In Tesla, Inc. v. Louisiana Automobile Dealers Assoc., the Fifth Circuit addressed Tesla’s challenges to Louisiana’s automobile dealership regulations, which prohibit manufacturers from selling directly to consumers and performing warranty services for cars they do not own.

• Due Process. The Court found that Tesla had plausibly alleged a due process violation. The Commission’s composition, with members who are direct competitors of Tesla, created a “possible personal interest” that could bias their decisions, which was sufficient for the Rule 12 stage.
• Antitrust. From there, the Court vacated and remanded the dismissal of Tesla’s antitrust claim, noting that the due process ruling fundamentally altered the grounds on which Tesla’s alleged antitrust injury was based. Tesla’s allegations of exclusion from the market due to the Commission’s actions could constitute a plausible antitrust injury.
• Equal Protection. The Court affirmed dismissal of Tesla’s equal protection claim, concluding that preventing vertical integration and potential abuses of market power were legitimate state interests justifying the regulations.

A dissent saw matters differently, focusing primarily on the due-process claim and its reliance on board structure. No. 23-30480, August 26, 2024.

Illumina, Inc. v. FTC provides a comprehensive review of every aspect of an FTC antitrust decision about a merger:

To sum up, Illumina’s constitutional challenges to the FTC’s authority are foreclosed by binding Supreme Court precedent, and substantial evidence supported the Commission’s conclusions that (1) the relevant market is the market for the research, development, and commercialization of MCED tests in the United States; (2) Complaint Counsel carried its initial burden of showing that the Illumina-Grail merger is likely to substantially lessen competition in that market under either the ability-and-incentive test or looking to the Brown Shoe factors; and (3) Illumina had not identified cognizable efficiencies to rebut the anticompetitive effects of the merger. However, in considering the Open Offer, the Commission used a standard that was incompatible with the plain language of the Clayton Act. 

No. 23-60167 (Dec. 15, 2023). The “Open Offer” issue involved a dispute about precisely where an agreement, entered to stave off competition-based challenges to this merger, should be considered in the context of the relevant burdens of proof.

New England Construction complained that large lumber companies monopolized the wood-products marked during the COVID-19 pandemic. Unfortunately for its claim, however, it only purchased the defendants’ lumber through intermediates (Lowes, Home Depot, etc.). It thus had no standing under the Illinois Brick line of authority, and the Fifth Circuit affirmed the dismissal of its claims. New England Construction, LLC v. Weyerhaeuser Co., No. 22-60329 (March 8, 2023) (unpublished).

In BRFHH Shreveport, LLC v. Willis-Knighton Medical Center, the Fifth Circuit affirmed the dismissal of antitrust claims when:

• As to the plaintiff’s theory of a “threat-and-accession” agreement in violation of section 1 of the Sherman Act, “[t]he problem is that LSU had a completely independent reason for refusing to cooperate with BRF, which predated any alleged coercion by Willis-Knighton. Specifically, LSU issued a notice of breach to BRF in 2015--the year before LSU’s cash crunch and Willis-Knighton’s alleged coercion.” (emphasis in original).
• And as to the related monopolization claim under section 2, the relevant allegations “are little more than high-level assertions about how wonderful things would be if Willis-Knighton hadn’t formed an exclusive-dealing relationship with LSU … [T]hey are miles away from plausibly alleging that Willis-Knighton came close to substantially foreclosing the Shreveport healthcare market.”

No. 21-30622 (Sept. 19, 2022).

