Articles Posted in Antitrust & Trade Regulation

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Nearly ten years ago, U-Haul Co. of California (UHC) sued Robinson, one of UHC’s independent dealers, for breach of contract and unfair competition after he terminated their contract and began renting Budget trucks from the former UHC dealership. UHC alleged a covenant not to compete in its dealer contract prohibited Robinson from offering the products of UHC’s competitors while a Yellow Pages ad, running at UHC’s expense, was still promoting Robinson’s business. Robinson sought a judicial declaration that the covenant was void due to fraud in the inducement. After UHC lost its request for a preliminary injunction and dismissed its complaint, Robinson filed a separate action alleging malicious prosecution by UHC in the prior lawsuit and violation of Business and Professions Code section 17200, the unfair competition law (UCL). A jury awarded Robinson $195,000 in compensatory damages for malicious prosecution. The trial court issued a permanent injunction prohibiting U-Haul from initiating or threatening judicial proceedings to enforce the noncompetition covenant. It awarded Robinson $800,000 in attorney’s fees as a private attorney general on his UCL cause of action. The court of appeal affirmed, holding that the injunction was proper and the court did not abuse its discretion in allowing Robinson to file a late motion for attorney’s fees. View "Robinson v. U-Haul Co. of Cal." on Justia Law

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Fred Duran filed a putative class action complaint against Obesity Research Institute, LLC (ORI) and Wal-Mart Stores, Inc. (Wal-Mart) (collectively, defendants). Duran alleged defendants falsely claimed that ORI's products, Lipozene and MetaboUp, had weight loss benefits. The court approved a claims-made settlement providing that class members submitting a claim without proof of purchase would receive $15, and those submitting receipt(s) would receive one refund of double the unit price paid. The settlement also provided that ORI would cease making certain assertions in product advertising. Defendants also agreed to not oppose a motion seeking $100,000 in attorney fees to class counsel. Objectors, class members DeMarie Fernandez, Alfonso Mendoza, and Brian Horowitz appealed, contending the settlement was the product of collusion. Objectors claimed the class did not receive sufficient notice of settlement, and the settlement was unreasonable and inadequate. They also contended the attorney fee award was excessive. The Court of Appeal reviewed the case and concluded that the trial court's judgment had to be reversed because the class notice failed in its fundamental purpose, to apprise class members of the terms of the proposed settlement. "The erroneous notice injected a fatal flaw into the entire settlement process and undermines the court's analysis of the settlement's fairness." View "Duran v. Obesity Research Institute" on Justia Law

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In 2003, several class action lawsuits were filed against automobile manufacturers and trade associations, alleging antitrust conspiracy, Bus. & Prof. Code, 167201, and unfair business practices, Bus. & Prof. Code, 17200, on behalf of individuals who purchased or leased new vehicles in California within a certain time period. The lawsuits, which were eventually coordinated, alleged conspiracy to restrict the movement of lower-priced Canadian vehicles into the U.S. market, to avoid downward pressure on U.S. new vehicle prices. After years of litigation, the court granted summary judgment in favor of the two remaining defendants, Ford U.S. and Ford Canada, concluding that there was not sufficient evidence of an actual agreement among Ford and the other manufacturers to restrict the export of new vehicles from Canada to the U.S. The court of appeal affirmed with respect to Ford U.S., but concluded that the admissible evidence was sufficient to demonstrate a material factual issue as to whether Ford Canada participated in an illegal agreement to restrict the export of automobiles. The court noted an expert economic analysis indicating that the manufacturers would not have continued to restrict exports during the alleged conspiracy period absent an agreement that none of them would break ranks and reap the profits available in the export market; parallel conduct by the manufactures during the same period; and deposition testimony. View "In re: Auto. Antitrust Cases I and II" on Justia Law

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Appellants in this case were Richtek Technology Corporation, a Taiwan corporation, and Richtek USA, Inc., its California subsidiary. Respondents were James Chang, H.P. Huang and J.C. Chen, Taiwan residents and former employees of Richtek Technology, and uPI Semiconductor Corporation, a California company they formed. Appellants sued Respondents for trade secret misappropriation. uPI, Chang and Huang filed a demurrer on the ground that Appellants’ claims were time-barred under Taiwan’s statute of limitations for trade secret misappropriation claims. Huang, Chang and Chen also filed a motion to dismiss based on a forum selection clause in their employment agreements mandating a Taiwanese forum for Richtek Technology’s trade secret claims. The trial court sustained the demurrer and granted Chen’s motion to dismiss. The Court of Appeals (1) reversed the order sustaining the demurrer to the complaint, holding that the trial court erred by using previous complaints filed in Taiwan to conclude that Appellants had knowledge of the misappropriation at issue in this lawsuit and the identity of the parties liable for damages; and (2) affirmed the order granting Chen’s motion to dismiss, holding that the forum selection clause in the employment agreement between Chen and Richtek Technology was mandatory. View "Richtek USA v. uPI Semiconductor Corp." on Justia Law

