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Compatibility of Transactional Resolutions of Antitrust Proceedings with Due Process and Fundamental Rights & Online Exhaustion of IP Rights pp 427–454Cite as

United States of America

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Abstract

The United States has a federalist system in which the powers of our federal or national government, though quite broad, are enumerated, defined, and in important ways limited. The powers of the governments of the American States, which have a residual sovereign status, are numerous and indefinite, a point that shows up most strongly in the fact that they, unlike the federal government, possess a so-called general police power to legislate on any subject. Accordingly, not only can the federal government enforce federal antitrust law, but also the American States can and do enforce both federal antitrust law as well as their own state antitrust law.

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Notes

  1. 1.

    See, e.g., Alden v. Maine, 527 U.S. 706, 715 (1999).

  2. 2.

    See, e.g., National Federation of Independent Business v. Sebelius, 132 S. Ct. 2566, 2577 (2012).

  3. 3.

    California v. American Stores, 495 U.S. 271, 283–84 (1990); California v. ARC America, 490 U.S. 93, 101–02 (1989).

  4. 4.

    This national reporter will not discuss state criminal plea agreements involving state antitrust statutes. A number of States either do not have criminal antitrust statutes or, like California, do have such statutes but often defer to federal criminal prosecutions of defendants for violation of federal antitrust law as a matter of law (see Cal. Pen. Code § 656) or as a matter of policy. In any event, the national reporter believes that the standards and processes for state criminal plea agreements are almost the same as their federal counterparts.

  5. 5.

    There are isolated instances in which American States have brought class actions that they themselves have settled or have participated in joint parens patriae-class settlements. This report will not discuss class action settlements, or private settlements between companies, as being outside the scope of Question A.

  6. 6.

    General principles regarding the need for separation of powers between the Executive, Legislative, and Judicial Branches of Government as being essential to a free Constitution are discussed in such cases as Nixon v. Administrator of General Services, 433 U.S. 425, 441–43 (1977). A separation of powers also aids in securing liberty. See, e.g., Youngstown Steel & Tube Co. v. Sawyer, 343 U.S. 579, 635 (1952) (Jackson, J., concurring). Similar separation of powers occurs under our state constitutions for similar reasons. See, e.g., Southern California Edison Co. v. Public Utilities Comm’n, 173 Cal.Rptr.3d 120, 143–44 (Cal. App. 2 Dist. 2014) (discussing California constitutional provisions and cases).

  7. 7.

    See U.S. Const., Art. II, §§ 1, 3.

  8. 8.

    See U.S. Const., Art. II, § 2, cl. 1.

  9. 9.

    E.g., Brown v. Chiang, 132 Cal.Rptr.3d 48, 63–64, 69 (Cal. App. 3 Dist. 2011). Even when multiple executive officers may share executive powers under a State’s law, “supreme” Executive Power may still be vested in the Governor, a State’s equivalent of our federal government’s President. See, e.g., id. at 69–70; see also, e.g., Professional Engineers in Cal. Government v. Schwarzenegger, 239 P.3d 1186, 1201(Cal. 2010).

  10. 10.

    E.g., Cal. Const. art. V, § 13 (California Attorney General represents the People of the State of California as the chief law enforcement officer). In contrast to the United States Attorney General, for example, who is appointed by the President and confirmed by Congress, the California Attorney General is directly elected by the People of the State of California.

  11. 11.

    See, e.g., Hollingsworth v. Perry, 133 S. Ct. 2652, 2666–67 (2013).

  12. 12.

    Cf. Brown, 132 Cal.Rptr.3d at 70 (discussing and quoting McCauley v. Brooks, 16 Cal. 11 (1860)).

  13. 13.

    U.S. SEC v. Citigroup Global Markets, Inc. (Citigroup Global Markets I), 673 F.3d 158, 163–64 (2nd Cir. 2012).

  14. 14.

    Marbury v. Madison, 1 Cranch 137, 170 (1803).

  15. 15.

    See U.S. (SEC) v. Citigroup Global Markets (Citigroup Global Markets II), 752 F.3d 285, 296–97 (2nd Cir. 2014) (citing and discussing non-Security Exchange Commission cases).

  16. 16.

    United States v. Borden Co., 347 U.S. 514, 519 (1954) (citing 15 U.S.C. § 25).

  17. 17.

    Id. (citing 15 U.S.C. § 16).

  18. 18.

    Id. at 518–20 (private plaintiffs’ success in obtaining an injunction cannot bar federal government from requesting an injunction); Howard Hess Dental Laboratories, Inc. v. Dentsply Int’l Inc., 602 F.3d 237, 248–50 (3rd Cir. 2010) (federal government’s success in obtaining injunction cannot bar private plaintiffs from requesting one but the required evidentiary showing from those plaintiffs must factor in the existence of the government injunction).

  19. 19.

    See, e.g. Cal. Bus. & Prof. Code § 16754.5 (affording the California Attorney General a wider scope in the remedial court orders she may seek for violations of state antitrust law than private plaintiffs enjoy); People v. Pacific Land Research Co., 569 P.2d 125, 129–31 (Cal. 1977) (distinguishing the California Attorney General from private plaintiffs by noting that, when the California Attorney General seeks civil penalties, injunctive relief, and restitution, she is acting in a law enforcement capacity and in the public interest).

  20. 20.

    United States v. Microsoft (Microsoft I), 56 F.3d 1448, 1456 (D.C. Cir. 1995).

  21. 21.

    See, e.g., Youngstown Steel, 343 U.S. at 635.

  22. 22.

