Law Commons^™

Matsushita At Thirty: Has The Pendulum Swung Too Far In Favor Of Summary Judgment?, Edward D. Cavanagh

Faculty Publications

(Excerpt)

The Supreme Court's ruling in Matsushita Electric Industrial Co. v. Zenith Radio Corp. marked the end of judicial hostility to Rule 56 motions and effectively legitimized the use of summary judgment in antitrust cases. The 5-4 decision dramatically altered the antitrust litigation landscape both procedurally and substantively. Procedurally, the decision underscored the trans-substantive nature of summary judgment, making clear that summary judgment is as appropriate in complex antitrust cases as in any other area of the law. Matsushita also made clear that the legal standards for summary judgment mirror the legal standards for directed verdict at trial. In …

Whatever Happened To Quick Look?, Edward D. Cavanagh

Faculty Publications

In California Dental Ass’n v. F.T.C. (hereafter “Cal Dental”), the Supreme Court observed that there is no sharp divide separating conduct that can be summarily condemned under section one of the Sherman Act as per se unlawful from conduct that warrants a more searching factual assessment to ascertain any anticompetitive effect and hence its legality. The Court further observed that not every antitrust claim falling outside the narrow ambit of per se illegality warrants the detailed Rule of Reason analysis prescribed in Chicago Board of Trade. The Court thereby eschewed any notion that section one analysis is …

The Jury Trial In Antitrust Cases: An Anachronism?, Edward D. Cavanagh

Faculty Publications

(Excerpt)

The Seventh Amendment of the United States Constitution provides in relevant part that "[i]n suits at common law, where the value in controversy exceeds twenty dollars, the right of trial by jury shall be preserved." The jury trial has long been the foundation of the American civil justice system and is deeply embedded in American culture. As the Supreme Court has observed, "[m]aintenance of the jury as a factfinding body is of such importance and occupies so firm a place in our history and jurisprudence that any seeming curtailment of the right to a jury trial should be scrutinized …

Marks, Morals, And Markets, Jeremy N. Sheff

Faculty Publications

The prevailing justification for trademark law depends on economic arguments that cannot account for much of the law's recent development, nor for mounting empirical evidence that consumer decisionmaking is inconsistent with assumptions of rational choice. But the only extant theoretical alternative to economic analysis is a Lockean "natural rights" theory that scholars have found even more unsatisfying. This Article proposes a third option. I analyze the law of trademarks and unfair competition as a system of moral obligations between producers and consumers. Drawing on the contractualist tradition in moral philosophy, I develop and apply a new theoretical framework to evaluate …

Antitrust Law And Economic Theory: Finding A Balance, Edward D. Cavanagh

Faculty Publications

Over the past forty years, the federal courts have relied more and more on economic theory to inform their antitrust analyses. Economic theory has indeed provided guidance with respect to antitrust issues and assisted the courts in reaching rational outcomes. At the same time, infusion of economic evidence into antitrust cases has made these cases more complex, lengthier, more expensive to litigate, and less predictable.

This Article argues that courts need to restore the balance between facts and economic theory in undertaking antitrust analysis. The problem is not that judges and juries cannot reach good outcomes in antitrust cases, but …

The Rule Of Reason Re-Examined, Edward D. Cavanagh

Faculty Publications

This article analyzes the application of the Rule of Reason as articulated by Justice Brandeis in Chicago Board of Trade v. United States to alleged restraints of trade in violation of section 1 of the Sherman Act. It argues that the Brandeis formulation, which requires courts to consider a broad range of economic factors and then weigh procompetitive benefits against anticompetitive effects, has proven unwieldy in the hands of trial judges. Because the Brandeis formulation provides little guidance as to how these factors should be weighed, courts have struggled to develop clear, predictable, and consistent standards under section 1. This …

Making Sense Of Twombly, Edward D. Cavanagh

Faculty Publications

(Excerpt)

In May 2007, the United States Supreme Court decided Bell Atlantic Corp. v. Twombly and sent shockwaves throughout the federal civil justice system. Reversing the Second Circuit, the Court held that an antitrust complaint that alleged mere parallel behavior among rival telecommunications companies, coupled with stray averments of agreement that amounted merely to legal conclusions, failed as a matter of law to state a claim for conspiracy in violation of § 1 of the Sherman Act and had been properly dismissed by the trial court. The Court then proceeded to (1) redefine the concept of notice pleading by "retiring" …

The Ftaia And Claims By Foreign Plaintiffs Under State Law, Edward D. Cavanagh

Faculty Publications

(Excerpt)

