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Antitrust Roundtable

Experts discuss the Trump administration's antitrust regulatory and enforcement priorities, U.S. v. American Express, and hot topics in class certification.

September 2017

Participants

Maxwell M. Blecher

Maxwell M. Blecher, the founding partner of Blecher Collins & Pepperman in Los Angeles, has litigated cases resulting in precedent-setting decisions in federal and state courts throughout the U.S. He is a Fellow of the American College of Trial Lawyers and of the American Board of Trial Advocates. In 2000, the California State Bar named him Antitrust Lawyer of the Year. He is the recipient of Legal Aid Foundation of Los Angeles’s 2006 Maynard Toll Award.

mblecher@blechercollins.com
http://www.blechercollins.com/
Peter K. Huston

Peter K. Huston is an antitrust and white collar partner in the San Francisco office of Sidley Austin LLP. He received a California Lawyer Attorney of the Year (CLAY) award for corporate antitrust in 2013 and was acknowledged as one of the Top 100 Lawyers in California by the Daily Journal in 2012. Prior to joining Sidley Austin he was the assistant chief of the San Francisco office of the U.S. DOJ’s Antitrust Division and lead counsel on criminal and civil antitrust trials.

phuston@sidley.com
http://www.sidley.com/
Joseph R. Saveri

Joseph R. Saveri, one of the nation’s premier plaintiffs antitrust lawyers, represents business owners, entrepreneurs, executives, public officials, and consumers in antitrust, class action, and other complex litigation. Joe has more than 25 years’ experience handling such matters, including cases involving financial services, computers, consumer electronics, labor, manufacturing, agricultural products, industrial inputs, and pharmaceuticals. He founded the Joseph Saveri Law Firm in 2012.

jsaveri@saverilawfirm.com
http://saverilawfirm.com/
Steven N. Williams

Steven N. Williams is a partner at Cotchett, Pitre & McCarthy, LLP and practices exclusively in the fields of litigation, trial, and client counseling with an emphasis on representation of civil plaintiffs injured by cartels. He serves on the Advisory Committee of the Cartel and Criminal Practice Committee of the ABA. Mr. Williams is also a Board member of Public Justice, member of the California State Bar Antitrust Executive Committee, and current chair of the Golden State Antitrust Institute.

swilliams@cpmlegal.com
http://www.cpmlegal.com/

As the Trump administration’s agenda and appointments take shape, our panelists explore how antitrust regulatory and enforcement priorities might change, and where they are likely to remain largely the same under the new leadership.

On the litigation front, the Second Circuit’s ruling in United States v. American Express highlights the challenges of applying antitrust laws to two-sided markets—an increasingly important issue as two-sided platforms flourish in the Internet age—yet the U.S. Department of Justice, curiously, declined to pursue U.S. Supreme Court review of the case. Meanwhile, the Ninth Circuit’s ruling in Briseno v. Conagra Foods sparked a spirited discussion on the deepening circuit split over ascertainability as a requirement for class certification. Our panel of experts explored these issues as well as antitrust trends on the horizon.

California Lawyer met with Maxwell M. Blecher of Blecher Collins & Pepperman, Peter K. Huston of Sidley Austin, Joseph R. Saveri of Joseph Saveri Law Firm, and Steven N. Williams of Cotchett Pitre & McCarthy.

MODERATOR: What a difference a year makes. In our last Antitrust Roundtable, Maxwell Blecher predicted, “In the unlikely event that Donald Trump wins, I think we can expect that the antitrust division will be essentially closed.” Is this a new era for antitrust policy?

MAXWELL M. BLECHER: That goes to show you, you can’t rely on me to make predictions. But the second part I stand by, I don’t think he will be able to make any significant changes in antitrust policy.

STEVEN N. WILLIAMS: My sense is the attorney general and president do not have a particular concern or focus on antitrust. They are focusing on other issues, which may permit the antitrust department to at least continue doing the same type of work it has been doing.

I don’t anticipate that mergers are going to be blocked very much. I think this is a great time if companies want to merge. But I am hoping that in terms of enforcement of cartel conduct or monopolization that the people in the antitrust department are still going to enforce those laws.

