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Event Transcript
October 30, 2002


The New Class Action Targets: Are Class Actions Undermining Regulation in the Fields of Financial Services, High Technology, and Telecommunications?

Panel 1: Are Class Action Lawyers Systematically Targeting Regulated Industries?

MS. PENDELL: Good morning and welcome. I’m Judyth Pendell. I direct the Center for Legal Policy at the Manhattan Institute. I’m delighted to see all of you here today. I want first to express our appreciation and support for the expertise and planning that the Federalist Society provided for this event. The Manhattan Institute is a New York–based think tank with a national focus. The Center for Legal Policy, or CLP, focuses on key issues of concern in the civil justice system: class actions and mass torts, issues surrounding contingency-fee lawyering (such as fee abuses and the inappropriate use of private lawyers for government litigation), judicial selection and integrity, the erosion of personal responsibility and its impact on the courts, workplace liability, and scientific evidence.

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Our conference transcripts provide a valuable ongoing resource for the legal communitybecause we address cutting-edge issues in the civil law and convene the most knowledgeable commentators on all sides to debate and challenge one another. We’re proud of our transcripts, and we’re often cited.

Finally, we support the publication of books and publish numerous papers. Wally Olson, our Senior Fellow at the Manhattan Institute, has completed a book that will be released in January 2003, entitled The Rule of Lawyers: How the New Litigation Elite Threatens America’s Rule of Law.. It is a searing account of how plaintiffs’ lawyers have turned lawyering into a ruthless business.

Wally is also editor of a website, Overlawyered.com, which has become a staple in the lives of those who follow important civil justice issues.

We’re proud of our distinguished speakers today. We look forward to the discussion, and we thank you for coming.

MR. BRIAN BROOKS: On behalf of the Federalist Society for Law and Public Policy Studies, I’d like to welcome you to this event cosponsored by the Manhattan Institute and the Federalist Society. We’re very excited that we can do this event together because our research interests and our legal and policy goals have so much in common. We’re very grateful to Judy for helping us to arrange this event.

Let me provide a moment’s context for today’s discussions. The Founders envisioned a system of government in which the judiciary was the least dangerous branch. The idea was that policy decisions would be made by the political branches of government, and legal cases would be decided in the courts. That distinction, between policy and law, has ancient origins.

Those of us in the room who are lawyers remember that Blackstone taught us that the law exists apart from the courts, but policy does not exist apart from the legislature.

When one person’s actions injure another person and a lawsuit is filed, the court is said to discover the law that was already in existence; it’s fair to award a remedy because the law was there at the time that the conduct occurred. In this traditional sense, the law was thought to be backward-looking. It examines conduct according to a preexisting norms and awards remedies when there has been a violation of that norm.

But policy is different; it doesn’t exist apart from the political branches of government. There is no common law of speed limits, for example. If the legislature says that the speed limit is 55, then so it is. If it’s 65, then it’s that, too. There’s no common law of insurance rates. Insurers are permitted to charge only the rate that’s approved by the Department of Insurance, and no other rate.

In this and many other senses, policy is forward-looking. It sets the rules of the road; it doesn’t redress grievances that happened in the past. But it tells people in advance what rule they can comply with to avoid liability. That’s the traditional account.

But as we all know, much of the traditional interpretation of the role of the law in society has changed. inception. Class actions have played a big role in changing that tradition. Some of us in the room believe that class actions have played a major role in blurring the line between law and policy.

The common law generally provides remedies only for those individuals who have suffered an actual injury, for example.  But in the world of big-time class action laws, the injury requirement is very troublesome. It’s hard to show that a group of people who have had insurance claims denied all have the same claim, because the reasons for one denial are going to be different from the reasons for another denial.

Because of that conundrum, some of us in the Class Action Bar have perceived a trend in which class action lawyers have begun to shy away from the traditional kinds of lawsuits—redress for a personal injury, a product defect claim based on a plane crash, and the like—and have begun to focus on what we think of as regulatory class actions.

It’s easy to think of examples. Example one: a group of class action lawyers in Baltimore filed a series of class actions against manufacturers of wireless telephones. The class is strangely defined: it is not the class of people who have experienced health harms from wireless telephones; it’s the class of people who have not been injured by wireless phones. They all have something in common: they have not been injured by a product that is said, in the hypothetical, to be risky.