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A class action complaint alleged that Honeywell engaged in uncompetitive and illegal conduct to increase its market share of round thermostats and to use its dominant market position to overcharge customers. In 2013, the parties reached a settlement and asked the trial court to preliminarily approve it. The court initially declined to do so because it had concerns about the notice proposed to be sent to class members. Those concerns were subsequently addressed to the court’s satisfaction, and on February 4, 2014, the court preliminarily approved the settlement. The notice of settlement was subsequently published and distributed to class members. The long version was distributed and posted on a website, and the short version was published in various print publications. The trial court found that four objectors to the settlement failed to establish they had standing, but rejected one objection on timeliness grounds and rejected the other three on their merits. The court of appeal affirmed, except for the ruling on standing, finding that the court properly approved the distribution of residual settlement funds and awarded class counsel attorney fees that amounted to 37.5 percent of the settlement fund. View "Roos v. Honeywell Int'l, Inc." on Justia Law

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This action under the Unfair Competition Law (UCL) and the False Advertising Law (FAL) arose from Philip Morris USA, Inc.'s use of terms such as "Lights" and "Lowered Tar and Nicotine" in advertising Marlboro Lights, to indicate they were less harmful to one's health than Marlboro Reds and other full-flavored cigarettes. The trial court determined Marlboro Lights were as dangerous than any other cigarettes, Philip Morris knew that, and its advertising was likely to deceive consumers. The court, however, denied plaintiffs' prayer for restitution on the ground they received value from Marlboro Lights apart from the deceptive advertising, and the evidence they submitted in an effort to show the difference between what they paid for Marlboro Lights and the value they actually received was incompetent and inadmissible. On appeal, plaintiffs contended the court erred as a matter of law by determining the only measure of restitution in a UCL products action was the measure set forth in "In re Vioxx Class of Cases," 180 Cal.App.4th 116 (2009)). Plaintiffs asserted value was immaterial, and they were not required to show any loss attributable to the deceptive advertising, because as an alternative measure the court had discretion to order Philip Morris to make a full refund of consumer expenditures, or its profits thereon, exclusively for the purpose of deterrence. Plaintiffs also contended the court abused its discretion by denying injunctive relief on the ground of mootness. A federal court opinion affirmed in relevant part in "United States v. Philip Morris USA, Inc." (566 F.3d 1095 (2009)), and federal legislation have already enjoined tobacco companies' use of the objectionable descriptors, plaintiffs asserted the matter was not moot because Philip Morris continued to market the cigarettes, called Marlboro Gold, in light-colored packs, which ostensibly signified they were less dangerous than Marlboro Reds or other cigarettes sold in dark-colored packs. Additionally, plaintiffs argued the court erred by denying them declaratory relief, awarding Philip Morris costs as the prevailing party under Code of Civil Procedure section 1032, and denying them sanctions under Code of Civil Procedure section 2033.420 for Philip Morris's failure to make admissions. After review, the Court of Appeal concluded that all of plaintiffs' points were meritless and affirmed the judgment. View "In re Tobacco Cases II" on Justia Law

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In 2011 and 2012, the government brought enforcement actions against more than 80 facilities alleged to be selling and distributing marijuana for medicinal purposes in violation of the Los Angeles Municipal Code for public nuisance, the Narcotics Abatement Law, Health & Safety Code section 11570, and the state unfair competition law, Business & Professions Code section 17200. The complaints sought permanent injunctions, abatement of the nuisances and civil penalties. The trial court denied the government’s omnibus motion for summary judgment, reasoning that claims for penalties made under each of the statutory plans are elements of the causes of action alleged. The court of appeal vacated, holding that the penalties being sought are among the remedies available rather than elements of the causes of action alleged in the several complaints. View "People v. Cahuenga's The Spot" on Justia Law

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The issue this case presented for the Court of Appeal's review centered on whether federal law preempted the effort by a district attorney to recover civil penalties under California’s Unfair Competition Law (UCL) based on an employer’s alleged violation of workplace safety standards. Petitioners Solus Industrial Innovations, Emerson Power Transmission Corp., and Emerson Electric Co. (collectively Solus) argued the trial court erred by overruling their demurrer to two causes of action filed against them by Respondent, the Orange County District Attorney, alleging a right to recover such penalties. Solus argued that federal workplace safety law (Fed/OSHA) preempted any state law workplace safety enforcement mechanism which has not been specifically incorporated into the state workplace safety plan approved by the U.S. Secretary of Labor. The district attorney argued that once a state workplace safety plan has been approved by the Secretary of Labor, the state retains significant discretion to determine how it will enforce the safety standards incorporated therein, and thus the state may empower prosecutors to enforce those standards through whatever legal mechanism is available when such a case is referred to them. The trial court agreed with the district attorney and overruled Solus’s demurrer. But the court also certified this issue as presenting a controlling issue of law suitable for early appellate review under Code of Civil Procedure section 166.1. Solus then filed a petition for writ of mandate asking the Court of Appeal to review the trial court’s ruling. After the Court summarily denied the petition, the California Supreme Court granted review and transferred the case back to the Court of Appeal with directions to issue an order to show cause. In the course of its opinion, the Court of Appeal noted that the UCL was not even in effect when California’s plan was approved. The California Supreme Court then granted review, and transferred the matter back to the Court of Appeal with directions to reconsider the matter in light of former Civil Code section 3370.1 repealed by stats. 1977, ch. 299, sec. 3, p. 1204. Having done so, the Court of Appeal again concluded that the district attorney’s reliance on the UCL to address workplace safety violations was preempted. View "Solus Industrial Innovations, LLC v. Super. Ct." on Justia Law