A Look at Judge Kavanaugh’s Antitrust Record

BakerHostetler Partner Carl Hittinger and Associate Tyson Herrold authored an article published Aug. 24, 2018, by The Legal Intelligencer. The article, “Is Judge Kavanaugh a Fan of Antitrust Laws? Let’s Take a Look,” examines the limited antitrust jurisprudence record of U.S. Court of Appeals Judge Brett Kavanaugh, who has been nominated to replace Justice Anthony Kennedy on the U.S. Supreme Court. Hittinger and Herrold examine two Kavanaugh dissenting opinions in antitrust cases and note that other judges on the D.C. Circuit have strongly criticized him for his naivety on antitrust issues and his seeming disregard for stare decisis and the rule of law that may indicate a willingness to take issue with other Supreme Court precedent. They also point out that Kavanaugh’s dissents illustrate his view that the antitrust laws are designed to promote consumer welfare and business efficiency at the expense of competition when those two goals are at odds, which is reminiscent of onetime Supreme Court nominee Judge Robert Bork’s controversial thinking.

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Update: Section 1 Challenge to Jimmy John’s No-Poach Agreement Survives Motion to Dismiss

We recently wrote that the Department of Justice’s and the Federal Trade Commission’s announcements condemning no-poaching agreements already have sparked civil class actions, including a putative class action against Jimmy John’s. Butler v. Jimmy John’s Franchise, LLP, No. 18-cv-0133, 2018 WL 3631577 (S.D. Ill. July 31, 2018). Since then, the district court denied a motion by Jimmy John’s to dismiss the plaintiff’s Section 1 claim.

According to the allegations, the plaintiff in Jimmy John’s, Sylas Butler, worked as a delivery driver and in-store employee for a Jimmy John’s franchise, but his supervisor cut his hours to approximately four hours per week. Butler wanted to transfer to a different Jimmy John’s franchise, but the Jimmy John’s franchise agreement prohibits any franchisee from soliciting or hiring any employee who has worked at another Jimmy John’s franchise within the previous 12 months. The franchise agreement imposes strict penalties for violating that clause, including termination of the franchise agreement. The franchise agreement also provides that all current and future franchisees are third-party beneficiaries of the agreement, meaning that other Jimmy John’s franchisees can enforce the no-hire provision. Finally, Jimmy John’s franchisees require their employees to sign a noncompete agreement, based on a form agreement provided by Jimmy John’s, that forbids their employees from working for any other area business that sells subs or sandwiches for two years after leaving the franchisee’s employment. Thus, the Jimmy John’s franchise agreement and the noncompete agreement allegedly precluded Butler from transferring to a different Jimmy John’s or a similar business.

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BakerHostetler Partners Publish Article Examining Reverse-Payment Suits Five Years After Actavis

Partners Carl Hittinger and Jeffry Duffy authored an article published by The Legal Intelligencer on July 27, 2018. The article, “Actavis and Reverse-Payments Suits in the Third Circuit After Five Years,” examines how purportedly anticompetitive patent-litigation settlement agreements between rival branded and generic pharmaceutical manufacturers—so-called “reverse payment” or “pay for delay” settlements—have generated numerous private lawsuits and remain one of the Federal Trade Commission’s top enforcement priorities. In the five years since Actavis, federal courts in the U.S. Court of Appeals for the Third Circuit have continued to wrestle with a disproportionate share of reverse-payment lawsuits. Those cases have generated a series of rulings by the Third Circuit addressing some of the significant questions left open by Actavis. In their article, Hittinger and Duffy review the rulings and the status of issues left open by Actavis.

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Ohio v. American Express: The Supreme Court Credits American Express’s Anti-Steering Provisions

In a 5-4 decision in Ohio v. American Express, the Supreme Court affirmed that the anti-steering provisions of American Express’s merchant agreement do not violate Section 1 of the Sherman Act.

Credit card companies’ core business involves two transactions. First, the credit card company provides credit services to its cardholders, as well as additional benefits such as frequent flier miles, cash back, etc. Second, in exchange for a per-transaction fee, the credit card company assumes the risk and costs the merchant would otherwise incur in extending credit to its customers. The credit card company also provides the merchant a customer base that will be more likely to patronize those merchants that accept the credit card.

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Carl Hittinger, Tyson Herrold Author Article that Assesses Congressional Attempts to Update FTC Merger Review Process

Partner Carl Hittinger and Associate Tyson Herrold authored an article published June 22, 2018, by The Legal Intelligencer. The article, “How Smart is the Proposed Merger Review SMARTER Act?,” discusses a long-awaited bill before Congress that would significantly streamline the standards for the Federal Trade Commission’s (FTC) merger review process and finally align the different standards of the FTC and the Department of Justice for obtaining preliminary injunctions in merger reviews, which will have a major impact on corporations.

