Dormant Commerce Clause: a Potential Brake On State Antitrust Legislation

by

DORMANT COMMERCE CLAUSE: A POTENTIAL BRAKE ON STATE ANTITRUST LEGISLATION

By Shira Liu1

The California Legislature has instructed the California Law Review Commission ("CLRC") to study expanding California’s Cartwright Act.2 The CLRC has been instructed to study whether to outlaw monopolies and redefine antitrust injury.3Either of these changes could expand the Cartwright Act beyond the current reach of federal antitrust law.4 The CLRC has also been instructed to consider adding state-level merger enforcement to the federal regime.5 These proposals are similar to those in New York’s proposed "Twenty-First Century Anti-Trust Act," which would expand New York’s antitrust law beyond the current reach of federal antitrust law and implement state-level merger enforcement.6 New York’s bill died in an Assembly Committee in June 2022, but its sponsor is seeking to reintroduce the bill in a future session.7

It is well-established that federal antitrust laws do not preempt state antitrust laws.8 But that does not mean that states have unlimited authority to expand their antitrust laws. One potential limit to state antitrust laws is the dormant Commerce Clause. As state legislatures consider expanding the reach of state antitrust laws, they should do so with an awareness of potential dormant Commerce Clause challenges.

I. FROM DUAL FEDERALISM TO THE DORMANT COMMERCE CLAUSE

State antitrust legislation has outpaced federal antitrust legislation before. When Congress enacted the Sherman Act in 1890, at least eleven states had already enacted their own antitrust laws.9 Nine more states passed antitrust laws in the decade that followed.10 But courts circumscribed the spheres of state and federal law very differently at the dawn of the twentieth century compared to current jurisprudence. Under the doctrine of dual federalism interpreting the federal Constitution’s grant to Congress "[t]o regulate Commerce . . . among the several States" at the time, state law governed intrastate activities, while federal law governed interstate activities.11 For example, four years before the passage of the Sherman Act, the Supreme Court held that Illinois could not regulate rates for train shipments that included interstate as well as intrastate segments, because only routes "exclusively confined to the limits of the territory of the state" are "within the competency of the I llinois

[Page 148]

legislature to regulate."12 Therefore, the Sherman Act was originally thought of as a "supplement to state regulation," providing a remedy to police interstate commercial activities.13 This relationship between the reach of state and federal antitrust laws was confirmed in the Supreme Court’s first case citing the Sherman Act. In United States v. E. C. Knight Co., the Supreme Court held that sugar refining within a single state was not "commerce"—which would have been reached by the Commerce Clause—but "manufacturing" beyond the reach of the federal government.14

Dual federalism ended as the Great Depression and World War 11 transformed commerce, prompting the Supreme Court to embrace a broad understanding of the Commerce Clause.15 In 1948, the Supreme Court held in Mandeville Island Farms v. American Crystal Sugar Co. that the Sherman Act could reach a price-fixing agreement between sugar growers in the same state.16 The Court recognized that it was reaching the opposite conclusion from E.C. Knight on functionally identical facts, but explicitly rejected the "old ideas," explaining that the "evolv[ed]" inquiry is whether there was any "aspect of or substantial effect upon interstate commerce."17 The Court observed that if E.C. Knight remained in place, the Sherman Act "today would be a weak instrument, as would also the power of Congress, to reach evils in all the vast operations of our gigantic national industrial system antecedent to interstate sale and transportation of manufactured products."18

After dual federalism fell out of favor, courts developed the dormant Commerce Clause as a new paradigm to limit state laws affecting commerce in other states.19 In contrast to the strong geographic restraint on states’ reach imposed by dual federalism, the dormant Commerce Clause doctrine restrains states’ ability to "discriminate against or burden the interstate flow of articles of commerce."20 In an approach familiar to antitrust lawyers, under the dormant Commerce Clause doctrine one must first evaluate if a state law should be evaluated under a per se standard or under a balancing test. The per se standard applies if the restriction on commerce is discriminatory—that is, "differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter."21 Discriminatory state laws are invalid because their "object is local economic protectionism."22

