Seldom does Blawgletter get the pleasure of reading an Intriguing and Forceful Analysis of a recent and important court of appeals decision.  Our dear friend Sam Simon blessed us with his views about In re Ins. Brokerage Antitrust Litig., No. 07-4046 (3d Cir. Aug. 16, 2010) (post here), today.  And, with his kind permission, we pass his thoughts on to you:

The court of appeals' recent decision in In re Insurance Brokerage Antitrust Litigation, No. 07-4046 (3d Cir. Aug. 16, 2010), presents a situations that is worth a further look. 

The unusual antitrust case is an appeal of consolidated private civil actions based on an enforcement effort by the New York State Attorney General's office that the Multidistrict Panel consolidated before District Judge Garrett Brown in the District of New Jersey.  The court of appeals' opinion weighs in at 200 pages, so you are strongly advised to have a bottle of Excedrin or Advil and a tall glass of water next to you as you peruse it.

The court's decision is unusual in many respects. In fact, it is so unusual that it may not serve as precedent for much of anything beyond its peculiar facts. 

The first item that immediately strikes the reader's attention is that plaintiffs declined to make this a rule of reason case. Hoping to simplify the litigation, plaintiffs insisted on treating the convoluted legal theories and the complex factual scenario in this "hub and spoke" case — actually, two complaints, each as long as the court of appeals' opinion — as either a per se or a quick look case. Though the court of appeals declined further to break down "quick look" into either "to condemn" or "to exonerate," defendants were able to use jiu-jitsu and effectively turn plaintiffs' attempt to simplify the litigation to defendants' own advantage. This is lawyering of the highest quality.

One of the factors that makes the decision unusual, and perhaps sui generis, is that the district court permitted plaintiffs to take years of discovery, enabling them to draw upon documents and depositions in the successive drafts of their complaint even as the court confronted (and granted) repeated dismissal motions. Slip Op. at 23. The fact that both the district court and the court of appeals addressed defendants' facial challenges to the complaint under Rule 12(b)(6) and Twombly/Iqbal, as opposed to converting the motion into one for summary judgment, would seem inconsisent with the substantial amount of detailed evidentiary matter set forth in the complaint, some of which the court of appeals quoted at length.

Under these circumstances, it might be suggested that the court of appeals confused and conflated Rule 12(b)(6) and Rule 56 standards, thus rendering the opinion all but useless as a guide for evaluating other antitrust complaints under either standard.  On the one hand, much admissible evidence, as gathered during the discovery process, was considered in deciding the dismissal motions, thus removing the motion from one that examined only the facial sufficiency of the Complaint.  But on the other hand, there was no contention that plaintiffs had completed discovery, thus arguably making the filing of a Rule 56 motion premature.

The decision itself seems chronically confused on whether it comprises a facial examination of a repeatedly amended complaint or a summary judgment evaluation. Compare Slip Op. at 25 (a complaint must plead evidence), 51 (plaintiff must plead "evidentiary facts" at a time when discovery has not yet begun), 24 and 57 ("a single 'method of proof' at the pleading stage"), 76 n.30 ("When we search for additional information") and 104 (use of detailed evidence to evaluate complaint, e.g., "the complaint contains enough well-pled factual matter") with the many references throughout the opinion (e.g., Id. at 144) that the decision is only "based on the face of the complaint," and on nothing else. 

The court of appeals wanted to have its cake and eat it too. The result of this chronic confusion is likely to strike an objective reader as 200 pages of gibberish or, as one eminent practitioner I know has stated, "the ravings of the law clerks."  Such an opinion would have given someone like Justice Holmes a heart attack. Its War and Peace-like length bespeaks a fundamental incomprehesion of the issues involved, as well as the role of an appellate court.  The decision, with its staggering length and its attempt to traverse much of antitrust, insurance-antitrust, and RICO jurisprudence in a tour d'horizon of limitless dicta, sometimes on topics of no possible relevance to the decision (e.g, tying arrangements, see Slip Op. at 37 n.19), is a locus classicus of the frequently repeated observation that "appellate courts" may be properly defined as the law clerks and their word processors.)