    Microsoft I, 56 F.3d at 1456.

  23. 23.

    See Microsoft I, 56 F.3d at 1456, 1459.

  24. 24.

    See Citigroup Global Markets I, 673 F.3d at 164; cf. Action on Safety and Health, et al. v. FTC, 498 F.2d 757, 759, 761–63 (D.C. Cir. 1974) (court cannot order Federal Trade Commission to allow third party to intervene in their consent decree negotiations). The United States Supreme Court has found the analogous decision to refuse to bring an action based on a violation of law to present similar considerations and hence to be unreviewable by the courts as a presumptive matter. See Heckler v. Chaney, 470 U.S. 831, 831–32 (1985).

  25. 25.

    See Citigroup Global Markets II, 752 F.3d at 296–97.

  26. 26.

    See, e.g., Youngstown Steel, 343 U.S. at 635 (Jackson, J., concurring).

  27. 27.

    See Hollingsworth, 133 S. Ct. at 2666–67 (set in the context of a refusal by the California Attorney General to pursue litigation defending the constitutionality of a state initiative barring same-sex marriage).

  28. 28.

    See Heckler, 470 U.S. at 831 (citing and discussing cases going back to 1869).

  29. 29.

    See, e.g., Citigroup Global Markets I, 673 F.3d at 168; see also, e.g., Nixon, 433 U.S. at 443 (noting that a separation of powers does not mean a complete division of authority between the branches and that each branch does not operate with complete independence); Southern California Edison, 173 Cal. Rptr. 3d at 144 (same).

  30. 30.

    See generally, e.g., Massachusetts et al. v. Microsoft (Microsoft II), 373 F.3d 1199, 1237–46 (D.C. Cir. 2004) (noting that the remedies contained in the consent decree between the federal government and the States had a number of innovative features designed to restore competition in the affected market, or even ensure competition in certain closely-related markets going forward, but did not go too far in favoring the defendant’s competitors over the defendant); Daniel Solove & Woodrow Hartzog, The FTC and the New Common Law of Privacy, 114 Columb. L. Rev. 583, 608, 648–51 (2004) (discussing how the FTC’s enforcement of Section 5 in the area of privacy via the use of Federal Trade Commission consent decrees is not inherently arbitrary but rather has grown “incrementally” and “predictably”). The paradigm for an unreasonable antitrust settlement would be one in which a court was “exceptionally confident” that adverse antitrust consequences would result. Microsoft I, 56 F.3d at 1460.

  31. 31.

    Cf. e.g., Microsoft II, 373 F.3d at 1242 (reviewing whether certain terms in the federal and certain States’ consent decree with Microsoft were sufficiently clear, including one left purposefully undefined so that it could be forward-looking); Justin Whitesides, The FTC’s Competition Policy after the Intel Settlement, 9 DePaul Bus. & Com. L.J. 555, 579–87 (2011) (making similar points in arguing for certain limits as to the Federal Trade Commission’s use of Section 5).

  32. 32.

    Cf. e.g., William Kovacic, Rating the Competition Agencies: What Constitutes Good Performance?, 16 Geo. Mason L. Rev. 903, 923–24 (2009) (discussing the process for assessing agency performance as a matter of competition policy).

  33. 33.

    See, e.g., Molly Kelley, Settling for Settlement: The European Commission’s New Cartel Settlement Procedure, Wash. Univ. Global Studies L. Rev. 699, 700–02 (2010) (discussing amnesty or leniency programs for corporations that report to the government as to conduct violating antitrust laws); see also, e.g., U.S. Department of Justice, Antitrust Division, Antitrust Division Manual, § III(F)(9) at III-95–103 (5th ed. last updated Mar. 2004) (describing the amnesty program of the United States Department of Justice).

  34. 34.

    Cf. e.g., Microsoft II, 373 F.3d at 1242 (reviewing whether certain terms in the federal and certain States’ posttrial consent decree with Microsoft were sufficiently clear, including one left purposefully undefined so that it could be forward-looking).

  35. 35.

    See, e.g., Whitesides, The FTC’s Competition Policy after the Intel Settlement, supra, 9 DePaul Bus. & Com. L.J. at 586–87 (making that point as to the FTC’s general use of Section 5); Thomas Dahdouh, Section 5 and its Critics: Just Who Are the Radicals Here?, 20 Comp. J. Anti. & Unfair Comp. L. Sec. St. B. Cal. 1, 3–4, 24 (2011) (same regarding unfair competition); see also, e.g., Margaret Zwisler & Amanda Reeves, Antitrust Judgments in Bench Trials as Evidence: The Unintended Consequences of Section 5(a), Sedona Conf. J. 113, 113–14, 120 (Fall. 2013) (discussing the difference between a trial judgment obtained by the United States Department of Justice on the one hand and a settlement on the other hand as admissible prima facie evidence in follow-on class actions).

  36. 36.

    Cf. Solove, The FTC and the New Common Law of Privacy, supra, 114 Columb. L. Rev. at 585–90, 599–600 (noting that a robust “common law” of privacy that gives a wealth of guidance to businesses on the application of Section 5 to privacy issues has now developed through FTC settlements but also noting that, initially, the Federal Trade Commission preferred self-regulation by online companies because of a legitimate fear that regulation would stifle online activity).

  37. 37.

    Cf., e.g., Whitesides, The FTC’s Competition Policy after the Intel Settlement, supra, 9 DePaul Bus. & Com. L.J. at 586–87 (2011) (making similar, though not identical, general points as to the Federal Trade Commission’s use of Section 5); Dahdouh, Section 5 and its Critics: Just Who Are the Radicals Here?, supra, 20 Comp. J. Anti. & Unfair Comp. L. Sec. St. B. Cal. at 14–23 (same regarding unfair competition).

