Articles Posted in US Supreme Court

Engineers and Bridge

Author: Jarod Bona

As an antitrust attorney, over time you see the same major cases cited again and again. It is only natural that you develop favorites. Here at The Antitrust Attorney Blog, we will, from time-to-time, highlight some of the “Classic Antitrust Cases” that we love, that we hate, or that we merely find interesting.

The Supreme Court decided National Society of Professional Engineers in the late 1970s—when I was two-years old—and before the Reagan Revolution. But the views that the author, Justice John Paul Stevens, expressed on behalf of the Supreme Court perhaps ushered in the faith in competition often associated with the 1980s.

The National Society of Professional Engineers thought that its members were above price competition. Indeed, it strictly forbid them from competing on price.

The reason was simple: “it would be cheaper and easier for an engineer ‘to design and specify inefficient and unnecessarily expensive structures and methods of construction.’ Accordingly, competitive pressure to offer engineering services at the lowest possible price would adversely affect the quality of engineering. Moreover, the practice of awarding engineering contracts to the lowest bidder, regardless of quality, would be dangerous to the public health, safety, and welfare.” (684-85).

So price competition will cause bridges to collapse? I suppose the same argument could be made for any market where greater expense can improve the health or safety of a product or service. We better not let the car manufacturers compete to provide us with cars because they will skimp on the brakes. It is often the professionals–including and especially lawyers–that find competition distasteful or damaging for their particular profession and believe that they are above it. Well, according to the US Supreme Court, they are not.

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Supreme Court amicus brief

Author: Jarod Bona

An amicus curiae brief is filed by a non-party—usually in an appellate court like the US Supreme Court—that seeks to educate the court by offering facts, analysis, or a perspective that the party briefing doesn’t present. The term amicus curiae means “friend of the court,” and that is exactly what the parties that file these briefs are. They aren’t objective, but they are—without pay—helping out the court, like a friend might. Well, sort of.

Entities filing amicus briefs do so for a reason and that reason isn’t typically just court friendliness. In fact, as we will discuss below, there are many good reasons for someone to file an amicus brief.

Along with antitrust and commercial litigation, I’ve been an appellate litigator my entire career. I started out by clerking for Judge James B. Loken on the United States Court of Appeals for the Eighth Circuit (in Minneapolis), then moved on to Gibson Dunn’s appellate group in Washington DC. So, as you might imagine, I’ve participated in many appellate matters. And without question some of my favorite briefs to write are amicus briefs. I’ve filed many of them over the years.

Indeed, at Bona Law, we have filed several amicus briefs on various topics (US Supreme Court (and here), Fourth Circuit, Eighth Circuit, Tenth Circuit and a couple with the Minnesota Supreme Court, which you can read about here and here and here).

From the attorney’s perspective what I really like about amicus briefs is that they invite opportunities for creativity. The briefs for the parties before the court include necessary but less exciting information like procedural history, standard of review, etc. Then, of course, they must address certain o necessary arguments. Even still, there is room for creativity and a good appellate lawyer will take a thoughtful approach to a case in a way that the trial lawyer that knows the case too well may not.

But what is great about writing an amicus brief is that you can pick a particular angle and focus on it, while the parties slog through other necessary details. The attorney writing the amicus brief figures out—with the client’s help—the best contribution they can make and just does it, as efficiently and effectively as possible.

Because the amicus brief should not repeat the arguments from the parties, the attorney writing the brief must develop a different approach or delve deeper into an argument that won’t get the attention it deserves from the parties. This is great fun as the attorney can introduce a new perspective to the case, limited not by the arguments below, but by the broader standard of what will help the court.

This means that the law review article that the attorney saw on the subject that hasn’t developed into case law is fair game. So is the empirical study from a group of economists that may reflect on practical implications of the decision confronting the court. Or the attorney might educate a state supreme court about what other states are doing on the issue. Often an association will explain to the court how the issue affects their members.

The point is that amicus briefs present opportunities to develop issues in ways that party briefs rarely do. Indeed, that is partly why they are valuable to courts.

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American Needle (Football)

Author: Jarod Bona

When you think about Sherman Act Section 1 antitrust cases (the ones involving conspiracies), you usually consider the question—often framed at the motion to dismiss stage as a Twombly inquiry—whether the defendants actually engaged in an antitrust conspiracy.

But, sometimes, the question is whether the defendants are actually capable of conspiring together.

That isn’t a commentary on the intelligence or skills of any particular defendants, but a serious antitrust issue that can—in some instances—create complexity.

