Justia Commercial Law Opinion Summaries

Articles Posted in Antitrust & Trade Regulation
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Septic systems comprise a septic tank that isolates and contains the sewage; the remaining wastewater flows through a drain field, where microorganisms treat it. Customers have two options for private septic systems—aerobic treatment units (contained systems), or soil-based/open-bottom treatment systems (T&D systems). Geomatrix markets and sells a T&D system, while many of its competitors sell contained systems.Since 1970, NSF has offered certification for the wastewater treatment industry, A manufacturer needs to obtain certification before marketing products in at least 37 states. This standard is developed through a voluntary consensus process, overseen by a joint committee staffed by NSF employees, state regulatory officers, industry manufacturers, and consumers. Geomatrix obtained certification. Geomatrix alleges that competitors then began conspiring against T&D systems, questioning whether T&D systems should be entitled to certification and disparaging the efficacy of T&D systems. The alleged conspiracy affected Geomatrix’s business by preventing it from obtaining state regulatory approval, although its certification should have made it possible to do so. Ultimately, Geomatrix withdrew its NSF certification. NSF has not adopted a new standard; discussions remain ongoing.Geomatrix filed suit, alleging violations of the Sherman Act and the Lanham Act. The Sixth Circuit affirmed the dismissal of the suit. The defendants’ petitioning activity was immunized under the Noerr-Pennington doctrine. Geomatrix failed to show the proximate cause required for its unfair competition claims, and its promissory estoppel claims were based on statements that did not state a sufficiently definite promise. View "Geomatrix, LLC v. NSF International" on Justia Law

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Legacy, a small family-owned business, provides nonemergency ambulance services in several Ohio counties that border Kentucky. After receiving many inquiries from Kentucky hospitals and nursing homes, Legacy sought to expand into the Commonwealth. Kentucky required Legacy to apply for a “certificate of need” with the Kentucky Cabinet for Health and Family Services. Existing ambulance providers objected to Legacy’s request. The Cabinet denied Legacy’s application partly on the ground that these providers offered an adequate supply. Legacy sued, alleging that Kentucky’s certificate-of-need law violated the “dormant” or “negative” part of the Commerce Clause.The district court granted the defendants summary judgment. The Sixth Circuit affirmed with respect to Legacy’s request to offer intrastate ambulance transportation in Kentucky. Under the modern approach to the dormant Commerce Clause, a law’s validity largely depends on whether it discriminates against out-of-state businesses in favor of in-state ones. Legacy’s evidence suggests that the state’s limits will harm Kentucky’s own “consumers.” It has not shown a “substantial harm” to interstate commerce. The court reversed with respect to Legacy’s request to offer interstate ambulance transportation between Kentucky and Ohio. States may not deny a common carrier a license to provide interstate transportation on the ground that the interstate market contains an “adequate” supply. The bright-line rule barring states from obstructing interstate “competition” does require a finding that a state has discriminated against out-of-state entities. View "Truesdell v. Friedlander" on Justia Law

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Consolidated suits claimed that many firms in the broiler-chicken business formed a cartel. Third-party discovery in that ongoing suit turned up evidence that Rabobank, a lender to several broiler-chicken producers, urged at least two of them to cut production. Some plaintiffs added Rabobank as an additional defendant.The Seventh Circuit affirmed the dismissal of those claims. The Sherman Act, 15 U.S.C. 1, bans combinations and conspiracies in restraint of trade and does not reach unilateral action. Here, all the plaintiffs allege is that Rabobank tried to protect its interests through unilateral action. The complaint does not allege that Rabobank served as a conduit for the producers’ agreement, helped them coordinate their production and catch cheaters, or even knew that the producers were coordinating among themselves. A flurry of emails among managers and other employees at Rabobank observing that lower output and higher prices in the broiler-chicken market would improve the bank’s chance of collecting its loans and a pair of emails from the head of Rabobank’s poultry-lending section, to executives at two producers indicated nothing but unilateral action. The intra-Rabobank emails could not have promoted or facilitated cooperation among producers and the two messages only reminded the producers that as long as demand curves slope downward, lower output implies higher prices. Advice differs from agreement. View "Amory Investments LLC v. Utrecht-America Holdings, Inc." on Justia Law

