Supreme Court Opens New Term by Handling Antitrust, Trade Regulation Matters

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter, and John W. Arden.

On the opening day of its 2008-2009 term, the U.S. Supreme Court denied review of two federal antitrust cases, vacated a restrictive covenant ruling under California law, and heard oral arguments on a case questioning whether smokers’ state unfair trade practices claims against the advertising of cigarette manufacturer Philip Morris were impliedly preempted by the FTC’s oversight of advertising.

Petitions for Review

The Supreme Court denied petitions for review in two antitrust cases.

Left standing by the Court is a decision by the U.S. Court of Appeals in New York City (2007-2 Trade Cases ¶75,983), rejecting a travel agency’s claim that an air carrier violated state and federal antitrust laws by terminating the parties’ ticket sales agreement. The appeals court ruled in an unpublished opinion that the agency failed to present sufficient evidence that the carrier’s conduct had been part of a conspiracy. The petition is Tokarz v. Lot Polish Airlines, Docket No. 07-1514, cert. filed June 2, 2008, review denied October 6, 2008.

The Court declined to review a decision of the U.S. Court of Appeals in Philadelphia (2008-1 Trade Cases ¶76,052), holding that a trade show contractor lacked standing to pursue claims that a contract between a convention center management company and a labor union violated federal antitrust law. A petition for review asked whether the standing analysis for labor antitrust cases differed from the analysis applied in non-labor law cases. The petition for review is Casper v. SMG, Docket No. 07-1603, cert. filed June 23, 2008, review denied October 6, 2008.

Noncompete Agreements

It further vacated a decision of the U.S. Court of Appeals in San Francisco (2008-1 Trade Cases ¶76,129), holding that an arbitrator manifestly disregarded California law by enforcing an in-term restrictive covenant in a trademark license agreement. The appellate court had reasoned that the arbitrator’s ruling foreclosed competition in a substantial share of the comedy club business. The decision was vacated and the matter was remanded in light of Hall Street Assoc. v. Mattel, Inc. (U.S. Sup. Ct. 2008), 128 S.Ct. 1396. The petition is Comedy Club, Inc. v. Improv West Associates, Docket No. 07-1334.

Preemption

Argument was heard on October 6 regarding whether smokers can pursue a suit alleging that a tobacco company made fraudulent misrepresentations in violation of the Maine Unfair Trade Practices Act by advertising and promoting cigarette brands as “light” and having “Lowered Tar and Nicotine.” The question presented for review, according to the petition, is whether state law challenges to FTC-authorized statements regarding tart and nicotine yields in cigarette advertising are expressly or impliedly preempted by federal law.

At issue was a decision of the U.S. Court of Appeals in Boston (2007-2 Trade Cases ¶75,877), rejecting the tobacco company’s contentions that the smokers’ state law claims were impliedly preempted by the FTC’s oversight of cigarette advertising and barred by the Maine statute’s exemption for actions otherwise permitted under laws as administered by any regulatory board or officer acting under the statutory authority of the United States.

The decision is Philip Morris USA Inc. and Altria Group, Inc. v. Good, Docket 07-562, cert filed October 26, 2007, cert. granted January 18, 2008.