In Sullivan v. Barclays PLC, Judge P. Kevin Castel, of the Southern District of New York, raised an interesting point regarding the relationship between the viability of antitrust claims subject to the Foreign Trade Antitrust Improvement Act (FTAIA) and constitutional requirements for personal jurisdiction: The FTAIA “arguably may apply a less-exacting standard than the due process threshold to exercise personal jurisdiction over a foreign defendant.” In other words, even though the standard for the FTAIA might be met to allow an antitrust claim to proceed against a foreign defendant, the court nonetheless might not be able to assert personal jurisdiction. The question whether the FTAIA should be read more strictly than has been the case to conform to due process requirements, or that foreign defendants should be more diligent in challenging personal jurisdiction, are interesting ones that warrant further analysis.
David Goldstein, a partner in Orrick’s San Francisco office, is a member of the Litigation Group focusing on antitrust and competition matters.
Mr. Goldstein has represented clients in demanding and complex commercial litigation matters for more than 25 years. For the past 20 years, his practice has focused on antitrust and trade regulation engagements involving cartels, dominant firms and monopolization, the antitrust/IP interface, standards essential patents and standards-setting activities, and other areas of antitrust law. He often is called up to provide guidance to clients on antitrust issues involving pricing and distribution, vertical agreements, trade association activities, and antitrust issues that arise in licensing agreements. He has litigated cases and counseled clients in a broad range of industries, including electronic devices and components, entertainment, health care, pharmaceuticals, clothing, payment cards, credit reports/identity theft, DSL technology, LED lighting, motor oil, and medical devices. Mr. Goldstein has been recommended in The Legal 500 in 2011 for the United States in Antitrust, and he has been named a Northern California Super Lawyer in Antitrust every year since 2006. He served as the editor-in-chief of Orrick's Antitrust and Competition Newsletter, and now serves as the editor-in-chief of Orrick’s antitrust blog, AntitrustWatch.com.
In addition to antitrust matters, Mr. Goldstein has represented clients in cases involving California's Unfair Competition Law, the Fair Credit Reporting Act, the Lanham Act, insurance coverage, real estate, and other business disputes. He also has represented clients in matters involving the First Amendment.
The following are some of Mr. Goldstein's representative matters.
- Sony Electronics. Defended Sony in direct and indirect purchaser class actions alleging price fixing with respect to SRAM chips.
- Sony Electronics and Sony PlayStation. Representing Sony as a plaintiff pursuing antitrust claims based on its purchases of price-fixed TFT-LCD panels.
- Sony Pictures. Defended Sony in alleged no-poach and wage-suppression class action.
- Merck v. Teva. Advised Merck in California Supreme Court proceedings in alleged price-fixing case.
- Copper Tubing Manufacturer. Defended German manufacturer of copper tubing in price-fixing class action.
- Texas Instruments. Defended Texas Instruments against Section 2 antitrust counterclaims based on standards-setting for DSL technology.
- nVidia. Represented nVidia in asserting Section 2 antitrust counterclaims based on Rambus' conduct before a standards-setting organization.
- One Technologies. Represented One Technologies in asserting Section 2 antitrust counterclaims in a trademark infringement case involving Google AdWords.
- Electronics Manufacturer. Advised U.S. subsidiary of Japanese parent regarding possible antitrust counterclaims based on a patent pool.
Dominant Firms and Monopolization:
- Visa. Defended Visa, in a purported U.S. $100 billion class action brought by Wal-Mart and other merchants asserting tying and attempted monopolization claims, In re Visa Check/MasterMoney Antitrust Litigation.
- Visa. Defended Visa in 40 indirect purchaser class actions in more than 20 states asserting monopolization, consumer protection, and common law claims in follow-on cases to In re Visa Check/MasterMoney Antitrust Litigation.
- Merck. Defended Merck against Section 2 antitrust counterclaims in a Hatch-Waxman case involving cholesterol drugs.
- Pennzoil-Quaker State. Defended Pennzoil-Quaker State in a challenge to the merger of the two companies.
- Delta Dental. Defending Delta in purported class action alleging breach of contract and other claims.
- Real Estate Company. Represented owner of real estate in a three-week arbitration to determine the fair market rent for a property in Silicon Valley.
Posts by: David M. Goldstein
In June 2016, China’s State Council issued its Opinions of the State Council on Establishing a Fair Competition Review System During the Development of Market-oriented Review System (“Opinions”). The fair competition review system (“FCRS”) that the Opinions contemplate is designed to protect against the potential abuse of administrative power by Chinese government agencies that could result in anti-competitive effects. In other words, the FCRS is supposed to constrain government activities from unduly influencing market competition, consistent with the prohibition that China’s Anti-Monopoly Law places on such conduct.