  38. 38.

    See, e.g., Kovacic, Rating the Competition Agencies: What Constitutes Good Performance?, supra, 16 Geo. Mason L. Rev. at 909–11.

  39. 39.

    See American Bar Association, Telecom Antitrust Handbook, Ch. 2 Mergers, at 63–64, 136–37, 140–43 (2d ed. 2013).

  40. 40.

    See id. at 136–37, 140–43.

  41. 41.

    See id. at 136–37, 144, 145, 146–47, 149–50, 154–56, 156–60.

  42. 42.

    See, e.g., Solove, The FTC and the New Common Law of Privacy, supra, 114 Columb. L. Rev. at 611–13 (discussing why companies enter into Federal Trade Commission settlements); cf. In re Processed Egg Prods. Antitrust Litig., 284 F.R.D. 278, 297–301 (E.D. Pa. 2012) (discussing these points as supporting an early antitrust settlement in class case).

  43. 43.

    Compare, e.g., Solove, The FTC and the New Common Law of Privacy, supra, 114 Columb. L. Rev. at 599–600, 604–05, 606–07, 608, 621–23, 625–26, 627–49, 651 (noting that a robust “common law” of privacy that gives a wealth of guidance to businesses on the application of Section 5 to privacy issues has developed through Federal Trade Commission settlements and as such provides such fair notice); Dahdouh, Section 5 and its Critics: Just Who Are the Radicals Here?, supra, 20 Comp. J. Anti. & Unfair Comp. L. Sec. St. B. Cal. at 4–23 (same regarding unfair competition based on text, legislative history, and case law) with, e.g., Gregory Stegmaier & Wendell Bartnick, Another Round in the Chamber: FTC Data Security Requirements and the Fair Use Doctrine, J. Internet L., 1, 17–19, 23–25, 28–29 (Nov. 2013) (reaching opposite conclusion on application of Section 5 to data security and calling for rulemaking).

  44. 44.

    The Federal Trade Commission’s Section 5 is no less precise than federal antitrust law with its general standard of reasonableness. The development of the common law, prosecutorial guidelines, and informal statements by government officials has been thought to be sufficient to flesh out the parameters of this reasonableness standard under federal antitrust law in supplying fair notice to enterprises without the need for formal rulemaking. Accordingly, the same could apply for Section 5. Cf. e.g., Whitesides, The FTC’s Competition Policy after the Intel Settlement, supra, 9 DePaul Bus. & Com. L.J. at 555–57, 559–60, 561–63, 574–89, 621–23, 625–26, 627–49 (discussing the parameters of Section 5 pertaining to privacy based on its text, legislative history, case law, and scope of Federal Trade Commission settlements in suggesting how Section 5 should be applied going forward); Dahdouh, Section 5 and its Critics: Just Who Are the Radicals Here?, supra, 20 Comp. J. Anti. & Unfair Comp. L. Sec. St. B. Cal. at 4–23 (same regarding unfair competition based on text, legislative history, and case law).

  45. 45.

    See Whitesides, The FTC’s Competition Policy after the Intel Settlement, supra, 9 DePaul Bus. & Com. L.J. at 555–57, 559–60 (discussing the Federal Trade Commission settlement with Intel as an expansion of the Federal Trade Commission’s Section 5 authority beyond the scope of federal antitrust law);, Section 5 and its Critics: Just Who Are the Radicals Here?, supra, 20 Comp. J. Anti. & Unfair Comp. L. Sec. St. B. Cal. at 16–23 (describing FTC cases regarding unfair competition); Kovacic, Rating the Competition Authorities, supra, 16 Geo. Mason L. Rev. at 911–12, 913–14 (describing Federal Trade Commission cases brought under the Bush Administration).

  46. 46.

    See, e.g., Solove, The FTC and the New Common Law of Privacy, supra, 114 Columb. L. Rev. at 620–21 (noting that the protracted nature of the Federal Trade Commission’s own rulemaking processes do not make rulemaking an option for the Federal Trade Commission).

  47. 47.

    Cf. id. at 613 (when the Federal Trade Commission conducts an administrative adjudication under its processes, the courts must give substantial deference to its interpretation of Section 5).

  48. 48.

    See U.S. (SEC) v. Citigroup Global Markets (Citigroup Global Markets II), 752 F.3d 285, 295 (2nd Cir. 2014).

  49. 49.

    Id. at 295.

  50. 50.

    Id. (quoting United States v. ITT Continental Baking Co., 420 U.S. 223, 235 (1975) [antitrust settlement].); FTC v. Circa Direct LLC, 2012 WL 3987610, *3-7, No. 11–2172 RMB/AMD (D.N.J. Sept. 11, 2012).

  51. 51.

    Citigroup Global Markets II, 752 F.3d at 295.

  52. 52.

    Id. (quoting Citigroup Global Markets I, 673 F.3d at 164).

  53. 53.

    Ibid. The Federal Trade Commission, for example, typically does not require admissions from a defendant that a law has been violated. See 1 Fed. Trade Comm. § 12:6 (2013).

  54. 54.

    Heckler, 470 U.S. at 831–32.

  55. 55.

    See Citigroup Global Markets I, 673 F.3d at 295–96.

  56. 56.

    See, e.g., U.S. Department of Justice, Antitrust Division, Antitrust Division Manual, §§ III(E)(1)(b), (F)(1), (F)(4) at III-46, III-82, III-85–88 (5th ed. last updated Mar. 2004).

