Tagged: Motions to Dismiss

No Harm to Competition: Third Circuit Upholds Decision for Uber in Antitrust Challenge by Philadelphia Taxicab Drivers

The Third Circuit’s newly-issued precedential opinion in Philadelphia Taxi Association v. Uber Technologies, Inc. is a classic reminder that the antitrust laws protect against harm to competition – not harm to competitors. In 2016, a group of Philadelphia taxicab drivers sued Uber in federal district court, alleging that the ride-sharing service was unlawfully attempting to monopolize the vehicle-for-hire market in Philadelphia. Plaintiffs pointed to the fact that, in October 2014, just prior to Uber’s entry into Philadelphia, there were 7,000 taxi drivers, and each of the city’s 1,610 taxicab medallions was valued at an average of $545,000. Two years later, 1,200 medallion taxi drivers had fled to Uber, those still driving taxis saw a thirty percent decline in their earnings, and the value of a medallion plummeted to just $80,000. The district court dismissed the complaint, holding that the plaintiffs had not pled antitrust injury – i.e., harm that the antitrust laws are designed to prevent – and thus did not have antitrust standing to maintain their suit. This appeal followed. The Third Circuit affirmed the dismissal but, unlike the district court, did so first based on plaintiffs’ failure to plausibly allege the elements of their attempted monopolization claim – i.e., that Uber (1) engaged in anticompetitive conduct with a (2) specific intent to monopolize and...

Slow Down You’re Moving Too Fast: Third Circuit Directs District Court to Resolve Motion to Compel Arbitration Before Motion to Dismiss

In a recent decision, the Third Circuit made it abundantly clear that a motion to compel arbitration must be decided before a Rule 12(b)(6) motion to dismiss. Joshua Silfee filed a lawsuit against ERG Staffing Service, his former employer, in the Middle District of Pennsylvania, claiming the company’s payroll policies violated state law because workers were required to use a fee-carrying debit card. ERG filed a motion to compel arbitration pursuant to Section 4 of the Federal Arbitration Act, asserting that the arbitration agreement between Silfee and ERG’s payroll vendor precluded the suit against ERG. ERG also filed a Rule 12(b)(6) motion to dismiss Silfee’s complaint based on the merits of his state law claims against the company. The district court decided to delay consideration of ERG’s motion to compel arbitration and denied the company’s motion to dismiss the case. ERG appealed. The Third Circuit concluded that the district judge erred in delaying the arbitrability inquiry, explaining that arbitrability is a “gateway” issue and that, after a motion to compel arbitration is filed, a court “must refrain from further action until it determines arbitrability.” The Third Circuit noted that “[t]he seeds of the District Court’s confusion may have been sown by our decision in Guidotti,” where the court explained that a motion to compel arbitration...

Third Circuit Relaxes Pleading Requirements for Limited Liability Company Defendants and Urges Supreme Court to Redefine Citizenship Rule

Should limited liability companies continue to be treated differently than corporations for diversity-of-citizenship purposes? If a limited liability company’s citizenship continues to be determined by the citizenship of each of its members, how can a plaintiff get past the pleading stage if the identity of one or more members is unknown even after a diligent pre-filing investigation? In a recent precedential opinion, the Third Circuit in Lincoln Benefit Life Company v. AEI Life, LLC answered the latter question for the first time, holding that a plaintiff need not affirmatively allege the citizenship of each member of a defendant limited liability company to survive a motion to dismiss for lack of subject-matter jurisdiction. And in a separate concurrence targeted directly at the U.S. Supreme Court, the Third Circuit urged the Supreme Court to consider the former question and adopt a more practical rule for determining the citizenship of limited liability companies.

Don’t Get Hacked By Your Cyber-Insurer

The risks inherent in the maintenance and storage of confidential information present an ongoing challenge to daily operations. Cyber insurance may be an appropriate mechanism to mitigate those risks. But – BUYER BEWARE – broad exclusions and other conditions in a cyber policy can hack into coverage and leave your company uninsured and exposed to significant liability for defense costs, liability payments, and regulatory damages.

Opinion Holds That Non-Monetary Reverse Payments Trigger Actavis Antitrust Scrutiny, Creating Split Within D.N.J.

