Thursday, December 30, 2010

Insignia v. News Trial Rescheduled for Feb. 7, 2011

Trial in the Insignia v. News America Marketing case has been rescheduled to begin February 7, 2011. A settlement conference is scheduled for January 25, 2011.

Motions are currently pending to exclude certain evidence (motions in limine) and to exclude certain expert opinions as unreliable (Daubert motions).

Related posts. Related articles (BNet; BNet; Minneapolis StarTribune)

Monday, December 27, 2010

Delta and AirTran Argue That Imposition of Bag Fees Caused Reduction in Fares

In an ongoing antitrust lawsuit over alleged collusion to charge first bag fees, Defendants Delta Air Lines and AirTran Airways recently filed briefs in opposition to Plaintiffs’ motion for class certification. (Delta, AirTran). Defendants argued that class certification was inappropriate because, they assert, the imposition of first bag fees led to a reduction in base fares, and that some proposed class members therefore may have benefited from the imposition of bag fees. Defendants filed four expert reports in support of their arguments. (Lee, Kasper, Schwartz, Gaier).

The proposed class is defined to include, with a few exceptions, anyone who has directly paid a first bag fee to Delta or AirTran. Summary judgment motions are scheduled to be filed in March 2011.

The case is In re Delta / AirTran Baggage Fee Antitrust Litigation, MDL 2089 (N.D. Ga.).

Friday, August 27, 2010

Court Unseals Documents Related to Lawsuit on Behalf of Consumers Seeking Recovery of First Checked Bag Fees Paid to Delta and AirTran

On August 20, 2010, the Court overseeing In re Delta / AirTran Baggage Fee Antitrust Litigation, MDL 2089 (N.D. Ga.) unsealed a number of documents that had been produced by defendants in discovery in the lawsuit but had been designated as confidential by the defendants.

Plaintiffs requested that the Court “unseal” certain documents to ensure that the millions of proposed class members who have paid a first bag fee to either Delta or AirTran have access to additional information related to the claims in the case. The lawsuit alleges that Delta Air Lines and AirTran Airways violated the antitrust laws by conspiring to impose a first checked bag fee.

Plaintiffs seek to represent a class of plaintiffs defined as follows:
All persons or entities in the United States and its territories that directly paid Delta and/or AirTran one or more first bag fees on domestic flights from December 5, 2008 through the present (and continuing until the effects of Delta’s and AirTran’s anticompetitive conspiracy ceases).
A summary of Plaintiffs’ factual allegations is available in Plaintiffs’ Memorandum of Law in Support of Class Certification at pages 6 to 16, linked below. Other documents now available for review are identified and can be linked below, including several court filings, several internal Delta and AirTran e-mails, and internal analyses prepared by Delta regarding the first bag fee.
  1. Consolidated Amended Complaint
  2. Plaintiffs’ Opposition to Defendants’ Motions to Dismiss (redacted)
  3. Court Order Partially Denying Motion to Dismiss
  4. Plaintiffs’ Memorandum of Law in Support of Class Certification (“Class Cert Brief”)
  • Ex. 2 to Pl.’s Class Cert Brief, Delta Antitrust Compliance Manual
  • Ex. 3, May 2008 e-mail from Delta CEO R. Anderson
  • Ex. 4, Deposition Transcript Excerpts of Ed Bastian
  • Ex. 5, July 31, 2008 internal AirTran e-mail exchange
  • Ex. 6, July 31, 2008 internal AirTran e-mail exchange
  • Ex. 7, July 31, 2008 e-mail from S. Fasano to A. Burman
  • Ex. 8, May 22, 2008 e-mail from A. Burman
  • Ex. 9, Aug. 5, 2008 e-mail from S. Fasano
  • Ex. 10, Aug. 8, 2008 e-mail from R. Fornaro
  • Ex. 11, July 20, 2008 e-mail from S. Fasano
  • Ex. 12, July 18, 2008 e-mail to J. Graham-Weaver
  • Ex. 13, July 31, 2008 internal AirTran e-mail exchange
  • Ex. 14, July 31, 2008 e-mail from T. Hutcheson
  • Ex. 15, July 14, 2008 e-mail from J. Graham-Weaver
  • Ex. 16, Oct. 14, 2008 Delta “Value Proposition” powerpoint
  • Ex. 17, Oct. 16, 2008 Delta “Value Proposition” powerpoint
  • Ex. 18, Oct. 22, 2008 Delta “Value Proposition” powerpoint
  • Ex. 19, Oct. 24, 2008 Delta “Value Proposition” powerpoint
  • Ex. 20, Deposition Transcript Excerpts of E. Phillips
  • Ex. 21, Nov. 5, 2008 Delta Press Release
  • Ex. 22, July 16, 2008 Delta Earnings Call Transcript
  • Ex. 23, Oct. 2, 2008 e-mail from E. Phillips
  • Ex. 24, Nov. 6, 2008 Article re: Delta to start charging fee for checked luggage
  • Ex. 25, Nov. 11, 2008 e-mail from M. Klein
  • Ex. 26, Nov. 6, 2008 e-mail from M. Klein
  • Ex. 27, Deposition Transcript Excerpts of R. Fornaro
  • Ex. 28, Deposition Transcript Excerpts of K. Healy
5. Order Granting Motion to Lift Confidentiality Designations

