Keep Calm and Causation On: Reframing Causation Analysis in Private Section 1 Antitrust Actions at Summary Judgment

Keep Calm and Causation On: Reframing Causation Analysis in Private Section 1 Antitrust Actions at Summary Judgment Anne E. Hartnett * ABSTRACT: A private plaintiff’s ability to enforce antitrust violations critically hinges upon proof that the plaintiff’s injury was in fact caused by the defendant’s antitrust violation—a deceptively simple requirement. This Note traces the history of the treatment of the causation element in private Section 1 antitrust conspiracy claims, as well as the differing approaches courts apply to the causation element when ruling on motions for summary judgment in Section 1 cases. In particular, this Note elaborates on how the adoption and use of the traditional tort law concept of causation in antitrust, as well as the heightened standards found in unrelated antitrust inquiries, has rendered federal courts incapable of properly examining economic evidence of causation. This Note advocates for more procedurally prudent court practices when assessing the causation element in pretrial rulings. Such practices are intended to hold courts accountable for verifying that a Section 1 plaintiff has sound evidence of causation before a case reaches a jury, while also ensuring that courts do not go beyond their role as gatekeepers when ruling on motions for summary judgment. I. INTRODUCTION ........................................................................... 2292 II. THE FUNDAMENTALS AND DEVELOPMENT OF CAUSATION ANALYSIS IN SECTION 1 CASES AT SUMMARY JUDGMENT ............. 2294 A. L EGAL R ULES FOR B RINGING AND W INNING A P RIVATE S ECTION 1 C ONSPIRACY C LAIM .............................................. 2295 1. The Clayton Act’s Private Right of Enforcement ...... 2295 2. Section 1 Conspiracy Claims ...................................... 2297 B. T HE E VER -E LUSIVE N ATURE OF A NTITRUST C AUSATION .......... 2299 1. The Abstract Causation Element in Private Antitrust Actions .......................................................... 2299 * J.D., The University of Iowa College of Law, 2017; B.A., Iowa State University, 2014. Thank you to Professor Herbert Hovenkamp for sparking my interest in this complex and fascinating topic. Thank you also to my friends and editors on the Iowa Law Review for their thoughtful suggestions and help with this Note. 2292 IOWA LAW REVIEW [Vol. 102:2291 2. Antitrust Standing and its Effect on the Causation Element ........................................................................ 2301 C. T HE R ISE OF S UMMARY J UDGMENT IN P RIVATE S ECTION 1 C ONSPIRACY C ASES ................................................................ 2302 1. Summary Judgment Loses its Leniency ..................... 2302 2. Summary Judgment Post- Matsushita : Plaintiff’s Friend Turned Foe ...................................................... 2303 III. THE TWO PRIMARY STANDARDS—AND CAUSES—OF IMPROPER SECTION 1 CAUSATION ANALYSIS AT SUMMARY JUDGMENT ........ 2305 A. T HE D EFERENTIAL A PPROACH : A H ISTORY OF P ILING I NFERENCE U PON I NFERENCE ................................................. 2305 1. The Original Distinction Between Causation and Quantification ............................................................. 2307 2. How Bigelow ’s Misinterpretation of Precedent Formed the Zenith Radio Standard ............................. 2309 3. Too Great of Inferences ............................................. 2311 B. T HE H EIGHTENED A PPROACH : A N U NCLEAR V ISION OF C AUSATION - IN -F ACT .............................................................. 2313 1. Misapplied Antitrust Standing and Injury Concepts ...................................................................... 2315 2. Misunderstandings of Matsushita and Proof of “Economic Plausibility” ............................................... 2316 IV. THE PROPER STANDARD OF ANALYSIS: RETURNING TO AN ANALYSIS OF CAUSATION THAT REQUIRES ECONOMICALLY SOUND THEORIES BASED IN FACTS ............................................. 2318 A. E XPRESSLY S EPARATING C AUSATION -I N -F ACT IN S ECTION 1 C LAIMS ................................................................................. 2318 B. R ETURNING TO THE G ATEKEEPING F UNCTION ......................... 2319 1. Focusing on Procedural Requirements Through Economic Substance ................................................... 2320 2. Untangling “But-For” Causation from Material Cause ............................................................................ 2322 V. CONCLUSION .............................................................................. 2323 I. INTRODUCTION In the whole of civil litigation, arguably no party has a more difficult time surviving a motion for summary judgment than a plaintiff alleging an injury from a violation of the federal antitrust laws. Although the forms of antitrust violations contain different elements, every private plaintiff must prove that 2017] KEEP CALM AND CAUSATION ON 2293 his or her injury was in fact caused by a defendant’s antitrust violation. 