An antitrust case about the interrelated fees charged for the use of a debit network led to a detailed analysis of antitrust injury; in particular, the Court held as to one of the plaintiff’s claims:

Under Pulse’s theory, it doesn’t lose customers to Visa in a fair fight over per transaction fees. Rather, Pulse loses customers because Visa abuses its dominance in the debit card market. Merchants have no choice but to pay Visa’s high fixed monthly fee. They recoup that expense by routing more transactions through Visa’s network, which charges lower per-transaction fees than competitors. But Visa can achieve that only by leveraging the upfront fees to artificially deflate its per-transaction fees. We must assume this pricing structure violates the antitrust laws. When we do, the link between Pulse’s injury and Visa’s alleged anticompetitive conduct becomes plain. Pulse is squeezed out of the market because Visa exploits its dominance to impose supracompetitive prices on merchants and simultaneously undercut competitors’ per-transaction fees. That is textbook antitrust injury.

Pulse Network v. Visa, No. 18-20669 (April 5, 2022) (citation omitted, emphasis added). (The case has also drawn attention for its other holding that reassigned the matter to a different district judge on remand).

The plaintiffs in Quadvest LP v. San Jacinto River Auth. alleged that a state-created river authority violated Section 1 of the Sherman Act by unreasonably restraining the market for wholesale raw water in Montgomery County. Procedurally, the Fifth Circuit concluded that the denial of the authority’s motion to dismiss on immunity grounds was appealable under Circuit precedent (acknowledging that the Fifth Circuit is an outlier on this point). Substantively, the Court affirmed the denial of the authority’s motion “at this stage” of the case, concluding that “the Texas Legislature did not authorize [the authority’s] entry into and enforcement of the challenged [contract] provisions with the intent to displace competition in the market for wholesale raw water in Montgomery County.” No. 20-20447 (August 5, 2021).

Confronted with the impossibly tangled Gordian Knot, Alexander the Great famously sliced it in half with his sword (right). Confronted with a “counterintuitive flow of money” in the complex intersection between pharmaceutical patents and the antitrust laws, in the Fifth Circuit affirmed the outcome of an FTC proceeding on the narrowest available ground in Impax Labs v. FTC, No. 19-60394 (April 13, 2021). The case arose from the settlement of a patent case between a brand-drug manufacturer and a generic drug maker, which presented these considerations about competition:

• The legal monopoly created by the brand-drug maker’s patent, and the challenge to it posed by the patent dispute;
• The framework established by the Hatch-Waxman Act for FDA approval of a generic drug, which has the practical effect of shifting all of the generic maker’s products into the first six months of manufacture;
• The settlement of the patent dispute by lengthening the brand-drug maker’s monopoly in exchange for consideration given to the the generic manufacturer (which in turn, potentially worsens the approval “bottleneck” created by the Hatch-Waxman Act);
• The pro-competitive effect of ending a patent monopoly earlier than it might otherwise have ended;
• Whether certain pro-competitive features of the parties’ settlement had a “nexus” to the above payments.

The FTC concluded that these factors made the settlement anticompetitive, and also concluded that the parties had a “less restrictive alternative” available that would have avoided these issues. The Fifth Circuit affirmed on the less-restrictive-alternative ground, finding it supported by “[t]hree evidentiary legs–industry practice, credibility determinations about settlement negotiations, and economic analysis ….”

Shah sued about the alleged monopolization of pediatric anesthesiology services in Bexar County. The Fifth Circuit looked to its discussion of market definition in Surgical Care Center of Hammond, L.C. v. Hosp. Serv. Dist. No. 1, 309 F.3d 836, 840 (5th Cir. 2002), which looked for “a showing of where people could practicably go” to obtain the services at issue. Here, Shah failed to satisfy that standard: “He did not even specify individual pediatric anesthesiologists from whom patients could practicably obtain health care services. Rather, he provided tallies, by county, of pediatric anesthesiologists in Texas that fit the anesthesiology requirements of the BHS-STAR Agreement. Moreover, as the BHS parties argue, Shah’s proposed relevant market does not encompass all interchangeable substitute products because it does not include the two non-BHS facilities that the BHS parties contend serve as viable alternatives to BHS facilities. Shah has not provided evidence or any persuasive argument to raise a genuine dispute as to either of those facilities.” Shah v. VHS San Antonio Partners LLC, No. 20-50394 (Jan. 13, 2021).