Example two: A group of class action lawyers in Miami file a series of lawsuits against health-insurance companies. Here the allegation is not that any claim of insurance has ever been denied; instead, it’s that practices observed by the insurance companies increase the risk that claims might be denied. Of course, this litigation proceeds notwithstandingthe fact that those claims and practices are specifically permitted and sometimes even required by state and federal law.

That’s what we talk about when we think about regulatory class actions: the use of the class action device to set rules as opposed to redress injuries—to make prospective requirements applicable to business in a way that they couldn’t have envisioned at the time that the conductat issue was happening.

That’s why we are so deeply concerned about this issue and look forward to hearing from this distinguished panel today about whether, in fact, there is the trend that some of us have perceived and what risks and perhaps opportunities it poses for those of us who care about these things.

The moderator of our first panel is a real hero to many of us. Rick Lazio was one of the great champions of free markets in the financial-services context during his eight years in Congress. Everyone—not just in New York, but in this room—knows Rick by reputation, not only from his years in Congress, but from his gallant Senate bid against then-first lady Hillary Clinton.

Rick has been in New York since 2000, running the Financial Services Forum as its president and chief executive officer. The Forum was established in early 2000 by the CEOs of 21 of America’s largest and most diversified financial institutions. Its purpose in the financial world, much like our purpose in the legal world, is to promote free enterprise and free-market principles to ensure the stability of the American and global financial systems. We think that Rick is uniquely qualified today to talk about the concept that is the basis for this panel: the focus of class action lawyers on financial, telecommunications, and technology firms, which are heavily subject to regulation.

During his last four years in Congress, Rick was the only member to serve on both the Commerce and the Banking Committees, and in that capacity, he was perhaps the key figure in brokering the deal that led to the passage of the Gramm-Leach-Bliley Act in 1999.

As chairman of the House Commerce Committee, Subcommittee on Housing, he authored and negotiated legislation that enacted what many believe to be the most sweeping reform of the public housing laws in over 60 years, resulting in record homeownership rates not only for all Americans, but specifically for minority homeowners.

As I mentioned, Rick challenged Hillary Clinton for a New York Senate seat just five months before Election Day in 2000, winning 49 of the 62 counties in New York—but we all know how elections work. Today, Rick is here in his capacity as one of the great leaders of the financial-services industry.

MR. RICK LAZIO: Thank you for that very kind introduction. I’m happy to be here to celebrate a new partnership between the Federalist Society and the Manhattan Institute, two great organizations that provide thoughtful leadership for a whole realm of issues.

We have a panel today that I think is second to none, comprising people who have provided intellectual leadership on many legal issues and class actions more particularly. I’m sure we’re going to learn a lot this morning from three people who are not just important theorists, but great legal practitioners.

We are here to try to answer several questions, but perhaps the central question is the title of our panel: “Are Class Action Lawyers Systematically Targeting Regulated Industries?”

We’ll also explore several related questions: Whether class actions are the best or most appropriate vehicle for addressing shareholder grievances? When do class actions conflict with regulatory agencies’ prerogatives in highly regulated industries?; Who benefits most from this type of litigation ? What are appropriate limits to class action litigation? If there are limits, what should the nuances of those limits be? What should the context be? Should the avenue of class action litigation ever be foreclosed?

We have a panel who, I’m sure, will provide a wealth of divergent viewpoints on these issues, and I’d like to announce who they are.

I’m going to begin with former attorney general William P. Barr, the executive vice president and general counsel of Verizon. He also heads the legal, regulatory and government affairs group there. Prior to the Bell Atlantic–GTE merger, Mr. Barr was executive vice president for government and regulatory Advocacy. He served as United States Attorney General for former president George Herbert Walker Bush, from 1991 to 1993.

As Attorney General, Mr. Barr established innovative programs to combat violent crime and set signature new law enforcement policies in a wide range of areas, including financial institutions, civil rights, and antitrust merger guidelines. Prior to his Justice Department service, he was a member of the law firm Shaw Pittman Potts & Trowbridge, from 1978 to 1989.

