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Five soft drink distributors were not “franchisees” under the meaning of the Minnesota Franchise Act (MFA) because they neither sold a manufacturer’s drinks in order to start a new business nor paid the manufacturer an indirect “franchise fee,” a federal district court in St. Paul, Minnesota, has decided. Thus, the manufacturer did not violate the MFA by terminating its agreements with the distributors without “good cause” and was granted summary judgment on the distributors’ claim.
The distributors brought suit against the manufacturer after it notified them that their agreements would terminate at the end of 2006. Three of the distributors had only oral agreements with the manufacturer, while the other two had written agreements that permitted termination without cause.
The distributors argued that they were franchisees under the meaning of the MFA’s business opportunity provision because they entered into their relationships with the manufacturer in order to start new businesses. Under the MFA’s business opportunity provision, payment of a franchise fee was not necessary to establish the existence of a franchise, the court noted. Rather, that portion of the statute defined, in relevant part, a “franchise” as the sale or lease of any products “for the purpose of enabling the purchaser to start a business…” Specifically, the distributors contended that they had been in the business of distributing beer prior to entering their relationships with the manufacturer and that the manufacturer sold them its soft drinks so that they could start the new business of distributing premium soft drinks.
Neither the parties nor the court was able to locate any caselaw interpreting the MFA’s business opportunity provision. However, a review of caselaw from other jurisdictions and consideration of the commonly understood meaning of “start a business” suggested that the phrase did not have the broad meaning claimed by the distributors, according to the court. Whatever the ambiguities inherent in the phrase “start a business,” the court believed that it could not be stretched to cover a situation in which an already-established beer distributorship took on the distribution of a line of soft drinks. Were the court to hold otherwise, the scope of the MFA would be so broad that, anytime a wholesaler or retailer added a new line of products, the wholesaler or retailer could be deemed a “franchisee” and the supplier could be deemed a “franchisor.” Thus, the distributors were not franchisees under the MFA’s business opportunity provision.
The distributors asserted that they were franchisees of the manufacturer under the MFA’s definition of a “franchise” requiring the franchisee to pay, directly or indirectly, a franchise fee. The distributors claimed that they pad indirect franchise fees in the form of co-op advertising and marketing fees, excessive minimum volume and sales requirements, and discount pricing programs.
Minnesota courts long held that ordinary business expenses such as purchased supplies, marketing materials, and participation in advertising and discount programs were not franchise fees unless they were unreasonable and lacked a valid business purpose, the court observed. Further, the record was devoid of evidence that any of the marketing and advertising expenses incurred by the distributors were unreasonable or lacked a valid business purpose.
At most, there was some showing that one of the distributors occasionally lost money when it participated in one of the manufacturer’s marketing programs, but to say that a distributor lost money because of such participation was not to say that the program was unreasonable or lacked a valid business purpose, the court reasoned. The evidence showed that when the distributor agreed to participate in a discount program at a loss, it did so in the hope of promoting brand awareness. Based on the record, no reasonable jury could find that the manufacturer’s discount and other marketing programs were unreasonable or lacked a valid business purpose, the court held. Similarly, there was no evidence that the manufacturer’s minimum purchase requirements and sales goals were unreasonable or lacked a valid business purpose. Thus, because the indirect fees that the distributors were allegedly forced to pay were ordinary, reasonable business expenses with a valid business purpose, they were not franchise fees under the meaning of the MFA, the court ruled.
The July 25, 2008, decision in Day Distributing Co. v. Nantucket Allserve, Inc., Case No. 07-CV-1132 (PJS/RLE), will appear in the CCH Business Franchise Guide.
"Premium, Natural, & Organic Supermarkets"
The FTC filed a complaint to block the transaction in June 2007. It contended that Whole Foods and Wild Oats were the two largest operators of premium, natural, and organic supermarkets (“PNOS”). According to the agency, the merger would create monopolies in 18 markets where Whole Foods and Wild Oats were the only PNOS. The district court denied the injunctive relief, and the appellate court refused the agency’s request for an injunction pending appeal. Whole Foods and Wild Oats then consummated their merger in August 2007.
The FTC offered evidence that a PNOS submarket existed catering to a core group of customers. The district court, however, assumed that market definition had to depend on marginal consumers. The appellate court did not agree with the district court that the FTC would never be able to prove a PNOS submarket.
A concurring opinion agreed with the majority decision that the district court erred in focusing only on marginal customers, but also contended that the lower court overlooked or mistakenly rejected evidence supporting the FTC’s view that Whole Foods and Wild Oats occupied a separate PNOS market. The concurring opinion pointed to evidence that the Whole Foods and Wild Oats CEOs believed that their companies occupied a market separate from the conventional grocery store industry.
The concurring opinion stated that private equities should be afforded little weight and should only be considered if Whole Foods can show some public equity favoring the merger, such as increased employment or reduced prices.
A dissent contended that the district court properly denied the requested relief because the relevant market for evaluating the merger was all supermarkets, and the merger would not substantially lessen competition in a market that included all supermarkets.
The text of the July 29, 2008, decision in FTC v. Whole Foods Market, Inc., and Wild Oats Markets, Inc., No. 07-5276, will appear in CCH Trade Cases.
In response to rising levels of childhood obesity across the nation, the Federal Trade Commission (FTC) is calling on the food and media industries to promote healthier food choices for children and adolescents.
A new FTC report, Marketing Food to Children and Adolescents: A Review of Industry Expenditures, Activities, and Self-Regulation, released July 29, shows that 44 major food and beverage marketers spent $1.6 billion in 2006 promoting their products to children and adolescents. The report was commissioned in 2005 by Sen. Tom Harkin (Iowa) to help Congress examine the effectiveness of self-regulatory frameworks to change the pattern of advertising to children and curb childhood obesity.
“While many food and beverage companies have pledged to market healthier options to kids through self-regulatory programs, I want to see real results and changes in the types of products marketed towards children. If these programs do not produce significant changes--government will have to act,” Harkin said.
The report notes that food advertising to youth is marked by integrated advertising campaigns that combine traditional media, along with packaging, in-store advertising, and the Internet. The ad campaigns often involve cross-promotion with a new movie or popular television program.
The FTC is recommending that all companies that market food or beverage products to children under 12 adopt “meaningful, nutrition-based standards” for their products, which extend to all advertising and promotional techniques. Companies also should improve the nutritional profiles of products marketed to children and adolescents, whether in or outside of schools. They should cease the in-school promotion of products that do not meet nutritional standards and improve the quality and consistency of the nutritional criteria adopted for “better for you” products.
While acknowledging that there is room for improvement, the food and beverage industries have made significant progress since 2005, the FTC concluded. To date, 13 of the largest food and beverage companies have pledged not to advertise to children under 12 or to limit their television, radio, print, and Internet advertising to foods that meet specified nutritional standards. Several major food and beverage companies have also adopted the Alliance for a Healthier Generation guidelines, which are designed to lower the caloric value and increase the nutritional value of foods and drinks sold in schools outside the school meal program.
Separately, the Council of Better Business Bureaus (BBB) on July 29 released its first report on the progress made by participants in BBB’s self-regulation program, the Children’s Food & Beverage Advertising Initiative.
“The participants in the Initiative are to be commended for their leadership in taking proactive steps to address concerns about advertising directed to children under 12 and childhood obesity,” said Elaine Kolish, director of the Initiative.
The report is available on the Council of Better Business Bureaus Web site: www.bbb.org.
The Department of Justice could be required to disclose redacted versions of amnesty agreements entered into by the Antitrust Division since 1993 pursuant to a Freedom of Information Act (FOIA) request, the U.S. Court of Appeals in Washington, D.C. has ruled. An order denying access to the amnesty agreements (2007-1 CCH Trade Cases ¶75,659) was vacated, and the matter was remanded to the district court "to establish the feasibility of the release of redacted versions of the amnesty agreements."
Parcel tanker shipping company Stolt-Nielsen made a series of FOIA requests seeking various records pertaining to a grand jury investigation. The company sought approximately 100 amnesty agreements. Stolt-Nielsen said that it would accept the agreements "with the names and identities of the relevant companies or individuals redacted." When the government produced some documents but refused to release the amnesty agreements, Stolt-Nielsen filed suit under FOIA.
The district court sided with the government on its refusal to turn over the amnesty agreements. The court held that the government properly withheld the documents based on exemptions to FOIA disclosure. In addition, the district court concluded that, because no portions of the amnesty agreements were reasonably segregable, the release of redacted versions was not permissible.
Under FOIA, federal government agencies are required to disclose information to a requestor, unless an exemption to the disclosure requirement applies. FOIA Exemptions 7(A) and 7(D) could be applicable to the amnesty agreements, the appellate court ruled. Under subsection (b)(7) of FOIA, the government is permitted to withhold records or information compiled for law enforcement purposes, if the production of such records or information could reasonably be expected to interfere with enforcement proceedings (Exemption 7(A)) or to disclose the identity of a confidential source (Exemption 7(D)).
Even if the documents were exempt from disclosure, "reasonably segregable" portions of the documents should have been provided after the deletion of the exempt portions, according to the appellate court. The government did not sufficiently justify withholding the agreements in the face of the redaction of identifying information.
The appellate court suggested that names and dates could be redacted from the documents if necessary. The government had argued that the dates of various documents could allow persons with expert knowledge of antitrust proceedings to determine what industries were under investigation. Also rejected was the government’s argument that disclosure was not necessary because the redacted documents without names and dates would provide no meaningful information. "FOIA mandate[d] disclosure of information, not solely disclosure of helpful information," the court stated.
