Under current procedural rules, federal antitrust claims brought by states can be transferred and consolidated into federal multi-district litigation (MDL) proceedings along with similar private claims. While transfer and consolidation of these types of claims has occurred for nearly half a century, many state attorneys general (AGs) are now objecting to such treatment. Pending federal legislation could change that norm. If enacted, the State Antitrust Enforcement Venue Act of 2021 would eliminate certain efficiencies that antitrust defendants currently enjoy and could potentially drive up the cost and duration of complex litigation.
This alert provides an overview of the current framework within which defendants are able to transfer and consolidate states’ federal antitrust claims into MDL proceedings, the federal legislative proposal that aims to eliminate that framework, and how businesses could prepare for a new environment in which they might need to defend themselves against states’ federal antitrust claims without access to any consolidation mechanism.
Section 1407 of title 28 of the United States Code (section 1407) dictates the rules of MDL proceedings. Currently, a defendant can move under section 1407 to transfer a state’s federal antitrust action to a federal MDL proceeding and have it consolidated with private antitrust actions (and other states’ actions) in that MDL. Transfer and consolidation are only granted if the state’s action “involve[s] one or more common questions of fact” with the other claims. This includes actions brought under section 4C of the Clayton Act, which, critically for AGs, allows states to bring Sherman Act suits on behalf of the citizens of their states, or on a parens patriae basis. Section 1407 also directs the judicial panel on multi-district litigation (JPML), a body of federal judges who oversee federal MDL processes, to consider whether transfer and consolidation “will be for the convenience of parties and witnesses and will promote the just and efficient conduct of such actions.” Unlike states, in antitrust litigation brought by the Department of Justice and the Federal Trade Commission, the federal government is not subject to transfer and consolidation under section 1407.
Pending federal legislation
On May 21, 2021, Congressmen Ken Buck (R-Colorado) and David Cicilline (D-Rhode Island) introduced H.R. 3460, the State Antitrust Enforcement Venue Act of 2021. A press release issued by Congressman Buck’s office in conjunction with the bill’s introduction noted that H.R. 3460 “would ensure state attorneys general are able to remain in the court they select rather than having their cases moved to a court the defendant prefers.” Just three days later, an identical Senate companion bill, S. 1787, was introduced by Senators Mike Lee (R-Utah) and Amy Klobuchar (D-Minnesota). Both bills have since garnered a number of co-sponsors from opposite ends of the political spectrum.
H.R. 3460 and S. 1787 (collectively referred to as the State Antitrust Enforcement Venue Act or the Act) are relatively unassuming pieces of legislation, but could have a significant impact on how, and where, antitrust defendants will litigate future federal claims brought by states. The Act amends section 1407 by extending the federal government’s preexisting exemption from MDL transfers and consolidations in antitrust actions to the states. The Act also strikes a provision of section 1407 (subsection (h)) that grants the JPML broad authority to consolidate and transfer actions brought under section 4C of the Clayton Act for both pretrial and trial purposes.