The Seventh Circuit’s decision in Motorola Mobility v. AU Optronics–which blocked a U.S. parent’s Sherman Act claim based on its foreign subsidiary’s purchases of a price-fixed product–continues to reverberate throughout federal district courts. A district court in the Sixth Circuit recently followed Motorola Mobility to dismiss a U.S. company’s price-fixing claims based on its foreign subsidiary’s purchases of allegedly price-fixed components that were incorporated abroad into finished goods that the subsidiary then shipped to the United States. In re Refrigerant Compressors Antitrust Litigation, No. 2:09-md-02042, 2016 WL 6138600 (E.D. Mich. Oct. 21, 2016). The district court’s decision demonstrates that, post-Motorola Mobility, defendants have strong arguments in some circuits under the Foreign Trade Antitrust Improvements Act (“FTAIA”) and Illinois Brick to defeat a U.S. parent’s price-fixing claims based on purchases by its overseas subsidiary, especially where that subsidiary is not wholly-owned.
In SOLIDFX, LLC v. Jeppesen Sanderson, Inc., Case Nos. 15-1079 and 15-1097 (opinion available here), the Tenth Circuit aligned itself with the First and Federal Circuits to hold that the invocation of intellectual property rights is a presumptively valid business justification sufficient to rebut a Sherman Act Section 2 refusal to deal claim, but left open some questions about when and how the presumption can (if ever) be rebutted.
In an October surprise, the DOJ and FTC (collectively, the “Agencies”) released guidance for HR professionals on the application of the antitrust laws to employee hiring and compensation. The Agencies’ October 20, 2016 release, Antitrust Guidance for Human Resource Professionals, announced that “naked” agreements among employers not to poach each other’s employees and to fix wages and other terms of employment are per se illegal. Critically, for the first time, the Agencies warn that such agreements could result in criminal prosecution against individual HR professionals, other company executives, as well as the company. This Guidance, coupled with repeated requests to approach the Agencies to report such agreements, signals a significant shift in enforcement focus for the Agencies, including a further move to individual prosecutions, particularly when taken together with last year’s DOJ Yates Memorandum calling for more emphasis on individual executive liability.
On August 9, 2016, the Second Circuit affirmed a district court’s dismissal of claims asserted by two groups of self-proclaimed “indirect purchasers” of aluminum products who alleged that three aluminum futures traders, which had acquired operators of warehouses for aluminum, manipulated a price component for aluminum (warehouse storage costs). The Second Circuit concluded that these “indirect purchasers” did not suffer antitrust injury because they were not participants in the aluminum warehousing market. In re Aluminum Warehousing Antitrust Litig., Nos. 14-3574, 14-3581(2d Cir. Aug. 9, 2016). In the district court, Judge Katherine Forrest recently applied the Second Circuit’s analysis to dismiss similar claims brought by the purported “direct purchasers” of the aluminum because they, too, were not participants in the aluminum warehousing market. In re Aluminum Warehousing Antitrust Litig., No. 13-2481 (S.D.N.Y. Oct. 5, 2016). These two decisions (assuming the district court’s decision is affirmed) should help defendants attack plaintiffs’ efforts to establish antitrust standing in other cases by trying to thread the “inextricably intertwined” needle for market participants that the Supreme Court established in Blue Shield of Virginia v. McCready, 457 U.S. 465 (1982).
Although China and Japan have very different histories regarding their antitrust laws, antitrust enforcement officials from the two countries have recently taken steps to open a formal dialogue. This is a welcome development for Chinese and Japanese companies, as well as for foreign companies that do business in China and Japan, and it continues the trend of increased communication, cooperation and coordination among national enforcement agencies. There remains an open question, however, as to how convergence among Asian antitrust enforcement agencies will affect possible convergence with agencies in the United States, the European Union and the rest of the world.
On September 15, 2016, the Third Circuit jump-started a federal antitrust class action involving truck transmissions, holding that a direct purchaser’s assignment of its federal antitrust claims to an indirect purchaser is valid as long as the assignment was written and express—even if there was no consideration for the assignment. The Third Circuit also held that a proposed class representative’s motion to intervene is presumptively timely if made before class certification. Wallach, et al. v. Eaton Corp., et al., No. 15-3320 (Sept. 15, 2016).
Last week, the Ninth Circuit affirmed a summary judgment disposing of numerous antitrust claims brought by an independent servicer against a manufacturer of systems and parts that also provides service. The court emphasized that “[t]his case serves as a reminder that anecdotal speculation and supposition are not a substitute for evidence, and that evidence decoupled from harm to competition—the bellweather of antitrust—is insufficient to defeat summary judgment.” Aerotec Int’l, Inc. v. Honeywell Int’l, Inc., No. 14-15562 (9th Cir. Sept. 9, 2016).
