Multistate investigations and litigation

• Pages: 51-88

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CHAPTER III

MULTISTATE INVESTIGATIONS AND

LITIGATION

State antitrust investigations and the resulting litigation is an

important component of the antitrust enforcement framework in this

country. State investigations and litigation can proceed as an action

brought by a state itself, or as part of a larger investigation or litigation

involving other states, a federal agency, private plaintiffs’ counsel, or

any combination of these.

Antitrust actions taken by states individually under state and federal

laws represent a significant area of state antitrust enforcement. These

antitrust actions include criminal1 and civil2 actions. When conducting

antitrust investigations, states typically rely upon their own investigative

powers and resources, such as criminal or civil process, to obtain

1. See, e.g., Michigan v. Chesapeake Energy Corp., No. 14-0140-FY (Mich.

Cir. Ct. Mar. 4, 2014) (prosecution of violation of Michigan antitrust law

for company’s alleged role in bid-rigging at 2010 state oil and gas lease

auction); Ohio v. Quattro, Inc. (Ohio Ct. C.P. 2012 ) (guilty plea obtained

in bid rigging of traffic devices); Consent Jud gment, New York v. Ca ndle

Bus. Sys., No. 402805-02 (N.Y. Sup. Ct. Aug. 29, 2002) (bribes and

fictitious bids prosecuted as per se illegal bid rigging).

2. See, e.g., Florida v. NSK, Ltd., No. 2:14-cv-12095 (E.D. Mich., May 27,

2014) (price fixing i n the market for auto motive ball bearings) ;

Connecticut v. H.I. Stone & Son, Inc., (Conn. Super. Ct. Oct. 22, 2014)

(snow removal services bid rigging); Ohio v. Cargill (Ohio Ct. C.P. Mar.

21, 2012) (rock salt market allocation agreement); Complaint, Califo rnia

v. EBay, Inc., No. 5:12-cv-05874 (N.D. Cal. Nov. 16, 2012) (no-

hire/market allocation agreement among technology companies);

Massachusetts v. McMullen, No. 12-512B (Commw. Ct. of Mass. Apr.

27, 2012) (pest control bid rigging); In re McSam Mgmt., (Connecticut

Attorney General Investigation July 5, 2011) (settlement of call-ar ound

price-fixing scheme), available at http://www.ct.gov/ag/lib/a g/press_

releases/2011/mcsamsettlement.pdf; In re Med. Transp. Mgmt., Inc.,

(Mississippi Attorney General Investigation Sept. 21, 2005) (settlement

of bid-rigging, monopolization, and vertical restraint c laims); West

Virginia ex rel. McGraw v. Microsoft Corp., No. 01-C-197 (W. Va. Cir.

Ct. 2004) (monopolization); New York v. Feldman, 210 F. Supp. 2d 294

(S.D.N.Y. 2002) (challenge to bid rigging at auctions of postal sta mps).

State Antitrust Enforcement Handbook

52

information relevant to the investigation. In particular, many states have

the authority under their respective state antitrust statutes to issue and

enforce subpoenas similar to the civil investigative demands issued by

the federal antitrust authorities.3 Many state attorneys general are also

authorized to use civil investigatory proceedings to develop evidence on

probable antitrust violations.4 Challenges to state subpoenas are, of

course, governed by state law. Generally speaking, however, challenges

to pre-complaint discovery are difficult to win if the discovery is related

to a valid governmental enforcement concern.

The prospect of representing clients in multiple state investigations

into the same conduct creates challeneges in coordination and

efficiency.5 A variety of state laws potentially come into play on such

central issues as jurisdiction, the scope of pre-complaint discovery, and

confidentiality of information obtained by states in an investigation. The

growing trend toward multistate investigations began in the mid-1980s,

in response to a perceived vacuum in federal enforcement of the antitrust

laws. Multistate enforcement now has a track record that extends over

almost three decades.6

3. See, e.g., CAL. GOV’T CODE §§ 11180–11191; HAW. REV. STAT. § 480-

18; KY. REV. STAT. ANN. § 367.240; MD. CODE ANN., COM. LAW § 11-

205; N.Y. GEN. BUS. LAW § 343; OH IO REV. CODE ANN. § 1331.16. A

more comprehensive listing of these provisions, including the actual

statutory language, appears in ABA SECTION OF ANTITRUST LAW, STATE

ANTITRUST PRACTICE AND STATUTES (5th ed. 2014) [hereinafter ABA

STATE ANTITRUST TREATISE]. The laws of all fifty states, the District of

Columbia, Puerto Rico, and the Virgin Islands are discussed in separate

chapters in the treatise. Government enforcement is addressed in § 15 of

each of those chapters.

4. See, e.g., WIS. STAT. ANN. § 133.11. See generally ABA STATE

ANTITRUST TREATISE, supra note 3.

5. Typically, such investigations are coordinated by the relevant sta tes

through the Multistate Antitrust Task Force of the National Association

of Attorneys General (NAAG).

6. The Antitrust Committee of the Natio nal Association of Attorneys

General maintains a database of multistate cases reported by the

participating states. NAT’L ASS’N OF ATTORNEYS GEN., State Antitrust

Litigation Database, http://app3.naag.org/antitrust/search/index.php

[hereinafter the NAAG State Antitrust Litigation Database]

Multistate Investigations and Litigation

53

A. Coordinated State Enforcement

State attorneys general often coordinate the investigation and

prosecution of antitrust matters with other states, the Federal Trade

Commission (FTC), the U.S. Department of Justice (DOJ). Once in

litigation, there is also coordination with private attorneys representing

individual plaintiffs or a class of plaintiffs. This section focuses on how

states interact as a group, with federal enforcers, and with class counsel.

1. Multistate Coordination

a. The Multistate Antitrust Task Force

The National Association of Attorn eys General (NAAG) was

founded in 1907 to assist attorneys general fulfill the responsibilities of

their office. NAAG established an Antitrust Committee, composed of

state attorneys general, to addresses antitrust policy issues and to assist in

the enforcement of state and federal antitrust laws. In 1983, NAAG

formed the Multistate Antitrust Task Force as a staff-level subgroup of

the NAAG Antitrust Committee “[t]o improve, enhance, and coordinate

state antitrust enforcement.”7 The NAAG Antitrust Committee oversees

and works with the Task Force.8

The Task Force has four major functions: (1) assisting in multistate

investigations and litigation, (2) assisting in the states’ participation as

amici curiae in antitrust cases, (3) suggesting legislation for Congress

and state legislatures, and (4) developing policy positions on antitrust

issues.9 All states are represented in the Task Force. Formal in-person

7. Michael Brockmeyer, Report on the NAAG Multi-State Task Force, 58

ANTITRUST L.J. 215, 216 (1989).

8. At the time of the drafting of this edition, the A ntitrust Committee co-

chairs are Connecticut Attorney General George Jepsen and Ohio

Attorney General Mike DeWine. Vic Domen, se nior counselor in the

Tennessee Attorney General’s Office, is the chair of the Task Force. For

the most updated information, see Antitrust Committee, NAT’L ASS’N OF

ATTORNEYS GEN., http:/ /www.naag.org/naa g/committees/na ag_standing_

committees/antitrust-committee.php.

9. The history of multistate antitrust enforcement is de tailed in extensive

materials assembled by NAAG’s antitrust counsel. Emily Myers,

Multistate Antitrust Enforcement, in ANTITR UST LAW IN NEW YORK

STATE 355 (Robert Hubbard & Pamela Jones Harbour eds., 2d ed. 2002);