Justia U.S. 6th Circuit Court of Appeals Opinion SummariesArticles Posted in Antitrust & Trade Regulation
Bearden v. Ballad Health
The Tennessee Department of Health allowed two healthcare companies to merge into Ballad Health. Some of the board members of the resulting entity also had ties to another area healthcare organization, MEAC. The plaintiffs filed suit, alleging that Ballad, MEAC, and individual defendants had created an interlocking directorate in violation of the Clayton Antitrust Act, 15 U.S.C. 19. The defendants moved to dismiss the case for lack of standing. The plaintiffs sought to amend their complaint. Their proposed 29-page complaint included “allegations” that amounted to “colorful insults,” such as that MEAC “surrendered to [Ballad] much in the manner Marshal Petain surrendered France" to Hitler.The Sixth Circuit affirmed the dismissal of the case. Plaintiffs must allege the elements of standing as they would any other element of their suit. The plaintiffs failed to alleged injury in fact by showing that they suffered “an invasion of a legally protected interest” that is “concrete and particularized” and “actual or imminent, not conjectural or hypothetical.” The plaintiffs alleged legal conclusions, speculative risks, and the interests of the general public, saying nothing about what medical services they have sought in the past, what services they will seek in the future, or how the dissolution of MEAC would affect their access to these services. Nothing in the Clayton Act purports to create a novel injury in fact or an exception to the case-or-controversy requirement. View "Bearden v. Ballad Health" on Justia Law
Saginaw County. v. STAT Emergency Medical Services, Inc.
Saginaw County has nearly 200,000 residents. A single company, Mobile Medical, has provided the county’s ambulance services since 2009. The county guaranteed Mobile the exclusive right to operate within its borders; Mobile pledged to serve all eight of Saginaw County’s cities and incorporated villages and its 27 rural townships. In 2011, STAT, a competing ambulance company, entered the Saginaw market, providing patient-transport services for an insurer as part of a contract that covered six Michigan counties. A municipality, dissatisfied with Mobile’s response times and fees, hired STAT. When Saginaw County proposed to extend Mobilel’s contract in 2013, STAT objected, arguing that the arrangement violated state law, federal antitrust law, and the Fourteenth Amendment. The county approved Mobile's new contract and enacted an ordinance that codified the exclusivity arrangement but never enforced the ordinance. STAT continued to insist that Michigan law permitted it to offer ambulance services. Saginaw County sought a federal declaratory judgment that Michigan law authorizes the exclusive contract and that it does not violate federal antitrust laws or the U.S. Constitution by prohibiting STAT from operating in the county. The Sixth Circuit affirmed the dismissal of the claim for lack of jurisdiction. The county failed to establish an actual or imminent injury. Federal courts have the power to tell parties what the law is, not what it might be in potential enforcement actions. View "Saginaw County. v. STAT Emergency Medical Services, Inc." on Justia Law
Medical Center at Elizabeth Place, LLC v. Atrium Health System
MCEP, an acute care, for-profit hospital owned by 60 physicians and one corporate shareholder, opened in 2006. By 2009, MCEP’s existence as a physician-owned enterprise ended when it sold an ownership interest to Kettering Health Network, a competitor in the Dayton healthcare market. MCEP alleges that it failed because of the anticompetitive actions of Premier, a dominant healthcare network in the Dayton area. MCEP alleges that Premier contracted with area physicians and payers (insurers and managed-care plan providers) on the condition that they did not do business with MCEP. MCEP claims that Premier engaged in a conspiracy so devoid of benefit to the market as to be per se illegal under the Sherman Act, 15 U.S.C. 1. The Sixth Circuit affirmed summary judgment in favor of the defendants. To be per se illegal, a defendant’s conduct has to be so obviously anticompetitive that it has no plausibly procompetitive features. Premier’s contracts with payers and physicians had plausibly procompetitive features. It is plausible that panel limitations, which prohibited referrals to MCEP, lower the cost of defendants’ services and improve “cost effectiveness and efficiencies in the delivery of health care services.” View "Medical Center at Elizabeth Place, LLC v. Atrium Health System" on Justia Law
Innovation Ventures, LLC v. Nutrition Science Laboratories, LLC
Innovation sold 5-Hour Energy. In 2004, it contracted with CN to manufacture and package 5-Hour. Jones, CN's President and CEO, had previously manufactured an energy shot. When the business relationship ended, CN had extra ingredients and packaging, which Jones used to continue manufacturing 5-Hour, allegedly as mitigation of damages. The companies sued one another, asserting breach of contract, stolen trade secrets or intellectual property, and torts, then entered into the Settlement, which contains an admission that CN and Jones “wrongfully manufactured” 5-Hour products and forbids CN from manufacturing any new “Energy Liquid” that “contain[s] anything in the Choline Family.” CN received $1.85 million. CN was sold to a new corporation, NSL. Under the Purchase Agreement, NSL acquired CN's assets but is not “responsible for any liabilities ... obligations, or encumbrances” of CN except for bank debt. The Agreement includes one reference to the Settlement. NSL, with Jones representing himself as its President, took on CN’s orders and customers, selling energy shots containing substances listed in the Choline Family definition. Innovation sued. Innovation was awarded nominal damages for breach of contract. The Sixth Circuit affirmed the rejection of defendants’ antitrust counterclaim, that NSL is bound by the Settlement, and that reasonable royalty and disgorgement of profits are not appropriate measures of damages. Jones is not personally bound by the Agreement. Upon remand, Innovation may introduce testimony that uses market share to quantify its lost profits. The rule of reason provides the proper standard for evaluating the restrictive covenants; Defendants have the burden of showing an unreasonable restraint on trade. View "Innovation Ventures, LLC v. Nutrition Science Laboratories, LLC" on Justia Law
