Antitrust and Unfair Competition Law E-Brief: November 2020 Edition
This edition of the Antitrust and Unfair Competition Law Section of the California Lawyers Association’s E-Briefs includes a recap of the 30th Annual Golden State Institute which was held as a virtual conference on October 27-29, 2020. The program co-chairs were Elizabeth Castillo, (Cotchett, Pitre & McCarthy) and Rob McNary, (Crowell & Moring). The program had 6 panels and two networking sessions and was attended by over 300 attorneys, law students and economists.
The summaries below give an only an overview of the content of the panel discussion. All speakers stated that they were speaking in their individual capacities only and not on behalf of their respective organization. Also, it is a challenge to summarize substantive panels which were fast paced and full of information. In the next edition of Competition, the Section’s law journal, there will be a full presentation of the GSI programs that will include the extensive program material that was prepared by the panels.
Congratulations to the entire team that put together the 30th Golden State Institute. The feedback was extremely positive. The virtual program was an impressive accomplishment, but let’s hope we are back live for the 31st GSI.
Below are summaries of the six panels:
RECENT DEVELOPMENTS IN ANTITRUST AND UNFAIR COMPETITION LAW
Shana Wallace was the first of three speakers on this panel. Ms. Wallace is a law professor at the Indiana University Maurer School of Law. Prior to joining the IU Maurer School of Law faculty in 2016, Ms. Wallace practiced both criminal and civil antitrust law for over a decade with the United States Department of Justice’s Antitrust Division.
Ms. Wallace’s comments focused on Section 2 of the Sherman Act. Section 2 has become a focus of significant antitrust cases today. Ms. Wallace analyzed the recent Antitrust Division’s Section 2 complaint against Google. There is a fair amount of parallel between the Google case and the Microsoft monopolization case of over a decade ago. One of similarities is the personnel on the government side is strikingly the same for the Google case as it was for the Microsoft case. It is ironic that Google’s CEO came over from Sun Microsystems, the complainant against Microsoft and now it seems as though Microsoft is actually a named victim in the Google case. One of the differences is that the Google case is a Section 2 complaint only while Microsoft alleged violations of Sections 1 & 2.
An advantage of prevailing on Section 2 is that if you carry the day that the defendant is a monopolist, the courts may expect less in terms of proof of harm. In a Section 1 complaint the courts still analyze alleged anticompetitive agreements for proof of competitive harm but without a showing of monopoly power, the competitive harm may be less clear.
The Google case has a relatively narrow focus on general search services, search advertising and general search text advertising. As a litigation strategy, a fairly narrow focus helps to keep court from throwing up her hands with overwhelming facts and declining to interfere. Moreover, the government can always bring additional charges–there isn’t a statute of limitations problem. The conduct alleged in Google included challenging exclusive contracts, and bundling products together. The harm includes higher process for advertisers and less innovation and entry. Customer harm is a little harder to nail down because customers aren’t paying but they are in terms of their providing their data free of charge.
The Google Complaint was vague on remedies, leaving them for another day. The complaint seeks only structural relief as necessary.
Professor Wallace discussed two other important Section 2 cases still on the docket.
FTC v. Qualcomm, 969 F.3d 974 (9th Cir. 2020)
The Ninth Circuit reversed Judge Koh’s decision in the district court that Qualcomm’s conduct related to its cellular standard essential patents (SEPs) and its monopolies in CDMA and premium LTE chips had violated the antitrust laws. The FTC has sought rehearing en banc.
Viamedia, Inc. v. Comcast Corp., 951 F.3d 429 (7th Cir. 2020)
The Seventh Circuit reversed the district court judgments in favor of Comcast, which had dismissed Viamedia’s Section 2 refusal-to-deal claim and granted summary judgment on Viamedia’s tying claim. The dispute stemmed from access to regional “interconnects” that had previously been jointly owned and operated by regional cable companies and which were crucial to cable companies’ ability to appeal to regional and national advertisers. Comcast has sought review in the Supreme Court.
Next, Kate Patchen spoke next on antitrust developments with the federal courts and federal agencies. Ms. Patchen is the Director and Associate General Counsel, Competition for Facebook and former Chief of the Antitrust Division’s San Francisco Field Office
Federal courts have been affected by COVID 19 and have been forced to adapt to this new way of living, just as all people have. Procedural rules have been changed in Federal circuit courts as a result of COVID 19 such as postponing arguments to later dates, holding arguments via telephone or holding argument via video call. Cases are continuing to be filed but case activity and the number of trials is down. In April 2020, antitrust cases were down 62 percent; the most significant decrease in any area of law. By October, antitrust filings had rebounded and were down only 12 percent.
