Washington, D.C. — Yesterday, the Ninth Circuit issued a significant decision in L.A. International Corp. v. Prestige Brands, siding with mom-and-pop businesses who were challenging illegal price discrimination that advantaged Costco and kept prices high for American consumers.

The ruling, which is grounded in the text of the statute, creates important precedent under the Robinson-Patman Act, an antitrust law designed to protect independent businesses and make groceries more affordable and accessible. The Federal Trade Commission revived RPA enforcement under Chair Lina Khan but has taken almost no action to enforce the law since Andrew Ferguson became Chair.

In the opening sentence of its opinion, the court cited Senior Legal Fellow Katherine Van Dyck’s scholarship on RPA, Price Discrimination and Power Buyers, which originated from her work at the American Economic Liberties Project.

“The Ninth Circuit embraced the original goals of Robinson-Patman and delivered a landmark victory for small businesses across the country,” said Van Dyck. “This ruling is an important moment in the fight to create a level playing field for small businesses, so they can deliver affordable goods to their customers.” 

Plaintiffs in L.A. International Corp. v. Prestige Brands challenged a number of discriminatory practices by the supplier of Clear Eyes Redness Relief Eye Drops that gave Costco a 5% annual price advantage plus another $3.00 advantage through instant rebates. Following a seven-day trial in December 2023, the jury ruled for the plaintiffs, and the court awarded them over $1 million in damages plus attorneys’ fees. 

Prestige appealed the jury verdict. Yesterday, the Court affirmed the decision, finding, among other things, that court properly instructed the jury on the role of functional discounts and the level of harm to competition that plaintiffs were required to prove. 

The Ninth Circuit also rejected the lower court’s decision to cut an award of attorneys’ fees simply because the plaintiffs’ lawyers work at a smaller firm, stating that “[f]irst-rate attorneys who prevail in litigation are entitled to receive fees commensurate with their skill, experience, and reputation, even if their clients are mom-and-pop businesses that don’t have Fortune 500 budgets to hire big law firms to represent them.” 

“The reversal of the lower court’s fee decision is a sharp rebuke of the snobbery that often permeates the practice of law. It shows enormous respect for the talented lawyers that brought this case to trial and won,” Van Dyck added. 

Plaintiffs are represented by Randolph Gaw, Mark Poe, and Victor Meng of Gaw Poe LLP in San Francisco. 

Read the full opinion here.

Learn more about Economic Liberties here.