The unfortunate thing is that no one is supposed to care about a complaint and an answer, which only frame the case and set out discovery perimeters, and are (or should be) quickly forgotten. Modern federal practice ("modern means" since 1938, the same year Mr. Tompkins walked along a railroad track in Hughestown, Pa., near Pittston and Forty Fort) is supposed to be about a search for the truth, i.e., Just the Facts. This is why Rule 15(a) permits untrammeled leave to amend a complaint, including even during the trial itself. Confronted with such embarassments as this uncouth appellate opinion, it does not take a perfervid imagination to visualize the ghosts of David Dudley Field and code pleading arising, like ghouls, from the grave. 

The court of appeals affirmed the district court's dismissal of the principal antitrust allegations on the ipse dixit that, no matter how explicitly they may have been pleaded, "they do not give rise to a plausible reference of horizontal conspiracy" — "plausible," that is, under the court's "understanding" of Twombly. But Twombly's reference to "plausible" can mean anything at all because plausibility, like beauty, is in the eye of the beholder. The court also makes the fundamental error of considering plaintiff's conspiracy allegations singly and wiping the slate clean after each, as opposed to considering them holistically, as it was required to do under Poller v. CBS (1962). 

Several additional points. The opinion (Id. at 114) cites the court of appeals' previous decision in Lum for the proposition that Rule 9(b) may have a place in anaylzing an antitrust complaint. In 1995, Congress resolved the historic tension between Rule 9(b) and Rule 8(a) in favor of demanding microscopic particularity in pleadin in securities cases sounding in fraud.  This antitrust decision another step in particularizing antitrust complaints, and thus in eviscerating another area of private enforcement of fundamental federal policy. (At one point there was a bill in Congress to reverse Twombly and restor Conley v. Gibson, but I don't know what happened to it or, if if ever becomes law, the Supreme Court will strike it down on separation of powers grounds.) 

The opinion (Id. at 167) cites Dura and the "in terrorem" effect of defendants of certain types of litigation — here, a civil RICO suit, which the judiciary has long disfavored. But civil RICO is no more terroristic than Section 4 of the Clayton Act, i.e., treble damages + a reasonable statutory attorney's fee. The next, logical step will, of course, be to call Section 4 itself an "in terrorem" statute, which will lead to its repeal or modification. (This may not be altogether a bad thing because it has long been the excuse that foreign antitrust authorities employ not to assist our own private enforcement efforts, e.g., In re Uranium Cartel Antitrust; moreover, the statutory imposition of treble damages + attorney's fees conduces many a district judge to look with jaundiced eye on private antitrust enforcement.) Futhermore, citing a Seventh Circuit decision in Limestone the opinion assumes that treble damages are punitive (Id. at 167). Not mentioned is Justice Marshall's decision in Hawaii v. Standard Oil (1972), in which the Court stated that treble damages are not punitive but compensatory.

For its more learned moments the opinion relies on treatises by Herbert Hovenkamp, among the most partisan and ideological of scholars, to the exclusion of many other scholars whose views of the antitrust laws are different and, in many cases, irreconcilable.

At one point (Slip Op. at 86), the opinion actually rules in plaintiffs' favor by concluding that "bid-rigging behavior does plausibly suggest concerted action by [defendants]." But instead of extrapolating from this conclusion that the other alleged conduct is also sufficiently suseptible of a "concerted action" inference to permit full-bore discovery, the court holds exactly the contrary, to wit, that it does not. This suggests that, though the opinion was unanimous, there was actually an irreconcialible split among its members as to the correct result, so that the decision became a classic split decision, with something for everyone. Nonetheless, even the areas in which the district court's analysis was found deficient did not, for the most part, produce a clear win for plaintiffs; rather, those particular portions of the decision below were largely vacated and remanded for yet further study and analysis in the district court. 

The decision has a near-endless discussion of McCarran-Ferguson, one of the few statutes to be named after an airport.  See Slip Op. at 122-45.  It should be of interest to all of us who litigate in the antitrust-insurance field. 

Finally, and captiously, the decision is not free of grammatical and syntactical errors. Examples include (a) the phrase "plaintiffs' allege that. . ." (Slip Op. at 76), with its misplaced apostrophe, (b) an inability to distingush whether the phrase "none" ["none" ="no one"], when used as the subject of a sentence, takes a plural or a singluar predicate (compare Slip Op. at 79 ("none. . .give reason" and 101 ("none have merit") vs. Slip Op. at 126 ("none. . .is") and 1988 ("none was addressed"), thus betraying multiple authorship, and (c) the use of a word (instantiations", Slip Op. at 80) that does not appear in a standard dictionary.  These, to be sure, are scarcely the decision's primary flaws.

