News & Developments

 

The United States Court of Appeals for the District of Columbia Circuit Issues its Decision in the Rambus Matter

On April 22, 2008, the United States Court of Appeals for the D.C. Circuit issued its long-awaited decision in the Rambus matter. The Court of Appeals ruled that the FTC failed to sustain its allegation of monopolization. The Court of Appeals concluded that deceit merely enabling a monopolist to charge higher prices than it otherwise could have charged would not in itself constitute monopolization. The Court also addressed whether there was substantial evidence that Rambus engaged in deceptive conduct at all, and expressed its serious concerns about the sufficiency of the evidence on two particular points.

» Read the Full Opinion | 

Everything You Thought You Knew About Twombly is Now Wrong

In Twombly v. Bell Atlantic, the Supreme Court told us that the allegations of an antitrust complaint must be "plausible". This was not a "heightened pleading standard," the Court instructed, but merely an application of Rule 8.

This has led to a vigorous debate over whether in fact Rule 8 requires "plausibility" in all cases. If Twombly was just an application of Rule 8, it should apply to all complaints, not just antitrust cases. There are policy reasons to limit Twombly to antitrust cases, particularly conspiracy cases, but the Supreme Court's language indicated a broader applicability.

On March 7, 2008, the Ninth Circuit weighed in and stated that "at least for the purposes of adequate pleading in antitrust cases, the Court [in Twombly] specifically abrogated the usual ‘notice pleading’ rule" found in Rule 8. Kendall v. Visa U.S.A., Inc. Thus, there is a heightened standard, at least in the Ninth Circuit, for antitrust cases, thus strongly implying that Twombly should not apply outside of antitrust.

What’s the right answer? Who knows. The only thing one knows for sure is that parties and courts are now going to spend even more time and energy bickering about what the standard is. And those of us briefing the issues in any case but an antitrust conspiracy case will have the unenviable task of either saying something contrary to the Ninth Circuit or contrary to the Supreme Court.

» Kendall v. Visa Court Opinion | 

Recent Leegin and Twombly Decisions

Here are some recent lower court decisions interpreting and applying Leegin and Twombly.

RECENT LEEGIN DECISIONS

» Tuncia 5th Circuit | 

» Citations to Additional Antitrust Cases Citing Leegin | 

RECENT TWOMBLY DECISIONS (ANTITRUST CASES)

» Travel Agent Commission Antitrust Litigation | 

» Pinion Opinion | 

» Stand Energy Opinion | 

» Temple Opinion | 

» Sheridan Opinion | 

» Citations to Additional Antitrust Cases Citing Twombly | 

» Citations to Additional Antitrust Cases Citing Twombly (March - April) | 

Janet L. McDavid Gives Statement Concerning the Leegin Decision

Janet L. McDavid, on behalf of the American Bar Association, recently testified before the Subcommittee on Antitrust, Competition Policy and Consumer Rights of the Committee on the Judiciary of the United States Senate concerning the Leegin Decision.

» Read Her Statement | 

High Court Reverses Century-Old Dr. Miles Precedent in Leegin Creative

The U.S. Supreme Court on June 28th issued another major antitrust ruling in Leegin Creative Leather Products, Inc. v. PSKS, Inc. The Court reversed the Fifth Circuit and overturned a nearly century-old precedent, holding that challenges to vertical price restraints under Section 1 of the Sherman Act should be judged by the rule-of-reason analysis.

Under the Supreme Court’s decision in Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373 (1911), mandatory minimum price agreements between manufacturers and distributors were per se illegal. The defendant in Leegin argued that this rule was based on outdated economics. It contended that a better legal analysis would be the “rule of reason,” under which price minimums should be held illegal only in cases where they could be shown to be anticompetitive. Both the District Court and Fifth Circuit Court of Appeals rejected these arguments. The courts felt compelled to follow the rule in the Dr. Miles case, under which the defendant’s practices were illegal regardless of whether they were anticompetitive.