Hewlett-Packard proved $176 million in antitrust damages at trial (later trebled); the defendant argued that HP had not proved it was a direct purchaser of the optical drives at issue. The Fifth Circuit affirmed. On the two key points, it held:

1. Expert testimony.  Under the proper standard of review, this testimony by HP’s damages expert sufficed: “[W]e did quite a lot of work to understand the data that we received; and it was my understanding, based on that work, that the data was purchases by the plaintiff HP, Inc. formerly known as Hewlett-Packard Company. . . . In the data files that I received, the transactions identified the supplier; and in any cases in which the supplier was identified as an HP entity, I excluded those . . . . ” 
2. Fact testimony. Any uncertainty in the following testimony by an HP executive was not enough to unseat the above-quoted expert conclusion:

Q. And so in a procurement event you have an ODD supplier and a purchaser, an entity that purchases. Did HP, Inc. . . . was that the purchaser in all of these procurement events that you have described?

A. It was some form of HP. I don’t know that it was HP, Inc., but it was a legal entity of HP, somewhere in the region that these were purchased, that purchased the drives.

Q. So the purchaser might not have been HP, Inc. at a particular procurement event? It might have been some subsidiary of HP, Inc.?

A. It could well have been, yes. . . . I’m not exactly sure on how that was spread out, but it could very well have been.

Hewlett-Packard Co. v. Quanta Storage, No. 19-20799 (June 5, 2020). A longer version of this post appears in the Texas Lawbook.

The plaintiff in SureShot Golf Ventures, Inc. v. Topgolf Int’l, Inc. alleged that the defendant engaged in anticompetitive conduct by acquiring a company that made critical technology for its golf-related entertainment facilities. The Fifth Circuit affirmed dismissal on the ground that the case was not ripe: “[A]l of the allegations SureShot identifies for us are phrased in future terms, and SureShot has not alleged that any of the federal antitrust violations have resulted in the above-referenced feared actions.” No 17-20607 (Oct. 9, 2018, unpublished) (per curiam). (The district court’s opinion also dismissed for lack of antitrust injury, a point that the Fifth Circuit did not reach.)

Veritext, a national court reporting service, challenged restrictions on its pricing practices (volume discounts, etc.) imposed by the Louisiana Board of Examiners of Certified Shorthand Reporters. The Fifth Circuit rejected Veritext’s constitutional claims but found that it had stated a viable restraint-of-trade claim under the Sherman Act. The Board claimed Parker antitrust immunity as a state actor, which required it to show “two requirements: first that ‘the challenged restraint . . . be one clearly articulated and affirmatively expressed as state policy,’ and second that ‘the policy . . . be actively supervised by the State.’” The Board satisfied the first, as its regulations were clear (thus creating the alleged restraint of trade in the first place), but failed the second: “Nothing in the record indicates that elected or appointed officials oversaw or reviewed the Board’s decisions or modified the Board’s enforcement priorities. And the Board’s argument on this point—that the legislature can amend the law in this area or veto proposed rules under Louisiana’s Administrative Procedure Act—is unconvincing. State legislatures always possess the power to change the law.”  Veritext Corp. v. Bonin, No. 17-30691 (Aug. 17, 2018) (applying State Board of Dental Examiners v. FTC, 135 S.Ct. 1101 (2015)).

The Supreme Court has stayed further proceedings in Archer & Daniels Sales v. Henry Schein Inc., a dispute about the arbitrability of a substantial antitrust case about dental equipment. The application and response are an interesting window into this seldom-seen aspect of civil practice.

