In Hewlett-Packard Co. v. LG Electronics Inc. et al., Hewlett-Packard Co. sued LG Electronics, Koninklijke Philips NV, Pioneer Corp., and various subsidiaries for their alleged involvement in a massive optical disc drive (“ODD”) price-fixing conspiracy. In its suit, HP claims that defendants violated the Sherman Act and California antitrust laws when they shared confidential business information with one another and formed agreements to set ODD prices in the market, thereby causing HP to pay higher prices for ODDs than it would have paid in a competitive market. According to HP, the six-year conspiracy has been the subject of consumer multidistrict litigation as well as a U.S. Department of Justice investigation, plea agreement, and a putative class action settlement with Hitachi-LG Data Storage Inc., one of the defendants.
Court Orders Tricleer Antitrust Suit to Proceed to Discovery
October 29, 2013 – 2:00 pm
In Actelion Pharmaceuticals Ltd. et al. v. Apotex Inc. et al., New Jersey District Court Judge Noel L. Hillman denied Actelion Pharmaceutical Ltd.’s motion for judgment on the pleadings and to dismiss defendants’ counterclaims in Actelion’s lawsuit over its blood pressure medication Tricleer. Actelion sued several generic drug makers, claiming that antitrust laws don’t require it to supply Tracleer to aid in developing generics, and that it must constrain generic manufacturers’ access to the pills in order to abide by the FDA’s “risk evaluation and mitigation strategy.” The judge did not elaborate on his reasons for denying Actelion’s motion, but said that he would issue an opinion explaining his decision within the next two weeks. In the meantime, he ordered the case to proceed to discovery.
Court Refuses to Dismiss Iron Pipe Fittings Price-Fixing Suit
October 18, 2013 – 3:08 pm
In In re: Ductile Iron Pipe Fittings Indirect Purchaser Antitrust Litigation, New Jersey District Court Judge Anne E. Thompson refused to dismiss indirect purchasers’ class action against McWane Inc. and several other manufacturers, importers, and sellers of ductile iron pipe fittings, accusing the companies of fixing the products’ prices. While the court dismissed plaintiffs’ unjust enrichment claim, injunction request, and antitrust claims brought under the laws of 20 states, it kept their nine home state-law antitrust and consumer protection allegations intact. In rendering its decision, the court disagreed with defendants’ claim that plaintiffs showed no concrete connection between the alleged anti-competitive conduct and the plaintiffs’ nine home states. The court held that dismissal on this ground was not proper at this time because it’s too early in the proceedings for the court to require that level of specificity.
Court Agrees to Stay $1.06 Billion Judgment, Pending an Appeal
October 18, 2013 – 2:44 pm
In In Re Urethane Antitrust Litigation, Kansas District Court Judge John W. Lungstrum stayed a $1.06 billion class action judgment against Dow Chemical Co. while it appeals the decision. The class action was part of the multidistrict litigation that purchasers of polyether polyol brought against Dow and several other companies, including Bayer AG, BASF SE and Huntsman International LLC., accusing the companies of fixing the price of chemicals used to make urethane foam. Dow is appealing the judgment against it to the Tenth Circuit, arguing that the court improperly refused to decertify the class, and improperly calculated the amount of damages. According to Dow, the court should not have trebled the entire $400 million jury verdict against it, but instead, should have trebled the damages awarded for each class member individually.
DOJ Breaks Up More Than Dozen Simultaneous International Auto Parts Price-Fixing Conspiracies
October 18, 2013 – 2:19 pm
U.S. Attorney General Eric Holder announced that nine Japanese-based auto parts makers have been fined $740 million and two executives have pleaded guilty to their roles in international price-fixing conspiracies that increased the cost of cars sold in the U.S. The effort was the largest criminal investigation the Department of Justice’s antitrust division has ever pursued, and involved more than a dozen independent conspiracies and affected more than $5 billion in commerce. According to the DOJ, auto part company executives used code names, attended meetings in remote locations, and had telephone conversations in the U.S. and Japan to reach collusive agreements to rig bids, set prices, and allocate the supply of auto parts sold to car manufacturers. The alleged price-fixing conspiracies affected numerous products, including air conditioning systems, windshield wipers, and power steering assemblies, among others.
Tenth Circuit Dismisses Software Developer’s Antitrust Suit Against Microsoft
October 18, 2013 – 1:56 pm
In Novell v. Microsoft Corp., Tenth Circuit Court of Appeals dismissed software developer Novell Inc.’s lawsuit against Microsoft Inc., alleging that Microsoft blocked Novell from the market in the 1990s by cutting compatibility with its applications. The ruling affirmed the lower court’s grant of summary judgment to Microsoft, holding that Novell couldn’t show that Microsoft’s 1994 decision to withdraw Windows 95 support for WordPerfect and other Novell applications violated the Sherman Act. According to the Tenth Circuit ruling, Microsoft’s 1994 decision was not anti-competitive because Novell knew that a pre-release version of Windows 95 it had received from Microsoft was subject to change. And the antitrust laws rarely impose on firms — even dominant firms — a duty to deal with or help their rivals, so with respect to Novell, Microsoft did nothing unlawful, said the court.
FTC Considering Investigating Patent Trolls
September 22, 2013 – 9:11 am
Patent trolls, which call themselves non-practicing entities (NPE), are companies that acquire patents with no intent to practice the patented technology. Instead, they seek out potential infringers and demand royalties. These entities argue that they perform an efficient service in ensuring that inventors receive a return on their inventive effort. That return, NPE’s contend, increases the incentive to innovate and helps produce a steady stream of new technologies.