Ltd. v. United States, No. 07-5191, will appear CCH Trade Cases.
The federal Truth-in-Lending Act (TILA) did not preempt claims or the relief granted by a lower court against a credit card company for engaging in a fraudulent and deceptive solicitation scheme in violation of the New York Deceptive Acts and Practices Law (DAPL), a divided New York Court of Appeals has ruled.
The New York attorney general alleged that the company’s applications and solicitations regarding potential credit limits, initially-available credit, secured card benefits, credit insurance coverage, re-aging benefits, and deceptive enrollment of consumers in a cardholder benefit program constituted a violation of DAPL.
The company argued that the TILA preempted the claims. The TILA expressly preempted state credit and charge card provisions governing application and solicitation disclosures. However, the attorney general’s claim did not relate to the disclosures in credit card applications or solicitations. Instead, the court found that it related to the inclusion in those materials of certain fraudulent and deceptive misinformation—none of which was addressed by the federal disclosure scheme.
The company also argued that the relief granted under the DAPL should be preempted by the TILA. A recent Supreme Court decision stated that if the relief granted imposed substantive requirements (i.e. disclosure requirements), then the judgment would be preempted by the federal law. However, because the relief granted below did not impose any disclosure requirements, it was not preempted, the court held.
The dissent argued that the TILA should preempt the attorney general’s bid to impose disclosure requirements on the company. The judge stated that the majority reached the opposite conclusion by misreading the TILA’s special preemption rule for credit or charge card applications or solicitations. Also, the dissenter suggested that the relief sought did alter the format and content of the disclosure in the company’s credit or charged card solicitations in violation of the TILA.
The June 26 decision is In the Matter of the People of the State of New York v. Applied Card Systems, Inc., CCH State Unfair Trade Practices Law ¶31,610.
Famous jeweler Tiffany failed to establish that online marketplace eBay engaged in false advertising under the Lanham Act in connection with the sale of counterfeit jewelry on its site, the federal district court in New York City has ruled.
eBay allegedly engaged in false advertising by (1) referring to Tiffany merchandise in promotional features on the eBay home page and Jewelry & Watches page and (2) purchasing “Tiffany” as a keyword to indicate the availability of Tiffany merchandise on eBay via “sponsored links” on Internet search engines such as Yahoo! and Google.
Because authentic Tiffany merchandise was sold on eBay’s website, Tiffany failed to prove that eBay’s challenged advertising was literally false, the court said. Tiffany argued that while the advertising might be literally true, it was nevertheless likely to mislead or confuse consumers into believing that any given piece of silver jewelry labeled “Tiffany” was genuine when, in fact, a consumer was more likely to receive counterfeit silver jewelry than authentic silver jewelry.
Tiffany’s false advertising claims focused on the same practices as Tiffany’s direct trademark infringement claims and were unsuccessful for the same reasons, according to the court. eBay’s use of the term “Tiffany” in advertising was a protected, nominative fair use. To the extent that Tiffany argued that eBay’s advertising was impliedly false, that argument rested on Tiffany’s assertion that eBay knew that jewelry sold on its website was counterfeit.
While eBay certainly had generalized knowledge that Tiffany products sold on eBay were often counterfeit, Tiffany did not prove that eBay had specific knowledge as to the illicit nature of individual listings. To the extent that the advertising was false, the falsity was the responsibility of third party sellers, not eBay.
In short, Tiffany failed to establish that eBay’s ads were likely to mislead consumers because authentic items were offered for sale, and inauthentic items were only listed on eBay due to the illicit acts of third parties. It could not be said that eBay was misleading customers when eBay was diligently removing listings from the website that were purportedly counterfeit, according to the court.
The July 14 decision in Tiffany (NJ) Inc. v. eBay, Inc. will be published at CCH Advertising Law Guide ¶63,019.
A monopolization claim by a manufacturer of prefabricated artificial teeth against the industry's dominant player, Dentsply International, Inc., was not barred as untimely and did not fail for lack of cognizable antitrust injury, the federal district court in Harrisburg, Pennsylvania, has ruled. Thus, Dentsply’s motion to dismiss was denied.
The antitrust injury asserted by the complaining competitor, Lactona Corporation, was in part predicated upon an event occurring more than a dozen years before Lactona filed suit—Dentsply's 1993 ban on its dealers’ carrying new products of its competitors. However, the suit was not time-barred because the face of the complaint did not clearly demonstrate the applicability of the limitations defense.
The complaint did sufficiently allege that Dentsply possessed market power and engaged in anticompetitive conduct that raised above mere speculation Lactona's right to recovery under Sec. 2 of the Sherman Act.
In 1999, the Department of Justice filed suit, challenging Dentsply’s practices under federal antitrust law. In 2005, the U.S. Court of Appeals in Philadelphia ruled that Dentsply's actions had indeed constituted unlawful monopolization (2005-1 Trade Cases ¶74,706). A final judgment prohibiting Dentsply from engaging in exclusionary conduct for seven and one-half years was entered in 2006 (2006-2 Trade Cases ¶75,383).
Private litigation arising out of the same conduct has produced more mixed results. A suit brought against Dentsply and many of its dealer-distributors on behalf of dental laboratories, who use Dentsply's (and its competitors') products to make sets of dentures for dentists, has progressed to trial after denial of the labs' motion for summary judgment (2007-2 Trade Cases ¶75,890).
The same court opinion, however, largely rejected a variety of antitrust charges filed against the manufacturer and many of its dealer-distributors. Earlier this year, a monopolization claim brought against Dentsply by another competing manufacturer survived a motion to dismiss based on statute of limitations and antitrust injury grounds (2008-1 Trade Cases ¶76,103).
In the instant suit, Lactona's monopolization claim could not be dismissed on limitations grounds because the complaint was not predicated solely upon Dentsply's alleged threat in 1994 to sever business ties with a dealer pursuant to its ban on carrying competitive products, which allegedly caused that dealer to terminate its offerings of Lactona's products, the court stated.
The monopolization claim was also based upon two undated incidents in which the Dentsply purchased dealers' stock of Lactona teeth or replaced them with its own products, as well as upon the anticompetitive effects of the particular market-control strategy that Dentsply had implemented. Granting the motion for dismissal would have imposed an obligation on Lactona to allege the precise timing of every instance of anticompetitive conduct. The Federal Rules of Civil Procedure imposed no such burden, and the complaint's failure to recite the dates on which the alleged harm occurred did not warrant dismissal under the statute of limitations, according to the court.
The claim was sufficiently alleged to survive dismissal under the pleading standard articulated by the U.S. Supreme Court in Bell Atlantic Corp. v. Twombly (2007-1 Trade Cases ¶75,709), the court added. Lactona's assertion that Dentsply controlled 75 percent of the market, a share approximately 15 times larger than that of the second-largest producer, was adequate, if proven, to demonstrate its monopolistic dominance in the market during the relevant period.
The market was characterized as consisting of relatively few dealers, who acted as distribution conduits between manufacturers and a limited number of dental laboratories. As a result of laboratories' expectation that dealers would stock the competitor's products, owing in part to its market position, Dentsply was alleged to have wielded considerable influence over the terms and conditions on which dealers purchased and sold its products and those of its rivals.
In addition, Lactona sufficiently alleged that Dentsply engaged in anticompetitive conduct, for purposes of a Sherman Act, Sec. 2 claim. At the heart of the complaint were factual assertions that (1) Dentsply threatened dealers with termination if they ordered or continued to sell Lactona's teeth, (2) Dentsply exchanged dealers' inventories of the Lactona's teeth for its own products, (3) Dentsply implemented a dealership agreement provision prohibiting dealers from carrying any other manufacturers' new products, and (4) none of Dentsply's dealers added competing tooth lines to its inventory over a six-year period.
If true, these allegations raised a plausible inference that Dentsply maintained its monopolistic market share through methods other than the competitive merits of its products, the court concluded.
The June 17 decision is Univac Dental Co.v. Dentsply International, Inc., 2008-2 Trade Cases ¶76,224.
A $177 million treble-damage award against a businessman who had illegally diverted millions of dollars from a bank in the Dominican Republic was affirmed by the U.S. Court of Appeals in Atlanta.
After the 2003 collapse of one of the largest banks in the Dominican Republic, a receivership established by the Dominican government brought suit against a Florida businessman for wrongfully diverting millions of the bank’s funds to finance other business ventures and personal expenses. A jury found for the receivership on three civil RICO claims and one fraudulent transfer claim. After trebling of the racketeering damages, the judgment totaled approximately $177 million.
On appeal, the businessman contended that the RICO claims should have been dismissed for “unripeness” and because the federal statute could not be applied extraterritorially. The businessman argued that the plaintiff's damages had to be "clear and definite" before a RICO claim could accrue and that this heightened standard of certainty in pleading and proving RICO damages foreclosed the viability of the plaintiff's claims. However, the court found the arguments unpersuasive.
A RICO claim was not “unripe” simply because a plaintiff had not first pursued other potential remedies, the court held. Indeed, there was no per se rule that every other avenue of recovery—such as realization on collateral or claims for fraud or breach of contract—must be pursued before a RICO claim could ripen. Nor was there a per se rule to the contrary.
