Court to rule on price fixing, 4 other cases
on Dec 7, 2006 at 1:39 pm
The Supreme Court, reopening an issue that has seemed settled since 1911, agreed on Thursday to rule on the antitrust standard to be used when a product maker sets a price floor on its products when sold at retail. The Court will decide whether vertical minimum resale price policies are to be judged by a “per se” or “rule of reason” analysis under the Sherman Act’s Section 1. The case is Leegin Creative Leather Products v. PSKS Inc. (06-480, petition here), involving a dispute over retail sales in Texas of a line of women’s shoes, bags and other accessories.
The Court had stayed the lower court ruling in August. The Fifth Circuit Court had rejected a plea to apply “rule of reason” analysis to the price-fixing complaint by the operator of Kay’s Kloset, a retail store in Lewisville, Texas. The Circuit Court said it was bound to apply “per se” analysis because that was dictated by the Supreme Court’s 1911 decision in Dr. Miles Medical Co. v. John D. Park & Sons Co. The Circuit Court upheld a jury verdict awarding the store $3.6 million (after tripling the damages amount), plus $375,000 in attorneys’ fees. The store had been cut off from selling the Brighton line of accessories after selling some of the items at a discounted price in violation of Leegin’s pricing policy.
The Court gave no indication when it will hold a hearing on this and on the four other cases granted review on Thursday. None of the cases granted today was put on an expedited schedule, perhaps an indication that they would not be heard before March.
In another major business case, the Court agreed to decide whether the process of selling new stocks after their initial offering on stocks markets — that is, sold in the securities “aftermarket” — is a field of economic activity immune to antitrust challenge because it is closely regulated under federal securities law. The case is Credit Suisse First Boston v. Billing, et al. (05-1157, petition here). Chief Justice John G. Roberts, Jr., without giving a reason, recused from hearing or deciding the case.
The case involves an appeal by some of the nation’s largest underwriters of stock offerings, plus some of the largest institutional investors. The appeal is supported by virtually the entire securities industry as amici. When the case was pending in the Second Circuit Court, the Justice Department’s Antitrust Division opposed immunity for aftermarket trading in newly issued stocks, while the Securities and Exchange Commission favored immunity.
The Supreme Court last June asked the U.S. Solicitor General for the government’s current view on the issue. In its reply, the government opposed what it called the “sweeping antitrust immunity” sought in the appeal, but said that immunity should extend only to transactions in the aftermarket that were either directly permitted under federal securities law or were “inextricably intertwined with such permitted activities.” It did urge the Court to hear the case, saying it was important to resolve the issue over immunity, since that affects the entire “capital formation process.” The Solicitor General also said that the case was important because it came out of the Second Circuit, where most securities lawsuits are pursued. In this case, the Second Circuit rejected the immunity claim, finding that the aftermarket trading at issue in the case included assertions of unlawful market manipulation not protected by the securities laws.
In one of the criminal appeals the Court accepted for review, the Court will rule on a federal appeals court’s authority to overturn a death sentence in a habeas case, based on a finding that the prosecutor’s closing argument in the penalty phase was unfairly inflammatory (Roper v. Weaver 06-313, petition here). The appeal is by the state of Missouri, arguing that the Supreme Court has never held that a prosecutor’s penalty phase closing argument violates due process.
The case involved William Weaver, convicted of murdering a St. Louis man in a dispute over drugs. An Eighth Circuit Court panel overturned Weaver’s death sentence after finding the prosecutor had prejudiced the jury on the sentence in a closing argument that told jurors they had to have the courage to kill, comments about the prosecutor’s personal belief in capital punishment, execution was necessary in society’s war on drugs, a remark that the prosecutor had decided in the exercise of special authority to seek the death sentence, and comments that appealed to the jurors’ emotions by urging them to “kill [the defendant] now.” The Circuit Court split 5-5 in denying en banc review.
CORRECTION: The Court’s grant of review in Fry v. Pliler was limited to the third question presented, and thus the Court will not be addressing whether exclusion of third party guilt evidence can ever be treated as harmless error. The Court will instead review only the standard for judging in habeas cases how prejudicial a constitutional violation in a state trial may be, and which side has the burden of persuasion on the issue. The following summary thus misstates the scope of the grant.
The question at issue in Fry v. Pliler (06-5247, 9th Circuit unpublished opinions here) is whether a trial judge’s order to exclude evidence that a third party was guilty of the crime can ever be excused as “harmless error.” This is a murder case involving John Francis Fry. After two juries failed to reach a verdict, Fry was convicted in a third trial. It took that jury five weeks of deliberation to reach a verdict. At the trial, the judge barred he testimony of a female witness, Pamela Maples, who would have implicated her cousin in the murder of which Fry was accused. The Ninth Circuit upheld the exclusion as harmless error under Brecht v. Abramson (1993).
The fifth case the Court granted is Bowles v. Russell (06-5306, 6th Circuit opinion here), testing whether a federal appeals court acting on its own may dismiss as too late an appeal that a District Court had authorized, out of the usual time limits but after the District Court had reopened the appeal time. The petition is by Keith Bowles, who was convicted of murder in Ohio and was sentenced to 15 years to life in prison. The case involves the interpretation of a federal appellate procedural rule, Rule 4-a-6.