He began his career as an analyst for the Central Intelligence Agency before becoming law clerk to Judge Malcolm Wilkie of the U.S. Court of Appeals, D.C. Circuit. He is currently the vice chairman of the board of directors for The College of William and Mary.

Our next panelist is Barbara J. Hart, who prosecutes class actions against corporate defendants accused of securities or antitrust violations. She is affiliated with the law firm Goodkind Labaton Rudoff & Sucharow. She is currently representing shareholders at JDS Uniphase, who lost billions of dollars when the value of JDSU shares collapsed. She has also represented Connecticut funds, and, in particular, in the Waste Management securities litigation, in which she helped reach a $457 million settlement. Those are just some of the many cases that Ms. Hart has worked on. She has also been a featured speaker in a number of different venues, including for the AFL-CIO Prescription Drug Task Force. She has authored various articles for The New York Law Journal on antitrust matters.

Finally, we will be hearing from John Beisner, from O’Melveny & Myers. He heads the firm’s 120-member class action practice group and specializes in the defense of purported class actions, mass tort litigation, and complex litigation in both federal and state courts. He heads the firm’s Washington, D.C., office. He has extensive federal and state appellate experience, including nearly all federal judicial circuits of the United States Supreme Court and appellate courts in 15 states.

John has provided expert testimony before Congress and federal agencies on numerous matters, including class action and claims aggregation issues. He is a member of the California and District of Columbia Bars and is a graduate of the University of Michigan School of Law.

MR. WILLIAM BARR: On June 20 of this year, the Second Circuit decided a case called Law Offices of Curtis V. Trinko v. Bell Atlantic Corp.,  the so-called Trinko case, which, we believe, radically changed the antitrust law in two respects: it expanded the scope of duties that incumbent firms owed to rivals; and it changed the traditional standing limits that barred suits by indirect purchasers. It significantly broadened the kind of conduct that, it could be argued, violated the antitrust laws, and it significantly broadened the scope of the people who can bring these claims.

Since Trinko was decided, 25 class actions have been filed in the Second Circuit. Among those, I believe, twelve were filed against Verizon, six against SBC. Others have been filed outside the Second Circuit against Qwest, and BellSouth. 

A fellow named Dan Berninger, who appears to be something of a class action apparatchik, has said that the goal is to turn the Bell companies into the next “asbestos” and “big tobacco”.  I think we all know what he means by that.  I contend that these actions are really an end run around the regulatory process and will stultify the whole regulatory regime that has been developed by the FCC.

Generally, antitrust laws don’t require companies to help their rivals. Even monopolies have no obligation to assist in any way companies that are attempting to compete against them. Basically, the antitrust laws impose negative duties and enjoin certain objectionable conduct. There are no affirmative duties to help or cooperate with their rivals.

Something that may appear, at first blush, to be an extremely narrow exception that has never been recognized by the Supreme Court and has rarely been invoked by lower courts is the so-called Essential Facilities Doctrine. It has been sparingly employed, and in certain narrow contexts it has been held that firms have to provide access to their facilities to other firms.

But in the context in which it’s been previously applied, it has involved two markets—market one and market two. The notion has been that if facilities in market one are essential to competing in market two, then under certain circumstances, they will be made available to someone who is trying to compete in market two.

This has been done where the company that has the facilities in market one has voluntarily made them available to others. So the terms and conditions have been established in the marketplace. They are things to be set by courts in the abstract, but there’s a course of dealing that essentially sets the benchmark. In that context, the courts have said that you can’t refuse to deal with someone to keep them out of market two. You have to allow them access to your facilities on the terms and conditions that you’ve essentially set as reasonable by your own course of dealing.

Moreover, in these contexts the incumbent who owns the facilities has not been displaced from their facilities and they are not being required to reconfigure their business. This has only heretofore been a claim for access that a rival firm or a competitor can bring. Customers or consumers have never been allowed previously to make claims that business that they’re buying from should have Essential Facilities rights in someone else’s facilities.

That’s the antitrust background.

In 1996, the Telecommunications Act was passed, and, as most of you know, the so-called Incumbant Local Exchange Carriers (ILECS), or primarily the  Baby Bells, have been required under that act to provide access to their facilities to competing firms that are coming in to provide local phone service. This is a situation in which you’re dealing with one market, and Congress is trying to get people to come in and compete in that market, and as part of that regime, Congress is saying to the incumbents that those entrants have to be allowed to use your facilities on certain terms.

