Federal Judges, Lawmakers, And Experts Raise Concerns With Antitrust Venue Bill
Federal judges, a bipartisan group of lawmakers, and experts are speaking out against the State Antitrust Enforcement Venue Act, which would block federal judges from centralizing antitrust litigation brought by State Attorneys General through the well-established Multidistrict Litigation (MDL) process, a special legal process the federal government created to handle large and complicated cases involving a large number of lawsuits that have a similar complaint.
They are concerned that the bill could:
— Break up the well-established MDL processes, which could cause numerous inefficiencies in the court system.
— Have costly unintended consequences for small and midsize businesses and the broader American economy.
Federal judges raised concerns the venue bill would decentralize well-established MDL processes, which could cause numerous inefficiencies.
In a letter on behalf of the Administrative Office of the United States Courts (AO) to Members of Congress, U.S. District Judge Roslynn R. Mauskopf noted the bill’s attempt to restrict the judiciary is unprecedented and hadn’t been fully analyzed. “Congress to date has never amended Section 1407 to restrict the Pane’s ability to centralize civil actions. Doing so in this instance raises several concerns that merit Congress’s consideration.”
— Mauskopf continued: “Neither the Judicial Panel on Multidistrict Litigation (“Panel”) nor any of the relevant committees of the Judicial Conference of the United States (“Conference”) have had the opportunity to analyze this bill thoroughly.”
Judge Mauskopf also explained multidistrict litigation is “most efficient when all related actions are centralized before a single judge.” “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 federal judges outlined numerous concerns of the antitrust venue bill:
— “Restricting the Panel’s ability to centralize State antitrust actions could negatively impact the efficiency and conduct of antitrust MDLs.”
— “There could be particular inefficiencies created by excepting State antitrust actions from centralization.”
— “Excluding State antitrust actions from MDL proceedings could adversely affect the interests of the States.”
— “Excluding State antitrust actions from centralization could undermine the Panel’s efforts to facilitate coordination and cooperation between private antitrust litigation and antitrust actions brought by the United States.”
The judges concluded: “We request that the Committees of the Judicial Conference and the Panel have the opportunity to conduct more in-depth analysis of the legislation before any further consideration by Congress.”
At a MDL hearing last July, federal judges on the MDL Judicial Panel expressed skepticism with arguments against centralization.
— U.S. District Judge Matthew F. Kennelly repeatedly pressed lawyers objecting to MDL, as reported by Law360. “Aren’t some of those same folks in your class?”
— “I think that’s true,” the attorney replied.
— “So how does it make sense then to have these two cases, which basically overlap … in two different places? I’m just not getting that. I have to say the opposition from your folks and the other folks on centralization is a little perplexing.”
A bipartisan group of federal lawmakers and experts warn of the venue bill’s costly unintended consequences for small and midsize businesses and “could impact numerous sectors” of the American economy.
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 emphasized 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.”
Rep. Darrell Issa (R-Calif.) said the venue bill would cost small businesses both time and “tens of millions of dollars,” noting “there’s no efficiency or effectiveness.” “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.”
— Rep. Issa continued: “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.”
Divergent state antitrust cases would “lead to more confusion around the application of antitrust” and “stifle economic growth and innovation,” writes 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.”