11th Circuit Antitrust Update – Private Enforcement of Public Wrongs…..

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Private Enforcement of Public Wrongs . . . the Antitrust “Private Attorney General”

The cornerstone of American Antitrust policy:

the “belief that economic questions are generally best determined …through a process of independent, competitive decision‐making by profit‐seeking firms striving to serve customers who seek maximum satisfaction through their choices among market alternatives. Antitrust law aims to protect economic competition by prohibiting collusive, exclusionary, and monopolistic practices that restrain competition and thereby pose a danger of increased prices and reduced output, quality, and innovation.”

Section Four of the Clayton Act, (15 U.S.C. § 15), permits “any person who… injured in his (or her) business or property by reason of anything forbidden in the antitrust laws (to) sue…in any district court… without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney’s fee.” The statute, by permitting a private cause of actions for what are primarily penal statutes, places the plaintiff in the shoes of the Attorney General; the public’s chief law enforcement officer. Hence, a Sherman Act (15 U.S.C. § 2) private plaintiff (alleging that the Defendant is a monopolist “or (has attempted) to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations”), may be said to act as a “private Attorney General.”  Florida’s Antitrust Act, (Fla. Stat. § 542.19) generally parallels the Federal scheme.

“The distinctive system of private enforcement that we have in this country is substantially underappreciated. Congress’s venerable “private Attorney General” idea has produced tremendous benefits for the United States economy – for businesses of all sizes and, ultimately, for consumers. It has helped to deter anticompetitive behavior and to compensate victims of illegal activity. It has enabled U.S. businesses and consumers to protect themselves from economic exploitation, both by those who subvert the free market in general and by foreign cartels in particular. It has saved the U.S. taxpayer tremendous sums in enforcement costs by shifting the enormous burdens and risks of litigating against sophisticated, well-financed lawbreakers to private plaintiffs’ counsel.” (Robert H. Lande and Joshua P. Davis, An Evaluation of Private Antitrust Enforcement: 29 Cases; An Interim Report (2006))

On March 4, 2013, the U.S. Court of Appeals for the 11th Circuit, in Sunbeam Television Corp. v. Nielson Media Research (No. 11-10901), considered “an issue of first impression in this circuit.” The Court was asked to determine whether a plaintiff customer (as required of a plaintiff competitor) in an antitrust action must “prove the existence of a competitor willing and able to enter the relevant market, but for the exclusionary conduct of the incumbent monopolist.” It upheld the district court’s partial summary judgment dismissing, for lack of antitrust standing, the plaintiff’s Sherman Act (15 U.S.C. §2), Florida Antitrust Act (Fla. Stat. §542.19), and a Section 4 Clayton Act (15 U.S.A. §2) treble damages claims.

Neilson (the Respondent) is “the predominant supplier of television audience measurement services in the United States.” Its monopoly power was not disputed. Sunbeam (the Appellant) operates Miami Fox affiliate WSVN television. A Nielson customer for 30 years, Sunbeam based its allegations on what it called Nielson’s 2008 “improper and defective implementation” of a new audience rating technology in the Miami–Fort Lauderdale that “understates WSVN’s actual viewership audience.” It claimed that in this relevant market, “WSVN lost approximately $1 million per month in advertising revenue (and that its) going concern value dropped by over $100 million.” Sunbeam cited a litany of willful exclusionary acts that “insulate Nielson from competition, allow it (Nielson) to force inferior products upon its customers, and force its customers to pay (sic) supracompetitive prices.” It claimed that the exclusionary conduct dissuaded competitors “willing and able to supply a superior product,” from entering the market.

Reviewing the antitrust issue de novo, the Court noted that, “(a)ntitrust standing requires a party to do more than meet the basic ‘case or controversy’ or ‘injury in fact’ required by Article III of the Constitution….The doctrine reflects…prudential concerns and is designed to avoid burdening the courts with speculative and remote claims. Antitrust standing is a conscientious method to find the proper private plaintiff to enforce the antitrust laws.” (Emphasis added)

Because the US Supreme Court has “declined to articulate a bright-line rule,” a case-specific determination is required. The Court reiterated the 11th Circuit’s two-pronged, threshold test: (1) Did the Plaintiff suffer antitrust injury; and (2) is the Plaintiff an “efficient enforcer” of the antitrust laws?

To have antitrust standing (i.e., to be a proper plaintiff in a “private Attorney General” or “efficient enforcer” role the Court indicated that the factors a court should consider are:

 

  1. The directness or indirectness of the asserted injury;
  2. The remoteness of the injury;
  3. Whether the potential plaintiffs are better suited to vindicate the harm;
  4. Whether the damages are highly speculative;
  5. The extent which the apportionment of damages was highly complex; and
  6. Whether Plaintiff would be able to efficiently and effectively enforce the judgment.

The Appeals Court reviewed the District’s Court’s detailed analysis, adopting for the 11th Circuit that court’s finding. That is, the lower court, relying on Meijer, Inc. v. Biovail, Corp., 533 F.3d 857 (D.C. Cir. 2008), determined that a customer antitrust plaintiff carries the same burden of proof as a competitor antitrust plaintiff. The D.C. Circuit Court held that

“Just as a would-be entrant suing an incumbent firm for excluding it from a relevant market in violation of the Sherman Act must demonstrate it intended and was prepared to enter that market…so a would-be purchaser suing an incumbent monopolist for excluding a potential competitor from which it might have bought a product at a lower price must prove the excluded firm was willing and able to supply it but for the incumbent firm’s exclusionary conduct.” (Emphasis added)

The 11th Circuit Court of Appeals declared that:

“Sunbeam (the customer antitrust plaintiff) must establish that the competitor has ‘taken[n] some affirmative steps to enter the business’…To prove preparedness, a plaintiff must show that the potential competitor ‘prepared cash flows estimates and financial statements in order to determine the profitability of the expansion,’ had existing capabilities that would have allowed it to serve the market, took affirmative steps to obtain necessary government permits, etc.”

In essence, the purchaser’s supporting proof of antitrust standing (e.g., that potential competitor entrants to the market are “waiting in the wings”) is only speculative.

Thank you Carl H. Perdue, Esq. for this case analysis.

Eric N. Assouline, Esq.

In Miami: 305-567-5576

In Broward: 954-929-1899

In Palm Beach: 561-361-6566

ERIC N. ASSOULINE, ESQ.

ASSOULINE & BERLOWE, P.A.

Intellectual Property, Labor & Employment Law, Bankruptcy, Commercial Litigation, and Corporate Law

Miami · Ft. Lauderdale · Boca Raton

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