Plaintiffs should nonetheless have reason to be pleased. They have settled with Marsh & McLennan defendants during the course of the appeal.  (Slip Op. at 24 n.4).  This development would hopefully mean that Marsh has agreed to a cooperation clause. Because Marsh is "the dominant force" and "did the enforcing" of the alleged conspiracy (Slip Op. at 103, see also Id. at 106), the Marsh defendants' hoped-for cooperation with plaintiffs could force the remaining defendants to the settlement table. Given the unremitting hostility plaintiffs encountered in the district court and the prolix, turgid, and largely negative decision their efforts have generated in the court of appeals, this is their moment to resolve the case.

Samuel R. Simon
Bala Cynwyd, PA

By the way, you can reach Sam at  Sam practices antitrust and securities law and has been an adjunct professor at Rugers Law School since 2004.  He has also testified before Congress on antitrust issues on behalf of the American Antitrust Institute.

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Photo of Barry Barnett Barry Barnett

Clients and colleagues call Barry Barnett an “incredibly gifted lawyer” (Chambers and Partners) who is “magic in the courtroom” (Who’s Who Legal), “the top antitrust lawyer in Texas” (Chambers and Partners), and “a person of unquestioned integrity” (David J. Beck, founder of Beck…

Clients and colleagues call Barry Barnett an “incredibly gifted lawyer” (Chambers and Partners) who is “magic in the courtroom” (Who’s Who Legal), “the top antitrust lawyer in Texas” (Chambers and Partners), and “a person of unquestioned integrity” (David J. Beck, founder of Beck Redden).

Barnett is a Fellow in the American College of Trial Lawyers, and Lawdragon has named him one of the top 500 lawyers in the United States three years in a row. Best Lawyers in America has honored him as “Lawyer of the Year” for Bet-the-Company Litigation (2019 and 2017) and Patent Litigation (2020) in Houston. Based in Texas and New York, Barnett has tried complex business disputes across the United States.

Barnett’s background, training, and experience make him indispensable to his clients. The small-town son of a Texas roughneck and grandson of a Texas sharecropper, Barnett “developed an unusual common sense about people, their motivations, and their dilemmas,” according to former client Michael Lewis.

Barnett has been historically recognized for his effectiveness and judgment. His peers chose him, for example, to the American College of Trial Lawyers and American Law Institute. His decades of trial and appellate work representing both plaintiffs and defendants have made him a master strategist and nimble tactician in complex disputes.

Barnett focuses on enforcement of antitrust laws, the “Magna Carta of free enterprise,” in Supreme Court Justice Thurgood Marshall’s memorable phrase. “Barry is one of the nation’s outstanding antitrust lawyers,” according to Joseph Goldberg, a member of the Private Antitrust Enforcement Hall of Fame. Named among Texas’s top ten antitrust lawyers of 2023, Business Today calls Barnett a “trailblazer” among the “distinguished legal minds” who “dedicate their skill and expertise to the maintenance of healthy competition in various sectors” of the Lone Star State’s booming economy. Barnett is also adept in energy and intellectual property matters and has battled for clients against a Who’s Who list of corporate behemoths, including Abbott Labs, Alcoa, Apple, AT&T, BlackBerry, Broadcom, Comcast, Dow, JPMorgan Chase, Samsung, and Visa.

Barnett commands a courtroom with calm and credibility and “is the perfect lawyer for bet the company litigation,” said Scott Regan, General Counsel of former client Whiting Petroleum. His performance before the Supreme Court in Comcast Corp. v. Behrend prompted the Court to withdraw the question on which it had granted review. The judge in a trial involving mobile phone technology called Barnett “one of the best” and that his opening statement the finest he had ever seen. Another trial judge told Barnett minutes after a jury returned a favorable verdict against the county’s biggest employer that he was one of the two best trial lawyers he’d ever come across—adding that the other one was dead.

A versatile trial lawyer, Barnett knows how to handle a case all the way from strategic pre-suit planning to affirmance on appeal. He’s tried cases to verdict and then briefed and argued them when they went before appellate courts, including the Second, Third, Fifth, and Tenth Circuits, the Supreme Court of Louisiana, and (in the case of Comcast Corp. v. Behrend) the Supreme Court of the United States.