Sunday, August 22, 2010

California Grocery Chains’ Profit-Sharing Agreement During 2003 Strike Violated Antitrust Laws

On August 17, the Ninth Circuit Court of Appeals held that a profit-sharing agreement between Vons, Albertson's, Ralphs, and Food 4 Less violated Section 1 of the Sherman Act as an unreasonable restraint of trade.

In 2003, defendant grocery chains were engaged in labor negotiations, and entered into a Mutual Strike Assistance Agreement that required them to share profits with each other in an effort to maintain each defendant's pre-labor dispute market share. The unions selectively picketed the grocery chains, and the stores responded by locking out their union employees and exchanging approximately $146 million under the profit-sharing agreement.

The State of California filed suit against the defendants, and moved for a summary judgment ruling that the profit sharing agreement violated § 1 of the Sherman Act. The trial court denied the motion, but the Ninth Circuit reversed. Using a "quick look" review, the Ninth Circuit determined that an observer with even a rudimentary understanding of economics could conclude that the agreement would have an anticompetitive effect on customers and markets that was not neutralized or outweighed by any procompetitive justifications:

Profit pooling or profit sharing arrangements eliminate incentives to compete for customers along every dimension: there is little purpose in attempting to attract another firm's customers by lowering prices, improving quality or taking any other measure if the profits earned from those new customers would be placed in a common pool in which the other firm is a participant, and the proceeds distributed in the same way no matter which participant in the profit pool generated the underlying sales, or if transfer payments are made between firms to achieve the same effect.

The Court rejected defendants' argument that the agreement was not anticompetitive because it was limited in duration and limited to only some of the supermarket chains in the relevant market, as such circumstances could only reduce the anticompetitive effects. The court also found that the purported pro-competitive benefit suggested by defendants – driving down compensation to workers – was not a cognizable procompetitive benefit under the Sherman Act.

California v. Safeway, Inc., __ F.3d __ (9th Cir. 2010).

Monday, August 2, 2010

Court Allows Plaintiffs to Carry On With Lawsuit Alleging Collusion on First Bag Fees

The Federal District Court in Atlanta issued an order today denying a request by Delta Air Lines and AirTran Airways to dismiss a proposed class action lawsuit accusing the two airlines of conspiring to impose first checked baggage fees. The Court ruled that Plaintiffs’ allegations plausibly suggest a conspiracy between the airlines, and that the case should move forward.

Plaintiffs allege that Defendants colluded through communications with each other, for example, on quarterly earnings calls and in speeches and other communications at industry conferences. Beginning in April 2008, Defendants allegedly signaled to each other a willingness to collude in order to decrease capacity and increase prices to consumers without losing market share. Both airlines reduced capacity after April 2008, and in October 2008, AirTran allegedly invited Delta to collude to impose first checked bag fees.