  57. 57.

    See, e.g., United States v. R. Enters., Inc., 498 U.S. 292, 300–01 (1991). It is important to note that, as part of the wide scope that federal and state prosecutors enjoy at this stage, corporations (as opposed to individuals as long as those individuals are not in a corporate capacity) cannot assert the Fifth Amendment as a basis for refusing to testify or provide information. Wilson v. United States, 221 U.S. 361, 374–75 (1911); United States v. Richardson, 469 F.2d 349, 350 (10th Cir. 1972) (“privilege against self-incrimination cannot be invoked by a [Subchapter S] corporate officer to prevent disclosure of corporate records which might incriminate him even though the corporation is a mere alter ego of its owner”); United States v. Mid-West Business Forms, Inc., 474 F.2d 722, 723 (8th Cir. 1973) (privilege against self-incrimination not available to officer of Subchapter S corporation to prevent disclosure of corporate records); United States v. Silverman, 359 F.Supp. 1113, 1114 (N.D. Ill. 1973) (officer-shareholder of subchapter S corporation could not invoke constitutional privilege against self-incrimination as bar to compliance with IRS subpoena directing him to appear before special agent and produce corporate records and documents); Naporano v. United States, 834 F.Supp. 694, 701 n. 12 (D.N.J. 1993) (“S Corporations are prohibited from invoking the Fifth Amendment privilege against self-incrimination to prevent the disclosure of corporate records which might incriminate a shareholder”). However, an individual who is a corporate officer cannot be compelled to produce his or her private papers. See, e.g., Wilson, 221 U.S. at 377. In contrast to such incorporated entities, an individual, or an unincorporated solo proprietorship run by that individual, does have such rights. Braswell v. United States, 487 U.S. 99, 104–05 (1988). Partnerships fall into the category of corporations, however, and not sole proprietorships. Id. at 107–08 (explaining “The test … is whether one can fairly say under all the circumstances that a particular type of organization has a character so impersonal in the scope of its membership and activities that it cannot be said to embody or represent the purely private or personal interests of its constituents, but rather to embody their common or group interests only.” (internal citations and quotation marks omitted).)

  58. 58.

    See, e.g., Fed. R. Crim. P. 6(e).

  59. 59.

    See Fed. R. Crim. P. 6(e); see also In the Matter of the Application of the United States for an Order, 936 F.Supp. 357, 359 (E.D. La. 1996) (citing cases).

  60. 60.

    See, e.g., Application of the United States for an Order, 936 F.Supp. at 358 (citing authorities).

  61. 61.

    See, e.g., United States v. Morton Salt Co., 338 U.S. 632, 635–36, 641–43, 652 (1950); FTC v. Turner, 609 F.2d 743, 744 (5th Cir. 1980); 15 U.S.C. §§ 1311–1314; Cal. Gov. Code § 11180 et seq. The associated government investigative files are also secret unless documents in those file end up being somehow lodged with the court. See, e.g., United States v. Loughner, 807 F.Supp.2d 828, 831, 833–36 (D. Az. 2011) (citing cases). Such a rule comports with due process (and does not violate the First Amendment to the U.S. Constitution) because it protects a defendant’s constitutional right to a fair trial by avoiding a trial of the defendant in the press rather than in court. Id.

  62. 62.

    See, e.g., Morton Salt Co., 338 U.S. at 641–43, 652; Associated Container Transp. (Australia) Ltd. v. United States, 705 F.2d 53, 58 (2d Cir. 1983); Turner, 609 F.2d at 744; Brovelli v. Sup. Ct., 15 Cal. Rptr. 630 (Cal. 1961).

  63. 63.

    See, e.g., FTC v. Texaco, Inc., 555 F.2d 862, 884–85 & n. 62 (D.C. Cir. 1977); FTC v. Owens-Corning Fiberglass Corp., 626 F.2d 966, 969–70, 974 (D.C. Cir. 1980); 15 U.S.C. § 1313; 1 Fed. Trade Comm. § 12:6 (2013); Cal. Gov. Code §§ 6254(f), 11183.

  64. 64.

    Cal. Gov. Code § 11183.

  65. 65.

    Accord U.S. Department of Justice, Antitrust Division, Antitrust Division Manual, § III(G)(1)(b) at III-111 (5th ed. last updated Mar. 2004); see also id. § III(G)(2)(c) at III-118 (discussing criminal investigations).

  66. 66.

    This observation does not apply to the Federal Trade Commission consent decree process since information, as such, does not have to be presented to the court although there is a public comment process as discussed infra.

  67. 67.

    See NBC Subsidiary v. Sup. Ct., 998 P.2d 337, 363 n. 34 (Cal. 1999); County of Orange v. Sup. Ct., 94 Cal.Rptr.2d 261, 264–65 (Cal. App. 4 Dist. 2000); 1 Fed. Trade Comm. § 12:6 (2013); cf. Loughner, 807 F.Supp.2d at 831, 833–36 (discussing criminal trials in noting that there was a strong interest in keeping government investigative files confidential to ensure that there was a fair trial).

  68. 68.

    See, e.g., 15 U.S.C. 1313(d)(1); Cal. Gov. Code § 11181(h).

  69. 69.

    See O’Sullivan v. Boerckel, 526 U.S. 838, 854 (1999); McFarland v. Scott, 514 U.S. 849, 859 (1994); Highlands Ins. Co. v. Nat’l Fire Ins. Co. of Pittsburgh, 27 F.3d 1027, 1032 (5th Cir. 1994).

