CAPITALIZING ON JUDICIAL ANTITRUST EXPERIENCE

By Peter K. Huston¹

I. INTRODUCTION

Federal antitrust cases are rarely simple. The statutes themselves are short enough and written in plain language, but they are broad. Courts have had to layer on all sorts of complex doctrines and constructs over the last 100-plus years as they have applied the statutes to real-world disputes. The list of thorny concepts is long: "Relevant product and geographic markets," "unilateral and coordinated effects," "conscious parallelism," "Illinois Brick/pass on," "dual distribution," "quick look," "recoupment," "foreclosure," "small-but-significant-non-transitory-increases-in-price (SSNIP)," and on and on. In addition, the influence of economics on antitrust law has steadily increased and econometric tools have become more sophisticated. And to make things even more complicated, both antitrust law and economics are moving targets. Cases decided in the past can reflect outmoded thinking, even if they haven’t been specifically overruled, creating a minefield for the uninitiated.

Of course, it becomes a little easier to mentally wrestle difficult antitrust concepts to the ground the more one is exposed to them. But many judges have little, if any, experience with antitrust cases. Others get a relatively steady diet. While hundreds of antitrust cases are filed in the federal court system every year, they are not filed evenly across all 94 districts. For a variety of reasons a few districts get far more than their fair share. In fact, statistics from the last few years show that more civil antitrust cases have been filed in the top five districts—the Northern District of California, the Southern District of New York, the Eastern District of Michigan, the Eastern District of Pennsylvania, and the District of New Jersey—than all of the other 89 districts combined.²

It stands to reason that the districts that routinely deal with antitrust concepts will have an easier time with them than those that hardly ever see them. On the other hand, we generally expect our federal judges to be able to handle whatever legal issues come their way,³ and a judge’s breadth of experience across disciplines is perhaps as valuable as a depth of experience in the field relevant to any given case. For these reasons, creation of specialized antitrust courts, which would require an Act of Congress (that no one appears to be clamoring for), does not make sense. But a district’s experience with antitrust law can and should give it an edge in terms of where a case lands in the context of a motion to transfer venue.

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II. PLAINTIFF’S CHOICE OF VENUE AND MOTIONS TO TRANSFER

Venue in antitrust cases is often proper in any judicial district in which a defendant is subject to the court’s personal jurisdiction.⁴ For many cases that is most districts because the defendants transact business nationally,⁵ giving plaintiffs multiple jurisdictions from which to choose. Indeed, it is not uncommon to see private antitrust class actions pop up in many districts simultaneously following a precipitating event, such as the announcement of a Department of Justice investigation. In those circumstances, the Judicial Panel on Multidistrict Litigation, a group of seven circuit and district judges from around the country appointed by the Chief Justice of the Supreme Court, is typically called on to decide where to consolidate the cases for pretrial purposes. The panel decides motions to transfer based on the "convenience of parties and witnesses and [the promotion of] the just and efficient conduct of such actions."⁶

The standard is similar in solo antitrust cases when a court considers a motion to transfer venue. Under Section 1404 of the Judicial Code, the district court can transfer a case to another venue "[f]or the convenience of the parties and witnesses" and "in the interest of justice."⁷ District court judges have wide discretion on such motions, and according to the Supreme Court, the statute permits a "flexible and individualized analysis."⁸

While assessing the convenience of witnesses is relatively straightforward,⁹ the "interests of justice" is not so concrete. In evaluating which venue best serves the interest of justice, courts weigh a host of factors, including (in no particular order):

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• the plaintiff’s choice of forum;¹⁰
• the ability to compel the attendance of unwilling nonparty witnesses;
• the ease of access to sources of proof;
• the respective parties’ contacts with the forum;
• the relationship of each community to the controversy;
• relative court congestion;
• the location where relevant agreements were negotiated and executed;
• applicable forum selection clauses;
• the differences in the costs of litigation in the two forums;
• the unfairness of burdening citizens in an unrelated forum with jury duty;
• the interest in avoiding litigation in a forum where there is a question over whether personal jurisdiction exists; and
• familiarity with the applicable law.¹¹

