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Business Law

Business Law

General Cigar Holdings, Inc., the plaintiff, is a cigar manufacturer in New York. They were seeking damages from the defendant, Altadis, S.A., Altadis U.S.A., and Consolidated Cigar Holdings, Inc., a Spanish Cigar manufacturer and its subsidiaries, claiming that they put themselves in a position to obtain monopoly power in certain cigar markets. The case was held in United States District Court for the Southern District of Florida. The claims that General Cigar Holdings had against the defendant include attempted monopolization, monopoly leveraging, unreasonable restraint of trade, violations of the Florida Antitrust act of 1980, tying full-line forcing, trademark infringement violations, violations of the Florida Deceptive and Unfair Trade Practices Act, violations of common law unfair competition law, and violations of common law interference with prospective business relations. The defendants filed motions to dismiss all claims.

The court dismissed the claim of attempted monopolization because the plaintiff did not prove that the defendant did not hold at least 50% of the market share. The court felt that there was no dangerous probability of monopoly power.

The court dismissed the plaintiff’s accusation of monopoly leveraging, stating that the defendant did not attempt to monopolize the secondary market. The court stated that the defendant was merely seeking to gain a competitive advantage.

The claim that the defendant was gaining most of the market by promising future sales of Cuban cigars, and therefore was tying and full line forcing, was also dismissed by the court. Since the sale of Cuban cigars is currently illegal in the US, Cuban cigars are not a relevant market and the plaintiff cannot prove that the defendant has that market power. However, in the future the plaintiff may have a cause of action if the sale of Cuban cigars become legal in the US.

The court dismissed the claims that the defendant was violating the Florida Antitrust Act for the same reasons that they dismissed the attempted monopolization claim.

The claim that the defendant made “false or misleading descriptions of fact” concerning the plaintiff’s ownership of the “Punch” and “Partagas” trademarks was dismissed due to the fact that the plaintiff will not be able to prove the statements until the Cuban embargo is lifted. However, if the statements alleged were made by the defendant, it is possible that the statements would effect the plaintiff during this future event.

The court dismissed other claims under the Florida state law, stating that they declined the opportunity to decide the issues. The plaintiff may further pursue the claims in state law if they so desire.

The decisions of the court to dismiss all claims stating that the defendant was attempting to obtain a monopoly seemed unreasonable. The defendant formed mergers in 1999 that allowed them to gain 78% of the world’s cigar market, and a large portion of the US cigar market. This could be considered a monopoly, as eventually the plaintiff could go out of business, along with other smaller competitors, and a monopoly would exist in the US.

The decision of the court to dismiss claims of misleading statements about the plaintiff’s ownership of certain Cuban cigar trademarks was reasonable. Though the claim may be true, it would not currently effect the sale of cigars in the US, as the sale of Cuban cigars in illegal under an embargo.

“For the foregoing reason, Altadis, S.A.’s motion to dismiss for lack of personal jurisdiction is GRANTED. In addition, as none of the Plaintiff’s federal claims are sufficient to sustain a cause of action, Altadis U.S.A and Consolidated Cigar’s motion to dismiss is also GRANTED.”


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