Articles Posted in Antitrust & Trade Regulation

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In 2008, Standard sued, on behalf of itself and “all others similarly situated," alleging that was injured when it “purchased several items of steel tubing [at an inflated price] indirectly … for end use," claiming that eight U.S. steel producers colluded to slash output to drive up the price of steel so that plaintiffs overpaid for steel sheets, rods, and tubing. Eight years later, the plaintiffs amended their complaint, asserting that they overpaid for end-use consumer goods, including vehicles, washing machines, and refrigerators, that were manufactured by third parties using steel. The district court dismissed the suit as time-barred because it redefines “steel products” to give rise to an entirely different, and exponentially larger, universe of plaintiffs, and, in the alternative, for not plausibly pleading a causal connection between the alleged antitrust conspiracy and plaintiffs’ own injuries. The Seventh Circuit affirmed. No reasonable defendant, reading the original complaint, would have imagined that plaintiffs were actually suing over the thousands of end-use household and commercial goods manufactured by third parties—a reading so broad that it would make nearly every person in the country a potential class member. The court further noted that it was unclear how to trace the effect of an alleged overcharge on steel through the complex supply and production chains that gave rise to consumer products. View "Supreme Auto Transport, LLC v. Arcelor Mittal USA, Inc." on Justia Law

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Deppe, a punter, enrolled at Northern Illinois University (NIU), a National Collegiate Athletic Association Division I school, in 2014 without an athletic scholarship. Deppe decided to “red shirt” his first year; he practiced with the team but did not compete, so the clock did not run on his four years of NCAA athletic eligibility. In 2015 NIU signed another punter, so he looked for a new program. Coaches at the University of Iowa, another Division I school, told Deppe they wanted him if he would be eligible to compete during the 2016–2017 season. The NCAA indicated that under its year-in-residence rule, Deppe would be ineligible to compete for one year following his transfer. An exception permitting a one-time transfer with immediate athletic eligibility in limited circumstances was unavailable to Deppe. A player who transfers under extenuating circumstances may obtain a waiver of the NCAA’s requirement that a student’s four years of playing time be completed in five calendar years; the school to which he transfers must initiate the process. Iowa's football staff notified Deppe that the team had decided to pursue another punter who had immediate eligibility and would not initiate the process for him. Deppe sued the NCAA on behalf of himself and a proposed class alleging violations of the Sherman Act. The Seventh Circuit affirmed dismissal. The year-in-residence requirement is an eligibility rule clearly meant to preserve the amateur character of college athletics, is therefore presumptively procompetitive, and need not be tested for anticompetitive effect under a full rule-of-reason analysis. View "Deppe v. National Collegiate Athletic Association" on Justia Law

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In this action challenging an insurance company’s doubling of Plaintiff’s insurance premium, the Seventh Circuit reversed the district court’s dismissal of Plaintiff’s complaint for failure to state a claim, holding that Plaintiff was entitled to relief on her contract claim and that the allegations Plaintiff raised were enough to permit her to go forward on her other theories. When Plaintiff was sixty-seven years old, she discovered that Metropolitan Life Insurance Company (MetLife) more than doubled her insurance premium. Plaintiff brought this lawsuit against MetLife on behalf of herself and a proposed class, alleging breach of contract, deceptive and unfair business practices, and common-law fraud. The district court granted MetLife’s motion to dismiss for failure to state a claim, concluding that the insurance policy unambiguously permitted MetLife to raise Plaintiff’s premium. The First Circuit disagreed, holding that the allegations raised in the complaint were enough to entitle Plaintiff to prevail on the liability phase of her contract claim and to go forward on her remaining claims. View "Newman v. Metropolitan Life Insurance Co." on Justia Law

