Making History: Six Strategic Trials in a Blockbuster Year of Antitrust Litigation 2022
Antitrust litigation and investigations continue to pose significant challenges to companies’ business strategies and operations. President Biden’s Executive Order on Promoting Competition in the American Economy took antitrust enforcement mainstream in 2021. Plaintiffs remain aggressive in their pursuit of antitrust class actions. And business-to-business antitrust litigation has only increased in complexity. O’Melveny’s Antitrust & Competition Practice has risen to a year of high-profile challenges, handling four major cases that resulted in six antitrust trials over an 11-month period and achieving several historic decisions by jury and judge. We are not aware of another firm that has tried so many antitrust cases in so short a period. In parallel, we also notched important advocacy successes at various stages of other litigation, helping clients avoid financial and reputational harm. These key case developments highlight what was at stake, the winning strategies implemented, and lessons learned from the complex and diverse antitrust issues we dealt with this past year.
O’Melveny’s Historic Year of Antitrust Litigation Trial Case Study #1, 2 & 3: United States of America v. Penn et al., Case No. 1:20-cr-00152 (D. Colo.). . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Trial Case Study #4: US Airways, Inc., for American Airlines, Inc. v. Sabre Holdings Corporation, et al., Case No. 1:11-cv-02725 (S.D.N.Y.) . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Trial Case Study #5: AngioDynamics, Inc. v. C.R. Bard, Inc., et al., Case No. 1:17-cv-00598-BKS-CFH (N.D.N.Y.) . . . . . . . . . . . . . . . . . . . . . . . 5 Trial Case Study #6: U.S. v. Bertelsmann SE & Co. KGaA, et al., Case No. 1:21-cv-02886 (D.D.C.) 7 Additional Litigation Successes . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 In re Dynamic Random Access Memory (DRAM) Indirect Purchaser Antitrust Litigation, 24 F.4th 42 (9th Cir. 2022). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Fresenius Kabi USA, LLC v. Par Sterile Products, LLC, et al., Case No. 2:16-cv-04544-SDW-LDW (D.N.J.) 10 Persian Gulf, Inc. v. BP West Coast Products LLC, et al.; Bartlett, et al. v. BP West Coast Products LLC, et al., Case Nos. 3:15-cv-01749-L-AGS, 3:18-cv-01374-L-AGS (S.D. Cal.) 11 Regeneron Pharmaceuticals Inc. v. Novartis Pharma AG et al., Case No. 1:21-CV-01066 (N.D.N.Y.). 12 Practice Overview & Recognitions . . . . . . . . . . . . . . . . . . . . . . . . . 13 Team Representatives 14
1 Trial Case Study #1, 2 & 3 United States of America v. Penn et al., Case No. 1:20-cr-00152 (D. Colo.) The government produced more than 16 million documents over the course of the case—emails, phone records, mobile-phone extractions, audio recordings, and others— and continued to flood the defendants with document productions throughout each of the three trials. To add to the difficulty, Mr. Penn’s former employer (Pilgrim’s Pride) entered into a plea agreement with the government in early 2021, and worked alongside the government to build the case against him and the other defendants. But the O’Melveny team overcame each challenge. By pioneering strategies to limit the impact of the government’s massive production, identifying and organizing key documents, methodically coopting or discrediting the government’s trial witnesses, and making innovative use of expert economic testimony in a criminal trial, the O’Melveny team paced the joint defense group through three trials to victory. Along the way, the O’Melveny team also spearheaded the joint defense group’s motion practice and won several important legal battles, involving the wording of jury instructions and the exclusion of several pivotal trial exhibits (including some the court had provisionally admitted). And throughout the winter, spring, and summer that they spent in Denver, O’Melveny’s integrated trial team of paralegals, staff attorneys, litigation vendors, associates, counsel, and partners worked relentlessly to position the client for his ultimate success. The Winning Strategy From the beginning, the odds were stacked against Jayson Penn, former Pilgrim’s Pride CEO, and the O’Melveny team. Michael Tubach SAN FRANCISCO Partner +1 415 984 8876 firstname.lastname@example.org Anna Pletcher SAN FRANCISCO Partner +1 415 984 8994 email@example.com TEAM REPRESENTATIVES
2 Criminal price-fixing and bid-rigging An unprecedented three criminal antitrust trials in the same case; the first two ended in hung juries, and the third delivered a full acquittal for our client, Jayson Penn, and four other poultry industry executives. Our client’s freedom and livelihood—he faced a maximum 10-year sentence and a fine of up to $1 million if convicted. Claims Trial and Outcome What Was at Stake Why It Matters The DOJ Antitrust Division pulled out all the stops in an attempt to convict Mr. Penn and the other defendants. When the presiding judge ordered Assistant Attorney General Jonathan Kanter to a hearing in Denver to explain the Division’s rationale for trying the case a third time, Mr. Kanter professed his continued belief that the government “will obtain a conviction.” The O’Melveny team’s trial victory ultimately resulted in a perceived unraveling of the DOJ’s years-long investigation into poultry sales to fast-food companies, with the DOJ failing to secure a single conviction of the 14 individuals it indicted as part of a push to address “kitchen table” antitrust issues.
