E-BRIEFS, NEWS AND NOTES: November 2022

Thank you to Speakers:

• Thomas Greene, Trial Attorney, United States Department of Justice, Antitrust Division San Francisco
• Colleen Huschke, Deputy District Attorney, Consumer Protection, San Diego County District Attorney’s Office, San Diego
• Douglas Rathbun, U.S. Public Policy – Competition, Meta Inc.
• Malinda Lee (moderator), Deputy Attorney General, California Department of Justice, Office of the Attorney General, Los Angeles

View from Marshall Fern, Executive Director of Notes and Comments, CWSL Law Review, J.D. (2023), California Western Law Review:

Federal Procedural Updates: Thomas Greene

Burden Shifting Standard:  Lawson v. PPG Architectural Finishes, 12 Cal. 5th 703 (2022)

Mr. Greene began the panel by discussing the background of the California Whistleblower Act. Mr. Greene explained that an employee who has information that they have “reason to believe” discloses: (1) a violation of a state or federal statute; or (2) a violation of a local, state, or federal regulation is protected under the Act. Disclosures that are made to a government agency, a person with authority over the employee, or another employee who has the power to investigate or correct the violation are protected. Mr. Greene comments on how the antitrust violations fit comfortably into this framework.

Mr. Greene highlighted the USSC decision in Lawson v. PPG Architectural Finishes, Inc., which clarified confusion regarding the burden-shifting standard in whistleblower retaliation claims. In Lawson, the Court rejected the test established in McDonell Douglas Corp. v. Green, 411 U.S. 792 (1973) and held that Cal. Labor Code section 1102.5 will provide the framework for whistleblower retaliation claims brought under section 1102.5. In the new decisional framework established in Lawson, the plaintiff-employee has the burden to prove, by a preponderance of the evidence, that retaliation for an employee’s protected activities was a contributing factor in a contested employment action. Once the plaintiff-employee has made the required showing, the burden shifts to the employer to demonstrate, by clear and convincing evidence, that it would have taken the action in question for a legitimate, independent reason even had the plaintiff not engaged in protected activity.

Key Takeaways:The Lawson decision provides a new, more employee-friendly structure. The initial burden of proof for the plaintiff-employee is lower in two ways: (1) the plaintiff need only show that disclosures were a contributing factor; and (2) the factor need only be proven by a preponderance of the evidence. Mr. Greene emphasizes that the power of section 1102.5 has become even stronger. 

Arbitration: Day v. Orrick, Herrington, 42 F.4th 1131 (2022)

This case arises from the denial of a petition to enforce a summons issued by an arbitrator conducting an international arbitration under Chapter Two of the Federal Arbitration Act. The case involves a Paris-based Jones Day partner who left to join Orrick, Herrington & Sutcliffe (“Orrick”), which created a dispute that was subject to a partnership agreement. The partnership agreement provided mandatory arbitration for disputes among all partners, and the FAA governs all arbitration proceedings. Under the agreement, the arbitration location was Washington, D.C. The arbitrator ordered Jones Day to produce certain relevant documents, which Orrick resisted. Furthermore, the arbitrator asked the N.D. Cal. to issue a subpoena for the deposition of two Orrick partners located within the district. 

The Ninth Circuit had to decide whether an action to enforce a tribunal summons issued by the arbitrator in an ongoing international arbitration under the convention also falls under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Mr. Greene highlighted two major decisions resulting from this dispute, which are that U.S. district courts have jurisdiction over petitions to enforce summonses issued by arbitrators overseeing international proceedings and that venue provisions are not exclusive but rather “supplement” the U.S. rules. As a result, this made the venue proper for Jones Day’s petition to compel enforcement of its Orrick summonses because Orrick and the summoned partners reside in the district.

Key Takeaways: This case gives significant powers to arbitrators to order discovery and is crucial if one is considering or is involved in an international arbitration proceeding.

Attorney-Client Privilege: In re Grand Jury, 23 F.4th 1088 (2022)

Mr. Greene provided an update on the In re Grand Jury dispute, which involves issues with communications between lawyers and clients that may contain both legal advice and business advice. The decision resolves differing tests used by the Ninth Circuit, such as the broader “because of” test drawn from work-product cases and the narrower “primary purpose” test. Split between “the primary purpose” test and “a primary purpose” test, the Ninth Circuit adopts the “primary purpose” test. Mr. Greene suggests that adopting “the primary purpose test” leaves open whether communications must be the primary purpose or a primary purpose to withhold as a privilege. Furthermore, Mr. Greene goes over the court’s skepticism about using “a primary purpose” test, citing other circuits.

Key Takeaways: Mr. Greene explains that without this narrow test, corporations will include lawyers in all business communications to shield themselves from review. Petitioners have suggested that some form of “a primary purpose” test should be the correct outcome. However, Mr. Greene emphasizes being on alert for the decision to come down from the USSC because it will affect your clients’ day-to-day communication strategies and privilege review processes.

Olean Wholesale Grocery v. Bumble Bee Foods

Olean is a price-fixing case against major tuna packers litigated by the San Francisco Office of the Antitrust Division. This decision focuses on the role of potential uninjured persons in the certified classes in assessing predominance under Fed. R. Civ. P. 23(b)(3). 

