In an unusual move, the U.S. Department of Justice has filed a brief with the U.S. Supreme Court opposing a request for the high court to hear an appeal of a blockbuster American Express Co. antitrust case. The DOJ, under the Obama administration, had brought the case along with a group of states.
While it may not be unusual for one administration's Justice Department to opt out of a case that was brought under a previous attorney general, it is rare for the DOJ to openly and actively oppose the granting of cert in its own case.
Randy Stutz, associate general counsel at the American Antitrust Institute, said he has seen a private plaintiff choose to opt out of an appeal, but he has never seen the federal government oppose cert in its own case. The institute has not taken a position on the litigation , Stutz said, "but it certainly is a unique situation."
George Hay, an antitrust law professor at Cornell University Law School and a former member of DOJ's Antitrust Division in the 1970s, agreed it would be more typical for a private plaintiff to oppose cert in his own case. "But DOJ has a broader horizon. They [lawyers at DOJ] have to think about the development of the law … and about future cases they will bring."
Hay said DOJ might fear a bad outcome at the Supreme Court or "they might prefer to see this play out in other cases and have some other appellate courts make some decisions."
Does the DOJ's decision mean that it is softening its stance on antitrust matters? Hay said it is too early to reach a conclusion based on one case.
"There is no question that the DOJ's Antitrust Division now will view the world differently than under the Obama administration," he said. "I think they will be just as tough on price fixing, maybe less on mergers, and less on single-firm conduct like the Amex case."
The antitrust case wasn't always a single-firm case. It was originally filed by the DOJ and the attorneys general of several states in 2010 against Amex, Visa and MasterCard.
The suit attacked their practice of restraining merchants from steering consumers to a cheaper payment option. Visa and MasterCard settled and ended their anti-steering rules.
But Amex fought on, saying the rule supports its business model that includes various rewards for cardholders based on their spending.
The DOJ and the states won the antitrust suit in U.S. District Court for the Eastern District of New York in 2015. But last September the U.S. Court of Appeals for the Second Circuit overturned the ruling, saying U.S. District Judge Nicholas Garaufis made an error when he found the merchant restraints were anti-competitive.
Ohio, Connecticut, Idaho, Illinois, Iowa, Maryland, Michigan, Montana, Rhode Island, Utah and Vermont then asked the U.S. Supreme Court to grant cert and hear the case. In June, the DOJ said it would not join with the states in seeking cert.
But last week, Jeffrey Wall, the acting U.S. solicitor general, went one step further and filed a brief opposing the states' brief on procedural grounds. His brief also soundly criticized the Second Circuit's ruling on the merits.
The U.S. brief explained its rationale this way: "Although the court of appeals' decision was erroneous, this case does not satisfy this court's traditional standards for certiorari. … Most importantly, the court of appeals' decision does not directly conflict with any decision of this court or another court of appeals."
Amex previously said it was pleased that the DOJ decided not to pursue the case further in June. "We believe the DOJ's decision not to proceed sends a strong signal that this seven-year litigation should come to an end," a company statement said.
But others strongly disagree. Among those filing friend of the court briefs in support of the states was the Retail Litigation Center, which is directed by chief legal officers of the country's leading retail companies and is an arm of the Retail Industry Leaders Association.
Deborah White, RILA general counsel, co-authored the brief. White was not immediately available for comment, but the brief contends that the appeals court "misconstrued the law."
"Amex's anti-steering rules restrain horizontal price competition among all credit card companies," the brief states, adding that the case affects over 90 percent of retail transactions.
Several other amicus briefs also ask the high court to hear the case. Some criticized the Second Circuit decision while others argued that the Supreme Court needs to clarify the "rule of reason" analysis employed by judges in the case.
Amici supporting the granting of cert include those from 25 professors of antitrust law, the credit card company Discover, Southwest Airlines Co. (which offers its own credit card in partnership with Visa), 14 major retailers who filed a separate brief, and four former federal antitrust officials. The four are Donald Baker, ex-assistant attorney general in the Antitrust Division; Albert Foer, former acting deputy director of the Federal Trade Commission's Bureau of Competition and founder of the American Antitrust Institute; Don Resnikoff, a longtime DOJ antitrust litigator; and Maurice Stucke, former DOJ antitrust litigator and now a law professor at the University of Tennessee.
Their brief states: "The acting solicitor general's failure to join this petition — at a time when both the Antitrust Division and the Solicitor General's office lack Senate-confirmed leadership — does not diminish the importance of clarifying the proper burden of proof in two-sided platform antitrust cases. The government plaintiffs are ably represented by 11 sovereign states."