Chamber Litigation Blog
Maureen K. Ohlhausen
Partner, Baker Botts LLP
Given its impact on the economy and government overall, it is not surprising that COVID-19 has, at least temporarily, affected the work of the U.S. federal antitrust enforcement agencies. Although the agencies have had to slow some efforts, they have sped up others, and have focused their attention on how the pandemic may trigger both procompetitive and anticompetitive activity.
Winston Churchill’s aphorism, “Never let a good crisis go to waste,” is not going unheeded by the plaintiffs’ bar.
On Friday, USA Today published an important story about how potentially massive amounts of COVID-19 litigation by plaintiffs’ lawyers could threaten our economic stability and recovery. My colleague Harold Kim, president of the Chamber’s Institute for Legal Reform, and I offered key insights about the forthcoming litigation wave.
Please go read the whole thing, but here’s a small taste:
The coronavirus pandemic is imperiling more than lives and livelihoods. It’s also leading to lawsuits.
“This early litigation is really, from our vantage point, the tip of the iceberg,” says Harold Kim, president of the U.S. Chamber Institute for Legal Reform.
Business and insurance companies are preparing for an onslaught. “I worry the plaintiffs’ bar will bring opportunistic class action lawsuits down the road,” says Steven Lehotsky, chief counsel for the U.S. Chamber Litigation Center.
The U.S. Chamber’s Litigation Center and Institute for Legal Reform are tracking these early trends—new lawsuits being filed, plaintiffs’ task forces forming, new advertising and social media activity by the plaintiffs’ bar. We’re rallying the business community to prepare for a future onslaught.
And most importantly we’re working with our colleagues throughout the U.S. Chamber to ensure there are laws and policies to keep the public safe, sustain our economy while the world confronts this pandemic, and facilitate our economic resurgence once we’re through the worst.
The Litigation Center team and our partners will be blogging frequently about COVID-19 legal and litigation trends. We look forward to hearing from each of you about what we can do to help.
- Steve Lehotsky
Click here to view the USA Today story quoting ILR’s Harold Kim and USCLC’s Steve Lehotsky about COVID-19 related litigation.
When a fellow former law clerk to Justice Antonin Scalia claims that our client, the U.S. Chamber of Commerce, betrays conservative legal ideals through its unyielding opposition to abuse of class-action suits by the plaintiffs’ bar, we take it seriously. But the argument that Professor Brian Fitzpatrick raised in his November 13 National Review piece does not stand up to scrutiny.
Professor Fitzpatrick, relying principally upon the U.S. Chamber’s brief in the landmark 2011 Supreme Court case AT&T Mobility LLC v. Concepcion, attempts to ascribe to the Chamber a position he invented: Opposed to class actions in all cases, and instead pining for more federal enforcement against business. No self-respecting legal conservative, he argues, would favor law enforcement by the executive branch in lieu of private-sector lawyers, motivated by profit in the form of contingency fees (lots and lots of contingency fees).
Well, our former boss Justice Scalia did, for good conservative reasons: history, tradition, and political accountability.
As Justice Scalia wrote in Wal-Mart Inc. v. Dukes, class actions are an exception to the long-standing rule, dating to English common law and the Founding era, that litigation is conducted on behalf of the individual named parties. Today’s class-action colossus is a creation largely of the mid-1960s — hardly the heyday of conservative legal reform.
When even the government does not think it deserves deference, it’s safe to say the government does not deserve deference. And when the government angles for a split decision only by tying itself in legal knots – relying on stare decisis at the same time it encourages the Supreme Court to overrule precedent – it’s safe to say something odd is going on. After all, stare decisis is Latin for “to stand by things decided,” not “to stand by some of the things decided while jettisoning others.” Latin’s a dead language, but it hasn’t decomposed that badly. To me, the takeaway is that the government knows that Auer deference stands on shaky legal ground and is doing what it can to preserve what it can. That’s perfectly understandable, and advocating a partial overruling may have some policy appeal to some people. But it does not make the legal ground under Auer any firmer.
Let me back up and explain what I mean and why I think this is important. The Supreme Court granted cert. in Kisor v. Wilkie to consider overruling Auer deference, which requires courts to defer to an agency’s interpretation of its own regulation so long as the interpretation is not “plainly erroneous or inconsistent with the regulation.” In the view of the Chamber of Commerce of the United States, the case for overruling Auer is strong. There is no legal support for Auer deference – indeed, Auer v. Robbins, 519 U.S. 452 (1997), and its precursor, Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945), offer no legal justification. Auer deference has allowed agencies to evade the Administrative Procedure Act’s notice and other procedural requirements by issuing sub-regulatory guidance to which courts give the force and effect of law. And it has let agencies stretch their statutory authority past the breaking point, as courts have upheld innumerable agency “interpretations” based on the flimsiest of standards. In short, Auer encourages and encapsulates the regulatory state run amok.
But don’t take the Chamber’s word for it. The situation has become so bad that even the government does not try to defend the status quo. Instead, the government falls back to the position that “Seminole Rock and Auer should not be overruled altogether.” In the government’s view, Auer should be “limited” to truly ambiguous regulations, and “a reviewing court should defer to the agency’s interpretation only if the interpretation was issued with fair notice to regulated parties; is not inconsistent with the agency’s prior views; rests on the agency’s expertise; and represents the agency’s considered view, as distinct from the views of mere field officials or other low-level employees.”
In a welcome development, a case that was supposed to be about cy pres settlements has turned into one about the viability of no-injury class actions. The Supreme Court granted cert. in Frank v. Gaos to consider the permissibility of cy pres settlements, which provide no direct relief to class members but instead benefit charitable entities and enrich class counsel. While observers generally expected the Court to restrict or even bar the use of such settlements, an interesting thing happened: the Court realized that the case presents a serious standing problem and requested supplemental briefing from the parties and the United States on that topic.
While the appropriateness of cy pres settlements is an important topic, standing is an even more fundamental and far-reaching question—a point the Chamber made in its amicus brief. No-injury class actions have become a scourge precisely because many courts have not required class representatives to demonstrate an injury-in-fact, as required by Article III. Plaintiffs’ supplemental briefing underscores that point by arguing that an unauthorized disclosure of information is per se an injury-in-fact—even if the disclosure did not cause any real-world harm. That would eviscerate the injury-in-fact requirement in a broad swath of cases, encouraging a wave of abusive class actions that has already been building and could reach epic proportions if the Court were to adopt plaintiffs’ position.
Though a determination of no standing would require the Court to dismiss this case for lack of jurisdiction without resolving the permissibility of cy pres settlements, it would address the cy pres problem in a different way—by greatly reducing the impetus for such settlements. Some class actions have ended in cy pres settlements precisely because the class members were not meaningfully harmed, and thus had not incurred any actual damages. Frank v. Gaos is a classic example. It does not appear that Google’s disclosure of search terms to website operators caused any meaningful, real-world harm to anyone. Named plaintiff Anthony Italiano, for example, searched only for publicly available information concerning his own divorce.