In Empagran, the Supreme Court construed the Foreign Trade Antitrust Improvements Act (FTAIA) to severely limit the extraterritorial reach of the Sherman Act. In the wake of Empagran and the D.C. Circuit’s subsequent ruling on remand in that case, foreign plaintiffs asserting claims under U.S. antitrust laws for injuries based on transactions consummated abroad have been largely shut out of federal courts. Foreign plaintiffs, however, have not abandoned their efforts to obtain relief in American courts for anticompetitive acts committed in the international arena. Rather, they have turned to claims under various state laws, including state antitrust laws, …

The Private Antitrust Remedy: Lessons From The American Experience, Edward D. Cavanagh

Faculty Publications

(Excerpt)

The treble damage remedy has been a centerpiece of private antitrust enforcement since the enactment of the Sherman Act in 1890. Aware that government resources were limited, Congress created the private right of action as a complement to public enforcement to assure the detection and prosecution of antitrust offenders. The private right of action has proven to be a very potent weapon in the civil enforcement arsenal. It is the very potency of the private remedy, however, that has made the private right of action a target of criticism by defendants and, more recently, the courts. Indeed, in the …

Detrebling Antitrust Damages In Monopolization Cases, Edward D. Cavanagh

Faculty Publications

(Excerpt)

This article examines the question of whether the statutory rule of mandatory treble damages should continue to apply in monopolization cases brought under Section 2 of the Sherman Act. The law of monopolization "has been a source of puzzlement to lawyers, judges and scholars." Compared to Section 1 of the Sherman Act, which has generated a plethora of case law and an emerging consensus on liability rules and remedies, the law of monopolization remains largely undeveloped with respect to both liability rules and remedies. In the remedies arena, the conversation has focused principally on equitable relief—conduct remedies versus structural …

Trinko: A Kinder, Gentler Approach To Dominant Firms Under The Antitrust Laws?, Edward D. Cavanagh

Faculty Publications

(Excerpt)

Section 2 of the Sherman Act prohibits monopolization, attempted monopolization and conspiracy to monopolize. The § 2 prohibitions are rooted in concerns "that possession of unchallenged economic power deadens initiative, discourages thrift and depresses energy; that immunity from competition is a narcotic, and rivalry is a stimulant, to industrial progress; that the spur of constant stress is necessary to counteract an inevitable disposition to let well enough alone." At the same time, courts have recognized that size alone cannot be the basis of condemnation under § 2, for as Learned Hand observed in Alcoa, "[t]he successful competitor, having …

The Ftaia And Empagran: What Next, Edward D. Cavanagh

Faculty Publications

(Excerpt)

In F. Hoffman-LaRoche Ltd. v. Empagran S.A. (Empagran I), the Supreme Court, vacating the D.C. Circuit's ruling, held that the Foreign Trade Antitrust Improvements Act ("FTAIA") precludes courts from exercising subject matter jurisdiction over antitrust claims by foreign plaintiffs who allege unlawful conduct that "significantly and adversely affects both customers outside the United States and customers within the United States," if "the adverse foreign effect is independent of any adverse domestic effect;" that is, if "the conduct's domestic effects did not help to bring about that foreign injury." The narrowly crafted decision was tailored to the record …

Antitrust Remedies Revisited, Edward D. Cavanagh

Faculty Publications

(Excerpt)

In the 115-year history of federal antitrust law, much has been written about substantive liability standards. Comparatively little has been written about antitrust remedies. This inattentiveness to remedy was underscored by the Microsoft case wherein the Antitrust Division, having successfully adjudicated Microsoft a monopolist, scrambled to fashion an appropriate remedy, first seeking to break up Microsoft and ultimately reversing itself and settling for a conduct decree. Putting aside the question of whether the relief in Microsoft was adequate, the fact is that the case law on equitable remedies in antitrust is sparse and dated, leaving critics to question whether …

Illinois Brick: A Look Back And A Look Ahead, Edward D. Cavanagh

Faculty Publications

(Excerpt)

In June 1977, the United States Supreme Court decided Illinois Brick Co. v. Illinois, ruling that only those dealing directly with price-fixers, and not others in the chain of distribution, are "injured" within the meaning of Section 4 of the Clayton Act in price-fixing cases. The decision struck the death knell to claims by indirect purchasers that illegal overcharges incurred by first purchasers had been passed-on to them through the distribution chain. The so-called direct purchaser rule of Illinois Brick was clear and unequivocal, the very essence of a bright-line rule. Yet, after over a quarter century, the …

The Ftaia And Subject Matter Jurisdiction Over Foreign Transactions Under The Antitrust Laws: The New Frontier In Antitrust Litigation, Edward D. Cavanagh

Faculty Publications

(Excerpt)

The aggressive antitrust enforcement activities by the United States Department of Justice Antitrust Division against international cartels in the last decade, coupled with the increasingly global character of commercial markets, have spawned significant private antitrust treble damages litigation in American courts by foreign plaintiffs. Not surprisingly, the jurisdictional reach of the Sherman Act has been a threshold issue in these cases. While jurisdictional questions are not new to American courts, this latest round of antitrust cases has posed novel issues of subject matter jurisdiction, including the extent to which foreign plaintiffs claiming antitrust damages based on foreign transactions may …