PETER K. HUSTON: We still probably have to wait and see until a permanent assistant attorney general and a permanent chair of the Federal Trade Commission are in place. Once they’re in the job, they will probably give some speeches and tell us what they would like to accomplish and what their priorities are.

When we were all last together, the campaign was in full swing and there were hints of perhaps a populist direction to antitrust under Trump. Now, all indications are that we are headed for a much more traditional Republican type of antitrust enforcement under Trump: Kind of neo-Chicago school antitrust enforcement, which means marginally less merger enforcement, stable cartel enforcement, and probably some additional focus on the intersection of antitrust and intellectual property with a tilt toward more protection of IP rights.

JOSEPH R. SAVERI: I wonder what predictive value there is to the populist rhetoric imbued in a lot of what Trump talked about on the campaign trail. I tend to think his populist campaign promises and campaign rhetoric will not lead to policies against market concentration, against the concentration of wealth. It is particularly unlikely that as an executive Trump is going to pursue those policies because most of the people around him, at least at the cabinet level, are successful capitalists. They are captains of industry or they come directly from Wall Street. It’s hard for me to imagine that that group of people as close advisors would be folks who would counsel for a more rigorous pro-enforcement antitrust regime.

WILLIAMS: I think one thing that illustrates that point, and it has not come to conclusion yet, but certainly during the campaign, Trump said he was going to block the AT&T merger. Given the people he has appointed at the sub-cabinet level, there’s no reason to think they would have any interest in blocking it. So I would view those things as more campaign rhetoric rather than campaign promises.

SAVERI: The one place where there was any specificity about antitrust issues had to do with mergers, and they were almost all in the media space. And it seemed those were influenced by other things that Trump thinks are important—for example, the fact that Jeff Bezos controls/owns The Washington Post, and Trump had a concern about the editorial voice of The Washington Post. It is not hard for me to imagine that Trump would want to hamper those that he considers rivals like The Washington Post.  But whether that gets manifested in antitrust policy seems really unlikely. In order for that to happen, Trump would have to intervene as an executive in the affairs of what happened in the antitrust division. Given recent news, I can’t completely dismiss that phone call as being something that would not happen. But I think there’s enough—I hope there’s enough—institutional restraint to prevent that from happening.  But we’ll see.

Like Peter [Huston], I think this is going to be largely a reprise of Bush II, Bush I enforcement regimes. And again, it’s also true that we don’t know very much because there are a lot of key seats that remain unfilled. Until that happens, we’re kind of in a position of stasis.

HUSTON: It’s funny because last year we were talking about Amazon and Jeff Bezos and The Washington Post, and those issues are still with us. Just recently Trump brought it up again. I agree that it is probably rhetoric and bluster.

So while Trump himself might want to punish Jeff Bezos and might even have in his mind that antitrust is the way to do it, as Joe [Saveri] mentioned, getting from point A to point B is a different story. People would put up a stink, I think, before they would allow the antitrust division or the FTC to be used as a political weapon.

BLECHER: Someone mentioned traditional Republican values. I’m old enough to go back to Eisenhower and Nixon who, surprisingly, had rather vigorous views about enforcing the antitrust laws. And if any of you remember Bob Bicks, who was a bit on the wild side, this was surprising. They were trying to disassociate their image of being the party of big business, and they did a very significant amount of anti-merger work and general antitrust enforcement.

Attorney General Jeff Sessions, whose future is also in doubt, represents the most conservative form of Republicanism. He is not of the Eisenhower/Nixon era. I’m prone to say today the Republicans would probably not let Nixon in the party.

Apart from whatever steps he may take against his perceived enemies, I don’t see Trump doing one thing, lifting one finger to help little people and enforce the antitrust laws.

The law has turned so decisively in favor of defendants that unless plaintiffs have something really, really solid, all they would be doing is forcing companies like Amazon to take money out of petty cash to pay the lawyers. It’s not going to accomplish anything.

MODERATOR: Bruce Hoffman, the acting director of the FTC’s bureau of competition, stated that the commission will not further investigate Amazon’s acquisition of Whole Foods. Any thoughts?

WILLIAMS: I think there is a pro-business, laissez-faire-type attitude. I don’t think the top of the administration has any views that mergers and concentration are bad. They think business should be given more free rein in concept, and letting those mergers go forward is in keeping with that.