Plaintiffs alleged antitrust violations by distributors of dental equipment; seeking damages and injunctive relief. The defendants sought to compel arbitration, based on this arbitration clause in a relevant contract:

Disputes. This Agreement shall be governed by the laws of the State of North Carolina. Any dispute arising under or related to this Agreement (except for actions seeking injunctive relief and disputes related to trademarks, trade secrets, or other intellectual property of Pelton & Crane), shall be resolved by binding arbitration in accordance with the arbitration rules of the American Arbitration Association [(AAA)]. The place of arbitration shall be in Charlotte, North Carolina.

The issue was whether arbitrability was for the courts to decide or the arbitrator. The Fifth Circuit applied “the two-step inquiry adoped in Douglas v. Regions Bank[, 757 F.3d 460 (5th Cir. 2014),] under which the first question is whether the parties “clearly and unmistakably” intended to delegate the question of arbitrability to an arbitrator. Finding that “the interaction between the AAA Rules and the [injunctive relief] carve-out is at best ambiguous,” the Court chose not to resolve that issue, concluding that the second Douglas question was dispositive. That question asks whether the “assertion of arbitrability is wholly groundless,” which the Court found to be the case:

The arbitration clause creates a carve-out for ‘actions seeking injunctive relief.’ It does not limit the exclusion to ‘actions seeking only injunctive relief,’ nor ‘actions for injunction in aid of an arbitrator’s award.’ Nor does it limit itself to only claims for injunctive relief. . . . The mere fact that the arbitration clause allows Archer to avoid arbitration by adding a claim for injunctive relief does not change the clause’s plain meaning.

Archer & White Sales v. Henry Schein, Inc., No. 16-41674  (Dec. 21, 2017) (emphasis added).

The Fifth Circuit’s recent opinion in Retractable Technologies Inc. v. Becton Dickinson Co. reversed a $340 million antitrust judgment and placed significant limits on the activity to which the antitrust laws apply. Judge Edith Jones wrote for the panel, joined by Judges Jacques Wiener and Stephen Higginson. No. 14-41384 (Dec. 2, 2016).

Plaintiff Retractable Technologies Inc. (“RTI”) and Defendant Beckton Dickinson (“BD”) were competing manufacturers of syringes. Retractable sued for false advertising under the Lanham Act, and alleged that BD attempted to monopolize the syringe market in violation of section 2 of Sherman Act.

As summarized by the Court, the antitrust verdict in RTI’s favor “rest[ed] upon three types of ‘deception’ by its rival: [1] patent infringement . . . [2] two false advertising claims made persistently; and [3] BD’s alleged ‘tainting the market’ for retractable syringes in which it alone competed with RTI.”

The Court found that each of these three liability theories failed.

First, as to patent infringement, the Court observed that by its very nature, a patent grants a limited monopoly. Thus, “patent infringement invades the patentee’s monopoly rights, causes competing products to enter the market, and thereby increases competition,” meaning that it “is not an injury cognizable under the Sherman Act.”

Second, the false advertising claims involved BD’s admittedly inaccurate claims to have the “world’s sharpest” needles with “low waste space.” But even these statements “may have been wrong, misleading, or debatable,’ . . . they were all “arguments on the merits, indicative of competition on the merits.” (quoting Stearns Airport Equip. Co. v. FMC Corp., 170 F.3d 518, 522 (5th Cir. 1999)).

After a thorough analysis of different standards used to evaluate antitrust claims based on allegedly false advertising, the Court concluded: “The broader point . . . is the distinction embodied in our precedents between business torts, which harm competitors, and truly anticompetitive activities, which harm the market.” RTI did not make such a showing here.

Finally, the “taint” claim alleged that BD refused to make needed repairs to its retractable needle design, in hopes of persuading purchasers that all such syringes – including RTI’s – were inherently unreliable, until some time after RTI’s patents expired and BD could use RTI’s design to revitalize and take over the retractable syringe market. The Court called this theory “illogical,” since selling a bad product would only serve to benefit RTI’s competitors, and would not serve BD well in any attempt to expand its brand once RTI’s technology became available.