State antitrust laws are typically non-discriminatory, meaning that they apply with equal force to in-state and out-of-state economic interests. Non-discriminatory state laws are evaluated under the balancing test articulated in Pike v. Bruce Church, Inc.23 The Pike balancing test asks whether the burden on interstate commerce is "clearly excessive in relation to the putative local benefits."24Challenges to non-discriminatory laws regulating national sports leagues and transportation, where the burden of state-by-state regulation is easier to conceptualize, have had the most success under the Pike balancing test.25 In contrast, challenges applying the Pike balancing test to other state economic or social regulations have had less success.26 Commentators have decried application of Pike to such cases as "notoriously unclear"27 and "unsettled and poorly understood."28 In National Pork Producers Council v. Ross, Justice Gorsuch, writing for three justices who would have overruled the Pike balancing test, asked "How is a court supposed to compare or weigh economic costs (to some) against noneconomic benefits (to others)? . . . Really, the task is like being asked to decide whether a particular line is longer than a particular rock is heavy."29

In May 2023, a majority of the Supreme Court in National Pork Producers reaffirmed that the Pike balancing test continues to apply, even as the Court failed to reach a majority that provided further guidance in its application.30 The California statute at issue in National Pork Producers governed cruelty standards for pork sold, but not necessarily raised, in California. Writing for two justices, Justice Sotomayor wrote that the "complaint fails to allege a substantial burden on interstate commerce."31Writing for four justices, Justice Roberts wrote that interstate commerce was substantially burdened because the challengers identified not just compliance costs but "broader, market-wide consequences" which require "compliance even by

[Page 149]

producers who do not wish to sell in the regulated market."32 Justice Roberts would have remanded the case "consider whether petitioners have plausibly claimed that the burden alleged outweighs any putative local interests."33 Separately, the Ninth Circuit has expressed reluctance to assess the "constitutionality of the challenged laws based on our assessment of the benefits of those laws and the State’s wisdom in adopting them."34

II. APPLYING THE DORMANT COMMERCE CLAUSE TO STATE ANTITRUST LEGISLATION

One relatively clear area of guidance in the caselaw is that Commerce Clause challenges to state antitrust laws fail when they attack the extraterritorial application of state laws that are consistent with federal laws. A state does not, for example, violate the dormant Commerce Clause when it enforces its state law condemning price-fixing conduct extraterritorially.35 Similarly, the Ninth Circuit and the District of Columbia have both rejected dormant Commerce Clause challenges where an in-state plaintiff was harmed by price-fixing conduct that occurred out of state.36 And a California Court of Appeal rejected a dormant Commerce Clause attack on a Cartwright Act claim that the defendant tied products and services out of state.37 As the Supreme Court recently explained in National Pork Producers, "[i]n our interconnected national marketplace, many (maybe most) state laws have the ‘practical effect of controlling’ extraterritorial behavior," and banning laws which have extraterritorial effects would "invite endless litigation and inconsistent results."38 These holdings are consistent with the shift away from dual federalism, with its focus on the geographic limits of state authority.

There is little precedent to guide the harder question of how expansive state antitrust legislation would fare when faced with dormant Commerce Clause challenges. The lack of precedent specific to antitrust cases is due to the fact that by the time the dormant Commerce Clause doctrine developed several decades ago, most states had "adopted statutes that either copied or paraphrased the language of the Sherman Act," causing state antitrust law to become "increasingly superfluous to the substantively almost identical federal law."39 Indeed, in 1983 Professor Hovenkamp wrote that "[w]hen state antitrust laws are alleged to be in direct conflict with federal antitrust law, the courts have found them not to be so."40 Even when states had antitrust statutes on their books, they were rarely enforced.41 If a new era in state antitrust enforcement dawns, courts will no longer be able to avoid these inconsistencies. Courts will have no choice but to evaluate these new and expansive state antitrust laws under the balancing test, and determine whether the laws place a burden on interstate commerce that is "clearly excessive in relation to the putative local benefits."42