Whether a plaintiff must first pursue other remedies depended on whether the other contingencies were "sufficiently likely to mitigate the plaintiff's loss that damages in the RICO case could not be ascertained, or may not have occurred at all."
The assertion of extraterritorial RICO jurisdiction was appropriate in this case, the court decided. Although federal courts disagreed about the extraterritorial reach of RICO, the more widely accepted view, and the one adopted by the instant court, was that RICO may apply extraterritorially if "conduct" material to the completion of the racketeering had occurred in the United States, or if significant "effects" of the racketeering had been felt here.
In this instance, the "effects test" was not satisfied because no person or business in the United States had been harmed by the businessman's alleged activities. However, the "conduct test" was satisfied because the conduct that occurred in the United States was not an insubstantial or preparatory part of the defendant's overall "looting" scheme. Indeed, the court found that the defendant's conduct had provided the means to consummate the scheme.
The June 19 decision is Liquidation Commission of Banco InterContinental, S.A. v. Renta, CCH RICO Business Disputes Guide ¶11,518.
Pernod Ricard received clearance from the Federal Trade Commission (FTC) and the European Commission (EC) for its proposed $9 billion acquisition of Swedish spirits company V&S Vin & Sprit on July 17. The transaction is, however, conditioned on the divestiture of a number of brands in various markets.
Pernod Ricard is based in France. Among the more popular brands of spirits produced and distributed by Pernod Ricard in the United States are Martell Cognac, Hiram Walker Cordials, Kahlua Coffee Liqueur, Chivas Regal, Ballantine’s, and The Glenlivet Scotches, Jameson Irish Whiskey, Beefeater Gin, Wild Turkey Bourbon, and Mumm Champagne. Pernod Ricard also distributes Stolichnaya vodkas, but it does not produce or own the line.
V&S is owned by the Kingdom of Sweden. The brands of V&S include the lines of Absolut Vodka, Level Vodka, Plymouth Gin, and Cruzan Rum.
The FTC expressed concern that the transaction may substantially lessen competition in five markets: "super-premium" vodka, Cognac, domestic cordials, coffee liqueur, and popular gin.
The agency contended that the acquisition would effectively combine the two most popular brands of "super-premium" vodka sold nationwide--Absolut and Stolichnaya.
Under the terms of a proposed consent order, Pernod Ricard would be required to end its distribution agreement with the owners of Stolichnaya—Spirits International BV—to satisfy competitive concerns in that market.
In purchasing V&S, Pernod Ricard will assume V&S's role in a distribution joint venture between V&S and Fortune Brands, Inc. According to the FTC, Fortune's subsidiary Beam Global Spirits & Wine, Inc. owns brands that compete with Pernod Ricard brands in the markets for Cognac, domestic cordials, coffee liqueur, and popular gin.
The proposed consent order is designed to preserve competition between Pernod Ricard and Beam Global in these markets by imposing firewalls to prevent Pernod Ricard from acquiring and using competitively sensitive information about the Beam Global brands. Beam Global brands that compete with Pernod Ricard brands include: Courvoisier Cognac, DeKuyper cordial, Starbucks coffee liqueur, and Gilbey’s gin.
In announcing the settlement, the FTC said that its staff cooperated with the staff of the EC in reviewing the proposed transaction. The cooperation was undertaken pursuant to their 1991 bilateral cooperation agreement and their 2002 Best Practices on Cooperation in Merger Investigations.
The EC investigation identified competition concerns in a number of national markets, including the market for: aniseed flavored spirits in Finland, vodka in Greece, gin in Poland, and cognac, port, gin, and Canadian whisky in Sweden.
To satisfy the EC’s competition concerns, Pernod Ricard offered to divest the following brands: Dry Anis in Finland, Serkova vodka in Greece, Lubuski gin in Poland and Star Gin, Red Port, and Grönstedts cognac in Sweden. In addition, Pernod Ricard will discontinue the distribution of a third party's brand, Royal Canadian, to alleviate competitive concerns with respect to the market for Canadian whisky in Sweden. The July 17 EC statement also noted that Pernod Ricard would terminate distribution agreements for Stolichnaya and Moskovskaya vodkas.
Further information regarding this development—In the Matter of Pernod Ricard S.A.—appears here on the FTC website.
The Ohio Attorney General sufficiently pled claims of conspiracy to allocate customers, divide markets, and restrain competition against insurance companies and an insurance broker, an Ohio state trial court has ruled.
The attorney general outlined a scheme in which the insurers communicated through the broker in order to provide protection and receive protection for renewal policies that generated lucrative premiums.
The complaint described communications from employees of the broker who were seeking inflated and fictitious quotes from defendant insurers to feign competition. Additionally, the broker allegedly perpetrated the conspiracy by seeking communication from defendant insurers declining to quote insurance.
The court ruled that the state's allegations met the standard of review specified by the U.S. Supreme Court's decision in Conley v. Gibson (1957), 355 U.S. 41, which held that a Rule 12(B)(6) motion would not be granted "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief."
Rejected was the defendants' contention that the court adhere to the standard of review applied by the U.S. Supreme Court's 2007 decision in Bell Atlantic Corp. v. Twombly (2007-1 Trade Cases ¶75,709). Twombly, which held that in order to survive a motion to dismiss the complaint had to allege "enough facts to state a claim to relief that is plausible on its face, "was not applicable. The scheme outlined by the attorney general was not merely one in which there was an allegation of parallel conduct, as the complaint alleged in Twombly. The circumstances established more than parallel conduct, according to the court.
The court also rejected contentions that the attorney general had standing under the Ohio Valentine Act to seek injunctive relief, equitable relief, and statutory forfeiture and that the statute of limitations barred the action. While the statute did not specifically provide for any tolling of the statute of limitations, the "discovery rule" was applied to situations, such as this one, where the defendants purportedly concealed their acts from being discovered.
The June 30 decision is State of Ohio v. American International Group, Inc., Ohio Court of Common Pleas, Cuyahoga County, 2008-2 Trade Cases ¶76,202.
Two identical Rhode Island bills that amend the good cause, notice of termination, and opportunity to cure provisions of the Rhode Island Fair Dealership Act (RIFDA) have become law without the Governor’s signature.
Enacted in 2007, the RIFDA is a relationship/termination law that requires the grantor of a dealership to provide a dealer at least 90 days' prior written notice of the termination, cancellation, nonrenewal, or substantial change in competitive circumstances of a dealership and to provide the dealer with at least 60 days in which to rectify any claimed deficiency.
The law's notice requirement will not apply in certain situations, including when the termination is for the dealer's insolvency. A shortened ten-day notice period applies in cases of payment defaults.
"(a) failure by a dealer to comply substantially with essential and reasonable requirements imposed upon the dealer by the grantor, or sought to be imposed by the grantor, which requirements are not discriminatory as compared with requirements imposed on other similarly situated dealers either by their terms or in the manner of their enforcement; or (b) bad faith by the dealer in carrying out the terms of the dealership."
Interestingly, the original version of the Act did not explicitly require "good cause" for termination, or even specify exactly to what its definition of “good cause” was to be applied.
The new amendments redefine “good cause” and specifically link it to terminations. Under the revised RIFDA, “good cause for terminating, canceling or nonrenewal shall include, but not be limited to, failure by the dealer to comply with reasonable requirements imposed by the grantor or for any of the reasons listed” elsewhere in the Act.
However, the amended RIFDA still does not explicitly mandate “good cause” for franchise terminations, in the manner of the relationship/termination laws of some other states.
The amendments modify the notice of termination and opportunity to cure provisions by requiring a grantor to provide 60 (previously 90) days prior written notice of termination or nonrenewal, and 30 (previously 60) days to cure any claimed deficiency. In addition, they specify that a dealer shall have the right to cure three times in any 12-month period.
The amendments also specify additional circumstances in which no advance written notice of termination is required (reasons one through six in the preceding paragraph), and make other changes.
As enacted, the bills differ drastically from their introduced versions, which sought to completely delete the good cause, notice of termination, and opportunity to cure provisions of the Act. In addition, the introduced version sought to eliminate the Act’s provision specifying that the Act did not apply to provisions for binding arbitration under certain circumstances. In the version of the bills that were enacted, that provision remained substantially intact.
House Bill No. 8150 became law without the Governor’s signature on July 5, 2008, and Senate Bill No. 2592 became law without the Governor’s signature on July 8, 2008. Both bills became effective immediately.
The amended law will appear at CCH Business Franchise Guide ¶4390.
The federal district court in Philadelphia has refused to dismiss antitrust claims brought against Babies ‘R’ Us—the large retailer of baby and juvenile products—and baby products manufacturers by smaller retailers and consumers.
The complaining retailers and consumers alleged that Babies ‘R’ Us orchestrated resale price fixing conspiracies in an effort to ward off competition from the smaller competitors that had undercut its prices. The undercutting purportedly stopped when the manufacturers began to require the retailers to sell their goods at or above a certain price.
The court denied defendants’ motion to dismiss on May 19 and denied a motion for reconsideration on July 2.
At the outset, the court accepted the plaintiffs’ relevant product markets. The challenged conduct allegedly restrained competition in the markets for “high-end baby and juvenile strollers,” “high-end high chairs,” “high-end breast pumps,” “high-end baby bedding,” “high-end car seats,” and “high-end infant carriers,” among others.
The complaining retailers and consumers asserted facts about interchangeability and cross-elasticity of demand that explained why the proffered markets were not larger than they were allege to be, in the court’s view.