This last factor leads some parties in antitrust cases to argue that the interests of justice favors having the case remain with (or go to) districts with significant antitrust experience. For example, in Le, et al. v. Zuffa LLC, an antitrust challenge to the Ultimate Fighting Championship (UFC) organization, the defense moved to transfer venue from the Northern District of California, where the case was originally filed, to the District of Nevada.¹² In opposing the motion, the plaintiff contrasted the 476 civil antitrust cases that had been filed in the Northern District of California over the last several years with just 19 that had been filed in Nevada.¹³ The plaintiffs argued that the disparity gave California a distinct edge in terms of which court could most efficiently manage the complex action.¹⁴

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A group of plaintiffs in the contact lens multidistrict litigation made a similar argument. They pointed out the depth of experience of the Northern District of California judges in dealing with coordinated class action antitrust suits, citing a series of cases the court has handled, including In re Cathode Ray Tube (CRT) Antitrust Litigation (MDL No. 1917), In re TFT-LCD (Flat Panel) Antitrust Litigation (MDL No. 1827), In re Optical Disk Drive Prods. Antitrust Litigation (MDL No. 2143), and In re Lithium Ion Batteries Antitrust Litigation (MDL No. 2420).¹⁵

In both the UFC case and the contact lens case, the plaintiffs’ efforts to keep the cases in the Northern District of California were unsuccessful. In the UFC case, contractual choice of law provisions helped convince the court to send the case to Nevada.¹⁶ In the contact lens cases, the MDL Panel coordinated the cases in the Middle District of Florida based on the presence of defendants in that state and the Florida judge’s familiarity with the industry from prior litigation.¹⁷

Despite these results, a disproportionate number of antitrust cases will continue to be filed in the districts traditionally favored by plaintiffs, and those plaintiffs will fight to keep them there citing the districts’ antitrust expertise.

III. DOES JUDICIAL ANTITRUST EXPERIENCE LEAD TO MORE JUST OR EFFICIENT OUTCOMES?

Some antitrust cases, regardless of where they are filed, should not survive the pleading stage. Others deserve to pass that threshold, but should be dismissed on summary judgment. Others should rightfully proceed to trial, but one or more expert witnesses should not be allowed to testify, or their testimony should be restricted. District court judges stand watch at each of these gates. And their decisions matter. Obviously, a dismissal is hugely consequential to plaintiffs. On the flip side, allowing an antitrust case to proceed into the discovery phase is incredibly expensive for defendants, as the Supreme Court noted when it tightened the pleading standard several years ago.¹⁸

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It is reasonable to think that a judge who has had to make these tough decisions in antitrust cases many times before is more likely to make the correct decisions in an efficient manner. Judges familiar with current antitrust legal and economic principles presumably are able to quickly zero-in on the relevant authorities, analyze the issues and cogently explain their reasoning using the most appropriate terminology.

This proposition, if true, and taken to its logical extreme, presents an argument for specialized antitrust courts. The idea has its appeal and has been considered. For example, Senior Circuit Judge Douglas H. Ginsburg of the District of Columbia Circuit and Federal Trade Commissioner Joshua D. Wright contemplated a specialist antitrust court staffed by judges drawn, on a rotating temporary basis, from generalist courts.¹⁹ They pointed out that allowing judges to specialize on antitrust cases would likely yield more satisfactory results in terms of efficiency, uniformity, and higher quality decisions.²⁰ But there are countervailing arguments. The tradition of generalist Article III judges is strong, and as Seventh Circuit ChiefJudge Diane Wood has noted:

The need to explain even the most complex area to the generalist judge (and often to a jury as well) forces the bar to demystify legal doctrine and to make the law comprehensible. . . . [And] the generalist judge is less likely to become the victim of regulatory capture than her specialized counterpart, despite the best intentions of the latter’s side. If one never emerges from the world of antitrust . . . one can lose sight of the broader goals that lie behind this area of law; one can forget the ways in which it relates to other fields of law like business torts, breaches of contract, and consumer protection, and more broadly the way this law fits into the loose ‘industrial policy’ of the United States. Economic mumbo-jumbo is already prevalent in the field, but lawyers talk of the trade-off between the deadweight loss ‘triangle’ and the income transfer ‘rectangle’ at their peril in front of a judge who does not live and breathe the field. Specialists need to come out of their cocoons from time to time and find out how their smaller worlds fit in with the larger one.²¹