The 1979 opinion in State of Connecticut v. Levi Strauss & Co. encapsulates the uncertainty in the law.43 In that case, Levi Strauss & Co. argued that application of Connecticut’s antitrust law was unconstitutional because "to the extent state and federal laws differ and state statutes are more exacting, Levi Strauss fears that it will have to comply with the strictest standard, which would then in effect preempt federal law."44 The court appeared to brush off this argument, commenting that the burden of meeting a stricter antitrust standard in one state is limited—"far less," for example, "than that of different and possibly conflicting requirements for equipment moving along interstate highways."45Nevertheless, the court conceded that "the extent of the differences" between federal and state law "may affect constitutionality" and remanded the case to the state courts to interpret the state statute, with no further guidance.46

A few cases have recognized the state interest in protecting consumers when applying the Pike balancing test. In In re Lorazepam & Clorazepate Antitrust Litigation, the court resolved the balancing test with little analysis beyond that promoting competition by curbing monopolistic practices is a "legitimate state purpose."47 In Guidance Endodontics LLC v. Denstply International, Inc., a small dental supplier challenged its much-larger rival and supplier for violating various laws including the New Mexico

[Page 150]

Unfair Practices Act.48 The District of New Mexico rejected a dormant Commerce Clause defense because, although "different states may have different impressions of what constitutes unfair conduct," the "states’ interest in" the protection of its consumers "is strong, and the countervailing burden on interstate commerce caused by restricting unfair and deceptive practices in situations in which the state can exercise personal jurisdiction over the defendant is relatively weak.49

Both In re Lorazepam and Guidance Endodontics indicate that local interests in enforcing antitrust laws weigh heavily in the Pike balancing test. These cases cannot be easily reconciled with last year’s decision in Association for Accessible Medicines v. Bonta.50 The plaintiff in that case was an association comprised of manufacturers and distributors of generic medication that challenged California’s AB 824.51 AB 824 codified the presumption that reverse payment settlements are anticompetitive.52 This codified presumption puts California law at odds with federal law, under which reverse payment settlements are evaluated with a "quick look."53The court granted the challengers to AB 824 a preliminary injunction, agreeing that the association was likely to succeed on the merits of its dormant Commerce Clause argument.54 While the court’s analysis focused on the extraterritorial effect of the law—an analysis largely superseded by National Park Producers55—the court ultimately appeared to be persuaded by a hypothetical positing that "[i]f two parties settle a patent suit in Delaware on terms that AB 824 deems unlawful, the settling parties . . . would be liable for severe penalties under California law."56 That is, the court was motivated by the fact that California was imposing a limit inconsistent with federal law and the laws of other states.57 Again, AB 824 operates only to change the burden from the federal standard in one type of fact pattern. Applying this logic broadly would not leave much room for state antitrust laws to expand beyond federal laws.

If a state imposes a significant merger control statute, the court is likely to look to two early dormant Commerce Clause involving challenges to state corporate law. In Edgar v. Mite Corp., a plurality of the Supreme Court struck an Illinois statute regulating tender offers for companies owned by at least ten percent Illinois shareholders.58 The Court held that "the burden the Act imposes on interstate commerce is excessive in light of the local interests the Act purports to further."59 Five years later, in CTS Corp. v. Dynamic Corp. of America, the Supreme Court rejected a challenge to an Indiana statute that conditioned acquisition of an Indiana corporation on approval of a majority of shareholders, explaining that it was within the state’s "authority to define the voting rights of shareholders."60 These decisions do not provide a sound basis for predicting whether more expansive state-level merger control will be held to excessively burden interstate commerce under the Pike balancing test. Challengers would likely argue that merger control is "inherently national," bolstered by Chief Justice Roberts’ dissent in National Pork Producers.61 Justice Roberts criticized the Ninth Circuit for failing to consider whether "by effectively requiring compliance by farmers who do not even wish to ship their product into California," the challenged pork cruelty standard "has a ‘nationwide reach’ similar to the regulation at issue in Edgar." 62 On the other hand, defenders would argue that requiring merging companies to meet a stricter standard in one state does not diminish from the federal merger control system.