Mr. Greene provided an update on Olean by touching on the recent en banc review where the Ninth Circuit affirmed the district court’s ruling that Rule 23(b)(3) predominance requirements must be demonstrated by a preponderance of the evidence. Mr. Greene also went over the second part of the holding that touches on individualized questions related to class members’ antitrust impact, or injury status, under Rule 23(b)(3). Mr. Greene explains that the court must determine whether individualized questions about the antitrust impact predominate over common questions.

Mr. Greene touches on the dissent arguments that more than a de minimis number of uninjured members in the class means the class would not have Article III standing. Mr. Greene shows that the majority rejected this analysis by citing Lujan v. Defenders of Wildlife, which states that plaintiffs must only show the elements of standing “with the manner and degree of evidence required at successive stages of litigation.” 

Key Takeaways: The focus of the Olean decision is on predominance. Stated that if common issues are predominant, the class can proceed. Mr. Greene emphasizes Olean‘s influence on the Ninth Circuit and on cases outside the Ninth Circuit. Mr. Greene suggests whether or not certiorari is issued; this is a case well worth reading and following.[1]

Hodges v. Comcast Cable Communs., Ltd. Liab. Co., 21 F.4th 535 (9th Cir. 2021)

Mr. Greene provided a brief update on Hodges that en banc review was requested but denied. However, Circuit Judge Berzon was allowed to update her dissent. The updated dissent provides arguments for why the relief requested in this case was public relief within the meaning of McGill and why this is fundamentally a state law issue and should be decided by California Courts. 

Mr. Greene quickly commented on the use of “hot tubbing” to better assess competing expert opinions. Formally known as “concurrent expert evidence proceedings,” Judge James Donato has used this method to have experts talk with each other, with the court acting as questioner and moderator. 

Finally, Mr. Greene quickly summarized three proposed rules: Fed. R. App. 42 (voluntary dismissal); Rule 7.1 (disclosure statement); and Rule 16 (discovery and inspection).  

Federal Update: Doug Rathbun

Federal Legislation

Mr. Rathbun highlighted three antitrust reforms directed at digital platforms: The American Innovation and Choice Online Act, Open App Markets Act, and the Competition & Transparency in Digital Advertising Act. Mr. Rathbun highlighted the Open Markets Act to be pointed toward companies such as Google and Apple. Furthermore, Mr. Rathbun mentioned three broader and industry-wide antitrust reforms: The Trust-Busting for the Twenty-First Century Act, Competition and Antitrust Law Enforcement Reform Act, and Journalism Competition and Preservation Act. Mr. Rathbun explained that most, if not all, these bills would be introduced into Congress sometime soon.

New and Ongoing Policy Actions by the Competition Agencies

Mr. Rathbun touched on the policy statement for Section 5e of the FTC Act, which provides more significant reach than the Sherman and Clayton Acts. Mr. Rathbun discussed the changes to the United States Department of Justice’s corporate leniency program, encouraging different divisions, like the criminal and national security divisions, to create similar programs. The leniency programs have been limited and are subject to two requirements: applicants must remediate and must report any wrongdoing immediately. The joint public inquiry is aimed at modernizing merger guidelines with chief substantive changes in mergers. Mr. Rathbun also briefly discussed the FTC’s unfair methods of competition and unfair or deceptive acts or practices in rulemaking authority, specifically with merger guidelines. Finally, Mr. Rathbun discussed the withdrawal of the proposed 2013 Standards-Essential Patents Policy Statement and the added division 1(b) of 2019.

New Policy Actions Resulting in Enforcement Actions

Mr. Rathbun gave insight into the increased focus on wage fixing and no-poach agreements in markets for labor and criminal enforcement under Section 2 of the Sherman Act. Mr. Rathbun highlights the Jindal case and its historic stamp as one of the Department of Justice’s first criminal wage-fixing cases; however, the case resulted in an acquittal. Mr. Rathbun used Jindal to illustrate that few criminal cases were brought under the Sherman Act. 

California Antitrust and Unfair Competition Law Update: Colleen E. Huschke

Military and Veteran Consumer Protection Act of 2022

The Military and Veteran Consumer Protection Act of 2022 provides updates on several provisions related to service members and veterans. Ms. Huschke explained that enforcement for service members and veterans would expand their small claims rights, and the Act enhances penalties under the California Business and Professions Code section 17206.2. The bill prohibits a person from conditioning the receipt of a military or veteran discount on the waiver by the person of any right under state or federal law. The bill would make a waiver of any right provided by specified laws to service members, former service members, or their dependents void. The Act will protect personal loans, motor vehicle loans, deferments, and the right to terminate contracts.

Protections Against Collecting Coerced Debt

Ms. Huschke gave a brief background of coerced debt and how it is a common component of economic abuse. Ms. Huschke emphasizes that the state wants to protect rural populations and is a very involved piece of legislation. The legislation will act in many ways such as, but not limited to, imposing civil liability for a person who causes another into coerced debt, conducting reviews to make reasonable faith determinations if the debt was coerced, and different remedies such as an injunction if it can be established by a preponderance of the evidence the debt was coerced. Ms. Huschke points out the excellent protection the legislation provides, allowing the court to take steps to protect the debtor.

Ms. Huschke gave a quick update on an amendment to the Song-Beverly Act for expressed warranties that states a manufacturer, distributor, or retailer shall not make an express warranty concerning a consumer good that commences earlier than the date of the delivery of the good. Furthermore, for consumer credit transactions, the language of the notice will be expanded to all languages in California Civil Code section 1632. The Department of Financial Protection and Innovation will provide translations on its website in 2023.

