Overlawyered: Chronicling The High Cost Of Our Legal System

Posts Tagged ‘antitrust’

A Conspiracy of One

It’s good to be back at Overlawyered. For those of you not scarred by my prior guest-blogging stint, this is Skip Oliva, director of the anti-antitrust Voluntary Trade Council, regular co-blogger for the Mises Institute, and freelance paralegal-for-hire.

Since antitrust is my bread and butter, I’ll spend some time this week examining the impact of the four antitrust cases decided in the last Supreme Court term. I’ll also discuss some lesser-known antitrust cases that I’ve been following (and in some cases, directly participating in); and maybe I’ll even address some purely non-antitrust legal topics as well.

But let’s start with—you guessed it—an antitrust case. Last week the U.S. Third Circuit Court of Appeals decided Cosmetic Gallery, Inc. v. Schoeheman Corporation (download PDF), one of the first appellate decisions that relies on the Supreme Court’s May decision in Bell Atlantic v. Twombly. In Twombly, a 7-2 court held that a complaint alleging a conspiracy to restrain trade under Section 1 of the Sherman Act required more than “an allegation of parallel conduct and a bare assertion of conspiracy”; there must be “enough factual matter (taken as true) to suggest that an agreement was made.”

In the Third Circuit case, a New Jersey company that operates hair salons and retails related hair care products (Cosmetic Gallery) sued a Pennsylvania distributor of said products (Schoeneman). Specifically, the issue is “salon-only” products that are normally sold, as the name suggests, only through salons. Distributors like Schoeneman agree to manufacturers’ restrictions on the sale of these products to, according to the Third Circuit, “increase the cachet and prestige” of the products.

Read On…

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July 20 roundup

  • Despite seeming majority support in both houses, conference committee on the Hill drops protection against lawsuits for “John Does” who report suspicious security behavior to authorities [PowerLine, Malkin; see May 11, etc.]

  • U.K. town advises holders of allotment gardens: you could be liable if trespasser gets hurt vandalizing your trellises [Gloucestershire Echo; Cheltenham, Prestbury, etc.]

  • School groundskeeper fired for illiteracy sues under ADA; suit’s future may depend on whether he can allege underlying predisposition such as dyslexia [St. Louis Post-Dispatch, StLRecruiting]

  • Large Pakistan bank should pay for my husband’s murder, says Mariane Pearl in lawsuit [NYSun]

  • Tell it to the EEOC, bud: Pennsylvania survey of law firm “diversity” finds plaintiff’s firms lag well behind their business/defense counterparts when it comes to hiring minorities [Legal Intelligencer first and second pieces]

  • Spare a tear for Gov. Spitzer, never realized public life would be such a rough and tumble affair [Kirkendall]

  • Trail of bogus auto accidents and “runners” leads to West Orange, N.J. lawyer and his law firm, say prosecutors [NJLJ; related New Jersey report on insurance fraud, PDF]

  • I’m interviewed re: the Giuliani announcement [Paul Mirengoff @ PowerLine] and publicity in National Journal is nice too [Blog-O-Meter]

  • Two Australian grave owners sue for damages over loss of feng shui [Melbourne Age]

  • You have to let me use your bathroom, I’ve got a note from my doctor [Robert Guest on Texas legislation]

  • New at Point of Law: University of Alberta lawprof Moin Yahya is guestblogging this week on Conrad Black trial, extraterritoriality, antitrust, etc.

  • Quadriplegic sues Florida strip club under ADA because its lap dance room not wheelchair accessible [five years ago on Overlawyered]

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So few class-action antitrust trials

Although the New York attorney general had already extracted $3 million in penalties on the charges, a jury returned a defense verdict in a class-action suit charging that Macy’s and other department stores conspired to fix the price of high-end tableware. Plaintiffs admitted they had no direct evidence of a conspiracy and jurors in San Francisco federal court declined to infer one. Manufacturer/defendant Lenox had already paid $500,000 to be let out of the case.