3 TEAM REPRESENTATIVES Andrew Frackman NEW YORK Partner +1 212 326 2017 firstname.lastname@example.org Ian Simmons WASHINGTON, DC Co-Chair, Antitrust +1 202 383 5106 email@example.com Katrina Robson WASHINGTON, DC Partner +1 202 220 5052 firstname.lastname@example.org Trial Case Study #4 US Airways, Inc., for American Airlines, Inc. v. Sabre Holdings Corporation, et al., Case No. 1:11-cv-02725 (S.D.N.Y.) We demonstrated how Sabre preserved its gatekeeper power and blocked new entrants by imposing contractual conditions on airlines, preventing them from encouraging travel agencies to use alternative distribution channels, penalizing airlines that tried to create competitive alternatives to Sabre, and locking in travel agents to the Sabre system through a variety of restraints and incentivized booking payments. No precedent existed for presenting a two-sided market claim to a jury. To achieve this victory, O’Melveny navigated several challenges: • We overcame US Airways’ prior agreements to the contractual restraints that it now was claiming to be anticompetitive; • We dealt with US Airways’ absorption into American Airlines and the many years that had elapsed since the events in dispute as a result of the Second Circuit’s reversal of our 2016 jury trial victory; and • We educated the jury on the economics and operation of two-sided platforms and explained how Sabre could exercise monopoly power, despite having less than the typical market share to support a Section 2 claim. We focused the jury’s attention on Sabre’s broader, market-wide misconduct toward multiple airlines and potential The Winning Strategy In the first ever two-sided market jury trial, through a combination of fact and expert economist evidence, O’Melveny successfully explained to the jury how a two-sided platform could possess anticompetitive, gatekeeper power.
4 Mia Gonzalez NEW YORK Partner +1 212 728 5698 email@example.com Madhu Pocha CENTURY CITY Partner +1 310 246 8588 firstname.lastname@example.org Anton Metlitsky NEW YORK Partner +1 212 326 2291 email@example.com competitors, made possible by a wealth of internal Sabre documents and helpful testimony from third parties (both airlines and technology providers). And we made the economic evidence understandable by the lay audience. Monopolization On behalf of client US Airways (now American Airlines), O’Melveny and cocounsel Yetter Coleman LLP obtained the first jury verdict finding that a defendant monopolized a two-sided market. Sabre—a two-sided technology platform providing distribution services to both airlines and travel agencies—has for two decades used a variety of exclusionary tactics to cement itself as an unavoidable middleman in airfare distribution in the United States, especially to business travelers who use travel agencies. US Airways and its successor, American Airlines, sought to bring competition to a market that has atrophied. Claims Trial and Outcome What Was at Stake Why It Matters Multi-sided platforms are at the heart of today’s digital economy. While markets and facts differ from case to case, our successful economic and legal approach will be (and already has been) copied in subsequent challenges involving two-sided platforms, including some where O’Melveny represents defendants. Our experience on both sides of these issues—including having actually presented the complicated economics to a jury—puts us in a unique position to assist clients in these and related disputes.