Expanded Investigative Subpoena Powers

Ms. Huschke explains that under the government code amendment, the Attorney General and District Attorney can bring a UCL action and issue investigatory subpoenas. The recipient may serve written objections, meet and confer to resolve objections, and file a motion to quash or modify a subpoena in the superior court of the county where the subpoena was issued.

Case Updates

In case updates, Ms. Huschke first discussed the People v. Amazon, Inc. case, in which she talked about restrictions on pricing and Amazon’s market dominance. She then discussed Serova v. Sony Music Entm’t and Cal. Chamber of Com. v. Couns. for Educ. & Rsch on Toxics, touching on commercial speech. Next, she discussed the California cases Pulliam v. HNL Auto., Inc.; BBBB Bonding Corp. v. Caldwell; and Rodriguez v. FCA US, LLC in some detail. Following the California cases, Ms. Huschke touched on three cases involving civil law enforcement: People of the State of Cali. v. Johnson.; and People v. Alorica, Inc. 

Finally, Ms. Hucshke touched on cases involving arbitration clauses and PAGA. She explained in Viking River Cruises, Inc. v. Moriana that the Iskanianrule PAGA actions cannot be divided into individual and non-individual claims because the Federal Arbitration Act preempts it. Ms. Huschke highlights a few cases that enforce arbitration clauses: Hodges v. Comcast Cable Commc’ns (dissent amended) and B.D. v. Blizzard Entert., Inc. In contrast, cases where arbitration clauses were not enforced, are Sellers v. JustAnswer LLC and Berman v. Freedom Fin.l Network. In conclusion, Ms. Huschke briefly discussed Department of Fair Employment and Housing v. Cisco Sys.and People v. Maplebear Inc., two cases where civil law enforcement arbitration clauses were rejected. [JD1] 

[1] Editors’ Note:   On November 14, 2022, the United States Supreme Court denied certiorari.

[JD1]Maybe cut?

Thank you to Speakers:

• John F. Cove, Jr., Of Counsel, Shearman & Sterling, San Francisco
• Professor Orly Lobel, University Professor & Warren Distinguished Professor of Law, Director of the Center for Employment & Labor Policy, University of San Diego
• Robert McNary, Deputy Attorney General, California Department of Justice, Office of the Attorney General Los Angeles
• Shira Liu (moderator), Crowell & Moring LLP

View from Rachele Byd, Managing Partner, Wolf Haldenstein:

Deputy Attorney General Robert McNary’s approach favors more antitrust fact-finding, citing generally the active litigation in Amex, Epic Games, and Apple, without commenting on any matter in detail. Mr. McNary noted that the California Attorney General filed an amicus brief in the Epic Games appeal regarding the California Unfair Competition Law.  The role of antitrust law is to provide active enforcement in the courts. Taking a case through trial, with an ultimate determination of the facts, assists with the public’s understanding of this evolving area of law.

The panel discussed the AmEx opinion and how, since that opinion, the focus on the market definition has been applied very narrowly. Ohio v. Am. Express Co., 138 S. Ct. 2274 (2018); PLS.COM, Ltd. Liab. Co. v. Nat’l Ass’n of Realtors, 32 F.4th 824 (9th Cir. 2022) (applied AmEx narrowly). The panel also discussed the Delta Dental case out of the Northern District of Illinois. In Delta Dental the court went through a more traditional analysis.   Finally, the panel commented on the UCL, which, expressly exceeds antitrust laws and may provide an avenue for enforcement beyond the traditional antitrust framework.

John F. Cove, from a high-technology industry standpoint, looked at the relative benefits and risks of individual platforms. Undeniably, some generate enormous amounts of money and, with it, substantial market power. The U.S.’s system, which tries to take an in-depth look at how these platforms operate in their particular businesses, through government enforcement action and private litigation, is the best way to address these things on a case-by-case basis.  In the view of Mr. Cove, comparable regulatory approach (the “E.U. approach”), is going to reduce output and innovation.  Mr. Cove expressed concerns about the “untethered” aspect of UCL claims and the potential for  a non-rules based realm of competition enforcement.

Professor Orly Lobel focused on the potential for technology to support equality within a modern society. In her view, we the users need to understand transitional technology. Ms. Lobel gave as an example the story of new technology, e.g., Uber utilizing human drivers, then transitioning to a Robotic-Taxi type service. Or perhaps market creation, e.g., Tesla subsidizing the EV market, which remained transitional until settling claims of regulatory arbitrage. These businesses may begin by collecting data while competing within a traditional market, in order to achieve algorithmic accuracy, and then pivot the businesses to leverage their new technology and data. This type of structured approach may be more long-term innovation focused, and may not fit squarely within a traditional antitrust analytical framework.

Speaker: Elizabeth Wilkins, Director, Office of Policy Planning, Federal Trade Commission, Washington, D.C.
Moderated by:  Professor Robin Feldman, Professor of Law Chair and Director of the Center for Innovation, UC Hastings Law

View from Marshall Fern, Executive Director of Notes and Comments, CWSL Law Review, J.D. (2023), California Western Law Review:

Ms. Wilkins kicked this discussion off with an overview of the stand-alone Section 5 of the FTC Act. She discussed the reach of Section 5 and how it reaches further than the Sherman and Clayton Act to encompass various types of unfair conduct that affect competitive conditions negatively. Ms. Wilkins explained that Section 5 provides more clarity and bright-line rules to follow instead of the open-ended rule of reason for antitrust claims. The policy statement for section five enforcement also establishes the meaning of unfair. Furthermore, Ms. Wilkins explains how incipient conduct will be used to examine anticompetitive effects in the analysis for future cases.

