Judge Sam Alito and Antitrust

Not Likely to Be a Strong Supporter

10/31/2005

Press Release of the American Antitrust Institute

Immediate, October 31, 2005

Contact: Michael J. Freed, 312-521-2429

The American Antitrust Institute requested Michael J. Freed, one of its Advisory Board members, to look into the record of Judge Samuel Alito with respect to antitrust. He found no relevant articles by Judge Alito, but identified a small group of cases in which Alito sat as judge where antitrust issues arose. While one must to some extent read between the lines in order to find the outlines of a position, it appears that Judge Alito is not favorably disposed toward the private enforcement of the antitrust laws. The one case in which he seemed most friendly to an antitrust claim was decided over fourteen years ago. Mr. Freed concluded from this research that "Judge Alito is not likely to be a supporter of antitrust enforcement."

The American Antitrust Institute is an independent non-profit organization that supports enforcement of the antitrust laws. For more information, see www.antitrustinstitute.org. AAI takes no position on nominees or candidates.

Albert A. Foer President bfoer@antitrustinstitute.org 202-276-6002

MEMORANDUM

To: Albert Foer, Executive Director, American Antitrust Institute, Washington, D.C.

From: Michael J. Freed, Principal, Much Shelist Freed Denenberg Ament & Rubenstein, P.C., Chicago, Illinois

Date: October 31, 2005

Re: Judge Samuel Alito Not Likely to be a Supporter of Antitrust Enforcement

Judge Samuel Alito's written opinions suggest that he will not be a supporter of antitrust enforcement. An analysis of these cases follows:

1. LePage's Inc. v. 3M, 324 F.3d 141 (3d Cir. 2003).

In this 7-3 en banc decision condemning 3M's bundled rebate program as an illegal act of monopolization, a full Panel of the Third Circuit reinstated the District Court's verdict and damages award. Alito joined in the dissent written by J. Greenberg relating to the opinion of the full Panel. The District Court had entered judgment in favor of LePage's on the monopolization claim while granting 3M's motion for judgment as a matter of law with respect to the "attempted maintenance of monopoly" claim. Alito was on the initial Third Circuit panel that reversed and remanded, overturning the $68 million judgment and instructing the District Court to enter judgment in favor of 3M on all counts. The Supreme Court declined to hear 3M's petition for certiorari. 3M Co. v. LePage's, Inc., 124 S.Ct. 2932 (June 30, 2004).

2. Joint Stock Society v. UDV North America, Inc., 266 F.3d 164 (3d Cir.2001).

This case was a reprise of the Slick 50 case (paragraph 3 below) . In Joint Stock, the Third Circuit, in an opinion by Judge Alito, held that a Russian Vodka producer and its intended licensee did not have Lanham Act 43(a) claims against an American vodka distiller for false designation or origin, false advertising and trademark cancellation. The issues and analysis in the case was a virtual repeat of the Slick 50 opinion.

3 . Conte Bros. Automotive, Inc. v. Quaker State-Slick 50, Inc., 165 F.3d, 221 (3d Cir. 1998).

The Third Circuit, in an opinion written by Judge Alito, affirmed dismissal of a Section 43(a) Lanham Act claim alleging false advertising. The case was brought as a class action by competitors of Slick 50 who claimed that the defendant was falsely advertising its product. In the opinion, stating that this appeared to be a case of first impression and that the review of standing issues was plenary, Judge Alito found that the plaintiff lacked "prudential standing". Judge Alito described prudential standing considerations as "a set of Judge made rules forming an integral part of 'judicial self government' " (at. p. 225), and based his ruling on analagous antitrust standing rulings, especially Associated Gen. Contractors of California, Inc.. v. California State Council of Carpenters, 459 U.S 519 (1983). Using this analogy, the opinion stated that, while plaintiff had alleged commercial interests as required by the Lanham Act, it had not alleged competitive harm, and there was no indication that its good will or reputation were harmed directly or indirectly.

4 . Barton & Pittinos, Inc. v. SmithKline Beecham Corp., 118 F.3d. 178 (3d Cir. 1997).

In this case, a telemarketing company, Barton & Pittinos ("B&P") solicited orders for a SKB manufactured vaccine at the request of General Injectables and Vaccines, Inc. ("GIV"), a company which sold pharmaceuticals to nursing homes. When pharmacies complained, SKB shut off sales to GIV. B&P sued for violations of the Sherman Act. The Third Circuit affirmed dismissal of the case in an opinion written by Alito, holding that because B&P's business was basically to drum up demand for the product and then pass along orders to GIV, B&P lacked standing under the antitrust laws (i.e. B&P was not a competitor in the relevant market and thus lacked antitrust injury to support standing).

5 . David Lerman v. Joyce International, Inc., 10 F.3d 106 (3d Cir.1993).

This case featured a breach of contract suit by former employees against the buyer of a business and a countersuit by the buyer against the former employees for RICO violations. The judge below basically held for the buyer in all repects and Third Circuit affirmed in an opinion written by Judge Alito. The only antitrust relevance is that, in deciding that the buyer had standing to bring the RICO counter-claim, Judge Alito referred to the case of Gulfstream III Associates, Inc. v. Gulfstream Aerospace Corp., 995 F. 2d 425 (3d Cir. 1990). In that case, the seller of a business assigned antitrust claims to the buyer and the court held that this was sufficient to support antitrust standing as a direct purchaser. Here, too, the buyer received an assignment of the seller's claims, which was equivalent to the Gulfstream situation and provided the basis for standing to bring the RICO claims.

6 . In re Lower Lake Erie Iron Ore Antitrust Litig., 998 F.2d 1144 (3d Cir. 1993) .

In this case, the Third Circuit upheld in large measure a jury verdict favorable to plaintiffs. Judge Alito was one of three judges who voted to grant a rehearing en banc (the petition for rehearing was denied by a vote of 8-3).

7 . TICOR Title Insurance Company et al. v. Federal Trade Commission, 998 F. 2d 1129 (3d Cir. 1991).

In this case, the FTC determined that an agreement among title insurers to collectively establish rates was an unfair method of competition. The defendants appealed claiming immunity under Noerr-Pennington and McCarran-Ferguson, and the FTC ruling was reversed by the appellate court. The FTC petitoned for certiorari, which was granted, and the case was reversed and remanded. On remand, the Third Circuit affirmed the FTC, but Alito dissented, stating that "the setting of uniform rates for title search and examination services is part of the 'business of insurance' within the meaning of ....(the) McCarran-Ferguson Act."

8 . Ralph J. Miller, M.D. v. Indiana Hospital et. al., 930 F.2d 334 (3d Cir. 1991).

This case involved suit by a physician who had staff privileges revoked. He sued a state hospital and a number of doctors for antitrust violations. The district court granted summary judgment to the defendants under state-action antitrust immunity provided in Parker v. Brown. On appeal, the Third Circuit, in an opinion written by Alito, reversed, holding that it had not been established that Pennsylvania actively supervised the peer group decision which resulted in the revocation of staff privilege .

Michael J. Freed

Michael J. Freed MUCH SHELIST Much Shelist Freed Denenberg Ament & Rubenstein, P.C. 191 N. Wacker Drive, Suite 1800 Chicago, IL 60606 Direct Dial 312-521-2429 Fax Number 312-521-2329 MFreed@muchshelist.com For more information about the firm, please visit our website at: www.muchshelist.com