SAVERI: A big technology company like Amazon presents challenging economics to figure out exactly what the business is and where competition would be restrained. It’s a very difficult problem to address through merger enforcement. I’m not surprised at all that the FTC, particularly as currently constituted, doesn’t have the resolve or resources to step into that thicket.

On the other hand, they did intervene in the DraftKings merger. I just think Amazon is a much tougher problem and has a much broader impact on the economy. So I’m not surprised that they’re not doing anything more than that.

WILLIAMS: One distinguishing aspect of that, which is also the same as to Time Warner-AT&T is that they’re not competitors. And I think that might lead to a different way of looking at it than, for example, in the DraftKings merger where you were talking about competitors and you were talking about greater market concentration.

SAVERI: I could make an argument that both Amazon and Whole Foods are competitors in the business of distributing or selling groceries. Also, I can make an argument that Amazon is turning from an Internet-based business to a brick and mortar business, and they’re expanding their dominance into a different distribution network. There are potential anti-competitive consequences of that.

HUSTON: But the FTC really would have had to go out on a limb to make that case. And when I first heard about the merger, I thought, they’re both household names, and maybe there are some people that view Amazon, as big as it’s gotten, with some suspicion, but it seems like a non-horizontal merger to me.

Also, it looks like Amazon’s takeover of Whole Foods will mean lower prices. It seems like Amazon’s model has been not to go after profit margins but to expand into different lines of business. I’m sure there are people who are upset about it because they may push other people out of the market, but they’re doing so by offering good services and low prices. That’s competition.

SAVERI: This is an interesting problem. Amazon presents this question whether there’s something predatory about what they’re doing in terms of their pricing and using that to obtain dominance in one market or to leverage that into another. I agree that it’s unlikely that the DOJ or the FTC would intervene in a merger. So they’re going to probably have to be raised by private litigants. I don’t know if that’s going to happen now or later.  But that’s going to be an interesting question.

BLECHER: We look at Amazon from time to time. But let me ask the question. What are they doing that you can charge?

SAVERI: If they see a margin, they will go after that margin. They’re going to price at a level that’s so low that nobody else can compete with them. And to me that sounds like predatory pricing. There are firms that engage in those kind of practices and there is long-term anti-competitive effect, particularly if there’s an elimination of choice or there is evidence of recoupment later.

MODERATOR: We touched on this, but what are your thoughts on the new leadership at the DOJ and the FTC?

SAVERI: This administration has been lethargic in getting seats filled.  It creates a lot of uncertainty for people who have to do business with the regulators or have to predict for their clients what positions the regulators can take. It’s really hard to predict anything right now with a lot of empty seats and a lack of clarity from the regulators.

WILLIAMS: I would say from me and people I work with in this field, the choice of Makan Delrahim to run the antitrust division was welcome. We thought that was about as good a choice as we could hope for in this administration.

MODERATOR: And why is that?

WILLIAMS:  Because of his demonstrated experience when he was in the Justice Department before. He is a Bush II type of person. You can understand what the policies are likely to be. He knows what the competition laws are about, and he is going to have an independent mind about running that department in the way that it’s been run in the past.

SAVERI: My concern is that there is an anti-expertise bias in this administration. For example, many of the pros in the State Department have now gone and exited the building. To the extent Delrahim is a professional who knows the field, I think that’s a better choice than someone who was there for some other reason.

HUSTON: The Trump administration was a little slow to get the Justice Department staffed up, but it’s basically fully staffed now with six permanent deputy assistant attorneys general in place. Delrahim just needs to get confirmed. So on the DOJ side things are pretty set.

The FTC has only had two commissioners for a long time, so they are really behind schedule as far as I can tell. They’ve got some work to do there.

SAVERI: So what do you think happens to Qualcomm in the Northern District of California when they fill out the FTC commission? (See FTC v. Qualcomm, N.D. Cal. Case No. 5:17-cv-00220).

HUSTON: Hard to say. You’ve seen in past presidential transitions, especially when there’s a change from one party to the other, it can make a difference in pending cases. United States v. Microsoft Corporation, 253 F.3d 34 (D.C. Cir. 2001), comes to mind. So it could happen.

