Public Power - November/December 2007 - (Page 34)

The High Court’s Antitrust Thunderbolts government before appellate courts, did not side with a Securities and Exchange Commission request to support Enron investors, state attorneys general, and consumer and investor advocates in a securities fraud case before the Supreme Court after President Bush sent a message that only the SEC should be able to sue in order to reduce “unnecessary lawsuits.” At issue were investor claims of collusion between financial institutions and companies. A presidential spokesperson is quoted as saying: “We think the SEC is the right entity to bring those lawsuits and make sure investors are protected…. We are in a society that is overly litigious and it’s very harmful to society, very harmful to investors.” “The president believes that it’s important to make certain that we reduce the unnecessary lawsuits because that’s a very big burden to the economy, which adversely impacts investors.” We all are aware of political and busi- ness claims of the need for “reform” to protect against claimed unnecessary litigation and of compelling and professional advertisements showing closed children’s playgrounds and the like because of fears of litigation. Plaintiff and various amici argued that all of this is hyperbole and that the evidence of harm from illegitimate litigation is vastly overstated. They argued that the solution is not cutting off access to the courts, but rather for courts to control discovery and take other actions to prevent abuse. Cutting plaintiffs off from litigation by creating stringent pleading requirements or changing legal standards has the danger, certainly in the antitrust field, of promoting unchecked, monopoly abuse and, more generally, of allowing wrong-doing and failing to remedy harm. In Trinko, the court minimized the marginal benefits of litigation, stating that where regulatory oversight is available, judicial antitrust enforcement may yield small additional competitive benefits. It stated concern about courts finding “false positives,” that is liability where defendants’ conduct is innocent. It said the forced facilities “sharing” (i.e., joint facilities participation) that was sought in that case could limit companies’ investments: “Judicial oversight under the Sherman Act would seem destined to distort investment and lead to a new layer of interminable litigation, atop the variety of litigation routes already available to and actively pursued by competitive LEC’s [local exchange carriers].” The key to Twombly and Trinko appears to be that the court does not intend to change the law, at least as it finds it to be, but that the court is influenced by alleged harms of frivolous litigation and is seeking to control abuse. Although neither Twombly nor Trinko technically reach questions of the scope of the Sherman Act, taken together, the cases exhibit reduced court concern for antitrust enforcement and a willingness to erect barriers to court relief. Moreover, in considering the intended scope of Twombly, at least some consideration must be given to the court’s 5-4 decision in Leegin Creative Leather Products, Inc. v. PSKS, Inc., decided at the very end of the recent court term. There, over a strong dissent, the court reversed close to a century-old, well established case to decide that “vertical price restraints” would no longer be deemed automatically illegal under Section 1 of the Sherman Act, but would be found illegal only if the plaintiffs could prove in a trial that manufacturers and customers agreeing on minimum product resale prices would injure competition. The court speculated that resale price restrictions could benefit competition (for example by promoting retail interbrand competition, new market entry or better service). Justice Stephen Breyer concluded in his dissent that the “only safe predictions” are that the court’s decision “will likely raise the price of goods at retail and that it will create considerable legal turbulence.” And in Credit Suisse Securities Remedies (USA) LLC v. Billing, also decided at the very end of the 2006-07 term, the court decided that PUBLIC POWER 34 NOVEMBER-DECEMBER 2007

Table of Contents Feed for the Digital Edition of Public Power - November/December 2007

Public Power - November/December 2007 Contents Washington Focus 10 Questions Connecting with the Customer Through Automation AMR or AMI? The High Court’s Antitrust Thunderbolts California’s Push for Demand-Response Plug-In Partners Get Plugged In Wiring Up for Double-Digit Growth For Engineers Safety Community Broadband For Governing Boards DEED Customer Service Hometown Connections Index to Advertisers Parting shot

Public Power - November/December 2007

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