What was truly unusual about the case, however, was that it went to trial at all, given the pressure to settle on defendants in such situations:

Antitrust attorneys say the verdict was remarkable if only because the case made it all the way to trial.

“In terms of a price-fixing class action going to trial, I honestly can’t think of one,” said James McGinnis, a partner at Sheppard, Mullin, Richter & Hampton, who briefly represented May Department Stores, one of the defendants, at an early stage in the case.

Usually, said lawyers on both sides of the bar, a combination of sky-high financial risks and the prospect of criminal prosecution is enough to encourage a settlement. Defense attorneys, for example, may not want to lay all their cards on the table in a civil case while prosecutors are watching.

(Matthew Hirsch, “Macy’s Beats Antitrust Price-Fix Rap”, The Recorder, Jul. 5).

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“The Microsoft of kickball”?

Apparently kickball isn’t just for elementary school students anymore: the website DCist reports that a lawsuit filed last February by the World Adult Kickball Association (“WAKA”) against rival adult kickball league (I’m having trouble reporting this without snickering) DC Kickball is still kicking around in the federal courts a year later.

The original complaint doesn’t appear to be online, but the Washington City Paper provided more details last year, including:

The complaint accuses DCKickball founder Carter Rabasa of copyright infringement for unauthorized use of WAKA’s co-ed kickball rules, including “the clearly unique requirement that there be 4 men AND 4 women at a minimum to play” and for mandating that “players must be at least 21 years old.” No other specific rules or intellectual-property thefts are mentioned, but the suit points out that David Fischer, a volunteer director for DCKickball, was previously a player for the WAKA team “Scoregasm.”

The suit also accuses Rabasa of defamation, based on his calling WAKA “the Microsoft of kickball” in a 2005 Washington City Paper story (“Kickball Wars,” Cheap Seats, 5/13) and his additional comments in a subsequent Wall Street Journal article. Those comments, the suit alleges, incited a kickballer to post “WAKA bites it” on the DCKickball Web site.

To the extent this represents the entire complaint (there also seems to be an unspecified trademark claim as well), it appears utterly meritless. You can’t copyright the rules of a game (although you can copyright the specific wording used), and in any case, neither of the rules cited sound particularly original. And “the Microsoft of kickball” may be insulting to a Macintosh fan, but is not defamatory. These hurdles don’t seem to faze WAKA, though; the company is suing its much smaller competitor for at least $350,000.

But WAKA is apparently very aggressive; it has reportedly sent out cease-and-desist letters to at least two other competitors, according to the City Paper article, accusing them of violating its intellectual property, trade secrets (!), and a non-compete clause (for an unpaid volunteer).

And since “turn the other cheek” is not one of the canons of legal ethics, DC Kickball has countersued for violations of federal and DC antitrust law.

Seriously, adults play kickball? Seriously?

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March 26 roundup

  • More fen-phen scandals: Possible smoking-gun email in Kentucky case (see Walter’s post today) came from Chesley firm computer; Vicksburg lawyer first attorney convicted in Mississippi fen-phen scam. [Courier-Journal via Lattman; Clarion-Ledger (h/t S.B.)] (Updated with correct Courier-Journal link.)
  • Allegheny College found not liable by jury for student’s suicide; school raised issue of student privacy concerns. Earlier on OL: May 30; Dec. 7, 2004. [WSJ]
  • Update on the tempered glass versus laminated issue earlier discussed in Overlawyered (Feb. 15, 2006; May 16, 2005; May 13, 2005, etc.) [LA Times]
  • Massachusetts court rejects quack sudden acceleration theory. (See also Dec. 20, Aug. 7, etc.) [Prince]
  • California bill would bar carpenters from school campuses. [Overcriminalized]
  • New book: Antitrust Consent Decrees in Theory and Practice [Richard Epstein @ AEI]
  • To be fair, I went to school with “young Mr Sussman, the boyish charmer”, and I don’t know how to pronounce “calumnies” either—it’s one of those words I’ve only seen written, and never heard spoken [Steyn; MSNBC]