Ms. Wilkins discussed some areas of exploration that are still needed, such as what is considered coercive and what is exploitative. Addressing potential concerns from the policy statement, Ms. Wilkins explained that the statement’s goal was to be, “faithful to congress and to carry out what congress wanted.” Ms. Wilkins then explains that the statement tries to lay out the framework of a two-prong approach. Prong one addresses whether it is fair, and prong two addresses whether it is competitive. The two-prong approach arises from concerns about competition being outside the reach of unfair practices that are inappropriate market conduct. Ms. Wilkins also highlights that a portion of the policy statement will have a list of cases that will assist in handling cases that involve behavior that is anticompetitive in nature but may not fit perfectly under the antitrust laws.

Ms. Wilkins expressed her enthusiasm and hoped the policy statement would be a roadmap for public participation in the policy. Ms. Wilkins touched on the fact that some states have unfair competition authority and hope this statement will keep the conversation going.

Finally, Ms. Wilkins touched on the type of expertise the FTC could use in the future. Some areas of expertise include in-house economists, analysts, and technologists (security, AI, and understanding), all valuable areas to have insight into for better understanding.

Speakers:

• Brent Snyder, Partner, Wilson Sonsini Goodrich & Rosati, San Francisco

• Joshua Sherman, Principal, Charles River Associates, Chicago
• Christopher Ries, Director and Associate General Counsel, Global Supply Chain Operations and Competition Law, Hewlett Packard Enterprise, San Jose
• Professor Amelia Miazad, Acting Professor of Law, University of California, Davis
• Megan E. Gerking (moderator), Partner, Morrison & Foerster LLP, Washington, D.C.

View from Levine Law LLP   

Just days before the Institute, five Senators highlighted the importance of this topic by sending letters to fifty-one leading law firms, threatening to refer the firms and their clients alike to the FTC and DOJ for “institutionalized antitrust violations being committed in the name of ESG.” The panel, consisting of one academic, one economist and two corporate counsel (one in house and one outside counsel), addressed the intersection of the antitrust laws and ESG initiatives to promote sustainability. The panelists explained ESG initiatives are designed to balance the governance of environmental and social risks to promote sustainable production and long-term shareholder value, rather than the imposition of ideological shareholder values. A side benefit of mitigating these long-term risks is the perception the company is a “good corporate actor.” There is, however, no “good intent” or ESG exception to the U.S. antitrust laws. The antitrust laws and economic analysis applied thereto is generally limited to the impact collaborative actions have on price and quantity. The antitrust laws do not even allow for the consideration of the externalities of environmental and social concerns – whether they benefit or harm sustainability of production and long-term shareholder value. From the standpoint of corporations, collaborative actions or agreements are essential to achieve the economies of scale to effectively mitigate the impact of environmental and social risks and eliminate the first mover disadvantage. While not safe harbors, the likelihood of antitrust enforcement can be reduced by directing collaborative efforts through trade or industry associations, standard setting, lobbying efforts, or collaboration within so-called “safety zones,” like those surrounding the COVID Health Care guidance. This leaves corporations evaluating ESG strategies to promote sustainability with three choices: continue with the status quo; implement the strategy alone and suffer the first mover disadvantage; or engage in collaborative efforts at the risk of FTC or DOJ enforcement. Unlike the EU, however, the FTC and the DOJ have not updated their Antitrust Guidelines for Collaboration Among Competitors since they were issued in 2000. Despite the tension between the antitrust laws and sustainability collaborations, the panel did not believe an ESG exception to the antitrust laws was either needed or appropriate. Instead, the panel called for the FTC and DOJ to provide updated guidance for collaborative agreements and a mechanism for an expedited review of collaboration agreements.

A Conversation with Jonathan Kanter, Assistant Attorney General, U.S. Department of Justice
Moderated by John B. Quinn, Partner, Quinn Emmanuel Urquhart & Sullivan

View from Associate Editor James Dallal, Cotchett Pitre & McCarthy LLP,  

Assistant Attorney General Kanter Attests to Passion for Vigorous Antitrust Enforcement

In the keynote address held during lunch at this year’s GSI conference, Assistant Attorney General for the United States Department of Justice Antitrust Division Jonathan Kanter presented a spirited defense of vigorous antitrust enforcement, including through notable recent triumphs and setbacks in several of the Division’s major litigation efforts.

John B. Quinn, founder of Quinn Emanuel Urquhart & Sullivan LLP, conducted questioning, though he began by taking note of the document retention letter he had recently received from the Division. In what became a characteristic exchange, Mr. Quinn opened the conversation by listing several of the recent setbacks including three losses in prominent merger challenge cases, noted that some may now increasingly view the Division as a “paper tiger,” and arrived at the question of whether or not any of these recent developments have changed that assistant AG’s views?

“No,” responded Assistant Attorney General Kanter, and let that simple response linger for a moment before laying out his case. Mr. Kanter then recited a long list of achievements including four planned mergers abandoned in response to Division pressure on the eve of litigation; a victory in a “5-4” merger challenge in the publishing industry that would have consolidated the industry from five major publishers to four, premised on harm to competition not in the ultimate product market for books but rather in the labor market for authors; plus the first criminal Sherman Act section 2 case in over 40 years; the first ever conviction in a criminal no-poach case; and the largest ever enforcement effort addressing the long dormant area of problematic interlocking directorates; all in the preceding three weeks.

