UNITED STATES – The Multistate Antitrust Task Force of the National Association of Attorney Generals (“NAAG”), the non-political organization of US state attorneys general that coordinates joint multistate and federal-state investigations and litigation, has created a new committee to examine class action settlements reported to the states under the Class Action Fairness Act, and specifically to examine whether companies may be using class action settlements to avoid antitrust enforcement actions that might otherwise be brought by government enforcers.
“There are times when some of the settlements we see purport to settle claims that really belong on the government enforcement side, that are improper,” said Kathleen Foote, Senior Assistant Attorney General with the California Department of Justice and NAAG Antitrust Chair, in an April 8 interview with MLex reporter Mike Swift. “What happens if we let it go? And what is the right way to go about dealing with that if something arises? What happens if we file our own case, and there is a claim that there has already been a class action settlement that would cut off our case? So those are some of the issues that committee is dealing with.”
Foote said that states enforcers “might well” decide take a case for the purpose of establishing liability, without seeking damages, if a class action has already resolved the damages portion of a case in which enforcers decide that the settlement short-circuited conduct that should be the subject of government enforcement. “Frequently, we do things of that kind. We may pursue civil penalties, for example.”
Multistate enforcement efforts have led to huge settlements for the states, including a $543.5 million group of settlements by companies alleged to have fixed the prices of flat-panel liquid crystal screens used in laptops and other consumer electronics. Those settlements were part of a total recovery of more than $1.1 billion that was divided among 24 states and the District of Columbia.
Also of note is one recent California antitrust settlement that included a first-ever $300,000 restitution component for generalized harm to the state’s economy.
Given the aggressive statements by Ms. Foote, it seems a certainty that state enforcers will carefully scrutinize future class action settlements to ensure they are in the public interest.