The Act tells the FCC to set out elaborate rules about what has to be provided on what terms and conditions, and at what price. Accordingly, the FCC has set up what has to be one of the most complex and pervasive regulatory regulatory regimes in history.

It involves hearings before state regulatory commissions on the setting of pricing. Complex and numerous rule-makings on the various pros and cons of allowing access to certain parts of the facility are weighed. There are processes for adjudication of complaints that insufficient access is being provided. There are working groups where all sectors of the industry, the entrants and the incumbents alike, get together to discuss how to provide access.

This has required substantial reconfiguration of the local telephone network. It’s involved billions of dollars of investment in new software and processes. These networks were not designed to provide a platform for multiple providers, and now they have to accommodate multiple providers. Extremely elaborate software, systems, and databases have had to be developed to do this.

The carrot for the ILECs to do this is that, once it’s done and the FCC says that you’ve done this and therefore your market is sufficiently contestable or open to competition, then the local company can compete in the long-distance markets that heretofore the local companies had been prohibited from competing in.

In short, there’s an elaborate process by which the issue of whether you have complied with the Act—and therefore, whether you can now compete to provide long-distance service—is adjudicated. These fights have been going on for several years. Basically, the long-distance companies are also CLECs (Competitive Local Exchange Carriers), and they’re coming competing in local markets against the ILECs. They’re among the companies that are trying to get access and use the facilities of the incumbents in local markets.

Long distance providers are coming in and using those facilities at very low prices, and at the same time they’re trying to keep the local companies from moving up into the long-distance market. So there are usually scorched-earth regulatory battles as to whether the local companies are complying. The InterXchange Carriers—the long-distance companies—would say that you’re not complying; you failed to do this, you failed to do that, you haven’t done this well enough. They’re trying to block the local company from the quid pro quo of moving up and competing in the long-distance market.

So that’s the framework.

Two years ago, the Seventh Circuit, in Goldwasser v. Ameritech,  dealt with a case brought by a CLEC that was complaining about the quality of access that was being provided by the local company and saying that the local company wasn’t going far enough in providing access to them. The District Court dismissed the case and the Seventh Circuit upheld the District Court.

Barbara Hart will give her view of the case, but the Goldwasser case, in my view, said that the claims brought by the CLEC were really duties not under the antitrust laws, but under the statute. They were affirmative duties to help that were created by Congress specifically in this area.

Furthermore, it’s not proper to invoke the Essential Facilities Doctrine under the antitrust law in this particular context because it was incompatible with this regulatory regime that was established by Congress. More than a dozen district courts have followed Goldwasser and have dismissed these cases as they’ve been brought.

Trinko was then brought in New York. Trinko is a plaintiffs’ class action law firm. It was a customer of AT&T, which, as I said, was a CLEC and therefore was trying to buy products on a wholesale basis from Verizon to resell to its customers.

There was an incident during Verizon’s entry into long-distance in New York in which a piece of software in our wholesale order-processing apparatus, which was provided by a third party, failed. As a result, when CLEC’s competitive companies were placing their wholesale orders, the orders were being fulfilled, but the part of the software that notified the CLEC that its order had been received and was being processed wasn’t working in some cases.

AT&T made a huge fuss about this in the regulatory regime because it was asking the FCC to take away our permission to go into long distance, saying that our systems weren’t up to snuff and that they were being impeded from competing. Largely to resolve this situation so that our ability to go into the long-distance business was not taken away, we agreed with the FCC that we would pay CLECs $10 million because of this problem, namely, the failure to notify them in a certain group of orders over a relatively brief period of time.

Again, there was no evidence of actual service disruption—these orders were in fact filled, and the customers did get the service.

The Trinko firm brought a class action based on this incident for the customers at AT&T on the grounds that AT&T’s business was disrupted by this and therefore they as AT&T customers suffered injury. We petitioned the Second Circuit to dismiss, on the grounds that there is no antitrust duty to spend money and create this kind of elaborate software and processing system.