An opinion issued on October 6, 2014, by Judge Sheridan of the United States District Court for the District of New Jersey further muddied the legal waters as to what type of “reverse payments” made by makers of brand-name pharmaceuticals to their generic competitors to settle patent litigation are subject to antitrust scrutiny under the Supreme Court’s decision in FTC v. Actavis. Judge Sheridan held that Actavis applies to non-monetary payments, such as a promise by the brand-name manufacturer in exchange for which the generic agrees to delay entry. Importantly, however, a non-monetary payment must be capable of being reliably converted to a monetary value so that it can be evaluated against the Actavis factors. Judge Sheridan’s holding runs counter to Judge Walls’s decision earlier this year in In re Lamictal Direct Purchaser Antitrust Litigation, which limited Actavis to reverse payments involving an exchange of cash and was the subject of a prior blog post.

Recent D.N.J. Opinion Offers Roadmap to Practitioners Defending Antitrust Claims

A recent opinion from the District of New Jersey illustrates the breadth of defenses available to an entity accused of violating the antitrust laws. World Phone Internet Services, Pvt. Ltd., a provider of VoIP services in India, and its majority shareholder, TI Investment Services, LLC, sued Microsoft (owner of Skype), alleging that Microsoft’s intentional failure to abide by the requirements of India’s licensing regime for VoIP service providers allowed it to undercut World Phone’s pricing, which advantage Microsoft supposedly used to quash its competitors. In granting Microsoft’s motion to dismiss the complaint in TI Investment Services, LLC v. Microsoft Corp., the Court relied on four independent grounds to decide that plaintiffs’ claims of monopolization and collusion did not pass muster under the Sherman Act.

The Foreign Trade Antitrust Improvements Act: A Recent Take in the S.D.N.Y.

The Foreign Trade Antitrust Improvements Act (“FTAIA”) removes from the ambit of the Sherman Antitrust Act otherwise actionable anti-competitive conduct abroad that does not have a “direct, substantial, and reasonably foreseeable” effect on domestic commerce. Questions persist as to what effects qualify as being sufficiently “direct” and also whether the FTAIA is jurisdictional in nature or goes to the substantive merits of a claim. A recent decision out of the Southern District of New York addressed both questions in dismissing an antitrust suit brought by one Chinese corporation against its Chinese competitors.

Factual Allegations in Superceded Complaint Not Judicial Admissions, But May Be Used for Rebuttal Purposes

In West Run Student Housing Associates., LLC v. Huntington National Bank, the United States Court of Appeals for the Third Circuit ruled that, under the liberal policy of allowing amendment under Rule 15, factual allegations made in a superceded complaint are not binding judicial admissions for purposes of a motion to dismiss, but such allegations may be used in the litigation to rebut the plaintiff’s subsequent factual contentions.

Antitrust Pleading Standards: A(nother) Cautionary Tale

A New Jersey federal district court’s March 18th opinion granting defendants’ motions to dismiss an antitrust complaint is yet another reminder of the need to inject precision and factual detail into an antitrust claim in order to meet the strict pleading requirements applicable to such claims. The putative class of indirect purchaser plaintiffs in In re Ductile Iron Pipe Fittings (“DIPF”) Indirect Purchaser Antitrust Litigation brought a total of ten claims, alleging principally that iron pipe fitting manufacturers and distributors conspired to fix prices and monopolized the domestic iron pipe fitting market in violation of Sherman Act Sections 1 and 2. In holding that the pleadings failed to establish antitrust impact with sufficient specificity (but granting plaintiffs leave to amend their complaint), the Court reasoned as follows:

Third Circuit’s Fair Notice Requirement Protects Defendants from Amended Claims Asserted After Expiration of Statute of Limitations

Affirming the statute-of-limitations-based dismissal of plaintiff Mary Glover’s claims against defendants Mark Udren and Udren Law Offices, the Third Circuit in Glover v. FDIC spoke clearly on the limits of the notice requirement under the relation-back doctrine, holding that Glover’s original pleading failed to provide fair notice of a subsequent claim in an amended complaint.