In April 2012 The Department of Justice and the Federal Trade Commission announced a joint expedited (7 day) COVID business review procedure that allows for companies to come forward and ask about the legality of planned conduct and ask what the DOJ and FTC’s intentions would be based on that conduct. The DOJ has done three reviews since this announcement and given a no-challenge response to the proposed collaborations. The DOJ has made it clear, however, that they would still bring criminal or civil charges for anticompetitive behavior, particularly anticompetitive conduct that increased prices or lowered wages, especially for frontline workers.
New DOJ/FTC vertical merger guidelines came out on June 30, 2020 and is the first major revision since 1984. Prior to 2017, vertical mergers challenges were rare. This revision is likely in response to the issues raised in AT&T case and possible COVID related acquisition concerns. Safe harbor thresholds dropped away from the guidelines. These guidelines are still largely silent on remedies for vertical mergers and leave open the question of whether the agencies would seek behavioral remedies. The current administration clearly favors structural remedies.
The DOJ also updated certain forms related to the CID process. These changes deal with individuals’ fifth amendment rights. Statements made in civil investigations have always been able to be used in other investigations. By giving fifth amendment warnings, however, the DOJ is seeking to insure that statements are admissible in potential criminal cases. The question presented now is whether these warnings will have an impact on whether witnesses might take the fifth in a civil deposition and whether they will be less willing to testify.
The last speaker, Colleen E. Huschke, a Deputy District Attorney in the Consumer Protection Unit in the San Diego District Attorney’s Office, discussed state law developments in antitrust. At the beginning of the COVID 19 pandemic, the statute of limitations had been tolled but given the ongoing nature of the pandemic, the statute is now running. Penal code section 396 prohibits traditional sellers from selling a covered good for a price of more than 10 percent greater than the price charged by that person for those goods or services immediately prior to the proclamation or declaration of the emergency. Additionally, penal code section 396 prohibits a seller that did not sell the product prior to the declared state of emergency from charging a price that is 50 percent greater than the seller’s existing costs. The Code has been expanded to cover online and in person sales.
Additionally, the California Consumer Privacy Act (CCPA) was adopted in 2018 and became effective this year, 2020. The third set of modifications was released October 12, 2020 and proposed that businesses that collect personal information in the course of interacting with consumers offline can provide the notice of right to opt out of the sale of personal information. The CCPA is discussed more fully in the written materials and is an evolving statute still undergoing revision. Ms. Huschke then pointed out that proposition 24 (on the ballot for the 2020 election) would amend consumer privacy laws if passed.
California Department of Financial Protection and Innovation (DFPI) renames the Department of Business Oversight and expands their authority to investigate, conduct administrative hearings and bring civil actions. The DFPI also prohibits unlawful unfair deceptive or abusive acts or practices. However, the DFPI still maintains powers of the AG, DA, and City Attorney’s Office to bring unfair competition actions under B&P Section 17204 as well.
Next, Ms. Huschke discussed several important cases that deal with civil enforcement of unfair competition and false advertising laws. In Abbott Laboratories v. Superior Court, 9 Cal. 5th 642 (2020) the California Supreme Court held that there is no territorial limitation regarding civil penalties and that the District Attorney can obtain civil penalties statewide. Additionally, in Nationwide Biweekly Administration v. Superior Court, 9 Cal. 5th 279 (2020) the California Supreme Court held that as equitable actions, there is no right to a jury trial in UCL and FAL actions. People of the State of California v. Johnson & Johnson, (Jan. 30, 2-2-, San Diego Supr.) 3702016-00017229-CU-MC-CTL, was a classic false advertising case in which the court found that Johnson and Johnson knew of the risks about pelvic mesh products and why they should have disclosed them, but they failed to disclose them. The California Attorney General obtained a judgment of $344 million. Johnson and Johnson appealed this case, and we should be hearing about this appeal in the near future.
Ms. Huschke noted a number of other important private action cases but due to time limitations, these cases are dealt with in the extensive written materials. [These will be part of the Spring Competition issue.]
Summary by Haley Carpenter. Ms. Carpenter is a student at UCLA School of Law and can be reached at firstname.lastname@example.org
CONVERSATION WITH SUPREME COURT JUSTICE JOSHUA P. GROBAN
From private practice to the California Supreme Court through Governor Brown’s administration: A Conversation with Associate Justice Joshua P. Groban.
Among all of the great opportunities the Golden State Institute provides to attendees, one that always stands out is the chance to hear from and talk with California justices.
Every year, these highly anticipated panels demonstrate the thoughtfulness and legal brilliance of the State’s bench and even a remote setting cannot alter this tradition. For this 30th Golden State Institute, California Supreme Court Justice Joshua P. Groban accepted to answer questions from Cheryl Johnson, Deputy Attorney General at the California Department of Justice, and Courtney A. Palko, partner at Baute Crochetiere Hartley & Velkei in Los Angeles.
