New Year, New Venue Law: Newly Passed Law Means State Attorneys General Can Avoid Having Their Antitrust Cases Consolidated in Multidistrict Litigation
9 min read
Prior to the State Antitrust Enforcement Venue Act—which was signed into US law on December 29, 2022 as part of the omnibus spending bill—the Judicial Panel on Multidistrict Litigation (JPML) had the power to transfer and consolidate all antitrust cases—including suits brought by State AGs—except for criminal and injunctive relief cases brought by the United States (i.e., the Antitrust Division of the DOJ).1
The new law changes that by making all State AG antitrust actions now ineligible for consolidation in multidistrict litigation (MDL).
As a result of the new law, it is now easier for State AGs to keep their cases in the venue of their choosing, which could put their case in a different court and on a different track from similar cases brought by private class action plaintiffs—or even other State AGs. Under the prior law, a defendant was likely to be fighting nationwide litigations on the same facts in one consolidated MDL, including state AG actions. A defendant could now be litigating on many more fronts simultaneously—at the expense of the efficiency, convenience to the parties and the court, and cost savings of multidistrict litigation—all the while risking duplicative recovery.2
Without fanfare, the new law, despite its title, also takes federal-government antitrust damages suits—i.e., brought by the US (usually the DOJ Antitrust Division)—out of MDL consolidation.
Before the enactment of the State Antitrust Enforcement Venue Act, the JPML, by motion or sua sponte, could transfer and consolidate parallel antitrust suits brought by State AGs, the DOJ Antitrust Division or Civil Division (seeking damages),3 and/or private plaintiffs. Once transferred, the action would proceed as an MDL, giving the parties and the courts the benefit of the efficiencies of conducting all pre-trial proceedings in a single jurisdiction, which is not only convenient for the parties and the witnesses, but establishes a Judge with universal knowledge of the consolidated actions, and allows for non-duplicative discovery and consistent rulings.
The new law eliminates the JPML's ability to consolidate and transfer any antitrust action brought by a State AG or the DOJ (including actions seeking damages, which were formerly eligible for MDL centralization).4 In other words, the new law prevents these actions from being consolidated into an MDL, even if the interests of the parties and the court otherwise weigh in favor of MDL consolidation.
What does the State Antitrust Enforcement Venue Act do? The law governing multidistrict litigation, 28 U.S.C. § 1407, empowers the JPML to consolidate and transfer US civil litigations (including antitrust litigations) that involve common questions of fact. Prior to enactment of the new law, § 1407(g) excluded from the JPML's authority "any action in which the United States is a complainant arising under the antitrust laws." It went on in the same section to define "antitrust laws" to encompass all actions arising under the Sherman and Clayton Acts, but specifically carved out actions brought under Section 4A of the Clayton Act, which is the section empowering the government to bring antitrust actions for damages (thus putting the Antitrust Division's actions for damages within the JPML's reach).
The former law, 28 U.S.C. § 1407, also had a subsection (h), which explicitly provided that "the [JPML] may consolidate and transfer with or without the consent of the parties . . . any action brought under section 4C of the Clayton Act"—which is the provision of the Clayton Act empowering State Attorneys General to enforce the antitrust laws.
The new law makes two important edits to 28 USC § 1407, one three-word addition, and two deletions:
(g) Nothing in this section shall apply to any action in which the United States or a State is a complainant arising under the antitrust laws. "Antitrust laws" as used herein include those acts referred to in the Act of October 15, 1914, as amended (38 Stat. 730; 15 U.S.C. 12), and also include the Act of June 19, 1936 (49 Stat. 1526; 15 U.S.C. 13, 13a, and 13b) and the Act of September 26, 1914, as added March 21, 1938 (52 Stat. 116, 117; 15 U.S.C. 56); but shall not include section 4A of the Act of October 15, 1914, as added July 7, 1955 (69 Stat. 282; 15 U.S.C. 15a).
(h) Notwithstanding the provisions of section 1404 or subsection (f) of this section, the judicial panel on multidistrict litigation may consolidate and transfer with or without the consent of the parties, for both pretrial purposes and for trial, any action brought under section 4C of the Clayton Act.
By striking the last phrase of § 1407(g), the new law treats DOJ Antitrust Division cases seeking damages the same as DOJ actions seeking criminal sanctions or injunctive relief—that is, the new law excludes all Antitrust Division actions from eligibility for JPML consolidation. The other two edits—the addition of "or a State" to subsection (g) and the complete deletion of subsection (h)—now put all State AG antitrust actions on the same footing as Antitrust Division actions, and similarly exclude them from potential MDL consolidation.
Why does it matter? The ability to centralize related actions through an MDL allows parties and courts "to avoid duplication of discovery, to prevent inconsistent pretrial rulings, and to conserve the resources of the parties, their counsel and the judiciary."5 MDL centralization can be particularly important in antitrust actions because antitrust defendants are frequently subjected to simultaneous, nearly identical lawsuits brought by class action plaintiffs and government enforcers. In such cases, where discovery is often both extensive and lopsided—with the vast majority of discovery burden on defendants—the use of an MDL to maintain a manageable and efficient discovery process is crucial. Indeed, when legislation for creating multidistrict litigation was proposed in the 1960s, the need for efficient and economical discovery across related litigations—and in particular across related antitrust litigations—was a key focus.6
Thus, when evaluating a motion to transfer, the JPML weighs whether the transfer "will promote the just and efficient conduct of such actions" and considers the convenience of all parties and witnesses.7 In antitrust actions brought by State AGs and the DOJ Antitrust Division, however, the State Antitrust Enforcement Venue Act removes the statutory power of the JPML to consider the interests of the courts, defendants, and witnesses that may weigh in favor of transfer and consolidation.