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To track accounting, payroll, inventory, sales, parts, service, finance, and insurance, auto dealerships use computerized dealer‐management systems. Some systems use open architecture, under which third parties have some access to dealer‐originated data in the system. Others use closed architecture, under which that type of data scraping is forbidden under the license. One provider, CDK, decided to change from an open system to a closed system. CDK and another provider, Reynolds, entered into agreements to ease the transition, which allowed their subsidiaries (Authenticom’s competitors) continued access to the data. Authenticom, in the business of collecting data from dealer‐management systems and selling or using it for applications, sued under the Sherman Act, 15 U.S.C. 1. Because Authenticom’s loss of access to the data was imperiling its survival, it obtained preliminary injunctions. CDK and Reynolds took an interlocutory appeal. The Seventh Circuit vacated the injunctions, which did not focus on the agreements that are the focus of Authenticom’s lawsuit. Instead, they address the measures that the court believed necessary to “extend a lifeline to Authenticom, to maintain its viability until this case is finally decided on the merits.” The court ordered the defendants to enter into a new arrangement with Authenticom, rather than simply barring implementations of the challenged agreement. View "Authenticom, Inc. v. Reynolds and Reynolds Co." on Justia Law

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The FDA approved Depakote for treating seizures, migraine headaches, and conditions associated with bipolar disorder. Physicians may prescribe it for other "off-label" uses, but a drug’s manufacturer can promote it only as suitable for uses the FDA has found safe and effective. Abbott, which makes Depakote, encouraged intermediaries to promote Depakote’s off-label uses for ADHD, schizophrenia, and dementia, hiding its own involvement. Abbott pleaded guilty to unlawful promotion and paid $1.6 billion to resolve the criminal case and False Claims Act suits, 31 U.S.C. 3729–33. Welfare-benefit plans that paid for Depakote’s off-label uses sought treble damages under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1964, for a class comprising all third-party payors. Following a remand, the court dismissed the suit on the ground that the plaintiffs could not show proximate causation, a RICO requirement. The Seventh Circuit affirmed, reasoning that the Payors are not the most directly, injured parties. Patients suffer if they take Depakote when it is useless and may be harmful and costly. Physicians also may lose, though less directly. Because some off-label uses of Depakote may be beneficial to patients, it is hard to treat all off-label prescriptions as injurious to the Payors; if they did not pay for Depakote they would have paid for some other drug. In addition, some physicians were apt to write off-label prescriptions whether or not Abbott promoted such uses. Calculation of damages would require determining the volume of off-label prescriptions that would have occurred absent Abbott’s unlawful activity. View "Sidney Hillman Health Center of Rochester v. Abbott Laboratories, Inc." on Justia Law

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Rooftops sells tickets to view Cubs games and other events at Wrigley Field from the roofs of buildings it controls. Chicago has an ordinance allowing the rooftop businesses. Before the 2002 season, the Cubs installed a windscreen above the outfield bleachers, obstructing the views from rooftop businesses and sued Rooftops, claiming misappropriation of Cubs’ property by charging fees to watch games.The parties settled by entering into the License Agreement running through 2023. Rooftops agreed to pay the Cubs 17% of their gross revenues in exchange for views into Wrigley Field. The Agreement contemplated Wrigley Field's expansion. In 2013, the Cubs released a mock‐up of its proposed renovation, showing that rooftop businesses would be largely blocked by the construction. The city approved the plan over objections. Rooftops claimed that Cubs’ representatives used the threat of blocking views and other “strong-arm tactics” as leverage to force a sale, and sued, alleging: attempted monopolization; false and misleading commercial representations, defamation, false light, and breach of the non‐disparagement provision; and breach of contract. The court denied Rooftops’ motion for a preliminary injunction. The Seventh CIrcuit affirmed its dismissal of monopolization claims because Major League Baseball’s antitrust exemption applies; Rooftops failed to establish a plausible relevant market; and the Cubs cannot be limited by antitrust law from distributing their own product. The contract's plain language did not limit expansions to Wrigley Field's seating capacity. View "Right Field Rooftops, LLC v. Chicago Cubs Baseball Club, LLC" on Justia Law

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Methodist and Saint Francis are the two largest hospitals in Peoria, Illinois. Saint Francis is considerably larger and more profitable. Methodist filed suit, charging Saint Francis with violating the Sherman Act by entering into exclusive contracts with insurance companies, covering more than half of all commercially-insured patients in the area. Methodist argued that it could not obtain a sufficiently high volume of patients to enable it to invest in improvements. The Seventh Circuit affirmed summary judgment in favor of Saint Francis, noting that health insurers regard Saint Francis as a “must have” hospital, because it provides certain services that the other hospitals in the area do not provide, such as solid-organ transplants, neonatal intensive care, and a Level 1 trauma center. The contracts are a form of requirements contract; an insurance company may get better rates from a hospital by agreeing to an exclusive contract, which will drive more business to the hospital. The contracts are of fixed duration; when they terminate, the insurance companies are free to contract with other hospitals. Competition-for-the-contract is protected by the antitrust laws and is common. The court noted that none of the other four area hospitals had joined the case and the Department of Justice declined to file a case. View "Methodist Health Services Corp v. OSF Healthcare System" on Justia Law