  70. 70.

    Even after a case is filed, federal and state government entities will continue to use discovery to develop that case. Their power to use such civil discovery tools as subpoenas for the production of documents or for the taking of testimony are nearly as broad as their investigatory powers. See, e.g., In re Urethane Antitrust Litig., 261 F.R.D. 570, 572–75 (D. Kan. 2009) (discussing breadth of discovery in civil antitrust proceedings as being even broader than in other civil proceedings and as including the ability to request information from defendants on foreign sales, foreign commerce, and foreign price-fixing meetings). As is the case during investigations, corporations (or individuals acting on behalf of the corporation in a corporate capacity) cannot assert a Fifth Amendment right against self-incrimination. However, if an individual (e.g., an ex-employee of a defendant) should assert his or her Fifth Amendment right to refuse to provide information, federal courts may allow in civil proceeding for an adverse inference to be drawn against a defendant from that individual’s assertion of that right. See, e.g., In re Ethylene Propylene Diene Monomer (EPDM) Antitrust Litig., 681 F.Supp.2d 141, 153 (D. Conn. 2009) (citing and discussing cases); Sun Microsystems Inc. v. Hynix Semiconductor Inc., 622 F.Supp.2d 890, 907 (N.D. Cal. 2009) (same). Insofar as state civil proceedings are concerned, an adverse inference may not be drawn against a defendant from an invocation of a Fifth Amendment right by an individual such as an ex-employee in certain States such as California. See, e.g., People v. Holloway, 91 P.3d 164, 240 (Cal. 2004). But, in California, the California Attorney General can grant immunity to such a witness under state antitrust law (see Cal. Bus. & Prof. Code § 16758), thereby requiring the witness to testify notwithstanding such an invocation.

  71. 71.

    See, e.g., Foltz v. State Farm Ins. Co., 331 F.3d 1122, 1131 (9th Cir. 2003); NBC Subsidiary, 998 P.2d at 359–61, 363 n. 34, 365; see also, e.g., 28 C.F.R. § 50.9; H.R. Rep. No. 94–1343 at 2610 (1976).

  72. 72.

    See, e.g., In re Processed Egg Prods. Antitrust Litig., 284 F.R.D. 278, 297–301 (E.D. Pa. 2012); see also In re Linerboard Antitrust Litig., 292 F.Supp.2d 631, 643 (E.D. Pa. 2003) (an early settlement with one of many defendants can “break the ice” and bring other defendants to the point of serious negotiations).

  73. 73.

    See, e.g., Antitrust Division Manual, supra, § III(F)(9) at III-95–103.

  74. 74.

    See, e.g., id. § III(G)(1)(c)(ii) at III-123–124.

  75. 75.

    See, e.g., Plotkin, Agent Settlement Reviewability, supra, 82 Ford. L. Rev. at 1402 (citing New York State Department of Law v. FCC, 984 F.2d 1209, 1214 (D.C. Cir. 1993), in noting the distinction on this basis between settlements and no-action decisions).

  76. 76.

    Congress has implicitly recognized and endorsed the Executive’s use of an amnesty program by passing legislation that limits damages in civil proceedings to single (nontrebled) damages if certain preconditions are met. See Antitrust Criminal Penalty Enhancement and Reform Act of 2004, Pub. L. No. 108–237, 118 STAT 661 (2004), amended by Pub. L. No. 111–90, 124 STAT 1275 (2010). This congressional recognition of executive discretion means, from a constitutional perspective, executive powers are at their acme in this area. See Youngstown Steel, 343 U.S. at 635 (Jackson, J., concurring).

  77. 77.

    Dustin Plotnick, Agency Settlement Reviewability, 82 Ford. L. Rev. 1367, 1378 (2013) (citing and quoting Black’s Law Dictionary 1270 (9th ed. 2009) (internal quotation marks omitted)); cf., e.g., United States v. Robinson, 924 F.2d 612, 613 (6th Cir. 1991) (“Plea agreements are contractual in nature. In interpreting and enforcing them, we are to use traditional principles of contract law.”).

  78. 78.

    E.g., Robinson, 924 F.2d at 613.

  79. 79.

    Libretti v. United States, 516 U.S. 29, 28 (1995); Fed. R. Crim. P. 11(b)(3).

  80. 80.

    See, e.g., Stephen Freccero, The Use and Effect of an Antitrust Guilty Plea in Subsequent Civil Litigation, 23 Comp. J. Anti. & Unfair Comp. L. Sec. St. B. Cal. 136, 141 (2013)

  81. 81.

    See Plotnick, Agency Settlement Reviewability, 82 Ford. L. Rev. at 1378 (internal citations omitted).

  82. 82.

    See, e.g., Oregonian Pub. Co. v. U.S. Dist. Court for the Dist. of Oregon, 920 F.2d 1462, 1465–66 (9th Cir. 1990) (citing cases).

  83. 83.

    18 U.S.C. § 3771(a)(4).

  84. 84.

    See, e.g., Ashe v. Styles, 67 F.3d 46, 51–52 (4th Cir. 1995) (citing cases for the proposition that, so long as government fulfills express or implied terms or promises, a plea agreement does not violate due process).

  85. 85.

    See, e.g., Amended Plea Agreement at ¶ 11, United States v. Samsung SDI. Co., Ltd., No. CR 11-0162 (WHA) (N.D. Cal. May 17, 2011).

  86. 86.

    See Antitrust Criminal Penalty Enhancement and Reform Act of 2004, Pub. L. No. 108-237, 118 STAT 661 (2004), amended by Pub. L. No. 111-90, 124 STAT 1275 (2010).