So far I’ve been somewhat opaque, so let me illustrate. Let’s say you want to sue a corporation under the antitrust laws, but can’t find another entity they’ve conspired with so you can invoke Section 1 of the Sherman Act (which requires a conspiracy or agreement). How about this: You allege that the corporation conspired with its President, Vice-President, and Treasurer to violate the antitrust laws. Can you do that?

Probably not. In the typical case, a corporation is not legally capable of conspiring with its own officers. The group is considered, for purposes of the antitrust laws, as a “single economic entity,” which is incapable of conspiring with itself. Of course, the situation is complicated if we aren’t talking about the typical corporate officers, but instead analyzing a case with a corporation and corporate agents (or perhaps in a rare case, even employees) that are acting for their own self-interest and not as a true agent of the corporation. The question, often a complex one, will usually come down to whether there is sufficient separation of economic interests that the law can justify treating them as separate actors.

A lot of tricky issues can arise when dealing with companies and their subsidiaries as well. In Copperweld Corp. v. Independence Tube Corporation, for example, the United States Supreme Court held that the coordinated activities of a parent and its wholly-owned subsidiary are a single enterprise (incapable of conspiring) for purposes of Section 1 of the Sherman Act.

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Antitrust Injury and Brunswick

photo credit: ginnerobot via photopin cc

Author: Jarod Bona

Antitrust injury is one of the most commonly fought battles in antitrust litigation. It is also one of the least understood antitrust concepts.

No matter what your antitrust theory, it is almost certain that you must satisfy antitrust-injury requirements to win your case. So you ought to have some idea of what it is.

The often-quoted language is that antitrust injury is “injury of the type the antitrust laws were intended to prevent and that flows from that which makes the defendant’s acts unlawful.” You will see this language—or some variation of it—in most court opinions deciding antitrust-injury issues. The language and the analysis are from the Classic Antitrust Case entitled Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., decided by the US Supreme Court in 1977.

You may also enjoy our article on the Bona Law website describing antitrust injury.

Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc.

If your antitrust attorney is drafting a brief on your behalf and antitrust injury is in dispute—which is quite likely—he or she will probably cite Brunswick Corp.

Since antitrust injury is synonymous with Brunswick Corp., let’s talk about the actual case for a moment. If you are passionate about bowling-alley markets, you’ll love this case.

If you were around in the 1950s, you probably know that bowling was a big deal. The industry expanded rapidly, which was great for manufacturers of bowling equipment. But sometimes good things come to an end and the bowling industry went into a sharp decline in the early 1960s. These same manufacturers began to have trouble, as bowling alleys starting paying late or not at all for their leased equipment.

A particular bowling-equipment manufacturer—Brunswick Corp—began acquiring and operating defaulted bowling centers when they couldn’t resell the leased equipment.  For a period of seven years, Brunswick acquired 222 centers, some that it either disposed of or closed. This buying binge turned it into the largest operator of bowling centers, by far.

This was a problem for a competing bowling-alley operator and competitor, Pueblo Bowl-O-Mat, who sued under the Clayton Act, arguing that certain Brunswick acquisitions in their territory “might substantially lessen competition or tend to create a monopoly.” Without the acquisition, the purchased bowling alleys would have gone out of business, which would have benefited Pueblo, a competitor.

The case eventually made its way to the US Supreme Court, which rejected the Clayton Act claim for lack of antitrust injury. The reason is that even though Pueblo was, indeed, harmed by the acquisition, it wasn’t a harm that the antitrust laws were meant to protect. The acquisition actually increased competition. Absent the acquisition, Pueblo would have gained market share. But with the acquisition, the market included both Pueblo and the bowling alleys that would have left the market—i.e. more competition.

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Supreme Court amicus brief

Author: Jarod Bona

As an attorney defending an antitrust class action, your job is to get your client out of the case as expeditiously and inexpensively as possible. There are several exit points.

For example, with a little help from the US Supreme Court’s Twombly decision, you might find your way out with a motion to dismiss, asserting (among other potential arguments) that plaintiffs fail to allege sufficient allegations that a conspiracy is plausible. This is usually the first battle.

Next, you could reach a settlement with class-action plaintiffs (and have it approved by the Court). This could happen at any point in the case. Oftentimes, case events that change expectations will prompt a settlement—i.e. a Department of Justice decision to drop an investigation or an indictment.

Third, you might prevail on summary judgment (or at least partial summary judgment). One means to winning on summary judgment is to disqualify plaintiff’s expert with a Daubert motion.

