FTC v. Superior Ct. Trial Lawyers Assoc. (1990)
Base Facts: Boycott by D.C. trial lawyers who demanded higher fees before
taking court appointed assignments. Rates were raised and FTC sued for
violation of FTC act. Appellate Ct. remanded on grounds that it was
“expressive boycott” and FTC should have inquired into market power and
First Amendment freedoms.
What is an “expressive” boycott?
Did lawyers have market power?
What if select individual lawyers refused assignments until fees raised? When
are there too many?
Law 552 - Antitrust - Instructor:
Dwight Drake
FTC v. Superior Ct. Trial Lawyers Assoc. (1990)
Base Facts: Boycott by D.C. trial lawyers who demanded higher fees before
taking court appointed assignments. Rates were raised and FTC sued for
violation of FTC act. Appellate Ct. remanded on grounds that it was
“expressive boycott” and FTC should have inquired into market power and
First Amendment freedoms.
First Issue: Was per se rule applicable to boycott?
Decision: Yes
- Boycott was price-fixing cartel, illegal per se.
- Social utility and political wisdom irrelevant.
- Per se rule for administrative convenience (no need for market power
showing), but also reflect long-standing judgment that prohibited acts do injure
competition.
Law 552 - Antitrust - Instructor:
Dwight Drake
California Dental Assoc. v. FTC (1999)
Base Facts: California Dental Assoc. included 75% of all Cal. Dentists. Rules
(1) prohibited across the board discounts, (2) prohibited promotional statements
about cheap or reasonable prices, (3) prohibited claims about quality or
superior services, (4) discouraged solicitations, and (5) imposed disclosure
requirements for advertising discounts. FTC held price constrains illegal per se
and non-price constrains illegal after quick look under Sherman 1 because of
market power. Ct. of Appeals affirmed after quick look.
What is purpose of quick look?
What was purpose of restrictions?
What effect – anti or pro competitive?
Who was hurt by restrains?
Are less restrictive restraints possible?
Law 552 - Antitrust - Instructor:
Dwight Drake
California Dental Assoc. v. FTC (1999)
Issue: Did FTC error in applying quick long and per se analysis?
Decision: Yes
-Anticompetitive effects not intuitively obvious. Restrictions may be procompetitive due to knowledge gap of patients, risks of false advertising. May
have no effect on the quantity of dental services. Can’t dismiss pro-competitive
effects as presumptively wrong.
-Terms “Per Se”, “Rule of Reason” and “Quick Look” not fixed. Flow with facts
of each case. Key issue is whether restrain enhances competition. Look to
circumstances, details and logic of restrain. If clear, quick look is all that is
needed. If not clear, as here, more detailed review warranted.
Dissent: (Breyer, Stevens, Kennedy, Ginsburg) – Price, advertising, non-price
constrains all hurt competition and consumers. Antitrust injury is “plain”. Can
prohibit false advertising without prohibiting all advertising.
Law 552 - Antitrust - Instructor:
Dwight Drake
Matter of Polygram Holdings, Inc. (FYC 2003)
Why did Polygram and Warner Bros. agree to not advertise and discount ’90
and ’94 recordings?
When did FTC say per se analysis applicable?
Note: Advertising “performs indispensable role in the allocation of resources in
a free market.
Why was argument relative to future ventures defective?
Law 552 - Antitrust - Instructor:
Dwight Drake
Parker v. Brown (1943)
Basic Facts: California regulated raisin producers so as to restrict competition
among growers and maintain prices.
Why did Brown, a raisin grower, sue?
Why was State involvement so important?
Do states have the power to exempt any business from the reaches of the
Antitrust laws?
Did the fact that most of the raisins produced in Cal are shipped out of state
make a difference? Should it make a difference? Compare to thrust of the
FAIA of 1982 re: exports?
What if the Parker v. Brown issue arose in Italy?
Law 552 - Antitrust - Instructor:
Dwight Drake
Eastern Railroad President’s Conf. v. Noerr Motor Freight (1961)
Basic Facts: Competing railroads joined to convince Pennsylvania Governor to
veto legislation that would have allowed truckers to compete for large loads.