Cates v. Crystal Clear Technologies, LLC
Plaintiffs are homeowners in centrally-planned neighborhoods in Thompson’s Station, Tennessee. The developers established and controlled owners’ associations for the neighborhoods but have transferred that control to third-party entities not controlled by either the developers or homeowners. While under the developers’ control, the associations each entered into agreements granting Crystal the right to provide telecommunications services to the neighborhoods for 25 years, with an option for Crystal to unilaterally renew for an additional 25 years. The Agreements make Crystal the exclusive agent for homeowners in procuring services from outside providers. Homeowners must pay the associations a monthly assessment fee, which the associations use to pay Crystal, regardless of whether the homeowner uses Crystal's service, and must pay Crystal $1,500 for the cost of constructing telecommunications infrastructure. Crystal uses service easements within the neighborhoods. Crystal had no prior experience in telecommunications-services and contracts with another provider, DirecTV, and charges homeowners a premium above the rate negotiated with DirecTV. Crystal does not provide services outside of the neighborhoods. The plaintiffs claimed that the Agreements constituted self-dealing, unjust enrichment, unconscionability, unlawful tying, and unlawful exclusivity. The Sixth Circuit reversed dismissal, in part, finding plaintiffs’ allegations plausible on their face with respect to the tying claim, but affirmed dismissal of the exclusivity claim. View "Cates v. Crystal Clear Technologies, LLC" on Justia Law
Energy Conversion Devices Liquidation Trust v. Trina Solar Ltd.
The defendant companies, based in China, produce conventional solar energy panels. Energy Conversion and other American manufacturers produce the newer thin-film panels. The Chinese producers sought greater market shares. They agreed to export more products to the U.S. and to sell them below cost. Several entities supported their endeavor. Suppliers provided discounts, a trade association facilitated cooperation, and the Chinese government provided below-cost financing. From 2008-2011, the average selling prices of their panels fell over 60%. American manufacturers consulted the Department of Commerce, which found that the Chinese firms had harmed American industry through illegal dumping and assessed substantial tariffs. The American manufacturers continued to suffer; more than 20 , including Energy Conversion, filed for bankruptcy or closed. Energy Conversion sued under the Sherman Act, 15 U.S.C. 1, and Michigan law, seeking $3 billion in treble damages, claiming that the Chinese companies had unlawfully conspired “to sell Chinese manufactured solar panels at unreasonably low or below cost prices . . . to destroy an American industry.” Because this allegation did not state that the Chinese companies could or would recoup their losses by charging monopoly prices after driving competitors from the field, the court dismissed the claim. The Sixth Circuit affirmed. Without such an allegation or any willingness to prove a reasonable prospect of recoupment, the court correctly rejected the claim. View "Energy Conversion Devices Liquidation Trust v. Trina Solar Ltd." on Justia Law
Shane Group, Inc. v. Blue Cross Blue Shield of Mich.
Blue Cross controls more than 60% of the Michigan commercial health insurance market; its patients are more profitable for hospitals than are patients insured by Medicare or Medicaid. BC enjoys “extraordinary market power.” The Justice Department (DOJ) claimed that BC used that power to require MFN agreements: BC would raise its reimbursement rates for services, if a hospital agreed to charge other commercial insurers rates at least as high as charged to BC. BC obtained MFN agreements with 40 hospitals and MFN-plus agreements with 22 hospital systems. Under MFN-plus, the greater the spread between BC's rates and the minimum rates for other insurers, the higher the rates that BC would pay. Class actions, (consolidated) followed the government’s complaint, alleging damages of more than $13.7 billion, and seeking treble damages under the Sherman Act, 15 U.S.C 15. In 2013, Michigan banned MFN clauses; DOJ dismissed its suit. During discovery in the private actions, plaintiffs hired an antitrust expert, Leitzinger. BC moved to exclude Leitzinger’s report and testimony. Materials relating to that motion and to class certification were filed under seal, although the report does not discuss patient information. BC agreed to pay $30 million, about one-quarter of Leitzinger's estimate, into a settlement fund and not to oppose requests for fees, costs, and named-plaintiff “incentive awards,” within specified limits. After these deductions, $14,661,560 would be allocated among three-to-seven-million class members. Class members who sought to examine the court record or the bases for the settlement found that most key documents were heavily redacted or sealed. The court approved the settlement and denied the objecting class members’ motion to intervene. The Seventh Circuit vacated, stating that the court compounded its error in sealing the documents when it approved the settlement without meaningful scrutiny of its fairness to unnamed class members . View "Shane Group, Inc. v. Blue Cross Blue Shield of Mich." on Justia Law
Med. Ctr. at Elizabeth Place, LLC v. Atrium Health Sys.