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The district court certified eight classes, consisting of persons in Illinois and Missouri who take eye drops manufactured by six pharmaceutical companies for treatment of glaucoma. Plaintiffs claimed that the defendants’ eye drops are unnecessarily large and wasteful, in violation of the Illinois Consumer Fraud Act, 815 ILCS 505/1, and the Missouri Merchandising Practices Act, Mo. Rev. Stat. 407.010, so that the price of the eye drops is excessive and that the large eye drops have a higher risk of side effects. There was no claim that members of the class have experienced side effects or have been harmed because they ran out of them early. The Seventh Circuit vacated with instructions to dismiss. The court noted possible legitimate reasons for large drops, the absence of any misrepresentation or collusion, and that defendants’ large eye drops have been approved by the FDA for safety and efficacy. “You cannot sue a company and argue only ‘it could do better by us,’” nor can one bring a suit in federal court without pleading that one has been injured. The plaintiffs allege only “disappointment.” View "Eike v. Allergan, Inc." on Justia Law

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BMS provides administrative services to bankruptcy trustees. It uses Rabobank as the depositary for banking services that BMS provides through its software. Crane, the trustee in the Integrated bankruptcy, hired BMS; the contract required Crane to hire Rabobank for banking services in the proceeding. In a separate contract, Crane authorized Rabobank to withdraw its monthly fee. The plaintiff, a law firm, was a creditor of Integrated and filed a bankruptcy claim, ultimately receiving a distribution of $12,472.55. It would have received $12,666.90, but for its part of Rabobank’s fee, and more had Rabobank paid interest on the estate’s deposits. Plaintiff sued under the Bank Holding Company Act, 12 U.S.C. 1972(1)(E), which states that a bank shall not "extend credit, lease or sell property of any kind, or furnish any service, or fix or vary the consideration for any of the foregoing, on the condition … that the customer shall not obtain some other credit, property, or service from a competitor of such bank … other than a condition … to assure the soundness of the credit.” The Seventh Circuit affirmed dismissal. Had Rabobank conditioned its provision of services on the trustee never hiring any other bank in any bankruptcy proceeding, it would constitute exclusive dealing. No one forced Crane to deal with BMS and Rabobank and there was no argument that the fee was exorbitant, or would have been lower with a different bank. View "McGarry & McGarry, LLC v. Rabobank, N.A." on Justia Law

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Advocate Health Care and NorthShore University HealthSystem operate hospital networks in Chicago’s northern suburbs. They propose to merge. The Clayton Act forbids asset acquisitions that may lessen competition in any “section of the country,” 15 U.S.C. 18. The Federal Trade Commission and the state sought an injunction, pending the Commission’s consideration of the issue. To identify a relevant geographic market where anticompetitive effects of the merger would be felt, plaintiffs relied on the “hypothetical monopolist test,” which asks what would happen if a single firm became the sole seller in a proposed region. If such a firm could profitably raise prices above competitive levels, that region is a relevant geographic market. The Commission’s expert economist chose an 11-hospital candidate region and determined that it passed the hypothetical monopolist test. The district court denied a preliminary injunction, finding that the plaintiffs had not demonstrated a likelihood of success on the merits, but stayed the merger pending appeal. The Seventh Circuit reversed; the geographic market finding was clearly erroneous. The evidence was not equivocal: most patients prefer to receive hospital care close to home and insurers cannot market healthcare plans to employers with employees in Chicago’s northern suburbs without including some of the merging hospitals in their networks. The district court rejected that evidence because of some patients’ willingness to travel for care; its analysis erred by overlooking the market power created by the remaining patients’ preferences (the “silent majority” fallacy). View "FTC v. Advocate Health Care Network" on Justia Law