MoFo News Item

Morrison & Foerster Wins Dismissal of Antitrust Class Action against UPS

11/12/2008

In a case challenging the manner in which interstate carriers provide their customers with protection against loss or damage, Morrison & Foerster has obtained complete dismissal of an antitrust class action against longtime client United Parcel Services, Inc. brought by Thermal Technologies, Inc.

Thermal Technologies, a shipper, accused UPS of illegally tying its ground parcel shipping services with insurance coverage for those shipments. Thermal alleged that by compelling its ground shipment customers to purchase insurance coverage for their shipments of parcels under $100 – regardless of whether they wanted such coverage or may have preferred to obtain it elsewhere – UPS was engaged in tying and monopolistic behavior in violation of the Sherman Act.

In a 14-page decision issued on November 5, District Judge Gregory K. Frizzell held that Thermal had failed to allege adequately the existence of two separate product markets to support its tying claims. In particular, Judge Frizzell held that the protection against loss or damage that UPS provides in connection with the shipment of packages is an integral part of the transportation service itself, and not the separate product of insurance. Judge Frizzell relied on the seminal 2007 U.S. Supreme Court decision in Bell Atlantic v. Twombly in which the court addressed the standard of factual pleading in antitrust cases. "Under the Twombly standard," Judge Frizzell wrote, "the complaint must give the court reason to believe that this plaintiff has a reasonable likelihood of mustering factual support for these claims." Judge Frizzell held that the plaintiff had not pled adequate facts to establish the existence of two separate products.

Representing UPS in the litigation were Morrison & Foerster partners Paul Friedman and Gregory Koltun, and associate Jacqueline Bos.

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