These were affirmative duties to assist created by the Act, not under the antitrust laws. Moreover, this would be the first time in history that an indirect purchaser, a customer of the firm, would be allowed to bring an Essential Facilities case. We lost on those grounds. As far as the case, we’re seeking cert to the U.S. Supreme Court.

Among other difficulties with this case, it requires inquiry as to whether this is a proper area to expand the concept of Essential Facilities and develop this court-fashioned doctrine and to expand access to the courts to indirect purchasers, in this regulated context.

This idea of allowing hundreds of district court juries and treble damage actions to be deciding the terms of access to our facilities is fundamentally incompatible with the regulatory regime and Congress’s plan under the Telecommunications Act.

The Telecommunications Act is clearly consistent with the notion that the FCC should be the one determining whether rivals need access. The Act did not give blanket access to rivals. It said that the FCC under a particular statutory standard should determine what parts of the network they would get access to.

The courts have said that this requires a balancing test. The purpose here is not just to be as profligate as you can in turning over parts of the networks to rivals, because that is counterproductive in terms of investment.

The intent of the Act was that you balance various public interests in determining how much access you give and for how long, and to stimulate investment not only by entrants, but also to keep the incentives for investment by the incumbents. That is a judgment call that the FCC is supposed to make by weighing a number of circumstances.

In a number of these cases, the basis of the claim is that the customer should have access to something that they weren’t given access to; the FCC hadn’t yet ordered access, but they should have had access under the antitrust laws. The FCC is meanwhile in the process of determining whether they should have acted, and whether, in fact, public policy should allow access to these facilities.

Trinko also seems to create a completely separate regime that is potentially inconsistent with FCC determinations of terms of access. The FCC sets highly articulated rules, such as that you have to provide something in 90 days after the order. Or it has to be at such and such a price. The prices, by the way, are huge discounts that have never been required in the Essential Facilities context.

So as the FCC sets these terms and conditions, but part of these class actions suits have to do with the terms and conditions that we provided access on. They said that we didn’t provide it fast enough. Well, we provided it within the time required by the FCC. Yes, they said, but our claim is not under the Act; it’s under the antitrust laws—and under the antitrust laws, you may have had a duty to provide it faster.

The third area is the multiplicity of entities making the decision. The whole rationale for the Telecommunications Act and for the FCC setting out its multi-thousand-page orders dictating all the details to the states as to how this was to be implemented was that you could have one national entity that could make some of these decisions—because in many respects, these are national markets.

Under Trinko, we could have every district court judge and jury in America making these decisions as to what terms and conditions of access are reasonable under those circumstances.

It’s also fundamentally inconsistent with the ultimate finding of competitive injury. In order to have an antitrust case, the issue is whether competition has been adversely affected. The FCC is ruling precisely on that issue when it determines whether the local company can get into long distance. In 80 percent of the markets that we’ve applied to so far to move into long distance, there have been huge battles as to whether the market is open. They get to put in their proof, and we put in our proof. They throw in everything but the kitchen sink, and they show every little flaw and glitch in our software system to claim that ours is an inadequate performance. The duly appointed commissions, the state commission, and the FCC make a ruling. We have won every one of those cases. The markets are open, and competition has not been adversely affected. Yet the core of the antitrust case is that we’ve impaired competition in that market.

The other area that is affected is the skewing of the regulatory process. Once you allow this second front—litigation in district courts under the broad principles of the antitrust law—to open up, then what parties ask for and are willing to agree to in the regulatory process, to the extent to which the parties actually come in and treat the regulatory process with respect and make their full case, are fundamentally altered.

We may be less willing to agree in the regulatory process to make certain concessions because now they’ve become the floor of district court treble damage antitrust liability. By the same token, companies may be changing what they seek in the process in order to position themselves for their second bite of the apple in court.

We’ve already seen evidence that some actors are essentially sandbagging the regulators, because rather than fighting out the battles in the regulatory process, they think that they don’t have to worry about the regulatory process because they can hold this thing up and make their case in a district court.

This represents a radical expansion of antitrust principles, and is clearly not an arena for judges to be fashioning and expanding this Essential Facilities Doctrine because it’s incompatible with the very detailed regulatory regime that was put in place by Congress.

