Justia U.S. D.C. Circuit Court of Appeals Opinion SummariesArticles Posted in Antitrust & Trade Regulation
In re: Rail Freight Fuel Surcharge Antitrust Litigation
Freight shippers (“Plaintiffs”) alleged that the nation’s four largest freight railroads (“Defendants” or “Railroads”) have violated the Sherman Act, 15 U.S.C. Section 1, by engaging in a price-fixing conspiracy to coordinate their fuel surcharge programs as a means to impose supra-competitive total price increases on their shipping customers. Before hearing summary judgment motions, the District Court considered Defendants’ motions to exclude certain evidence on which Plaintiffs rely. Defendants argued the challenged documents were inadmissible under 49 U.S.C. Section 10706(a)(3)(B)(ii)(II) (“Section 10706”) as evidence of the Railroads’ discussions or agreements concerning “interline” traffic. The D.C. Circuit affirmed in part and reversed in part the District Court’s interpretation of Section 10706, vacated the District Court’s order and remanded for the court to reconsider the evidence at issue. The court held that the District Court’s interpretation of Section 10706 sometimes strays from the literal terms of the statute. The court reasoned that a discussion or agreement “concern[s] an interline movement” only if Defendants meet their burden of showing that the movements at issue are the participating rail carriers’ shared interline traffic. A discussion or agreement need not identify a specific shipper, shipments, or destinations to qualify for exclusion; more general discussions or agreements may suffice. Further, the court held that a carrier’s internal documents need not convey the substance of a discussion or agreement concerning interline movements to qualify for exclusion under the statute. View "In re: Rail Freight Fuel Surcharge Antitrust Litigation" on Justia Law
USA, ex rel. Vermont National Telephone Company v. Northstar Spectrum, LLC
Vermont National Telephone Company filed a qui tam action against Northstar, SNR, DISH, and several affiliated companies (collectively, “Defendants”), alleging they violated the False Claims Act (“FCA”) by making false certifications and manipulating the Commission’s auction rules to secure fraudulent bidding credits on spectrum licenses. The district court dismissed the suit, resting its decision on the FCA’s “government-action bar” and its “demanding materiality standard.” The D.C. Circuit reversed the district court’s dismissal finding that neither basis the district court invoked warranted dismissal. Defendants argued that the Commission levied civil money penalties by subjecting Northstar and SNR to default payment. The court reasoned that even assuming that these default payments are civil money penalties, they have no bearing on whether the Commission’s licensing proceeding is a “civil money penalty proceeding” because the default payments were not assessed during the licensing proceeding. Second, Defendants pointed out that the Commission may assess forfeiture penalties for willful failure to comply with any FCC rule or regulation. Commission regulations, however, authorize assessment of forfeiture penalties only in forfeiture proceedings. Third, Defendants alluded to "other penalties” that the Commission may impose, however, because the Commission had no authority to assess civil money penalties during its licensing proceeding, which evaluated only Northstar’s and SNR’s long-form applications and the petitions to deny them, the licensing proceeding was not an “administrative civil money penalty proceeding.” Finally, the court held that Vermont Telephone also satisfied Rule 9(b) by setting forth detailed allegations regarding the “time, place, and manner” of the fraudulent scheme. View "USA, ex rel. Vermont National Telephone Company v. Northstar Spectrum, LLC" on Justia Law
Spirit Airlines, Inc. v. United States Department of Transportation
Until 2016, the FAA maintained a formal “slot control” system at Newark International Airport, requiring each airline to request a “slot” for each takeoff or landing. The FAA currently announces caps on takeoffs and landings for a given scheduling season. Each airline tells the FAA what flights it wants to operate during the upcoming season. The FAA may either approve an airline’s plan or request that it make changes in order to reduce congestion. An airline is not legally barred from operating unapproved flights/In 2010, the Department of Justice (DoJ) conditioned a merger on United’s transferring 36 slots to Southwest Airlines, a low-fare carrier, new to Newark. For five years, the DoJ resisted United’s attempts to acquire more slots. In 2015 the DoJ sued United for attempted monopolization but United remained Newark's dominant carrier. In 2019 Southwest announced it would pull out of Newark; 16 of its slots were in “peak hours.” Spirit Airlines requested five. The DoJ and the Port Authority cautioned the FAA against retiring Southwest’s slots, to preserve competition.The D.C. Circuit vacated the FAA’s decision to retire the slots. The decision was final because it prevented Spirit from operating as many peak-period flights as it would otherwise have done in Summer 2020 and was arbitrary and capricious because the agency disregarded warnings about the effect of its decision on competition at Newark. View "Spirit Airlines, Inc. v. United States Department of Transportation" on Justia Law
United States v. AT&T, Inc.