Specifically, AirTran’s CEO stated on an investor conference call that AirTran had put the technological capability in place to implement the fee, that it was constrained from implementing the fee by competition with Delta, and that AirTran would likely follow suit if Delta enacted a first bag fee:

We have the programming in place to initiate a first bag fee. And at this point, we have elected not to do it, primarily because our largest competitor in Atlanta [i.e., Delta], where we have 60% of our flights, hasn't done it. . . . I think we prefer to be a follower in a situation rather than a leader right now.

Robert Fornaro, AirTran Investor Call (Oct. 23, 2008).

Delta, which monitors AirTran’s quarterly calls, announced just over a week later, on November 5, 2008, that it would begin charging passengers a $15 first bag fee, which Plaintiffs allege was an acceptance of AirTran’s invitation to collude. As promised in the conference call, AirTran followed Delta’s lead, and announced the following week that it would impose the same $15 fee, effective the same date as Delta’s fee.

Defendants sought to dismiss Plaintiffs’ complaint, arguing that Plaintiffs’ allegations were insufficient to plausibly demonstrate the existence of an agreement to restrain trade. Defendants argued that Plaintiffs were required to demonstrate the existence of an “actual, manifest agreement,” and argued that Plaintiffs were required to prove that “the defendants got together and exchanged assurances of common action or otherwise adopted a common plan.”

The Court rejected Defendants’ argument, pointing out that “it is only in rare cases that a plaintiff can establish the existence of a conspiracy by showing an explicit agreement; most conspiracies are inferred from the behavior of the alleged conspirators. . . . [C]ollusive communications can be based upon circumstantial evidence and can occur in speeches at industry conferences, announcements of future prices, statements on earnings calls, and in other public ways.” “Courts have also found that unlawful conspiracies may be inferred when collusive communications among competitors precede changed/responsive business practices, such as new pricing practices.”

The Court recognized that Plaintiffs Complaint “is not lacking in detail,” and alleges collusive communications, alignment of business practices following those communications, and implementation of business practices that would be contrary to independent self-interest after those communications. In light of the foregoing, the Court found that “it would be both improper and imprudent to dismiss a case of this magnitude, where the interests of consumers are at stake, on the mere hunch that [Delta and AirTran’s] defenses . . . may prove valid.”

In concluding that the case should proceed, the Court found that it was “noteworthy” that “Defendants’ conduct is currently being investigated by the Antitrust Division of the United States Department of Justice.”

In light of the Court’s ruling, Plaintiffs will proceed on their claims that Defendants conspired to restrain trade in violation of Section 1 of the Sherman Act, and will seek damages equal to three times the amount of first bag fees that have been charged by Delta and AirTran after they were first imposed in December 2008.

The Court granted dismissal, however, of Plaintiffs’ claim that each defendant attempted to monopolize a relevant market by inviting the other to collude in violation of Section 2 of the Sherman Act. According to the Court, Plaintiffs relied on “a rather novel theory” of liability under Section 2, which was insufficiently supported by applicable law. Plaintiffs sought only injunctive relief for violation of Section 2.

The law firm of Kotchen & Low LLP filed the original lawsuit against Delta and AirTran in May 2009, and the court appointed Kotchen & Low LLP as primary interim co-lead class counsel on January 5, 2010. Trial is expected to take place next year. Anyone with information regarding the alleged conspiracy is encouraged to contact Kotchen & Low LLP at

The case is captioned In re Delta/ AirTran Baggage Fee Antitrust Litigation, No. 1:09-md-2089-TCB (N.D. Ga.). The Court’s August 2, 2010 Order is available here, and a redacted copy of Plaintiffs’ brief opposing Defendants’ motion to dismiss is available here.

Related media coverage: Bloomberg; Reuters; AJC; CompLaw360.

Sunday, July 18, 2010

Packaged Ice Class Action Survives Motion to Dismiss

On July 1, a federal court denied defendants Reddy Ice and Arctic Glacier's motion to dismiss a direct purchaser class action antitrust lawsuit, allowing plaintiffs to proceed with the case alleging a nationwide conspiracy to allocate customers and territories.