MR. LAZIO: Thank you very much. Now we’ll hear the perspective of the plaintiffs’ bar.

MS. BARBARA HART: I have some prepared remarks, but unsurprisingly, I want to comment that I couldn’t differ more strongly on the rendering of the Trinko decision. The Trinko decision was not a breakthrough in terms of antitrust standing, given that it followed Supreme Court and Third Circuit precedent to the letter in analyzing who the injured party and who an appropriate party is, and it was squarely within the McCready decision of the Third Circuit on Illinois Brick. Moreover, it was not a breakthrough decision on the issue of clear repugnancy that there was some type of conflict between the Telecommunications Act and application of the antitrust laws.

Finally, on the Trinko decision, the Second Circuit is very measured in its approach. It talks about damages as not being disruptive to the regulatory process or interfering with the regulators’ oversight of the industry, whereas it would be more cautious in applying a remedy of injunctive relief.

So it’s a very well-measured decision and within the confines of a great deal of precedent. I would actually wonder what ramifications it has for our Goldwasser decision, which we had the unfortunate experience of losing in the Seventh Circuit for reasons that Bill articulated.

As for what I had intended to say, I guess the not-at-all-subtle issue for today’s caucus is to ponder whether class actions are engaging in undue or counterproductive efforts by targeting regulated industries. This discussion is akin to saying that the problem is not that there are maggots in your meat, but that Upton Sinclair dared to write about them.

In today’s environment, where companies are regulated by the FCC or the SEC, or local regulatory authorities, and are imploding as Enron and WorldCom did, it’s almost laughable to think that regulations are sufficient or vigorously enforced and that there’s no role for the class action bar.

Uniformly, courts and regulators, including numerous previous SEC chairs and recently, the Seventh Circuit in the ADM High Fructose antitrust case, have recognized the significant role that the class action plaintiffs’ bar plays in augmenting enforcement and regulatory efforts.

The government agencies are stretched beyond their abilities in light of budget constraints, and therefore also in light of staffing constraints. Let’s face it: corporations engage a very high-powered, very sophisticated defense bar. They’re not sitting there like pigeons for us to attack. They have their own defenses, which certainly are used in response to government inquiries. 

Moreover, the idea that we target highly regulated industry is just not well taken. Undertaking cases where one is likely to encounter doctrines such as filed rate preemption, implied repeal, or primary jurisdiction is not typically what we do, for a variety of reasons, including the fact that those cases are expensive and we often lose them. So it doesn’t make a lot of sense.

In the Goldwasser case, as has been discussed, we alleged violations of the Sherman Act and the Telecommunications Act based on allegations that Ameritech was routinely failing to comply with collocation requests and interconnection requests, akin to what has been alluded to regarding access for the carriers, which is mandated under the 1996 Act.

The idea is that these entities are already monopolies and that they are supposed to give access. We spent a lot of money on experts investigating the facts of this case; they even found that the fax machine was intended to run out of paper. The fax machine was supposed to take a lot of calls, but it would be busy for hours and hours so that the interconnection requests were going unanswered. It was intended not to comply with the requirements of the 1996 Act.

That case was very costly for my firm and for other firms that undertook the effort. We were dismissed by the district court based on filed rate and ultimately by the Seventh Circuit, based on the idea that the Telecommunications Act had imposed its own regulatory regime and that the antitrust laws wouldn’t apply.

It’s hard for class action lawyers to stay in business that way. We aren’t targeting highly regulated industries.

Similarly, we’ve encountered issues such as implied repeal or plain repugnancy, which was alluded to in the Trinko case in the In re options antitrust litigation. Our firm and others spent significant time and resources litigating claims that the exchanges were not competing on the listing of options.

We all know what the benefits of competition are, and we all want to enjoy those benefits. We were alleging that the exchanges were not competing on the listing of options. All the exchanges, except the New York Stock Exchange, which had the most de minimus risk in this case, settled the case for $84 million. The New York Stock Exchange has thus far successfully held up that settlement by arguing the doctrine of implied repeal.

Judge Conway Casey agreed with the NYSE that plaintiff’s claims were preempted despite the amicus views of the Justice Department and the SEC to the contrary. Judge Casey pointed to the fact that the SEC, in establishing the options market, had originally required only single listing of options.