In an action filed by the government to enjoin the vertical merger between AT&T and Time Warner under Section 7 of the Clayton Act, the DC Circuit affirmed the district court's denial of the government's request for a permanent injunction. At issue on appeal was the district court's findings on its increased leverage theory whereby costs for Turner Broadcasting System's content would increase after the merger, principally through threats of long-term "blackouts" during affiliate negotiations.The court held that the government failed to clear the first hurdle in meeting its burden of showing that the proposed merger was likely to increase Turner Broadcasting's bargaining leverage. Furthermore, the government's objections that the district court misunderstood and misapplied economic principles and clearly erred in rejecting the quantitative model were unpersuasive. In this case, the government offered no comparable analysis of data for prior vertical mergers in the industry that showed "no statistically significant effect on content prices" as defendants had. Additionally, the government's expert opinion and modeling predicting such increases failed to take into account Turner Broadcasting System's post-litigation irrevocable offers of no-blackout arbitration agreements, which a government expert acknowledged would require a new model. The court also held that the evidence indicated that the industry had become dynamic in recent years with the emergence of distributors of only on-demand content, such as Netflix and Hulu. View "United States v. AT&T, Inc." on Justia Law
Daugherty v. Sheer
The DC Circuit held that two Federal Trade Commission attorneys were immune from suit for their conduct during an enforcement action against a medical-records company after the company's CEO publicly criticized the FTC about their investigation, where the company's data-security practices made patient records available over public file-sharing. The court held that qualified immunity protected all but the plainly incompetent or those who knowingly violate the law and, even if the attorneys sought to retaliate for the public criticism, their actions did not violate any clearly established right absent plausible allegations that their motive was the but-for cause of the Commission's enforcement action. Therefore, the court reversed the district court's denial of qualified immunity to the attorneys. View "Daugherty v. Sheer" on Justia Law
Soundboard Association v. FTC
SBA filed suit seeking to enjoin rescission of an informal opinion letter issued by the FTC (the 2016 Letter). The 2016 Letter stated that it was the FTC staff's opinion that telemarketing technology used by SBA's members was subject to the FTC's regulation of so-called "robocalls," and it announced the rescission of a 2009 FTC staff letter that had reached the opposite conclusion. The DC Circuit dismissed the complaint for failure to state claim and held that because the 2016 staff opinion letter did not constitute the consummation of the Commission's decisionmaking process by its own terms and under the FTC's regulations, it was not final agency action. Finally, SBA's speech claims were pleaded as Administrative Procedure claims under 5 U.S.C. 706(2)(B) and could not proceed without final agency action. View "Soundboard Association v. FTC" on Justia Law
United States v. Anthem
The court affirmed the issuance of a permanent injunction enjoining the merger of Anthem and Cigna under Section 7 of the Clayton Act, 15 U.S.C. 18. The court held that the district court did not abuse its discretion in enjoining the merger based on Anthem's failure to show the kind of extraordinary efficiencies necessary to offset the conceded anticompetitive effect of the merger in the fourteen Anthem states: the loss of Cigna, an innovative competitor in a highly concentrated market. The court also held that the district court did not abuse its discretion in enjoining the merger based on its separate and independent determination that the merger would have a substantial anticompetitive effect in the Richmond, Virginia large group employer market. View "United States v. Anthem" on Justia Law
Osborn v. Visa Inc.
Plaintiffs, users and operators of independent (non-bank) ATMs, filed related actions against Visa, MasterCard, and certain affiliated banks, alleging anticompetitive schemes for pricing ATM access fees. Plaintiffs alleged anticompetitive harm because Visa and MasterCard prevent an independent operator from charging less, and potentially earning more, when an ATM transaction is processed through a network unaffiliated with Visa and MasterCard. The court held that the district court erred in concluding that plaintiffs had failed to plead adequate facts to establish standing or the existence of a horizontal conspiracy to restrain trade under the Sherman Antitrust Act, 15 U.S.C. 1. Accordingly, the court vacated the district court's denial of plaintiff's motion to amend the judgment and remanded for further proceedings. View "Osborn v. Visa Inc." on Justia Law
Posted in: Antitrust & Trade Regulation
Pharmaceutical Research v. FTC
The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (Act), 15 U.S.C. 18a, added section 7A to the Clayton Antitrust Act of 1914, 15 U.S.C. 12 et seq., to establish notification and waiting requirements for large acquisitions and mergers. The principal purpose of the Act is to facilitate Government identification of mergers and acquisitions likely to violate federal antitrust laws before the proposed deals are consummated. In 2013, the FTC modified its reportable asset acquisition regulations to clarify that, even if patent holders retain limited manufacturing rights or co-rights, transfers of patent rights within the pharmaceutical industry constitute reportable asset acquisitions if all commercially significant rights are transferred. PhRMA filed suit challenging the FTC's Rule and the district court granted summary judgment in favor of the FTC. The court concluded that the Rule does not violate the plain terms of the Act; the court owes deference to the FTC because the contested rule embodies a permissible construction of the Act; and the Commission's action also survives review under the arbitrary and capricious standard. Because the FTC's action is supported by reasoned decisionmaking and PhRMA's claims are without merit, the court affirmed the judgment of the district court. View "Pharmaceutical Research v. FTC" on Justia Law
FTC v. Boehringer Ingelheim Pharm.
The FTC initiated an enforcement proceeding against Boehringer after the pharmaceutical company failed to comply with an administrative subpoena seeking various documents related to a settlement agreement between the company and Barr, a generic drug manufacturer. Boeringer subsequently certified compliance with the subpoena but withheld hundreds of responsive documents under the work product doctrine and the attorney-client privilege. Te court rejected the FTC's assertion that the district court erred as a matter of law when it concluded that settlement documents pertaining to a co-promotion agreement between Boehringer and Barr were prepared in anticipation of litigation. The court held that a settlement term may have independent economic value and still be considered part of a settlement for purposes of work product protection. The court also found that the district court reasonably concluded that the bulk of the contested co-promotion materials were prepared in anticipation of the Boehringer-Barr litigation, with a single exception pertaining to post-settlement documents. Therefore, the court generally affirmed the district court's finding on this issue but remanded for further consideration with respect to post-settlement documents. The court agreed with the FTC that the district court misapprehended the proper distinction between fact and opinion work product and reversed and remanded on this issue. View "FTC v. Boehringer Ingelheim Pharm." on Justia Law