MODERATOR: How will judicial appointments under this administration—including Justice Gorsuch—influence antitrust?

WILLIAMS: Justice Gorsuch tried antitrust cases and comes from a firm that had a fairly extensive antitrust practice. Those are all positive aspects in terms of what perspective he would bring to looking at antitrust cases.

However, he also in his judicial opinions has demonstrated that he is not necessarily in favor of the class action procedures. That is going to be critically important to the private enforcement of the competition laws. There has been, in my opinion, a campaign to starve state courts of money. Simultaneously, federal court has become so expensive for litigation to proceed—antitrust cases are among the most expensive—that the class action device is in my opinion the most critical aspect of private antitrust enforcement.

So while Justice Gorsuch’s views on antitrust might be closer to how Joe [Saveri] and I might look at it, I do have a concern about where class action jurisprudence will go and what impact that is going to have on antitrust enforcement.

SAVERI: I have a darker view of the potential mischief that Justice Gorsuch can create. It’s true he has had as much antitrust experience before he came to the bench as maybe Justice Stevens, but while on the Tenth Circuit, he took very strident, dim views of unilateral conduct, exclusive dealing, and monopoly leveraging types of cases.

He said that those theories presume anti-competitive effect. He said that monopoly leveraging was undone by Verizon v. Trinko, 540 U.S. 398 (2004). He labeled the essential facilities doctrine as an epithet. He doesn’t think Aspen Skiing was correctly decided. See Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985). Also, he cited Kay Electric Cooperative as one of his key cases that he decided, which is a state-action immunity case. See Kay Electric Co-op. v. City of Newkirk, Okla., 647 F.3d 1039 (10th Cir. 2011)

So those are areas where I think he will not be good for enforcement. He will want very strict, bright line rules on some of these issues. He’s going to be quite problematic for those who support a broad or vigorous enforcement of the antitrust law.

BLECHER: You’re being charitable. Despite the fact that he was an antitrust teacher and an antitrust practitioner, and therefore more knowledgeable than most of the members of the Court who had not had that experience, he is, in a word, Scalia revisited. And that is where we’re going to be.

HUSTON: As mentioned earlier, case law is very important in antitrust. It puts up guardrails that make it impossible to turn the ship on a dime. Because case law is so important to this field, changes happen over long periods of time bubbling up from district courts and courts of appeal. So, the fact that Gorsuch is in there is somewhat important, but perhaps more important is the fact that Trump will fill vacancies that exist in the lower courts. These are lifetime appointments, and that’s going to make a huge difference down the road.

From what I can tell, he’s taking his cues as to whom to appoint from the Federalist Society and the Heritage Foundation. So you’re likely to see very conservative judges appointed, who tend to support a Chicago school type of antitrust enforcement.

WILLIAMS:  It’s hard to overstate the importance of that point. Perhaps the greatest impact the Trump administration may have on the country will be through its judicial appointments.

BLECHER: If he ever gets around to filling the myriad vacancies that exist in the lower courts, it will be downright scary. Right now I think the bench is reasonably split between Republicans and Democrats. But with the passage of time, that is going to change, and he’s going to tilt the direction of the judiciary in a conservative way which for antitrust means no enforcement. We had a chance to kind of balance the ship and now it’s hopeless.

WILLIAMS: And I think adding 50 slots within the Ninth Circuit at the district court level is on the table. So imagine the Trump administration having 50 new spots in the Ninth Circuit to fill and what effects that’s going to have

BLECHER: The law is now twisted badly in favor of the defendants. And doing anything substantial is going to be a huge hurdle unless there’s some change by the Supreme Court, which is not in the cards foreseeably, or legislatively which is not in the cards foreseeably, either.

Every time you turn around, the courts have found some excuse to exonerate the defendants, particularly in single-firm Section 2 cases. And then by expanding Twombly beyond anything anybody could have imagined, they have now basically done havoc even to conspiracy cases.

MODERATOR: The Justice Department decided to not pursue Supreme Court review of U.S. et al. v. American Express Co. et al., No. 15-1672, (2d Cir. 2017). Meanwhile, 11 states that were co-parties are pressing on and have filed a petition for a writ of certiorari. Is this unusual?

