Antitrust Law Daily High Court will not disturb verdict in grocery market allocation case, seeks U.S. views on Viamedia suit against Comcast
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Monday, December 7, 2020

High Court will not disturb verdict in grocery market allocation case, seeks U.S. views on Viamedia suit against Comcast

By Peter Reap, J.D., LL.M.

Meanwhile, Louisiana Real Estate Appraisers Board in Fifth Circuit filing offers a preview of its petition regarding state action immunity in FTC case.

The U.S. Supreme Court has denied a petition by grocery stores requesting that it to overturn a decision from the U.S. Court of Appeals in St. Louis upholding a jury verdict in favor of C&S Wholesale Grocers, Inc. Separately, the Court today asked the Acting Solicitor General to file a brief in a dispute involving.

Grocery market allocation. The Court today let stand a decision of the Eighth Circuit holding that a plaintiff alleging both customer and territorial allocations must prove the conspirator allocated both customers and territories to prevail in establishing a per se violation, rather than proving either of these market-division schemes separately or individually. The petitioners argued that the Eighth Circuit’s decision conflicted with decisions from the Second, Fifth, and Seventh Circuits (D&G, Inc. v. C&S Wholesale Grocers, Inc.Dkt. 20-643).

C&S, which provides wholesale grocery services to grocery retail stores primarily in the Northeast, entered into an asset exchange agreement with SuperValu. A number of small independent grocery stores brought an antitrust suit against C&S alleging that it violated the Sherman Act by agreeing with SuperValu to allocate customers and territories for full-line grocery wholesale goods and services and that this anti-competitive conduct caused retailers to pay supracompetitive prices for wholesale goods and services. A jury returned a verdict for C&S.

The plaintiffs asserted that the district court erred in formulating one jury instruction and the verdict form. The U.S. Court of Appeals in St. Louis upheld the district court’s instructions to the jury, holding that a reference in the instructions to the defendants dividing "territories and customers along geographic lines" did not mislead the jury. The jury’s instructions "fairly and adequately" submitted the issues, the appellate court held.

The small grocers argued that they were not required by the Sherman Act to prove that C&S agreed to allocate both customers and territories. Antitrust jurisprudence has long held that territorial allocations between horizontal competitors are per se illegal. Further, the Eighth Circuit’s decision created a division among the courts of appeals as to whether customer allocation and territorial allocation are separate per se violations of the Sherman Act, the petition argued. The grocers contended that by failing to hold that a customer allocation claim should be adjudicated separately by the jury from a territorial allocation claim, and in failing to find that a customer allocation agreement constitutes a separate per se violation of the Sherman Act, the Eighth Circuit split from decisions of the Second, Fifth, and Seventh Circuits addressing similar fact patterns.

Refusal to deal. The Supreme Court also has asked the Acting U.S. Solicitor General to file a brief offering the Department of Justice’s views in a dispute involving Viamedia’s suit against Comcast that is pending before it. Viamedia alleged that the media company used its monopoly power over the cooperative Interconnects to force its smaller retail cable television competitors to stop doing business with Viamedia, thereby gaining monopoly power over the market for advertising representation services. Comcast recently asked the Court to review a decision by the Seventh Circuit reinstating Viamedia’s antitrust lawsuit against Comcast alleging that Comcast illegally tied the purchase of its ad rep services to Interconnects it controlled (Comcast Corp. v. Viamedia, Inc.Dkt. 20-319).

State action antitrust immunity. In a case initiated by the FTC antitrust against the Louisiana Real Estate Appraisers Board for restraining price competition for appraisal services in Louisiana, the Board has provided a "preview" of its upcoming petition to the High Court. The Board asked the U.S. Court of Appeals in New Orleans for a stay in the case initiated against it by FTC for restraining price competition for appraisal services in Louisiana while it seeks Supreme Court review of the appealability of an order denying a state entity state-action antitrust immunity (Louisiana Real Estate Appraisers Board v. FTC, Case No. 19-30796).

The Fifth Circuit recently held that a federal district court lacked jurisdiction to stay administrative proceedings. The FTC rejected the Board’s assertion of immunity under the state action doctrine, and the Board appealed, arguing that the order should be treated as final and subject to challenge under the Administrative Procedure Act (APA). The appellate court rejected that argument and held that the lower court lacked jurisdiction based (as the Board argued) on the collateral order doctrine as applied through Section 704 of the APA.

The Board asked the Fifth Circuit to stay the mandate or, alternatively, stay the FTC proceeding pending the disposition of the Board’s forthcoming petition for certiorari to the Supreme Court. The Board points out that, in the absence of a stay, its immunity from suit would be irretrievably lost before the Supreme Court could resolve the dispute, and it committed to filing its petition on an expedited basis—within 60 days of its motion, if the stay was granted. The court denied the motion.

For details about these and other petitions and cases pending before the Supreme Court, please consult the Antitrust Law Daily Supreme Court Docket chart.

Attorneys: Seth David Greenstein (Constantine Cannon, L.L.P.) for Louisiana Real Estate Appraisers Board. Daniel Winik, U.S. Department of Justice, for the FTC. Eric F. Citron (Goldstein & Russell, P.C.) for D&G, Inc., et al. Gregory Silbert (Weil Gotshal & Manges LLP) for C&S Wholesale Grocers, Inc. Arthur J. Burke (Davis Polk & Wardwell LLP) and Ross B. Bricker (Jenner & Block LLP) for Comcast Corp. and Comcast Cable Communications Management, LLC. Aaron M. Panner (Kellogg, Hansen, Todd, Figel & Frederick, P.L.L.C.) for Viamedia, Inc.

Companies: D&G, Inc.; Blue Goose Super Market, Inc.; Nemecek Markets, Inc.; Millennium Operations, Inc.; Elkhorn-Lueptows, Inc.; Jefferson Lueptows, Inc.; East Troy Lueptows, Inc.; C&S Wholesale Grocers, Inc.; Comcast Corp.; Comcast Cable Communications Management, LLC; Viamedia, Inc.

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