Defendants Reddy Ice and Arctic Glacier had argued that the plaintiffs did not allege enough factual matter to plausibly suggest a nationwide conspiracy, as Arctic Glacier and Home City's criminal guilty pleas to customer allocation were limited to a small geographic area. The Court held that "Plaintiffs have offered sufficient factual content to 'raise a reasonable expectation that discovery will reveal evidence of illegal agreement,'" citing guilty pleas of several individuals, the pending government investigations, allegations made by former sales executive Martin McNulty and several other former employees, and the structure of the packaged ice industry,

With the resolution of the motion to dismiss, discovery should commence shortly. Discovery is likely to be limited, however, to written discovery and not depositions until the resolution of the ongoing criminal investigation of Reddy Ice.

Home City Ice previously entered into a settlement agreement with the class action plaintiffs, agreeing to pay $13.5 million.

Tuesday, June 15, 2010

Floorgraphics Appeals Denial of Motion to Reopen Case

After the trial court denied its motion to reopen its case after a $29.5 million settlement, Floorgraphics has filed a notice of appeal, asking the Third Circuit to reverse the trial court's ruling, reports Bloomberg.

Tuesday, June 1, 2010

Congress Renews ACPERA, Requires Study of Antitrust Whistleblower Rewards Legislation

Congress passed legislation last week extending the Antitrust Criminal Penalty Enhancement and Reform Act ("ACPERA") until June 2020, and requiring that the U.S. Government Accountability Office ("GAO") study the appropriateness of adding a whistleblower rewards provision and an anti-retaliation provision.

ACPERA, which was originally enacted in 2004, increased the maximum penalties for price-fixing, and enhanced a leniency program to encourage cooperation. ACPERA originally included a five year sunset provision. In 2009, Congress passed a one-year extension in order to consider possible amendments or revisions before a more permanent reauthorization.

My firm has advocated for an amendment to ACPERA that would provide rewards to antitrust whistleblowers similar to the highly successful False Claims Act. Corporate insiders are in the best position to provide useful information regarding cartel activity, but currently have strong disincentives to expose unlawful collusion. Whistleblowers consistently face retaliation by their employers and by others in the industry. In order to overcome such disincentives, substantial rewards should be offered to whistleblowers. Like the False Claims Act, an antitrust whistleblower rewards program could offer as an incentive a percentage of the government's recovery – i.e., the criminal fines recovered from any defendants who are found guilty. Such rewards would create a win-win situation, discouraging criminal activity, allowing the government to collect hundreds of millions of dollars in fines that would not otherwise be collected, and rewarding insiders for taking the risk of blowing the whistle.

During the last two years, my firm has published articles in favor of the legislation on this blog and in CompLaw 360, has met with individuals at antitrust enforcement agencies, at antitrust policy groups, and has met with individuals and groups on Capitol Hill.

Last week, Congress passed legislation that requires the GAO to conduct a study of the appropriateness of the addition of whistleblower rewards and whistleblower protection provisions to the antitrust leniency program, and to report its findings back to Congress within one year. I look forward to reading the report.

Related posts: Incentives and Disincentives for Insiders to Expose Unlawful Cartels; Whistleblower Sues Packaged Ice Manufacturers; Considerations for Individuals Who Refuse to Participate in Illegal Business Practices

Thursday, May 13, 2010

Floorgraphics Motion to Reopen Case Is Denied

The Court denied Floorgraphics' request to reopen their case against News America Marketing under Fed. R. Civ. P. 60(b).

After learning about the strong evidence provided by News America to Valassis in discovery in the Valassis case – which led to a $500 million settlement, Floorgraphics sought to undo its $29.5 million settlement and reopen its case.

Federal Rule of Civil Procedure 60(b) provides that a court may reopen a final judgment if there is:

(2) newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party; … or (6) any other reason that justifies relief.
Courts have held that relief under Rule 60(b) should only be granted where extraordinary justifying circumstances are present, in part because of the judicial system's interest in the finality of judgments. Given the standard, Floorgraphics' motion was an uphill battle from the start. While it appears that the discovery received by Floorgraphics was incomplete, it apparently was not an extraordinary enough shortfall to warrant undoing the judgment in the case.

