Articles Posted in US Court of Appeals for the Second Circuit

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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

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Sleepyʹs purchased beds from the Select Comfort for resale in Sleepyʹs stores and suspected that Select Comfort was disparaging Sleepyʹs stores and the particular line of Select Comfort beds it sold. Sleepy’s sued, alleging slander per se, breach of contract, unfair competition, breach of the implied covenant of good faith and fair dealing, and the Lanham Act. After a bench trial, the district court dismissed. On remand, a different district judge entered a judgment for Select Comfort on the merits and concluded that attorneyʹs fees were warranted because the case was ʺexceptionalʺ under the Lanham Act. The Second Circuit vacated the dismissal of Sleepyʹs slander claims. That dismissal had been on the ground that the publication element cannot be met under New York law when the statement in question is only made to the plaintiffʹs representatives--”secret shoppers” sent into Select Comfort stores by Sleepy’s. The Second Circuit remanded for a determination of whether the plaintiff consented to the slanderous statements by engaging the secret shoppers. The district court was directed to apply the “Octane Fitness” standard for evaluating whether a Lanham Act claim is ʺexceptional.ʺ The district court erred by not sufficiently explaining or justifying the amount of the defendantsʹ attorneyʹs fees. View "Sleepy's LLC v. Select Comfort Wholesale Corp." on Justia Law

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Empire a distributor of alcoholic beverages, is New York State’s exclusive distributor for popular brands like Johnnie Walker, Grey Goose, and Seagram’s Gin. Empire alleges that from 2008-2014, Reliable and (non‐party) RNDC, among Maryland’s largest liquor distributors, conspired with retail liquor stores in Cecil County, Maryland and New York City to smuggle liquor from Maryland to New York, in violation of New York liquor law. Empire sued Reliable and several Cecil County and New York retailers under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961, alleging that their bootlegging directly harmed Empire “because every case of alcohol smuggled into New York from Maryland was a lost sale by New York’s authorized distributors.” The defendants argued that the smuggling operation did not directly cause Empire to lose sales and that Empire had not adequately alleged proximate cause under RICO. The district court dismissed the case. The Second Circuit affirmed. Empire failed to allege proximate cause adequately. Empire adequately alleged a smuggling scheme, satisfying the first element of wire fraud and satisfied the third element of wire fraud, alleging “dozens of specific wire communications allegedly made by defendants.” The Supreme Court, however, has suggested the need for skepticism “to claims brought by economic competitors” and New York State was a more direct victim of the smuggling operation. View "Empire Merchants, LLC v. Reliable Churchill, LLLP" on Justia Law