Justia U.S. 3rd Circuit Court of Appeals Opinion Summaries

Several individuals who were former partners at Cantor Fitzgerald L.P., BGC Holdings L.P., and Newmark Holdings L.P. separated from those partnerships and were entitled to receive certain payments after their departure. These payments included an initial amount plus four annual installment payments, but the partnership agreements allowed the partnerships to withhold the annual payments if the former partners engaged in broadly defined “Competitive Activity.” The partnerships exercised this right and withheld payments from the plaintiffs after determining they had engaged in such activity. The plaintiffs alleged that these provisions constituted unreasonable restraints of trade in violation of Section 1 of the Sherman Act and, for two plaintiffs, a violation of Delaware’s implied covenant of good faith and fair dealing.The United States District Court for the District of Delaware dismissed the plaintiffs’ complaint. The court found that the plaintiffs had failed to plead an “antitrust injury,” which is necessary to assert a claim under the Sherman Act, and further held that the implied covenant claims failed because the partnership agreements gave the partnerships express contractual discretion to withhold the payments when a former partner competed, leaving no contractual gap for the implied covenant to fill. The plaintiffs appealed the dismissal.The United States Court of Appeals for the Third Circuit affirmed the District Court’s judgment. The court held that the plaintiffs’ pecuniary injuries, stemming from the withholding of payments, were not antitrust injuries because they did not result from anticompetitive conduct affecting their status as market participants, nor were their injuries inextricably intertwined with any anticompetitive scheme. Regarding the implied covenant claims, the Third Circuit found that the relevant agreements expressly permitted withholding the payments under the circumstances, and there was no plausible allegation that the partnerships exercised their discretion in bad faith. View "McLoughlin v. Cantor Fitzgerald L.P." on Justia Law

A student athlete who played football at Rutgers University challenged two NCAA Division I bylaws that counted seasons played at junior colleges toward the NCAA’s limit of four seasons of eligibility over a five-year period. The athlete, Jett Elad, had played at Ohio University, Garden City Community College (a junior college), and UNLV, exhausting his eligibility under the rule despite only playing three seasons at NCAA Division I schools. After learning of a favorable ruling for another athlete in a similar situation, Elad sought a waiver from the NCAA, which was denied. He then entered the transfer portal, was recruited by Rutgers, received a lucrative NIL contract, and filed suit seeking an injunction to allow him to play an additional season.The United States District Court for the District of New Jersey granted Elad a preliminary injunction, preventing the NCAA from counting his junior college season toward his eligibility limit. The NCAA appealed, arguing that the rule was not subject to antitrust scrutiny and that the lower court had failed to properly define the relevant market for its antitrust analysis.The United States Court of Appeals for the Third Circuit reviewed the case and applied de novo review to the district court’s legal conclusions and clear error review to factual findings. The appellate court held that NCAA eligibility rules are not categorically exempt from Sherman Act scrutiny and that the challenged “JUCO Rule” had a commercial effect because it restrained participation in the college football labor market. However, the court found that the district court erred by failing to adequately define the relevant market and by relying on outdated market realities that did not reflect changes following NCAA v. Alston. The Third Circuit vacated the preliminary injunction and remanded for further proceedings, instructing the lower court to conduct a proper market analysis. View "Elad v. NCAA" on Justia Law

Mesabi Metallics Company LLC (Mesabi) filed for Chapter 11 bankruptcy in 2016 and emerged successfully in 2017. During the bankruptcy proceedings, Mesabi initiated an adversary proceeding against Cleveland-Cliffs, Inc. (Cliffs), alleging tortious interference, antitrust violations, and other claims. Mesabi sought to unseal certain documents obtained from Cliffs during discovery, which had been filed under seal pursuant to a protective order. Cliffs opposed the motion, arguing that the documents should remain sealed under Bankruptcy Code § 107, not the common law right of access.The United States Bankruptcy Court for the District of Delaware applied the common law standard from In re Avandia Marketing, Sales Practices & Products Liability Litigation, concluding that Cliffs had not met the burden to keep the documents sealed. The court recognized the potential for a different interpretation and certified the question for direct appeal to the United States Court of Appeals for the Third Circuit.The Third Circuit held that the sealing of documents in bankruptcy cases is governed by § 107 of the Bankruptcy Code, not the common law right of access. The court clarified that § 107 imposes a distinct burden for sealing documents, requiring protection of trade secrets or confidential commercial information if disclosure would cause competitive harm. The court vacated the Bankruptcy Court's order and remanded for application of the correct standard.Additionally, the Third Circuit addressed a separate motion by Greg Heyblom to intervene and unseal the documents. The court concluded that the Bankruptcy Court lacked jurisdiction to grant Heyblom's motions while the appeal was pending, as it would interfere with the appellate court's jurisdiction. The orders granting Heyblom's motions were vacated. View "In re: ESML Holdings Inc v. Mesabi Metallics Company LLC" on Justia Law