While reversing on the antitrust claim and the substantial damages associated with it, the Court went on to remand for reconsideration of what Lanham Act remedies for false advertising might still be appropriate.

This case is a forceful reminder that a good business tort claim does not equate to a good antitrust claim – or, even any antitrust claim at all. It is also a reminder of two broader points about how the Fifth Circuit approaches business tort claims arising from federal law.

On the one hand, that Court allows vigorous litigation of federal claims within their proper boundaries, as it recently did in affirming a nine-figure judgment arising from an antitrust conspiracy claim in MM Steel LP v. JSW Steel (USA), Inc., 806 F.3d 835 (5th Cir. 2015). (Notably, Judge Stephen Higginson, who was on the panel in the Retractable case, wrote the opinion in MM Steel.)

But on the other hand, the Court carefully polices the boundaries of those claims, as it did here, and as it also did in its painstaking comparison between state law trade secret claims and federal copyright claims in GlobeRanger Corp. v. Software AG, 836 F.3d 477 (5th Cir. 2016). The “siren song” of treble damages under the Sherman Act is a compelling one, but the pathway to such damages is carefully guarded.

Abandoning its reputation as a skeptic of antitrust claims, the U.S. Court of Appeals for the Fifth Circuit recently affirmed a $150 million judgment in MM Steel, L.P. v. JSW Steel (USA) Inc., a hard-fought battle among steel distributors on the Texas Gulf Coast.  No. 14-20267 (Nov. 25, 2015).  Judge Stephen Higginson, a relatively recent Obama appointee, wrote the opinion, joined by Judges Edith Brown Clement and Fortunato “Pete” Benavides.  A likely landmark in the modern law of antitrust conspiracy, the opinion unhesitatingly applies longstanding rules about “per se” antitrust liability instead of engaging in the more complex economic analysis that has dominated in recent years.  By doing so, the opinion has the potential to invigorate antitrust litigation in many situations where competing businesses allegedly join forces against another competitor.

As background, the opinion notes: “In the Gulf Coast steel industry, steel manufacturers sell about half of their steel plate to end users, including companies such as Wal-Mart, Exxon, and General Motors, and sell the other half to distributors who then resell the plate to end users.”  The dispute arose when two former employees of a distributor, named Chapel Steel, formed a new distribution company called MM Steel.  Chapel’s management, angry at their departure and competition, not only sued MM and its founders for violation of a non-compete agreement, but began an aggressive boycott campaign to cut off MM’s supply of steel plate and put it out of business.

Evidence showed that Chapel’s leadership enlisted other distributors in its attack on MM, and also threatened several steel manufacturers, including Nucor Corporation and JSW Steel, with a boycott if they did not refuse to deal with MM.  In particular, JSW received threats from Chapel and another distributor within several weeks of each other, and shortly afterwards, cancelled a supply contract that it had earlier negotiated with MM.

MM went out of business. It sued JSW for breach of contract, and sued Chapel (and other distributors), along with Nucor, JSW, and another manufacturer.  After a six-week trial, the Southern District of Texas entered judgment for over $150 million for MM, finding that the distributors formed a conspiracy in violation of Section 1 of the Sherman Act to keep steel away from MM, and that the manufacturers knowingly joined that conspiracy.  The distributors settled, leaving Nucor and JSW as the only appellants by the time of the Fifth Circuit’s decision.

The opinion’s analysis began by stating the accepted legal standards in the area.  A Section 1 claim requires proof that the defendants “(1) engaged in a conspiracy (2) that restrained trade (3) in a particular market.”  That proof must “tend[] to exclude the possibility of independent conduct,” which in a refusal-to-deal case such as this one, means showing that the defendants’ conduct is “inconsistent with the manufacturer’s independent self-interest.”