WILLIAMS: The brief was really schizophrenic. It had a first part that seemed to be arguing you should absolutely change this result and then a second part that seemed to be written by somebody else saying it’s really not worth taking this case.

HUSTON: The DOJ’s decision to ask the Supreme Court not to take the case was certainly unusual. Essentially, American Express’s nondiscrimination provisions prohibit merchants from steering consumers to other cards, and the DOJ sued and won at trial. Then the Second Circuit reversed. Then the DOJ files its brief and basically says, I’m paraphrasing, “Listen, we were right the first time and the Second Circuit was wrong.”  And then in the last few pages of the brief, it says, “By the way, we don’t think you should take the case”—which seems weird.

The part I find most weird is that they didn’t just stand down or decide not to pursue it, they stood up for the other side, affirmatively asking the court to deny cert. So I imagine that members of the trial team were gnashing their teeth. And I’m sure the state attorneys general who were co-parties to the DOJ were probably not happy about it either.

I do think that you have to take the DOJ at its word that it believes that there needs to be additional work done at the court of appeals level on this very tricky issue having to do with two-sided markets before the U.S. Supreme Court takes the case.

There is neither a permanent head at the antitrust division, nor at the solicitor general’s office. So it could be that they’re saying, We know that this is a big issue that affects a big chunk of the economy, and we know that these issues are teed up in this case. But when you get to the Supreme Court level where it could affect the whole economy, we want to take a pause and step back, let our people get in place, study it, and then down the road we’ll ask the Court to weigh in if need be.

SAVERI: One of the important parts of the Justice Department is not only its regulatory function, but its advocacy function. To the extent that the Justice Department takes pro-enforcement positions at the appellate level in front of the Supreme Court, I think that’s been important. And I think there was some of that under the Obama administration.  Maybe it was truer with respect to the FTC on drug pricing cases. But that’s an area where I don’t think there’s going to be much activity at all. American Express is something you could point to where already the Justice Department is kind of pulling back.

MODERATOR: So should we expect state attorneys general to step in more often?

WILLIAMS: I don’t think that’s new, but I think that will become enhanced. And I think we’ve seen that for years that the state attorneys general have taken much more active roles in participating in enforcement actions under state laws.

It’s also worth noting that state antitrust and competition laws are not just copies of the Sherman Act. They came in before the Sherman Act. They have their own regimes. And a state—California, for example, is the sixth largest economy in the world which is Asian facing and has business relationships everywhere—has every interest and every right to enforce its laws just as much as the U.S. government.

BLECHER: I looked at the Second Circuit decision less as a matter of straight legal analysis. It seemed to me there was a sympathetic grain running through it that American Express was victimized for a long period of time by Visa and MasterCard and that it was politically incorrect to be leaning on them when they were trying to get healthy. That seemed to me to be the underpinning of this decision more than a straight antitrust analysis. It’s possible the Justice Department looked at that and figured this is going nowhere and abandoned it.  It’s also possible that there’s a little politics involved.

MODERATOR: Where does this leave practitioners in defining antitrust markets and analyzing market power in two-sided markets?

SAVERI: We’ll see what happens now with the attorneys general and their cert petition. But if Gorsuch votes to grant cert, I don’t think he’s granting cert to reverse, right? I don’t think it’s an irrational view for the DOJ to say if we care about these issues, maybe we should try to get some more favorable law at the circuit level to balance out in the context of a Supreme Court.

WILLIAMS: Are you suggesting that maybe someone at the Department decided we’re going to do worse at the Supreme Court than we did at the Second Circuit, so let’s just stay away?

SAVERI: Yeah, I think so. There’s a possibility. There are issues in this case that have to do with market definition that are going to be important in cases in this area or other cases in the future. So maybe you just take your lumps.

BLECHER: Well, if they’re afraid of the Supreme Court, then we’re doomed.

SAVERI: It is remarkable to me that two of the biggest DOJ civil trial results are in this two-sided market credit card area. They had a big result against Visa. And then they had a big result against American Express. This is a really complicated area. They went into the deep end in terms of antitrust analysis and got really significant results.