Appointed to the California Supreme Court on November 14, 2018 by Governor Jerry Brown, Justice Joshua P. Groban had a commensurate impact on the current face of the California judiciary. While being an adviser to the Brown administration on litigation and policy, Justice Groban oversaw the appointment of more than 600 judges, a third of the State’s bench. Likely inspired in his task by his clerkship for the Honorable William C. Conner in the Southern District of New York from 1998 to 1999, and his experience as a litigator—first at Paul, Weiss, Rifkind, Wharton & Garrison from 1999 to 2005 and then at Munger, Tolles & Olson until 2010, Justice Groban is described by his peers as an outstanding lawyer and public servant. In many ways, hearing Justice Groban speaking about his career and his thoughts about what makes a great judge was more than inspiring.
Born and raised in South California, Justice Groban is a Stanford University alum where he graduated with honors and distinction with a Bachelor’s degree in Arts. He obtained his J.D. cum laude from Harvard Law School.
His path to be a Justice “was a process, not a grand strategy”
Very early, Justice Groban knew he wanted to pursue a career in law which he reckons could be due to robust conversations over dinner with his family. He believes he may have thought for a moment of becoming a judge when he was a young lawyer, though it was never a career plan. In fact, he is actually always surprised to hear occasionally from other lawyers that their goal since law school is to be a judge. In 1999, although he was thriving in his clerkship and considered staying, he chose to leave for private practice. As he mentioned, this move was “never part of a grand scheme,” but mostly motivated by joining his former classmates at Paul Weiss. Above it all, he very much enjoyed being a litigator.
In the same manner, Justice P. Groban did not have any political aspiration prior to join Jerry Brown’s campaign in 2010. He actually was introduced to Jerry Brown by a former colleague at Munger, Tolles & Olson. Counseling Jerry Brown’s gubernatorial campaign originally started as a pro bono opportunity, but the amount of work rapidly increased to the extent that Justice Groban took a leave of absence from his firm. This is only after the election that he joined Jerry Brown’s administration as an adviser. One thing leading to another, he then became Jerry Brown’s fourth appointment to the California Supreme Court and was sworn into office on January 3, 2019.
“Being able to take away the noise of the politics to focus on the merits is a joy”
Justice Groban is confident he is benefitting every day from the Supreme Court of California’s infrastructure. In no way does he believe the Court’s well-known collegiality pressures him to agree with his peers, nor does being the newest appointee. To the contrary, he believes that it is “easier than in a combative atmosphere” to write separately either in concurrence or dissent. Additionally, being the latest Justice sworn in, allows him to hear from “six of the brightest practitioners” before he gets to speak—as Justices speak in order of seniority. If anything, the only pressure may come from himself when deciding whether to help shaping the majority or to write a separate opinion. And just as for the majority of the other Justices, his lack of prior judicial experience does not come as a weakness. Contrary to cases in trial courts where judges also act as fact finders, cases heard at the Supreme Court are “highly academic, highly research intensive” and the questions asked are “pure law.”
As Justice Groban then justly reminded, only a small fraction of the thousands of petitions to the Supreme Court of California decisions are ultimately granted. A petition focusing on showing “why a case is so special” that it should be reviewed is more likely to be granted, rather than one screaming a disagreement with the trial judge. For this, Justice Groban appreciates when petitioners “triangulate their brief on the most important issues and winning arguments” instead of diluting them. He also values amicus briefs as they attest to the importance of an issue, both at the petition and merits stages. His greatest advice to lawyers arguing in front of the Court is alas to “answer the question” instead of dodging it as politicians would do.
Generally, Justice Groban did not find it hard to “divorce from the politics” when he joined the bench. To the opposite, Justice Groban found that “being able to take away the noise of the politics to focus on the briefs and the merits of a case is a joy.” Specifically, he takes pleasure in seeing how the California Supreme Court decisions have an impact on the Federal courts. He was in this regard particularly proud to share about the opinion he recently authored Robinson v. Lewis, No. S228137, 2020 WL 4045925 (Cal. July 20, 2020). Coming as a sui generis certified question from the Ninth Circuit, Justice Groban took pride in providing the federal court with instructions on how are processed and handled State habeas corpus cases with regard to tolling.
“There is no longer a traditional path to obtaining a judgeship”
From private practice to the bench through Jerry Brown’s administration, Justice Groban had the opportunity to think of what makes a great judge from multiple perspective.
While overseeing the appointment of a third of the California judiciary in Governor Brown’s administration, Justice Groban was inspired by his own experience in court as a litigator. During the hiring process, there was not one prototype to use and replicate. In his words and Governor Brown’s vision, the idea was most of all to find “excellent lawyers who would make excellent judges wherever we might find them.” Instead of selecting candidates from a specific area of practice or with a specific background, Justice Groban was more interested in their empathy and level of decisiveness, two traits he believed essential.