Pleading Rules In Antitrust Cases: A Return To Fact Pleading?, Edward D. Cavanagh

Faculty Publications

(Excerpt)

The Federal Rules of Civil Procedure, adopted in 1938, introduced a simplified pleading regimen for litigation in the federal courts. Commonly referred to as notice pleading, this new pleading regimen was designed to shift the courts' attention away from the pleadings and toward proof at trial. Under the simplified pleading standards adopted by the Federal Rules, the complaint need not contain a ritualistic recitation of elements of an abstruse theory of recovery, as required at common law; nor did it need to detail "facts" sufficient to make out a "cause of action," as required under the old scheme of …

Antitrust Liability Premised, Edward D. Cavanagh

Faculty Publications

(Excerpt)

This article will explore potential antitrust liability arising from attempted enforcement of invalid patents or trade secrets known to be invalid. A fundamental tension exists between the law of intellectual property and antitrust law. Federal patent laws and the state law doctrines of trade secrets confer on the holder exclusive rights to exploit an invention or creation and to exclude others from its use. The rationale of the patent laws and state intellectual property laws is to foster innovation and to provide inventors with protection for the fruits of their labor. By contrast, antitrust laws embody a public policy …

Attorneys’ Fees In Antitrust Litigation: Making The System Fairer, Edward D. Cavanagh

Faculty Publications

(Excerpt)

Section 4(a) of the Clayton Act entitles prevailing plaintiffs in private antitrust actions to recover, in addition to treble damages, their reasonable attorneys' fees. Unique when adopted as part of the Sherman Act in 1890, this fee-shifting provision has been imitated, at least in part, in over 100 federal statutes. In providing for attorneys' fees, Congress intended to promote private enforcement of the antitrust laws and to insulate the treble damages recovery from expenditures for legal fees. Fee-shifting is mandatory where a plaintiff prevails, but the court has some leeway in setting the amount of the fee. The controversy …

Contribution, Claim Reduction, And Individual Treble Damage Responsibility: Which Path To Reform Of Antitrust Remedies?, Edward D. Cavanagh

Faculty Publications

(Excerpt)

Antitrust violations traditionally have been viewed as statutory torts, yet tort principles of damage allocation, including contribution and claim reduction, have not been extended by analogy in the federal courts to antitrust cases. Moreover, the principle of joint and several liability, made applicable to antitrust conspirators by judicial fiat some eighty years ago, has gone largely unchallenged. While the federal antitrust laws are nearly a century old, the damage allocation debate is of recent vintage, emerging in the wake of the Electrical Equipment Cases, when the private treble damage remedy came into its own.

The recent emergence of …

Detrebling Antitrust Damages: An Idea Whose Time Has Come?, Edward D. Cavanagh

Faculty Publications

(Excerpt)

Since the passage of the Sherman Act in 1890, successful plaintiffs in private antitrust actions have been entitled to recover three times the actual damages awarded. Originally embodied in section 7 of the Sherman Act, the mandatory treble damages provision was later incorporated into section 4 of the Clayton Act and made applicable to all actions in which private plaintiffs sought recovery under the federal antitrust laws. In the century since the Sherman Act became law, the antitrust debate has concentrated largely on issues of substantive liability. While the desirability of the mandatory treble damages remedy has been challenged …

The Illinois Brick Dilemma: Is There A Legislative Solution?, Edward D. Cavanagh

Faculty Publications

(Excerpt)

In Illinois Brick Co. v. Illinois, the United States Supreme Court held that in price-fixing actions brought under section 1 of the Sherman Act, only first purchasers in the chain of vertical distribution are "injured," within the meaning of section 4 of the Clayton Act, by the full amount of any overcharge. The Court's ruling bars plaintiffs who are "indirect purchasers" from offering proof that they have been injured by defendants' illegal overcharges which have been "passed on" to them by middlemen. The Court's holding reaffirmed the principles previously enunciated in Hanover Shoe, Inc. v. United Shoe Machinery …

Illinois Brick Revisited: An Analysis Of A Developing Antitrust Jurisprudence, Edward D. Cavanagh

Faculty Publications

(Excerpt)

In June 1977, the United States Supreme Court handed down the landmark decision in Illinois Brick Co. v. Illinois. Reaffirming its decision in Hanover Shoe, Inc. v. United Shoe Machinery Corp., the Court held that in a treble damages action where defendants are charged with price-fixing in violation of Section 1 of the Sherman Act, first purchasers, and not others down the distribution line ("indirect purchasers"), are injured by the full amount of any overcharge; and indirect purchasers are prohibited from offering proof that illegal overcharges had been "passed on" to them by their sellers.

The holding …