Shopping mall giant Simon Property Group, Inc. on Friday asked a federal court in Indiana to dismiss antitrust claims brought by competitor Gumwood HP Shopping Partners, claiming that a magistrate judge misapplied federal antitrust law in recommending that Simon’s motion to dismiss be denied.

Simon claims that Magistrate Judge Christopher A. Nuechterlein of the U.S. District Court for the Northern District of Indiana erred in finding that Gumwood had sufficiently pled that Simon had “partially excluded” it from the shopping center market in Mishawaka, Indiana, in violation of the Sherman Act.  Simon is now asking presiding Judge Jon E. DeGuilio to toss the complaint.

Gumwood’s complaint in Gumwood HP Shopping Partners LP v. Simon Property Group Inc. alleges that Simon, the largest public real estate company in the United States, and a major force in shopping malls, violated the Sherman Act’s prohibitions against monopolization and unreasonable restraints of trade.   According to the complaint, which was filed in June 2011, Simon used threats, bullying and other “anti-competitive tactics” against tenants to stop them from leasing space from competitors such as Gumwood.

Gumwood alleges that Simon interfered with Gumwood’s negotiations with retail tenant Ann Taylor LOFT by pressuring Ann Taylor not to open its store at Heritage Square, Gumwood’s one mall.  Gumwood alleges that this interference caused multiple tenants to cease their dealings with Heritage Square.  Gumwood further alleges that Simon Property engaged in false representations and other anticompetitive tactics with other actual and potential Heritage Square tenants including Layne Bryant, Coldwater Creek, Eddie Bauer, and Acorn.

Simon argues that the Sherman Act claims should be dismissed because Gumwood failed to allege a relevant product market, substantial market foreclosure, competitive harm, or anticompetitive conduct.

Magistrate Judge Nuechterlein was not persuaded by Simon’s arguments, and concluded that Gumwood properly alleged that Simon’s actions restrained trade in retail shopping centers by inducing retail tenants to cease business dealings with Simon’s competitor.  As a result, Magistrate Judge Nuechterlein decided that Gumwood had properly pled claims under sections 1 and 2 of the Sherman Act, and recommended that Simon’s motion to dismiss be denied.

Pool Corp., the largest distributor of swimming pool supplies in the U.S., has filed a motion in the U.S. District Court for the Eastern District of Louisiana to dismiss class action antitrust claims, arguing that the complaint fails to state a claim.

Plaintiffs allege that Pool Corp. entered into illegal agreements with three different manufacturers: Pentair Water Pool and Spa, Hayward Industries, and Zodiac Pool Systems. These agreements were allegedly designed to keep new distributors of swimming pool supplies from entering the market.

Pool Corp. is seeking to dismiss the claims of two different purported classes – direct purchasers (such as pool supply stores, golf courses and hotels) and indirect purchasers. The plaintiffs allege that Pool Corp. sought to suppress competition by buying out 13 competitors in five regions of the U.S. over the course of 14 years, and that new pool supply distributors closed at a rate of 40 percent because of Pool Corp.’s dominance.

The motion to dismiss is partially based on the fact that similar complaints of anticompetitive conduct were already investigated and resolved by the Federal Trade Commission in November 2011. Pool Corp. settled the investigation and agreed to FTC recommendations, including training staff members about antitrust laws.

FTC Commissioner J. Thomas Rosch had argued the FTC investigation should have been closed due to a lack of evidence that the Pool Corp.’s actions actually harmed competitors or consumers.

In addition to relying on its settlement of the FTC investigation, Pool Corp. argues that the case should be dismissed because the plaintiffs fail to satisfy the elements of a claim under Section 1 of the Sherman Act. According to Pool Corp., the plaintiffs failed to adequately allege that the agreements with the manufacturers existed or that these agreements were made with the specific goal of restricting trade.

Pool Corp. also asked the Court to consider whether or not “nationwide” is a specific enough geographic market to support a monopolization claim.

As the United States continues to process the Supreme Court’s opinion on the constitutionality of the Affordable Care Act, the Court has accepted another important case in the health care industry. 

The Supreme Court has granted the FTC’s petition challenging a hospital merger in Federal Trade Commission v. Phoebe Putney Health System, Inc.  Antitrust practitioners are closely following the case because the decision could provide valuable guidance on the boundaries of state action immunity in antitrust cases.  

As described in a previous Antitrust Today post, the FTC brought a federal action in April 2011 to preliminarily enjoin this hospital merger in Georgia.  The terms of the merger are somewhat complicated: Phoebe Putney Health System, Inc. (“PPHS”) announced a plan to have a political subdivision, the Hospital Authority of Albany-Dougherty County (“Hospital Authority”), use its general corporate powers to acquire Palmyra Park Hospital, Inc. (“Palmyra”) and lease Palmyra’s assets to PPHS or one of its subsidiaries.  

The FTC claims that the acquisition is practically a “merger to monopoly” that threatens harm to competition.  Defendants argue that the statutory authorization and the involvement of the Hospital Authority triggered the state-action doctrine, which immunized the plan from antitrust scrutiny.  The FTC counters by arguing that the Hospital Authority is merely a strawman that was included solely for the purpose of immunizing the transaction from antitrust scrutiny.  The U.S. District Court for the Middle District of Georgia and the Eleventh Circuit Court of Appeals sided with the defendants.  Now the FTC gets to take its case to the Supreme Court. 