Fourth, you can win at trial.

Fifth, if you lose at trial, it is time to find an appellate lawyer.

So far, these methods to get out of court look just like any other antitrust case (or commercial litigation matter). An attorney defending an antitrust class action, however, has extra way to get its client out of the case: Defeating Class Certification. (like the defendants did in the Lithium Ion Batteries case, which we wrote about here).

Defense attorneys are increasingly turning to class certification as a primary battle point to get their clients out of federal antitrust class actions.

An antitrust class action usually alleges some form conduct that is a per se antitrust violation in which the damages are a small amount for each class member. For example, an antitrust class action plaintiff might allege a price-fixing conspiracy among the major manufacturers in a particular industry. Plaintiffs may allege that the damage is just a few dollars or cents per plaintiff, but collectively the damages are in the millions or tens or hundreds of millions (or more).

Thus, if the Court denies plaintiffs’ motion to certify a class (barring appeal), each individual plaintiff must sue. And since each only has damages of a few dollars or less, litigation just doesn’t make sense. That, in fact, is the point of Federal Rule 23 and class actions generally—to allow relief when the aggregate harm is great but the individual harm is miniscule.

[See this article that I co-authored with Carl Hittinger on the private-attorney general purpose of class actions.]

A defendant that can defeat class certification effectively wins the case.

The US Supreme Court made this task easier for attorneys defending antitrust class actions in the 2013 classic antitrust case of Comcast Corporation v. Behrend, written by the late Justice Antonin Scalia.

Back in my DLA Piper days, I wrote about the Comcast case for the Daily Journal shortly after the Supreme Court published it.

This case involved a class action against Comcast that alleged that Comcast’s policy of “clustering” violated Section 1 of the Sherman Act. Clustering is a strategy of concentrating operations within a particular region. Plaintiffs alleged that Comcast would trade cable systems outside of their targeted region for competitor systems within their region. This would limit competition for both parties, by concentrating the market for each region with fewer cable providers.

But that wasn’t the issue the Supreme Court addressed. The Supreme Court in Comcast v. Behrend instead sought to determine whether the district court properly certified the class action under Federal Rule of Civil Procedure, Rule 23(b)(3), which is known as the predominance requirement.

You can read our article about a California antitrust decision rejecting class certification here.

If you want to learn more about how Bona Law approaches the defense of antitrust class action cases, read here.

And if you want to know more about how class-action settlements work as described in the context of the In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, read here.

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Aspen Mountains

Author: Jarod Bona

Yes, in certain narrow circumstances, refusing to do business with a competitor violates Section 2 of the Sherman Act, which regulates monopolies, attempts at monopoly, and exclusionary conduct.

This probably seems odd—don’t businesses have the freedom to decide whether to do business with someone, especially when that person competes with them? When you walk into a store and see a sign that says, “We have the right to refuse service to anyone,” should you call your friendly antitrust lawyer?

The general rule is, in fact, that antitrust law does NOT prohibit a business from refusing to deal with its competitor. But the refusal-to-deal doctrine is real and can create antitrust liability.

So when do you have to do business with your competitor?

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Resale Price Maintenance

Author: Jarod Bona

Some antitrust questions are easy: Is naked price-fixing among competitors a Sherman Act violation? Yes, of course it is.

But there is one issue that is not only a common occurrence but also engenders great controversy among antitrust attorneys and commentators: Is price-fixing between manufacturers and distributors (or retailers) an antitrust violation? This is usually called a resale-price-maintenance agreement and it really isn’t clear if it violates the antitrust laws.

For many years, resale-price maintenance—called RPM by those in the know—was on the list of the most forbidden of antitrust conduct, a per se antitrust violation. It was up there with horizontal price fixing, market allocation, bid rigging, and certain group boycotts and tying arrangements.

There was a way around a violation, known as the Colgate exception, whereby a supplier would unilaterally develop a policy that its product must be sold at a certain price or it would terminate dealers. This well-known exception was based on the idea that, in most situations, companies had no obligation to deal with any particular company and could refuse to deal with distributors if they wanted. Of course, if the supplier entered a contract with the distributor to sell the supplier’s products at certain prices, that was an entirely different story. The antitrust law brought in the cavalry in those cases.

You can read my blog post about the Colgate exception here: The Colgate Doctrine and Other Alternatives to Resale-Price-Maintenance Agreements.