  87. 87.

    Freccero, The Use and Effect of an Antitrust Guilty Plea in Subsequent Civil Litigation, supra, 23 Comp. J. Anti. & Unfair Comp. L. Sec. St. B. Cal. at 136–37, 141, 148–55 (discussing, among other things, Section 5(a) of the Clayton Act and case law interpreting that section).

  88. 88.

    See, e.g., John Bourdeau, William Danne, Eleanor Grossman, et al., Monopolies et al., Am. Jur. 2d § 552 (May 2014).

  89. 89.

    See, e.g., Microsoft II, 373 F.3d at 1234–36; Monopolies, supra, Am. Jur. 2d, § 552.

  90. 90.

    See, e.g., Microsoft II, 373 F.3d at 1236–37.

  91. 91.

    See, e.g., Monopolies, supra, Am. Jur. 2d § 552.

  92. 92.

    See, e.g., id.

  93. 93.

    See, e.g., Microsoft I, 56 F.3d at 1459.

  94. 94.

    Id. at 1460.

  95. 95.

    Id.

  96. 96.

    See, e.g., Microsoft II, 373 F.3d at 1236 (citing cases), 1238.

  97. 97.

    See, e.g., Microsoft II, 373 F.3d at 1234; Monopolies, supra, Am. Jur. 2d § 552. There is also a requirement that intervention not delay or prejudice the action being settled. See Microsoft II, 373 F.3d at 1235–36.

  98. 98.

    See id. at 1249. An example of the application of these principles can be found in Microsoft II, 373 F.3d at 1237–50.

  99. 99.

    Post-entry, third parties cannot, as a constitutional matter, go to court to challenge enforcement decisions, or the lack thereof, under those consent decrees made by the United States Department of Justice before it actually files an enforcement action. See Epic, 844 F.Supp.2d at 103–06; Alpine Inds., 40 F.Supp.2d at 942–43.

  100. 100.

    As with its criminal antitrust plea agreements, the United States Department of Justice generally does not pursue damages in its civil antitrust settlements but rather leaves that up to any follow-on private actions.

  101. 101.

    See, e.g., Freccero, The Use and Effect of an Antitrust Guilty Plea in Subsequent Civil Litigation, supra, 23 Comp. J. Anti. & Unfair Comp. L. Sec. St. B. Cal. at 136 (discussing section 5(a) of the Clayton Act); see also, e.g., Metrix Warehouse, Inc. v. Daimler-Benz Aktiengesellschaft, 555 F.Supp. 824, 826 (D. Md. 1983) (citing cases).

  102. 102.

    See Metrix Warehouse, Inc., 555 F.Supp. at 826 (citing legislative history behind section 5(a) of the Clayton Act).

  103. 103.

    See, e.g., Solove, The FTC and the New Common Law of Privacy, supra, 114 Columb. L. Rev. at 610.

  104. 104.

    See, e.g., 1 Fed. Trade Comm., supra, § 12:6; Solove, The FTC and the New Common Law of Privacy, supra, 114 Columb. L. Rev. at 610, 623.

  105. 105.

    See, e.g., Solove, The FTC and the New Common Law of Privacy, supra, 114 Columb. L. Rev. at 623.

  106. 106.

    See Action for Safety and Health, 498 F.2d at 762–63; see also Epic v. FTC, 844 F.Supp.2d 98, 103–06 (D.D.C. 2012), sum. aff’d 2012 WL 1155661 (D.C. Cir. 2012) (Federal Trade Commission cannot be compelled to bring court action to enforce Federal Trade Commission consent decree); Alpine Inds. v. FTC, 40 F.Supp.2d 938, 942–43 (E.D. Tenn. 1998) (court refused to construe Federal Trade Commission consent decree provisions, and thereby bar FTC from bringing an enforcement action, as the Federal Trade Commission has complete discretion over the initiation of enforcement proceedings). Put another way, settlement agreements are construed as contracts rather than as binding judicial precedent. 1 Fed. Trade Comm., supra, § 12:6.

  107. 107.

    See, e.g., Solove, The FTC and the New Common Law of Privacy, supra, 114 Columb. L. Rev. at 599–600, 604–05, 606–07, 608.

  108. 108.

    E.g., id. at 613–19.

  109. 109.

    See, e.g., Circa Direct LLC, 2012 WL 3987610 at *3–7.

  110. 110.

    See Action for Safety and Health, 498 F.2d at 762–63; see also Epic, 844 F.Supp.2d at 103–06; Alpine Inds., 40 F.Supp.2d at 942–43.

  111. 111.

    See generally Plotkin, Agent Settlement Reviewability, supra, 82 Ford. L. Rev. at 1370–71, 1394–1404 (federal agency settlements that do not involve court orders should not be regarded as being unreviewable but rather should be reviewed in the highly deferential manner applicable to other agency actions). The national reporter does not necessarily agree that arguments contained in this article should, or do, trump any countervailing arguments as a constitutional matter insofar as the review of any federal agency settlement is concerned, let alone Federal Trade Commission consent decrees. See Epic, 844 F.Supp.2d at 103–06; Alpine Inds., 40 F.Supp.2d at 942–43. Nor can or should third parties be able to obtain an order requiring the Federal Trade Commission to enforce a consent decree, Epic, 844 F.Supp.2d at 103–06, or construing a Federal Trade Commission consent decree so that the Federal Trade Commission cannot initiate an enforcement action, Alpine Inds., 40 F.Supp.2d at 942–43. The national reporter merely cites this article as a starting point for considering whether Federal Trade Commission consent decrees should, as a matter of sound policy, be subject to some form of highly deferential review by the courts before they take effect.

