Balancing on the Edge of the Merits

I have posted a draft of my newest article - Striking an Efficient Balance: Making Sense of Antitrust Standing in Class Action Certification Motions - on SSRN.

My thesis is that a district court judge considering a motion for class certification in an antitrust class must preserve the bargaining relationship of both the putative plaintiff class and the defendant(s) through an analysis of both the Article III and antitrust standing doctrines. In the article, I demonstrate the adverse impact an imprudently certified class will have on the consuming public as a whole. I propose that by considering the antitrust standing (and thus antitrust injury) of a putative plaintiff class at the certification stage of the litigation, efficient conduct – and thereby consumer welfare – will be achieved.

The trouble is that ascertaining antitrust standing can be quite complicated, almost always invoking issues typically reserved for the merits of a case. This is problematic, because a district court judge is bound by the Supreme Court's admonishment to avoid "inquiry into the merits of a suit in order to determine whether it may be maintained as a class action." Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177 (1974).

I welcome any comments on the piece.

Finally

Premium, Natural, and Organic Supermarket shoppers, rejoice! Whole Foods has settled with the FTC. According to the FTC press release, "The consent order will restore competition in 17 geographic markets that were impacted by the acquisition. In addition to requiring the transfer or divestiture of all rights to 32 stores, Whole Foods also is required to divest related Wild Oats intellectual property, including unrestricted rights to the “Wild Oats” brand, which retains significant name recognition and loyalty among consumers." FTC Chairman Jon Leibowitz says, "As a result of this settlement, American consumers will see more choices and lower prices for organic foods." Sounds good to me, but is it true?

The settlement requires Whole Foods to divest itself of thirty-two stores, in seventeen geographic markets (In 2007, when the merger agreement was entered into, Whole Foods acquired seventy-four Wild Oats stores). Nineteen of these stores are already closed. Selling closed stores will not likely prove to be easy, and unlike the competition created by a Wild Oats-esque competitor, Whole Foods need not sell the designated stores to a single buyer. This means, the stores could potentially be sold to smaller-scale operations, which may not have the ability to effectively compete with the efficiencies of an operation the size of Whole Foods. A similar problem is seen with the IP rights. Whole Foods must sell its interest in the Wild Oats name, but if the buyer is not at least as big as Wild Oats, the value of the name could diminish greatly.

The settlement also means the Supreme Court won't have the chance to review the D.C. Circuit's opinion, issued last summer, which some have criticized as "a step backward" as it "runs counter to the strong trend in recent Supreme Court jurisprudence for economic rigor and clear standards to guide businesses and the agencies." Will this consent order truly "restore competition"? Only time will tell. All I can say for sure is that settlements are always a compromise.