Yesterday, the United States District for the Eastern District of Michigan denied a motion to dismiss the Direct Purchasers’ Consolidated Amended Class Action Complaint in In re Packaged Ice Antitrust Litig., MDL 1952 (Opinion). It held, “Plaintiffs’ CAC contains enough factual content to plausibly suggest that these Defendants participated in a nationwide conspiracy to allocate customers and territories and raises a reasonable expectation that discovery will reveal evidence of illegal agreement. The CAC provides Defendants with fair notice of Plaintiffs’ claims and the grounds on which they are based, such that these Defendants will know how to respond. The present complaint succeeds where Twombly’s failed because the complaint alleges specific facts sufficient to plausibly suggest that the parallel conduct alleged was the result of an agreement among the defendants.” Slip op. at 38 (citation omitted). It also held that the Complaint contains sufficient allegations of fraudulent concealment to defeat the motion to dismiss on statute of limitations grounds.
Kohn, Swift & Graf, P.C. is interim lead counsel for the direct purchaser class.
Wild Law Group PLLC is interim lead counsel for the indirect purchaser class.

On February 23, 2010, the California Attorney General entered into a consent decree with Dermaquest, Inc., which prohibits Dermaquest from engaging in resale price maintenance.  Specifically, the order enjoins Dermaquest from requiring resellers to charge a specified price or to increase their prices.  The action was brought under the Cartwright Act and the Unfair Competition Law.  California now joins Illinois, New York and Michigan (see March 31, 2008 Post) in treating resale price maintenance as a per se offense in violation of its state antitrust law even though such conduct is subject to rule of reason review under section 1 of the Sherman Act after Leegin Creative Lether Prods., Inc. v. PSKS, Inc., 551 U.S. 877 (2007).  This case reinforces the dangers to a manufacture when it implements a resale price maintenance program under the belief that because such conduct might be permissible under the Sherman Act, there is no genuine exposure.  The California complaint and consent decree appear here: Dermaquest Complaint  and Dermaquest Judgment.

Wild Law Group PLLC (“WLG”) has been named interim lead and liaison counsel for the indirect purchaser class in In re Packaged Ice Antitrust Litig., MDL No. 1952 and interim lead counsel for the indirect purchaser class in In re Dairy Farmers of America Antitrust Litig., MDL No. 2031.  The WLG attorneys (Matthew S. Wild, Max wild and John Perrin) will continue their roles as interim lead and liaison counsel in these cases that they had at predecessor law firms.  

WLG was formed in March 2010.  With offices in New York, Michigan and London, WLG is a litigation boutique that specializes in antitrust, class actions and commercial litigation. WLG has been named lead class counsel in multidistrict litigation. WLG attorneys have represented clients in some of the largest antitrust controversies in the United States. They have tried more than 100 cases to juries in state and federal courts.

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.”

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.

Levitt & Kaizer, on behalf of the class of indirect purchasers in In re Packaged Ice Antitrust Litig., MDL No. 1952 and the individual class representatives, asserted today the class’ rights as victims under the Crime Victims Rights Act (18 U.S.C. 3771) in connection with the criminal prosecution of Arctic Glacier and its former executives.  They requested the opportunity to be heard before the court decides whether to accept any plea agreements.  They also requested that the court postpone the upcoming arraignment of Arctic Glacier on October 27, 2009 and provide them with 30 days’ notice before the Court accepts any plea agreement.  A copy of their letter is available here: CVRA Letter

As previously reported, these defendants entered into plea agreements on October 14, 2009.  In apparent violation of the CVRA, the government entered into the plea agreements without conferring with the indirect purchasers beforehand.  See, e.g., In re Dean, 527 F.3d 391, 394 (5^th Cir. 2008) (“the government should have fashioned a reasonable way to inform the victims of the likelihood of criminal charges and to ascertain the victims’ views on the possible details of a plea bargain”).  The CVRA provides, inter alia, “[t]he right to reasonable, accurate, and timely notice of any public court proceeding … involving the crime,” “the right to confer with the attorney for the government” and “[t]he right to be reasonably heard at any public proceeding in the district court involving … plea [or] sentencing.”  18 U.S.C. § 3771(a)(2)&(4)&(5).  The CVRA further provides that “the court shall ensure that the crime victim is afforded the[se] rights.”  18 U.S.C. § 3771(b)(1). 