From there the conversation turned to an exploration of recent changes to the Division’s focus. Assistant Attorney General Kanter agreed with the suggestion that challenging the proposed publishing industry merger based on labor market concerns signals that the Division is willing to focus on areas other than price, since prices are “important but not exclusively.” In response to a question about the Division’s loss at trial this past year in the broiler chicken Section 1 conspiracy case, Mr. Kanter called for looking at the enforcement program as a whole and attested that doing so would reveal more wins than losses.

Asked about how he developed his passion for antitrust enforcement, Assistant Attorney General Kanter recounted the various roles he had held throughout his career. Mr. Kanter started at the Federal Trade Commission, volunteering at first, securing a paid gig for his second law school summer, and finding the experience such a good fit that he did not even bother with applying to law firms upon graduation. It was not a matter of “sink or swim,” since “there are lifeguards.” But working for the FTC gave him the opportunity to depose CEOs right away, and he recalled fondly the experience of investigating and building a case through reviewing documents one by one to find the candid admissions contained within them. Mr. Kanter offered that even as a young attorney, knowing the case better than anyone else in the room can create a path to success, and that working on both sides in private practice gives perspective, reveals each side’s playbook, and had set him up to advocate for pursuing the positions and cases he believes in.

Assistant Attorney General Kanter noted that the Division’s lawyers are “law enforcement, not regulators,” and must therefore be able to litigate multiple matters at the same time. To enhance its reach the Division is growing, and has added roughly 100 attorneys in recent years.

The conversation then explored several aspects of the Division’s recent enforcement actions in more detail. Mr. Kanter noted that challenging interlocking directorates is an effective means for deconcentrating the economy. He noted that taking a broader view of the Division’s history, criminal charges for section 2 violations are appropriate in the right circumstances, and the drop in section 2 criminal enforcement had coincided with a diminution in section 2 enforcement generally. New merger guidelines are in the works, with the Division working closely with the FTC and managing a robust public commenting process. The new guidelines will take considerations other than price into account, not least because the consumer welfare standard is open to so many competing interpretations that its usefulness is limited. Privacy concerns will be a consideration, as is appropriate to the current economy given how many services consumers now pay for by granting access to their data. Mr. Kanter describes himself as a “big supporter” of state antitrust enforcement, and the Division is investing in its relationships with state governments. The Division maintains a very active amicus program that Mr. Kanter describes as “an efficient use of resources” and important given the dearth of recent extant caselaw reflecting the most up-to-date federal DOJ antitrust enforcement framework. In response to a question about delays caused by merger review, Assistant Attorney General Kanter noted that firms seeking to merge often delay their merger review filings in an effort to engage in “regulatory arbitrage” among the relevant global enforcers. Decisions to pursue a given case are always fact-specific but the Division does not necessarily take into account the health of an industry as such in making such decisions since there exists a failing firm defense but not a failing industry defense.

Mr. Kanter then concluded his thoughts about the Division’s activities by inviting listeners to “Expect us to be vigorous antitrust enforcers who care about competition.”

Thank you to Speakers:

• Gareth J. Macartney, OnPoint Analytics, Emeryville
• Hitesh Makhija, Analysis Group, San Francisco
• Dina Older Aguilar, Cornerstone Research, San Francisco
• Lawrence Wu, Ph.D. (moderator), NERA Economic Consulting, San Francisco

View from Alex Tramontano, Wolf Haldenstein

The panel discussed the role of economists in antitrust matters, and how an economist adds value to the case. Dr. Macartney surmised that an economist adds value by applying the correct economic theory for the facts. Explaining there are many theories out there, but it is applying the correct theory to the specific facts – where the expert provides added value. Dr. Makhija added, once you pick a theory, you must perform an economic data-based test, to see if it actually applies. He advised practitioners to look at what impact the particular conduct has on the market. Dr. Aguilar pointed out, that while economists are good at causation it is important to look at why a statistically relevant data point occurs, i.e., why an “empirical average effect” might occur in a particular matter.

In response to the moderator’s query about what economists need when setting out to perform their work on an antitrust matter, Dr. Macartney provided the perspective that for an economist, more data is generally always useful. Economists need large data sets and documentation to serve as foundation for the econometric analysis. As Dr. Makhija explained, “economics is dry, but if you combine: the data, plus a model, plus a theory, and tell a story; this will produce an understandable and interesting narrative for the jury.”

In discussing developments in the two-sided platform markets, Dr.  Aguilar commented that anticipated FTC rule changes may affect market definition with respect to current geographic boundary analysis.  Next, panelists looked at the area of “value judgments” with respect to unfair competition claims. Economists are careful not to make “value judgments,” but instead ask and answer econometric questions. Dr. Aguilar commented, for example, “If the claim is regarding an unfair pricing practice: Is this about competition, or is this about a market failure?” This discussion dovetailed nicely into a consideration of the reasons behind antitrust law from an economist’s standpoint. The panel agreed, antitrust laws and concepts are about protecting competition and not competitors. Dr. Macartney stressed that this is about protecting the competitive outcome, not the competitor business who is trying to compete.

