Justia Commercial Law Opinion Summaries

Articles Posted in Antitrust & Trade Regulation
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In 2017, Maryland enacted “An Act concerning Public Health – Essential Off-Patent or Generic Drugs – Price Gouging – Prohibition.” The Act, Md. Code, Health–General 2-802(a), prohibits manufacturers or wholesale distributors from “engag[ing] in price gouging in the sale of an essential off-patent or generic drug,” defines “price gouging” as “an unconscionable increase in the price of a prescription drug,” and “unconscionable increase” as “excessive and not justified by the cost of producing the drug or the cost of appropriate expansion of access to the drug to promote public health” that results in consumers having no meaningful choice about whether to purchase the drug at an excessive price due to the drug’s importance to their health and insufficient competition. The “essential” medications are “made available for sale in [Maryland]” and either appear on the Model List of Essential Medicines most recently adopted by the World Health Organization or are “designated . . . as an essential medicine due to [their] efficacy in treating a life-threatening health condition or a chronic health condition that substantially impairs an individual’s ability to engage in activities of daily living.” The Fourth Circuit reversed the dismissal of a “dormant commerce clause” challenge to the Act, finding that it directly regulates the price of transactions that occur outside Maryland. View "Association for Accessible Medicine v. Frosh" on Justia Law

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In this dispute between retailers and direct competitors in the gas station and convenience store market, the circuit court correctly determined that W. Va. Code 47-11A-6(a) does not include taxes in the calculation of a retailer’s cost under the West Virginia Unfair Practices Act.Plaintiff filed suit against Defendants alleging that Defendants had violated the Act by selling gasoline below cost. Both parties moved for summary judgment seeking a determination as to whether section 47-11A-6(a) includes taxes within the calculation of a retailer’s cost. The circuit court concluded that the calculation of a retailer’s cost does not include tax and awarded summary judgment to Defendants. The Supreme Court affirmed, holding that the statute does not include taxes in the calculation of a retailer’s cost. View "Alan Enterprizes LLC v. Mac's Convenience Stores LLC" on Justia Law

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Organik and Dow both manufacture opaque polymers, hollow spheres used as additives to increase paint’s opacity. Dow has maintained its worldwide market-leader position through a combination of patent and trade-secret protections. Dow filed a complaint with the International Trade Commission requesting an investigation into whether Organik’s opaque polymer products infringed four Dow patents. The Commission granted Dow’s request, and the parties began discovery. During the proceedings, Dow amended its complaint to add allegations of trade secret misappropriation when it discovered that Organik may have coordinated the production of its opaque polymers with the assistance of former Dow employees. As Dow attempted to obtain discovery relating to the activities of those employees, Dow discovered spoliation of evidence “on a staggering scale.” The Federal Circuit affirmed the Commission’s imposition of default judgment and entry of a limited exclusion order against Organik as sanctions for the spoliation of evidence. Organik’s “willful, bad faith misconduct” deprived Dow of its ability to pursue its trade secret misappropriation claim effectively. The record supports the limited exclusion order of 25 years with the opportunity for Organik to bypass that order at any time if it can show that it has developed its opaque polymers without using Dow’s misappropriated trade secrets. View "Organik Kimya v. International Trade Commission" on Justia Law

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Nearly ten years ago, U-Haul Co. of California (UHC) sued Robinson, one of UHC’s independent dealers, for breach of contract and unfair competition after he terminated their contract and began renting Budget trucks from the former UHC dealership. UHC alleged a covenant not to compete in its dealer contract prohibited Robinson from offering the products of UHC’s competitors while a Yellow Pages ad, running at UHC’s expense, was still promoting Robinson’s business. Robinson sought a judicial declaration that the covenant was void due to fraud in the inducement. After UHC lost its request for a preliminary injunction and dismissed its complaint, Robinson filed a separate action alleging malicious prosecution by UHC in the prior lawsuit and violation of Business and Professions Code section 17200, the unfair competition law (UCL). A jury awarded Robinson $195,000 in compensatory damages for malicious prosecution. The trial court issued a permanent injunction prohibiting U-Haul from initiating or threatening judicial proceedings to enforce the noncompetition covenant. It awarded Robinson $800,000 in attorney’s fees as a private attorney general on his UCL cause of action. The court of appeal affirmed, holding that the injunction was proper and the court did not abuse its discretion in allowing Robinson to file a late motion for attorney’s fees. View "Robinson v. U-Haul Co. of Cal." on Justia Law

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Limoliner Inc., which owned and operated a fleet of luxury motor coaches, hired Dattco, Inc. to perform repair work on one of those vehicles. While Dattco recorded most of those requests in writing, Dattco neglected to write down Limoliner’s verbal request to repair one of the vehicle’s important electrical components. When Dattco failed to make any repairs to that component, Limoliner commenced this action, alleging, inter alia, that Dattco violated Mass. Gen. Laws ch. 93A, 2(a), as interpreted by 940 Code Mass. Regs. 5.05(2), by failing to record Limoliner’s request in writing. Dattco removed the case to federal court on the basis of diversity jurisdiction. Following a jury-waived trial, a magistrate judge found for Dattco on Limoliner’s regulatory claim under 940 Code Mass. Regs. 5.05, concluding that the provision at issue applies only to consumer transactions and not to transactions where the customer is another business. Limoliner appealed, and the United States Court of Appeals for the First Circuit certified a question regarding the issue to the Supreme Court. The Supreme Court answered that 940 Code Mass. Regs. 5.05 does apply to transactions in which the customer is a business entity. View "Limoliner, Inc. v. Dattco, Inc." on Justia Law

