On July 3, 2010, the Justice Yates (the trial judge) overturned his decision after a bench trial convicting William Gilman and Edward McNenny of violating the Donnolly Act (New York’s antitrust statute) for rigging bids on insurance contracts. According to the New York Times, he did so based on “newly discovered contradictory statements made by witnesses who cooperated with prosecutors, and the suppression of documents that would have been ‘invaluable’ to the defense.” Gilman and McNenny are the only Marsh executives that were convicted after a trial. As reported in earlier posts, Marsh paid an $850 million civil penalty and was not prosecuted. One former Marsh executive pleaded guilty and others had their cases voluntarily dismissed by the government or were acquitted after a bench trial.
Mar
31
Posted by : | On : March 31, 2010
The Supreme Court held today that district courts must follow Fed.R.Civ. 23 in class actions alleging violations of state law even though the state statute prohibits prosecution of the claim as a class action. In Shady Grove Orthopedic Assoc. v. Allstate Insurance Co., No. 08-1008, 2010 WL 1222272 (Mar. 31, 2010), the Court held that Rule 23 trumps NY CPLR 901(b), which prohibits class actions under New York statutes authorizing a claim for statutory or multiple damages. That statute has barred claims under New York’s antitrust statute (the Donnelly Act) as well its Deceptive Trade Practices Act. Numerous state consumer protection statutes likewise have prohibitions on class actions. Shady Grove breathes life into class actions in federal court under those statutes.
Dec
10
Posted by : | On : December 10, 2009
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.
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.
Feb
17
Posted by : | On : February 17, 2009
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.
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.
Oct
06
Posted by : | On : October 6, 2008
The United States Court of Appeals for the Second Circuit recently held that Major League Baseball’s licensing of team logos was subject to rule of reason review under Section 1 of the Sherman Act. The court affirmed summary judgment in favor of MLB because the appellant did not challenge the licensing program under that rule. Major League Baseball Properties, Inc. v. Salvino, Inc., No. 06-1867 (2d Cir. Sept. 12, 2008) (attached MLB Properties v. Salvino). The baseball clubs give (with a few exceptions) exclusive licensing rights to a single entity. According to the MLB’s expert Frank Fisher (a world renowned economist), this system offers many efficiencies including allowing MLB licensing to compete better with other sports licensing; offering one-stop shopping to licensees; centralized management on matters such as quality control, intellectual property rights enforcement and negotiations and sales to licensees. According to Fisher, these efficiencies should result in lower licensing fees. The appellant had offered an expert report from economist Mr. Louis A. Guth, a Special Consultant for NERA, who disputed these efficiencies and asserted that the MLB licensing entity functioned as a cartel unresponsive to demand. The Second Circuit affirmed the exclusion of Guth’s report under Daubert v. Merrell Dow because (unlike Fischer’s report) it was unsupported by evidentiary citations or empirical analysis. The Second Circuit held that the rule of reason and not the per se rule or “quick look” analysis applied because the “arrangement might plausibly be thought to have a net precompetitive effect, or possibly no effect at all on competition.” Through different reasoning, the Second Circuit in this case reached the same result as the Seventh Circuit did in a challenge to a nearly identical licensing program by the NFL. See American Needle Inc. v. Nat’l Football League, No. 07-4006, 2008 WL 3822782 (7th Cir. Aug. 18, 2008) discussed in the Post of September 4, 2008. In that case, the Seventh Circuit held that the NFL teams were incapable of conspiring with themselves under the Copperweld doctrine in these particular circumstances. In this case, the Second Circuit did not address the Copperweld doctrine, but it did observe that the relevant market should include licenses for other professional sports. Therefore, it would be unlikely for the MLB’s licensing activities to have an effect on competition. This case should prove useful for practitioners for its discussion of when the per se rule, rule of reason or quick look analysis applies, the tests used under these analyses and the pitfalls of an inadequate expert report.
Jul
07
Posted by : | On : July 7, 2008
On July 1, 2008, the Antitrust Division announced that VISA agreed to rescind a rule that required merchants to give VISA debit cards superior treatment than non-VISA debit transactions from VISA branded cards. Under the rule, VISA allowed merchants to waive the signature and PIN requirements for transactions of less than $25 on VISA debit cards but required the entry of a PIN or a signature on a VISA branded card for a non-VISA debit transaction. With a 70% share of the debit card market, this hurdle may have given VISA an unfair competitive advantage. This practice had become the subject of investigations by the Antitrust Division and the District of Columbia, New York and Ohio attorneys general. It is not surprising that VISA is gun-shy in light of its multi-billion settlements in private antitrust litigation. The Antitrust Division’s press release is attached. DOJ Press Release (VISA)