Dr. Wu closed the panel with a self-probing question to the economists, “What can we do to be more effective as economists?” Dr. Macartney commented that economists always like to use the word “or,” but what is helpful is to say, “this is the theory which aligns with this case, this data and these facts.” Dr. Makhija, urged economists to boil down all these complex theories to the four or five items the fact finder needs to rely upon – using as little economic jargon as possible. Dr. Aguilar stressed that it is not helpful to “dumb down” your argument, but rather to explain it properly to empower a jury.

Thank you to Speakers:

• Andre Mura, Partner, Gibbs Law Group LLP, Oakland
• Zoe Savitsky, Supervising Deputy City Attorney, Oakland City Attorney’s Office, Oakland
• Steven E. Swaney, Partner, Venable LLP, San Francisco
• Betsy C. Manifold (moderator), Managing Partner, Wolf Haldenstein Adler Freeman & Herz LLP, San Diego

View from Erin N. Tramontano, Wolfenzen Rolle

The UCL Remedies panel presented cutting edge developments in Unfair Competition Law (“UCL”) discussing the limited remedies available in both public and private actions. The moderator likened UCL remedies to the Rolling Stones lyrics “you can’t always get what you want, but if you try sometime, you’ll find, you get what you need.” UCL violations do not allow for damages per se, but do provide for certain civil penalties, restitution, and injunctive relief, whether it is a government or private action. The UCL, however, still provides significant penalties against violating defendants.

Government UCL Claims

Panelist Zoe Savitsky, a Supervising Deputy City Attorney at the Oakland City Attorney’s Office, discussed the civil penalty and injunction remedies available in public government UCL actions. Statutory civil penalties totaling no more than $2,500 per violation are law enforcement tools and not considered to be criminal or compensatory. The court considers six factors to assess civil penalties and while individual violation amounts may appear low, they can add up quickly when collecting statewide for repeated violations. Ms. Savitsky highlighted this last point in People v. Johnson & Johnson (2022) 77 Cal.App.5th 295, where Johnson & Johnson incurred over $300 million in civil penalties due to its knowingly pervasive UCL violations related to deceptive advertising of pelvic mesh implants, which caused many women throughout the state to suffer extensive adverse health effects.

The government can also seek injunctive relief for UCL claims. “Public Injunctive Relief” is an injunction to protect consumers and the public from unfair business practices and focuses on potential future harm rather than past harm. Proposition 64 reversed prior 2004 rulings and allowed only the Attorney General and local public officials to prosecute actions on behalf of public at large. Panelist Andre Mura, a plaintiff class actions attorney and Partner at Gibbs Law Group LLP, however, explained individuals can technically still pursue public injunctive relief by meeting the same standards and purposes required for a public action, and satisfying certain existing class-action requirements.

Private UCL Claims

Steven Swaney (consumer class actions defense attorney) discussed private UCL actions and commented that practitioners may often be disappointed to discover restitution as the sole remedy though plaintiffs have attempted pleading certain non-restitutionary damages to recover pursuant to the UCL.

From a pleading perspective, plaintiffs can raise these claims as both a monetary damages claim and a restitution claim when the amount of the restitution and damages are the same. But plaintiffs may be barred from asserting an equitable restitution claim when there is an available monetary damages remedy.  This point was highlighted by Sonner v. Premier Nutrition Corp., 971 F.3d 834 (9th Cir. 2020). Sonner initially pled a monetary damages claim, a Consumer Legal Remedies Act (“CLRA”) claim, and a UCL claim for the defendant’s false advertising of chondroitin joint supplements. Prior to trial, Sonner voluntarily dismissed its state monetary damages and CLRA claim, leaving only the equitable UCL restitution claim which has relaxed standards for proving liability. Defendant then requested dismissal of the remaining UCL claim on the grounds Sonner had another available remedy and the Sonner Court agreed. The Ninth Circuit affirmed this holding but only as a question of federal law under Erie and not as a matter of state law. Panelist Swaney and Mura indicated federal courts are now routinely dismissing UCL claims at the pleading stage where there is an alternate monetary remedy. Accordingly, the panel cautioned diversity cases may lead to a dismissal of the equitable UCL claim when another monetary damages remedy is available. Panelists Swaney and Mura agreed that Guzman v. Polaris Indus., 49 F.4th 1308 (9th Cir. 2022) suggests even if defendants continue to challenge UCL remedies when others are available, plaintiffs may still be able to refile in the state court.

Overall, the panel agreed the California Courts are in a transition period to decide whether a plaintiff can assert an equitable UCL restitution claim when there is an alternate monetary claim. The California Supreme Court may need to address this issue.

Thank you to Speakers:

• Andre Mura, Partner, Gibbs Law Group LLP, Oakland
• Zoe Savitsky, Supervising Deputy City Attorney, Oakland City Attorney’s Office, Oakland
• Steven E. Swaney, Partner, Venable LLP, San Francisco
• Betsy C. Manifold (moderator), Managing Partner, Wolf Haldenstein Adler Freeman & Herz LLP, San Diego

View from Erin N. Tramontano, Wolfenzen Rolle

The UCL Remedies panel presented cutting edge developments in Unfair Competition Law (“UCL”) discussing the limited remedies available in both public and private actions. The moderator likened UCL remedies to the Rolling Stones lyrics “you can’t always get what you want, but if you try sometime, you’ll find, you get what you need.” UCL violations do not allow for damages per se, but do provide for certain civil penalties, restitution, and injunctive relief, whether it is a government or private action. The UCL, however, still provides significant penalties against violating defendants.