  112. 112.

    The Federal Trade Commission has, on at least one occasion, agreed to a settlement agreement that, in one aspect, did not involve entry of a consent decree. Fed. Trade Commission Stmt. at 3 n. 2, FTC File No. 111–0163, In the Matter of Google, Inc. (Jan. 3, 2013). The difference between such a settlement provision, which the Federal Trade Commission still views as being binding (see id.), and a consent decree appears to be that the Federal Trade Commission cannot impose civil penalties for violations of such a settlement provision. Insofar as this report is concerned, that distinction makes no difference to the report’s findings or conclusions, regardless of the wisdom of entering into such settlements.

  113. 113.

    Dahdouh, Section 5 and its Critics: Just Who Are the Radicals Here?, supra, 20 Comp. J. Anti. & Unfair Comp. L. Sec. St. B. Cal. at 8–9. Whether, and under what circumstances, the Federal Trade Commission can or should be able to seek restitution is beyond the scope of this report.

  114. 114.

    15 U.S.C. §16.

  115. 115.

    See Metrix Warehouse, Inc., 555 F.Supp. at 826 (discussing consent decrees generally); Damon Corp. v. Geheb, 1982 WL 1927, *2, No. 80 C 1500 (N.D. Ill. Nov. 23, 1982) (discussing FTC consent decree).

  116. 116.

    See Metrix Warehouse, Inc., 555 F.Supp. at 826.

  117. 117.

    See Dahdouh, Section 5 and its Critics: Just Who Are the Radicals Here?, supra, 20 Comp. J. Anti. & Unfair Comp. L. Sec. St. B. Cal. at 3–4, 15–23.

  118. 118.

    See, e.g., Cal. Bus. & Prof. Code § 17200 et seq.

  119. 119.

    See, e.g., Cal. Bus. & Prof. Code § 16750(b) & (c).

  120. 120.

    There is the possibility that, though it tends to be strongly discouraged as a bipartisan policy matter in most American States, a State may enter into a settlement agreement that imposes duties or conditions on parties beyond the payment of funds with no consent decree or court order required or with such a decree or order being imposed after breach of the agreement is found. Assuming that the resulting dismissal of any such action does not require judicial approval (but see Cal Bus. & Prof. Code §16760 [judicial approval required before dismissing state antitrust action]); such an action does not defeat judicial review as breach of any such agreement can only be remedied via the bringing of an action in court for breach of contract. See Walton v. Mueller, 102 Cal. Rptr. 3d 605, 609–10 (Cal. App. 6 Dist. 2009). Whether such a policy choice otherwise serves the goals of public accountability and the proper use of public funds is beyond the scope of this report, though the national reporter notes that such settlements are often disclosed to the public such that enforcers may be held to politically account for them.

  121. 121.

    Citigroup Global Markets II, 752 F.3d at 293–94. Insofar as proprietary claims are made under a state’s antitrust law to recover damages for state or local government entities, a settlement of those claims may be binding such that a review for adequacy may be appropriate, though with an extra measure of deference given that a state executive must be almost conclusively presumed to be acting in the best interests of fellow state agencies and local government entities.

  122. 122.

    Id. at 292–95.

  123. 123.

    See, e.g., Citigroup Global Markets II, 752 F.3d at 294–95 (citing and discussing non-SEC cases).

  124. 124.

    See id. at 297.

  125. 125.

    Cf. Circa Direct LLC, supra, 2012 WL 3987610, *3–7, No. 11–2172 RMB/AMD (D.N.J. Sept. 11, 2012).

  126. 126.

    See Massachusetts v. EPA, 549 U.S. 497, 518–21 (2007); State of Georgia v. Tennessee Copper Co., 206 U.S. 230, 237–38 (1907).

  127. 127.

    See, e.g., Cal. Bus. & Prof. Code § 16760; see also, e.g., 15 U.S.C. § 15c (State Attorneys General have the power to file parens patriae actions under federal law).

  128. 128.

    Alfred L. Snapp et al. v. Puerto Rico ex. rel. Barez, 458 U.S. 592, 601–02 (1982).

  129. 129.

    Id. at 603.

  130. 130.

    Id. at 602–08.

  131. 131.

    H.R. Rep. No. 499, 94th Cong., 2d Sess. 6–7 (1975) (legislative history of 15 U.S.C. § 15c).

  132. 132.

    E.g., Cal. Bus. & Prof. Code § 16760 (b)(3); see also Order, State of California et al. v. Philips Electronics Co. et al., A140908 (July 9, 2014) (order in possession of author) (requiring briefing on the merits of a parens patriae settlement by the California Attorney General because of the concern that such a settlement could operate to bar federal class action litigation involving alleged price fixing).

  133. 133.

    See, e.g., 15 U.S.C. § 15c; Cal. Bus. & Prof. Code § 16760(c).

  134. 134.

    See, e.g., In re Compact Disc Minimum Advertised Price Litigation, 216 F.R.D. 197, 204, 206 (D. Me. 2003); see also In re Mid-Atlantic Toyota Antitrust Litig., 564 F. Supp. 1374, 1384–1385 (D. Md. 1983).

  135. 135.

    See Cal. Bus. & Prof. Code § 16760(b)(3).

  136. 136.