5 TEAM REPRESENTATIVES Andrew Frackman NEW YORK Partner +1 212 326 2017 firstname.lastname@example.org Pamela A. Miller NEW YORK Partner +1 212 326 2088 email@example.com Trial Case Study #5 AngioDynamics, Inc. v. C.R. Bard, Inc., et al., Case No. 1:17-cv-00598-BKS-CFH (N.D.N.Y.) O’Melveny proved at the trial that: • Bard adopted an integrated product design to maximize patient safety, not to block competitors; • Bard’s product design did not force any hospitals to purchase Bard catheters rather than AngioDynamics’s and customers had access to other alternative PICC products; • Bard’s pro-competitive investment in selling high-quality innovative products at low prices resulted in its commercial success and high market share, not foreclosure of competition; and • AngioDynamics’s lack of business success was the result of its own failures and choices and not Bard’s PICC design and sales strategy. The Winning Strategy Tying cases are rarely tried. This case presented the important question whether a company should have the freedom to offer an integrated product that benefits its customers, or be forced to adopt “open architecture” and create interoperability with rival offerings even at the expense of the product.
6 Mark Racanelli NEW YORK Partner +1 212 326 4403 firstname.lastname@example.org Sergei Zaslavsky WASHINGTON, DC Partner +1 202 383 5162 email@example.com Tying O’Melveny obtained a complete victory for our client Bard in a threeweek jury trial in the Northern District of New York. Plaintiffs have appealed the verdict to the Second Circuit. Bard designed a vascular PICC catheter that included technology that acted as a “GPS” to help nurses place the PICC safely next to the patient’s heart. Bard’s competitor, AngioDynamics, claimed that Bard’s decision to design and sell the technology only integrated in its catheters, and not as a standalone product that could be combined with competitors’ catheters, was an illegal tie, violating Sherman Act Section 1. AngioDynamics sought an injunction to force Bard to sell the technology part of the PICC as a standalone product, as well as $135 million in damages (before trebling). Claims Trial and Outcome What Was at Stake Why It Matters This case addressed whether a successful business must help its less successful rivals catch up (either by supplying products directly to them or making the products interoperable with rivals’ offerings) or whether such freeriding is not part of healthy competition. Many of today’s leading industries—including technology platforms, consumer electronics, and virtually any business where product integration offers tangible benefits—face these critical issues.
7 TEAM REPRESENTATIVES Daniel M. Petrocelli CENTURY CITY Partner +1 310 246 6850 firstname.lastname@example.org M. Randall Oppenheimer CENTURY CITY Partner +1 310 246 6722 email@example.com Trial Case Study #6 U.S. v. Bertelsmann SE & Co. KGaA, et al., Case No. 1:21-cv-02886 (D.D.C.) Andrew Frackman NEW YORK Partner +1 212 326 2017 firstname.lastname@example.org Having marshaled a trial team under similar circumstances in our successful defense of the AT&T-Time Warner merger, O’Melveny did not hesitate. The Penguin Random House ramp-up was a sprint, involving over 75 depositions and millions of pages of electronic data and documents. We argued that the alleged market—confined to authors of anticipated top-selling books—was wrong factually and legally, and the government had not shown there would be less competition for the most sought-after books. The district court ultimately agreed with the government in one of the few merger cases to be enjoined on a monopsony theory of liability. O’Melveny’s Strategy Few firms have the experience and ability to take such a complex antitrust case from inception to trial in nine months, especially a firm that did not handle the pre-litigation investigation.