III. CONCLUSION

Dormant Commerce Clause challenges will undoubtedly grow more frequent if states extend their antitrust laws beyond the bounds of federal enforcement. It is hard to predict the outcome of such challenges, as the law is currently unsettled and will develop as more cases are litigated.

In the meantime, when drafting an antitrust law that extends beyond the reach of federal antitrust law, state legislators would be wise to keep potential dormant Commerce Clause challenges in mind. For example, drafters could consider including findings of fact regarding the benefits of the law to the state’s consumers and businesses. Drafters could also consider limiting the applicability of the law to

[Page 151]

corporations that have substantial connections to the state or to conduct that has a substantial effect on consumers within the state. State merger control laws are more likely to succeed, for example, if they are tied to the local benefits of the law, such as a significant minimum threshold of activity affected within the state. Merger control laws targeted at clearly local markets, such as health care provider mergers, are even more likely to succeed.63

——–

Notes:

1. Counsel, Crowell & Moring. The views expressed herein do not necessarily represent the views of Crowell & Moring or its clients.

2. Assemb. Con. Res. 95, 2021-2022 Reg. Sess. (Ca. 2021).

3. Antitrust Law – Study B-750, California L. Rev. Comm’n (May 16, 2023), available at .

4. A flurry of federal antitrust bills was proposed in 2021-2022, but none of the substantive provisions passed before Democrats lost control of the House in November 2022 and it is unlikely that any of these bills will pass in the near term. See Matthew Perlman, Mid-Year Update: No Antitrust Redux Yet Despite Stack Of Bills, Law360 (July 13, 2022), https://www.law360.com/articles/1510974/mid-year-update-no-antitrust-redux-yet-despite-stack-of-bills (providing overview of then-pending legislation).

5. Assemb. Con. Res. 95, 2021-2022 Reg. Sess. (Cal. 2021).

6. S. S933A, 2021-2022 Leg. Sess. (N.Y. 2021); see also Assem. A1812A, 2021-2022 Leg. Sess. (N.Y. 2021)

7. See Kate Lisa, No major changes expected to stalled New York antitrust reforms, Spectrum News 1 (June 23, 2022, 8:20 PM), https://spectrumlocalnews.com/nys/central-ny/politics/2022/06/23/no-major-changes-expected-to-stalled-antitrust-reforms.

8. California v. ARC Am. Corp., 490 U.S. 93, 102 (1989) (state antitrust statutes allowing recovery for indirect purchasers not preempted because "Congress intended the federal antitrust laws to supplement, not displace, state antitrust remedies" (citing 21 Cong. Rec. 2457 (1890) (remarks of Sen. Sherman))); see also Exxon Corp. v. Governor of Md., 437 U.S. 121, 132 (1978) ("[I]t is illogical to infer that by excluding certain competitive behavior from the general ban against discriminatory pricing, Congress intended to pre-empt the States’ power to prohibit any conduct within that exclusion."); Shell Oil Co. v. Younger, 587 F.2d 34, 36 (9th Cir. 1978) (state price discrimination provision is not preempted even though it is broader than federal law), cert. denied, 440 U.S. 947 (1979); R. E. Spriggs Co. v. Adolph Coors Co., 37 Cal. App. 3d 653, 6591974) (rejecting argument that the "relevant federal antitrust legislation has evidenced a congressional intent to occupy the field"); William Inglis & Sons Baking Co. v. ITT Cont’l Baking Co., 668 F.2d 1014, 1049 (9th Cir. 1981) (California statute that presumes that pricing below average total cost is anticompetitive not preempted by federal law, which presumed pricing above average variable cost was permissible, because federal law "does not create a federal right to set such prices").