The Court heard argument on Floorgraphics' motion yesterday, and rejected it.

Insignia's lawsuit against News America is still pending, and is scheduled for trial in December.

Related documents: FGI's Motion; News' Response; FGI's Reply; News' Letter; Proposed Order

Related article: SF Chronicle.

Monday, May 10, 2010

Insignia v News Set for December 2010 Trial

Trial in the Insignia v. News America Marketing lawsuit has been scheduled for December 6, 2010.

A settlement conference was held on April 12, 2010, but no settlement was reached. The Court held a status conference on May 4, 2010, and Insignia had hoped for a trial date within a couple months of that date. But trial is expected to last one to two months, which complicates scheduling, and contributed to the December 2010 trial date.

Meanwhile, in Floorgraphics v. News America Marketing, a hearing has been set for May 12, 2010 on Floorgraphics' motion under Rule 60(b) to vacate the settlement between the parties in light of the fact that News America failed to produce videos and other evidence to Floorgraphics that was produced to Valassis in its successful trial against News America.

Sunday, April 4, 2010

News America Whistleblower Emmel Files Appellate Brief Challenging Injunction

On Friday, former News America Marketing employee and whistleblower Robert Emmel filed his opening brief appealing a district court's imposition of an injunction barring him from disclosing confidential News America information.

Mr. Emmel had complained to government authorities about News America Marketing's anti-competitive business practices prior to his termination by News America in 2006. He shared information about News America with government authorities until he signed a non-disclosure agreement with News America after his termination. His last disclosure was a letter he sent to the investigative counsel for the Senate Judiciary Committee the day before signing the non-disclosure agreement.

News America wanted to prevent Mr. Emmel from serving as a witness in several lawsuits pending against News America, and filed suit against Emmel alleging that he unlawfully shared the information, and that he unlawfully kept an electronic copy of numerous News America documents. The pending lawsuits against News America were filed by News America competitors Floorgraphics, Valassis, and Insignia Systems, each of which alleged that News America had engaged in anti-competitive business practices, consistent with Mr. Emmel's allegations.

Although News America's attorneys had possession of Mr. Emmel's documents, they did not timely disclose those documents to Floorgraphics in discovery. When Mr. Emmel revealed the existence of the documents, Floorgraphics was able to use the documents and his live testimony in its trial against News America, which ended in a $29.5 million settlement. Valassis later won a $300 million judgment against News America in state court, and settled that lawsuit and related suits for $500 million. Mr. Emmel appeared at the Valassis trial via a videotaped deposition. The Insignia lawsuit is scheduled for trial later this year.

In News America's suit against Mr. Emmel, the lower court found that Mr. Emmel's mailing the day before signing the non-disclosure agreement was in breach of the agreement. The court entered an injunction against Mr. Emmel barring him from disclosing any News America information. The court also found that a jury trial was required on the issue of whether News America was entitled to any of its attorneys' fees in the case, which exceeded $1.5 million. In response, Mr. Emmel declared bankruptcy.

In his appeal, Mr. Emmel argues that the non-disclosure agreement was not intended to apply retroactively to the mailing, and he argues that News America failed to prove that the mailing was ever received. Further, he states that disclosure to government authorities of alleged wrongdoing is protected on public policy grounds, that the injunction is overly broad, and contrary to his rights under the First Amendment.

While it appears that Mr. Emmel's appeal may have merit, it is unclear whether he will receive a ruling on his appeal before the Insignia v. News America trial at which he could potentially serve as a witness.

Thursday, March 11, 2010

Floorgraphics Seeks to Undo Settlement with News America Based on Non-Disclosure of Evidence

Floorgraphics Rule 60(b) Motion for Relief from Judgment - In the wake of News America's $500 million settlement with FSI competitor Valassis, News America's former in-store floor and shelf advertising competitor, Floorgraphics, has filed a motion pursuant to Fed. R. Civ. P. 60(b) to undo its $29.5 million mid-trial settlement with News America.