In addition, Justice Groban and Governor Brown were dedicated to diversifying the California judiciary. Proud of our judicial system he believes to be the best he knows of, Justice Groban is convinced that how a Court looks speaks to its due process and integrity. In this regard, it does matter for Courts to “look like the community they serve,” because if it does not “it raises concerns about fairness of the process.”
Since he joined the Supreme Court of California, Justice Groban’s opinion has not changed. In his view, being a smart lawyer is important, but only if it is in conjunction with emotional intelligence. “There is no longer a traditional path to obtaining a judgeship,” and attorneys who hope to be appointed to the bench should “focus on being great at what [they] are doing,” and make sure to be referenced by their peers as “being a great lawyer.”
As a great way to end this conversation, Justice Groban answered a burning question attendees were eager to ask: yes, he does believe to be related to singer Josh Groban, probably as a 2nd or 3rd cousin…
By Anthony Leon– Anthony is an in-house attorney and can be reached at email@example.com.
ANTITRUST AND SOCIAL JUSTICE
The Antitrust and Social Justice program featured a spirited discussion between Sandeep Vaheesan and Doug Melamed, moderated by Mandy Chan. Mr. Vaheesan is Legal Director at the Open Markets Institute and previously served as Regulations Counsel at the Consumer Financial Protection Bureau (CFPB). Mr. Melamed is Professor of the Practice of Law at Stanford University and previously served as Senior Vice President and General Counsel of Intel Corporation and chair of WilmerHale’s Antitrust and Competition Practice Group. Ms. Chan is an Associate at DLA Piper where she focuses on representing multinational corporations in all aspects of antitrust and competition law.
Mr. Vaheesan began the discussion by presenting the thesis that U.S. antitrust law contributes to inequality and injustice. He cited the general underenforcement of non-poach prohibitions, and offered several specific case studies of harm to workers under the antitrust laws, including: (1) the justification of wage suppression by the NCAA on amateurism and viewer taste grounds, (2) the tolerance of wage suppression by ranchers in the Rockies for Peruvian guestworkers on specious factual grounds, (3) the allowance of franchisors to force franchisees to bear risks of loss, and (4) the prohibition of unionization by gig workers as a per se violation of the Sherman Act. Vaheesan also suggested that the rule of reason should be abandoned as too subjective and discretionary, and replaced with a rules-based system that prohibits wage fixing and allows workers and franchisees to organize. He posited that this type of system would help distribute power away from the white and wealthy to people of color and laborers.
Mr. Melamed agreed that we are living in an age of excessive inequality but disagreed with the suggestion that antitrust law is the right vehicle to address that issue. He explained that many areas of the law address inequality directly—such as labor and civil rights law—but that antitrust is not one of them and has different aims. Specifically, antitrust law is intended to promote competition and enhance economic welfare, and to focus on problematic conduct rather than on who is engaged in such conduct. While there is no doubt room for improvement in antitrust law, it should maintain its focus on competition and economic welfare. Further, Melamed suggested that the proposed changes would lead to a loss of economic welfare, create arbitrary lines, and leave room for discretion around issues like who is a worker and whether workers have market power. This sort of discretion would create opportunities for capture of regulatory agencies which would generally benefit those who already have power.
Vaheesan responded that capture is rampant in our current system, as evidenced by a general pro-merger policy leading to broad market concentration, particularly in the healthcare industry, despite empirical evidence that mergers generally lead to price increases rather than efficiencies. He also cited intense lobbying by merger proponents out of public view and the opaque and subjective nature of antitrust jurisprudence overall. Melamed disputed any general state of market concentration but agreed that there had been an enforcement failure around hospital mergers.
Vaheesan and Melamed also discussed the historical development of antitrust law and agreed that Judge Robert Bork has had an undue influence on framing this area of the law as primarily preoccupied with consumer welfare. Vaheesan argued that the Sherman and Clayton Acts were fundamentally meant to disperse power throughout society and avoid oligarchy. Melamed suggested this confused congressional means and ends, and that while dispersion of power may have been an intentional byproduct of these statutes, the law itself is narrowly focused on anticompetitive conduct, as reflected in its contemporaneous interpretation by the Supreme Court. Vaheesan responded that the statutory text is open ended, making interpretation inescapable and legislative history a valid interpretive aid, and that he is not inclined to trust the judgment of the Supreme Court of this era given the antiregulatory disposition evidenced in cases like Lochner. He also suggested that Congress, as a democratically accountable body, should now reassert its authority in this area and make legislative judgments about where to draw lines rather than letting courts do so on a case by case basis. Melamed responded that he has less faith in Congress, and that while judges are admittedly imperfect, antitrust law will always require case by case evaluation because empirical legislative line drawing is unrealistic.