In a 5 to 4 opinion written by Justice Kennedy, the Supreme Court reversed the Fifth Circuit, holding that challenges to vertical price restraints would be judged by the rule-of-reason analysis. In reaching its decision, the Court noted that it had abandoned the rule of per se illegality for other vertical restraints a manufacturer imposes on its distributors and that respected economic analysts have concluded that vertical price restraints can have procompetitive effects. The Court concluded that the reasons upon which Dr. Miles relied do not justify a per se rule.

DOCUMENTS

» Full text of decision | 

» Oral argument transcript | 

MEDIA COVERAGE

» New York Times

» Wall Street Journal (subscription required)

» WSJ Blog

» Law.com

Supreme Court Issues Decision in Billing v. Credit Suisse

The Supreme Court issued a major antitrust and securities ruling in Billing v. Credit Suisse First Boston on June 18th. The Court reversed the Second Circuit, holding that underwriters are entitled to immunity from antitrust suit for their actions in underwriting initial public offerings (“IPOs”).

The Court reasoned that there should be implied immunity because: IPOs and related activities are “squarely within the heartland of securities regulation”; the SEC has clear authority to regulate such activities; the SEC, in fact, regulates the very conduct at issue; and there is a “serious conflict between the antitrust and regulatory regimes.” The Court clarified that “plain repugnancy,” which has been the cornerstone standard of implied immunity cases, arises when the regulatory system and the antitrust laws are “clearly incompatible.”

Respondents were investors who brought private antitrust actions seeking treble damages and alleging that Petitioners (16 IPO underwriters and institutional investors) had violated the Sherman Act, Robinson-Patman Act and state antitrust law by manipulating the prices of securities through illegal tie-in agreements and “laddering” schemes that affected the allocation of shares during IPOs and prices in the aftermarket. The Second Circuit had held that because Congress had not made clear its intent to immunize such conduct from the antitrust laws, there was no implied immunity.

DOCUMENTS

» Full text of decision | 

» Oral argument transcript | 

MEDIA COVERAGE

» Bloomberg

» Washington Post

» WSJ blog

» SCOTUSblog

Legislative Updates

Numerous bills are currently pending in both houses of Congress that would prohibit price gouging relating to gasoline and other fuels in areas affected by major disasters. These bills are in response to complaints made about price gouging in areas affected by Hurricane Katrina. For example, Senate Bill 1520, would make it "unlawful for a supplier to sell, or offer to sell, gasoline or diesel fuel in an affected area at an unconscionably excessive price." The phrase "unconscionably excessive price" means a price charged in an affected area for gasoline or diesel fuel that "(A) represents a gross disparity, as determined by the FTC" between "the price charged for gasoline or diesel fuel and the average price of gasoline or diesel fuel charged by suppliers in the affected area during the 30-day period ending on the date the President declares the existence of a major disaster; and (B) is not attributable to increased wholesale or operational costs incurred by the supplier in connection with the sale of gasoline or diesel fuel." Under Senate Bill 1529, the FTC would be responsible for enforcing the law. In addition, the bill provides for a private right of action for, among other things, disgorgement, special and punitive damages, injunctive relief, reasonable attorney's fees and costs. The text of this bill, as well as other proposed bills are below. Check back here to follow these, and other, legislative developments.

PROPOSED BILLS

» S. 94 | 

» S. 1520 | 

» S. 1263 | 

» H.R. 2460 | 

» H.R. 1252 | 

» H.R. 1252 | 

» H.R. 2492 | 

Intel Cites Twombly In Support of Motion to Dismiss

Barely a week after the Supreme Court ruled in Twombly, Intel relies upon the case as support for dismissal of a Sherman Act complaint filed by Advanced Micro Devices and a class of consumers. Intel’s May 29, 2007 supplemental filing in support of its motion to dismiss is available online.