Moreover, it is not clear that additional exposure to antitrust cases alone leads to significantly better results. In a 2011 article in the Journal of Law and Economics, Commissioner Wright and economist Michael Baye published the results of a study which sought to empirically test whether the economic issues in antitrust cases had become too complex for generalist judges.²² They looked at whether economic complexity in antitrust cases and the economic training of judges impacted the decisions. In order to test their hypotheses, they collected antitrust decisions from both Article III federal district court judges and administrative law judges and categorized them in terms of economic complexity. They also collected data on the judges, including their antitrust experience and economic training. Lastly, they correlated these and other variables with the quality of the decisions as measured by whether they were appealed. The authors explained the rationale for selecting appeals as the relevant variable for assessing the quality of the decision:

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[T]he parties—who have typically invested in expert economists and thus are in a strong position to understand the strengths and weaknesses of complex economic arguments—can assess relatively well whether the initial court got the economics right or wrong in a case. Thus, by revealed preference, the fact that a party is willing to bear the cost of appealing a judge’s opinion signals that (at least it believes) that the judge made a potentially reversible error.²³

Baye and Wright concluded that economic complexity significantly increases the probability of appeal.²⁴ They also concluded that judicial economic training reduces the probability of appeal in simple cases but not complex cases.²⁵ Lastly, they found that in terms of getting decisions right, "repeated exposure to complex antitrust issues is not a close substitute for economic training."²⁶

This last finding presents another argument against separate antitrust courts. Higher levels of exposure to antitrust issues did, in fact, correlate with higher quality decisions in Baye and Wright’s study (as measured by lower appeal rate, as noted above), however the results were small and not as statistically significant as economic training.²⁷ The weak correlation does support a major shake-up of the judiciary. But it does not detract from using a district’s antitrust experience as a factor to help decide venue motions. While antitrust experience might lead to only a mildly higher number of good decisions, it almost surely allows judges to resolve issues more quickly. And efficiency is a driving force behind the change of venue statute. The Supreme Court has said that the purpose of the statute is "to prevent the waste of time, energy and money and to protect litigants, witnesses and the public against unnecessary inconvenience and expense."²⁸

These goals are advanced when cases are heard by judges who, by virtue of their experience with prior cases, can quickly and confidently recognize a claim that should be dismissed, a bankrupt argument, or an expert witness who is relying on junk science. And allowing antitrust experience to affect venue decisions does not compromise the values touted by Judge Wood (and shared by many). Even in the districts with the highest number of antitrust cases, those cases will represent a relatively small fraction of the judges’ overall caseload, allowing judges to maintain the broader perspective of which Judge Wood spoke.

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IV. Conclusion

Some federal district courts get many more antitrust cases than others. The experience gained from dealing with these cases likely makes the courts more efficient, if not better, at dealing with the complex concepts that arise. There are solid reasons why antitrust cases should continue to be decided by generalist rather than specialist judges, as has been the long tradition in this country. The perspective generalist judges bring from hearing a variety of types of cases is likely a net benefit to the development of antitrust law, as is the more accessible writing and speaking mode that antitrust lawyers must adopt when presenting their arguments to generalist judges. Yet relative antitrust expertise is a legitimate factor to be considered in deciding which district should get a case in the context of a motion to transfer venue or motion to consolidate multidistrict litigation.

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Notes:

^1. Peter K. Huston is a partner in the San Francisco office of Sidley Austin LLP and practices in the firm’s global Antitrust and Competition group, Complex Commercial Litigation group, and White Collar: Government Litigation & Investigations group. The views expressed in this article are exclusively those of the author and do not necessarily reflect those of Sidley Austin LLP and its partners.

^2. See Federal Court Management Statistics, U.S. Courts, http://www.uscourts.gov/statistics-reports/analysis-reports/federal-court-management-statistics (last updated March 31, 2015).

