At Stake in “Apple v. Pepper”: Why the Supreme Court’s Direct-Purchaser Rule is a “Super-Precedent”

app storeOne of the more interesting cases the Supreme Court will hear in the new term is Apple, Inc. v. Pepper. We’ve blogged previously about the case here. Superficially, the Court will decide whether iPhone users who buy apps from Apple’s App Store may sue Apple for alleged antitrust violations, or whether only app developers may bring such claims. But more fundamentally, resolution of the case hinges on the continued viability of Illinois Brick Co. v. Illinois, which holds that only the direct purchaser of a good or service may sue an allegedly abusive monopolist for damages.

In February, two high-level officials in the Department of Justice’s Antitrust Division floated the possibility of asking the Supreme Court to abandon Illinois Brick’s direct-purchaser rule. But the Solicitor General, in the United States’ amicus brief, insists that the question is not properly joined in the case. If either the Respondents or their amici urge the Court to overturn Illinois Brick, they will face a high hurdle. Continue reading “At Stake in “Apple v. Pepper”: Why the Supreme Court’s Direct-Purchaser Rule is a “Super-Precedent””

FDA-Mandated Listing of Drug Prices in Ads Would Flunk Legal and Constitutional Tests

first-amendmentWe’ve read with amusement the recent, overblown claims of some constitutional-law commentators and even U.S. Supreme Court justices that the First Amendment has been “weaponized” as a tool of deregulation. Of course, First Amendment challenges increasingly have become indispensable as politicians and regulators target more and more speech rather than regulate conduct directly.

Consider, for instance, the advertising-disclosure requirement floated last May as a part of the Department of Health and Human Services’ (HHS) blueprint to lower prescription drug prices. HHS asked the Food and Drug Administration (FDA) “to evaluate the inclusion of list prices in direct-to-consumer advertising.” The proposal appears to be under serious consideration. HHS Secretary Alex Azar has specifically invoked it when briefing the press and testifying before two Senate committees (here and here). And FDA Commissioner Scott Gottlieb indicated (in a May interview) that an agency working group will soon study the idea.

If that study includes a dispassionate legal and constitutional analysis, the working group should recommend that HHS scrub the list-price mandate from its policy blueprint. Not only does FDA lack the statutory authority to impose the mandate, but even if it could legally do so, the regulation cannot survive a First Amendment challenge. Continue reading “FDA-Mandated Listing of Drug Prices in Ads Would Flunk Legal and Constitutional Tests”

The Dog That Didn’t Bark in the Night: SCOTUS’s “NIFLA v. Becerra” and the Future of Commercial Speech

supreme court

The U.S. Supreme Court last week issued its long-awaited opinion in National Institute of Family and Life Advocates v. Becerra. In a 5-4 decision authored by Justice Clarence Thomas, the Court held that a California law requiring licensed pro-life counselling clinics to direct their clients to abortion providers  likely violated the clinics’ free speech rights under the First Amendment. Like the famous dog that didn’t bark in the night,[*] however, Justice Thomas’s majority opinion in NIFLA is far more revealing for what it doesn’t say than for what it does say. Continue reading “The Dog That Didn’t Bark in the Night: SCOTUS’s “NIFLA v. Becerra” and the Future of Commercial Speech”

West Virginia’s High Court Rejects Novel Theory of “Innovator Liability”

west vaShould the law recognize a plaintiff’s tort claims against a branded drug manufacturer when the drug that allegedly caused the plaintiff’s injuries was manufactured and sold by the defendant’s generic competitor? State and federal courts have been grappling with this novel question of “innovator liability” ever since the U.S. Supreme Court held, in Pliva and Bartlett, that such tort claims against generic manufacturers are preempted under federal law.

At bottom, innovator liability seeks to hold innovator drug manufacturers liable for injuries resulting from products they neither manufactured nor sold. Such “deep pocket jurisprudence,” as a recent Washington Legal Foundation paper by Shook Hardy & Bacon’s Victor Schwartz explains, marks a radical departure from long-settled principles of product liability premised on a naked policy decision that shifts financial responsibility onto a third party with the deepest pockets. Continue reading “West Virginia’s High Court Rejects Novel Theory of “Innovator Liability””

Novel Theory of NLRA Liability Would Trample Employers’ Free Speech Rights

NLRBThe independent-contractor model has been an important catalyst for improving the nation’s economic vitality. Because individuals often provide services for others while maintaining independent control over the means and methods of their own work, the use of independent contractors fosters an entrepreneurial spirit while giving firms that contract with such individuals an increased flexibility that promotes efficiency and innovation.

In recent years, however, federal regulators have increasingly pressured businesses to move away from the use of independent contractors, who are not legally entitled to unionize under federal law. Among federal agencies, the National Labor Relations Board (NLRB) has led this charge. Beginning with the last administration, the NLRB has intensely scrutinized and second-guessed companies’ worker-classification determinations, often deeming independent contractors to be “employees” under the National Labor Relations Act (NLRA). At great expense in time and resources, some companies have successfully appealed from the NLRB’s employment-classification rulings in federal court. Continue reading “Novel Theory of NLRA Liability Would Trample Employers’ Free Speech Rights”

Second Circuit Shuts Down Duplicative Regulation by Litigation of Organic Products

organicA January 9, 2018 WLF Legal Pulse post applauded a federal district court’s textbook application of implied-preemption analysis in dismissing a consumer-protection suit that alleged mislabeling of an organic infant formula. A recent decision of the U.S. Court of Appeals for the Second Circuit in Marentette, et al. v. Abbott Laboratories, Inc. similarly utilized implied preemption to reject a putative class action presenting nearly identical claims involving another brand of organic infant formula. The decision should put an end to plaintiffs’ use of state consumer-protection suits to regulate products bearing the U.S. Department of Agriculture’s (USDA) “Organic” symbol. Continue reading “Second Circuit Shuts Down Duplicative Regulation by Litigation of Organic Products”

Another California Intrusion on Businesses’ Free Speech Fails in Court

FirstAmendmentFor a state with cities like Berkeley, which birthed the Free Speech Movement 54 years ago, California’s record on respecting the First Amendment is surprisingly spotty. That is especially true for the expressive activities of businesses. The state, as well as its municipalities, often curtail businesses’ speech, or compel them to speak, as a way to demonstrate government is “doing something” to solve complex social or public-health problems.

Occasionally, but not nearly often enough, courts reintroduce California’s censors to the First Amendment, as the U.S. Court of Appeals for the Ninth Circuit did last year in striking down San Francisco’s warning-label mandate for “sugary” drinks. On February 20, a Northern District of California judge handed the state its latest speech-regulation defeat, striking down a law designed to limit information that entertainment database company IMDb.com could publish (IMDb.com Inc. v. Becerra). Continue reading “Another California Intrusion on Businesses’ Free Speech Fails in Court”