Justia U.S. 7th Circuit Court of Appeals Opinion Summaries

Plaintiffs were high school football players that earned scholarships to play for National Collegiate Athletic Association Division I football programs. Both suffered career-ending football injuries at college. Their athletic scholarships were good for one year. When injuries prevented them from playing football, their scholarships were not renewed. Plaintiffs challenge two NCAA regulations as having an anticompetitive effect, in violation of the Sherman Act. 15 U.S.C. 1: the cap on the number of scholarships given per team and the prohibition of multi-year scholarships. The district court dismissed, finding that plaintiffs failed to allege a relevant commercial market on which NCAA Bylaws had an anticompetitive effect. The Seventh Circuit affirmed. It was not clear whether plaintiffs believed that the Bylaws affect an overall market for degrees, which would impact scholarship athletes and non-athletes alike, or some market that only concerns athletes attempting to obtain education in exchange for athletic services. Plaintiffs claimed that they alleged that there was no practical alternative for students wishing to pursue an education in exchange for playing ability, but the complaint explained the lack of practical alternatives for colleges wanting to field teams outside of the NCAA framework, not the lack of alternatives for student-athletes.

When Sears, Roebuck & Co. merged with Kmart in 2005, the company formed as the parent (Sears) inherited directors from both. Crowley also serves on the boards of AutoNation and AutoZone; Reese is also on the board of Jones Apparel. In a derivative action, Sears shareholders claimed that the consolidated business competes with those other firms and that the Clayton Act, 15 U.S.C. 19 (section 8), forbids the interlocking directorships. Delaware usually allows investors to sue derivatively only if, after a demand for action, the board cannot make a disinterested decision. The investors filed suit without first making a demand. The district court refused to dismiss, accepting an assertion that a demand would have been futile and agreeing that section 8 can be enforced through derivative litigation, even though cooperation with a competitor should benefit the investors. The Seventh Circuit reversed, stating that the suit "serves no goal other than to move money from the corporate treasury to the attorneys' coffers," while depriving Sears of directors, freely elected and of benefit to the company. Usually serving on multiple boards demonstrates breadth of experience, which promotes competent and profitable management. The Antitrust Division and the FTC do not see a problem.

In 2009 the fire protection district adopted an ordinance requiring commercial buildings and multi-family residences to have fire alarms equipped with wireless radio technology to send alarm signals directly to the district's central monitoring board. The ordinance provided that the district would contract with one private alarm company to provide and service signaling equipment, displacing several private fire alarm companies that have competed for these customers. The alarm companies sued on claims under the U.S. Constitution, federal antitrust law, and state law. The district court granted summary judgment for the alarm companies on the basis of state law and enjoined the district from implementing the ordinance. The Seventh Circuit affirmed in part, holding that the district has statutory authority to require that commercial and multi-family buildings connect directly to its monitoring board through wireless radio technology. The district does not, however, have authority to displace the entire private market by requiring all customers to buy services and equipment from itself or just one private company.

Following published stories about an investigation of their business practices, principals of a waste-management company improved their chances of winning a bid for a contract to refurbish garbage carts for the City of Chicago by slashing their bid. They encouraged other companies to bid in hopes of being hired as a subcontractor if another company won the bid. Each bidder had to certify that it had not entered into any agreement with any other bidder or prospective bidder relating to the price, nor any agreement restraining free competition among bidders. The company won the bid, and after a Justice Department investigation for antitrust violations, the principals were convicted of mail and wire fraud. The Seventh Circuit reversed, reasoning that the purpose of "colluding" with other potential bidders had not been to prevent them from underbidding but to provide insurance against the bid being rejected based on the earlier investigation. There was no harm as a result of the company encouraging additional bidders.

In 2006, BP began converting company-operated gas and convenience stores into franchisee-operated stores. From 2006 to 2008, plaintiffs purchased gas station sites and entered into long-term contracts with BP for fuel and use of BP's brand name and marks. In 2009 plaintiffs sued under the Illinois Franchise Disclosure Act. Consolidated cases were removed to federal court when plaintiffs added claims under the federal Petroleum Marketing Practices Act. They later added price discrimination claims under the Robinson-Patman Act. Before trial, all federal claims were withdrawn. The district judge relinquished supplemental jurisdiction and remanded to Illinois state court. The Seventh Circuit affirmed. A district court has broad discretion and the general presumption in favor of relinquishment was particularly strong because the state-law claims are complex and raise unsettled legal issues.