What was railroads’ bottom line purpose?
Was it a good, legitimate purpose or just political greed?
What if railroads had made agreement with truckers?
How important was the means here?
Law 552 - Antitrust - Instructor:
Dwight Drake
Eastern Railroad President’s Conf. v. Noerr Motor Freight (1961)
Basic Facts: Competing railroads jointed to convince Pennsylvania Governor
to veto legislation that would have allowed truckers to compete for large loads.
Decision: Competitors may join together to petition for change in law without
violating Sherman Act:
- Democracy requires that all have the right to tell their representatives what
they want.
- Constitutional protected right to petition government.
What if competitors use government administrative processes to bar or frustrate
entrance of other competitors? Is there a difference between government
administrative and political processes?
Law 552 - Antitrust - Instructor:
Dwight Drake
Allied Tube & Conduit Corp v. Indian Head Inc. (1988)
Basic Facts: National Fire Protection Ass. refused to approve use of plastic
electric conduit. Steel conduit interests stacked political process in Association
to prevent plastic approval. Jury awarded $3.8 million damages under
Sherman claim. Dist. Ct. entered judgment NOV on theory that NoerrPennington applied because association was “akin” to legislature.
What impact did Association have on state and local fire codes?
How did Allied Tube differ from Noerr case?
Compare the actions and purposes of steel players with those of railroads in
Noerr.
Law 552 - Antitrust - Instructor:
Dwight Drake
Allied Tube & Conduit Corp v. Indian Head Inc. (1988)
Holding: Noerr Pennington rule not apply to activities of private association.
- Must look to “context and nature of activity.”
- Noerr can’t apply to any concerted effort that may influence legislation.
Dissent (White/Oconnor): Noerr should apply because entire effort was
designed to influence government action.
What if steel interests had used same tactics to influence local code officials?
Local planning commissions?
Law 552 - Antitrust - Instructor:
Dwight Drake
What if competitors join together to bring a lawsuit which stops others from
entering market or competing? Could the lawsuit itself be a basis for a
Sherman 1 violation?
How might such a lawsuit hurt a new player?
What if the lawsuit has no substance – is frivolous?
Should Noerr Pennington protect any petition to the courts?
Law 552 - Antitrust - Instructor:
Dwight Drake
Professional Real Estate Investors v. Columbia Pictures (1993)
Basic Facts: Copyright infringement action by Columbia against resort hotels
who rented movies to guests. Copyright claims dismissed. Claim that action
itself violated Sherman 1 dismissed under Noerr-Pennington.
Holding: Noerr applied.
- Bad intent can’t turn potentially meritorious claim into sham.
- Sham requires “objectively baseless” finding and attempt to interfere “directly”
with competitors business.
Law 552 - Antitrust - Instructor:
Dwight Drake
Group Boycotts
Issue: Do group boycotts of businesses violate Sherman 1 if the purpose of the
boycott is to force legislative change?
What if the boycotts are organized and promoted by competitors of those being
hurt?
Does the nature of the desired legislation make a difference?
Law 552 - Antitrust - Instructor:
Dwight Drake
Group Boycotts
State of Missouri v. NOW (1980): Economic boycott to force ERA passage not
subject to Sherman violation. Said Sherman could apply to noncommercial and
non-economic boycotts, but here activity was to petition government under
Noerr.
NAACP v. Claiborne Hardware (1982): Non violent racial boycott to force
political change protected under First Amendment.
FTC v. Superior Court Trial Lawyers (1990): Boycott of trial lawyers to get
higher fees in court-appointed cases not protected by Noerr. Goal of boycott
was to get specific economic benefit for parties. First Amendment not
applicable to “business competitors who stand to benefit by lessening
competition through boycott”. Noerr not applicable because restrain here was
the means, not the intended consequence, of the political action.
Law 552 - Antitrust - Instructor:
Dwight Drake