attorney General Letter; S. 2261. The March 31, 2008 post reported that the New York, Michigan and Illinois attorneys general obtained a consent decree under state law against Herman Miller for its resale price maintenance scheme. The May 8,2008 post reported that although the FTC modified Nine West’s consent decree that had prohibited resale price maintenance, the FTC reminded Nine West that it was still subject to state restrictions. This most recent letter further confirms that counselors must be cognizant of state law when they advise clients about the legality of resale price maintenance. It would be prudent for clients to act unilaterally and follow the Colgate doctrine rather than rely on Leegin.