The Supreme Court will consider two specific questions raised by the FTC: (1) “Whether the Georgia legislature, by vesting the [Hospital Authority] with general corporate powers to acquire and lease out hospitals and other property, has ‘clearly articulated and affirmatively expressed’ a ‘state policy to displace competition’ in the market for hospital services,” and (2) “Whether such a state policy, even if clearly articulated, would be sufficient to validate the anticompetitive conduct in this case, given that the [Hospital Authority] neither actively participated in negotiating the terms of the hospital sale nor has any practical means of overseeing the hospital’s operation.” click here for more »

Football players’ antitrust claims that the National Football League (“NFL”) and teams conspired to deprive them of their rights to football game footage are being kicked out of court after a federal judge found that the plaintiffs had failed to come within the Supreme Court’s holding in American Needle, Inc. v. National Football League, 130 S. Ct. 2201 (2010).

Judge Paul A. Magnusen of the U.S. District Court for the District of Minnesota has dismissed with prejudice a putative class action antitrust lawsuit brought in Washington v. National Football League by retired NFL players against the NFL, NFL Ventures, L.P., NFL Productions, LLC, NFL Enterprises, LLC, and each of the 32 NFL teams.

The plaintiffs, former professional athletes seeking to represent a class of similarly situated individuals, alleged that the defendants monopolized the market for former players’ images and likenesses in violation of the Sherman Act by not allowing them the rights to films and images from their games.

The court found that the plaintiffs’ claims failed to come within the holding of American Needle that the NFL and its teams might, in some instances, be capable of concerted action in violation of the Sherman Act.

Specifically, Judge Magnusen found that American Needle does not support plaintiffs’ contentions because that Supreme Court decision involved intellectual property that each team owned individually.  By contrast, the intellectual property involved in this case is historical football game footage – something that the individual teams do not separately own.  Judge Magnusen found this distinction dispositive on the ground that the NFL and its teams could not be considered to have conspired with respect to property that the teams and the NFL collectively owned.

The court concluded that the plaintiffs failed to plausibly allege any antitrust violation from defendants’ conduct.  Judge Magnusen stated that “[i]f the NFL is refusing to pay Plaintiffs for the use of their images in its copyrighted material, then Plaintiffs may have a claim for a violation of their right of publicity.… What they have are claims for royalties, not claims for antitrust.  The Complaint is therefore dismissed with prejudice.”

A federal judge in the Northern District of California has dismissed an antitrust complaint against SanDisk Corporation, the dominant maker of computer flash memory.

In the suit, PNY Technologies, Inc. v. SanDisk Corporation, downstream competitor PNY alleged that SanDisk violated Sections1 and 2 of the Sherman Act through licensing practices of its extensive patent portfolio.

According to the complaint, SanDisk owns more than 1,400 U.S. patents, covering 100% of the technology used to manufacture or assemble flash memory – such that every single firm in the industry must pay royalties to SanDisk or face litigation.  The complaint alleged that SanDisk exploited its robust portfolio by coercing competitors to enter licensing agreements which required licensees to:

* Pay multiple royalties on the same product as it is sold along the distribution chain;

* Pay royalties on worldwide sales, regardless of whether SanDisk had patent rights;

* License a full patent portfolio, rather than specific individual patents; and

* Grant back to SanDisk a worldwide, royalty-free license to any of the licensee’s future technological innovations related to flash memory.

Judge Yvonne Gonzalez Rogers pointed to the “tension” between the legitimate rights of patent holders and ruled that the complaint failed to sufficiently explain how SanDisk dominated the market.  While granting leave to amend the complaint, the court pointed to the “overarching inadequacy” of the allegations that failed to “distinguish[] between and among the various markets and causes of action,” and the failure “at its most basic level” to relate alleged anticompetitive conduct to the “legally obtained monopoly of the patented technology.”

While the court accepted that PNY had adequately alleged monopoly power and barriers to entry in the upstream market for flash memory, the complaint failed to allege monopoly power in the downstream markets.  The court concluded that SanDisk’s power to extract a royalty on the same patented technology on all downstream market sales did not establish that SanDisk has the power to control downstream prices or competitors.

The court also found that PNY had not alleged anticompetitive conduct in the relevant markets.  As to the technology market, the complaint did not allege any willful acquisition of a monopoly.  With respect to the other downstream markets, the complaint failed to allege that SanDisk was demanding “double royalties,” as opposed to collecting separate royalties for separate patents.  And the grantback provision was not clearly anticompetitive, because PNY did not allege that the provision in fact stifled innovation.

The dismissal followed the unsealing earlier in the month of a federal court decision in the Western District of Wisconsin dismissing nearly identical claims against SanDisk after a full bench trial on the merits.  That case involved antitrust counterclaims asserted by Kingston Technologies in response to an infringement suit brought by SanDisk.  Rejecting Kingston’s claims that SanDisk’s patent licensing protocol was unfair and anticompetitive, Judge Barbara Crabb found that Kingston failed to prove “that the challenged licensing terms would have an adverse effect upon the market for USB flash drives in the United States.”