Antitrust Venue Bill Harms Small Businesses And Broader Economy
As US District Judge Roslynn R. Mauskopf noted, “Given the nationwide scope of these antitrust litigations, such inconsistent rulings may complicate proceedings and sow confusion not only among the courts and parties, but also in the marketplace.”
The criticism has continued to roll in from antitrust experts and bipartisan policymakers who warn that the State Antitrust Enforcement Venue Act would have unintended consequences for small businesses and the broader economy.
Here are their concerns:
— The bill would harm American small and midsize businesses
— The current system fosters fair and efficient outcomes for all parties
The bill would harm American small and midsize businesses.
Rep. Darrell Issa (R-Calif.) said that the venue bill would cost small businesses substantial time and “tens of millions of dollars” dealing with “the same basic” lawsuits across the country. “Can you imagine if you’re a small company and you get sued five, 10, 15, 20 times? It’s the same basic suit. It alleges the same conduct. The same officers, directors, and individuals in the company are being deposed. And yet, you’re being hauled hither and yon on behalf of a dozen or maybe 48 states. There’s no efficiency or effectiveness there.”
— “And you can imagine, an antitrust case costs the defendant millions of dollars. If you have the ability to have 10 cases consolidated into one when they have substantially the same factors, it saves both sides those tens of millions of dollars.”
Rep. Zoe Lofgren (D-Calif.) warned that the venue bill is a “serious mistake” that would force midsize businesses to respond to costly lawsuits across the country. “There is a lot of animosity towards big companies. But this is not limited to big companies, and if a medium-sized company is forced to respond across the United States to a multiplicity of AGs in various states, you’re going to be hearing from them, as you should. Changing this venue rule at this point, even without the input from the Judicial Council, I think is a serious mistake, and I oppose this measure at this time.”
Rep. Lofgren (D-Calif.) underscored that antitrust cases “should not be litigated piecemeal,” as is proposed in this bill. “These cases shouldn’t be litigated piecemeal. Now, the potential through the MDL process for transfer of these related cases to a single federal district court judge enhances coordination and the manager provides an avenue for significant efficiencies for the parties, for the conveniences of witnesses, for judicial economy, and the avoidance of risk of inconsistent decisions.”
— Businesses would inevitably “find themselves facing multiple costly lawsuits in countless courts across the country,” Rep. Lofgren warned. “Now, if this legislation passes, multiple different states could simultaneously pursue their own separate actions against the same antitrust defendant in numerous different federal courts. Businesses, inevitably, would find themselves facing multiple costly lawsuits in countless courts across the country.”
Divergent state antitrust cases would “lead to more confusion around the application of antitrust” and “stifle economic growth and innovation,” reminds Jennifer Huddleston of the American Action Forum. “With a growing number of likely divergent claims, the current tech antitrust battles could continue for some time and lead to more confusion around the application of antitrust to this dynamic sector of [the] economy. This may appear to be a short term problem, but uncertainty around the application of competition policy could impact numerous sectors of the economy.”
— “If a court chooses to embrace the creative and expansive theories at the center of these state-led cases, it could set precedent that changes the application of antitrust law in the future not only for the technology industry, but in many other areas of the economy as well. Regardless of the impact of these cases—and there is reason to think that these antitrust actions would not remedy the underlying policy concerns—the uncertainty and broad reach created by these competing state cases would likely stifle economic growth and innovation.”
The current system fosters fair and efficient outcomes for all parties.
Multidistrict litigation is “most efficient when all related actions are centralized before a single judge,” U.S. District Judge Roslynn Mauskopf, director of the Administrative Office of the U.S. Courts, noted in a letter on behalf of the Administrative Office of the United States Courts to members of Congress. “When the Panel centralizes actions under Section 1407, it considers whether centralization will enhance convenience and efficiency with respect to the parties, witnesses, and the federal Judiciary as a whole — the Panel does not limit its consideration to the impact on any one party in isolation. In general, MDL litigation is most efficient when all related actions are centralized before a single judge. Doing so minimizes the potential for duplicative discovery and motion practice, eliminates the potential for inconsistent pretrial schedules or rulings, and conserves the resources of the parties, counsel, and the Judiciary.”
The current centralized framework for antitrust “ensures that all state level antitrust litigation is resolved in the most efficient manner,” writes Marianela López-Galdos of the Computer and Communications Industry Association. “In practice this means that litigation often involves multiple states which, absent the possibility to centralize under one venue, would risk having balkanized antitrust judgements with multiple and divergent outcomes on the same facts. Hence, the fact that antitrust cases initiated by states under federal law may be subject to the [Judicial Panel on Multidistrict Litigation (JPML)] ensures that all state level antitrust litigation is resolved in the most efficient manner, especially when multiple states are involved in the case.”
Centralizing antitrust cases is “necessary to ensure an efficient and rigorous review,” reminds the Lawsuit Reform Alliance of New York. “Upholding the highest possible standard of judicial process is imperative, and that is particularly true for antitrust cases. Centralizing these cases, as currently made possible by the multidistrict litigation (MDL) process, is indeed necessary to ensure an efficient and rigorous review of antitrust actions. As we’ve seen time and again, antitrust litigation often involves multiple states bringing action against companies which operate at a national level. A robust judicial infrastructure is required to review such cases.”
Rep. Issa (R-Calif.) emphasized the need to work with the Judicial Conference to increase efficiency before rushing to the conclusion that “50 cases will be more efficient than one.” “I would just close by saying if you want to mend the system, let’s work with the Judicial Conference to find ways to increase the efficiency, not end it in hopes that 50 cases will be more efficient than one.”