In light of the prior regulation of the options market, Judge Casey found that the SEC, despite its argument in support of the application of the antitrust laws, could ultimately reassert its jurisdiction. He therefore held that he lacked jurisdiction to approve the settlement.

The idea was that somehow the SEC could whipsaw the exchanges by regulating, and then not regulating, and then one day deciding to reenter and reregulate. Therefore, the speculation regarding this whipsaw effect precluded—clearly, there was a plain repugnancy between the antitrust laws and the application of the antitrust laws—the possible reentry to regulate the options market.

 The appeal in that case has been pending before the Second Circuit for over a year. So that $84 million settlement is just hanging in limbo. I would tend to say that the Trinko decision bodes well for the outcome that the Second Circuit will ultimately reach in light of the Trinko decision’s holdings on the issue that there has to be a clear repugnancy between the specific regulatory regime and the antitrust laws for there to be a non-application of the antitrust laws.

My point being, we don’t target regulated industries, except that, to some extent, all American industries are regulated. And to the extent that an industry is extensively regulated, it typically sends up flags as we analyze our cases, that we may have a hard row to hoe if we decide to undertake such a case for the reasons of the doctrines that I’ve already mentioned.

Yet when we do undertake such cases, we bring a real benefit. First, we compensate the victims. You’ll find that almost no regulator compensates the people who have been injured.

For instance, in the CFTC case against Sumitomo, where the allegation was manipulation of the copper market, the CFTC got a breakthrough fine and a breakthrough recovery for the CFTC. Notwithstanding that, while a small portion of those monies was available to the victims of the copper-market manipulation, that small amount of money was not compensatory.

In fact, the class action bar—and I am involved in this case—will have ultimately recovered close to $100 million for the companies. In this instance, we’re talking about companies—small businesses and large businesses and probably some telecommunications carriers—that purchased the manipulated copper, and they will get back money. Not from the regulators, but from the class action bar.

Second, we push the dialogue about issues. Look at tobacco. The tobacco industry argued vigorously that it was a highly regulated industry. That was its effort to take the sword and turn it into a shield. It said no, the class action bar and the attorneys general cannot sue us; we are a highly regulated industry.

The plaintiffs’ bar and the attorneys general, through discovery of the fact that the tobacco industry was less than forthcoming with regard to additives in cigarettes that increased addictiveness and other knowledge that the tobacco companies had, helped bring about an enormous recovery that has changed the public’s perspective about both the trustworthiness of big tobacco and the health effects of smoking.

Ultimately, we will have saved lives. So the dialogue, the pushing forward, where some might say we shouldn’t be engaged in a policy discussion—to silence this additional voice would be very unfortunate.

This is also illuminated by the issue of prescription drugs. Class actions brought regarding monopolization by the brand name manufacturers will probably ultimately recover close to $1 billion cumulatively when you look at the monopolization of drugs such as Synthroid, Coumadin, Partisem, and some that are still pending regarding Buspar and Hytrin.

There the brand-name drug manufacturers have gamed the system, a highly regulated industry answering to the FDA. The Hatch-Waxman Act has supposedly put all kinds of incentives into the industry for generic competition. Yet the industry is still gaming the system, and the class action bar has led to hundreds of millions of dollars in recoveries. In the end, it’ll be close to a billion dollars in recovery for health-insurance companies as well as for consumers, and for union health and welfare funds that are paying the increased cost for prescription drugs.

In participating in that action, we’ve shaped the dialogue. Probably all of you are well aware that the Bush administration has come out in support of amendments to the Hatch-Waxman Act. We made that a hot-button and a palatable issue that the Republicans had to get behind. Drugs are clearly a regulated industry, yet I would argue that they weren’t effectively regulated and that there was a role for the class action bar to play.

The other benefit that we bring to bear is our independence. Class action lawyers have the incentive to bring viable lawsuits, unlike the regulators, where we often see a revolving door from government to industry and sometimes back again.

I don’t know why the plaintiffs’ class action securities lawyers are never chosen to chair the SEC or even to act as a commissioner. Instead, you have the selection of someone whom the accountants are obviously comfortable with, a selection of cold comfort to investors and pensioners.