Levitt & Kaizer and the Law Offices of Max Wild are interim co-lead counsel for the indirect purchaser class in In re Packaged Ice Antitrust Litig., MDL No. 1952.   The Perrin Law Firm is liaison counsel for the indirect purchaser class.

The Antitrust Division’s press release:

"WASHINGTON — A packaged-ice company, headquartered in St. Paul, Minn., has agreed to plead guilty and to pay a $9 million criminal fine for allocating customers, the Department of Justice announced today. In addition, three of the company’s former executives pleaded guilty for their roles in the conspiracy to allocate customers.

According to a one-count felony charge filed under seal on Sept. 10, 2009, and unsealed today in the U.S. District Court in Cincinnati, Arctic Glacier International Inc. engaged in a conspiracy to suppress and eliminate competition by allocating packaged-ice customers in the Detroit metropolitan area and southeastern Michigan, beginning Jan. 1, 2001, and continuing until at least July 17, 2007. Under the plea agreement, which must be approved by the court, Arctic Glacier has agreed to cooperate with the Department’s ongoing investigation.

According to separate one-count felony charges, also filed under seal on Sept. 10, 2009, and unsealed today in the U.S. District Court in Cincinnati, Frank Larson, Arctic Glacier’s former senior vice president of operations, and Keith Corbin, the company’s former vice president of sales and marketing, participated in the same conspiracy beginning at least as early as March 1, 2005, and continuing at least until July 17, 2007. According to an additional one-count felony charge filed under seal on Sept. 10, 2009, in the U.S. District Court in Cincinnati and unsealed today, Gary Cooley, the company’s former vice president of sales and marketing, also participated in the conspiracy from at least as early as June 1, 2006, until July 17, 2007. Under the three separate plea agreements, which must be approved by the court, the former executives have agreed to cooperate with the Department’s ongoing investigation.

In court documents, the Department said that the three former executives and Arctic Glacier, conspired with another packaged-ice competitor to allocate packaged-ice customers in southeastern Michigan and the Detroit metropolitan areas. As a part of the conspiracy, Arctic Glacier, its former executives and other co-conspirators exchanged information for the purpose of monitoring and enforcing adherence to the agreed customer allocations and refrained from competing for the allocated customers.

Arctic Glacier, Larson, Corbin and Cooley are each charged with allocating packaged-ice customers in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine for individuals and a $100 million fine for corporations. The maximum fines may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either of those amounts is greater than the Sherman Act maximum fines.

These charges stem from an ongoing antitrust investigation into the packaged-ice industry. As a part of the same investigation, Home City Ice Company pleaded guilty on June 17, 2008, for its participation in a conspiracy to allocate customers and territories in the packaged-ice industry."

Levitt & Kaizer and the Law Offices of Max Wild are interim co-lead counsel for the indirect purchaser class in In re Packaged Ice Antitrust Litig., MDL No. 1952.   The Perrin Law Firm is liaison counsel for the indirect purchaser class.

Google announced today that Arthur D. Levinson resigned from its board of directors.  However, Mr. Levinson remains on Apple’s board of directors.  Mr. Levinson was the remaining common director on the Google and Apple boards.  As reported in the June 3, 2009 Post, Eric D. Schmidt, Google’s CEO, resigned from Apple’s board amid antitrust concerns raised by the FTC.  The June 3 Post noted that it was unclear whether the FTC would require Mr. Levinson’s resignation from one of the boards.  Apparently, the FTC did just that as FTC Chariman Jon Leibowitz said, “Google, Apple and Mr. Levinson should be commended for recognizing that overlapping board members between competing companies raise serious antitrust issues, and for their willingness to resolve our concerns without the need for litigation.”  Chairman Leibowitz further warned, “[b]eyond this matter, we will continue to monitor companies that share board members and take enforcement actions where appropriate.”  It seems that the FTC is warning corporations that it plans to take an increased interest in enforcing section 8 of the Clayton Act, which prohibits interlocking directorates among competitors under some circumstances.  That statute has not been enforced with much frequency.  Nevertheless, antitrust practitioner always have to be concerned that the existence of common directors could be used as evidence of a conspiracy between the two corporations in violation of the Sherman Act because it provides an opportunity to conspire.  Accordingly, antitrust practitioners know to advise against such overlaps among corporations vulnerable to Sherman Act litigation without regard to section 8 of the Clayton Act.