Mesabi Metallics Company LLC (Mesabi) filed for Chapter 11 bankruptcy in 2016 and emerged successfully in 2017. During the bankruptcy proceedings, Mesabi initiated an adversary proceeding against Cleveland-Cliffs, Inc. (Cliffs), alleging tortious interference, antitrust violations, and civil conspiracy. Mesabi claimed Cliffs engaged in anti-competitive conduct to impede Mesabi's business operations. To facilitate discovery, the parties entered a stipulated protective order allowing documents to be designated as confidential. Mesabi later moved to unseal certain documents filed under seal to support a petition in the Minnesota Court of Appeals.The United States Bankruptcy Court for the District of Delaware, applying the common law right of access, held that Cliffs had not met the burden to keep the documents sealed. The court relied on the Third Circuit's precedent in In re Avandia, which requires a showing that disclosure would cause a clearly defined and serious injury. Recognizing potential ambiguity in the law, the Bankruptcy Court certified the question for direct appeal to the United States Court of Appeals for the Third Circuit.The Third Circuit clarified that the sealing of documents in bankruptcy cases is governed by 11 U.S.C. § 107, not the common law right of access. Section 107 imposes a distinct burden, requiring protection of trade secrets or confidential commercial information without the need for balancing public and private interests. The court vacated the Bankruptcy Court's decision and remanded for application of the correct standard under § 107. Additionally, the Third Circuit held that the Bankruptcy Court lacked jurisdiction to grant a third party's motion to intervene and unseal documents while the appeal was pending, vacating those orders as well. View "ESML Holdings Inc v. Mesabi Metallics Compay LLC," on Justia Law

The case in question is a petition for a writ of mandamus filed by Abbott Laboratories, Abbvie Inc., Abbvie Products LLC, Unimed Pharmaceuticals LLC, and Besins Healthcare, Inc. These petitioners were involved in a patent and antitrust lawsuit concerning the drug AndroGel 1%. They sought a writ of mandamus after a district judge ruled that the application of the crime-fraud exception to the attorney-client privilege justified an order compelling the production of certain documents. The Petitioners claimed those documents were privileged.The Court of Appeals for the Third Circuit denied their petition. The court reasoned that the petitioners failed to meet the high standard for granting a petition for writ of mandamus. Specifically, they failed to show a clear and indisputable abuse of discretion or error of law, a lack of an alternate avenue for adequate relief, and a likelihood of irreparable injury.The court also found that the district court did not err in its interpretation of the crime-fraud exception to the attorney-client privilege as it applies to sham litigation. The court held that sham litigation, which involves a client’s intentional “misuse” of the legal process for an “improper purpose,” can trigger the crime-fraud exception. The court also rejected the argument that a "reliance" requirement must be applied in this context. View "In re: Abbott Laboratories" on Justia Law

The case involved a dispute between Winn-Dixie Stores and the Eastern Mushroom Marketing Cooperative, Inc. (EMMC), its individual mushroom farmer members, and certain downstream distributors. Winn-Dixie accused the defendants of violating antitrust laws by engaging in a price-fixing agreement. The U.S. Court of Appeals for the Third Circuit held that the District Court was correct in applying the rule of reason, rather than a "quick-look" review, in assessing the legality of the defendants' pricing policy under the Sherman Act. The court found that the complex and variable nature of the arrangements within the cooperative, involving both horizontal and vertical components, necessitated a careful analysis to determine anticompetitive effects. The court also held that the jury's verdict, which found that the defendants' pricing policy did not harm competition, was not against the weight of the evidence and did not warrant a new trial. The court affirmed the District Court’s judgment in favor of the defendants. View "Winn Dixie Stores v. Eastern Mushroom Marketing Cooperative Inc" on Justia Law

Winn-Dixie sued EMMC, its individual farmer members, and certain downstream distributors claiming their price-fixing agreement violated the Sherman Act. 15 U.S.C. 1. EMMC, a cooperative of mushroom growers, targets the Eastern United States. Initially, EMMC controlled over 90 percent of the supply of fresh Agaricus mushrooms in the relevant market. That share fell to 58% percent by 2005, and 17% percent by 2010. EMMC’s 20-plus initial members shrunk to fewer than five. EMMC’s stated purpose was to establish a “Minimum Pricing Policy,” under which it would “circulat[e] minimum price lists” along with rules requiring the member companies to uniformly charge those prices to all customers. Those minimums were not the price at which growers sold the product, but the price at which EMMC members hoped to coerce downstream distributors to go to market. Certain members were grower-only entities, lacking an exclusive relationship with any distributor. Many members partnered with specific, often legally-related downstream distributors. The precise nature of these relationships varied widely but downstream distributors were prohibited from joining EMMC.The district court instructed the jury to apply the “rule-of-reason” test. The Third Circuit affirmed a verdict in EMMC’s favor. Winn-Dixie argued that the judge should have instructed the jury to presume anticompetitive effects. Because this hybrid scheme involved myriad organizational structures with varying degrees of vertical integration, the court correctly applied the rule of reason. Under that more searching inquiry, the evidence was sufficient to sustain the verdict. View "Winn Dixie Stores v. Eastern Mushroom Marketing Cooperative Inc" on Justia Law