High Court Decides Twombly

The U.S. Supreme Court issued its opinion in Bell Atlantic Corp. v. Twombly (No. 05-1126) on May 21, 2007. The issue before the Court was:

• How much detail must a plaintiff allege in order to state a claim of conspiracy for violation of Section 1 of the Sherman Act?
• Must a plaintiff allege more than parallel conduct by several defendants in order to state a claim for conspiracy?
• Must the plaintiff allege facts beyond the parallel conduct would, if true, establish the existence of an agreement?

The District Court held that a plaintiff must do more than allege parallel conduct and assert such conduct was evidence of conspiracy. The plaintiff must also allege facts which are sufficient, if proven, to establish at least some of the “plus factors” which will be necessary to overcome a motion for summary judgment. According to the District Court, a plaintiff is required to allege facts which, if proven, tend to exclude legitimate business explanations for the defendants’ conduct.

The Second Circuit reversed, holding that a plaintiff did not need to do more than advance the bare allegation of conspiracy—that the parallel conduct is the result of an agreement among the defendants—together with sufficient information to give notice of the nature of the alleged conspiracy. For the Circuit Court, the allegations of parallel conduct were enough to give notice of the nature of the alleged conspiracy.

In a 7 to 2 decision by Justice Souter (2007 WL 141066 (U.S.)), the Supreme Court reversed the Second Circuit, holding that alleging parallel conduct alone is not sufficient to state a claim for conspiracy under Section 1. A plaintiff must also allege facts sufficient to suggest an actual agreement. More generally, the complaint must allege facts which “raise a right to relief above the speculative level.” In context, this means that a complaint for conspiracy must allege facts which, if proven, would show the conspiracy. This does not require the plaintiff to advance allegations making recovery probable, but it does require that the factual allegations raise a reasonable expectation that discovery will reveal evidence of an illegal agreement. The Court was influenced by recognition of the tremendous costs which discovery can impose on defendants in private antitrust litigation.

The decision can be seen as a victory for antitrust defendants, allowing fewer complaints to proceed to discovery. One may then expect a decline in private antitrust actions, at least over the medium term, because it will be harder for plaintiffs to get such cases started. Interestingly, it might also mean that a higher portion of those complaints which do survive Rule 12 challenges will ultimately succeed, or at least surmount summary judgment.

Oral Argument Before Supreme Court in Leegin Creative Leather Products, Inc.

On March 26, 2007, the Supreme Court heard oral argument in Leegin Creative Leather Products, Inc. v. PSKS, Inc. Blog analysis of the issues and arguments is available at ScotusBlog and AntitrustReview.

High Court Hears Oral Argument in Credit Suisse First Boston

On March 27, 2007, the Supreme Court heard oral argument in Credit Suisse First Boston (USA), LLC v. Billing.

Tamoxifen Citrate Antitrust Litigation: Amicus Briefs

Amici seeking to overturn the Second Circuit's decisions in Tamoxifen Citrate Antitrust Litigation request the Supreme Court to grant cert on the issue of name brand drug companies' ability to use reverse payments to keep generic drugs off the market.

Brief in Opposition to Certiorari
On February 15, 2007, respondents filed their Brief in Opposition to Petitioner's Petition for Writ of Certiorari. Respondents argued that cert was not appropriate in this case because: 1) there was no conflict in the courts of appeals as to when settlements of genuine patent disputes may violate the Sherman Act; 2) the 2nd Circuit correctly held that petitioners' allegations failed to state a claim under the Sherman Act; and 3) this case is a poor vehicle for determining when settlements of drug patent claims may violate the Sherman Act.

In a related development, that very same day, the Senate Judiciary Committee passed the "Preserve Access to Affordable Generics Act" that, if enacted, would prohibit the type of "reverse payment" settlements at issue in the Tamoxifen litigation.

Rambus Update

Following the FTC's final decision in Rambus, the respondent has filed a motion for reconsideration and a motion for a stay of the FTC's order.