HUSTON: Two-sided markets have been around for a long time. Newspapers, shopping malls, it’s not a new concept. But with the Internet it has exploded. And now there are two-sided markets everywhere you look. It’s a big area of the economy.

SAVERI: I think the strongest basis for the appeal would be that the Second Circuit applies cases like Brown Shoe Co. v. U.S., 370 US 294 (1962), incorrectly with respect to market definition. The whole idea about elasticities or interchangeability, the Second Circuit just didn’t pay attention to it.

So I do think there’s some confusion now, at least in the Second Circuit, about how you define market definition in one of these cases. Now, maybe it’s because it is a two-sided market and that’s different. But I do agree with you that the most practical implication of this has to do with these technology companies like Amazon, Google, and Uber, all of which operate in two-sided markets.

So again, I don’t have to do counseling, but it would be really hard for me to predict or counsel based on what the law is right now.

HUSTON: I think the best you can say is that if you operate a two-sided platform that has these network effects where you manipulate the price to one side of the platform to affect demand on the other side of the platform, that that presents you with some additional arguments to make as to how the market should be defined—especially now that we’ve got this case on the books at the Second Circuit.

SAVERI: But this is the problem. The fact that the company gets two sources of income from selling non-substitutable products doesn’t put them in the same market. That’s what I understand traditional market definition law to say. The Second Circuit doesn’t agree with that.

HUSTON: I think the Second Circuit had a lot to go on. Oftentimes in these two-sided markets, one side is subsidizing the other side. The platform is setting their prices in a way to maximize the number of connections and make it work.

It’s not as if it’s just two separate markets stuck together with crazy glue. They are really intertwined and interdependent. If that’s the case, do the old rules with respect to market definition apply? The Second Circuit seems to be saying, no, you’ve got to think about the whole picture even if the two sides are not substitutable. Even if one side of the market is totally different than the other side of the market, they come together in this platform and you have to consider it together.

SAVERI: It would be an unfortunate result if the rule is that if there are network effects, you can’t have market power. Maybe it’s going to take a while to figure that out, and maybe we’re not there yet.  But I think that’s one of the ways you can read the Second Circuit opinion, and I think that’s going to be bad for consumers at the end of the day.

HUSTON: In my mind if you’ve got a two-sided market that has network effects, the implications for market definition and market power are such that I’m not 100 percent sure that the paradigms and the tools of antitrust that were created in the last century are up to the task without some adjustment.

WILLIAMS: That’s a really profound question, and I think it’s true. I think that it’s going to be really, really hard for laws and decisions to keep up with the advances in technology that are changing all of these markets and the way we all interact with them.

BLECHER: I agree. One of the real serious problems we have in today’s world is the antitrust laws were created 100 years ago for an economy that’s 100 percent different from what we have today. And nobody has attempted to accommodate those changes. So we apply the same rules that we applied in 1937 to 2017 and it doesn’t really fit. Somebody’s got to sit down and revamp this in a way that makes it consistent with the world we live in today.

HUSTON: But the laws on the books are pretty general, and as we’ve mentioned throughout today, much of antitrust law is judge-made law. So judges can do that. Whether they can keep pace is another question because the economy moves really fast nowadays and cases take a long time. How well can a lay judge who has so many different issues on their docket and who gets an antitrust case every once in a while, deal with these cases that more and more are involving very sophisticated economics? I think the federal judiciary is definitely up to the task, but it’s a challenge.

Certainly here where we’re sitting today in the Northern District of California, they get a lot of antitrust cases. And we’ve got a fantastic bench that regularly sees these cases. But there are many other districts around the country that only get antitrust cases once in a blue moon.

BLECHER: To suggest we rely on a conservative judiciary to make needed changes is, to me, useless. The point is ideas like market definitions and market shares and recoupment and all of that are all obstacles to looking at the reality of whether a particular arrangement or conduct actually adversely affects consumer interests.  That should be the test.

And all these technical ideas that have been engrafted into the law mainly by economists need to be reexamined. They don’t really advance juridical wisdom. They inhibit application of what is the basic question, is this a restraint of trade, is this some form of monopolization, and get away from these high-bound technical concepts which really are an excuse to throw cases out. Any case that has an intense evaluation of the relevant market means they’re finding a way to dump you.