9. See State ex rel. Van de Kamp v. Texaco, Inc., 46 Cal. 3d 1147, 1154-55 (1988) (citing pre-1890 antitrust statutes in Kansas, Nebraska, Iowa, Michigan, Tennessee, Maine, Missouri, Mississippi, North Dakota, South Dakota, and Texas); see also James May, Antitrust Practice and Procedure in the Formative Era: The Constitutional and Conceptual Reach of State Antitrust Law, 1880-1918, 135 U. Pa. L. Rev. 495, 497-507 (1987) (describing early state antitrust laws).

10. Brief of Former State Antitrust Enforcement Officials & Antitrust Law Professors as Amici Curiae ISO Appellants and Reversal, State of New York v. Facebook, No. 21-7078, 2022 WL 266807, at *3 n.8 (2d. Cir. Jan. 28, 2022); see also Clayworth v. Pfizer, Inc., 49 Cal. 4th 758, 772 (2010) ("The Cartwright Act was passed in 1907 as part of a wave of turn-of-the-century state and federal legislation intended to stem the power of monopolies and cartels.").

11. See Herbert Hovenkamp, State Antitrust in the Federal Scheme, 58 Ind. L.J. 375, 379-82 (1983); Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law: An Analysis of Antitrust Principles and Their Application ¶ 2403a (4th and 5th Editions 2015-2021); see also Pennoyer v. Neff, 95 U.S. 714, 720 (1877) (applying a similar construct to personal jurisdiction, and explaining that the "authority of every tribunal is necessarily restricted by the territorial limits of the State in which it is established").

12. Wabash, St. L. & P. Ry. Co. v. Illinois, 118 U.S. 557, 582 (1886); see also Areeda & Hovenkamp, supra note 11, ¶ 2403a.

13. See Note, The Commerce Clause and State Antitrust Regulation, 61 Colum. L. Rev. 1469, 1473-74 (1961) (discussing debates during the consideration of the Sherman Act); see also Hovenkamp, supra note 11, at 379 ("The Senator’s paradigm was simple: [I]f a restraint on trade was located entirely within a state, it was out of congressional reach. On the other hand, if a combination or conspiracy was located in more than one state, then the entire combination was beyond the jurisdictional power of the state legislature and the state court.").

14. 156 U.S. 1 (1895).

15. "Between 1936 and 1995, the Court upheld every federal statute regulating private conduct challenged as beyond Congress’s power under the Commerce Clause. . . . As one leading commentator observed, ‘by the 1980s the Commerce Clause game seemed about over. Case book editors were driven to dream up wild hypotheticals to try to find ways to encourage students to consider whether the commerce power had any practical limits at all.’" A. Christopher Bryant, The Third Death of Federalism, 17 Cornell J. L. & Pub. Pol’y 101, 138 (citations excluded). For example, in Wickard v. Filburn, the Supreme Court held that "even if appellee’s activity be local and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce." 317 U.S. 111, 125 (1942). The Supreme Court commented that Wickard and other contemporary cases "ushered in an era of Commerce Clause jurisprudence that greatly expanded the previously defined authority of Congress under that Clause. In part, this was a recognition of the great changes that had occurred in the way business was carried on in this country. Enterprises that had once been local or at most regional in nature had become national in scope." United States v. Lopez, 514 U.S. 549, 556 (1995). Wickard concerned a wheat regulation, but noted in dicta that the Sherman Act was the second "federal resort to the commerce power" and criticized E. C. Knight for limiting its reach. 317 U.S. at 121. Three years later, in what remains the Supreme Court’s "canonical" personal jurisdiction decision, the Supreme Court similarly transformed personal jurisdiction jurisprudence as well. It held in International Shoe v. Washington that personal jurisdiction "depends on the defendant’s having such ‘contacts’ with the forum State that ‘the maintenance of the suit" is "reasonable, in the context of our federal system of government,’ and ‘does not offend traditional notions of fair play and substantial justice.’" Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct., 141 S. Ct. 1017, 1024 (2021) (quoting Int’l Shoe Co. v. State of Wash, 326 U.S. 310, 316-17 (1945)).