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Imperial Sugar went bankrupt in 2001 and suffered a costly accident in 2008, prompting its sale to Louis Dreyfus. Imperial receives from Louis Dreyfus only minimal investment and is an “import-based, price-uncompetitive sugar refinery” that is “structurally uncompetitive” and lost roughly 10 percent of its customers from 2021-2022. Florida-based refiner U.S. Sugar agreed to purchase Imperial. The government sought an injunction (Clayton Act. 15 U.S.C. 18), arguing that the acquisition would have anticompetitive effects, leaving only two entities in control of 75% of refined sugar sales in the southeastern United States. The government applied the hypothetical monopolist test to demonstrate the validity of its proposed product and geographic markets. U.S. Sugar responded that it does not sell its own sugar but participates with other producers in a Capper-Volstead agricultural cooperative that markets and sells the firms’ output collectively but exercises no control over the quantities produced. At capacity, Imperial’s facility could produce only about seven percent of national output. U.S. Sugar argued that distributors constitute a crucial competitive check on producer-refiners that would undermine any attempt to increase prices and noted evidence of the high mobility of refined sugar throughout the country.The Third Circuit affirmed the denial of an injunction, upholding a finding that the government overlooked the pro-competitive effects of distributors in the market, erroneously lumped together heterogeneous wholesale customers, and defined the relevant geographic market without regard for the high mobility of sugar throughout the country. View "United States v. United States Sugar Corp." on Justia Law

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The Supreme Court granted a writ of prohibition sought by Thornhill Motor Care, Inc. to prevent the Circuit Court of Mingo County from enforcing its order denying Petitioner's motion to dismiss based on improper venue, holding that Thornhill established that it was entitled to the writ.Moore Chrysler, Inc. brought this action against Thornhill in Mingo County, alleging violations of W. Va. Code 17A-6A-1 to -18 and seeking declaratory and injunctive relief. Thornhill moved to dismiss the complaint pursuant to W. Va. R. Civ. P. 12(b)(3) on the basis of improper venue, asserting that the proper venue for this lawsuit was in Logan County pursuant to the general venue statute, W. Va. Code 56-1-1. The circuit court denied the motion, basing its ruling on a specific venue statute, W. Va. Code 17A-6A-12(3), which governs declaratory judgment actions brought by new motor vehicle dealers against manufacturers or distributors. Thornhill then sought the writ of prohibition at issue. The Supreme Court granted the writ, holding that the circuit court committed clear legal error in applying section 17A-6A-12(3) rather than section 56-1-1. View "Thornhill Motor Car, Inc. v. Honorable Miki Thompson" on Justia Law

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The San Francisco Examiner sued the San Francisco Chronicle, claiming that the defendant sold a certain type of print advertising in the Chronicle at prices that violated California’s Unfair Practices Act (UPA, Bus. & Prof. Code, 17000) and Unfair Competition Law (UCL, 17200). The trial court granted the defendant summary judgment. The court of appeal affirmed. The trial court properly rejected the claim of below-cost sales under the UPA after excluding the opinion of the plaintiff’s expert on costs. The plaintiff had disclaimed reliance on specific transactions to prove the Chronicle’s alleged underpricing of its print advertising, leaving only the aggregate cost analysis prepared by that expert to establish the occurrence of alleged below-cost sales. The plaintiff’s expert lacked the foundational knowledge to conduct the requisite cost analysis and based his analysis on another individual’s non-UPA-related pricing analysis without understanding its foundations, such as some of the included cost components. Summary judgment was proper as to the claim for unlawful use or sale of loss leaders under the UPA because the plaintiff failed to identify the loss leader sales on which this claim was based. The trial court did not err in granting summary judgment on the causes of action for secret and unearned discounts under the UPA. View "San Francisco Print Media Co. v. The Hearst Corp." on Justia Law

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The Supreme Court affirmed the decision of the court of appeals affirming the circuit court's dismissal of Chris Hinrichs and Autovation Limited's (collectively, Hinrichs) common law misrepresentation claims against the DOW Chemical Company and reversing the circuit court's dismissal of Hinrichs' statutory claim under Wis. Stat. 100.18, holding that the court of appeals did not err.Specifically, the Supreme Court held that, with regard to Hinrichs' common law claims, neither the "fraud in the inducement" exception nor the "other property exception" to the economic loss doctrine applied to allow Hinrichs' common law claims to go forward. With regard to Hinrichs' statutory claims the Court held (1) the economic loss doctrine does not serve as a bar to claims made under section 100.18; (2) because one person can be "the public" for purposes of section 100.18(1), the court of appeals did not err in determining that dismissal for failure to meet "the public" factor of the section 100.18 claim was in error; and (3) the heightened pleading standard for claims of fraud does not apply to claims made under section 100.18 and that Hinrichs' complaint stated a claim under the general pleading standard. View "Hinrichs v. DOW Chemical Co." on Justia Law