As grounds for its request, Floorgraphics cites News America's failure to disclose evidence to Floorgraphics in discovery – despite being responsive to Floorgraphics' discovery requests – that subsequently emerged during Valassis' trial against News America Marketing in Michigan state court. That evidence included, for example, videos of senior News America executives making statements about anticompetitive tactics that they were using against Valassis and Floorgraphics, and budget books purportedly showing that their contracts with retailers were unprofitable. This evidence proved to be very persuasive to a jury in the Valassis trial – which resulted in a $300 million verdict. If Floorgraphics had received this material in discovery, Floorgraphics presumably would have been less ready to settle.

Floorgraphics has asked the Court to grant it access to the sealed discovery materials from the Valassis case, and has also requested a hearing on whether the judgment in the Floorgraphics case should be vacated.

While Courts are generally reluctant to reopen a case after a final judgment has been entered, especially after a voluntary settlement, it appears that Floorgraphics may have a legitimate basis to complain about News America's failure to produce these materials. News America was previously found to have failed to produce relevant documents to Floorgraphics after whistleblower Robert Emmel revealed that his files contained numerous unproduced responsive documents that bolstered Floorgraphics' case.

I'll be interested to see how the Court responds. One thing that's certain, however, is that News America will fight tooth and nail to prevent the trial from being reopened.

Insignia v. News America - Meanwhile, Insignia Systems' lawsuit against News America Marketing is inching closer to trial in federal court in Minnesota. The Court has ordered a settlement conference on April 12, 2010, and originally ordered the parties to be ready for trial by that date. News America requested that the trial be delayed, however, and the Court granted that request, stating that a trial date will be set after the completion of the settlement conference.

Wednesday, March 3, 2010

Arctic Glacier, Home City Sentenced for Criminal Customer Allocation Conspiracy

Packaged Ice companies Arctic Glacier and Home City were each sentenced to a $9 million fine for participating in a criminal conspiracy to allocate customers in violation of the Sherman Antitrust Act, 15 U.S.C. § 1.

Arctic Glacier's sentencing was February 11, while Home City was sentenced yesterday, as described in a press release issued by DOJ yesterday:

A Cincinnati packaged-ice manufacturer was sentenced today to pay a $9 million criminal fine for its participation in a conspiracy to allocate packaged-ice customers and territories, the Department of Justice announced today.

The Home City Ice Company pleaded guilty on June 17, 2008, to a one-count charge of conspiring to suppress and eliminate competition by allocating packaged-ice customers and territories in the Detroit metropolitan area and southeastern Michigan. The conspiracy began at least as early as Jan. 1, 2001, and continued until on or about July 17, 2007.

Packaged ice is marketed as high-grade ice for consumption and is sold in varying size bags and blocks. Home City Ice is a manufacturer of packaged ice with multiple locations throughout the United States.

Today's sentencing is a result of an ongoing investigation by the Antitrust Division's Cleveland Field Office and FBI offices in Ann Arbor, Mich.; Indianapolis; Toledo, Ohio; and Cincinnati. As a part of the same investigation, Arctic Glacier International Inc., a packaged-ice company headquartered in St. Paul, Minn., and three of its former executives pleaded guilty in October 2009 to allocating customers in the Detroit metropolitan area and southeastern Michigan. On Feb. 11, 2010, Arctic Glacier was sentenced to pay a $9 million criminal fine.

At Arctic Glacier's sentencing hearing, multiple individuals asserted rights under the Crime Victims Rights Act ("CVRA"), 18 U.S.C. § 3771, and spoke out about the harm caused to them by Arctic Glacier's actions. A group of packaged ice purchasers who claimed to be victims of the conspiracy opposed the plea agreement that Arctic Glacier had entered into with the government, seeking to have the agreement rejected because it made no provision for restitution and included a much narrower admission of guilty than the apparently much broader scope of the conspiracy. Two individuals represented by Kotchen & Low sought restitution for harm caused by the conspiracy, including Martin McNulty, who alleges that he was terminated and boycotted for refusing to participate in the conspiracy.