16. 334 U.S. 219 (1948).

17. Id. at 233-34.

18. Id. at 233.

19. See S.C. State Highway Dep’t v. Barnwell Bros., 303 U.S. 177 (1938); S. Pac. Co. v. Arizona ex rel. Sullivan, 325 U.S. 761 (1945); see also Sam Kalen, Dormancy Versus Innovation: A Next Generation Dormant Commerce Clause, 65 Okla. L. Rev. 381, 391-400 (2013).

20. Or. Waste Sys., Inc. v. Dep’t of Envtl. Quality of the State of Or., 511 U.S. 93, 98 (1994); see also Rocky Mountain Farmers Union v. Corey, 730 F.3d 1070, 1087-88 (9th Cir. 2013). The dormant Commerce Clause has been criticized as unmoored from the text of the Constitution. See, e.g., Tyler Pipe Indus., Inc. v. Wash. State Dep’t of Revenue, 483 U.S. 232, 254-65 (1987) (Scalia, J., concurring); Martin H. Redish & Shane V. Nugent, The Dormant Commerce Clause and the Constitutional Balance of Federalism, 1987 Duke L.J. 569, 581-90 (1987).

21. Or. Waste Sys., Inc., 511 U.S. at 99; see also Wyoming v. Oklahoma, 502 U.S. 437, 455 (1992).

22. C & A Carbone, Inc. v. Town of Clarkstown, N.Y., 511 U.S. 383, 390 (1994); see also Nat’l Pork Producers Council v. Ross, 143 S. Ct. 1142, 1153 (2023) ("Today, this antidiscrimination principle lies at the ‘very core’ of our dormant Commerce Clause jurisprudence."); see also id. at 1164-65 ("Before the Constitution’s passage, Rhode Island imposed special taxes on imported "New-England Rum"; Connecticut levied duties on goods "brought into the State, by Land or Water, from any of the United States of America"; and Virginia taxed "vessels coming within the State from any of the United States.") (cleaned up).

23. 397 U.S. 137 (1970). In National Pork Producers, the Supreme Court suggested that the Pike test is not clearly delineated from the antidiscrimination rule, but instead "serves as an important reminder that a law’s practical effects may also disclose the presence of a discriminatory purpose." 143 S.Ct. at 1157; see also id. at 1166 (Sotomayor, J., concurring); id. at 1167 (Roberts, C.J., concurring).

24. 397 U.S. at 142.

25. For example, in Raymond Motor Transportation, Inc. v. Rice, trucking companies challenged a Wisconsin law that governed the length and configuration of trucks that could be operated within the state. 434 U.S. 429, 439 (1978). The balancing inquiry was relatively straightforward because the trucking companies demonstrated that the state law imposed "a substantial burden on the interstate movement of goods" while the state "virtually defaulted in its defense of the regulations as a safety measure." Id. at 444, 445. In Partee v. San Diego Chargers Football Co., the California Supreme Court was "satisfied that national uniformity required in regulation of baseball and its reserve system is likewise required in the player-team-league relationships challenged . . . and that the burden on interstate commerce outweighs the state interests in applying state antitrust laws to those relationship." 668 P.2d 674, 679 (Cal. 1983).

26. See, e.g., Ass’n des Eleveurs de Canards et d’Oies du Quebec v. Harris, 729 F.3d 937, 950 (9th Cir. 2013) (rejecting dormant Commerce Clause challenge to California law banning sale of products that were the result of force feeding because law did not substantially burden interstate commerce); Nat’l Ass’n of Optometrists & Opticians v. Harris, 682 F.3d 1144, 1155, 1156 (9th Cir. 2012) (rejecting dormant Commerce Clause challenge to California laws regulating licensed opticians the sale of prescription eyewear because laws did not substantially burden interstate commerce).