Two interrelated types of concerted action were sufficiently alleged: (1) concerted action between Babies ‘R’ Us and each manufacturer, and (2) concerted action between each manufacturer and that manufacturer’s retailer dealers.
The plaintiffs asserted concerted action by claiming parallel conduct coupled with “plus factors” or circumstances that tended to negate the possibility that the defending retailer and each manufacturer acted independently. The complaints alleged: (1) that the parallel conduct at issue was against each manufacturer’s independent economic self-interest; (2) that Babies ‘R’ Us wielded sufficient influence over each manufacturer to create a duress situation; and (3) that Babies ‘R’ Us threatened to retaliate against each manufacturer if each manufacturer did not implement a minimum resale price maintenance (RPM) agreement with its retailers, and the manufacturers in turn acquiesced.
The plaintiffs also sufficiently alleged that the conspiracy could have harmed competition, according to the court. The alleged RPM scheme caused prices for the baby products to increase beyond competitive levels. In addition, the RPM policies purportedly blocked certain sales that otherwise would have been made, and in some cases caused sales to be made less rapidly than they otherwise would have, resulting in reduced overall output. Further, there was at least one allegation that quality had decreased in the form of a decrease in customer service.
The court also refused to dismiss Sherman Act, Sec. 2 claims of monopolization, attempted monopolization, and conspiracy to monopolize against Babies ‘R’ Us. The complaining retailers and consumers sufficiently alleged that Babies ‘R’ Us maintained its monopoly power by procuring the anticompetitive RPM agreements with the manufacturers. The challenged conduct could also show a specific intent to monopolize for purposes of their attempted monopolization claim.
One of the defending manufacturers moved for reconsideration of the earlier decision as to the issue of concerted action. The court rejected the manufacturer's argument that the court erred in applying the law with respect to the plaintiffs’ plus-factor allegations.
The case is BabyAge.Com, Inc. v. Toys ‘R’ Us, Inc., Civil Action Nos. 05-6792, 06-242. The May 19 decision and the July 2 decision will appear in CCH Trade Reguation Reports.
Although “behavioral advertising” raises consumer privacy concerns, the Federal Trade Commission is “cautiously optimistic” that those concerns can be effectively addressed by industry self-regulation, an FTC official said on July 9 in testimony before the Senate Committee on Commerce, Science, and Transportation.
“Behavorial advertising” is the practice of collecting information about an individual’s online activities in order to provide advertisements that are tailored to the individual’s interests, according to Lydia Parnes, Director of the FTC’s Bureau of Consumer Protection.
The practice involves the use of “cookies” to track consumers’ online activities and to associate those activities with a particular computer or device. The cookies collect information on websites and web pages visited by the consumer. However, this information is usually not personally identifiable.
While behavioral advertising may benefit consumers by providing them with advertising relevant to their interests, it also may track sensitive information about children, health, or a consumer’s finances, according to Ms. Parnes.
Two recent surveys indicate that a majority of consumers feel discomfort about having their online activities tracked, collected, and used to provide advertising. These surveys indicated that 45 percent of consumers believe that the tracking should be banned, while 47 percent believe that tracking should be allowed with some form of consumer control.
(3) Business and consumer groups expressed support for transparency and consumer control in the online marketplace.
Self-regulatory efforts by the Network Advertising Initiative (NAI) were criticized for the limited membership of the NAI, the limited scope of the efforts, and the lack of enforcement and cumbersome “opt-out” system.
In response to these criticisms, the FTC issued its own set of self-regulatory principles and sought public comment on them. (See “Trade Regulation Talk,” December 21, 2007). These principles recommended: (1) transparency and consumer control of data collection, (2) reasonable security and limited retention of consumer data, (3) a requirement of consumer consent to the use of data in a materially different way than previously represented, and (4) a requirement of affirmative express consent for use of sensitive data such as that involving children, health, or finances.
The Commission received more than 60 public comments, which are now being evaluated. These included some specific proposals for possible implementation of self-regulation.
“The FTC is encouraged by the efforts that have already been made by the NAI and some other organizations and companies and believes that the self-regulatory process that has been initiated is a promising one,” said Ms. Parnes.
The Commission expressed optimism that the issues raised can be effectively addressed through “meaningful, enforceable self-regulation” and an intention to continue to monitor the marketplace in order to take appropriate action to protect consumers.
A news release and text of the prepared testimony appears at the FTC website.
The FTC is seeking comment on a proposal to rescind its 1966 guidance to tobacco companies, which indicated that factual statements of tar and nicotine yields based on the Cambridge Filter Method, also frequently referred to as the “FTC Test Method,” generally will not violate the FTC Act.
If the guidance were to be withdrawn, advertisers would no longer be able to use terms such as “FTC Method” or other phrases that state or imply FTC endorsement or approval of the Cambridge Filter Method or other machine-based test methods.
The Commission is considering rescinding the guidance in light of criticism that the machine-measured yields determined by the Cambridge Filter Method may be misleading to individual consumers who rely on the yields as indicators of the amount of tar, nicotine, and carbon monoxide they actually will get from smoking a particular cigarette.
The current yields tend to be relatively poor indicators of tar, nicotine, and carbon monoxide exposure and do not provide a good basis for comparison among cigarettes, according to the Commission.
Interested parties are invited to submit comments on or before August 12, 2008. Comments should refer to "Cigarette Test Method, [P944509]" and should be mailed or delivered, with two complete copies, to the following address: Federal Trade Commission, Office of the Secretary, Room H-135 (Annex L), 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. Comments can also be filed electronically via the Web-based form at https://secure.commentworks.com/ftc-CigaretteTestMethod.
A news release and a notice to be published in the Federal Register appear at the FTC web site.
On July 8, Senator Frank R. Lautenberg (D-N. J.) issued a statement in response to the FTC announcement.
Lautenberg introduced legislation in March 2008 to prohibit the use of the FTC Test Method to market cigarettes as "light" or "low-tar." The proposed “Truth in Cigarette Labeling Act of 2008” (S. 2685), which was reported favorably by the Committee on Commerce, Science, and Transportation on May 15, is similar to a measure introduced by Lautenberg in 2006 that failed to become law.
Five more airlines have agreed to plead guilty and pay criminal fines totaling $504 million for participating in a multi-year conspiracy to fix prices for international air cargo rates, the Department of Justice has announced.
Four other carriers have already pleaded guilty to participating in the conspiracy and have paid significant fines. Of the $504 million in newly announced fines, Air France-KLM has agreed to pay $350 million—the second-highest fine ever levied in a criminal antitrust prosecution.
Price fixing charges were filed in the federal district court in Washington, D.C. on June 26 against Société Air France, Cathay Pacific Airways Limited, Koninklijke Luchtvaart Maatschappij N.V., Martinair Holland N.V., and SAS Cargo Group A/S. Air France-KLM now operates under common ownership.
The carriers were charged with fixing cargo rates at meetings and discussions held in the United States, Europe, and Asia. The companies also monitored and enforced adherence to the agreed-upon cargo rates.
According to Associate Attorney General Kevin O'Connor, as a result of the conspiracy, fuel surcharges imposed by some of the conspirators rose by as much as 1,000 percent during the course of the conspiracy, far outpacing any fuel cost increases during the same time period.
The plea agreements are subject to court approval. In addition to Air France-KLM's agreement to pay a fine, Cathay agreed to pay a $60 million criminal fine, Martinair agreed to pay a $42 million criminal fine, and SAS agreed to pay a $52 million criminal fine.
According to the Department of Justice Antitrust Division, the total fines from the investigation in the air transportation industry are anticipated to reach $1.27 billion if the plea agreements are accepted. This would mark the highest total amount of fines ever imposed in a criminal antitrust investigation.
Last year, British Airways Plc and Korean Air Lines pleaded guilty and were each sentenced to pay a $300 million criminal fine. In January, Qantas Airways Limited pleaded guilty and was sentenced to pay a $61 million criminal fine for its role in the conspiracy. Japan Airlines in May pleaded guilty and was sentenced to pay a $110 million criminal fine for its role.
Further information regarding these most recent settlements appear at U.S. Antitrust Cases No. 4953 and 4956 (CCH Trade Regulation Reporter ¶45,108) and at the U.S. Department of Justice, Antitrust Division website.
Lessees of new cars lacked standing to seek damages from Canadian and U.S. auto makers for conspiring to restrict the flow of cheaper Canadian cars into the U.S. market between 2001 and 2003, when the U.S. dollar was much stronger than the Canadian dollar, the U.S. Court of Appeals in Boston has ruled.
The lessees contended that, as a result of the conspiracy, they were forced to pay inflated payments under their automobile lease agreements in the United States. Because the lessees were indirect purchasers, they lacked standing to sue for damages under Sec. 4 of the Clayton Act, and their suit was correctly dismissed under the rule of Illinois Brick Co. v. Illinois (1977-1 Trade Cases ¶61,460). In March, the appellate court rejected the certification of a class seeking injunctive relief under federal antitrust laws (2008-1 Trade Cases ¶76,100).
The court rejected the lessees’ attempt to recast the claim as one of vertical conspiracy involving auto dealers, in an effort to avoid their indirect purchaser status. If the dealers were co-conspirators, then the lessees would arguably be direct victims of the conspiracy. However, the lessees did not did not join the dealers as defendants, nor did they plead sufficiently or argue consistently that dealers were part of the conspiracy.