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Did You Know the ‘Plausibility’ Standard Can Be Used for More Than Pleading Antitrust Claims?

Partners Robert Abrams, Gregory Commins, and Danyll Foix authored an article published in the Global Competition Review’s “The Antitrust Review of the Americas 2018.” Their article reviews how the “plausibility” pleading standard announced by the Supreme Court in recent years has changed not only how claims are alleged, but also how this standard may be useful in motions to dismiss, strike, and amend antitrust and class action claims. In these motions, three decisive substantive issues have emerged – whether standing is plausibly alleged, whether the alleged class includes uninjured members, and whether the alleged class members are ascertainable. Their article considers plausibility-based motions that can challenge claims at the onset of antitrust and class action litigation and the emerging substantive issues to be considered by parties pursuing or defending antitrust class action litigation.

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Class Actions Now Flowing From FTC and DOJ’s No-Poach Enforcement

Partner Carl Hittinger and Associate Tyson Herrold authored an article published by The Legal Intelligencer on May 5, 2018. The article, “Class Actions Now Flowing from FTC and DOJ’s No-Poach Enforcement,” discusses the increase of class action lawsuits brought under Section 1 of the Sherman Act against national franchises for imposing employee no-hire agreements on their franchisees.

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DOJ Now Targeting HR Professionals for Criminal Antitrust Violations

Partner Carl Hittinger and Associate Tyson Herrold authored an article published by The Legal Intelligencer on March 30, 2018. The article, “DOJ Now Targeting HR Professionals for Criminal Antitrust Violations,” examines the Department of Justice’s (DOJ) ongoing enforcement of certain no-poach employee and wage-fixing cases. Specifically, the article lists DOJ complaints successfully filed against employers and analyzes the difference between naked restraints and ancillary restraints.

Hittinger and Herrold report that Makan Delrahim, assistant attorney general for the antitrust division of the DOJ, has recently announced that no-poach and wage-fixing collusive agreements will remain a top priority at the Trump DOJ and significantly will be prosecuted not only as civil antitrust violations but also as criminal antitrust violations against companies and involved individuals.

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The Department of Justice Weighs In on the Application of North Carolina Dental Examiners to the Florida State Bar

The Department of Justice (DOJ) recently took the uncommon step of submitting an amicus brief to weigh in on a motion to dismiss. TIKD Services, LLC v. The Florida Bar, No. 1:17-cv-24103 (S.D. Fla. filed Nov. 8, 2017), Dkt. 115. Specifically, the DOJ intervened to clarify whether the analysis set forth in the Supreme Court’s decision in North Carolina State Board of Dental Examiners v. FTC, 135 S. Ct. 1101 (2015), about which we wrote here and here, applied to the Florida Bar’s attempts to regulate a new technology that simplifies contesting a traffic ticket in Florida.

In TIKD Services, the plaintiff TIKD developed a cellphone app for drivers who receive a traffic ticket. The app allows the user to upload the ticket, pay a fixed fee and contest the ticket without having to appear in court. Although the app developer is not an attorney, the user’s case is assigned to one of a network of independent attorneys licensed in Florida, and the user and the attorney enter into a separate representation agreement.

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Should a Judge’s Personal Judicial Experience Affect Antitrust Pleadings?

When the U.S. Supreme Court scrapped Conley v. Gibson’s “no set of facts” federal pleading standard in Twombly (2007) and Iqbal (2009), courts initially struggled to apply the inherently ambiguous “plausibility” standard. In the immediate aftermath, some courts frankly misconstrued Twombly and Iqbal to invite a Daubert-style “gate keeper” appraisal of complaints in which judges could (and should) prune claims that, based on their own personal experience with the subject matter at issue, appeared dubious. One potential source of this confusion is a single sentence in the Supreme Court’s Iqbal opinion: “Determining whether a complaint states a plausible claim for relief will … be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” While the U.S. Court of Appeals for the Third Circuit has largely rectified this misconception, courts occasionally toss daunting complex claims based on skepticism and a concern about costly and burdensome discovery rather than a correct application of the plausibility standard. A recent antitrust decision by U.S. District Judge Mark A. Kearney of the Eastern District of Pennsylvania provides a model framework for analyzing plausibility.

Read the full article via The Legal Intelligencer.

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