1 While establishing causation is universally required in all civil claims, attempting to either prove or assess causation in the antitrust context is particularly challenging. The difficulty of proving a causal connection is most often felt in the context of motions for summary judgment, where even courts appear unsure of what level and form of proof is required to satisfy the causation element. Amidst this confusion, plaintiffs claiming a Section 1 conspiracy may have to overcome an additional burden of proof—namely, that it is more likely than not that the defendant in fact caused the plaintiff’s injury. 2 As such, there is currently a large degree of inconsistent analysis and outcomes in rulings on motions for summary judgment in Section 1 cases. More specifically, two polar-opposite approaches have created a spectrum of inconsistency: under the first, courts simply presume that a plaintiff has sufficiently established a causal connection once the judge deems the other elements can be reasonably inferred; and under the other, courts strictly require a determination as to whether a plaintiff has proved a causal connection to a reasonable certainty. 3 In early 2014, this inconsistency came to light in a Sixth Circuit decision that reversed a grant of summary judgment against dairy retailers who alleged that a group of milk wholesalers had illegally fixed prices in violation of Section 1 of the Sherman Act. 4 While the district court found that the dairy retailers’ expert failed to show that the alleged conspiracy did in fact cause milk prices to increase, 5 the court of appeals found that because there was enough evidence to reasonably infer a conspiracy and an unexplained rise in prices and thus an injury, the price increase “clearly result[ed]” from the price-fixing conspiracy. 6 The defendants petitioned the Supreme Court to 1 . See, e.g. , El Aguila Food Prods., Inc. v. Gruma Corp., No. 04-20125, 2005 WL 1156090, at *2 (5th Cir. May 17, 2005) (“The fact of damage requirement is one of causation; the plaintiff must show that the defendant’s unlawful conduct was a material cause of injury to its business.”); Abcor Corp. v. AM Int’l, Inc., 916 F.2d 924, 931 (4th Cir. 1990) (affirming summary judgment because plaintiffs “failed to show a causal link to anticompetitive activity”). 2 . See, e.g. , Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 588 (1986) (“To survive a motion for summary judgment or for a directed verdict, a plaintiff seeking damages for a violation of § 1 must present evidence ‘that tends to exclude the possibility’ that the alleged conspirators acted independently.” (quoting Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 764 (1984))); Monsanto , 465 U.S. at 764 (“[S]omething more than evidence of complaints is needed. There must be evidence that tends to exclude the possibility that the [two defendants] were acting independently.”). 3 . See infra Part III. 4 . In re Se. Milk Antitrust Litig., 739 F.3d 262, 268 (6th Cir. 2014). 5 . In re Se. Milk Antitrust Litig., No. 2:08–MD–1000, 2012 WL 1032797, at *6 (E.D. Tenn. Mar. 27, 2012) (“Further, it appears to the Court that [the plaintiffs’ expert] cannot, and did not, measure how prices would have increased in the absence of a conspiracy. He simply compared pre-merger prices to post-merger prices. In short, [the expert’s] analysis does not create a material issue of fact on the question of whether the price increases were ‘by reason of’ an illegal conspiracy in violation of the antitrust laws . . . .”), rev’d , 739 F.3d 262 (6th Cir. 2014). 6 . In re Se. Milk Antitrust Litig. , 739 F.3d at 286 (“[W]hen competition is limited pursuant to an agreement and customers are punished through higher prices, the injury clearly results from anticompetitive conduct.”). 2294 IOWA LAW REVIEW [Vol. 102:2291 hear what they believed was a subtle yet meaningful circuit split—namely, whether a Section 1 plaintiff must present affirmative evidence of causation to survive a summary judgment motion, “or whether a court may instead presume causation at [the] summary judgment” stage. 7 While the Supreme Court denied the cert petition, the issue received a good deal of attention from legal practitioners, scholars, and large companies that are often subject to similar Section 1 claims. 8 In particular, many sought additional guidance on one particular area: Assuming that causation may be presumed in some cases but not in others, how can courts consistently approach causation in antitrust cases at summary judgment 9 This Note seeks to answer this question by putting forth certain practices that courts can and should follow at summary judgment when assessing causation in Section 1 cases. Specifically, Part II discusses the mechanics of private antitrust actions, causation as an element of such an action, and the role of summary judgment motions and rulings in Section 1 conspiracy cases. Part III.A first analyzes...