Ms. Chan asked the panelists to comment on the impact of the composition of the antitrust community. Vaheesan suggested that the antitrust field is made up of a narrow click of lawyers and economists who are disproportionately white and male and have generally spent time defending large companies. He believes that issues of public law such as antitrust policy should take into account the perspective of a wider group of stakeholders, such as faith leaders and civil rights organizations that were consulted in connection with policy debates during his time at the CFPB. Melamed expressed the belief that the antitrust agencies consider the law from the perspective of both plaintiffs and defendants, but that they are heavily influenced by economists, and that the economics profession has historically skewed male. He was not sure if this has impacted outcomes but noted that the economics field is also reckoning with a lack of diversity. Melamed also opined that the field of antitrust law has become increasingly complex and technocratic, leaving generalist practitioners and judges in the dark, and that revisions to make the field more accessible to generalists might also ameliorate diversity issues.
Ms. Chan also asked the panelists for suggestions for further reading. Both recommended the DOJ’s recent complaint against Google (https://www.justice.gov/opa/press-release/file/1328941/download). Mr. Vaheesan also recommended the recent House Antitrust Subcommittee report on its investigation into the state of competition in the digital economy (https://judiciary.house.gov/uploadedfiles/competition_in_digital_markets.pdf). Mr. Melamed agreed that the House report included good information on the tech industry but believed that it was too political, used manipulative language, and had little analytical value. Vaheesan responded that any discussion of antitrust policy is inherently political.
By Lee Brand. Lee is counsel in the San Francisco office of Pillsbury Winthrop Shaw Pittman LLP, where he focuses his practice on complex commercial litigation with an emphasis on antitrust disputes and consumer class actions. He can be reached at firstname.lastname@example.org.
BIG STAKES ANTITRUST TRIAL: NEW YORK v. DEUTCHE TELECOM AG (S.D.N.Y.)
As part of the 30th Annual Golden State Institute, attorneys involved in New York v. Deutche Telecom AG (S.D.N.Y) litigation presented the opening arguments that the court decided to forgo at trial. The trial took place in December 2019, allowing the merger between Sprint and T-Mobile to go forward in accordance with conditions and divestiture set forth by the U.S. Department of Justice. Laura Wilkinson, Global Antitrust Counsel for PayPal, Inc., moderated the discussion titled Big Stakes Antitrust Trial: New York v. Deutche Telecom AG (S.D.N.Y). During the session, Paula Blizzard, Supervising Deputy Attorney General in the Antitrust Section of the California Attorney General’s Office presented the opening argument for the parties advocating to block the merger. George Cary, Partner at Cleary Gottlieb represented T-Mobile and Sprint’s interests defending the merger. Below are the highlights from the opening arguments that were not delivered during the trial but provide insight into the arguments and key issues each party focused on in the proceedings.
Paula Blizzard, advocating the merger be blocked
Ms. Blizzard began her remarks by framing the ubiquity of cellphone use in consumer’s daily life, pointing out that there are more cellphone lines than there are people in the U.S. In the pre-merger landscape, the four mobile wireless telecommunications networks—Verizon, AT&T, T-Mobile, and Sprint—competed as the owners of networks upon which everything else relies for delivering retail mobile wireless telecommunication services. As such, the merger going from four competitors to three would reduce competition between these rivals that has yielded lower prices for consumers.
Advocating blocking the merger, Ms. Blizzard argued this merger would harm competition and raise prices for consumers based on evidence showing 1) a legal presumption that the proposed merger is anticompetitive; 2) a likelihood that the merger would bring about both coordinated and unilateral anticompetitive effects; and 3) the anticompetitive effects outweigh the efficiencies of the proposed merger, notwithstanding the parties’ agreement and conditions set forth by FCC and DOJ for approval of the merger. To her last point, Ms. Blizzard emphasized that efficiency was not the key issue at hand, but rather, competition. Here, she previewed evidence that the efficiencies gained through the merger did not offset the anticompetitive effects on American consumers. Further, the argument emphasized shortcomings in DISH as a future competitor, pointing to its history of missing regulatory deadlines and commitments along with pricing practices that raised doubts about its prospects as a viable competitor. In sum, the argument posited that the proposed merger should be blocked because it was presumptively anticompetitive, likely to bring about anticompetitive effects, and the proposed remedies and efficiencies failed to sufficiently offset the harm to consumers.
George Cary, defending the merger
Mr. Cary framed the defendants’ opening argument around the capacity and efficiencies created by the merger, arguing the merger between T-Mobile and Sprint was about increasing competition by creating a higher quality product and lower prices for consumers. The quality argument centered on spectrum and the notion that capacity and speed of service would both be improved by the merger between the two networks. T-Mobile offered its customers more comprehensive coverage but was limited in spectrum capacity that it could offer or use to attract new customers; in contrast, Sprint had plenty of spectrum capacity due to its smaller customer base but it’s customer base was small because the network’s coverage was less comprehensive and reliable for consumers. As such, Mr. Cary argued “each company’s problem is resolved by the other’s assets,” and that Sprint could provide T-Mobile’s network resources for increased capacity and T-Mobile gave Sprint users improved network coverage. The defendants posited that the post-merger efficiencies would not only generate increased capacity, but also reduce the cost of running the network after combining resources between firms.
