Antitrust Law Daily Wrap Up, SUPREME COURT DOCKET—Recent decisions, cases, and petitions pending High Court review, (Jun 24, 2024)

By Peter Reap, J.D., LL.M.

The decisions, arguments, briefs, and petitions concerning antitrust and trade regulation issues before the October 2023 Term of the U.S. Supreme Court are presented in this Antitrust Law Daily feature.

The U.S. Supreme Court has denied two petitions that each sought High Court review of an Eleventh Circuit ruling affirming the massive $2.67 billion settlement of antitrust claims alleging that Blue Cross Blue Shield restricted member plans’ ability to compete. The petitions, Behenna, No. 23-1163 (April 25, 2024) and Home Depot U.S.A., Inc., No. 23-1063, March 26, 2024), asked the Supreme Court to look into different aspects of the case, with Behenna questioning the method applied by the Eleventh Circuit in determining the reasonableness of the attorney fees award and Home Depot arguing that the “categorical” Eleventh Circuit reasoning that “no public policy prohibits prospective releases in antitrust cases” conflicted with other Circuits and High Court precedent.

Background. In 2012, the Judicial Panel on Multidistrict Litigation centralized nine antitrust actions about Blue Cross Blue Shield Association (BCBSA) Blue Plan licensing agreements in the federal district court in Birmingham. The claims alleged that the 38 Blue Plans divided and allocated among themselves health insurance markets throughout the nation in violation of Sections 1, 2, and 3 of the Sherman Act and various state laws.

A decade later, in 2022, the parties ultimately entered into a $2.67 billion settlement agreement with substantial injunctive relief to enhance health insurance market competition. The district court granted final approval, overruling all objections. Several objectors appealed on various grounds. Among them, Home Depot U.S.A., Inc., contended the settlement violated public policy by releasing prospective antitrust claims and violated due process and class-action rules by allowing the same counsel and class representatives to represent both an injunctive class and a damages class. The Eleventh Circuit affirmed the settlement.

A Blue Cross Blue Shield subscriber who had objected to the settlement, David G. Behenna, filed a petition that took issue with the fairness of the attorney fee award. Home Depot filed for review by arguing the settlement violated public policy by releasing prospective antitrust claims and violated due process and class-action rules by allowing the same counsel and class representatives to represent both an injunctive class and a damages class.

Behenna’s petition. The settlement approved by the district court and affirmed by the Eleventh Circuit used a percentage-of-the-fund method to calculate reasonable attorney fees. Behenna pointed out that this settlement worked to the advantage of plaintiffs' counsel because the Clayton Act specifically authorizes treble damages, and litigating the case to a conclusion favorable to the plaintiffs would have resulted in a higher attorney fee award for their counsel, but for the Eleventh Circuit's prohibition against the use of the lodestar method. The trade-off, claimed Behenna, is detrimental to the plaintiffs in the case because they stand to recover more if the case is litigated to its conclusion. Behenna accordingly sought to overcome the Eleventh Circuit's ban on the use of the lodestar method.

Behenna requested the Supreme Court to grant certiorari in order to resolve a split among the circuits. The petition noted that the Eleventh Circuit and the District of Columbia Circuits have required the percentage-of-the-fund method to be used to calculate attorney fees; all the other circuits having found that the district courts have the discretion to use the lodestar method, even if only as a cross-check verification of the reasonableness of a percentage-of-the-fund calculation. Behenna accordingly urged the Supreme Court to rule that the lodestar method, which the Court has previously endorsed in other matters, should be available to district courts in antitrust common benefit fund contexts.

Behenna also requested the Court to determine whether a 25 percent benchmark figure is reasonable in cases where a percentage-of-the-fund calculation is used, noting a split among some circuits on that issue.

Home Depot’s petition. Home Depot’s petition for certiorari focused on the prospective applicability of the settlement release. It said the agreement’s express terms provided for the millions of members of the class to release any and all claims, including unknown claims, that related in any way to either the factual predicates of or any issue raised in any of the subscriber actions or to any new, post-settlement restrictions approved by the committee created by the settlement. Home Depot said the agreement was “crystal clear” that released claims could arise after the settlement’s effective date.

Home Depot objected it had no opportunity to opt out of the injunctive-relief class where it putatively violated the “well-established prohibition against the waiver of antitrust claims.” Home Depot said the settling parties never agreed on what the district court meant when it foreclosed future class-wide injunctive relief but clarified individual class members could pursue their own “individualized” injunctive relief. It said the settlement agreement did not explain “individualized” injunctive relief anywhere, but it was otherwise clear that it precluded any future remedies that would “dismantle any of the Blues’ on-going competitive restraints or obtain any market-wide relief.”

Home Depot continued that the Eleventh Circuit’s affirmation of the district court’s approval of the settlement conflicted with Lawlor v. Nat’l Screen Serv., 349 U.S. 322, 329 (1955) and other Supreme Court cases. It said the Eleventh Circuit had not even addressed Home Depot’s repeated citations to Lawlor. Meanwhile, Home Depot proposed that Second and Seventh Circuit cases, like the Eleventh Circuit here, are in conflict with Lawlor to the extent they say claims about ongoing antitrust violations may be prospectively waived. Home Depot urged the high court to “resolve this division, which shows no signs of dissipating.” Home Depot said the Supreme Court had already reversed a similar Eleventh Circuit decision in FTC v. Actavis, Inc., 570 U.S. 136 (2013).

For details about these and other petitions and cases pending before the Supreme Court, please consult the Antitrust Law Daily Supreme Court Docket chart.

Attorneys: Steven Paul Lehotsky (Lehotsky Keller Cohn LLP) for Home Depot U.S.A., Inc. Daniel Woofter (Goldstein, Russell & Woofter LLC) for David G. Behenna.

Companies: Home Depot U.S.A., Inc.; Blue Cross Blue Shield Association

News: Antitrust