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From Antitrust Law Daily, October 5, 2015

High Court turns away baseball exemption, predatory pricing cases

By Jeffrey May, J.D.

Kicking off its new term today, the U.S. Supreme Court avoided taking up a number of cases raising antitrust and trade regulation issues. Most notably, the City of San Jose was unable to persuade the Court to consider the continuing value of the 92-year old baseball antitrust exemption. The Court turned away San Jose's effort to revive antitrust claims challenging Major League Baseball’s franchise relocation policies that have thwarted the city's efforts to land an MLB club. The Court also refused to consider whether General Motors LLC’s “Bump the Competition” program with auto parts dealers constituted predatory pricing. Other petitioners in matters involving advertising, franchising, and racketeering law also saw federal appellate court decisions stand. The Court did, however, vacate a Ninth Circuit decision rejecting a billboard developer’s constitutional claims against the City of Richmond over its sign ordinance.

Baseball antitrust exemption. The Supreme Court handed MLB a victory today. It let stand a decision of the U.S. Court of Appeals in San Francisco, upholding the dismissal of San Jose's antitrust claims challenging MLB's franchise relocation policies. In its petition, the city had argued that the exemption should be abolished because the two reasons for the exemption—reliance interest of club owners and congressional acquiescence through silence—no longer existed. Because the reserve system was “dead and gone,” San Jose argued club owners no longer had any reliance interest. Further, the city noted that Congress explicitly declared that it would neither acquiesce in nor reject the exemption. San Jose alternatively argued that the Court should clarify the scope of baseball’s antitrust exemption (City of San Jose v. Office of the Commissioner of Baseball, Dkt. 14-1252).

Predatory pricing. An auto collision parts dealer was denied Supreme Court review of a decision by the U.S. Court of Appeals in New Orleans, affirming the dismissal of claims that General Motors LLC’s “Bump the Competition” program amounted to unlawful predatory pricing in violation of the Sherman Act. In its petition, the dealer suggested that rebates dealers received under the program should not be considered when calculating average variable cost. The appellate court had decided that rebates should be considered in the predatory pricing analysis because they affected the bottom line in whether a dealer obtained a profit and whether it sold the collision parts at below cost (Felder’s Collision Parts, Inc. v. All Star Advertising Agency, Inc., Dkt. 14-1299).

Federal auto dealer reinstatement law. A Chrysler automobile dealer failed to convince the Supreme Court to review a decision of the U.S. Court of Appeals in Cincinnati that Section 747 of the Consolidated Appropriations Act, which provides for arbitration by terminated dealers seeking reinstatement of their franchise agreement, did not violate the separation of powers doctrine because the provision did not interfere with a final court judgment. The dealer's petition had asked specifically whether, by reopening the final order of a federal bankruptcy court and permitting a private arbitrator to reverse that order, Section 747 of the Consolidated Appropriations Act of 2010 was unconstitutional (Fred Martin Motor Co. v. Spitzer Autoworld Akron, LLC, Dkt. 14-1455).

RICO standing. The Court denied a small business owner's petition for review of a decision of the U.S. Court of Appeals in New York City that affirmed dismissal of his RICO claims against a business, collection agency, accountant, and private school. The petitioner had contended that appellate court erred in failing to recognize the special duty exception with respect to his individual standing and did not consider evidence referenced in the complaint (Lacertosa v. Blackman Plumbing Supply Co., Inc., Dkt. 14-1509).

Advertising, sign regulations. The High Court also dispensed with two petitions involving local sign restrictions. In last term's decision in Reed v. Town of Gilbert, the High Court unanimously held that an Arizona municipality's regulations of outdoor signs contained content-based regulations of speech that failed to survive strict scrutiny under the First Amendment. Today, in light of Reed, the Court vacated a decision of the U.S. Court of Appeals in San Francisco, affirming summary judgment in favor of the City of Richmond in a constitutional challenge to the city’s ban on non-commercial signs—including political signs—where commercial signs were allowed. The billboard operator's petition asked whether Richmond's mere assertion of a content-neutral justification rendered its facially content-based sign code content-neutral and justified the ban (Herson v. City of Richmond, Dkt. 14-1322).

Separately, the Court denied without comment the petition of a sign company raising a constitutional challenge to a Pennsylvania municipality’s sign code in light of Reed. The petitioner had been unable to get permits for signage containing messages (1) to “Support Our Troops” and (2) for Samaritan’s Purse—an international relief organization. Left standing is a decision of the U.S. Court of Appeals in Philadelphia rejecting the claims on standing grounds (Mercer Outdoor Advertising, LLC v. City of Hermitage, Dkt. 15-19).

Attorneys: Joseph W. Cotchett (Cotchett, Pitre & McCarthy), Stuart Banner, and Richard Doyle for City of San Jose. John W. Keker (Keker & Van Nest LLP) for Office of the Commissioner of Baseball. James M. Garner (Sher Garner Cahill Richter Klein & Hilbert, L.L.C.) and Harvey S. Bartlett III (Jones, Swanson, Huddell & Garrison, L.L.C.) for Felder’s Collision Parts, Inc. Mark A. Cunningham (Jones Walker, L.L.P.) for All Star Advertising Agency, Inc. Kannon K. Shanmugam (Williams & Connolly LLP) for Fred Martin Motor Co. Anthony B. Giardini (Anthony B. Giardini Co. LPA) for Spitzer Autoworld Akron, LLC. Samuel Hood Foreman (Weber Gallagher) for City of Hermitage. Joshua Reuben Furman for Jeffrey Herson. Matthew D. Zinn (Shute, Mihaly & Weinberger LLP) for City of Richmond.

Companies: City of San Jose; Office of the Commissioner of Baseball; Felder’s Collision Parts, Inc.; All Star Advertising Agency, Inc.; Fred Martin Motor Co.; Spitzer Autoworld Akron, LLC; Chrysler Group, LLC; Blackman Plumbing Supply Co., Inc.; City of Hermitage; Mercer Outdoor Advertising, LLC; City of Richmond.

MainStory: TopStory Advertising Antitrust FranchisingDistribution RICO

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