^3. See Hawkes v. Hewlett-Packard Co., No. 10-05957, 2012 WL 506569, at *5 (N.D. Cal. Feb. 15, 2012) ("District courts are ‘equally capable of applying federal law’") (quoting Allstar Mktg. Grp. LLC v. Your Store Online, Inc., 666 F. Supp. 2d 1109, 1133 (C.D. Cal. 2009)).

^4. The Clayton Act provides that "[a]ny suit, action, or proceeding under the antitrust laws against a corporation may be brought not only in the judicial district whereof it is an inhabitant, but also in any district wherein it may be found or transacts business; and all process in such cases may be served in the district of which it is an inhabitant, or wherever it may be found." 15 U.S.C. § 22 (2012).

The general venue provision for civil actions provides that they "may be brought in—(1) a judicial district in which any defendant resides, if all defendants are residents of the State in which the district is located; . . . or (3) if there is no district in which an action may otherwise be brought . . . , any judicial district in which any defendant is subject to the court’s personal jurisdiction with respect to such action." 28 U.S.C. §1391(b) (2012). "For all venue purposes—. . . (2) an entity . . . shall be deemed to reside, if a defendant, in any judicial district in which such defendant is subject to the court’s personal jurisdiction . . . ; and (3) a defendant not resident in the United States may be sued in any judicial district. . . ." 28 U.S.C. § 1391(c) (2012).

^5. See KM Enters., Inc. v. Global Traffic Technologies, LLC, 725 F.3d 718, 723-31 (7th Cir. 2013) for a thorough discussion of the interplay between the general venue provisions and the venue and personal jurisdiction provisions specific to the Clayton Act (and the circuit split on the subject).

^6. 28 U.S.C. § 1407(a) (2012).

^7. Id. § 1404(a).

^8. Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988).

^9. The convenience of important nonparty witnesses is often cited as the most significant factor in ruling on a motion to transfer venue. See 15 Charles Alan Wright , et al., Federal Practice and Procedure § 3851 (4th ed. 2014); see also Lipnick v. United Air Lines, Inc., No. 11-2028, 2011 WL 4026647, at *2 (N.D. Cal. Sept. 9, 2011).

^10. Courts have noted that plaintiffs’ chosen forum is entitled to less weight where they seek to represent a nationwide class. As the Supreme Court explained in Koster v. Lumbermens Mutual Casualty Co, "where there are hundreds of potential plaintiffs, . . . all of whom could with equal show of right go into their many home courts, the claim of any one plaintiff that a forum is appropriate merely because it is his home forum is considerably weakened." 330 U.S. 518, 524 (1947); see also, e.g., Lou v. Belzberg, 834 F.2d 730, 739 (9th Cir. 1987) ("If the operative facts have not occurred within the forum and the forum has no interest in the parties or subject matter, [the plaintiffs’] choice is entitled to only minimal consideration."); Hawkins v. Gerber Prods. Co., 924 F. Supp. 2d 1208, 1214-15 (S.D. Cal. 2013) ("In part, the reduced weight on plaintiff’s choice of forum in class actions serves as a guard against the dangers of forum shopping, especially when a representative plaintiff does not reside within the district"); Job Haines Home for the Aged v. Young, 936 F. Supp. 223, 228 (D.N.J. 1996) ("[T]he weight of authority holds that in class actions and derivative law suits the class representative’s choice of forum is entitled to lessened deference.").

^11. See Van Dusen v. Barrack, 376 U.S. 612, 645 (1964) (explaining that "to the extent that Pennsylvania laws are difficult or unclear and might not defer to Massachusetts laws, it may be advantageous to retain the actions in Pennsylvania where the judges possess a more ready familiarity with the local laws."); Research Automation, Inc. v. Schrader-Bridgeport Int’l., Inc., 626 F.3d 973, 978 (7th Cir. 2010) (discussing the factors courts consider under the interests of Justice analysis, and explaining that "the interests of Justice may be determinative, warranting transfer or its denial even where the convenience of the parties and witnesses points toward the opposite result."); Jones v. GNC Franchising, Inc., 211 F.3d 495, 498-99 (9th Cir. 2000) (enumerating the factors courts consider under the interests of Justice analysis); Coffey v. Van Dorn Iron Works, 796 F.2d 217, 221-22 (7th Cir. 1986) (same); Nyulassy v. Lockheed Martin Corp., No. 12-1182, 2012 WL 2906572, at *2 (N.D. Cal. July 16, 2012) (same); King v. Sam Holdings, LLC, No. 10-04706, 2011 WL 4948603, at *4 (N.D. Cal. Oct. 18, 2011) (same); SoccerSpecific.com v. World Class Coaching, Inc., No. 08-6109, 2008 WL 4960232, at *5 (D. Or. Nov. 18, 2008) (same).