As noted in the June 29, 2009 Post, the Supreme Court granted certiorari to review the Seventh Circuit’s decision in American Needle v. Nat’l Football League.  As explained in the September 4, 2008 Post, American Needle applied the Copperweld doctrine to a sports league’s joint licensing scheme for the first time. In so doing, it affirmed summary judgment in favor of the NFL, its teams and Reebok in an antitrust challenge to an exclusive license of team names and logos to Reebok for use on headwear.  (The decision is linked to the September 4 Post).  As explained in Wild, et al., “Private Equity Groups Under Common Legal Control Constitute a Single Enterprise Under the Antitrust Laws,” 3 NYU Journal of Law and Business 231, 237 and n.31 (attached under articles above), that doctrine treats two or more firms that are under common ownership or have a unity of interest in a common course of action as a single firm incapable of conspiring or otherwise acting collectively under the antitrust laws.

In their amici curiae brief, the government urges reversal.  It argues that the Seventh Circuit extended the Copperweld doctrine in a manner inconsistent with prior precedent — e.g., Texaco Inc. v. Dagher, 547 U.S. 1 (2006), in which the Supreme Court applied the rule of reason to a price-setting joint venture and NCAA v. Board of Regents, 468 U.S. 85 (1984), in which the Supreme Court applied a “quick look” to a NCAA restriction on each individual college’s right to broadcast their football games.  While the government conceded that the league should be entitled to Copperweld immunity under circumstances in which the teams need to cooperate such as to produce games, the licensing of NFL team logos is not one of them.  Indeed, the government observed that the NFL joint licensing scheme was similar to the type of scheme under review in Broadcast Music, Inc. v. CBS, 441 U.S. 1 (1979).  In BMI, the Supreme Court applied the rule of reason to a joint venture in which composers created a clearinghouse to sell a blanket license to works by more than one of them.   The American Antitrust Institute and Consumer Federation of America also filed a brief as amici curiae urging reversal.  Their brief and the government’s brief are linked below.  DOJ and FTC Brief;  AAI Brief

On September 15, 2009, LEVITT & KAIZER and THE LAW OFFICES OF MAX WILD (interim lead counsel for the class) and THE PERRIN LAW FIRM (liaison counsel) filed an amended class action complaint seeking recovery on behalf of packaged ice consumers in 47 states and the District of Columbia.  The amended complaint provides further details of the conduct of defendants Reddy Ice, Arctic Glacier and Home City Ice that were not available when the original complaint was filed.  As the amended complaint explains,

“[t]his action arises from a long-standing agreement among defendants – producers of packaged ice in the United States and Canada, which have a combined market share of nearly 70 percent — not to compete with each other. In furtherance of their cartel, defendants agreed to, and did in fact, fix and inflate prices, allocate territories and customers, acquire competitors, refuse to compete and otherwise commit a variety of unlawful and anticompetitive acts. The purpose and effect of the cartel has been to fix, raise, maintain and stabilize the prices paid for ice sold in plastic bags or large blocks (“packaged ice”) throughout the United States. Evidence of the existence of the conspiracy includes but is not limited to admissions made by participants in the conspiracy, a guilty plea by one of the defendants to a violation of Section 1 of the Sherman Act, defendants’ suspension of officers who they believe may have participated in the cartel, defendants’ attempts to intimidate and bribe a whistleblower and economic behavior that would have been inconsistent with each defendant’s self-interest or implausible in the absence of the conspiracy.”

The amended complaint is available here: Ice Amended Complaint

The defendants have 60 days to respond.