In addition to the merger efficiencies and quality improvements, the defendants argued that DISH had significant spectrum assets that would make it a powerful new entrant in the market. Mr. Cary further argued that as a result of the divestitures to DISH, there would be increased competition between firms to keep and attract new customers in the competitive marketplace. In concluding his argument, Mr. Cary emphasized that the merger created more capacity, efficiencies in cost, and a new competitor between firms that would ultimately result in lower prices and better, faster coverage for consumers.
Both speakers shared insight into how they chose to frame their case through opening arguments. Ms. Blizzard’s focused on the economic analysis—proving the presumption, the anticompetitive effects that follow from market concentration of this kind, and the balance of efficiencies and harms. Mr. Cary’s opening argument outlined the efficiencies and benefits the merger created for the networks based on their current weaknesses and the role of Spectrum in relation to competition between networks. At the end of the session, Ms. Wilkinson asked both attorneys how they view the role of economic evidence versus testimony in antitrust litigation going forward. Mr. Cary emphasized that it is important to understand efficiencies as part of a wholistic analysis and that expert testimony can help the judge understand and evaluate efficiencies in context. Ms. Blizzard suggested that future trial strategy may rely less heavily on economic analysis depending on the structure of the proceedings, which would impact witness order and changes in presentation of the argument.
Sarah Koslov–Ms. Koslov is a graduate of Georgetown Law School and can be reached at Sarah.Koslov@georgetown.edu.
Robert McNary, partner, Crowell & Moring moderated a panel comprised of Manish Kumar, Chief of the San Francisco Office, Antitrust Division of the U.S. Department of Justice; Emilio Varanini, former California Deputy Attorney General, Antitrust Section; Bonny Sweeney, partner, Hausfeld LLP; and Niall Lynch, partner, Latham & Watkins LLP. All the panelists spoke in their personal capacity about their experience in cartel enforcement including investigations, criminal and civil prosecutions, the Antitrust Criminal Penalty Enhancement and Reform Act of 2004 (“ACPERA”), leniency, no notice indictments, deferred prosecution agreements (“DPAs”), civil follow-on actions, and compliance programs.
PRIVATE AND PUBLIC ROLES
Mr. Kumar spoke about the DOJ’s role in cartel investigations; particularly how they develop leads and how criminal grand jury investigations are often followed by civil follow on cases especially where indictments are filed. Mr. Varanini emphasized the difference between state and DOJ investigations, noting state investigations often begin earlier than suspected and that the state needs to take into consideration whether any one investigation is worth spending the necessary taxpayer dollars. He commented that the state has the ability to prosecute cartels on a full basis and to seek remedies such as damages, disgorgement and injunctive relief.
In her private plaintiff-side practice, Ms. Sweeney spoke about representing her clients principally in class actions and often in multi-district litigations (“MDLs”). She noted that often cases flow from US investigations or charges and private enforcement seeks restitution for victims where the federal government does not. The plaintiff classes are direct, indirect, and increasingly, intermediate purchasers.
Mr. Lynch offered the defense’s perspective, notably in preparing the defense during investigations. He said building a good factual organization and understanding at the beginning of a case is important. Cases can last up to 10 years and a defendant may be dealing with the DOJ, direct and indirect plaintiffs, the States Attorneys’ General, and possibly foreign jurisdictions all at once. He distinguished representing the company, as compared to its executives and noted both should be properly represented. They may have separate interests because a positive outcome for one (immunity for an individual, for example) does not ensure a positive outcome for the other. Finally, he discussed how, if a company is going to plead to a criminal price-fixing charge, defense counsel will try to limit the scope of the plea to limit the damages in any related civil case.
Both Mr. Lynch and Ms. Sweeney noted that private plaintiffs’ settlement agreements may have broader scope in terms of time period, products covered and other factors compared to the criminal plea agreements negotiated by the government. Ms. Sweeney explained that in civil litigation plaintiffs seek to maximize recovery for the victim. Plaintiffs are not bound to limit their recovery to the scope of the government plea agreement and the burden of proof for civil cases (preponderance of the evidence) is lower than the government’s criminal standard of beyond a reasonable doubt.
CORPORATE LENIENCY AND ACPERA
Mr. Kumar explained the policy behind the Antitrust Division’s Corporate Leniency program: to incentivize a company to come forward and cooperate and in return avoid criminal prosecution, fines, and non-prosecution for cooperating executives. Only one company involved in a conspiracy charge can qualify for leniency—meaning a second applicant late only by a few hours will not be eligible. At a practical level, this can be the difference between a complete pass and immunity for executives and employees versus hundreds of millions in fines and prison time.