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Spartan, which operated on St. Croix, sought to displace Heavy Materials as the sole provider of ready-mix concrete on St. Thomas. Upon entering the St. Thomas market, Spartan started a price war that caused financial losses to Spartan while Heavy Materials retained its dominant position. After three years of fierce competition, the companies reached a truce: Spartan agreed to sell on St. Croix while Heavy Materials would keep selling on St. Thomas. Spartan then sued Argos, a bulk cement vendor, alleging violations of the Robinson-Patman Act, 15 U.S.C. 13(a), by giving Heavy Materials a 10 percent volume discount during the price war. The district court entered judgment for Argos and denied Spartan leave to amend its complaint to include two tort claims, finding undue delay and prejudice. The Third Circuit affirmed. Although Argos gave Heavy Materials alone a 10 percent volume discount on concrete, Spartan presented no evidence linking this discount to its inability to compete in the St. Thomas market. Spartan did compete with Heavy Materials for three years and not only lowered its retail prices, but also began a price war and achieved a nearly 30 percent share of the St. Thomas retail ready-mix concrete market. View "Spartan Concrete Products LLC v. Argos USVI Corp." on Justia Law

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Apple sells iPhone applications (apps) directly to iPhone owners through its App Store—the only place where iPhone owners may lawfully buy apps. Most apps are created by independent developers under contracts with Apple. Apple charges the developers a $99 annual membership fee, allows them to set the retail price of the apps, and charges a 30% commission on every app sale. Four iPhone owners sued, alleging that Apple has unlawfully monopolized the aftermarket for iPhone apps. The Ninth Circuit reversed the dismissal of the suit concluding that the owners were direct purchasers under the Supreme Court’s “Illinois Brick” precedent.The Supreme Court affirmed. The Clayton Act provides that “any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue,” 15 U.S.C. 15(a), and readily covers consumers who purchase goods or services at higher-than-competitive prices from an allegedly monopolistic retailer. While indirect purchasers who are two or more steps removed from the violator in a distribution chain may not sue, the iPhone owners are not consumers at the bottom of a vertical distribution chain who are attempting to sue manufacturers at the top of the chain. The absence of an intermediary in the distribution chain between Apple and the consumer is dispositive. The Court rejected an argument that Illinois Brick allows consumers to sue only the party who sets the retail price. Apple’s interpretation would contradict the long-standing goal of effective private enforcement and consumer protection in antitrust cases. Illinois Brick is not a get-out-of-court-free card for monopolistic retailers any time that a damages calculation might be complicated. View "Apple, Inc. v. Pepper" on Justia Law

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Total Wine challenged provisions of Connecticut’s Liquor Control Act and regulations as preempted by the Sherman Act, 15 U.S.C. 1. Connecticut’s “post and hold” provisions require state-licensed manufacturers, wholesalers, and out-of-state permittees to post a “bottle price” or “can price” and a “case price” each month with the Department of Consumer Protection for each alcoholic product that the wholesaler intends to sell during the following month; they may “amend” their posted prices to “match” competitors’ lower prices but are obligated to “hold” their prices at the posted price (amended or not) for a month. Connecticut’s minimum-retail-price provisions require that retailers sell to customers at or above a statutorily defined “[c]ost,” which is not defined as the retailer’s actual cost. The post-and-hold number supplies the central component of “[c]ost” and largely dictates the price at which Connecticut retailers must sell their alcoholic products. The Second Circuit affirmed dismissal of the complaint. Connecticut’s minimum-retail-price provisions, compelling only vertical pricing arrangements among private actors, are not preempted. The post-and-hold provisions were not preempted because they “do not compel any agreement” among wholesalers, but only individual action. The court also upheld a price discrimination prohibition as falling outside the scope of the Sherman Act. View "Connecticut Fine Wine and Spirits LLC v. Seagull" on Justia Law