While the lessees referred at times to dealers as members of the conspiracy, these references were primarily to Canadian dealers, not to the U.S. dealers who actually negotiated the leases. Moreover, those passing and general allusions were contradicted and outweighed by allegations in the complaints that dealers also paid higher prices due to the conspiracy, the court explained.
The June 30 decision is In re New Motor Vehicles Canadian Exp. Antitrust Litigation. The opinion will appear at 2008-1 Trade Cases ¶76,195.
Tying and price fixing claims brought by Marathon and Speedway gasoline dealers against Marathon Petroleum Company and its wholly-owned subsidiary Speedway SuperAmerica LLC were properly dismissed, the U.S. Court of Appeals in Chicago has ruled. An Indiana Marathon dealer failed to state an antitrust claim.
The complaining dealer alleged that, as a condition of granting a dealership, Marathon required the dealer to agree to process credit card purchases through a processing service designated by Marathon. Although Marathon dealers were required to use the service for sales involving Marathon’s proprietary credit card, the dealer contended that it was compelled to use the designated processing system for all credit card transactions in order to avoid the cost of duplicate processing systems.
Even assuming that Marathon tied the processing of all credit card sales by its dealers to the Marathon franchise, the oil company could not have engaged in a per se illegal tying arrangement, according to the court. A per se tying claim required proof that the seller had “market power” in the market for the tying product, and Marathon did not have such market power.
Despite the allegations, the oil company did not have significant unilateral power over the market price of gasoline. Marathon could not charge a supracompetitive price (folded into the price for gasoline that it charged its dealers) for credit card processing, according to the court.
While Marathon had a “monopoly” over its franchises, there was no separate product market for Marathon franchises, the court held. “Marathon” was not a market; it was a trademark, the court explained. And a trademark did not confer a monopoly. Moreover, no local gasoline markets were alleged in which the oil company had market power.
If Marathon raised the price of using its name or trademark to sell gasoline above the competitive level by raising the price of the credit card processing service that it offered, competing oil companies would nullify its price increase by keeping their own wholesale gasoline prices at the existing level.
In any event, Marathon required that the particular card processing services be used only for transactions using its brand of credit card. The complaining service station operator might have had an incentive to route all credit card transactions through the designated system to avoid having duplicate processing equipment. However, the additional cost of using multiple card processing systems was not a penalty imposed by Marathon. This was not tying.
The dealer also failed to state a plausible price fixing claim against Marathon. The dealer contended that Marathon, in exchange for overcharging its dealers for credit card processing, was receiving kickbacks from banks and other financial institutions that offered credit cards. The theory made no sense, in the court's view.
If Marathon forced its dealers to pay an exorbitant fee for processing credit card sales, then this would only hurt firms that offered credit cards, the court observed. Most of the fee would be passed on to the consumer in the form of a higher gasoline price, which would reduce the demand for gasoline and hence the use of credit cards. Issuers of credit cards would not pay the oil company to reduce the demand for their product.
The decision, written by Judge Richard A. Posner, is Sheridan v. Marathon Petroleum Co., LLC, decided June 23, 2008. The opinion appears at 2008-2 Trade Cases ¶76,192.
Two members of the former rock band “The Doors” engaged in false advertising under California law by disseminating ads for a concert tour by a band falsely identified as “The Doors,” a California appellate court has ruled. The band members (keyboardist Ray Manzarek and guitarist Robby Krieger) also violated the California right of publicity statute, according to the court.
The trial court's finding of liability (CCH Advertising Law Guide ¶61,765) on the false advertising claim was not inconsistent with jury verdicts rejecting trademark infringement and unfair competition claims, which were not substantively equivalent to the false advertising claim, the appellate court determined.
The court upheld a permanent injunction barring the two band members from promoting their concerts using the name “The Doors”; using any name containing the name “The Doors”; or using the name, voice, or likeness of deceased band member Jim Morrison.
The band members violated the California right of publicity statute by using the name, voice, or likeness of Jim Morrison to promote the concert tour. A statutory exemption for musical works was inapplicable because the use of Morrison's name, voice, and likeness was part of the overall marketing plan to sell tickets for more than 65 concerts. In addition, no "original work" protectible by the First Amendment was created by the use of Morrison's likeness, the court held.
The not-for-publication decision is Densmore v. Manzarek, California Appellate Court, Second Appellate District, May 29, 2008, CCH Advertising Law Guide ¶63,015.

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B.M. Antonelli, Warden, FCI Williamsburg, Respondent.
This matter is before the Court upon Petitioner James L. Roudahush, Jr.'s (“Roudabush”) petition seeking a writ of prohibition/writ of mandamus under 28 U.S.C. § 1651(a). In accordance with 28 U.S.C. § 636(b)(1)(B) and Local Civil Rule 73.02(B)(2)(d) (D.S.C.), the matter was referred to a United States Magistrate Judge for preliminary determinations. On January 19, 2018, Magistrate Judge Jacquelyn D. Austin issued a report and recommendation (“Report”) outlining Petitioner's claims and recommending that Petitioner's motion to proceed in forma pauperis be denied and that Petitioner be given 21 days to pay the $400 filing fee. According to the Magistrate Judge, in light of Petitioner's three strikes, and because Petitioner's claims do not satisfy the three strikes rule's standard of “imminent danger of serious physical injury, ” 28 U.S.C. § 1915(g), Petitioner cannot proceed with this action in forma pauperis and must instead pay the full filing fee.
Attached to the Report was a notice advising Petitiner of his right to file specific, written objections to the Report within 14 days of receiving a copy. On February 1, 2018, Petitioner filed objections to the Magistrate Judge's Report, objecting to the Magistrate Judge's finding that Petitioner has three prior strikes.
The Magistrate Judge makes only a recommendation to the Court. The recommendation has no presumptive weight, and the responsibility to make a final determination remains with the Court. Mathews v. Weber, 423 U.S. 261 (1976). The Court is charged with making a de novo determination only of those portions of the Report to which specific objections are made, and the Court may accept, reject, or modify, in whole or in part, the recommendation of the Magistrate Judge, or recommit the matter to the Magistrate Judge with instructions. 28 U.S.C. § 636(b)(1).
3. Roudabush v. Johnson, No. 7:05-cv-691, ECF No. 29, 2006 WL 270020 (W.D. Va. Feb. 3, 2006) (“Johnson I”) (counting as a strike because complaint dismissed as frivolous, malicious, or failing to state a claim for relief pursuant to 28 U.S.C. § 1915A(b)(1)).
In his objections, Petitioner asserts that Roudabush v. Kopelove, No. 2:05-348, should not count as a strike against him because the only information presented by the government as evidence of this strike is a docket sheet. The Court finds this objection without merit; as the Third Circuit noted in Roudabush v. Bitener, courts often rely on dockets in older cases, and the docket in Kopelove is unambiguous insofar as the case was dismissed as frivolous. See __ F. App'x __, 2018 WL 416819 (3d Cir. 2018).
Petitioner next points out that the Third Circuit in Bitener ultimately was unable to determine that Petitioner had three strikes. The Court also finds this argument unavailing. In Bitener, the Third Circuit concluded that the dismissal of Roudabush v. Johnson was a strike but that the dismissal in Roudabush v. Hylton (relied on by the Magistrate Judge in this case) was not a strike because it did not occur prior to the filing of the underlying action in Bitener. See Bitener, 2018 WL 416819, *2-*3. Here, in contrast to Bitener, the dismissal in Hylton did occur prior to Petitioner's filing of this action. Accordingly, the Court agrees with the Magistrate Judge that both Johnson and Hylton qualify as strikes, and the Court finds Petitioner's objections without merit.


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Parker Poe has extensive experience handling a full range of litigation matters, both in state and federal courts as well as in alternative dispute resolution settings, involving the intellectual property rights that are critical to the strength and success of any business venture in today's market. In addition, we counsel clients on the establishment, protection, and defense of trade secret and intellectual property rights, including licenses, acquisitions, and contracts.
We represent clients at all stages of litigation, from temporary restraining order and preliminary injunction hearings through discovery, trial, and appeal. We also evaluate potential intellectual property claims, advise clients on litigation prospects and risks, assist clients in achieving negotiated resolutions of disputes, and represent clients in mediation or before arbitration tribunals.
Genpharm, Inc. v. TorPharm, Inc., 5:97-CV-686-BO(3) (E.D.N.C. Mar. 8. 1999) – Represented a pharmaceutical manufacturer in a declaratory judgment action seeking a declaration that the '423 patent of defendant TorPharm, which claimed a "form of Form 1" ranitidine hydrochloride, was invalid and was not infringed by client's ranitidine product. After extensive discovery, the case was decided in favor of our client and another defendant with the judge granting summary judgment in our client's favor based largely upon the "on sale" bar. TorPharm Inc. v. Novopharm, Ltd., 48 U.S.P.Q.2d 1471 (E.D.N.C. 1998). The Court of Appeals for the Federal Circuit affirmed the decision. TorPharm Inc. v. Genpharm Inc., 250 F.3d 754 (Fed. Cir. 2000). The United States Supreme Court denied TorPharm's petition for a writ of certiorari. 531 U.S. 1051 (2000).
aaiPHARMA Inc v. Barr Laboratories Inc, et al., 7:01 CV 150, 202, 208 F1 (E.D.N.C.). – Represented Par Pharmaceutical, defending a claim of alleged infringement of three patents relating to a polymorphic form of fluoxetine hydrochloride, which Eli Lilly sells under the trade name Prozac®. After discovery the case was settled on terms favorable to Par.