Ms. Sweeney spoke about ACPERA, which supplements leniency in the criminal context by allowing the leniency applicant to also cooperate with the private plaintiffs in return for a single damages cap, instead of treble damages and joint and several liability. She noted that while the goal of ACPERA is to facilitate satisfactory cooperation with plaintiff-victims, in practice this is not always a realized goal. Mr. Varanini observed that leniency applicants often offer greater cooperation to the DOJ to obtain leniency but after that cooperation under ACPERA is less forthcoming.
Mr. Lynch noted the decision by a company to apply for leniency may not always be easy. Defendants are faced with two opposing objectives: the need for speed in seeking leniency and the need to know all the relevant facts before committing to that course. In an international cartel a corporation may face prosecution in many foreign jurisdictions so leniency, if sought, may be necessary on a world-wide basis. Further, though he appreciates ACPERA and the policy of single damages, he observed that plaintiffs can calculate damages at such a high amount the practical effect of eliminating treble damages is negligible.
NO NOTICE INDICTMENTS, DPAs, AND COMPLIANCE PROGRAMS
Mr. Kumar noted that as a general matter, the Antitrust Division’s practice is to grant pre-indictment meetings to counsel for any defendant prior to their indictment. But this is Division practice and not a procedural right. In situations when defense counsel does not engage in a dialogue with prosecutors during the investigation, they may find that they are not given preindictment notice.
Mr. Kumar spoke about recent Deferred Prosecution Agreements to put them in context. While they are disfavored by the Department, DPA’s are occasionally used. In some recent situations, like the oncology and generic pharmaceuticals cases, DPAs were driven, inter alia, by collateral consequences of conviction, like mandatory exclusion from all federal healthcare programs. However, there are situations where, notwithstanding the consequences, the Department may pursue outright guilty pleas or convictions. Mr. Kumar also noted that under a DPA, a company cannot take advantage of ACPERA. There is also no protection from prosecution for that company’s employees.
Lastly, on policy, Mr. Kumar pointed out in July 2019, the Antitrust Division announced it would consider antitrust compliance programs in the charging stage of an investigation. Departing from the Division’s previous practice, the potential now exists for a company with a robust good faith compliance program to earn a DPA. Mr. Kumar pointed to publicly available guidance for companies interested in those programs or who are already running those programs. The Antitrust Division has an extensive information about their policies on their website.
Mr. Lynch commented that all companies should be adopting compliance programs and that the change in Antitrust Division policy is a welcome development, particularly in the wake of COVID when compliance is especially important. But he concluded that it is till to early to see any effects from the policy changes. Mr. Varanini and Ms. Sweeney both noted how compliance programs can have the opposite effect of its intention—teaching employees to hide their anticompetitive behavior rather than avoid it. While that is a potential downside, the panelists concur in the benefit of ongoing compliance programs.
Summary by: Diana Yen, UCLA 2022 J.D. Candidate. Ms. Yen is a student at UCLA law school and can be reached at email@example.com.
A CONVERSATION ABOUT DIVERSITY, RACISM, AND EQUALITY IN THE LEGAL PROFESSION
The speakers were D. Bruce Hoffman, partner in Clearly Gottlieb Steen & Hamilton and Former Director, Bureau of Competition, Federal Trade Commission; John Gibson, Antitrust Litigation Partner, DLA Piper; and Harvey Anderson, General Counsel, HP, Inc.
I will break down the session into a few bullets highlighting the major points. There panel was very interactive and generally in agreement so I have not attributed the comments to any particular speaker.
Where Are We At With The Representation of Minority Attorneys
Overall in the legal profession, minority attorneys are underrepresented compared to the general population. The panelists noted that government, law firms and corporations have had long standing sincere programs to increase minority representation, but it still lags. The problem cuts across recruitment, retention, and representation at the top. In fact, as you go up in seniority/responsibility the underrepresentation of minorities increases.
There was a discussion of the FTC as a case study. While the numbers are generally better in the government, underrepresentation in all these areas, recruitment, retention, and leadership positions, was found.
How To Do Better
The “Rooney Rule” was discussed as an example of how to increase minority hiring. The Rooney Rule was adopted by the National Football League in the aftermath of the firing of two black football coaches who had good records when compared to their peers. The rule requires that when a team is hiring a new head coach or general manager that at least one candidate be African American. The rule has increased the hiring of minority candidates at both the GM and coaching level. The Rooney Rule has also been successful in finding candidates who may not have otherwise been interviewed who went on to excel. A prime example is Mike Tomlin, the longtime head coach of the Pittsburgh Steelers. Tomlin did not fit the typical resume of men considered for head coaching jobs. But Dan Rooney, following his own rule, interviewed Tomlin, was impressed, decided to give him a chance. Tomlin has been an extremely successful head coach.