Applying these standards, the court affirmed the liability finding as to JSW.  “The fact that both [distributors’ made . . . threats within several weeks of each other was sufficient evidence for a reasonable juror to conclude that JSW was aware of the horizontal conspiracy to exclude MM from the market.”  Then, when JSW responded by terminating its contract with MM, virtually guaranteeing a suit for breach, “[a] reasonable juror also could have concluded that JSW’s abrupt decision to no longer deal with MM following those threats and JSW’s statements regarding that decision tended to exclude the possibility of conduct that was independent of the distributor’s conspiracy.”  While JSW contended that its actions were motivated by concern about the Chapel lawsuit against MM, the court found that “[a] reasonable juror could have concluded that JSW’s explanation for its supposedly independent refusal to deal was pretextual.”

The court reversed as to Nucor, who had received only one threat, from Chapel.  In response, Nucor introduced evidence that it had an “incumbency practice,” under which it remained loyal to established customers such as Chapel, to maintain a stable supply chain.  The court reasoned that “[e]ven if the jury did not credit this practice, MM did not provide evidence that when Nucor first refused to quote MM, Nucor was aware of an agreement between the distributors to foreclose MM from the market. . . . In fact, at the time Nucor first refused to quote MM, Nucor believed that JSW, its competitor, was supplying MM.”

Returning to JSW, the court observed that “[t]he Supreme Court has consistently held that the per se rule [of antitrust liability] is applicable to group boycotts identical to the boycott alleged in this case.”  JSW argued that in the recent opinion of Leegin Creative Leather Products v. PSKS, 551 U.S. 877 (2007) when the Supreme Court eliminated per se liability for price-setting vertical agreements (i.e, exclusive dealing arrangements), it necessarily did so for horizontal agreements such as the one among distributors in this case.  The court disagreed, concluding: “Purely vertical refusals to deal . . . frequently have procompetitive justifications, such as limiting free riding and increasing specialization.  However, the crux of the group boycotts at issue in the cases in which per se liability has always applied is that members of a horizontal conspiracy use vertical agreements anticompetitively to foreclose a competitor from the market.”  The court concluded by rejecting a challenge to MM’s damage model.

The MM opinion has considerable significance, both practically and theoretically.  Practically, a company in a position like JSW’s is not unsympathetic – on the one hand, it has substantial contract obligations to a new customer, while on the other hand, it confronts serious threats to substantial other and longstanding business.  A tough business decision becomes harder when potential Section 1 antitrust liability – which carries with it the threat of treble damages – must be considered.

Theoretically, the court’s affirmation of per se liability connects to an older school of antitrust thought that emphasized bright-line rules over case-by-case analysis.  That view has received strong criticism as anachronistic; as Robert Bork wrote many years ago in a famous Yale Law Journal article: “The current shibboleth of per se illegality in existing law conveys a sense of certainty, even of automaticity, which is delusive. The per se concept does not accurately describe the law relating to agreements eliminating competition as it is, as it has been, or as it ever can be.”  Yet per se rules remain in place in the antitrust laws, and the MM opinion shows that they are not going away any time soon, absent sweeping action by Congress or the Supreme Court.

Sanger Insurance Agency alleged that HUB International violated the antitrust laws to keep it from selling professional liability insurance to veterinarians. The Fifth Circuit reversed the dismissal of Sanger’s claims with two holdings. The Court first found that while Sanger was new to this business, it had done enough to establish antitrust standing, especially since Sanger alleged that the defendants’ anticompetitive activity had hurt its ability to enter the market: “[B]y pursuing a deal with a professional association of veterinarians and even achieving some success in its initial efforts, Sanger went beyond ‘the most basic preparatory steps’ that we require of nascent competitors.”  While then remanding as to other claims, the Court found Sanger’s federal antitrust claims “reverse-preempted” under the McCarran-Ferguson Act.: “Assuming that HUB is engaged in exclusive dealing that prevents the insurers from writing insurance for other group plans, that conduct fortifies the Program HUB operates through the American Veterinary Medical Association. Keeping a large, geographically and professionally diverse pool of veterinarians in the Program—including significant numbers of small- animal, large-animal, mixed, and equine veterinarians—spreads risk.”  Sanger Insurance Agency v. HUB Int’l, Inc, No. 14-40854 (Sept. 23, 2015).