Auxiliary Power Units (“APUs”) power an airplane’s air conditioning, cabin lights and instrumentation. Aerotec International, Inc. (“Aerotec’), a small servicer of APUs, including those manufactured by Honeywell International, Inc. (“Honeywell”), complained that Honeywell had stalled Aerotec’s sales efforts and prevented it from reaching cruising altitude through a variety of alleged anticompetitive conduct.
On September 7, 2016, the Third Circuit ruled that a district court erred in granting a Fed. R. Civ. P. 12(b)(1) motion to dismiss federal antitrust claims for lack of subject matter jurisdiction, because the court conflated the analyses for Article III standing and antitrust standing. Hartig Drug Co. Inc. v. Senju Pharmaceutical Co. Ltd., No. 15-3289 (3d Cir. Sept. 7, 2016).
Hartig Drug Company Inc. (“Hartig”), an Iowa-based drug store chain, sued pharmaceutical manufacturers alleging that they suppressed competition for medicated eyedrops through a variety of means, which resulted in higher prices for the eyedrops. Hartig purchased the eyedrops from a distributor, AmerisourceBergen Drug Corporation (“Amerisource”), which purchased the eyedrops from the manufacturers. Hartig’s claim as an indirect purchaser from the defendant manufacturers was barred by Illinois Brick v. Illinois, 431 U.S. 720 (1977), so it alleged that Amerisource had assigned its claim to Hartwig, which enable Hartwig to sue as a direct purchaser.
The manufacturers filed a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction, and also a Rule 12(b)(6) motion to dismiss for failure to state a claim. For the Rule 12(b)(1) motion, defendants submitted Amerisource’s Distribution Services Agreement (“DSA”) with one of the manufacturers—which was not mentioned in Hartwig’s complaint—to argue that an anti-assignment clause in the DSA prohibited Amerisource from assigning its claim without the defendant’s consent. The District Court accepted that argument and granted the Rule 12(b)(1) motion on the ground that Hartig was actually suing as an indirect purchaser and not as a direct purchaser because the assignment was invalid.
On appeal, several retailers filed an amicus brief arguing that defendant’s anti-assignment argument reached only the issue of antitrust standing, which is different from Article III standing, and the district court erred in ruling that it did not have subject matter jurisdiction. The Third Circuit agreed.
After several turbulent years of litigation and policy wrangling, many have asked whether the federal antitrust agencies should rewrite their two-decade old Antitrust Guidelines for the Licensing of Intellectual Property (“Guidelines”). Should they provide clearer guidance regarding thorny questions about licensing standard essential patents (SEPs), patent assertion entities (PAEs), reverse payment settlements, or other matters that have prompted new guidelines from other enforcers around the world? On August 12, the Federal Trade Commission and US Department of Justice’s Antitrust Division responded with modest updates to the Guidelines, likely setting themselves up for considerable commentary in the weeks to come.
The Second Circuit recently held that under Federal Rule of Civil Procedure 23, a district court judge can decertify a class after a jury verdict in favor of the class but before entering judgment, upholding a Southern District Court of New York decision granting defendants’ post-verdict motion to decertify the class. Joseph Mazzei v. The Money Store, TMS Mortgage Inc., HomEq Servicing Corp., No. 15-2054 (2d Cir. July 15, 2016). The Second Circuit’s decision confirms that after a court certifies a class, defendants should continue to develop evidence to seek to decertify the class even after a jury verdict in favor of the class.
For the past several years, plaintiffs and defendants in international price-fixing cases have battled over the extraterritorial application of the Sherman Act in light of the Foreign Trade Antitrust Improvements Act of 1982 (“FTAIA”), 15 U.S.C. § 6a, and the U.S. Supreme Court’s seminal decision in F. Hoffman-LaRoche Ltd. v. Empagran, S.A., 542 U.S. 155 (2004). Although the Supreme Court passed on an opportunity to clarify the scope of the FTAIA when it denied petitions for certiorari following decisions in Hsuing v. United States, 778 F.3d 738 (9th Cir. 2014), as amended (Jan. 30, 2015), and Motorola Mobility LLC v. AU Optronics Corp., 775 F.3d 816 (7th Cir. 2014), as amended (Jan. 12, 2015), the Court’s decision in RJR Nabisco v. European Community—which addresses the extraterritorial application of the federal RICO statute—may provide some insight into how it views antitrust claims based on foreign injuries under the FTAIA.
On June 14, 2016, U.S. District Judge Jorge Alonso, of the Northern District of Illinois, denied a motion for preliminary injunction by the Federal Trade Commission (“FTC”) and the Attorney General for the State of Illinois, seeking to block the proposed merger between Advocate Health Care and the NorthShore University Health System (“NorthShore”) in the Chicago metropolitan area. According to Judge Alonso’s opinion released on June 20, the Plaintiffs failed to prove a relevant geographic market, the lack of which the Court deemed fatal to the Plaintiffs’ case.