In 2007, the Supreme Court dramatically changed the landscape when it decided Leegin Creative Leather Products, Inc. v. PSKS, Inc. (Kay’s Closet). The question presented to the Supreme Court in Leegin was whether to overrule an almost 100-year old precedent (Dr. Miles Medical Co.) that established the rule that resale-price maintenance was per se illegal under the Sherman Act.

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Weaponized-First-Amendment-300x254

Author: Robert Everett Johnson, The Institute for Justice

Robert Everett Johnson litigates cases protecting private property, economic liberty, and freedom of speech. He is also a nationally-recognized expert on civil forfeiture. Bona Law has a strong relationship with The Institute for Justice, going back to Jarod Bona’s clerkship with the group after his first year of law school. We highly recommend that you check out the wonderful work they do for freedom and liberty.

You may have heard: The First Amendment has been weaponized.

Justice Kagan said so in Janus v. State, County and Municipal Employees, where her dissent accused the majority of “weaponizing the First Amendment, in a way that unleashes judges, now and in the future, to intervene in economic and regulatory policy.” Justice Breyer agreed, dissenting in NIFLA v. Becerra and complaining that (contrary to the majority opinion) “professionals” should not “have a right to use the Constitution as a weapon.” And the New York Times took up the cry, publishing a front-page Sunday article titled “How Conservatives Weaponized the First Amendment.”

All of this sounds frightening, but the truth is more reassuring. Courts are doing what they are supposed to do: As the amount of economic regulation has increased, it has inevitably restricted freedom of speech, and now courts are restoring the balance. Lawyers should embrace this newly vibrant First Amendment, and should ask themselves how it can serve the interests of their clients.

Rights Are—And Should Be—Weapons

The truth is, the First Amendment has always been a weapon. After all, that’s exactly what constitutional rights are—weapons to be used against the government. When critics say the First Amendment has been “weaponized,” all they really mean is it is being enforced.

The First Amendment has been used, time and time again, as a weapon to resist government power. When the NAACP invoked the First Amendment to protect their right to solicit clients for civil rights litigation, they used the First Amendment as a weapon. When unions invoked the First Amendment to protect the right to picket their employers, they used the First Amendment as a weapon. And when students invoked the First Amendment to protect their right to protest the Vietnam War, they also used the First Amendment as a weapon.

What is the alternative to a “weaponized” First Amendment? We could retire the First Amendment from active service and hang it on the wall like a soldier’s antique gun. We could continue to protect speech with little real-world impact—protests at funerals and animal crush videos come to mind—while exempting speech that threatens the status quo. That kind of neutered First Amendment would be a shiny object to admire, but it would not secure freedom of speech in any meaningful sense. Fortunately, the First Amendment is more than a shiny object on the wall.

Economically-Motivated Speech Is Still Speech

While the First Amendment has always been a weapon, something has changed in recent years. When people say the First Amendment has been “weaponized,” they really mean it has been applied to uphold free speech rights in the context of economic regulation. But that is as it should be: Speech does not become any less valuable because it is associated with economic activity.

There is no question that the Supreme Court is increasingly willing to uphold First Amendment claims that arise in the economic context. This Term, Janus upheld the right of employees not to contribute money to a public union, and NIFLA rejected the argument that speech receives less protection because it is uttered by a “professional.” Other recent cases have applied the First Amendment to regulations of credit card pricing schemes, as well as restrictions on the sale of drug prescription information. There is no reason to think any of that will change with the nomination of Judge Kavanaugh to the US Supreme Court, as he has previously applied the First Amendment to regulations of internet service providers.

This is a good thing. As Justice Kennedy put it, writing in 1993 in Edenfield v. Fane: “The commercial marketplace, like other spheres of our social and cultural life, provides a forum where ideas and information flourish.” Indeed, speech in the commercial marketplace often touches on some of the most important facets of human life: Doctors speak to patients about matters of life and death; financial professionals speak to clients about their financial security; and even your local grocer can convey information critical to your health. The importance of these subjects only makes the free flow of information all the more vital to a free society.

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Vitamin-C-antitrust-class-action-supreme-court-300x200

Author: Jarod Bona

In an antitrust case deciding a non-antitrust-specific issue, the US Supreme Court held in Animal Science Products, Inc. v. Hebei Welcome Pharmaceutical Co. (the Vitamin C Antitrust Litigation) that to determine foreign law in federal courts, judges are not strictly bound by that foreign government’s statements.

The judge should “accord respectful consideration to a foreign government’s submission,” but it is his or her call in making the ultimate decision.