Comes v. Microsoft Update

Microsoft reached a settlement with the plaintiffs in the consumer antitrust case pending in Iowa state court. Terms of the settlement are to remain confidential until April when the parties are expected to present the settlement to the judge for approval.

Weyerhaeuser Update

Today the Supreme Court issued its decision in Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co.

Rambus Update

The FTC limited the royalty rate that Rambus can charge for its industry standard (but patented) high-speed memory chips. Read more in the FTC press release, final order, and opinion.

Also, Commissioners Harbour and Rosch prepared separate statements, each concurring in part and dissenting in part.

Antitrust Modernization Commission

The Antitrust Modernization Commission ("AMC") was created pursuant to the Antitrust Modernization Act of 2002. The Commission is charged by statute to (1) examine whether the antitrust laws need to be modernized and to identify and study related issues; (2) solicit views of all parties concerned with the operation of the antitrust laws; (3) evaluate the advisability of any proposals with respect to the modernization of the laws; and (4) prepare and submit a report to Congress and the President.

The AMC recently released two documents which were discussed at the January 11, 2007 meeting—the AMC's tentative recommendations and a preliminary draft outline of the AMC Report Introduction and Executive Summary. In those documents, the AMC summarizes its tentative positions on various substantive antitrust issues, including but not limited to, the AMC's recommendations to (a) repeal the Robinson-Patman Act, (b) modify Hannover Shoe and overrule Illinois Brick to facilitate direct and indirect purchaser litigation in one federal court for all purposes and (c) enact a statute that would permit non-settling defendants to obtain reduction of plaintiff's claim before trebling, by the amount of the settlement or the allocated share of liability of the settling defendant(s), whichever is greater.

FTC Commissioner Provides Testimony on Patent Settlements in U.S. Pharmaceutical Industry

On January 17, 2007, FTC Commissioner Jon Leibowitz testified on behalf of the Federal Trade Commission before the Senate Committee on the Judiciary on the subject of anticompetitive patent settlements in the U.S. pharmaceutical industry. Commissioner Leibowitz said, among other things, that recent court cases have made it difficult to bring antitrust cases to stop exclusion payment settlements between manufacturers of brand name pharmaceuticals and their generic counterparts. The Commissioner defined "exclusion payment settlements" as settlements of patent litigation in which a brand name drug manufacturer pays its potential generic competitor to abandon the patent challenge and delay entering the market. According to the testimony, the FTC "supports legislation to prohibit these anticompetitive settlements" and strongly supports the intent of legislation introduced by three senators, including the objective to "adopt a bright-line approach to addressing exclusion payments."

Intel Corp. Illegally Thwarting Competition?

European Union investigators have recommended that EU Competition Commissioner Neelie Kroes formally charge Intel Corp. with illegally thwarting competition in the computer-chip market. Intel rival in the computer-chip market, Advanced Micro Devices Inc. ("AMD") originally filed an EU complaint against Intel in October 2000, alleging that Intel illegally punished computer makers when their purchases from AMD reach a certain level."

FTC Announces Review Calendar for 2007 to 2017

On December 26, the FTC& approved the Regulatory Reform Project and Rule Review for 2007 and a revised regulatory review calendar for the next 10 years. In the coming year, the FTC will conduct a review of the Guides for Select Leather and Imitation Leather Products; the Mail or Telephone Order Merchandise Rule; and the Guide Concerning Fuel Economy Advertising for New Automobiles. The FTC will request comments on, among other things, the economic impact of, and the continuing need for, the rule and guides; possible conflict between the rule and guides and state, local, or other federal laws or regulations; and the effect on the rule and guides of any technological, economic, or other industry changes.

Certiorari in Two Antitrust Cases

The Supreme Court has granted certiorari to two antitrust cases. The first case, Credit Suisse First Boston v. Billing, raises the issue of how to treat the inherently collaborative activity of an underwriting syndicate, activity that—while it would appear to violate the Sherman Antitrust Act—is permitted by the regulatory agency that oversees it. The second case, Leegin Creative Leather Products v. PSKS, raises the question of how antitrust law should treat the minimum prices that manufacturers require retailers to charge for their products.