Over the objection of the purchaser victims, the trial court accepted the plea agreement, finding that the purchasers had been accorded their rights under the CVRA. The court also denied restitution to the putative victims, finding that only customers were victims of Arctic Glacier's conspiracy. The purchasers filed a mandamus petition with the Sixth Circuit under the CVRA seeking reversal of the trial court's ruling. Siding with a minority of circuits, the Sixth Circuit applied a stringent standard of review -- "clear abuse of discretion" -- to CVRA mandamus petitions. The Court went on to deny the petition, finding that the lower court had not clearly abused its discretion in finding that the purchasers had sufficiently been accorded their rights under the CVRA, as described here.

Mr. McNulty also petitioned for a writ of mandamus from the Sixth Circuit, which the Sixth Circuit denied under the clear abuse of discretion standard, finding that he was not a foreseeable victim of a customer allocation conspiracy, as described in National Law Journal, CompLaw360, and the Sentencing Law and Policy Blog. Mr. McNulty continues to pursue a RICO case against Arctic Glacier, Home City, and Reddy Ice related to his termination and boycott.

Class action antitrust lawsuits are also pending against the three major packaged ice companies by purchasers of packaged ice.

Saturday, January 30, 2010

Valassis Accepts $500 Million Settlement from News America

A few days before Valassis' federal trial against News America Marketing was scheduled to begin, Valassis announced that it has accepted a $500 million settlement to resolve not only the federal case, but also the pending California state court case, and the Michigan case where a $300 million jury verdict is on appeal.

In addition to the monetary payment, the settlement provides that the judge will issue a permanent injunction preventing News America from engaging in certain of the business practices at issue, and News America will also enter into a 10-year shared mail distribution agreement with Valassis Direct Mail.

While $500 million is a large sum of money, Valassis had alleged that News America's anti-competitive conduct, including alleged violations of the antitrust laws, had caused $1.5 billion in damages to Valassis, and Valassis was seeking treble damages.

Valassis CEO Alan F. Schultz stated, "I am pleased that we were able to reach a mutually agreeable settlement and avoid protracted future litigation."

In a press release issued by News Corporation today, News stated:

"It has become evident to our legal advisors from pre-trial proceedings over the past couple of weeks that significant risks were developing in presenting this case to a jury. That, coupled with concerns over the venue, led us to believe it was in the best interests of the Company and its stockholders to agree to a settlement."
News America was concerned that the Detroit, Michigan venue would favor Valassis, which is based in Livonia, Michigan. News America had requested that they be allowed to submit a questionnaire to jurors about possible bias, and to move to transfer venue if the responses suggested such a bias. Judge Tarnow denied the request for a written questionnaire on January 22, 2010, though News America still had an opportunity to question potential jurors about possible bias during voir dire.

Given the outcome of the Michigan state court trial, and the damaging evidence that Valassis introduced in that case, News America had reason to be concerned about the risk of trial. News America had filed motions with the Court seeking to exclude certain evidence, including, for example, references to the state court verdict against News America, an internal Valassis memo – dubbed the "Valassis Dolphin Project Memo" – analyzing the reasons for News America's aggressive tactics, and a statement made a representative of Sara Lee who stated that it "[f]eels like they [News America] are raping us and they enjoy it."

With the settlement of all three Valassis cases against News, and the prior settlement with Floorgraphics, the only major lawsuit News America still faces is the Insignia v. News America case currently pending in federal court in Minnesota.

Tuesday, January 26, 2010

Conference on Consumer Goods, Retail, and Antitrust

The Global Competition Review is sponsoring a conference on "Competition Law, Consumer Goods and Retail," to be held in London on March 23, 2010.

According to GCR's conference web site:
The focus of competition regulators on the supply chain and retailing of fast moving consumer goods continues to grow. More enforcement activity at EU and national level is expected. This conference will examine the key areas of concern.
  • Information flows - the dangers: supplier/retailer contacts; 'hub and spoke' cartels; information exchange; collaboration to achieve environmental and other policy objectives; trade associations
  • The customer/competitor relationship - resale price maintenance; category management, pricing (rebates, over-riders, stocking allowances, delisting)
  • Buyer power - nature and sources; buyer alliances; approaches of regulators
  • Consolidation: FMCG and retail mergers
  • Online distribution and sales restrictions
More information is available here.