    See, e.g., In re Mid-Atlantic Toyota Antitrust Litig., 564 F. Supp. at 1384–86; see also, e.g., In re Tableware Antitrust Litig., 484 F.Supp.2d 1078, 1080 (N.D. Cal. 2007). Significantly, “the fact that a proposed settlement may only amount to a fraction of the potential recovery does not, in and of itself, mean that the proposed settlement is grossly inadequate and should be disproved.” City of Detroit v. Grinnell Corp., 495 F.2d 448, 455 (2d Cir. 1974). Conversely, nonmonetary relief such as cooperation and injunctive relief can be very important. See, e.g., In re Mid-Atlantic Toyota Antitrust Litig., 564 F. Supp. at 1384–86; Rebney v. Wells Fargo Bank, 269 Cal.Rptr. 844, 857 (Cal. App. 1 Dist. 1990).

  137. 137.

    See, e.g., In re Lorazepam & Clorazepate Antitrust Litig., 205 F.R.D. 369, 380 (D.D.C. 2002).

  138. 138.

    See New York v. Reebok Int’l Ltd., 96 F.3d 44, 48 (2d Cir. 1996) (Attorneys General in parens actions are motivated by concern for the public interest); In re Lorazepam, 205 F.R.D. at 380 (“the Court may place greater weight on such opinion in addressing a settlement negotiated by government attorneys committed to protecting the public interest.”); In re Toys ‘R’ Us Antitrust Litig., 191 F.R.D. 347, 351 (E.D.N.Y. 2000) (“The participation of the State Attorneys General furnishes extra assurance that consumers’ interests are protected.”).

  139. 139.

    See, e.g., Cal. Evid. Code § 664.

  140. 140.

    See, e.g., Mullhane v. Central Hanover Bank & Trust Co., 339 U.S. 309, 314 (1950); Grunin v. International House of Pancakes, 513 F.3d 114, 120–121 (8th Cir. 1975); Cal. Bus. & Prof. Code § 16760(b)(1).

  141. 141.

    See, e.g., Mullhane, 339 U.S. at 317–18 (1950) (under due process clause, notice by publication is sufficient where it is not reasonably possible or practical to give more adequate warning to absent beneficiaries); Cal. Bus. & Prof. Code § 16760(b)(1) (notice by publication is default form of notice). The national reporter is aware that, for parens settlements, notice can include publication on a government Web site, Internet ads, a press release, and use of e-mail lists.

  142. 142.

    15 U.S.C. § 6a.

  143. 143.

    See, e.g., United States v. Hsiung et al., slip. op. at 3–4, No. 12–10514 (9th Cir. July 10, 2014).

  144. 144.

    See Amarel v. Connell, 248 Cal. Rptr. 276, 283 (Cal. App. 3 Dist. 1988).

  145. 145.

    Hsiung, slip op. at 3–4.

  146. 146.

    Hsiung, slip op. at 25–28.

  147. 147.

    See Matsushita Elec. Inds. Co. Ltd. v. Epstein, 516 U.S. 367, 374–79 (1996) (court can give preclusive effect to settlement even if settlement resolved claims over which court entering settlement had no jurisdiction).

  148. 148.

    Id. slip op. at 24.

  149. 149.

    Id. slip. op. at 25.

  150. 150.

    Id. slip op. at 33–35, 41–42.

  151. 151.

    Id. slip. op. at 39–41. Whether this exception covers overseas anticompetitive activity, such as price fixing, involving product components that are incorporated into products sold to U.S. citizens or U.S. corporations is open to dispute. See, e.g., id. at 41 & n. 9.

  152. 152.

    Youngstown Steel, 343 U.S. at 636 (discussing the seizure of steel mills by the President).

  153. 153.

    AT&T Mobility LLC v. AU Optronics Corp., 707 F.3d 1106, 1113 (9th Cir. 2013).

  154. 154.

    Metallgesellschaft AG v. Sumitomo Corp. of Am., 325 F.3d 826, 842 (7th Cir. 2003).

  155. 155.

    See Loeb Inds. v. Sumitomo Corp., 306 F.3d 469, 486–89 (7th Cir. 2002) (discussing the injury of copper wire producers from unlawful activity in the copper futures market); In re TFT-LCD (Flat Panel) Antitrust Litig., 822 F.Supp.2d 953, 964 (N.D. Cal. 2011) (discussing overcharges on LCD panels making their way from LCD manufacturers to American retail stores). However, this issue is now being litigated, albeit in the nonsettlement context, in front of the United States Court of Appeals for the Seventh Circuit in Motorola Mobility LLC v. AU Optronics Corp., No. 14-8003 (7th Cir.).

  156. 156.

    Floridan Wagner-von Papp, Competition Law and Extraterritoriality, in Research Handbook on International Competition Law 21, 57 (Ariel Ezrachi ed. 2012).

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Authors and Affiliations

  1. California Office of the Attorney General, San Francisco, CA, USA

    Emilio E. Varanini

  2. President-Elect, U.S. Group, LIDC, San Francisco, CA, USA

    Emilio E. Varanini

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  1. Addleshaw Goddard LLP, London, United Kingdom

    Bruce Kilpatrick

  2. de Weck, Zoells & Kobel, Geneva, Switzerland

    Pierre Kobel

  3. Këllezi Legal, Geneva, Switzerland

    Pranvera Këllezi

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Varanini, E.E. (2016). United States of America. In: Kilpatrick, B., Kobel, P., Këllezi, P. (eds) Compatibility of Transactional Resolutions of Antitrust Proceedings with Due Process and Fundamental Rights & Online Exhaustion of IP Rights. LIDC Contributions on Antitrust Law, Intellectual Property and Unfair Competition. Springer, Cham. https://doi.org/10.1007/978-3-319-27158-3_17

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