Waggoner owned a working interest in a carbon dioxide well that sold to Denbury Resources.  He alleged that Denbury sold carbon dioxide to its subsidiaries at low prices, thereby decreasing the royalties it had to pay, and resulting in less money for Waggoner. The Court affirmed the dismissal of his claim, relying on Jebaco v. Harrah’s Operating Co., 587 F.3d 314 (5th Cir. 2009), which found no antitrust standing from the effect of casinos’ behavior on riverboat rentals, and Bailey v. Shell W. E&P, Inc., 609 F.3d 710 (5th Cir. 2010), which involved a similar royalty claim.  “As with the decrease in per-patron [rental] fees in Jebaco, Waggoner’s decrease in royalties is the result of downstream conduct by the payor, in a market in which Waggoner is not a participant.”   Waggoner v. Denbury Onshore, LLC, No. 14-60310 (May 20, 2015, unpublished).

Felder’s Collision Parts sells aftermarket parts for GM cars; it sued GM and several dealers in original equipment manufactured parts made by GM, alleging that they ran a pricing and rebate program (with the unfortunate name of “Bump the Competition”) that amounted to predatory pricing.  The district court dismissed and the Fifth Circuit affirmed in Felder’s Collision Parts, Inc. v. All Star Advertising Agency, No. 14-30410 (Jan. 27, 2015).

Under the program, a dealer would offer a price significantly lower than the ordinary aftermarket part price.  Felder’s argued the dealer was pricing beneath average variable cost — and thus engaging in predatory pricing — and offered an example of a dealer selling a part for $119 that it bought from GM for $135.  The defendants pointed out that a key part of the program was a rebate to the dealer from GM based on sales, and including that rebate in the “cost” calculation turned the seeming $15 loss in this example into a 14% profit.

The Fifth Circuit agreed:  “The price versus cost comparison focuses on whether the money flowing in for a particular transaction exceeds the money flowing out. The rebate undoubtedly affects that bottom line for All Star by guaranteeing that it makes a profit on any Bump the Competition sale. That undisputed fact resolves the case, as a ‘firm that is selling at a shortrun profit maximizing (or loss-minimizing) price is clearly not a predator.'” The Court acknowledged: “Felder’s no doubt is having a tougher time selling aftermarket equivalent parts for GM vehicles  . . . But antitrust law welcomes those lower prices for consumers of collision parts so long as neither GM nor its dealers is selling parts at below-cost levels.”   (Or, “parts is parts . . . “)

Plaintiffs — breeders of quarter horses using cloning technology — sued the American Quarter Horse Association, alleging that its bar on the registry of cloned horses was anticompetitive and violated Sections 1 and 2 of the Sherman Act.   Abraham & Veneklasen Joint Venture v. American Quarter Horse Association, No. 13-11043 (Jan. 14, 2015).  The district court agreed and entered an injunction; the Fifth Circuit reversed.

With respect to the Section 1 (conspiracy) claim, the Court expressed skepticism about whether the Association’s management could legally conspire with the Association, noting (without deciding):  “American Needle‘s rejection of ‘single entity’ status for organizations with ‘separate economic actors’ [such as the NFL as to licensing] does not fit comfortably with the facts before us.  AQHA is more than a sports league, it is not a trade association, and its quarter million members are involved in ranching, horse trading, pleasure riding and many other activities besides the ‘elite Quarter Horse’ market.”  The Court then held that Plaintiffs had not shown a conspiracy, finding that their evidence about powerful members of the Association speaking out against cloning did not prove an actual agreement: “[T]he antitrust laws are not intended as a device to review the details of parliamentary procedure.”  (citation omitted)

As to the Section 2 claim, the Court observed: “AQHA is a member organization; it is not engaged in breeding, racing, selling or showing elite Quarter Horses.”  Thus, because “nothing in the record . . . shows that AQHA competes in the elite Quarter Horse Market,” no claim about its alleged monopolization of that market was cognizable.  The Court distinguished other cases in which a trade association actually became a market participant and competitor.