8 Julia Schiller WASHINGTON, DC Partner +1 202 383 5412 email@example.com Abby F. Rudzin NEW YORK Partner +1 212 326 2033 firstname.lastname@example.org Jonathan Hacker WASHINGTON, DC Partner +1 202 383 5285 email@example.com The DOJ claimed that the merger between Penguin Random House and Simon & Schuster would substantially lessen competition for authors of anticipated top-selling books. On October 31, 2022, after a threeweek trial, the district court found for the government and enjoined the merger. While the merger would have increased the combined publishers’ market share, the DOJ could not prove any lessening of competition in the downstream distribution markets. Instead, the DOJ claimed that the merger would result in less competition in the upstream book acquisition market in the form of lower advances paid to authors of “anticipated top selling books.” The $2.175 billion merger turned on the validity of that alleged monopsony market. Claims Trial and Outcome What Was at Stake Why It Matters DOJ’s complaint was premised on a monopsony theory of harm, uncommon in the merger context. By focusing on buyer power—publishers’ acquisition of the rights to authors’ works— rather than seller power, the government shifted away from the traditional consumer welfare standard.
9 Additional Litigation Successes In re Dynamic Random Access Memory (DRAM) Indirect Purchaser Antitrust Litigation, 24 F.4th 42 (9th Cir. 2022) Plaintiffs, representing putative classes of direct- and indirect-purchasers of DRAM products, alleged that our client Samsung and manufacturers Micron and SK Hynix conspired to restrict supply between 2016 and 2018, causing DRAM prices to skyrocket. The Ninth Circuit affirmed the Northern District of California’s dismissal of the indirect-purchaser complaint (which led to direct-purchaser plaintiffs voluntarily dismissing their appeal). DRAM chips are incorporated in millions of products around the globe, from mobile phones and tablets to automobiles and “smart” appliances. Had their claims gotten off the ground, the putative class plaintiffs would likely have sought billions of dollars in damages from the defendants. Claims Outcome What Was at Stake The plaintiffs’ theory, pointing to specific allegations of information exchanges and other evidence, was that the three largest DRAM suppliers were communicating future output intentions on calls with financial analysts, thereby signaling to one another. Deflating this theory required presenting a comprehensible and compelling explanation of how “oligopolistic” markets function. In demonstrating the insufficiency of plaintiffs’ allegations, we wove together scattered details and easily-overlooked admissions in the plaintiffs’ lengthy complaints to demonstrate why defendants’ supposed actions were more consistent with lawful, independent conduct than illegal collusion. The Winning Strategy Our challenge was explaining why the defendants’ alleged parallel product supply reductions were more consistent with independent decision-making than with collusion. This case required the Ninth Circuit to weigh in on one of the most challenging issues in antitrust law— when pleading a conspiracy on the basis of circumstantial evidence, how much must a plaintiff allege to get past the pleading stage under Twombly’s “plausibility” framework? In a 23-page published opinion, a unanimous Ninth Circuit panel methodically examined each of the plaintiffs’ alleged “plus factors” to provide clear jurisprudence on what it takes to survive a motion to dismiss. Why It Matters
10 Fresenius Kabi USA, LLC v. Par Sterile Products, LLC, et al., Case No. 2:16-cv-04544-SDW-LDW (D.N.J.) Monopolization, attempted monopolization, conspiracy to monopolize, exclusive dealing, group boycott, and tortious interference O’Melveny client Par prevailed on summary judgment for a second time, ending a long-running dispute between the two competitors. Fresenius alleged that Par had monopolized the market for Vasopressin Injection—a life-saving drug used to boost blood pressure in emergency settings—by purportedly entering into exclusive agreements with suppliers of the active pharmaceutical ingredient (API) needed to develop and manufacture the drug. Holding that Fresenius failed to create a genuine issue of material fact on substantial foreclosure, the district court dismissed the claims in their entirety. Had Par not secured summary judgment on each of Fresenius’s claims, the case would have proceeded to trial, with hundreds of millions of dollars in treble damages at stake. Claims Outcome What Was at Stake On this ground, the court found that a jury