The Supreme Court in this case is interpreting Federal Rule of Civil Procedure 44.1, which states that when deciding foreign law—sometimes that is necessary in federal court—a judge may “consider any relevant material or source . . . whether or not submitted by a party.”

This decision arose out of the Vitamin C Antitrust Litigation, which is an antitrust class-action lawsuit against four Chinese corporations that manufacturer and export, you guessed it, Vitamin C. Purchasers of the vitamin sued Chinese vitamin C sellers, alleging that they agreed to fix the price and quantity of Vitamin C exported to the United States from China. Price fixing, of course, is a per se antitrust violation.

(Read here if you want to learn more about defending an antitrust class action case.)

The Chinese vitamin C sellers argued that they are shielded from US antitrust law liability by the act-of-state doctrine.

But what is the act-of-state doctrine?

Good question.

US courts under the act-of-state doctrine should not judge the validity of an official act of a foreign government committed within that foreign government’s borders. This is a doctrine that extends beyond antitrust law.

In Animal Science Products, the defendants argued that China law required them to fix prices as part of a “regulatory pricing regime.”

The parties, however, disputed whether China law actually mandated the fixed prices. To help resolve that question, the Ministry of Commerce of the People’s Republic of China filed an amicus curiae brief supporting the Chinese vitamin C sellers’ argument that China law required defendants to fix prices.

(You can read our article here on the many reasons to file amicus briefs).

So the trial court had to figure out whether China law mandated price fixing. And to assist it, China’s Ministry of Commerce weighed in via amicus brief.

What would you do?

Would you just agree with whatever China says about its own law? Or would you do an independent examination and decide?

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SolarCity-Picture-300x174

Author: Aaron Gott

Last month, the U.S. Supreme Court granted a writ of certiorari to decide a circuit split on an important procedural question concerning the state-action immunity to the federal antitrust laws: whether a decision denying the state-action immunity is immediately appealable or must await a final decision just like most issues raised on a motion to dismiss.

The case, SolarCity Corporation v. Salt River Project Agricultural Improvement and Power District, is about a power company that changed its rate structure to make it less appealing for consumers to switch to solar power. Power companies are typically quasi-natural monopolies because of the way power is delivered—through a massive infrastructure of physical lines.

Update: The parties reached a settlement and filed a stipulated dismissal dated March 20, 2018. So the US Supreme Court will not hear this case.

But new technology is changing that: people can generate electricity straight from the sun by installing panels on their roofs, and soon it will be more cost effective to install batteries to hold that power for when it is needed than to continue paying the power company. In places like Southern California, where the price of peak electricity is more than four times the national average, solar power is a no-brainer.

It comes as no surprise that some power companies are using their incumbency to slow the disruption of this innovative technology. SolarCity (now Tesla, Inc.) sued an Arizona power district for attempting to maintain its monopoly over the supply of electrical power in its territory, alleging that the power district created new fees that penalize solar customers, which ultimately had its intended effect: solar retailers received 96% fewer applications for new solar systems among customers in the power district after the new rates took effect.

The power district moved to dismiss, arguing that it is immune from the federal antitrust laws under the state-action immunity. The district court denied the motion because the power district had not met its burden of showing that it acted pursuant to a clearly articulated state policy to displace competition. The power district sought an order certifying the denial for interlocutory appeal, which was also denied. Nevertheless, the power district immediately appealed to the Ninth Circuit, arguing that a denial of the state-action immunity should be immediately appealable under the collateral order doctrine.

Before we dive into the Ninth Circuit decision, let’s discuss some of these terms.

The Collateral Order Doctrine

The collateral order doctrine is an exception to the general rule that the federal courts of appeal have jurisdiction to hear only appeals of “final orders” from the district courts.  The exception is narrow and must be strictly applied.

A collateral order is appealable immediately if it meets three requirements: first, the order being appealed must be conclusive. Second, it must address a question that is separate from the merits of the case. Third, it must raise “some particular value of a high order” and evade effective review if not considered immediately.

With these requirements, there are only a few categories of decisions that meet the collateral order doctrine, and they are all “immunities”: Eleventh Amendment immunity, absolute immunity, qualified immunity, foreign and tribal sovereign immunity. Given this, it might seem that the state-action “immunity” also fits. But it isn’t quite that simple because the state-action immunity isn’t actually an immunity, but a judicially recognized exemption.

What Is An Immunity?

Read broadly, an immunity could mean many different things. It could mean immunity from suit, immunity from liability, or even just immunity from money damages.

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