Supreme Court Turns Down Trio of Antitrust Appeals

Supreme Court Turns Down Trio Of Antitrust Appeals

ByMatthew Perlman

Law360, New York (October 2, 2017, 2:48 PM EDT) -- TheU.S. Supreme Courton Monday turned down appeals concerning alleged antitrust schemes in the polystyrene container recycling, maritime vehicle shipping, and medical-surgical supply industries, leaving wins in place for the defendants in each case.
Defunct polystyrene recycling company Evergreen Partnering Group hadpetitioned the justicesin its suit alleging Solo Cup,Dart Containerand other food container manufacturers conspired against Evergreen. The other two petitions camefrom a group of buyersof vehicles transported by maritime shipping companies involved in an alleged conspiracy,and fromSuture Express in its suit accusing a pair of national medical supply companies of illegally offering bundled discounts.
On Monday the high court did not provide its rationale for denying the three petitions, which is customary.
Evergreen had alleged that Solo, Dart,Pactiv Corp., Dolco Packaging, Genpak LLC and theAmerican Chemistry Councilcould not abide a successful recycling company causing upheaval in the market. The manufacturers allegedly agreed not to pay Evergreen the commission it depended on, pumped up a sham competitor, and planted positive stories in the press about non-Evergreen entities.
A district judge dismissed that suit, but the decision was reversed at the First Circuit, and Genpak has since settled out, according to court records. On remand, the remaining defendants won summary judgment, which was upheld by a three-judge First Circuit panel inAugust 2016.
The panel found a lack of evidence of a conspiracy, saying that the container companies had other rational reasons not to do business with Evergreen. The panel added that some of the companies did engage in business with Evergreen, buying its products even during the alleged conspiracy, just not on all the terms Evergreen wanted. Other companies tested the product but decided against closing a deal, the panel said.
Evergreen said in its March 2017 certiorari petition that the First Circuit was wrong and that if the ruling is upheld, then evidence in cases like this one would need to rise to the level of a "smoking gun" to get the cases before a jury. Evergreen argued that the circuit ruling conflicted with Supreme Court precedent on the standard that must be overcome at the summary judgment stage in antitrust cases and deepened a circuit split on the issue
An attorney for Evergreen, Richard Wolfram, told Law360 on Monday that the high court missed an opportunity to create clarity on an important issue by not taking the case, and said confusion around the proper standard for summary judgment in antitrust cases is not going away.
“Although the Court understandably focuses on issues of law and not fact for petitions that it accepts, one has to wonder what set of facts — with the lower court here improperly weighing evidence and making credibility determinations and applying the much-criticized equal inferences rule — would serve as a better vehicle for resolving this question,” Wolfram said.
In the maritime shipping case, auto and equipment dealers and other vehicle purchasers had sued several shipping companies — includingWallenius Wilhelmsen Logistics,Nippon Yusen Kabushiki KaishaandMitsui O.S.K. Lines Ltd. — after competition authorities in Japan, the U.S., Canada and Europe launched probes of the industry.
The purchasers accused the companies of a conspiracy to fix prices, allocate customers, and restrict capacity for vehicle carrier services on ocean shipping routes that dated back to as early as 1997.
A New Jersey federal judge in August 2015 dismissed the multidistrict litigation, finding that the purchasers’ federal and state antitrust claims were preempted by the Shipping Act.
A Third Circuit panelconcurred in January 2017, saying that the Shipping Act of 1984 provides shipping companies with immunity from private antitrust suits based on conduct prohibited by the act. The law gives plaintiffs the opportunity to bring claims directly to theFederal Maritime Commissionand bars antitrust claims from being decided in federal or state court.
The buyers filed their petition in May, arguing that the panel’s findings rejected the views of the Federal Maritime Commission itself, which had filed a brief arguing that the buyers’ federal, but not state, claims were preempted. The ruling also created a split with the Ninth Circuit over when federal courts should apply a presumption against preemption of state laws, the buyers said.
An attorney for the buyers, Warren T. Burns ofBurns Charest LLP, told Law360 on Monday that they are disappointed with the petition's denial but that it is not a “great surprise” considering the limited number of cases taken up by the Supreme Court each term.
“We remain eager to pursue our clients' claims before the Federal Maritime Commission,” Burns said. “We hope this disappointing ruling will clear the way for commission action.”
As for Suture Express, it had filed its $200 million suit in December 2012 accusingCardinal Health200 LLC andOwens & Minor Distribution Inc. of using their market power over the distribution of medical-surgical supplies to squeeze more business out of acute care providers that would otherwise prefer to shop elsewhere for products used to seal wounds.
Suture Express claims that as the only distribution company operating solely in the wound-closure product niche, Suture Express thrived thanks to providing a greater selection, better service and lower costs than the defendants, until the alleged antitrust scheme began in 2008. Under the scheme, the suppliers charged a higher price, either through penalties or the elimination of discounts, to customers that did not buy at least 90 percent of their wound closure products through the suppliers, according to that suit.
The district court granted summary judgment to Cardinal and O&M in March 2016, finding that Suture Express failed to prove the two had dominant positions in the market and that competition was injured by the alleged scheme. A Tenth Circuit panelaffirmed in March 2017.
In its June petition, Suture Express asked the justices to settle what it said was a circuit split over whether market power needs to exist when deciding so-called rule-of-reason claims, where the bundling of products is alleged to be anti-competitive. The petition said that the First, Third and Ninth circuits have found the claims can go forward in a bundled, or tied, market only when they are found to have actual anti-competitive effects. The Tenth and Eleventh circuits say that those effects must be shown and that the seller has to have “sufficient market power” in that market.
The Fifth Circuit has its own interpretation, where the market power must still be considered, but not as much as the anti-competitive effects, Suture Express said in its petition.
An attorney for Suture Express declined to comment Monday.Respective counsel for the cup manufacturers, shipping companies and medical supply companies did not respond to requests for comment Monday.
Evergreen is represented by Richard Wolfram.
Solo Cup Co. and Dart Container Corp. are represented by William E. Lawler III, John P. Elwood and Ralph C. Mayrell ofVinson & Elkins LLP. Pactiv is represented by Richard A. Sawin Jr. and Richard E. Bennett ofMichienzie & Sawin LLC. Dolco is represented by Steven M. Cowley ofDuane Morris LLP. The American Chemistry Council is represented by Ralph T. Lepore III, Michael T. Maroney and Benjamin M. McGovern ofHolland & Knight LLP.
The case is Evergreen Partnering Group et al. v. Pactiv Corp. et al., case number 16-1148, before the Supreme Court of the United States.
The vehicle purchasers are represented by Burns Charest LLP,Robins Kaplan LLP,Cotchett Pitre & McCarthy LLP,Cuneo Gilbert & Laduca LLP,Barrett Law Group PA,Larson King LLP, and Duane Morris LLP.
The shipping companies are represented by Roberto Andres Rivera-Soto ofBallard Spahr LLP.
The case is Alban et al. v. NYK Line Inc. et al., case number 16-1415, before the Supreme Court of the United States.
Suture Express is represented by Sanford I. Weisburst, Stephen R. Neuwirth and David M. Cooper ofQuinn Emanuel Urquhart & Sullivan LLPand Daniel M. Abuhoff, Michael Schaper and Erica Weisgerber ofDebevoise & Plimpton LLP.
Cardinal and O&M are represented by Shay Dvoretzky ofJones Day LLP.
The case is Suture Express v. Owens & Minor et al., case number 16-1487, in the Supreme Court of the United States.
--Additional reporting by Eric Kroh and Dani Kass. Editing by Edrienne Su.