Government UCL Claims

Panelist Zoe Savitsky, a Supervising Deputy City Attorney at the Oakland City Attorney’s Office, discussed the civil penalty and injunction remedies available in public government UCL actions. Statutory civil penalties totaling no more than $2,500 per violation are law enforcement tools and not considered to be criminal or compensatory. The court considers six factors to assess civil penalties and while individual violation amounts may appear low, they can add up quickly when collecting statewide for repeated violations. Ms. Savitsky highlighted this last point in People v. Johnson & Johnson (2022) 77 Cal.App.5th 295, where Johnson & Johnson incurred over $300 million in civil penalties due to its knowingly pervasive UCL violations related to deceptive advertising of pelvic mesh implants, which caused many women throughout the state to suffer extensive adverse health effects.

The government can also seek injunctive relief for UCL claims. “Public Injunctive Relief” is an injunction to protect consumers and the public from unfair business practices and focuses on potential future harm rather than past harm. Proposition 64 reversed prior 2004 rulings and allowed only the Attorney General and local public officials to prosecute actions on behalf of public at large. Panelist Andre Mura, a plaintiff class actions attorney and Partner at Gibbs Law Group LLP, however, explained individuals can technically still pursue public injunctive relief by meeting the same standards and purposes required for a public action, and satisfying certain existing class-action requirements.

Private UCL Claims

Steven Swaney (consumer class actions defense attorney) discussed private UCL actions and commented that practitioners may often be disappointed to discover restitution as the sole remedy though plaintiffs have attempted pleading certain non-restitutionary damages to recover pursuant to the UCL.

From a pleading perspective, plaintiffs can raise these claims as both a monetary damages claim and a restitution claim when the amount of the restitution and damages are the same. But plaintiffs may be barred from asserting an equitable restitution claim when there is an available monetary damages remedy.  This point was highlighted by Sonner v. Premier Nutrition Corp., 971 F.3d 834 (9th Cir. 2020). Sonner initially pled a monetary damages claim, a Consumer Legal Remedies Act (“CLRA”) claim, and a UCL claim for the defendant’s false advertising of chondroitin joint supplements. Prior to trial, Sonner voluntarily dismissed its state monetary damages and CLRA claim, leaving only the equitable UCL restitution claim which has relaxed standards for proving liability. Defendant then requested dismissal of the remaining UCL claim on the grounds Sonner had another available remedy and the Sonner Court agreed. The Ninth Circuit affirmed this holding but only as a question of federal law under Erie and not as a matter of state law. Panelist Swaney and Mura indicated federal courts are now routinely dismissing UCL claims at the pleading stage where there is an alternate monetary remedy. Accordingly, the panel cautioned diversity cases may lead to a dismissal of the equitable UCL claim when another monetary damages remedy is available. Panelists Swaney and Mura agreed that Guzman v. Polaris Indus., 49 F.4th 1308 (9th Cir. 2022) suggests even if defendants continue to challenge UCL remedies when others are available, plaintiffs may still be able to refile in the state court.

Overall, the panel agreed the California Courts are in a transition period to decide whether a plaintiff can assert an equitable UCL restitution claim when there is an alternate monetary claim. The California Supreme Court may need to address this issue.

Thank you to Speakers:

• Hon. Jacqueline Scott Corley, United States District Court for the Northern District of California, San Francisco
• Hon. James Donato, United States District Court for the Northern District of California, San Francisco
• Hon. Susan Illston, United States District Court for the Northern District of California, San Francisco
• Kevin Yeh (moderator), Assistant United States Attorney, Criminal Division, Northern District of California, San Francisco
• Marshall Fern, 2022 Inclusion and Diversity Fellow, California Western School of Law

View from Alex Tramontano, Wolf Haldenstein

The moderator asked the judges when it is appropriate to set a case schedule, and how they evaluate when to set the schedule. Judge Illston responded that it is important to set a schedule early and keep it moving, but she will not generally do this in complex antitrust matters. In complex cases, she will schedule case management conferences and will issue a schedule in stages. She also prefers when the same judge is assigned to both the civil and criminal sides of a case, if both exist simultaneously. When Judge Illston approaches a class action she never sets a trial date prior to the class certification decision because this decision is determinative of class size and the trial dynamics.

In responding to whether discovery is permitted before the motion to dismiss, Judge Donato was clear.  “Discovery starts after the Rule 26 conference.” In Judge Donato’s view, discovery shall not be stayed based on the filing of a motion to dismiss. The realistic approach being, even if counsel hits a home run with a motion to dismiss, leave to amend is liberally granted. Therefore, discovery rarely being stayed.

How do judges determine when to hold a hearing? Judge Corley holds hearings for about seventy-five percent (75%) of motions, and believes hearings are a great docket management tool for court and staff. The event date triggers an analysis or draft order, and keeps the docket from piling up. Judge Corley is also open to learning things at the hearing, which can change how she approaches writing the order.  Judge Corley’s favorite practice tip: Sometimes conceding an argument tactically gets a faster order by narrowing the issues, or can lend you credibility in an argument.

Of note, Judge Donato keeps all of his discovery disputes as opposed to sending the parties to a Magistrate.   Judge Donato has a very streamlined process, counsel is instructed to proffer a three (3) page letter to the court and opposing counsel. Response is not allowed until requested. Counsel are then invited to appear on an unrecorded telephone call to work it out. This prevents costly motions, and allows for a more streamlined and less tactical process.