The Federal Trade Commission, however, has cited data suggesting that patent trolls’ activity increases the cost of doing business without providing countervailing value. The agency is currently gathering comments and deciding whether to investigate patent-trolling activity.
U.S. Supreme Court Upholds Class Arbitration Waiver Agreements
September 22, 2013 – 9:10 am
In American Express Co. et al. v. Italian Colors Restaurant et al., the U.S. Supreme Court upheld a class arbitration waiver agreement, holding that the Federal Arbitration Act (FAA) bars courts from invalidating class action arbitration waivers. The Second Circuit had held that the agreement in this case was unenforceable because plaintiffs’ costs to arbitrate each claim individually would be too high to permit an effective antitrust challenge, triggering the judge-made “effective vindication” exception to the FAA.
The Supreme Court rejected that argument, holding that the exception only applies if an arbitration agreement blocks plaintiffs from pursuing their federal claims altogether. A contract that makes pursuing individual claims allegedly uneconomic, by contrast, remains enforceable. Justice Scalia, writing for the majority, rejected the plaintiffs’ argument “that requiring them to litigate their claims individually — as they contracted to do — would contravene the policies of the antitrust laws.” Those laws, the Court held, “do not guarantee an affordable procedural path to the vindication of every claim.” Congress has supported antitrust plaintiffs by providing for treble damages and attorney’s fees. “In enacting such measures,” the Court explained, “Congress has told us that it is willing to go, in certain respects, beyond the normal limits of law in advancing its goals of deterring and remedying unlawful trade practice.” But that does not support the plaintiffs’ argument that Congress must have intended to guarantee an economic remedy in every antitrust case.
In a strongly worded dissent, Justice Kagan wrote on behalf of three justices that “the arbitration clause . . . [enabled] AmEx [to] insulate itself from antitrust liability — even if it has in fact violated the law.” The dissenters accused the majority of betraying precedent in concluding that it was simply “too darn bad” if an arbitration agreement rendered an antitrust irremediable.
Court May Not Rely on Defendant’s Allegation of Unilateral Conduct to Dismiss at Pleading Stage of a Conspiracy Case
September 22, 2013 – 9:08 am
In Evergreen Partnering Group Inc. et al. v. Pactiv Corp. et al., the U.S. Court of Appeals for the First Circuit held that in a refusal-to-deal case a plaintiff can survive a motion to dismiss by alleging the basic contours of a plausible conspiracy. The plaintiff alleged that a group of defendants conspired not to deal with it because it had developed a system to recycle food service trays that threated their businesses. The appellate court concluded that the trial court, by considering the defendant’s contention that it unilaterally decided not to deal with the plaintiff, improperly applied at the pleading stage a standard that would be applicable only on summary-judgment or post-trial.
The First Circuit stressed that lower courts were applying the Supreme Court’s Twombly decision too strictly. The court cautioned trial courts not to rely on “case law evaluating antitrust claims at the summary judgment and post-trial stages,” when determining whether a pleading is adequate to survive a motion to dismiss.
On the merits, the court explained that the trial court correctly recognized that allegations of parallel conduct alone are insufficient to support a conspiracy allegation. At the pleading stage, however, the court should not rely on the defendant’s claim that the case rests on parallel conduct when the plaintiff has provided context for an illegal agreement.
In the case before it, the First Circuit explained that Evergreen provided the necessary context by alleging that (1) in late 2005 or 2006 the defendants met and agreed that recycled polystyrene products threatened their business model, and (2) anti-competitive behavior followed this meeting. The trial court erred in (1) drawing inferences in favor of the defendant that directly conflicted with allegations in the complaint and (2) demanding more “highly specific details as to how the alleged conspirators communicated with each other, the individuals who were involved, when the communications took place, the substance of their contents, and the dramatic switch in business practices that followed.” Although the First Circuit acknowledged that “each of Evergreen’s allegations of circumstantial agreement standing alone may not be sufficient to imply agreement,” it concluded that “taken together, they provide a sufficient basis to plausibly contextualize the agreement necessary for pleading.”
Court Dismisses Antitrust Suit Over Beer Brewery Merger Deal
September 20, 2013 – 2:24 pm
In Edstrom et al. v. Anheuser-Busch InBev SA/NV, Northern District of California Judge Maxine Chesney dismissed a group of consumers’ antitrust suit against Anheuser-Busch InBev over its $20.1 billion acquisition of Grupo Modelo. In June 2012, Anheuser-Busch announced plans to acquire Modelo. The DOJ sued to block the deal, in fear that removing Modelo from the market would make it easier for the remaining breweries to engage in price fixing. In response, Anheuser-Busch sold off Modelo’s assets to Constellation Brands Inc. Following the sale, a group of nine beer drinkers sued Anheuser-Busch, alleging that there was a significant threat that Constellation is Anheuser-Busch’s “puppet,” so it would not serve as a competitive restraint against Anheuser-Busch, and the companies would collude to fix prices. The court dismissed plaintiffs’ suit, holding that plaintiffs failed to present any factual allegations to support their claims of price-fixing or that Constellation is controlled by Anheuser-Busch. The court also held that plaintiffs’ claims of future price-fixing fail because the threat of future conduct does not constitute a claim under the Sherman Act.