Corporations have adopted programs similar to the Rooney rule. HP has a diversity hold back program. The program has modest requirements for minority representation on team working for HP, with some exceptions for small organizations. HP holds back 10% of the fee if these goals are not met. HP is not alone in this regard. The Mansfield Rule, a program of Diversity Lab, allows a corporation or law firm to be certified as in compliance if they meet certain goals for expanding minority outreach.
These programs do not mandate the outcome–but they expand the pool of candidates.
The goal is to change how you recruit; where you go looking for candidates. There are other informal ways to increase the diversity of the pool of applicable. A good way to think about this is to “interrupt the pattern” of doing things as they have always been done and expand the pool of candidates diverse in every way, including different life experiences and different parts of the world.
Minority Participation Leads to A Better Product
The panel emphasized the “why” of creating a more diverse team. The Mike Tomlin example was mentioned above. A candidate who probably would not otherwise have been interviewed has become one of the most successful, long term head coaches in the NFL. It was also discussed how a diverse team brings a wider range of views to the project at hand and contributes to a better product. Businesses can have diverse customer base and it’s important for the legal team serving the business to reflect that diversity.
On a practical level for law firms, it is important to deliver what the client wants and many corporations are requiring diversity and opportunity in staffing. As mentioned, this is not just about fairness, but reflecting the diversity of customers is important to business in producing the best product. Diversity brings a broader perspective to whatever the issue may be, leading to better outcomes.
How We As Individuals Can Promote Diversity and A Culture of Inclusiveness.
Below are several themes that ran throughout the program and were touched upon in each speakers summary.
Be mindful that people generally reach out to people that are like them. We are more likely to reach out to a newer attorney when, “That person reminds me of myself when I was a new lawyer….” There’s no ill intention with this thinking; it is just human nature. That generally extends to who we want to work with and that can lead to fewer opportunities for minority lawyers. Being mindful of this natural bias and be intentional about expanding opportunities.
“Interrupt the pattern”
This was a phrase every speaker endorsed. Do something different. Expand the “old boys network.” You always work with X because you like him/her. Try thinking of who else could do the job and give them a chance. Interrupt the pattern of how you recruit, who you sponsor/mentor and give more thought and opportunities to others.
The panelist differentiated between mentoring (teaching the tools of the trade–brief writing/depositions) and sponsorship, taking an interest in the career development of a new attorney. To many new lawyers, how to succeed may be a mystery. We deal with who we are comfortable with. We tend to mentor or sponsor people who remind us of ourselves. Interrupt the pattern and include diverse attorneys in your circle.
Be an Ally/Create a Safe Space
Minority retention is an issue; minorities generally leave firms with greater frequency. Often the reason given is “I never felt like I belonged.” Being an ally may mean making an encouraging comment or speaking up if an inappropriate comment is made. Creating a safe space can mean making it safe for minority lawyers to ask questions “Can I take a deposition? Etc.” The answer may be no but how the “No” is delivered is important.
The Power of One
Remember, you may be the person to make a big difference in someone’s life.
I enjoyed this thoughtful panel. It was interesting and offered practical advice on how to be an ally, interrupt the pattern and created a culture where minority candidates and recruited, retained and advanced in their career.
Summary by Robert Connolly, Law Offices of Robert Connolly, firstname.lastname@example.org.
NEWS and NOTES
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- The Antitrust and UCL Section serves to engage, inform, and inspire generations of lawyers to further the practice of antitrust and competition law in California and to foster a network of lawyers interested in these practice areas. The Section provides cutting-edge perspectives on legal developments in California and federal antitrust and UCL laws, as well as insights into regulatory and enforcement issues, that affect California consumers, businesses, and practitioners through its substantive treatises, journals, e-publications, and live events and webinars. To become involved in the Section, please apply to be on a Standing Committee. Please email your completed application and your resume to Qianwei Fu, Chair of the Executive Committee of the Antitrust and UCL Section of the California Lawyers Association, at firstname.lastname@example.org by Thursday, December 31, 2020.
- Antitrust Division, USDOJ job openings: The Antitrust Division, United States Department of Justice is looking to hire two relatively junior attorneys with some antitrust or general corporate investigation/compliance experience to join the Office of Decree Enforcement and Compliance. The Office of Decree Enforcement and Compliance has primary responsibility for enforcing civil judgments and oversight regarding the selection and supervision of monitors, provides counsel to the Assistant Attorney General on matters relating to judgment enforcement and the selection of monitors, and also evaluates and promotes effective corporate compliance programs.
The positions are in Washington, DC. The application window is only open for two weeks. The application closing date is November 23, 2020: https://www.usajobs.gov/GetJob/ViewDetails/584084900.