could not conclude that Par substantially foreclosed the US Vasopressin Injection market by restricting access to API. Moreover, five other manufacturers’ ability to obtain Vasopressin API and file new drug applications before Fresenius demonstrated that the market was not substantially foreclosed. The record O’Melveny compiled was so compelling that Fresenius decided not to appeal the Court’s ruling. The Winning Strategy O’Melveny demonstrated that Fresenius had the opportunity to compete for access to API from its preferred supplier (as well as alternative suppliers) but made the business decision not to. Challenges to alleged exclusive supply agreements arise in many industries, including pharmaceuticals. O’Melveny’s success is a roadmap for refuting such claims—showing that Fresenius had every opportunity to compete, but chose not to bid for API when it had the chance. Why It Matters
11 Additional Litigation Successes Persian Gulf, Inc. v. BP West Coast Products LLC, et al., Case No. 3:15-cv-01749-LAGS (S.D. Cal.); Bartlett, et al. v. BP West Coast Products LLC, 3:18-cv-01374-L-AGS (S.D. Cal.) Alleged conspiracy in violation of the Sherman Act and California’s Cartwright Act The district court granted the defendants’ joint motion for summary judgment on all antitrust claims. Claims Outcome Plaintiffs (a retail gasoline station and three consumers who purchased gasoline at retail stations) had sued ExxonMobil Refining & Supply Co. and Exxon Mobil Corp. (“ExxonMobil”) in two putative class actions, alleging that ExxonMobil and seven other gasoline refiners in California conspired to fix gasoline prices at artificially high levels from 2012 to 2020. Early in the case, O’Melveny led the joint-defense effort to defeat a motion to remand, then launched an aggressive discovery strategy that included multiple third-party subpoenas and depositions. O’Melveny also served a Rule 11 letter that forced plaintiffs to strike key allegations against ExxonMobil. As a result, plaintiffs shifted their focus away from ExxonMobil, originally their main target. O’Melveny also drafted a successful motion to strike a plaintiff-side expert’s opinions on diesel, which eliminated $15 billion in potential damages. And O’Melveny coordinated the joint-defense efforts on Daubert briefing related to the plaintiffs’ liability expert. Though it ultimately denied that Daubert motion as moot, the court agreed with ExxonMobil’s arguments that the expert’s opinions were largely irrelevant and unhelpful on key issues, and on that basis held that the expert’s opinions were insufficient to withstand summary judgment. The Winning Strategy Spanning several years, this litigation included many twists and turns, with O’Melveny at the center of nearly all critical motions and decisions. In September 2022, the court granted the defendants’ joint motion for summary judgment on all claims, finding no genuine dispute of material facts on the existence of a conspiracy or causation. The summary judgment victory ended a lengthy and hard-fought antitrust litigation that threatened astronomic damages. Acting as a critical contributor to the joint-defense efforts while notching wins for ExxonMobil on the basis of its unique circumstances, O’Melveny displayed a deft and strategic approach to discovery and motion practice. Why It Matters $30 billion in claimed damages against all major California gasoline refiners. What Was at Stake
12 Regeneron Pharmaceuticals Inc. v. Novartis Pharma AG, et al., Case No. 1:21-CV-01066 (N.D.N.Y.) Attempted monopolization, unreasonable restraint of trade, and tortious interference O’Melveny scored the ultimate victory for Novartis—the Northern District of New York dismissed Regeneron Pharmaceutical’s claims against Novartis in full. In doing so, the court ruled that Regeneron failed to plead a plausible relevant market and the tort claim was time-barred. Claims Outcome But when Regeneron sued Novartis for Walker Process fraud and conspiracy to block it from the pre-filled syringe market, the O’Melveny team immediately rose to the occasion. We transferred the case to the Northern District of New York to consolidate it with Novartis’s patent infringement suit. We counseled Novartis through discovery, overseeing the review and production of over half a million pages of Novartis’s documents. And we homed in on the complaint’s deficiencies, ultimately securing a full dismissal for failure to state a claim. The Winning Strategy When Novartis sued Regeneron for infringing its patent for a pre-filled syringe used to treat eye diseases, Novartis expected that Regeneron would zealously defend