antitrust law

Federal Trade Commission v. Phoebe Putney Health System, Inc. (11-1160)

Phoebe Putney Health Systems ("PPHS") leased and operated one of two hospitals in Dougherty County, Georgia. PPHS then leased the other county hospital, Palmyra Medical Center, from the Hospital Corporation of America ("HCA"). In April 2011, the Federal Trade Commission ("FTC") filed a complaint against PPHS, alleging that by leasing Palmyra, PPHS violated the Clayton Act and the FTC Act by acting with anticompetitive effect. PPHS argues that it should be exempt from federal antitrust law under the state action doctrine. The Eleventh Circuit found for PPHS, stating that a private actor falls within the state action doctrine when its anticompetitive activity is foreseeable by the state legislature. The FTC urges a more stringent standard where the anticompetitive effect must be intrinsic to the state’s authorization. How the Supreme Court decides this case will dictate how state legislatures delegate power to local government entities, and whether or not they must formally articulate authorization for such an entity to act with anticompetitive effect.

Questions as Framed for the Court by the Parties: 

1. Whether the Georgia legislature, by vesting the local government entity with general corporate powers to acquire and lease out hospitals and other property, has “clearly articulated and affirmatively expressed” a “state policy to displace competition” in the market for hospital services.

2. Whether such a state policy, even if clearly articulated, would be sufficient to validate the anticompetitive conduct in this case, given that the local government entity neither actively participated in negotiating the terms of the hospital sale nor has any practical means of overseeing the hospital's operation.

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Issue(s)

Where a state legislature’s authorization leads to anticompetitive actions by a private actor, what standard will be applied to determine whether those actions are exempt from federal antitrust law?

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Comcast Corp. v. Behrend

Respondent Caroline Behrend et al., cable television subscribers, brought an antitrust class action against Petitioner Comcast Corporation alleging anticompetitive activity. In order to be certified as a class, Respondents had to present evidence that they suffered damages on a class-wide basis. The evidence they submitted consisted of a damages model prepared by their expert witness. Comcast challenges the District Court’s reliance upon that evidence, claiming that it is inadmissible under standards set forth in Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U. S. 579 (1993). In this case, the Supreme Court will address whether evidence presented in support of class certification must be admissible under those standards. The decision will likely significantly impact the ability of plaintiffs to certify as a class under Federal Rule of Civil Procedure 23, and it may also affect underlying commercial conduct, such as the future use of territory-swapping and clustering agreements. 

Questions as Framed for the Court by the Parties: 

May a district court certify a class action under Federal Rule of Civil Procedure 23 without resolving whether the plaintiff class has introduced admissible evidence to show that they may be awarded damages on a class-wide basis?

Issue

May a district court certify a class action without resolving “merits arguments” that bear on Federal Rule of Civil Procedure 23’s prerequisites for certification, including whether purportedly common issues predominate over individual ones under Rule 23(b)(3)?

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Acknowledgments: 

The authors would like to thank former Supreme Court Reporter of Decisions Frank Wagner for his assistance in editing this preview.

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State action antitrust immunity

Under the state-action doctrine elucidated in Parker v. Brown, 317 U.S. 341 (1943), state and municipal authorities are immune from federal antitrust lawsuits for actions taken pursuant to a clearly expressed state policy that, when legislated, had foreseeable anticompetitive effects. When a state approves and regulates certain conduct, even if it is anticompetitive under FTC or DOJ standards, the federal government must respect the decision of the state.

 

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