Plaintiff is a 26-bed, for-profit, physician-owned hospital that specializes in acute-care surgical services. Its Dayton-area competitors include the defendant hospitals (Premier Group), which have joint operating agreement for negotiating managed care insurance contracts and sharing revenues and losses through an agreed-upon formula, while maintaining separate asset ownership and filing separate tax returns and other corporate forms. Plaintiff sued, alleging violation of the Sherman Act, claiming that Premier was not a single entity, but a group of hospitals capable of concerted action to keep plaintiff from competing in the market. The court dismissed, concluding that Premier was a single entity. The Sixth Circuit reversed, citing the Supreme Court’s multi-factored test for determining whether a joint venture constitutes a “combination” under 15 U.S.C. 1: the condition of the business before and after the restraint is imposed; the nature of the restraint and its effect, actual or probable; the reason for adopting the particular remedy, and the purpose or end sought to be attained. The summary judgment record indicated that the purpose of Premier was to prevent plaintiff from entering the Dayton market; there was evidence of coercive conduct, threatening physicians and insurance companies with financial loss if they did business with plaintiff. There was also evidence of continued competition among the defendants, creating a genuine issue of material fact. View "Med. Ctr. at Elizabeth Place, LLC v. Atrium Health Sys." on Justia Law
Allied Erecting & Dismantling Co. Inc. v. Genesis Equip. & Mfg., Inc.
Allied, founded in 1973 by Ramun, competes with Genesis in the field of industrial dismantling and scrap processing, including the design, development, and manufacture of related specialized equipment. From 1992-2001, Ramun’s son Mark worked at Allied. By 1999, Allied developed innovative multi-use demolition machine attachments, called MT. Various sizes and types of jawsets, including a steel beam cutter and a concrete crusher, were available, allowing the MT operator to perform different tasks with just one tool. The jawset could be changed without removing the main pin, saving time and enhancing productivity. Mark had detailed information regarding the design and function of the attachment, which was highly confidential. In 2001 Mark left Allied, taking a laptop containing 15,000 pages of Allied documents, including detailed technical information about the MT. Mark joined Genesis in 2003. Genesis later released its own multiuse tool. Genesis brought trade secret claims, based on similarity to the MT. A jury rendered a verdict in favor of Allied. The court awarded damages but refused to enter an injunction. The Sixth Circuit affirmed dismissal of a subsequent suit under the Ohio Uniform Trade Secrets Act, alleging misappropriation after that verdict, citing issue preclusion. View "Allied Erecting & Dismantling Co. Inc. v. Genesis Equip. & Mfg., Inc." on Justia Law
Kehoe Component Sales Inc. v. Best Lighting Prods., Inc.
Best designs and markets exit signs and emergency lighting. Pace manufactured products to Best’s specifications. Best’s founder taught Pace how to manufacture the necessary tooling. There was no contract prohibiting Pace from competing with Best. By 2004, Best was aware that Pace was selling products identical to those it made for Best to Best’s established customers. Several other problems arose between the companies. When they ended the relationship, Pace was in possession of all of the tooling used to manufacture Best’s products and the cloned products, and Best owed Pace almost $900,000 for products delivered. Pace filed a breach of contract suit. Best requested a setoff of damages for breach of warranty and counterclaimed for breach of contract, tortious interference, misappropriation of trade secrets, conversion, and fraud. Pace claimed that Best had misappropriated Pace’s trade secrets and had tortiously interfered with Pace’s contracts. The district court found that Best had breached its contractual obligations by failing to pay, but that Pace was liable for breach of warranties, breach of contract, tortious interference, misappropriation of trade secrets, conversion, and false designation of origin and false advertising under the Lanham Act. The Sixth Circuit affirmed that Pace is liable for breach of contract and tortious interference, but reversed or vacated as to the trade secrets, Lanham Act, conversion, and warranties claims. View "Kehoe Component Sales Inc. v. Best Lighting Prods., Inc." on Justia Law