Warner-Lambert Company v. Apotex Corp., et al., 316 F.3d 1348 (Appeal No. 2-1073, United States Court of Appeals for the Federal Circuit) (2002). – Represented and filed an amicus brief for a generic pharmaceuticals manufacturers’ association. This case principally involved issues concerning alleged inducement of infringement in a dispute about Warner Lambert’s patents on a drug used to treat epilepsy and neurodegenerative diseases. The Court of Appeals decided the case on terms favorable to the generic association client.
aaiPHARMA Inc. v. Thompson. 296 F.3d 227, 63 U.S.P.Q.2d 1670 (4th Cir. 2002). – Represented Par Pharmaceutical and Barr Laboratories in challenging the plaintiff’s efforts to force the FDA to list one of plaintiff’s patents in the so-called “Orange Book”.
Granutec, Inc. v. Shalala, 139 F.3d 889 (4th Cir. 1998) – Represented a generic pharmaceutical manufacturer in an action filed by our client's competitor against the Food and Drug Administration to rescind our client's statutory exclusivity to market its generic ranitidine hydrochloride product. The Court of Appeals for the Fourth Circuit affirmed our client's exclusive right to market its generic product.
Glaxo, Inc. v. Genpharm Pharmaceuticals, Inc. – Represented a generic drug manufacturer that filed an ANDA for approval to manufacture a generic form of ranitidine hydrochloride in competition with Glaxo's Zantac, the world's largest selling prescription drug. Glaxo sued Genpharm in the U.S.D.C. for the Eastern District of North Carolina (No. 91-222-CIV-5-BO). The case was later transferred to Maryland (K-92-1831 U.S.D.C. D.Md.). After four and a half years of discovery and motion practice, including proceedings in the Court of Appeals for the Federal Circuit concerning the right to a jury trial in a patent dispute, the case was settled on the eve of jury selection. It is reported in various phases at 796 F. Supp. 872 (E.D.N.C. 1992), and 69 F.3d 553 (1995).
Glaxo-Wellcome Inc., et al. v. Genpharm Inc., No. 96-CIV-6719 (DAB) (S.D.N.Y., filed September 5, 1996) – Represented Genpharm, which was sued for patent infringement by Glaxo-Wellcome when Genpharm filed an abbreviated new drug application with the FDA seeking approval to market a generic version of Form 2 ranitidine hydrochloride in competition with Glaxo's Zantac. This case involved extensive and highly technical discovery. It was settled on the eve of trial by a consent judgment of non-infringement, which permitted Genpharm to obtain FDA approval to market its product.
Glaxo Wellcome v. H.T. Marketing Inc., 1:96-CV-00937 (M.D.N.C.) – Represented a defendant in a case where the plaintiff's company alleged that the defendant's over-the-counter medication, packaging and advertising materials infringed the plaintiff's trademark and trade dress rights. The case was settled in mediation following discovery.
Westfield Homes of the Carolinas, LLC, f/k/a Westfield Homes of North Carolina, Inc. v. Centex Real Estate Corporation, d/b/a/ Centex Homes, 5:03-CV-192-H(3) (E.D.N.C. 2003) – Represented a major developer and builder of townhomes in an action alleging copyright infringement of architectural plans, trade dress infringement, and unfair trade practices against a competitor who was marketing townhomes, which our client contended were substantially similar to its own designs, on nearby property. The case was resolved by way of settlement following initial motions.
Represented a major supplier of dental equipment in defending an action by a competitor for misappropriation of trade secrets, violation of the Computer Fraud and Abuse Act, and related claims. The case was resolved by settlement following extensive discovery.
Represented a major discount wholesaler sued for trade dress infringement in the Eastern District of North Carolina and negotiated a favorable resolution.
Empire of Carolina, Inc., et al. v. Mac Plastics, Inc., et al., 4:97-CV-138 (E.D.N.C.) – Represented the defendant in an action in federal court alleging trade secret misappropriation, breach of nondisclosure and non-solicitation agreements, and unfair and deceptive trade practices. We successfully dissolved a temporary restraining order and defeated a preliminary injunction motion. After expedited discovery, the case was settled favorably.
TrustMark, Inc. and Charles Schwab & Co., Inc. v. Paul Watkins, individually, MobileHWY, Inc. and TeamVest, Inc., f/k/a TeamVest L.L.C., (Superior Court of North Carolina, Mecklenburg County 00-CVS412131) – Represented a software developer and manager in an action against an employee of the company and one of its customers for trade secret misappropriation and unfair competition. After obtaining an order of expedited discovery from the Superior Court in Mecklenburg County, the matter was settled favorably including the entry of a consent order permanently enjoining the defendants from certain conduct.
Omnitrade Industrial Co., Ltd. v. UNIPLET Company Ltd., 95-2489, (W.D.N.C.) – Represented a manufacturer and distributor of printing presses in an action in the United States District Court for the Western District of North Carolina involving a claim of trade dress infringement under the Lanham Act. After defeating a motion to dismiss for lack of jurisdiction, the matter was settled favorably.
Represented a company in the business of selling and servicing accounting management and financial software in an action in the Mecklenburg County Superior Court alleging breach of a noncompete agreement, breach of a confidentiality provision, trade secret misappropriation, and unfair competition. We obtained an injunction on behalf of the client, preventing the defendant from violating the noncompete agreement and disclosing or using the trade secret information. We also successfully opposed an appeal of that injunction.


Agister's lien; domestic and foreign; perfection; financing statement; filing; enforcement; fee.
(1) When any person, firm, corporation, partnership, or limited liability company not provided for in subsection (2) of this section procures, contracts with, or hires any other person, firm, corporation, partnership, or limited liability company to feed and take care of any kind of livestock, the person, firm, corporation, partnership, or limited liability company so procured, contracted with, or hired shall have a first, paramount, and prior lien upon such livestock for the feed and care furnished for the contract price agreed upon or, in case no price has been agreed upon, for the reasonable value of such feed and care, as long as the holders of any prior liens shall have agreed in writing to the contract for the feed and care of the livestock involved. A lien created under this subsection shall be treated in all respects as an agricultural lien as provided in article 9, Uniform Commercial Code, and may be enforced in the manner and form provided for the enforcement of secured transactions as provided in article 9, Uniform Commercial Code. A lien created under this subsection shall be perfected as provided in article 9, Uniform Commercial Code. Any financing statement filed to perfect such lien shall be filed prior to removal of such livestock from the premises of the person, firm, corporation, partnership, or limited liability company entitled to a lien and shall contain or have attached thereto (a) the name and address and the social security number or federal tax identification number of the person, firm, corporation, partnership, or limited liability company claiming the lien, (b) the name and address and the social security number or federal tax identification number, if known, of the person, firm, corporation, partnership, or limited liability company for whom the feeding and care were furnished, (c) a description of the livestock fed and furnished care, and (d) the amount justly due for the feeding and care. The failure to include the social security number or federal tax identification number shall not render any filing unperfected. At the time the lien is filed, the lienholder shall send a copy to the person, firm, corporation, partnership, or limited liability company for whom the feeding and care were furnished. The fee for filing, amending, or releasing such lien shall be the same as set forth in section 9-525, Uniform Commercial Code.
(2) When any person, firm, corporation, partnership, or limited liability company whose residence or principal place of business is located outside the State of Nebraska procures, contracts with, or hires any other person, firm, corporation, partnership, or limited liability company within the State of Nebraska to feed and take care of any kind of livestock, the person, firm, corporation, partnership, or limited liability company so procured, contracted with, or hired shall have a first, paramount, and prior lien upon such livestock for the feed and care furnished for the contract price agreed upon or, in case no price has been agreed upon, for the reasonable value of such feed and care. A lien created under this subsection shall be treated in all respects as an agricultural lien as provided in article 9, Uniform Commercial Code, and may be enforced in the manner and form provided for the enforcement of secured transactions as provided in article 9, Uniform Commercial Code. A lien created under this subsection shall be perfected as provided in article 9, Uniform Commercial Code. Any financing statement filed to perfect such lien shall be filed prior to removal of such livestock from the premises of the person, firm, corporation, partnership, or limited liability company entitled to a lien and shall contain or have attached thereto (a) the name and address and the social security number or federal tax identification number of the person, firm, corporation, partnership, or limited liability company claiming the lien, (b) the name and address and the social security number or federal tax identification number, if known, of the person, firm, corporation, partnership, or limited liability company for whom the feeding and care were furnished, (c) a description of the livestock fed and furnished care, and (d) the amount justly due for the feeding and care. The failure to include the social security number or federal tax identification number shall not render any filing unperfected. At the time the lien is filed, the lienholder shall send a copy to the person, firm, corporation, partnership, or limited liability company for whom the feeding and care were furnished. The fee for filing, amending, or releasing such lien shall be the same as set forth in section 9-525, Uniform Commercial Code.
(3) Effective January 1, 2015, this section applies to a lien created under this section regardless of when the lien was created.
Laws 2014, LB750, § 16.
This section provides the agister with a lien upon the stock for the agister's keeping, and the owner cannot lawfully obtain possession of the stock until the owner has paid or tendered to the agister the amount due for the feed and care. Graff v. Burnett, 226 Neb. 710, 414 N.W.2d 271 (1987).
Priority, as used in this section and UCC section 9-310, means first in time. Washington County Bank v. Red Socks Stables, 221 Neb. 300, 376 N.W.2d 782 (1985).