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February 26 roundup

  • High-school basketball player gets TRO over enforcement of technical foul after pushing referee. [Huntington News; Chad @ WaPo]

  • Madison County court rejects Vioxx litigation tourism. [Point of Law]

  • Faking disability for accommodation disqualifies bar applicant [Frisch]

  • DOJ antitrust enforcement doesn’t seem to be consistent with U.S. trade policy position. [Cafe Hayek]

  • Professor falsely accused of sexual harassment wins defamation lawsuit against former plaintiff, but too late to save his job. [Kirkendall]

  • Watch what you say dept.: Disbarred attorney and ex-felon sues newspaper, letter-to-editor writer, Illinois Civil Justice League. (His brother won the judicial election anyway.) [Madison County Record; Belleville News Democrat; US v. Amiel Cueto]

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Author: Penguin tagged my book as “black interest”

Many large bookstores carry sections devoted to works of African-American interest, and a number of book clubs and other specialized selling channels do a thriving business by specializing in black themes and authors. In October, however, Florida-based author Nadine Aldred, who writes under the pen name “Millennia Black“, filed a pro se lawsuit in federal court in Manhattan against her publisher, Penguin Group, on the grounds that Penguin (she alleges) insisted on steering her work into black-interest channels although she would rather have been marketed as a general-interest author. On the Wrong Side of the Alligator has reprinted excerpts from the complaint (Jan. 6).

The estimation of whether a particular author’s work will sell better if marketed to a niche or to a more general audience is inescapably going to depend on case-by-case judgment (assuming that marketing dollars and available cues of cover design, etc. are limited and cannot be dispatched in both directions at once). It is not immediately apparent why Penguin would not have an interest in taking a path that maximized its author’s sales. Aldred’s suit asks $250 million. See also Jeffrey A. Trachtenberg, “Why book industry sees the world split still by race”, Wall Street Journal/Pittsburgh Post-Gazette, Dec. 6.

P.S. Disclosure, for whatever it’s worth: Penguin was my publisher on my first book (The Litigation Explosion).

More: Charles E. Petit of Scrivener’s Error writes to say:

The real problem in this instance is not with Penguin. The real problem is an antitrust nightmare: the book distribution system, which is probably the paradigmatic example of “one man’s antitrust is another man’s economy of scale”–at least until you look into the financing and terms of doing business, which makes me ask “What economies of scale?” The _distributors_ are the ones who demand “pigeonholing” of books, and Penguin’s best defense will be to point out that books that are released _without_ a category tend to stay in distributors’ warehouses unshipped. In other words, “We had to put _some_ category on it as a business necessity, and this is the one that in our commercial judgment was the best fit.”

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Rambus, Antitrust & the Common Law

In the next few weeks, the FTC is expected to issue a final order in its five-year case against Rambus Inc., a California-based developer of memory technology. Rambus has proven to be the longest and possibly costliest litigation in FTC history. The FTC’s trial costs alone approached $3 million, with over $1 million going to “expert” witnesses and consultants.

The Rambus case started as a patent infringement dispute between the company and several memory manufacturers. Rambus doesn’t produce any memory itself; it develops and patents technologies and licenses them to manufacturers. During the mid-1990s, Rambus participated in a memory standard-setting group, JEDEC, and this is where the trouble began. The manufacturers claim Rambus misled JEDEC into incorporating Rambus patents into certain memory standards. Rambus said it was denied permission to present its technologies for standardization and that JEDEC members simply infringed Rambus’s patents.

Read On…

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FTC snares doctors in price fixing trap

The Federal Trade Commission ended its year by prosecuting a 1,900-member physician group in Chicago for price-fixing. Since 2001, the FTC and DOJ have coerced 29 physician groups—some with as few as six members—into signing consent orders that restrict the right of doctors to negotiate contracts.

The FTC and DOJ apply a double standard to doctors and third-party payers. Payers may represent thousands of individual consumers and present doctors with a “take it or leave it” contract offer. But if even a handful of doctors get together to present a counter-offer, it’s a “per se” antitrust violation.

Read On…

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