October Antitrust Bulletin

October 16, 2013

Supreme Court Refuses Milk Pricing Class Action Appeal

On October 7, in DairyAmerica, Inc. v. Carlin, the U.S. Supreme Court refused to review the Ninth Circuit’s ruling that overturned the dismissal of monetary claims in an action brought by dairy farmers alleging that Dairy America, Inc., and California Dairies, Inc. (together, “Dairy America”), misreported pricing data to the United States Department of Agriculture (USDA). The USDA sets the minimum dairy prices by issuing federal milk marketing orders based on pricing data reported by distributors such as Dairy America. The district court had dismissed the farmers’ monetary claims as barred by the filed rate doctrine, a rule that bars private actions in certain industries where the pricing terms are set by the sectors’ federal overseers.

The Ninth Circuit reversed the district court’s decision, reasoning that an exception to the filed rate doctrine applied; i.e., where the federal agency has rejected the questionable rate, the filed rate doctrine does not bar private action. The Ninth Circuit found that the USDA’s recalculation of the minimum dairy prices constituted a sufficient rejection such that the filed rate doctrine was not a bar to litigation, and the dairy farmers could pursue their claims against Dairy America.

District Court Dismisses Antitrust Action Against Highmark and UPMC

On September 27, the U.S. District Court for the Western District of Pennsylvania dismissed plaintiffs’ complaint in Royal Mile Co. v. UPMC, which alleged that Highmark Inc. entered into an anticompetitive agreement with the University of Pittsburgh Medical Center (UPMC) that inflated consumer premiums. The court held that the antitrust claims are barred by the filed rate doctrine because the insurance rates at issue were set by the state’s insurance regulator. The suit specifically accused Highmark, the leading health insurer in western Pennsylvania, of conspiring with UPMC, the leading health care system in western Pennsylvania, to monopolize the markets for medical care and health insurance in the Pittsburgh area. As a result of the alleged conspiracy, the plaintiffs purportedly paid excessive insurance premiums. The court found that state regulators approved the specific base rate Highmark used and the rate formulas. The court also found that it therefore could not interfere with or review the state regulators’ decisions. The court, however, granted the plaintiffs 30 days to amend their complaint.

Court Official Sides With DOJ, US Airways Can’t Have Information Obtained from DOJ Interviews

On October 10, Special Master Judge Richard Levie ruled that American Airlines, Inc., and US Airways Group, Inc., are not entitled to most of the evidence that drove the U.S. Department of Justice (DOJ) to block the $14 billion merger of these two airlines. The airlines wanted to know who the DOJ interviewed and what the DOJ learned from them during its analysis of the proposed merger, prior to initiating the blocking lawsuit. The DOJ had provided the airlines with a list of individuals likely to have discoverable information, but not whom they specifically interviewed and what they learned from the interviewees.

Special Master Levie was appointed to oversee discovery, including discovery disputes. Judge Levie recommended that the U.S. District Court for the District of Columbia find this information protected under the opinion work product doctrine because the information an attorney chooses to record is almost certainly material that the attorney deems important to the case at hand, and disclosure might nonetheless reveal the attorney’s thought processes and mental impressions of the case.

The airlines also sought documents that led the DOJ not to challenge four previous airline mergers. Although he believed the airlines met their burden of showing the requested information was relevant, Levie recommended that the district court compel the DOJ to produce only one of the six requested documents.

On October 14, the airlines said they would not appeal the special master’s ruling.

Meanwhile, Oklahoma’s attorney general urged the DOJ to approve the merger and Texas’ attorney general reached a settlement with the airlines and dropped out of the lawsuit, leaving only the attorneys general of five states and Washington, D.C., in the lawsuit.

$740 Million Price-Fixing Fine Imposed on Japan Auto Parts Makers

Following the guilty plea of a former G.S. Electech executive, nine Japanese-based automobile parts manufacturers and two of their executives pled guilty and agreed to pay fines totaling more than $740 million for their roles in price-fixing conspiracies that increased the cost of cars sold in the United States and elsewhere. The illegal activities affected more than $5 billion in automobile parts sold to U.S. car manufacturers. It also affected more than 25 million cars purchased by American consumers. Price-fixed parts included air-conditioning systems, windshield wipers, radiators, alternators, power window motors, and power steering assemblies. This investigation is the largest criminal investigation the DOJ antitrust division has ever pursued in terms of scope and affected commerce, and so far 20 companies and 21 executives have been charged, with the indicted companies agreeing to plead guilty and to pay more than $1.6 billion in criminal fines.

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