In a California Bar Journal, Professor Chemerinsky documents what he describes as the Supreme Court’s “sharp turn to the right.” Ted Frank describes Chemerinsky’s review of the term as “not especially honest” and discusses a few cases there. So what does Chemerinsky make of the recent antitrust decisions? Your hint is that the section is titled: “The Supreme Court favors business over consumers and employees.” Ted Frank doesn’t like this description at all because “we all know darn well that many “pro-business” legal rules favor consumers and employees as a group ex ante.”  I don’t like the description either and expand on Ted’s theme here a little bit below the fold.
 Chemerinsky summarizes the Supreme Court’s antitrust output (the “employee” part is a reference to Ledbetter v. Goodyear Tire) for the 2006-07 terms as follows:
In several cases, the Court made it much more difficult to sue business for antitrust violations. In Leegin Creative Leather Products Inc. v. PSKS Inc., 127 S.Ct. ___ (June 28, 2007), the Court overruled a 96-year-old decision and held that it is not a per se violation of antitrust laws for a manufacturer to set minimum resale prices. In Credit Suisse Securities (USA) LLC v. Billing, 127 S.Ct. 2383 (2007), the Court ruled that there cannot be antitrust claims for securities law violations. The Court explained that securities laws were “clearly incompatible” with antitrust laws, such that securities law implicitly precluded antitrust claims. And in Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955 (2007), the Court held that stating a claim under the Sherman Act’s restraint of trade provision requires that the complaint allege sufficient facts to suggest that an agreement was made. The Court rejected notice pleading for such claims, thus making it harder for plaintiff to get into court.
I might have described the cases a bit differently to improve accuracy, but what gets me about this section is the heading: “Supreme Court favors businesses over consumers.” Is that really what these cases are about? I have read political accounts of the Supreme Court opinions in newspapers and periodicals or blogs that read this way (“The Roberts Court wants to stick it to the consumer — I can prove it: the Defendant won in all 4 cases this term”). But I’ve not heard law professors take this route too often, and never an antitrust commentator.  In fact, a reasonable reading of the Court’s antitrust output this year suggests that the issues are much more nuanced than this oversimplified soundbite that pits business against consumers.
Is Leegin a pro-business and anti-consumer decision? I’m not sure I even know what that means in this context. Let’s turn the question on its head for a moment to illustrate its absurdity.  Is a decision that prohibits a firm from engaging in some behavior clearly anti-business and pro-consumer? Of course not! It depends on the competitive effects of the conduct at issue and how the antitrust rule will impact firm behavior.
Justice Kennedy’s opinion on behalf of the majority does allow manufacturers to engage in behavior that was previously constrained. Perhaps that is a sufficient condition for a pro-business label? On the other hand, the very reason the Court overturned the per se rule was the result of evidence that minimum resale price maintenance made consumers better off!  Now, one might think that the Court got it wrong and that RPM actually harms consumers. I disagree and believe Leegin was correctly decided. But to argue that the Court got there by favoring business over consumers is not accurate, and obvious from reading the opinion.Â
What about Twombly? Is Twombly pro-business and anti-consumer? It certainly makes it more difficult for plaintiffs to survive a motion to dismiss in a Section 1 case. But is that anti-consumer? Only if one ignores the argument that abuse of the antitrust laws through discovery and frivolous claims exposes firms to the risk of false positives and may chill pro-competitive conduct — which is bad for consumers. But this argument is, in part, what the case is about: preventing the passing on of the social costs from massive discovery in complex antitrust litigation where there is a very low probability of consumer harm.
As for Credit Suisse, I’m not quite sure Chemerinsky got the holding right. But in any event, whether granting implied immunity to antitrust claims where the SEC has rules and regulations prohibiting the conduct at issue (and has actively regulated) is against consumer interests is an interesting question. It depends in large part on the relative comparative advantages of antitrust versus the SEC for regulating this sort of conduct (see Thom’s post, Keith’s eCCP paper, and Carlton & Picker’s excellent paper) and the costs imposed from overlapping regulatory authority.Â
The point here is that the issues are far more nuanced than his misleading characterization of the cases suggests. It is a short article, I know. There is not always room to get in every detail about every case. But these are not minor details. These sorts of misleading descriptions aimed at producing soundbites. That sort of thing should be left to journalists, not law professors.