Subsection (1) of this section gives Nebraska agisters a first lien for services rendered to a Nebraska livestock owner if the holders of any prior liens on that livestock agree in writing to the contract for the care and feeding of that livestock. Washington County Bank v. Red Socks Stables, 221 Neb. 300, 376 N.W.2d 782 (1985).
Subsection (2) of this section gives Nebraska agisters a lien prior to any other liens without a written agreement to the contract for care and feeding of the livestock, if the party contracting for the agister's services is a nonresident of Nebraska. Washington County Bank v. Red Socks Stables, 221 Neb. 300, 376 N.W.2d 782 (1985).
This section creates a statutory agister's lien within the meaning of UCC section 9-310. Washington County Bank v. Red Socks Stables, 221 Neb. 300, 376 N.W.2d 782 (1985).
Caretaker has lien for care of livestock. Stickell v. Hagerty, 158 Neb. 34, 62 N.W.2d 107 (1954).
One who receives animals under an agreement to share in increase has an agister's lien. Schrandt v. Young, 62 Neb. 254, 86 N.W. 1085 (1901).
Lien arises only by contract. Hale v. Wigton, 20 Neb. 83, 29 N.W. 177 (1886).
Agister's lien under feeding contract is superior to subsequent chattel mortgage. Hoerler v. Prey, 125 Neb. 822, 252 N.W. 327 (1934).
Lien is superior to mortgage executed after it has attached and while property is in possession of agister. Becker v. Brown, 65 Neb. 264, 91 N.W. 178 (1902).
Under this section, a prior recorded chattel mortgage is superior to claim of agister for keeping animals. State Bank of Nebraska v. Lowe, 22 Neb. 68, 33 N.W. 482 (1887).
Lien of liveryman failing to maintain possession of horses is inferior to mortgage executed after possession is relinquished. Marseilles Mfg. Co. v. Morgan, 12 Neb. 66, 10 N.W. 462 (1881).
Once it is determined a person is protected by the statutory lien granted an agister, the statute will be liberally construed so its object will be effectuated. Mousel v. Daringer, 190 Neb. 77, 206 N.W.2d 579 (1973).
It is not necessary for agister to follow statute in foreclosure if consent of bailor is had, and under circumstances not tending to injure third parties. Dale v. Council Bluffs Savings Bank, 65 Neb. 692, 91 N.W. 526 (1902); reversed on rehearing, 65 Neb. 694, 94 N.W. 983 (1903).
The taking by the owner of livestock from the possession of agister without his consent does not divest his lien, and subsequent purchaser is charged with notice of the lien. Weber Bros. v. Whetstone, 53 Neb. 371, 73 N.W. 695 (1898).
One who cares for livestock under contract with owner has agister's lien, and owner cannot obtain possession by legal process until he has paid or tendered the full amount due. Kroll v. Ernst, 34 Neb. 482, 51 N.W. 1032 (1892).
Person furnishing feed and care to livestock can hold stock against owner who contracted for care until amount due is paid, but cannot hold where contract was not made with owner. Gates v. Parrott, 31 Neb. 581, 48 N.W. 387 (1891).


HEIDI E. WASHINGTON ET. AL, Defendants.
This matter is before the Court on a Report and Recommendation (Doc #72) filed by Magistrate Judge Mona K. Majzoub on Plaintiff Brian Bonner's “Emergency Motion for Court Order to Go to Outside Detroit Receiving Hospital Non-MDOC Contracted Hospital” (Doc #25) (“Bonner's motion”). No objections have been filed to the Report and Recommendation, and the time to file objections has passed.
The standard of review by the district court when examining a Report and Recommendation is set forth in 28 U.S.C. § 636. This Court “shall make a de novo determination of those portions of the report of the specified proposed findings or recommendations to which an objection is made.” 28 U.S.C. § 636(b)(1)(C). The court “may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.” Id. In order to preserve the right to appeal the magistrate judge's recommendation, a party must file objections to the Report and Recommendation within fourteen (14) days of service of the Report and Recommendation. Fed.R.Civ.P. 72(b)(2). Failure to file specific objections constitutes a waiver of any further right of appeal. Thomas v. Arn, 474 U.S. 140, 155 (1985); Howard v. Sec'y of Health and Human Servs., 932 F.2d 505, 508-09 (6th Cir. 1991); United States v. Walters, 638 F.2d 947, 949-50 (6th Cir. 1981).
In determining whether to grant a motion for preliminary injunctive relief, a court should consider whether (1) the movant has shown a strong or substantial likelihood of success on the merits; (2) the movant will suffer irreparable injury without the injunctive relief; (3) the injunctive relief will cause substantial harm to others; and (4) the public interest will be served if the injunction issues. Overstreet v. Lexington-Fayette Urban Cnty. Gov't, 305 F.3d 566, 573 (6th Cir. 2002)(citation omitted). “[A] party moving for a preliminary injunction must necessarily establish a relationship between the injury claimed in the party's motion and the conduct asserted in the complaint.” Colvin v. Caruso, 605 F.3d 282, 300 (6th Cir. 2010)(citation omitted). “This is because the purpose of interim equitable relief is to protect the movant, during the pendency of the action, from being harmed or further harmed in the manner in which the movant contends he was or will be harmed through the illegality alleged in the complaint.” Id. (citation and internal quotation marks and alterations omitted; emphasis added). That is, “[i]f the plaintiff's claim in the motion for injunctive relief does not relate to the plaintiff's original claim in the complaint, injunctive relief is improper.” Rayford v. Millay, No. 1-14-00122, 2015 WL 2454673, at *1 (M.D. Tenn. May 22, 2015) (citing De Beers Consul. Mines v. U.S., 325 U.S. 212, 220 (1945); Colvin, supra, 605 F.3d at 299-300).
Having reviewed the Magistrate Judge's Report and Recommendation, the Court finds that her conclusions and findings are correct. Plaintiff has been released on parole (Doc #70) and is no longer in the custody of the Michigan Department of Corrections. Plaintiff is free to seek his own medical care and go to any hospital he chooses. Plaintiff's motion for preliminary injunctive relief is moot. Garrison v. Dutcher, No. 1:07-cv-642, 2010 WL 165807, at *1 (W.D. Mich. Mar. 12, 2010), report and recommendation adopted, No. 1:07-CV-642, 2010 WL 1658744 (W.D. Mich. Apr. 23, 2010) (prisoner plaintiff's release from incarceration rendered his claims for injunctive relief moot). For these reasons, the Court finds that Plaintiff failed to show a likelihood of success on the merits.
Finding no error in the Magistrate Judge's Report and Recommendation, the Court adopts the Report and Recommendation in its entirety. Furthermore, as neither party has raised an objection to the Report and Recommendation, the Court finds that the parties have waived any further objections to the Report and Recommendation. Smith v. Detroit Fed'n of Teachers Local 231, 829 F.2d 1370, 1373 (6th Cir. 1987) (a party's failure to file any objections waives his or her right to further appeal); Thomas v. Arn, 474 U.S. 140, 149 (1985).
For the reasons set forth above, IT IS ORDERED that Magistrate Judge Mona K. Majzoub's Report and Recommendation (Doc #72) is ACCEPTED and ADOPTED as this Court's findings of fact and conclusions of law.


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Tax liabilities when staying and working abroad can be rather complicated and tedious. This overview provides you with a useful starting point in coming to grips with this tricky but important topic.
Who must pay income tax in Norway?
Taxes most likely to affect an international researcher staying and/or working in Norway are income tax, wealth tax, gift and inheritance taxes, and value added tax (VAT). Income, wealth, and gift and inheritance taxes are levied as direct taxes, value added tax is an indirect tax.
An international researcher's tax status in Norway depends on personal circumstances and possibly on the provisions of a tax treaty (regjeringen.no) between Norway and the country in which the researcher is or was a resident before arriving.
The extent to which an individual is subject to direct taxation in Norway depends primarily on the individual's residence status according to Norwegian tax law. A tax-resident individual is subject to tax in Norway on his or her worldwide income and capital. A non-tax-resident is liable to tax on certain Norwegian-source income only, e.g. from employment exercised in Norway and income from real and personal property situated in Norway. Special regulations pertain to gift and inheritance taxes.
An individual is deemed to be tax-resident in Norway if he or she stays in Norway for more than 183 days in any 12-month period (each day counts), or more than 270 days in any 36-month period. The individual will be regarded as resident from the calendar year when the aggregate stay exceeds 183/270 days.
Figures and rates quoted on this page refer to 2013.
As a rule, anyone who receives a salary from a Norwegian institution is taxable on the same basis as Norwegian citizens.
Guest lectures who's stay in Norway does not exceed one day, are usually not taxed.
International researchers who are citizens of theUSA, Brazil, China, France, Hungary, Italy, Israel or Turkey, may qualify for tax exemption for up to two years (three for China). Details vary and are specified in the tax treaties (regjeringen.no) with these countries (cf. USA Art. 15, Brazil Art. 20, China Art. 20, France Art. 21, Hungary Art. 20, Italy Art. 20, Israel Art. 20, Turkey Art. 20). For the US, Brazil and Israel it is a condition that the stay in Norway does not exceed two years.
The point of departure is an individual's gross income which includes all payments from the employer, i.e. wages, salary for off-duty periods, vacation pay, bonuses and certain payments in kind.