Barnett is a sought-after public speaker, often serving on panels and talking about topics like the trials of antitrust class actions and techniques for streamlining complex litigation. He also comments on trends in commercial litigation and the implications of major rulings for outlets such as NPR, Reuters, Law360, Corporate Counsel, and The Dallas Morning News. He’s even appeared in a Frontline program about underfunding of state pensions, authored chapters on “Fee Arrangements” and “Techniques for Expediting and Streamlining Litigation” (the latter with Steve Susman) in the ABA’s definitive treatise on Business and Commercial Litigation in Federal Courts, 5th, and commented on How Antitrust Enforcers Might Think Like Plaintiffs’ Lawyers.

Clients and other hard graders have praised Barnett for his courtroom skills and legal acumen.

A client in a $100 million oil and gas case, which Barnett’s team won at trial and held on appeal, said Barnett and his team “presented a rare combination of strong legal intellect, common sense about right and wrong, and credibility in the courtroom.” David McCombs at Haynes and Boone said Barnett “has a natural presence that goes over well with juries and judges.”

Even former adversaries give Barnett high marks. Lead opposing counsel in a decade-long antitrust slugfest said “Barry is a highly skilled advocate. He understands what really matters in telling a narrative and does so in a very compelling manner.”

Barnett relishes opportunities to collaborate with all kinds of people. At the Center for American and International Law (CAIL), founded by a former prosecutor at Nuremberg in 1947 and headquartered in the Dallas area, he has served on the Executive Committee, co-chaired the committee that produced CAIL’s first-ever strategic plan, supported CAIL’s Institute for Law Enforcement Administration and other development efforts, and proposed formation of a new Institute for Social Justice Law. CAIL’s former President David Beck said “Barry is extremely bright” and is “very well prepared in every lawsuit or professional task he undertakes.”

Barnett is also a Trustee of the New-York Historical Society, a Sterling Fellow at Yale, a member of the Yale University Art Gallery’s Governing Board, a winner of the Class Award for his work on behalf of his college class, and a proud contributor to the Yellow Ribbon Program at Harvard Law. Barnett’s pro bono work includes leading the trial team representing people who are at greatest risk of severe illness and death as a result of being exposed to the novel coronavirus SARS-CoV-2 while being detained in the Dallas County jail—work for which he received the NGAN Legal Advocacy Fund RBG Award.

At Susman Godfrey, Barnett has served on the firm’s Executive Committee, Employment Committee, and ad hoc committees on partner compensation, succession of leadership, and revision of the firm’s partnership agreement. He also twice chaired the Practice Development Committee.

Barnett understands that clients face many pressures. Managing the stress is important, especially in matters that take years to resolve. He encourages clients to call him whenever they have a question or concern and to keep the inevitable ups and downs in perspective. He wants them to know that he will do his level best to help them achieve their goals. He also strives to foster trust and to make working with him a pleasure.

Cyrus “Skip” Marter, the General Counsel of Bonanza Creek in Denver and a former Susman Godfrey partner and client, said Barnett is “excellent about communicating with clients in a full and honest manner” and can “negotiate for his clients from a position of strength, because he is not afraid to take a case through a full trial on the merits.” Stacey Doré, the President of Hunt Utility Services and a former client, said that Barnett is “an excellent trial lawyer and the person you want to hire for your bet-the-company cases. He is client focused, responsive, and uniquely savvy about trial and settlement strategy.” A New York colleague said, “Barry is a joy to work with as co-counsel. He tackles complex procedural and factual hurdles capably, efficiently, and without drama.”

Barnett’s wide-ranging experience and calm, down-to-earth approach enable him to connect with clients, judges, jurors, witnesses, and even opposing counsel. He grew up in Nacogdoches, Texas. He co-captained his high school varsity football team as an All-East Texas middle linebacker while also serving as the Editor of Key Club’s Texas-Oklahoma District, won the Best Typist award, took the History Team to glory, and sang in the East Texas All Region Choir. As Dan Kelly of client Vistra Corp. put it, Barnett is “a great person to be around.”

Barnett is steady and loyal. He has practiced at Susman Godfrey his entire career. He and his wife Nancy live in Dallas and enjoy spending time in Houston and New York. Their daughter works for H-E-B in Houston, and their son is a Haynes and Boone transactions lawyer in Dallas.

As a member of Ivy League championship football teams in his junior and senior years at Yale and a parent of two Yalies, Barnett has no trouble choosing sides for “The Game” in November. And he knows how important fighting all the way to the end is. On his last play from scrimmage, in the waning minutes of The Game on Nov. 22, 1980, he recovered a Crimson fumble.

Yale won, 14-0.