^12. Defendant Zuffa, LLC’s Consolidated Notice of Motion and Motion to Transfer Venue Under 28 U.S.C. § 1404(a), Le, et al. v. Zuffa LLC, No. 14-05484 (N.D. Cal., Apr. 10, 2015), ECF No. 31.

^13. Plaintiffs’ Opposition to the UFC’s Motion to Transfer Venue at 23, Le, et al. v. Zuffa LLC, No. 14-05484 (N.D. Cal., Jan. 30, 2015), ECF No. 69.

^14. Id. (explaining that the Northern District of California has had more than 25 times the number of antitrust actions as the District of Nevada, and could be "expected to rely on its substantial experience to more efficiently manage" the case).

^15. Response of Plaintiffs Joanne Buckley, et al. for Centralization in Northern District of California Pursuant to 28 U.S.C. § 1407 at 4, In re Disposable Contact Lens Antitrust Litigation, No. 2626 (J.P.M.L., Mar. 30, 2015), ECF No. 59.

^16. See Order Granting Defendant’s Motion to Transfer Venue at 3, Le, et al. v. Zuffa LLC, No. 14-05484 (N.D. Cal., June 2, 2015), ECF No. 94 ("At the final bell, it is Defendants arguments that clinch this round because the relevant forum selection clause and the § 1404(a) convenience considerations both favor a Nevada forum.").

^17. See Transfer Order at 2, In re Disposable Contact Lens Antitrust Litigation, No. 2626 (J.P.M.L., June 8, 2015), ECF No. 186.

^18. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007).

^19. See Hon. Douglas H. Ginsburg & Joshua D. Wright, Antitrust Courts: Specialists Versus Generalists, in International Antitrust Law & Policy: Fordham Competition Law (Barry E. Hawk ed., 2012), reprinted in 36 Fordham Int’l L. J. 788 (2013); see also Joshua D. Wright & Angela M. Diveley, Do Expert Agencies Outperform Generalist Judges? Some Preliminary Evidence from the Federal Trade Commission, 1 J. Antitrust Enforcement 82 (2012). The issue has also come up in the context of patent law. See Jay P. Kesan & Gwendolyn G. Ball, Judicial Experience and the Efficiency and Accuracy of Patent Adjudication: An Empirical Analysis of the Case for a Specialized Patent Trial Court, 24 Harv. J.L. & Tech. 393 (2011) (discussing the general arguments for judicial specialization and presenting empirical evidence of a "real but moderate case for the development of . . . a specialized patent trial court.").

^20. Ginsburg & Wright, supra note 19, at 793-98.

^21. Diane P. Wood, Generalist Judges in a Specialized World, 50 SMU L. Rev. 1755, 1767 (1997).

^22. Michael R. Baye & Joshua D. Wright, Is Antitrust Law Too Complicated for Generalist Judges? The Impact of Economic Complexity and Judicial Training on Appeals, 54 J.L. & Econ. 1 (2011).

^23. Id. at 5.

^24. Id.

^25. Id. This finding supports training judges in economics, a conclusion also reached by the American Bar Association Antitrust Section Economic Evidence Task Force. See Memorandum from Jonathan B. Baker & M. Howard Morse, Final Report of Economic Evidence Task Force (Aug. 1, 2006), http://www.americanbar.org/content/dam/aba/migrated/antitrust/at-reports/01_c_ii.authcheckdam.pdf.

^26. Baye & Wright, supra note 22, at 16, 20 (emphasis added).

^27. Id. at 16.

^28. Van Dusen v. Barrack, 376 U.S. 612, 616 (1964) (internal quotation marks and citations omitted).