The Federal Trade Commission found that a merger between a health system and a hospital violated the Clayton Act, 15 U.S.C. 18. Plaintiffs sought treble damages and certification of a class of patients and third-party payors who allegedly paid higher prices for care. Under FRCP 23(b)(3), a class may be certified only if questions of law and fact common to members predominate over questions affecting only individuals in the class. Plaintiffs proposed to rely on economic and statistical methods used by the FTC and defendant's economic experts to analyze antitrust impact. The "difference-in-differences" method estimates price increases resulting from exercise of market power rather than from other factors. The district court denied certification, concluding that the expert had not shown that his methodology could address impact on a class-wide basis. The Seventh Circuit granted interlocutory appeal, vacated, and remanded. Although plaintiffs' expert initially believed that the health system did increase prices uniformly across all services, he acknowledged that it might not have done so, and explained how his methodology could show impact to the class despite such complications. The degree of uniformity the court demanded is not required; "it is important not to let a quest for perfect evidence become the enemy of good evidence."

The Illinois Attorney General filed suit against eight manufacturers of LCD panels for violations of the Illinois Antitrust Act, claiming that the defendants unlawfully inflated prices on LCD products sold to the state, its agencies, and residents. The complaint sought injunctive relief, civil penalties, and treble statutory damages for the state as a purchaser and, as parens patriae, for harmed residents. Defendants removed the case to federal court under the Class Action Fairness Act of 2005, 28 U.S.C. 1332(d), 1453. The district court granted a motion to remand. The Seventh Circuit denied appeal, rejecting defendants' characterization of the parens patriae case as a disguised class action or mass action.

The company, an egg producer, was charged in class action suits with conspiring to fix the price of eggs, in violation of section 1 of the Sherman Act. and requested that its liability insurers defend. The company argued that the complaints sought damages for what its policies call "personal and advertising injury," defined as injury. arising out of a list of torts that includes use of another's advertising idea in your advertisement. The insurer refused and the district court granted summary judgment in favor of the insurer. The Seventh Circuit affirmed, noting that the antitrust complaints make no mention of the company's theory that consumers might believe that advertised "free-roaming" chicken management policies are an attempt to justify prices.

Most of the world's reserves of potash, a mineral used primarily in fertilizer, are in Canada, Russia, and Belarus. Defendants are producers with mines in those countries. Plaintiffs are direct and indirect potash purchasers in the U.S. They allege that producers operated a cartel through which they fixed prices in Brazil, China, and India, and that inflated prices in those markets influenced the price of potash in the U.S. Defendants moved to dismiss, arguing that the district court lacked jurisdiction under the Foreign Trade Antitrust Improvements Act, 15 U.S.C. 6a. The district court denied the motion. The Seventh Circuit reversed. The FTAIA limits the extraterritorial reach of the Sherman Antitrust Act to foreign anticompetitive conduct that either involves U.S. import commerce or has a "direct, substantial, and reasonably foreseeable effect" on U.S. import or domestic commerce. Whether it blocks jurisdiction or establishes an element of a Sherman Act claim, the FTAIA bars this suit. The complaint alleged little of substance concerning the relationship between the alleged overseas anticompetitive conduct and the American domestic market.

Plaintiff, a natural gas supplier, and defendants, a natural gas distributor and its executive, had a written contract. The relationship unraveled in the face of a failed acquisition, several million dollars' worth of unpaid invoices, and frequent disputes over pricing, inflamed by allegations that natural gas suppliers were manipulating the indices on which natural gas price quotes are based. The district court granted plaintiff summary judgment and ultimately issued a Rule 54(b) judgment on contract and guaranty claims and rejecting counterclaims. The court awarded $8,929,449 in pre-judgment interest on top of its damages of $13,693,943. The Seventh Circuit affirmed, rejecting arguments concerning exclusion of an affidavit submitted by defendant, the alleged existence of additional oral contracts, an implied agreement to waive interest, and the sufficiency of evidence. Without something linking defendant's downfall to plaintiff's divulgence or inappropriate use of information in violation of the confidentiality agreement, there was no issue warranting trial on that claim. There was insufficient evidence of price discrimination in violation of the Robinson-Patman Act, 15 U.S.C. 13(a).