Parental allowance (foreldrefradrag, NOK 25.000 for the first child, NOK 15.000 for each additional child).
Standard deduction for foreigners: In addition, most foreigners may claim a standard deduction for foreigners (skatteetaten.no) (10 % of gross income reducing taxes by about 2,8 %) the first two years they are tax-residents in Norway. However, researchers who receive a tax-free stipend covering extra expenses for living abroad, such as an EU mobility allowance, cannot claim the standard deduction for foreigners.
Commuter deduction: Commuters from EEA countries may claim a special commuter deduction (skatteetaten.no).
The basic tax rate is 28 % of the net income. The social security contribution is 7,8 % of the gross income. Therefore, the total tax rate rarely exceeds 36 %.
Surtax: On gross income exceeding NOK 509.600 (relevant as of salary grade 62) a surtax (toppskatt) of 9 % is levied. On gross income exceeding NOK 828.300 (relevant as of salary grade 84) a surtax of 12 % is levied.
Employers in Norway are obliged to deduct taxes from wages before employees are paid.
Prior to or upon starting work at NMBU, international researchers must obtain a tax deduction card from the local tax office and submit it to the NMBU Pay Section. The tax card states what percentage of the income the employer must deduct.
If work is started without a tax card, NMBU is obliged to deduct 50 % which is generally more than would be deducted otherwise. The balance between 50 % and the correct rate will be reimbursed as soon as the tax deduction card has been submitted to NMBU.
Settlement of income and wealth taxes is finalized by means of a tax return (selvangivelse).
The tax return is due by 30 April the year following the income year.
Wealth tax (formuesskatt) is charged on the net wealth of an individual per 1 January every year.
Resident individuals are liable on their world wide wealth; non-residents on their Norwegian-situated assets only.
The wealth tax rate for single individuals is 0 % of up to NOK 870.000, and 1,1 % of the exceeding amount.
The rate for married couples assessed together for wealth is 0 % of up to NOK 1.740.000, and 1,1 % of the exceeding amount.
Norway levies a tax on inheritances and certain lifetime gifts (avgift på arv og visse gaver).
Liability to the tax depends on the residence status and nationality of the transferor, although it is the recipient from whom the tax is charged.
Where the transferor is a Norwegian national and resident at the date of the transfer (the date of the gift or the date of death), tax is payable on all the assets comprised in the transfer, wherever situated.
The same applies in principle where the transferor is a Norwegian national not resident in Norway, but a wide range of assets are granted exemption under certain conditions in such a case.
Where the transferor is a non-resident foreign national, only Norwegian immovable property and fixed installations, without preconditions, are taxable.
The gift and inheritance tax rate is 0 % of up to NOK 470.000, 6 % (children & parents) / 8 % (others) of NOK 470.000-800.000, and 10 % (children & parents) / 15 % (others) of the amount exceeding NOK 800.000.
Value added tax is a general tax levied on sales (i.e. goods and services) within the country and on imports.
The standard VAT rate is 25 % of the net price.
Reduced rates apply to certain sales, notably to food (15 %) and to passenger transport, accommodation services, travel agents and cinema tickets (8 %).
Tax-related questions pertaining to employment at NMBU may be addressed to the administrative contact person at the host department.
For matters concerning tax deduction card, tax return, tax assessment and tax settlement the Tax Office East, Ski (skatteetaten.no) or the Service Centre for Foreign Workers (sua.no) should be contacted directly.
Independant opinion and comprehensive tax assistance may be obtained from the Norwegian Taxpayers Association (Skattebetalerforeningen) (skatt.no). For contact information on taxpayer associations and tax experts in countries around the world, consult the website of the World Taxpayers Association (worldtaxpayers.org).

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On December 10, 2018, in the Southern District of Florida, Apotex filed a motion to dismiss the patent infringement complaint that Amgen filed this past August alleging patent infringement based on Apotex’s filing of aBLAs for pegfilgrastim and filgrastim biosimilar candidates. This action is a follow-on suit concerning a manufacturing process patent that issued in January 2018, after the Federal Circuit had already affirmed the district court’s judgment of non-infringement of a related patent in the parties’ first BPCIA litigation. In its supporting brief, Apotex argues that Amgen’s complaint fails to state a claim upon which relief can be granted because (1) Apotex does not literally practice the claimed process, (2) Amgen is estopped from relying on the doctrine of equivalents to prove infringement, and (3) Amgen is estopped from re-litigating allegedly case-dispositive claim construction arguments and rulings from the prior action. Amgen filed it opposition to the motion to dismiss on January 23, 2019, and Apotex’s reply brief is due on February 6, 2019. Also this month, the court entered a scheduling order calling for a trial in May 2020.
On December 10, in the Amgen v. Hospira litigation concerning Hospira’s Retacrit® (epoetin alfa-epbx), a biosimilar of Epogen®/Procrit®, Hospira filed its opening appellate brief in its appeal from the adverse judgment it received from the District of Delaware this past September. Hospira challenges, among other things: (1) the district court’s ruling that Hospira infringed one of Amgen’s now-expired manufacturing process patents in 2013-2015 by manufacturing fourteen batches of drug substance outside—as the district court found—the scope of the safe harbor of 35 U.S.C. § 271(e)(1), which allows use of patented processes if reasonably related to the development and submission of information to the FDA; (2) the district court’s finding that Hospira failed to prove that the patent is invalid; and (3) the district court’s award to Amgen of damages and interest of more than $80 million. Amgen’s responsive and cross-appellant brief is due on February 5, 2019.
Also on December 10, in the Janssen v. Celltrion litigation concerning Celltrion’s and Pfizer’s Inflectra® (infliximab-dyyb), a biosimilar of Remicade®, Janssen filed its opening appellate brief to challenge the Massachusetts district court’s grant of summary judgment of non-infringement in favor of the defendants based on the doctrine of ensnarement. In its brief, Janssen argues that the district court erred in how it analyzed and applied the ensnarement doctrine and the standard for summary judgment. Celltrion’s responsive and cross-appellant brief is due on February 11, 2019.
On December 12, in the Amgen v. Coherus litigation concerning Coherus’ Udenyca® (pegfilgrastim-cbqv), a biosimilar of Neulasta®, Amgen filed a reply appellate brief in support of its challenge to the Delaware district court’s dismissal of Amgen’s complaint based on the court’s erroneous (according to Amgen) application of prosecution history estoppel and dedication-disclosure doctrine to preclude Amgen’s claim of patent infringement. The parties have completed appellate briefing and are awaiting the scheduling of oral argument.
Also on December 12, Genentech filed reply briefs in support of its appeals of the PTAB’s adverse final written decisions in Hospira’s IPRs of U.S. Patent Nos. 7,807,799, which concerns a protein purification method using protein A chromatography, and 7,622,115, which concerns a method of treatment using bevacizumab (the active ingredient in Avastin®). In its briefs, in addition to challenging the merits of the PTAB’s decisions, Genentech reiterated its position that the IPR of this patent, which issued before the enactment of the America Invents Act (AIA) and creation of the IPR system in 2011, is unconstitutional as an improper taking under the Fifth Amendment. In November, Hospira (#1, #2) and intervenor the United States (#1, #2) filed briefs in these appeals in which they argued that subjecting pre-AIA patents to IPR comports with the U.S. Constitution.
On December 14, 2018, Pfizer filed a reply brief in its appeal from the PTAB’s final written decision upholding the patentability of Biogen’s U.S. Patent No. 7,820,161, which concerns a method of treatment using rituximab. Pfizer’s brief focuses on challenging the PTAB’s refusal to consider the Rituxan® label to qualify as prior art during the IPR.
On December 20, 2018, in Genentech’s BPCIA patent litigation in the District of Delaware against Celltrion and Teva concerning their recently approved HERZUMA (trastuzumab-pkrb) biosimilar referencing HERCEPTIN, the parties filed a Joint Stipulation of Dismissal that stated that they “have entered into a settlement agreement, and mutually agree[d] to voluntarily dismiss all claims and counterclaims asserted in the above-captioned consolidated case without prejudice.” On December 27, 2018, the Court endorsed the Stipulation and dismissed the case. Genentech’s related BPCIA litigations against trastuzumab biosimilar developers Amgen and Samsung Bioepis remain pending.
On January 22, 2019, in the Amgen v. Sandoz litigation concerning Sandoz’s Zarxio® (filgrastim-sndz) biosimilar product and its proposed biosimilar of Neulasta®, the Federal Circuit scheduled oral argument for March 4, 2019 at 10:00 am. Amgen is appealing the district court’s grant of summary judgment of non-infringement in Sandoz’s favor with respect to both of the accused biosimilar products, as well as numerous claim construction issues.
On January 23, 2019, in the Amgen v. Mylan litigation concerning Mylan’s Fulphila® (pegfilgrastim-jmdb) biosimilar product, Mylan filed a renewed motion for judgment on the pleadings with respect to the ’707 patent, one of the two patents-in-suit. This motion follows the district court’s November 15, 2018 denial of Mylan’s original motion, without prejudice and “subject to its reassertion (in whole or in part) following the issuance of the Court’s Claim Construction Opinion and Order.” The district court issued its claim construction opinion on November 20, 2018. According to Mylan’s brief supporting its renewed motion, Amgen is not asserting literal infringement of the ’707 patent under the district court’s claim construction ruling, and is prohibited as a matter of law from accusing Mylan of infringement of this patent based on the doctrine of prosecution history estoppel and the dedication-disclosure rule.