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The defendant companies, based in China, produce conventional solar energy panels. Energy Conversion and other American manufacturers produce the newer thin-film panels. The Chinese producers sought greater market shares. They agreed to export more products to the U.S. and to sell them below cost. Several entities supported their endeavor. Suppliers provided discounts, a trade association facilitated cooperation, and the Chinese government provided below-cost financing. From 2008-2011, the average selling prices of their panels fell over 60%. American manufacturers consulted the Department of Commerce, which found that the Chinese firms had harmed American industry through illegal dumping and assessed substantial tariffs. The American manufacturers continued to suffer; more than 20 , including Energy Conversion, filed for bankruptcy or closed. Energy Conversion sued under the Sherman Act, 15 U.S.C. 1, and Michigan law, seeking $3 billion in treble damages, claiming that the Chinese companies had unlawfully conspired “to sell Chinese manufactured solar panels at unreasonably low or below cost prices . . . to destroy an American industry.” Because this allegation did not state that the Chinese companies could or would recoup their losses by charging monopoly prices after driving competitors from the field, the court dismissed the claim. The Sixth Circuit affirmed. Without such an allegation or any willingness to prove a reasonable prospect of recoupment, the court correctly rejected the claim. View "Energy Conversion Devices Liquidation Trust v. Trina Solar Ltd." on Justia Law

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Clorox decided to sell the largest-sized containers of its products only to discount warehouses such as Costco and Sam’s Club. Ordinary grocery stores, including Woodman’s, could only obtain smaller packages. Arguing that package size is a promotional service, Woodman’s sued Clorox for unlawful price discrimination under the Robinson-Patman Act, 15 U.S.C. 13(e). The district court denied Clorox’s motion to dismiss. On interlocutory appeal, the Seventh Circuit reversed. Only promotional “services or facilities” fall within subsection 13(e). Size alone is not enough to constitute a promotional service or facility for purposes of subsection 13(e); any discount that goes along with size must be analyzed under subsection 13(a). The convenience of the larger size is not a promotional service or facility. View "Woodman's Food Mkt, Inc. v. Clorox Co." on Justia Law

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In 2003, several class action lawsuits were filed against automobile manufacturers and trade associations, alleging antitrust conspiracy, Bus. & Prof. Code, 167201, and unfair business practices, Bus. & Prof. Code, 17200, on behalf of individuals who purchased or leased new vehicles in California within a certain time period. The lawsuits, which were eventually coordinated, alleged conspiracy to restrict the movement of lower-priced Canadian vehicles into the U.S. market, to avoid downward pressure on U.S. new vehicle prices. After years of litigation, the court granted summary judgment in favor of the two remaining defendants, Ford U.S. and Ford Canada, concluding that there was not sufficient evidence of an actual agreement among Ford and the other manufacturers to restrict the export of new vehicles from Canada to the U.S. The court of appeal affirmed with respect to Ford U.S., but concluded that the admissible evidence was sufficient to demonstrate a material factual issue as to whether Ford Canada participated in an illegal agreement to restrict the export of automobiles. The court noted an expert economic analysis indicating that the manufacturers would not have continued to restrict exports during the alleged conspiracy period absent an agreement that none of them would break ranks and reap the profits available in the export market; parallel conduct by the manufactures during the same period; and deposition testimony. View "In re: Auto. Antitrust Cases I and II" on Justia Law

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An Automated Maritime Telecommunications System (AMTS) is a U.S. communication service between land and vessels in navigable waterways, existing on specific broadcast frequencies. Advances in technology have greatly expanded the potential uses of AMTSs. Under the original site-based system, small geographic regions were defined by location and the waterway served and the FCC provided licenses at no cost to the first applicant. In 2000, the FCC stopped issuing site-based licenses and began issuing licenses by competitive bidding; it divided the U.S. into 10 regions and, at public auctions, sold “geographic” licenses for two blocks of AMTS frequencies in each region. Although geographic licensees may generally place stations anywhere within their region, they may not interfere with the functioning of existing site-based stations, so the location of a site-based station creates a gap in a geographic licensee’s coverage area. Plaintiffs obtained geographic licenses in areas overlaying pre-existing site-based licenses. Site-based operators refused to provide plaintiffs with the operating contours for their site-based locations within plaintiffs’ geographic locations. Plaintiffs filed suit, alleging violation of the Federal Communications Act and the Sherman Antitrust Act. The Third Circuit affirmed dismissal of the FCA claims and a determination that no antitrust conspiracy existed. Plaintiffs did not identify particular actions that were determined by the FCC to be unreasonable or unjust and, therefore, do not possess a private right of action. View "Havens v. Mobex Network Servs., LLC" on Justia Law

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Between 2001 and 2004, Nitek Electronics, Inc. entered thirty-six shipments of pipe fitting components used for gas meters into the United States from China. U.S. Customs and Border Protection (“Customs”) claimed that the merchandise was misclassified and issued Nitek a final penalty claim stating that the tentative culpability was gross negligence. Customs then referred the matter to the United States Department of Justice (“Government”) to bring a claim against Nitek in the Court of International Trade to enforce the penalty. The Government brought suit against Nitek to recover lost duties, antidumping duties, and a penalty based on negligence under 19 U.S.C. 1592. Nitek moved to dismiss the case for failure to state a claim. The court denied dismissal of the claims to recover lost duties and antidumping duties but did dismiss the Government’s claim for a penalty based on negligence, concluding that the Government had failed to exhaust all administrative remedies under 19 U.S.C. 1592 by not having Customs demand a penalty based on negligence, instead of gross negligence. The Federal Circuit affirmed, holding that the statutory framework of section 1592 does not allow the Government to bring a penalty claim based on negligence in court because such a claim did not exist at the administrative level. View "United States v. Nitek Elecs., Inc." on Justia Law