HUSTON: If Max [Blecher] is right that it’s a lost cause at the federal level, then maybe it’s state courts, state legislatures, state enforcers that step up to the plate to do what’s necessary to bring a more antitrust-friendly environment. But then you look at the states, there’s a lot of red out there at the state level, too.

BLECHER: As a general proposition, I would say in California that the state court system is much more responsive to and interested in little people than the federal court.  So if you have a choice and you can stay there, that’s probably where you want to be. At least in California. That might not be true in Alabama.

MODERATOR: What will be the impact of the Ninth Circuit’s ruling in Briseno v. Conagra Foods, Inc., 844 F.3d 1121 (9th Cir. 2017), rejecting ascertainability as required for Rule 23 analysis?

WILLIAMS: My hope is it means we will stop seeing, certainly in the Ninth Circuit, this argument that ascertainability is required. When this issue started to pop up in the Third Circuit, I thought it seemed obvious that if you take anyone whose judicial philosophy is textualism and you apply the law as written, that this was a no-brainer that there was no requirement. I’m surprised it got as much traction as it did.

If you read Briseno, every argument asserted in favor of ascertainability had nothing to do with the statute. Fraudulent claims and proper notice were not problems that needed to be fixed. They have been addressed by the rules and by decisions.

This is just an effort to add something else that some may have thought would be a silver bullet that would help them kill some classes.

The rule says what it says. Notwithstanding what we said before about a lot of antitrust law being judge-made, procedure shouldn’t be judge-made. Procedure should be based on the rules or the statutes. And this was, in my view, an effort to add something that didn’t exist in the statute.

And you see it very prominently in a lot of the indirect purchaser cases where the argument would be, well, you can’t certify this because how are you going to find everyone who bought a phone or everyone who bought this product. There’s no requirement that you do that at the class certification stage.

And if you look in particular at the analysis where they say, and it’s a very simple, straightforward point, you should avoid denying certification in cases because of supposed management issues. And that’s established law. And that’s all this was: an argument based on supposed management issues. It was rightfully rejected. And I hope that to the extent it still is part of the Third Circuit law, which some people debate, I hope that it will go away there soon as well.

HUSTON: Briseno makes it much more likely that we’re going to have the Supreme Court rule on this issue because there was a split before this case came down and this just deepens it. Class plaintiffs won a battle, but I’m not sure where the war’s going to come out.

Right now, the venue of a case really decides what happens. So if you’re in the Third Circuit, you’re going to get one result. If you’re in the Ninth Circuit, you’re going to get a different result. The split is almost right down the middle. It’s inevitable that the Supreme Court gets involved. Whether they take this one or not, I’m not sure. But it’s only a matter of time.

And I had kind of the same thought that Steve [Williams] did about conservative judges wanting to hew very closely to the rules as they’re spelled out. And that’s certainly true when it comes to statutes. But we’re talking about rules here, not statutes. Maybe that makes a difference.

WILLIAMS: An interesting point on that, too, is that Gorsuch was on the Rules Committee. And, in fact, his committee signed off on a letter opposing this new class action litigation act on the grounds that it’s up to the Rules Committee to make these decisions and not up to Congress.

SAVERI: I have some sympathy for Peter [Huston’s] view that there might be something different about statutes and rules. But the problem with Rule 23 is Rule 23(a) has got four specific requirements. It doesn’t say anything about ascertainability or administrative feasibility.

And then 23(b)(3) has its predominance requirement. To graft onto that an ascertainability requirement really seems results-oriented and cynical at the Supreme Court level were they to do that.

I also would say that the concerns about fraud or false claims, all of that can be dealt with under the requirements or concerns that are embodied in Rule 23(b)(3). I think that the rule works.

HUSTON: It’s certainly not a Rule 23(a) issue.  But the argument is that this ascertainability is derived from 23(b)(3) and if you take predominance and superiority requirements seriously, you have to have ascertainability. And at some level it gets to be a due process issue because defendants have to be able to present their defenses. And if the only way for a defendant to present its defenses is on an individualized basis, then class certification is inappropriate.

Class actions are so popular and consequential, I just think that the Supreme Court is going to weigh in.  And so then it comes to predicting how the Court is going to rule. The fact that Judge Gorsuch was on the Rules Committee is a very interesting fact for sure.