Imperial Sugar went bankrupt in 2001 and suffered a costly accident in 2008, prompting its sale to Louis Dreyfus. Imperial receives from Louis Dreyfus only minimal investment and is an “import-based, price-uncompetitive sugar refinery” that is “structurally uncompetitive” and lost roughly 10 percent of its customers from 2021-2022. Florida-based refiner U.S. Sugar agreed to purchase Imperial. The government sought an injunction (Clayton Act. 15 U.S.C. 18), arguing that the acquisition would have anticompetitive effects, leaving only two entities in control of 75% of refined sugar sales in the southeastern United States. The government applied the hypothetical monopolist test to demonstrate the validity of its proposed product and geographic markets. U.S. Sugar responded that it does not sell its own sugar but participates with other producers in a Capper-Volstead agricultural cooperative that markets and sells the firms’ output collectively but exercises no control over the quantities produced. At capacity, Imperial’s facility could produce only about seven percent of national output. U.S. Sugar argued that distributors constitute a crucial competitive check on producer-refiners that would undermine any attempt to increase prices and noted evidence of the high mobility of refined sugar throughout the country.The Third Circuit affirmed the denial of an injunction, upholding a finding that the government overlooked the pro-competitive effects of distributors in the market, erroneously lumped together heterogeneous wholesale customers, and defined the relevant geographic market without regard for the high mobility of sugar throughout the country. View "United States v. United States Sugar Corp." on Justia Law

Direct purchasers of drywall—not including Home Depot—sued seven drywall suppliers for conspiring to fix prices. Those cases were centralized in multi-district litigation. Home Depot was a member of the putative class. Georgia-Pacific was not sued. Before class-certification or dispositive motions were filed, a settlement with defendants USG and TIN was certified. Home Depot did not opt-out. Lafarge settled. The court certified a new settlement class; Home Depot opted out. The court later certified a new settlement class with respect to the remaining defendants with terms similar to the USG/TIN settlement—preserving the right of class members to pursue claims against alleged co-conspirators other than the settling defendants. Home Depot remained in the settlement class. The court entered judgment.Home Depot then sued Lafarge. Home Depot never bought drywall from Lafarge, but argued that Lafarge was liable for the overcharges Home Depot paid its suppliers; its expert opined that the pricing behaviors of Lafarge and other suppliers, including USG, CertainTeed, and Georgia-Pacific, were indicative of a conspiracy to fix prices. The court struck the expert report, citing issue preclusion and the law of the case, noting the grant of summary judgment to CertainTeed, that Georgia-Pacific had not previously been sued, and that alleged conspirator USG settled early in the class action.The Third Circuit vacated. Issue preclusion applies only to matters which were actually litigated and decided between the parties or their privies. Home Depot was not a party (or privy) to any of the relevant events. Two of the three events to which it was “bound” were not judicial decisions. The law of the case doctrine applies only to prior decisions made in the same case. View "Home Depot USA Inc v. Lafarge North America Inc" on Justia Law

Host operates airport concessions. MarketPlace is the landlord at Philadelphia International Airport (PHL). After competitive bidding, Host won PHL concession spots, planning to open a coffee shop and a restaurant. MarketPlace insisted on a lease term allowing it to grant “third-parties exclusive or semi-exclusive rights to be sole providers" of certain foods and beverages, including a “pouring-rights agreement” (PRA), “granting a beverage manufacturer, bottler, distributor or other company (e.g., Pepsi or Coca-Cola) the exclusive control over beverage products advertised, sold and served at [PHL].”Host abandoned the deal and sued, alleging that MarketPlace would receive payoffs from a “big soda company” courtesy of an exclusive PRA. The complaint alleged an unlawful tying arrangement and an illegal conspiracy and agreement in restraint of trade, in violation of Section 1 of the Sherman Act. The district court dismissed the case with prejudice, finding Host failed to adequately plead a relevant geographic market. The Third Circuit affirmed. Host lacks antitrust standing and has not adequately pled a violation of the Sherman Act. Host alleged harm only to itself; failure to secure preferred contractual terms is not an antitrust injury. Host was not being forced to purchase any product. MarketPlace’s control over the non-alcoholic beverage suppliers at PHL does not stem from market power but from its role as a landlord. View "Host International Inc v. MarketPlace PHL LLC" on Justia Law