All files below are available in PDF format unless otherwise noted. ()

Leegin Creative Leather Products v. PSKS

» Certiorari Petition

» Economists’ Amicus Brief

» The Wireless Association's Amicus Brief

» National Association of Manufacturers's Amicus Brief

» Supreme Court Grants Certiorari

On February 26, 2007, FTC Commissioner Pamela Jones Harbour wrote an open letter to the United States Supreme Court regarding the illegality of vertical minimum price fixing. In the letter, Commissioner Harbour urges the Court, as it considers the Leegin case, to refrain from overruling Dr. Miles.

» Commissioner Harbour’s Speech

» Comanor and Scherer Amicus Brief Supporting Neither Party

Credit Suisse First Boston v. Billing

» Certiorari Petition

» Respondent's Brief

» U.S. Amicus Brief

» Supreme Court Grants Certiorari

Comes v. Microsoft, Inc.

Read about recent developments in Comes v. Microsoft, Inc., the antitrust, class action suit pending in Iowa state court.

BLOG COVERAGE

» Iowa Update – Allchin 2004 email

» Comes v. MS Antitrust Trial Begins in Iowa

Bell Atlantic Corporation v. Twombly: Briefs and Transcript

QUESTION PRESENTED

Whether a complaint states a claim under Section 1 of the Sherman Act, 15 U.S.C. § 1, if it alleges that the defendants engaged in parallel conduct and adds a bald assertion that the defendants were participants in a "conspiracy," without any allegations that, if later proved true, would establish the existence of a conspiracy under the applicable legal standard.

All files below are available in PDF format unless otherwise noted. ()

BRIEFS

» Petitioner's Brief

» Respondents' Brief

AMICI SUPPORTING PETITIONERS

» Amicus Brief of Washington Legal Foundation

» Amicus Brief of the United States

» Amici Brief of States

» Amici Brief of Legal Scholars

» Amici Brief of the Chamber of Commerce, et al.

AMICI SUPPORTING RESPONDENTS

» Amicus Brief of American Antitrust Institute

TRANSCRIPT

» Transcript of Twombly oral argument (from Nov. 27, 2006)

BLOG

» Blog coverage at SCOTUSblog [webpage]

Weyerhaeuser Company v. Ross-Simmons Hardwood Lumber Company: Briefs and Transcript

QUESTION PRESENTED

In Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993), the Court held that an antitrust plaintiff alleging predatory selling must prove that the defendant (I) sold its product at a price level too low to cover its costs and (2) had a dangerous probability of recouping its losses once the scheme of predation succeeded. The question in this case is whether a plaintiff alleging predatory buying may, as the Ninth Circuit held, establish liability by persuading a jury that the defendant purchased more inputs "than it needed" or paid a higher price for those inputs "than necessary," so as "to prevent the Plaintiffs from obtaining the [inputs] they needed at a fair price"; or whether the plaintiff instead must satisfy what the Ninth Circuit termed the "higher" Brooke Group standard by showing that the defendant (I) paid so much for raw materials that the price at which it sold its products did not coyer its costs and (2) had a dangerous probability of recouping its losses.

All files below are available in PDF format unless otherwise noted. ()

BRIEFS

» Petitioner's Brief

» Brief for Respondent

AMICI SUPPORTING PETITIONERS

» Amici Brief of Business Roundtable, et al.

» Amici Brief of the Chamber of Commerce, et al.

» Amici Brief of Economists

AMICI SUPPORTING RESPONDENTS

» Amici Brief of States

» Amicus Brief of American Antitrust Institute

» Amici Brief of Forest Industry Participants

TRANSCRIPT

» Transcript of Weyerhaeuser oral argument (from Nov. 28, 2006)

BLOG

» Blog coverage at SCOTUSblog [webpage]