WILLIAMS: The importance of private enforcement has long been recognized by the Supreme Court and all the states. Applying an ascertainability requirement to indirect purchaser cases, for example, could be a way to make them extremely difficult to proceed on, which basically is just providing a shield to people who are engaged in cartel conduct, which has always been recognized as inherently evil, damaging to the economy, and something that we’re supposed to encourage private litigants to pursue. It may provide almost an immunity to cartelists to engage in behavior if they think there’s not going to be enough people with the ability to challenge that behavior.

SAVERI: I completely agree.  But I also think that the way to deal with those issues has a lot to do with doing your own homework and making sure that the class is defined correctly, that there are objective criteria. You don’t sue for all levels of the indirect purchasers.  You have those sorts of things.

MODERATOR: Do you think defendants will try to couch ascertainability and administrative feasibility in terms of manageability, superiority, predominance, or objectivity?

HUSTON: That’s certainly what defendants are going to have to do in the Ninth Circuit, at least for the time being.

SAVERI: The rule is drafted to allow those arguments. But the fact that they’re allowed, doesn’t mean they’re right. And I think courts have rejected them more frequently than they’ve accepted them.

At some level, picking up on what Steve [Williams] said, it has to do with whether you think at the margins it makes sense to have some procedural flexibility and some latitude in order to prevent the wrongdoer from retaining the ill-gotten gains.

And at least historically the courts have been willing to put up with a little bit of imprecision in order to achieve the interests of justice that underlie Rule 23. I think that’s a really good idea.

HUSTON: It depends on how you look at Rule 23. On the one hand there are people, myself included, who look at the class mechanism of Rule 23 as a tool to drive judicial efficiency.  That is, it makes sense to have one case if you’re dealing with the same set of facts and law rather than a number of cases all over the place.

And then there are other people that would look at Rule 23 as a tool to keep companies from getting away with smaller violations. If you repackage those small violations into one big case, then it makes sense for attorneys to bring them, and the attorneys get rich, and the class members get a few bucks maybe.

MODERATOR:  Finally, what are some antitrust issues on your radar?

HUSTON: International antitrust is an area to keep your eye on. As antitrust enforcement ramps up around the rest of the world, you’re going to start to see more and more potential conflict between US antitrust enforcement and enforcement in other areas of the world that could create interesting issues.

Even on the merger side as different authorities and jurisdictions around the world become more active, it creates significant problems for companies that want to do deals. That’s an area that I think is ripe for some interesting developments.

SAVERI: I think that the Foreign Trade Antitrust Improvement Act (FTAIA) is a challenge, and perhaps a nightmare because of its implications. There’s little circuit level authority on that. It’s interesting because it confounds on both sides of the aisle in private litigation.

WILLIAMS: An issue I would raise is the filed-rate doctrine. The doctrine, which is 110 years old, was based on the proposition that regulatory agencies have better ability and power to determine competition and pricing issues than do courts and therefore courts shouldn’t have the ability to issue damage awards in cases where there’s a regulator.

In In Re: Transpacific Passenger Air Transportation Antitrust Litigation, No. 15-16280 (9th Cir. 2017), the court agreed with Judge Breyer that the filed-rate doctrine didn’t bar claims, even though the defendants filed their rates with the Department of Transportation. The en banc petition was denied and there’s now a Supreme Court petition, which will be fascinating given the present Supreme Court makeup. You have conservative jurists, but not jurists who are fans of regulatory bodies or big government. It will be interesting to see whether they might deem this an opportunity to reevaluate that doctrine.

BLECHER: I’m listening to a lot of what I would call “fringe” issues. To me the core issue in the antitrust laws is whether an ordinary company injured by some trade participating in a monopolization scheme has a real opportunity to go to court, have its complaints sustained, go through discovery and have a trial like we did in the old days. That process has been largely decimated. And, unfortunately, I don’t see a whole lot of light at the end of the tunnel.

WILLIAMS: I think what Max [Blecher] mentions is a very, very serious issue.  And I think even worse, it applies across all civil justice and access to justice. One of the greatest threats to the citizens of our country right now is that the courthouse doors are being shut.

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