Judge Corley uses remote video conference hearings every three weeks to keep things moving, and encourages parties to raise issues as they arise during those conferences. She then provides her initial soft ruling regarding the discovery disputes. If necessary, a motion may be brought thereafter. Judge Illston added that occasionally a Special Master is appropriate, which may come out of the parties’ pockets if there is a complex dispute involving large amounts of information.

Perhaps the most interesting discussion involved the “Expert Hot Tub” pioneered in the Northern District by Judge Donato. It is essentially a coordinated back-to-back exchange of expert witness information, but the term “expert hot tubbing” makes the concept more memorable. When a Daubert motion comes up, Judge Donato has both opposing experts appear for a guided debate. Judge Donato is able to ask questions of the experts, hear opposing responses in real time, and then uses that record to rule. . Judge Illston added, if you have a genuine Daubert motion, and you feel you righteously ought to win, bring it early!

To link to all Antitrust Division, DOJ press releases, go to:  https://www.justice.gov/atr/press-releases.   Highlights include the following:

Justice Department Obtains Permanent Injunction Blocking Penguin Random House’s Proposed Acquisition of Simon & Schuster

DOJ Press Release, October 31, 2022

Following a thirteen day trial in August 22, the U.S. District Court for the District of Columbia ruled in favor of the Justice Department in its civil antitrust lawsuit to block book publisher Penguin Random House’s proposed $2.2 billion acquisition of Simon & Schuster. The court found “that the effect of the proposed merger would be to substantially lessen competition in the market for the U.S. publishing rights to anticipated top-selling books.”

The district court’s opinion is temporarily under seal to allow the parties to review for confidentiality.

Health Care Company Pleads Guilty and is Sentenced for Conspiring to Suppress Wages of School Nurses

DOJ Press Release, October 27, 2022

VDA OC LLC (VDA), a health care staffing company, plead guilty and was sentenced for “entering into and engaging in a conspiracy with a competitor to allocate employee nurses and to fix the wages of those nurses.”   “During the conspiracy, from about October 2016 until July 2017, VDA, then known as Advantage On Call, LLC, was one of two primary providers of contract nursing services to the Clark County School District. According to the plea agreement it entered into with the government, VDA, through one of its employees, participated in a conspiracy with another contract health care staffing firm to suppress and eliminate competition by agreeing to allocate nurses and fix the wages of those nurses. At the same hearing during which VDA pleaded guilty, U.S. District Court Judge Richard F. Boulware II sentenced VDA to pay a criminal fine of $62,000 and restitution of $72,000 to victim nurses.”

Directors Resign from the Boards of Five Companies in Response to Justice Department Concerns about Potentially Illegal Interlocking Directorates

DOJ Press Release, October 19, 2002

“The Justice Department announced today that seven directors have resigned from corporate board positions in response to concerns by the Antitrust Division that their roles violated the Clayton Act’s prohibition on interlocking directorates. Section 8 of the Clayton Act (Section 8) prohibits directors and officers from serving simultaneously on the boards of competitors, subject to limited exceptions. Over the last several months, the Division announced its intent to reinvigorate Section 8 enforcement. This announcement is the first in a broader review of potentially unlawful interlocking directorates.”

To link to all FTC press release, see https://www.ftc.gov/news-events/news/press-releases.

FTC Joins Justice Department in Amicus Brief Supporting Workers’ Challenge to McDonald’s “No Hire” Franchise Restrictions

FTC Press Release, November 10, 2022

“The Federal Trade Commission joined the Department of Justice in filing an amicus briefwith the U.S. Court of Appeals for the Seventh Circuit in the cases of Deslandes v. McDonald’s USA, LLC and Turner v. McDonald’s USA, LLC. The brief argues that the antitrust laws protect competition for workers. It also asks the appeals court to hold that a lower court applied the wrong test in a decision that dismissed workers’ allegations that restrictions in McDonald’s franchise agreements banning store owners from hiring workers away from other McDonald’s stores violated U.S. antitrust law.”

To link to All California Department of Justice press releases, see https://oag.ca.gov/media/news.

Attorney General Files Legal Brief Opposing McDonald’s Attempt to Evade Liability for Past Efforts to Stifle Competition and Under Wages

Office of Attorney General Press Release, November 10, 2022

California Attorney General Rob Bonta joined a coalition of 21 attorneys general in an amicus brief opposing McDonald’s attempt to evade liability for past alleged efforts to stifle competition and undercut wages through the use of “no-poach” agreements. “No-poach agreements like those employed by McDonald’s in this case stifle competition and directly undercut wages,” said Attorney General Bonta. “In California, no-poach agreements are not enforceable and members of the public should immediately report them if they see them. At the California Department of Justice, we will continue to fight to support businesses and workers who do things the right way. No corporation is above the law. My office urges the appellate court to follow the law and give the plaintiffs an opportunity to make their case.”

“In the friend-of-the-court brief in support of the class action plaintiffs, the attorneys general assert: 

• The district court erred in rejecting the plaintiffs’ argument regarding the application of antitrust law;
• The district court improperly assumed the role of a factfinder or jury in the case;
• Amici states have successfully protected workers within their jurisdictions by enforcing antitrust laws to police no-poach agreements; and
• The appellate court should reverse the district court’s erroneous judgment.”

In filing the amicus brief, Attorney General Bonta joins the attorneys general of Illinois, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Idaho, Maryland, Massachusetts, Minnesota, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, and Washington.

A copy of the amicus brief, as filed with the court, is available here.