The Federal Trade Commission remains vigilant about protecting the integrity of “Made in USA” claims. This is evidenced by its recent settlement with Williams-Sonoma Inc. The FTC claimed that that the well-known home products and kitchen wares company deceptively represented that certain of its products were made in the U.S. when, in fact, they were wholly imported, or contained significant imported materials or components. Those products included its Goldtouch Bakeware products, Rejuvenation-branded products, and Pottery Barn Teen and Pottery Barn Kids-branded upholstered furniture products. Williams-Sonoma had claimed that all or virtually all of the products were made in the U.S.
On Jan. 28, 2020, the Federal Trade Commission (FTC) announced the annual changes to the notification thresholds for filings under the Hart-Scott-Rodino Antitrust Improvements Act (HSR), as well as certain other values under the HSR rules. These new thresholds will become effective Feb. 27, 2020.
As background, the HSR Act requires that acquisitions of voting securities or assets that exceed certain thresholds be disclosed to U.S. antitrust authorities for review before they can be completed. The “size-of-transaction threshold” requires that the transaction exceeds a certain value. Under certain circumstances, the parties involved also have to exceed “size-of-person thresholds.” This year’s values, which are adjusted annually based on changes in the GNP, take effect in a few weeks. The FTC also adjusted the safe harbor thresholds that govern interlocking directorates in competing companies.
Before even moving for certification of the putative classes they seek to represent, Interim Class Counsel (ICC) in the In re Generic Pharmaceuticals Pricing Antitrust Litigation sought to insure they would get not only their own piece of the pie, but also a sizable sliver of everyone else’s. Claiming they are prosecuting potentially “the largest cartel case in the history of the United States,” the ICC petitioned the court for preemptive orders that would have placed in escrow 10 percent of any judgment or settlement entered into by parties who have opted out and brought their own suit directly (the Direct Action Plaintiffs). Subject to additional court approval, this common fund would then have been distributed among the ICC, ostensibly compensating them for their work, albeit with funds from cases involving plaintiffs they do not represent. Not surprisingly, the briefing between the various plaintiff groups on the issue was quite acrimonious. After nearly six months, Judge Cynthia Rufe, who presides over the sprawling MDL in the Eastern District of Pennsylvania, entered a two-page order denying the ICC’s request . . . at least for now. Continue Reading
As millions of Americans contemplate whether to fry, smoke or barbeque their chicken over the upcoming 4th of July holiday, the antitrust class action against our nation’s largest chicken producers—In Re Broiler Chicken Antitrust Litigation, No. 16-cv-8637—took a significant turn this past week, when the U.S. Department of Justice formally intervened in the multi-district private litigation originally filed in 2016.
DOJ granted leave to intervene and three-month discovery stay
The DOJ’s June 21, 2019 Motion to Intervene and Stay Discovery sought a six-month stay of both written and deposition discovery against defendants (and their current and former employees) in the ongoing civil proceedings in the U.S. District Court for the Northern District of Illinois in order to “protect the integrity of the grand jury’s investigation.” Although neither the plaintiff purchasers nor the defendant producers objected to the DOJ’s intervention request, the purchasers filed a memorandum in opposition to the DOJ’s stay request. According to the opposition, such a stay would have been unprecedented where discovery of defendants had been ongoing for more than a year, and more than 150 depositions had already been taken since October 2018.
After a June 27 hearing, Judge Durkin granted a more limited, three-month stay. Judge Durkin emphasized an interest in allowing plaintiffs to push towards a resolution by indicating that this would be the only stay he would grant. Judge Durkin also reportedly told counsel for the DOJ that after the three-month stay expired, he intended to permit plaintiffs to begin issuing discovery requests to defendants for any documents they may have turned over in response to a grand jury subpoena.
Implications for the litigation
The DOJ’s intervention marks a potentially significant milestone in the case. Unlike the many civil price fixing cases brought by private plaintiffs after a government antitrust investigation (and often after criminal indictments), the private civil case against the chicken producers was filed before the government investigation. And it has already survived defendants’ initial motions to dismiss. The DOJ’s recent decision to intervene may signal that the government now believes that serious criminal antitrust violations occurred. If the government’s investigation uncovers additional evidence against the chicken producers, it could further increase pressure on the defendants to evaluate opportunities to resolve the civil litigation in order to avoid treble damages exposure. As a result, the second half of 2019 promises to be an interesting one in the broiler chicken antitrust litigation, as the government’s investigation intensifies and potentially becomes the subject of discovery by the private plaintiffs.
If you have any questions concerning this briefing, please contact Jason Dubner.