New York’s Proposed Antitrust Overhaul Would Allow Recovery of Expert Fees
New York may soon be at the vanguard of antitrust enforcement and litigation in the United States in more ways than one.
On June 7, 2021, the New York Senate passed Senate Bill S933A (43 aye, 20 nay), which would overhaul the Donnelly Act, New York’s antitrust law. Constantine Cannon lawyers have already discussed what the bill’s “abuse of dominance” provisions would mean for companies that have market shares in excess of 30-40%, how the bill’s premerger review program would benefit consumers, and why “New York May Become Antitrust Central.”
This post focuses on an aspect of S933A that has flown under the radar. The bill adds a new section to New York’s General Business Law, pursuant to which the New York Attorney General (“NYAG”) and private antitrust litigants may recover expert witnesses’ fees and costs when they prevail:
In any action alleging a violation of a provision of this article . . . the attorney general and private litigants shall recover reasonable fees and costs for its expert witnesses and consultants if the attorney general or private litigants prevail in such action.
Senate Bill S933A § 342-d.
This new section was absent from S8700A, S933A’s predecessor also sponsored by Senator Michael Gianaris. It is also broader than a similar provision in the original, pre-Amendment version of S933, which limited the recovery of expert witness fees and costs to the NYAG—excluding private litigants. Senate Bill § S933 § 342-d. But Senate Bill S933A, as amended, would allow prevailing private litigants substantial recovery of “reasonable fees and costs” paid to experts in New York antitrust cases.
This provision is meaningful. Most, if not all, antitrust litigants retain one or more experts to help establish the core elements of an antitrust claim. Such experts may analyze relevant markets and market shares, determine whether the defendant has market or monopoly power, opine on anticompetitive effects, analyze the “but-for world,” and quantify damages. Experts can be quite expensive. Payments to economists for work on an antitrust litigation can run to the hundreds of thousands, if not millions, of dollars. That expense may chill potential plaintiffs from bringing even the most meritorious antitrust cases. Unlike with most other litigation, a potential plaintiff foregoing a meritorious antitrust case impacts not just the potential plaintiff, but also the public.
Senate Bill S933A recognizes the reality that antitrust plaintiffs usually rely on expensive experts and seeks to incentivize potential plaintiffs to bring meritorious claims by telling them they can expect to be compensated for expert fees upon prevailing. The Supreme Court sidestepped this issue in American Express Co. v. Italian Colors Restaurant, where it sided with Amex concerning its motion to compel individual arbitration, despite the opinion of the antitrust plaintiffs’ economist that “the cost of an expert analysis necessary to prove the antitrust claims would be at least several hundred thousand dollars, and might exceed $1 million, while the maximum recovery for an individual plaintiff would be . . . $38,549 when trebled.” 570 U.S. 228, 231 (2013) (internal quotation omitted). As Justice Kagan wrote in her vivid dissent, the Court’s “nutshell” response was: “Too darn bad.” Id. at 240 (Kagan, J., dissenting). Senate Bill S933A’s award of expert fees to prevailing private litigants recognizes this reality and helps encourage the filing of antitrust cases in New York. It is also consistent with two legislative findings underpinning the bill: a “great concern for the growing accumulation of power in the hands of large corporations”; and “anti-competitive practices harm great numbers of citizens . . . .” Senate Bill S933A § 2.
But there’s another interesting twist worth watching. The clear thrust of the provision awarding expert fees—and Senate Bill S933A in its entirety—is to encourage more vigorous enforcement of New York antitrust laws, including through the encouragement of meritorious antitrust actions. However, there is a slight ambiguity in the bill’s language.
Whereas the Donnelly Act currently awards “any person who shall sustain damages by reason of any violation of this section . . . [treble damages] as well as costs not exceeding ten thousand dollars, and reasonable attorneys’ fees,” N.Y. Gen. Bus. Law § 340(5) (emphasis added), Senate Bill S933A’s new section does not explicitly limit awards of expert fees to plaintiffs, or those that sustained damages by reason of anticompetitive conduct. Instead, the section provides for the recovery of expert fees “if . . . private litigants prevail” “[i]n any action alleging a violation of a provision of this article . . . .” Senate Bill S933A § 342-d (emphasis added). If the bill as written becomes law, a prevailing defendant in a Donnelly Act case may try to argue that it should recover expert fees. This strained reading is not the aim of the section or the bill, but such a result could chill plaintiffs from suing under the Donnelly Act. A framework awarding expert fees to prevailing private litigants that “sustain damages by reason of any violation [of a provision] of this [article]” (as well as the NYAG) would not only more closely mirror language in the existing Donnelly Act, but it would also further the bill’s fundamental purpose of encouraging more antitrust actions in New York.
If Senate Bill S933A becomes law, New York will be at the forefront of antitrust enforcement in the United States. The new “abuse of dominance” standard would cover a wide range of anticompetitive conduct beyond what is covered by the current Donnelly Act or even the federal antitrust laws. The new premerger notification requirements would strengthen the NYAG’s merger enforcement efforts. And if the bill becomes law, antitrust plaintiffs, particularly small-and medium-sized businesses, with Donnelly Act claims—the scope of which would expand significantly under the new law—should consider whether, and to what extent, they may recover fees of economists and other experts pursuant to proposed § 342-d.
Edited by Gary J. Malone
Tagged in: Antitrust Litigation,