Bloomberg Law
Free Newsletter Sign Up
Bloomberg Law
Welcome
Go
Free Newsletter Sign Up

Justice Looks to Sway Private Antitrust Law With More Briefs

Aug. 4, 2022, 9:00 AM

The DOJ’s antitrust division is leaning on legal briefs to influence competition law even when it lacks the time and resources to join private litigation as a party.

In deploying statements of interest in private cases—such as challenges to no-poach pacts between employers—division head Jonathan Kanter is focusing on clarifying the law while laying the groundwork for potential future major cases, according to former DOJ staff and antitrust lawyers.

“Under Trump and even more so under Biden, there’s more of an appetite to litigate, even if they’ll possibly lose,” said Daniel Crane, a University of Michigan Law School professor. “The statements of interest are a warm up for that.”

Kanter’s predecessor, former antitrust division head Makan Delrahim, ramped up statement-of-interest filings, partly in response to lawmaker pressure to crack down on anticompetitive behavior. That trend has continued under the Biden administration.

The agency under Kanter is using every tool available to advance its agenda, said Kathy O’Neill, a former division senior director who departed in May. Against a backdrop of historic staffing lows, the use of statements illustrates the division’s pressing need to allot resources among investigations, litigation, and briefs.

“The antitrust agencies have been starved for resources for over a decade,” O’Neill said. “So there’s this renewed interest and recognition that a statement of interest can be a useful vehicle for advancing their antitrust agendas.”

Since 2018, the division has filed 40 statements of interest and replies, virtually all with US district courts. Before then, it had filed just two: one in 2010 and one in 2009, according to a review of division records.

Most of the statements were filed under Delrahim, but Kanter looks to be keeping pace, filing eight statements in the nine months since he was confirmed—six of them since late April.

The filings are also illustrative of how the division’s legal priorities have shifted. Nearly a third of Delrahim’s statements focused on the intersection of intellectual property law and antitrust, although department tackled some no-poach cases. The division under Delrahim also took an interest in private litigation that relied heavily on the interpretation of antitrust exemptions.

Kanter, meanwhile, has sharpened the focus on labor, with half of the statements filed so far under his direction dedicated to no-poach and noncompete agreement litigation. Two others deal with antitrust exemptions.

‘Nothing But Good’

Statements of interest can only be filed by the government. They also provide an opportunity for early input in cases, often at the district court level. They differ from amicus briefs, which are open to all parties, and tend to be most welcomed at the appellate level or higher.

“People could look at it and say ‘Gosh, why is the division doing this instead of bringing cases?’” said Andrew Finch, a Paul Weiss partner and former principal deputy assistant attorney general under Delrahim.

“But it could be more efficient: you get involved earlier, don’t need to spend resources at the circuit court level, and maybe you’ll achieve a positive development in the law without having to bring a full case,” he said.

DOJ statements of interest are often times “nothing but good,” for antitrust plaintiffs, said Robert Litan of Berger Montague, who is involved in a proposed class action against elite universities for alleged cartel price-fixing.

Although the division limits statements to a case’s legal standards, rarely taking sides, its interpretation of law under Kanter—and the Biden administration’s broader, pro-competition doctrine—tends to favor plaintiffs. The division maintains, for instance, that no-poach agreements are inherently illegal, violating competition in labor markets, and it backs narrow interpretations of existing antitrust exemptions.

In Litan’s case, Henry et al v. Brown University et al., the division, in a July 7 statement, said the court should narrowly construe the antitrust exemption for universities that admit students on a needs-blind basis.

It backed another narrow exemption, this time for Major League Baseball, in a June statement in Nostalgic Partners LLC et al v. The Office of the Commissioner of Baseball. In that case, a group of minor league baseball teams sued MLB over a restructuring plan that cut 40 of the 160 teams from professional baseball’s farm system.

“When the DOJ comes in and says, `Here’s how you should interpret the law,’ that’s powerful,” said Dean Harvey, a partner at Lieff Cabraser who represents a proposed class suing their employer over no-poach agreements. The division twice filed statements of interest in the case over the agreements’ illegality.

Risk of Rejection

But not all judges want to hear from the DOJ. Federal Judge Jorge L. Alonso of the US District Court for the Northern District of Illinois in March denied the government’s request to file a statement of interest in a case over McDonald’s franchises’ no-poach agreements.

The division wanted to walk back a previous statement of interest from 2019, which held that agreements between franchises and their corporate overseers not to hire staff from other franchises are not presumptively illegal. Alonso declined to allow the new statement of interest “based upon principles of separation of power” between the executive and judiciary branches, according to a court transcript.

Such denials are rare, attorneys and professors said. Antitrust is a particularly intricate area of the law, made more complex by the economic research often required to apply statutes correctly. Courts often realize the benefit of having the most learned antitrust body in the US weighing in, said Eleanor Fox, a professor of trade regulation at New York University Law School.

“Courts are generalists,” said Eric Hochstadt, a Weil partner who’s been involved in three cases where the antitrust division filed statements. “Most judges don’t have much antitrust experience. It’s helpful for the court to have an expert agency weigh in, particularly in a new area like no-poach or on immunity statutes that haven’t been interpreted by the courts.”

But the division also assumes a risk that its statements of interest won’t succeed, said Barak Orbach, a law and business professor at the University of Arizona James E. Rogers College of Law. A court’s rejection or pursuit of a different understanding of the law might damage the DOJ’s reputation and sour other courts on its statements, he said.

Orbach encouraged the division to pick its targets carefully and ensure each statement is airtight. Some recent filings were “sloppy” in focusing on making broad political statements rather than specific legal arguments, he said.

‘Force Multiplier’

Statements of interest are a cost-effective tool at a time when division resources are at a premium and staff levels are rebounding from a major decline during the Trump administration.

“This has become a force multiplier for the DOJ,” said Andre Geverola, an Arnold & Porter partner and former division criminal litigation director. “If there’s a private case out there that presents the right facts, the DOJ can jump on it and use those facts to move the law in the direction it wants. That’s more bang for the DOJ’s buck because doesn’t it have to build the case itself.”

Beyond their comparative efficiency, statements of interest allow the division to remain connected to a variety of representative antitrust cases even as it develops its own enforcement actions. Courts have shown willingness to at least consider statements of interest filed in similar lawsuits outside their districts, although the statements don’t carry the weight of precedent.

Still, the department must make conscious decisions on how to dedicate its resources between statements and enforcement, O’Neill said.

“One could argue that the agencies speak most powerfully when bringing an action in their own right,” she said. “The value of bringing that action versus filing a statement of interest needs to be considered.”

To contact the reporter on this story: Dan Papscun in Washington at dpapscun@bloombergindustry.com

To contact the editor responsible for this story: Melissa B. Robinson at mrobinson@bloomberglaw.com; Michael Ferullo at mferullo@bloomberglaw.com