27. Katherine Florey, State Courts, State Territory, State Power: Reflections on the Extraterritoriality Principle in Choice of Law and Legislation, 84 Notre Dame L. Rev. 1057, 1060 (2009).

28. Jack L. Goldsmith & Alan O. Sykes, The Internet and the Dormant Commerce Clause, 110 Yale L.J. 785, 789 (2001).

29. Nat’l Pork Producers, 143 S. Ct. at 1159-60 (plurality). But see id. at 1166 (Sotomayor, J.) ("I acknowledge that the inquiry is difficult and delicate, and federal courts are well advised to approach the matter with caution. Yet, I agree with the Chief Justice that courts generally are able to weigh disparate burdens and benefits against each other, and that they are called on to do so in other areas of the law with some frequency.").

30. 143 S. Ct. 1142, 1174 n.3 (2023) (Kavanaugh, J., concurring) ("six Justices agree[d] to retain the Pike balancing test"). Therefore, Naional Pork Producers "does not shut the door on" "Pike claims that do not allege discrimination or a burden on an artery of commerce." Id. at 1166 (Sotomayor, J., concurring); see also id. at 1168 (Roberts, C.J., concurring) ("As a majority of the Court agrees, Pike extends beyond laws either concerning discrimination or governing interstate transportation.").

31. Id. at 1166 (Sotomayor, J., concurring).

32. Id. at 1169, 1171 (Roberts, C.J.) (cleaned up).

33. Id. at 1169.

34. Nat’l Ass’n of Optometrists & Opticians v. Harris, 682 F.3d 1144, 1155-56 (9th Cir. 2012).

35. AT&T Mobility LLC v. AU Optronics Corp., 707 F.3d 1106, 1109, 1113 (9th Cir. 2013) (rejecting challenge to a Cartwright Act claim in a case in which price-fixed goods were purchased outside of California but some of defendants’ price fixing agreements allegedly took place in California).

36. See Knevelbaard Dairies v. Kraft Foods, Inc., 232 F.3d 979, 993-94 (9th Cir. 2000) (claim could be brought under California’s Cartwright Act where plaintiffs alleged price-fixing conduct occurred out of state but caused California cheese makers to purchase milk at artificially depressed prices); In re Lorazepam & Clorazepate Anitrust Liig., 295 F. Supp. 2d 30, 49-50 (D.D.C. 2003) (holding that Illinois Antitrust Act reached price-fixing allegations brought by an Illinois corporation for indirect purchases of drugs sold in Texas and New Mexico, and rejecting dormant Commerce Clause challenge in part because the Illinois Antitrust Act "does not directly conflict with that of the Sherman Act"); see also Heath Consultants v. Precision Instruments, 527 N.W.2d 596, 606-07 (Neb. 1995) (allowing nonresident company to assert a Nebraska antitrust claim against another nonresident company for a tying arrangement perpetrated outside of Nebraska which ultimately affected Nebraska consumers, and explaining that the burden on interstate commerce was low when the state law was consistent with federal law); Olstad v. Microsoft Corp., 700 N.W.2d 139, 158 (Wisc. 2005) (holding that Wisconsin’s antitrust statute could regulate wrongful conduct that affects and impacts people in its state, even where the illegal activity occurred predominantly or exclusively outside the state).

37. RLH Indus., Inc. v. SBC Commons, Inc., 133 Cal. App. 4th 1277, 1289-90 (2005); see also Epic Games, Inc. v. Apple Inc., 559 F. Supp. 3d 898, 1058 (N.D. Cal. 2021) (rejecting argument that the Commerce Clause requires restricting the scope of an injunction issued under the UCL to California where defendant is headquartered in California and "commerce affected by the conduct that the Court has found to be unfair takes place at least in part in California").

38. 143 S. Ct. at 1153-54; see also id. (Petitioners’ argument "that our dormant Commerce Clause cases suggest an additional and ‘almost per se’ rule forbidding enforcement of state laws that have the ‘practical effect of controlling commerce outside the State" "falters out of the gate").