Wednesday, January 13, 2010

Oral Arguments Heard in American Needle v. NFL

The Supreme Court heard oral argument today in American Needle v. NFL, a case this blog previously posted about here.

The NFL argued that it constituted a single entity that can collectively license its merchandise and enter into exclusive licenses on behalf of all NFL teams, even if the result is increased prices. At issue was an exclusive licensing deal that the NFL entered into with Reebok, giving Reebok exclusive rights, thereby excluding American Needle, which previously sold NFL-branded headwear.

As reported by the New York Times here, the Supreme Court was skeptical of the NFL's argument that its licensing activities were entirely immune from antitrust scrutiny under the single-entity Copperweld doctrine. Justice Scalia, for example, asserted that the purpose of apparel sales was to make money, not to promote the game. This blog's previous post on the topic was similarly skeptical of the NFL's arguments, suggesting that the teams do not act as a single economic unit in the sale of team apparel.

A transcript of the oral argument is available here.

Kotchen & Low LLP Appointed Co-Lead Interim Class Counsel in Airline Baggage Fee Antitrust Litigation

On January 5, 2010, Judge Timothy Batten of the U.S. District Court for the Northern District of Georgia appointed Kotchen & Low LLP as Co-Lead Interim Class Counsel in MDL 2089, In Re Airline Baggage Fee Antitrust Litigation. Kotchen & Low LLP represents a proposed class of airline passengers who paid first checked bag fees to Delta or AirTran Airlines and who allege that these two airlines colluded prior to imposing the fee.

In the order appointing Kotchen & Low LLP and its partner law firms, the Court stated that:

[T]hese firms are well suited to manage this litigation and efficiently litigate this action in the best interest of the putative class. It is particularly significant to the Court that the law firms of Kotchen and Low LLP [and its partner firms] initiated this litigation by filing the first complaint pertaining to this matter. Indeed, these firms have performed all of the substantive work – spanning seven months – in identifying, investigating, and drafting the claims that have now been largely adopted by other attorneys in the tag-along actions. Additionally, these firms have extensive antitrust and class action experience, and have abundant resources to effectively litigate this action.

Kotchen & Low and its partner law firms – Richardson, Patrick, Westbrook & Brickman LLC; McCulley McCluer PLLC; and Conley Griggs LLP – filed the original complaint in this case in May 2009. Eleven cases making virtually identical allegations were filed by numerous other law firms, and they were consolidated before Judge Batten by the Judicial Panel on Multidistrict Litigation in October 2009. The Court appointed Kotchen & Low and its partner law firms despite competing motions from attorneys in the tag-along actions.

Kotchen & Low LLP Appointed Co-Lead Interim Class Counsel in Wholesale Grocery Antitrust Litigation

On December 15, 2009 Judge Ann Montgomery of the U.S. District Court for the District of Minnesota appointed Kotchen & Low LLP as Co-Lead Interim Class Counsel in In re Wholesale Grocery Products Antitrust Litigation, MDL 2090. Kotchen & Low LLP represents a proposed class of retail grocery stores that purchased wholesale grocery products from Defendants C&S Wholesale Grocers Inc. or Supervalu Inc. and allege that the two defendants engaged in a per se unlawful customer and territorial allocation conspiracy in connection with an asset swap agreement.

In the order appointing Kotchen & Low LLP, Judge Montgomery stated that: “the Court finds that Kotchen & Low’s efforts in originating the first action that was filed in the multi-district litigation warrants their inclusion as co-lead counsel.”

Kotchen & Low filed the original complaint in this case in December 2008. Several cases making virtually identical allegations were filed by other law firms, and the cases were consolidated before Judge Montgomery by the Judicial Panel on Multidistrict Litigation in October 2009. Plaintiffs filed a Consolidated Amended Class Action Complaint on January 4, 2010.


The Law Firm of Kotchen & Low LLP - Civil Litigation, Counseling, and Representation Before Government Agencies

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