"Home-Field Advantage." Indeed, according to the bill's sponsor US Representative Ken Buck of Colorado, the stated purpose of the Act was to give State AGs a "home-field advantage" by allowing them to "select and remain in their preferred venue."8 According to Representative Buck, the legislation is said to eliminate "inefficiencies and obstacles" that State AGs face enforcing the federal antitrust laws, "resulting in quicker resolution for the citizens of those states."9 The sponsors, as well as early drafts of the bill, were silent on Antitrust Division damages actions.
But while the Act may make it easier for state enforcers to bring litigation in their preferred venues, the Act will make it more difficult for defendants and the courts by excluding these actions from the JPML process—increasing expense, reducing efficiencies, and risking double recoveries and inconsistent judgments. The challenges are particularly apparent with respect to discovery, which is often a significant and costly undertaking in antitrust cases. Now, by default, discovery in one State AG actions would proceed separately from another State AG's action and the civil litigations in other courts involving similar (or identical) factual issues, witnesses, and discovery disputes. The evident effect is the piling on of litigation from a single event or set of conduct, with many federal courts throughout the country having to handle the new suits.
So what now? While the JPML procedure will no longer be available for defendants seeking to transfer an action brought by a State AG, defendants can still evaluate whether other avenues, such as a motion under 28 U.S.C. § 1404 (similar to forum non conveniens) or § 1406, may have merit.10 The State Antitrust Enforcement Venue Act does not affect these statutory avenues for potential transfer to the same district and judge as the MDL court.
Additionally, defendants should evaluate whether they can achieve discovery efficiencies with a pending MDL (or other related litigation) even without a formal transfer to the MDL court—either through a cooperative discovery process or motion practice. Of course, such an agreement or motion is far from guaranteed and historically, parties rarely achieve it.
1 Under the old statute (28 U.S.C. § 1407(g)), DOJ Antitrust Division cases seeking damages could be subject to JMPL transfer and consolidation, but not Antitrust Division cases seeking criminal sanctions or civil cases seeking injunctive relief only.
2 Consolidated Appropriations Act, 2023, Pub. L. No. 117-328, Div. GG § 301, 136 Stat. 4459, 5970 (2022).
3 Prior to the State Antitrust Enforcement Venue Act, the JPML could transfer antitrust cases brought by the US DOJ that sought damages. But under the prior law (and now), the JPML cannot transfer Antitrust Division cases seeking criminal sanctions, civil asset forfeiture, or injunctive relief. 28 U.S.C. § 1407(g).
4 In recent years, the Antitrust Division has expressed its intention to increase enforcement of Section 4A on behalf of purchases made by the US Government itself. See Assistant Attorney General Makan Delrahim Remarks at the American Bar Association Antitrust Section Fall Forum, "November Rain": Antitrust Enforcement on Behalf of the American Consumers and Taxpayers (Nov. 15, 2018), https://www.justice.gov/opa/speech/assistant-attorney-general-makan-delrahim-remarks-american-bar-association-antitrust. The speech gives a history of the Antitrust Division's use of Section 4A. Id. ("Section 4A is an important but underused enforcement tool that allows the government to recover treble damages for antitrust violations when the government itself is the victim. . . . Going forward, the Division will exercise 4A authority to seek compensation for taxpayers when the government has been the victim of an antitrust violation.").
5 About the Panel, US Jud. Panel on Multidistrict Litig., https://www.jpml.uscourts.gov/about-panel.
6 A Proposal to Provide Pretrial Consolidation of Multidistrict Litigation: Hearings on S. 3815 Before the Subcomm. on Improvements in Jud. Mach. of the S. Comm. on the Judiciary, 89th Cong. (1966) at 2 (statement of Sen. Joseph D. Tydings, Chairman, Subcomm. on Improvements in Jud. Mach. of the S. Comm. on the Judiciary), 6 (statement of Hon. Edwin A Robson, Judge of the US District Court, Northern District of Illinois), 9 (statement of Phil C. Neal, Dean, University of Chicago Law School), 20 (statement of Hon. William H. Becker, Chief Judge of the US District Court, Western District of Missouri), 88 (report of Marcus Mattson, Chairman, Section of Antitrust Law to the House of Delegates of American Bar Association).
7 28 U.S.C. § 1407(a) (emphasis added).
8 Press Release, Rep. Ken Buck, Rep. Buck Introduces the State Antitrust Enforcement Venue Act (May 21, 2021), https://buck.house.gov/media-center/press-releases/rep-buck-introduces-state-antitrust-enforcement-venue-act.
9 Id.
10 28 U.S.C. § 1404 authorizes a district court in its discretion to transfer a case brought in a proper venue, stating, "[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented." 28 U.S.C. § 1406 requires a district court to dismiss or transfer a case brought in an improper venue, stating "[t]he district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought."
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