In this issue:
We’re taking a look at two pivotal cases. The Supreme Court’s American Needle case (involving the National Football League) could determine when a joint venture should be regarded, for antitrust purposes, as a single economic entity—creating an impact far beyond just sports leagues. Our three authors frame the arguments. And the Second Circuit’s recent decision in Starr v. Sony has muddied what the Supreme Court decision on Twombly was supposed to clarify. To clear up the confusion or, at least, clarify the conflict, we asked the opposing counsels to give us their views of the decision, and brought in a third opinion as well. Enjoy!
American Needle: When is a Joint Venture a Single Economic Entity?
Joint Ventures and the Sherman Act: The Problem Revealed by American Needle and How Best to Address It
By stepping back from the overambitious antitrust agenda currently applied to joint ventures, the courts can create the clarity needed to allow joint ventures to fulfill the promise recognized in Copperweld”increasing a firm’s efficiency and enabling it to compete more effectively. Thomas Brown, Katherine Robison, & Ian Simmons from O’Melveny & Myers
Competing Single-Entity Tests in American Needle v. NFL and Their Implications for Sports Leagues and Other Joint Ventures
The basic question raised by American Needle is: Are the NFL and its member clubs a single-entity with respect to their trademark licensing activities? In answering this question, an even more basic question is raised: By what criteria can a single-entity be identified? There is profound disagreement on the answer to this question, not only between the litigants, but also among the courts, economists, and legal scholars as well. Greg Pelnar, Compass Lexecon
A legitimate joint venture entails an efficiency-enhancing integration of economic activity and does not mask a cartel. Gregory J. Werden, Antitrust Division, U.S. Department of Justice
Starr v. Sony BMG: Muddying the Twombly Waters
The Second Circuit’s Starr opinion offers an excellent roadmap through the uncertain territory of pleading a Section 1 complaint. Gary S. Jacobson, Lovell Stewart Halebian Jacobson
Starr v. SONY BMG Music Entertainment: The Second Circuit’s Misapplication of Twombly in a Section 1 Sherman Act Conspiracy Case Alleging Parallel Conduct
This article provides an overview of plaintiffs allegations, Judge Preska’s opinion, the Second Circuit’s decision, and outlines the authors views on the Second Circuit’s errors and the implications Starr will have on antitrust pleading standards in the Second Circuit and elsewhere. Kenneth R. Logan & Jonathan K. Youngwood, Simpson Thacher & Bartlett
But the Second Circuit’s decision, by allowing a vague set of factual allegations and an equally vague set of claimed violations to proceed past a motion to dismiss, ignored Twombly’s most basic lesson: An antitrust plaintiff, in the absence of any direct claim of agreement, must support a claim of conspiracy with clear factual allegations and persuasive inferences. Aaron S. Panner, Kellogg, Huber, Hansen, Todd, Evans & Figel