39. Areeda & Hovenkamp, supra note 11, ¶ 2401a; see also Note, supra note 13, at 1472 (lamenting a lack of state-level antitrust enforcement but predicting "a growing interest in the enforcement of state antitrust laws").

40. Hovenkamp, supra note 11, at 390 n.76; see also RLH Indus., 133 Cal. App. 4th at 1289-90 (reasoning in part that the law "cannot create any inconsistency by projecting California’s prohibition of tying arrangements into other states, because the Sherman Act already bars tying arrangements").

41. James A. Rahl, Toward A Worthwhile State Antitrust Policy, 39 Tex. L. Rev. 753, 754 (1961) ("Except for occasional appearance in private litigation, the laws in most of the remaining states have been comatose for many years."); see also May, supra note 9, at 498 ("In 1961, a leading commentator could declare enforcement of state antitrust laws ‘virtually dead’ and openly wonder whether it would have been unethical in recent years for lawyers in most states to tell their clients to ignore them. In 1900 or 1910, businesses and business lawyers in several states could overlook the possibilities of state-level challenge to anticompetitive activity only at substantially greater risk.") (discussing Rahl, Toward A Worthwhile State Antitrust Policy)).

42. Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970).

43. 471 F. Supp. 363, 368 (D. Conn. 1979).

44. Id.

45. Id.

46. Id.

47. 295 F. Supp. 2d 30, 49 (D.D.C. 2003).

48. 663 F. Supp. 2d 1138, 1153-54 (D.N.M. 2009).

49. Id. at 1154.

50. Ass’n for Accessible Meds. v. Bonta, 562 F. Supp. 3d 973, 977 (E.D. Cal. 2021), modified, No. 2:20-CV-01708-TLN-DB, 2022 WL 463313 (E.D. Cal. Feb. 15, 2022).

51. Codified at section 134002 of the Health & Safety Code.

52. Reverse payment settlements arise when a generic drug manufacturer challenges a patent owned by an approved brand-name drug owner, and the parties’ settlement prevents the generic from producing the in return for a payment. See FTC v. Actavis, Inc., 570 U.S. 136, 140-44 (2013); see also C. Scott Hemphill, Paying for Delay: Pharmaceutical Patent Settlement as A Regulatory Design Problem, 81 N.Y.U. L. Rev. 1553, 1563-73 (2006). AB 824 followed In re Cipro Cases I & II, 61 Cal. 4th 116, 154 (2015), in which the California Supreme Court held that certain reverse payment settlements establish a prima facie case that the settlement is anticompetitive.

53. Actavis, 570 U.S. at 159.

54. Ass’n for Accessible Meds., 562 F. Supp. 3d at 987.

55. See supra note 38.

56. Ass’n for Accessible Meds., 562 F. Supp. 3d at 986 (quoting plaintiff’s brief).

57. See id. at 981 (quoting a declaration by one of the association’s members averring that "the member recently decided, in light of AB 824. . . . to pull out of a tentative settlement agreement").

58. 457 U.S. 624 (1982).

59. Id. at 640; see also id. at 643-46 (Pike analysis).

60. 481 U.S. 69, 89 (1987); see also id. at 89-94 (Pike analysis).

61. Nat’l Pork Producers Council v. Ross, 143 S. Ct. 1142, 1171 (2023) (Roberts, C.J., dissenting in part).

62. Id.

63. For example, Oregon H.B. 2362 went into effect in 2022. It requires 180 days’ notice to the Oregon Health Authority of "material change transactions" involving health professionals, hospitals, and insurers. 2021 Oregon House Bill No. 2362, Oregon Eighty-First Legislative Assembly. Nevada’s 2021 S.B. 329 requires hospitals and physician groups to notify the Nevada Department of Health and Human Services of transactions involving physician group practices, including hospitals. See 2021 Nev. S. Bill No. 329, Nev. Eighty-First Reg. Sess.

[Page 152]