itself. It did not expect Regeneron to file a retaliatory antitrust suit. Central to the dismissal lies a question quintessential to antitrust law, both in and out of the pharmaceutical context: when is a relevant market plausible? The court’s dismissal reaffirmed that conclusory allegations fall short. In dismissing Regeneron’s antitrust claims for failure to plead a plausible product market, the Northern District of New York reaffirmed that companies cannot drag their competitors into court on the basis of whatever relevant markets they concoct; plaintiffs must plead facts demonstrating that the proposed relevant market captures all reasonably interchangeable products. O’Melveny’s victory— which Regeneron now challenges on appeal—reminds plaintiffs that this pleading requirement remains alive and well, particularly in the pharmaceutical industry. Why It Matters Had Novartis not secured a dismissal, the case would have proceeded through discovery, summary judgment briefing, and potentially trial. Regeneron alleged monopolization of a market worth billions in annual sales, and would likely have sought damages of that magnitude at trial. What Was at Stake
13 Practice Overview & Recognitions Whether facing scrutiny over a paradigm-shifting merger or challenged to defend itself in an antitrust investigation or litigation, a company cannot go it alone. Commanding the law, understanding business realities, and marshaling antitrust economics requires expertise, judgment, and ingenuity, all borne from experience. O’Melveny’s widely respected Antitrust and Competition Practice brings that experience to the full suite of our clients’ antitrust and competition related issues. That we are regularly called upon to defend major companies in multi-jurisdictional antitrust matters in “hot” industries—including pharmaceuticals, technology, computer electronics sectors, and meat and poultry processing and sales—is testament to our hard-earned reputation for producing exceptional results for clients enmeshed in difficult, potentially industry-shifting dilemmas. O’Melveny has earned our clients’ loyalty. We are one of the few firms called upon when US agencies decide to challenge a merger in court, and have experience crafting groundbreaking legal arguments and simplifying complex concepts. We successfully handle the most challenging cases—even those thought to be “unwinnable”—under tight deadlines and facing skilled opposition. We leverage all of this with a team that includes veterans of the DOJ, the FTC, US Attorney’s Offices, the Hong Kong Competition Commission, and other agencies. 41 71 Practices Lawyers Named to the 2022 “GCR 100” list Recognized among the top 100 antitrust firms worldwide “A commanding presence on the world stage” - Benchmark Litigation Recognized in 38 practice areas Represents numerous household-name clients in some of the biggest US and worldwide cases, including class actions and multidistrict litigation.” - CHAMBERS USA O’Melveny’s antitrust group punches above its weight and is seen as a top shelf choice for investigations and litigation.” - GLOBAL COMPETITION REVIEW
14 Team Representatives Andrew Frackman | NEW YORK Partner +1 212 326 2017 firstname.lastname@example.org Mia Gonzalez | NEW YORK Partner +1 212 728 5698 email@example.com Sergei Zaslavsky | WASHINGTON, DC Partner +1 202 383 5162 firstname.lastname@example.org Michael Tubach | SAN FRANCISCO Partner +1 415 984 8876 email@example.com Madhu Pocha | CENTURY CITY Partner +1 310 246 8588 firstname.lastname@example.org Anna Pletcher | SAN FRANCISCO Partner +1 415 984 8994 email@example.com Daniel M. Petrocelli | CENTURY CITY Partner +1 310 246 6850 firstname.lastname@example.org M. Randall Oppenheimer | CENTURY CITY Partner +1 310 246 6722 email@example.com Mark Racanelli | NEW YORK Partner +1 212 326 4403 firstname.lastname@example.org Katrina Robson | WASHINGTON, DC Partner +1 202 220 5052 email@example.com Julia Schiller | WASHINGTON, DC Partner +1 202 383 5412 firstname.lastname@example.org Abby F. Rudzin | NEW YORK Partner +1 212 326 2033 email@example.com Pamela A. Miller | NEW YORK Partner +1 212 326 2088 firstname.lastname@example.org Anton Metlitsky | NEW YORK Partner +1 212 326 2291 email@example.com Ian Simmons | WASHINGTON, DC Co-Chair, Antitrust +1 202 383 5106 firstname.lastname@example.org Ben Bradshaw | WASHINGTON, DC Co-Chair, Antitrust +1 202 383 5163 email@example.com Jonathan Hacker | WASHINGTON, DC Partner +1 202 383 5285 firstname.lastname@example.org Steve McIntyre | LOS ANGELES Partner +1 213 430 8382 email@example.com
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