The Ninth Circuit Holds That Res Judicata Bars State Recovery of Restitution for Members of a CAFA-Compliant Class Action

In California v. Intelligender, LLC[1], the Ninth Circuit ruled that final judgment in a CAFA-compliant class settlement barred the State of California from seeking restitution on behalf of members of the settlement class for losses caused by Intelligender’s allegedly false advertising of its gender predictive test.  The Ninth Circuit rejected Intelligender’s efforts to block other remedies sought by the State.

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Supplier Beware Before Terminating Dealers: California’s Equipment Dealers Act

Developments in modern antitrust law have made it increasingly difficult for termination of vertical relationships between a supplier and a dealer to be actionable under the antitrust laws, particularly under a per se theory of liability.  Suppliers contemplating termination of dealer agreements, however, may need to carefully consider laws beyond contracts and antitrust.  That is, many states including California have statutes intended to afford greater substantive and procedural protections to dealers than may be found within the four corners of the dealer agreement.  What’s more, California’s statute – the Fair Practices of Equipment Manufacturers, Distributors, Wholesalers and Dealers Act (commonly known as California’s Equipment Dealers Act or CEDA), Cal. Bus. & Prof. Code § 22900 et seq. – is relatively arcane, has broad applicability to all kinds of “equipment” dealers, may apply to dealers solely doing business outside of California, and has a dearth of case law.

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District Court Weighs in on Level of Integration Required to Shield Health Care Collaborations from Section 1 Scrutiny

In Medical Center at Elizabeth Place v. Premier Health Partners et. al, Case No. 12-cv-26 (S.D. Oh. Oct. 20, 2014), the Southern District of Ohio held that previously-competing health care systems who join together in a revenue-sharing arrangement are incapable of conspiring with each other under Section 1 of the Sherman Act.  This is the latest decision to weigh in on the level of integration required among legally separate entities to be deemed a single economic actor for antitrust purposes, and particularly significant given the rapidly increasing number of collaborations within the health care industry following passage of the Affordable Care Act.

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Agricultural Cooperative Antitrust Litigation Continues to Mushroom

Pennsylvania District Court certifies five year ruling for interlocutory appeal, that mushroom cooperative is not immune from antitrust claims based upon “advice of counsel” argument.  In Re Mushroom Direct Purchaser Antitrust Litigation, Case No. 2:06-cv-00620, (E.D. Pa. October 17, 2014.)

The multidistrict litigation over alleged price fixing in the mushroom market is one of many antitrust class actions pending against cooperatives in various agricultural industries throughout the United States.  These include In Re Fresh & Processed Potatoes Antitrust Litigation, (MDL No. 2186 D. Idaho) and In Re Processed Egg Products Antitrust Litigation, MDL No. 2002 (E.D. Pa.)  These cases involve the scope of immunity for agricultural cooperatives pursuant to the Capper-Volstead Act of 1922, 7 U.S.C. §291-292.  The Capper-Volstead Act provides agricultural coops with a limited scope of immunity to agree to fix sales prices through “collectively processing, preparing for market, handling, and marketing.”

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Beginning to Close the POM Circle? – POM Wonderful and Drug Advertising: JHP Pharmaceuticals

Earlier this year, in POM Wonderful LLC v. Coca-Cola Co.,[1] the Supreme Court examined the interaction between the Lanham Act’s prohibition against false advertising and the FDCA’s prohibition against food, drug and cosmetics labeling that is “false or misleading.”  In POM Wonderful, POM alleged that Coca-Cola’s labeling and marketing of its “Pomegranate Blueberry” juice was false and misleading.  Coca-Cola sought dismissal of POM’s Lanhan Act and state law claims on the grounds that because its labeling complied with the requirement of the Food, Drug and Cosmetics Act (FDCA), POM’s claims were precluded.  The Supreme Court disagreed, holding that the FDCA and Lanham Act were complementary statutory schemes and allowed competitor advertising claims under the Lanham Act that challenge food and beverage labeling regulated under the FDCA.

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DOJ Will Not Challenge Cyber Security Data Sharing Platform

On October 2, 2014, the U.S. Department of Justice announced that a cyber intelligence data-sharing platform known as TruSTAR, developed by CyberPoint International, LLC, passed antitrust muster.  The TruSTAR platform allows members to share threat and incident data along with cyber-attack information, and to develop remediation solutions to facilitate more effective cyber-attack prevention strategies.  The DOJ’s business review letter also reiterated antitrust guidelines applicable to information exchanges by business organizations such as industry trade associations.

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ABA Antitrust Section, Consumer Protection Subcommittee September 2014 Monthly Consumer Protection Update

On October 14, 2014, Bruce Colbath  and Sheppard Mullin presented the ABA Antitrust Section, Consumer  Protection SubCommittee September 2014 Monthly Consumer Protection Update.  Bruce is the Vice-Chair of the ABA Antitrust Section’s Consumer Protection Committee, which focuses on issues that arise in commercial advertising, including administrative and private advertising litigation and related proceedings.  The Consumer Protection Updates are presented each month and summarize developments at the Federal Trade Commission, Consumer Finance Protection Bureau, NAD and in private advertising litigation.

Click here to view the presentation.

Allegations that Defendants Provided Product for “Free” State Claims Under California’s UPA and UCL, Notwithstanding that “Cost” of Product Was Recouped by Overcharging for Shipping

Bebe Au Lait, LLC v. Mothers Lounge, LLC and Udder Covers, LLC, Case No. 5:13-CV-03035-EJD (N.D. Cal. Sept. 23, 2014)

Plaintiff Bebe Au Lait sells nursing covers.  It was the first company to make and sell, pursuant to patent, a flexible, convex stiffener located across the top of a nursing cover (“udder cover”) that can be bent to allow a nursing mother to view a nursing infant, and then returned to its original shape.

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Bundled Discounts Subject to Section 1/Clayton 3 Scrutiny In the Absence of Market Power and Substantial Foreclosure?

Bundled discount programs have received significant antitrust scrutiny over the past decade, even though these marketing programs may benefit both consumers and competition. Typically, bundled discounts have been evaluated as either exclusive dealing or tying arrangements under Section 1 of the Sherman Act (and Section 3 of the Clayton Act in the case of a tying claim), or under Section 2 of the Sherman Act questioning whether such marketing plans result in unlawful monopolization.  While the appropriate legal analysis under these doctrines has continued to confound the courts, one consistent prerequisite to a finding of liability has been the existence of market or monopoly power, or in the case of an exclusive dealing arrangement, that the arrangement caused substantial foreclosure from the market.  A recent decision by a Pennsylvania district court, Schuylkill Health Systems v. Cardinal Health, Inc., et al.[1], has further confused the analysis of the lawfulness of bundled discounts by allowing a bundling claim to proceed under Section 1 of the Sherman Act (challenged as an exclusive dealing claim) and Section 3 of the Clayton Act (as a tying claim), even though it found that the defendants lacked market power and the discount programs failed to foreclose a sufficient portion of the relevant market.

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Second Circuit Clarifies the Use of Legal Presumptions of Consumer Confusion and Injury in Certain Lanham Act Cases

On Tuesday, July 29, the United States Court of Appeals for the Second Circuit “clarified certain aspects of [its] false advertising jurisprudence” and held that, where literal falsity and deliberate deception have been proved in a market with only two players, it is appropriate to use legal presumptions of consumer confusion and injury for the purposes of finding liability in a false advertising case brought under the Lanham Act.[1]

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