The plaintiff in Marucci Sports LLC v. NCAA alleged that the “Bat-Ball Coefficient of Restitution Standard” — a testing protocol “to ensure that aluminum and composite bats perform like wood bats” — was in fact an anticompetitive device calculated to protect the NCAA’s relationship with large bat manufacturers.  No. 13-30568 (May 6, 2014).  The Fifth Circuit affirmed dismissal, finding: (1) inadequate pleading of a conspiracy under Twombly; (2) inadequate pleading of an injury to “competition among non-wood baseball bat manufacturers” as opposed to its own; and (3) that the standard could fairly be called a procompetitive “rule and condition” of athletic competition.  Denial of leave to amend was also affirmed.

As part of broader disputes about the bankruptcy of Pilgrim’s Pride, chicken growers alleged that its decision to shut down a large facility violated the Packers and Stockyards Act of 1921.  Relying on its earlier [9-7] en banc decision which found that a broader provision of the Act required proof of anticompetitive conduct, the Fifth Circuit found that section 192(e) of the Act imposes the same requirement.  Agerton v. Pilgrim’s Pride Corporation, No. 12-40085 (August 27, 2013) (citing Wheeler v. Pilgrim’s Pride Corporation, 591 F.3d 355 (5th Cir. 2009)).  The Court then reversed a $25 million judgment for the growers, reasoning: “In the instant case, PPC had overextended itself into the commodity chicken market, was producing more chicken than the market appeared to need, and was thereby driving the market price of chicken down at great cost to itself. Recognizing the damage inflicted by its own excess production, PPC wisely decided to stop flooding the market with unprofitable chicken.  . . . Far from being a nefarious goal, higher prices are the natural consequence of a reduction in supply.  If it is lawful for a business to independently control its own output, then it is also lawful for the business to hope for the natural consequences of its actions.”

A consumer group sued under the Clayton Act about the market for funeral caskets, and then settled all compensatory damages with one of the defendants.  Funeral Consumers Alliance v. Service Corp. Int’l, No. 10-20719 (Sept. 13, 2012).  The Fifth Circuit held that, even after that settlement, the group had standing to proceed against the remaining defendants for attorneys fees.  Id. at 4-14.  Noting, however, that “[t]he fact that death is inevitable is not sufficient to establish a real and immediate threat of future harm,” the Court found no standing for injunctive relief.  Id. at 15, 18.  The Court also affirmed the denial of class certification, finding that the scope of the putative nationwide class fit poorly with the evidence of localized market activity for funeral services and casket sales.  Id. at 27 (distinguishing United States v. Grinnell Corp., 384 U.S. 563 (1996)).

In an antitrust suit about fees for a golf voucher program, the defendant successfully moved to dismiss on the ground that the plaintiff had not alleged an effect on interstate commerce.  Substantively, the Court acknowledged that while it has “limited the reach of the Commerce Clause with respect to non-economic activity,” (Op. at 7, citing U.S. v. Lopez, 514 U.S. 549 (1995)), “the conduct alleged here . . . bringing out-of-state tourists to play golf–falls squarely within the Supreme Court’s commerce clause jurisprudence.  Procedurally, the Court reviewed the plaintiff’s allegations about the effect of the fees on “out-of-state residents” in light of Twombly and Iqbal and concluded that, while “sparse,” those allegations sufficed to allege an effect on interstate commerce.  The Court reversed the lower court’s dismissal of the case for lack of jurisdiction.  Gulf Coast Hotel-Motel Association v. Mississippi Gulf Coast Golf Course Association