This loss could be a blow for the FTC’s health care competition enforcement program. It is the agency’s second loss in district court this year in a hospital merger challenge. Additionally, as we noted in our May 13, 2016 blog post concerning the FTC’s earlier loss on the Hershey merger—now on appeal to the Third Circuit—both cases reflect push-back by courts against what to this point have been highly successful FTC market definition and consumer harm arguments in hospital merger cases.
Courts in the Northern District of California, which have been handling price-fixing class actions in the electronics industry for more than a decade, are continuing to develop ground rules about whether defendants in a price-fixing case are entitled to know the amount for which an opt-out Direct Action Plaintiff (DAP) settles its cases against other defendants. On May 27, 2016, Judge Jon S. Tigar overruled objections to a Special Master’s Report and Recommendation compelling two DAPs to disclose settlement amounts in the Cathode Ray Tube (CRT) Antitrust Litigation, No. 3:07-cv-5944 (N.D. Cal.). Judge Tigar compelled both companies to provide that information to a Special Master so he can determine whether the information should be provided to other defendants to facilitate settlements—even though both companies had already settled all of their claims against all defendants. ECF 4661.
On May 17, 2016, Judge Emmet G. Sullivan (D.D.C.) issued a memorandum opinion explaining his decision to enjoin the Office Depot/Staples merger under Section 13(b) of the FTC Act. The court conducted a two-week trial in which the FTC called ten witnesses and 4000 exhibits were admitted into evidence, after which defendants opted to rest. The court found that the FTC “established their prima facie case by demonstrating that Defendants’ proposed merger is likely to reduce competition in the Business to Business (“B-to-B”) contract space for office supplies.” Defendants largely relied on Amazon’s development of on-line B-to-B services to replace or restore any reduction in competition resulting from the merger, but the court found that argument unpersuasive and enjoined the merger.
On May 9, 2016, U.S. District Judge John Jones III, of the Middle District of Pennsylvania, rejected a motion for preliminary injunction by the Federal Trade Commission (“FTC”) and the Pennsylvania Attorney General to halt the proposed merger between Penn State Hershey Medical Center (“Hershey”) and PinnacleHealth System (“Pinnacle”). The Court’s decision represents a potential setback for the FTC’s enforcement against hospital consolidation around the country. The opinion raises further questions about recent analyses endorsed by the agency and other federal courts when reviewing hospital mergers. The Court has extended the temporary restraining order in effect until May 27, 2016, to allow the FTC and the Attorney General to seek relief from the 3d Circuit.
On April 14, 2016, the U.S. Department of Justice and two West Virginia hospitals entered into a consent decree requiring the hospitals to cease allocating territories for marketing their healthcare services. The complaint and consent decree can be viewed here and here. This consent decree follows a similar consent decree that the DOJ entered into with three Michigan hospitals in June 2015, perhaps signaling the DOJ’s increased focused in policing allegedly anticompetitive agreements among hospitals and medical centers.
This alert, the title of which is adapted from a March 30, 2016 FTC Staff Attorney blog post, considers the FTC’s first lawsuit challenging a so-called “no-AG” agreement. No-AG agreements are components of Hatch-Waxman patent infringement litigation settlements in which the brand manufacturer agrees, expressly or through exclusive licenses, not to launch an “Authorized Generic” for a period of time after the generic manufacturer’s entry. The FTC’s complaint attacks two such settlements that Endo Pharmaceuticals Inc. and the Japan-based patent holder for one of the relevant patents reached with generic manufacturers Watson Laboratories (and Watson’s current owner, Allergan plc) and Impax Laboratories, to settle Hatch-Waxman litigation involving Endo’s two most important products—the pain relievers Opana ER® and Lidoderm®. The FTC’s complaint, and its simultaneous settlement with the Japanese patent holder and its U.S. subsidiary (collectively, “Teikoku”), are less a window into the FTC’s thinking, which at this point is hardly unpredictable, than they are into its litigation strategy and what drug manufacturers need to consider regarding potential FTC and private actions as they continue to wrestle with the many issues that remain unresolved post-Actavis.
Members of Orrick’s Life Sciences practice with experience addressing pharmaceutical industry antitrust and IP issues recently published an article analyzing the recent decision of the U.S. Court of Appeals for the Federal Circuit in In re Loestrin, No. 14-2071 (1st Cir. Feb. 22, 2016). In that decision—only the second appellate decision applying the Supreme Court’s seminal 2013 decision in FTC v. Actavis , the First Circuit addresses a few of the antitrust issues surrounding so-called “reverse-payment” settlements of patent infringement litigation between branded and generic drug manufacturers. To read the published article, please click here.