In this regard, the SEC is not unique. Regulated industries are big lobbying, big contributing, big players, and the regulators are not immune. Because the class action bar has the incentive to scrutinize, we will shine the harsh light on these industries, and we do have a role to play.

MR. LAZIO: Thank you, Barbara. We’re now going to hear from John Beisner.

MR. JOHN BEISNER: Mr. Barr and Ms. Hart have each made a compelling case, both in their own way, that there is some targeting of regulated industries in the class action world. I wanted to talk a bit about the who, what, when, and where of that targeting, and point out a few troubling ironies that I see in that targeting.

A good place to start is to think about the rationale for administrative agencies as we know them--- agencies that are created at the national level by Congress as well as those that have been created by state legislatures at the state level.

Basically, those legislative bodies have selected certain areas that they think require special regulatory attention. The rationales for those selections vary. In some instances, the rationale is that you need agencies to protect personal safety. At the federal level, you see agencies such as the Food and Drug Administration, the Consumer Products Safety Commission, and various agencies in the motor vehicle safety area that are intended to protect our personal safety.

Sometimes the rationale is to protect economic safety, for lack of a better term, particularly in technical financial contexts. Federal state banking regulators, state insurance regulators, and securities regulators all serve this function.

In some areas, the purpose of the agencies that have been established by the legislative branches has been to ensure the availability of critical infrastructure for the public, often in technical areas. The telecommunications industry, which Bill was focusing on earlier, is a good example of that.

The function of these regulators is probably twofold. One is often to fill in the blanks of a general regulatory regime that the legislature has set forth. The legislature sets out the basic framework, but says that an agency has to fill in the blanks—the legislatures declare that the agencies are the expert and should establish the details of how this regulatory process should work.

The second function is to ensure that in establishing that regulatory structure and filling in those details, you have people there who are able to make day-to-day judgments about balancing the need to protect the public interest against the need to ensure that public expectations are met in terms of the services and goods that are available to them in these areas.

For example, the easiest way to ensure that people are not poisoned by food is simply to ban the sale of food. But the public, for better or worse, has grown accustomed to having food available, so the federal and state regulators need to exercise judgment about competing public needs: daily sustenance versus food safety. Regulators to engage in that balancing act all the time.

There certainly are, as I think Barbara noted, contexts in which those regulatory regimes explicitly provide for private enforcement activity—the securities regulatory regime being one of those contexts. But the securities area is actually a relatively rare exception. In many regulatory regimes, the private enforcement rights are relatively limited, or the statutory regime does not speak to that issue at all. In many regulatory regimes, there simply is not an expectation that there would be private enforcement activity permitted through our judicial system.

Against that background, if the proverbial person from another galaxy came down and looked at what was going on now with our regulatory system and the entry of class actions on that scene, he would note a few significant ironies.

The first one he would note is that we’ve established elaborate regulatory regimes with many experts involved who are supposed to carefully balance all public interests in making regulatory and enforcement decisions, but, as was noted by our two previous speakers, we simultaneously allow private attorneys in many contexts to compete against those regimes.

This is a disquieting development because of the nature of that competition. The regulators, by and large, are balancing private interests and public interests. Rhetoric aside, however, the class actions that are out there today are a business. I am not saying that class actions are never brought with a public interest consideration in mind; that would be a falsehood.

But it’s also a myth that what you have in these cases are people walking in off the street saying, “Gee, I’ve been injured in some way. Would you please bring a class action on behalf of all people nationwide like me?” Class actions normally are a product of strategic decisions made by practitioners at the bar to pursue certain issues because there is a potential profit—an enormous profit—in doing so.

Sometimes those activities reinforce decisions that regulators are making. Sometimes they are helpful. But, usually, the contrary is true. The purpose of most of those lawsuits—particularly those that are outside the pure enforcement area, those that are plowing new ground, so to speak—is to directly challenge the primacy of an agency in a particular area, or to ride in the wake of the agency.

The RAND class action study several years ago indicated that a major source of class actions today is regulatory activities. In determining where class actions come from, the study indicates that many of them are spawned by newspaper articles and other reports that an administrative agency is looking at a particular issue or at an enforcement action against a company. In the wake of that, along comes a class action saying, “Me, too, we’re going to get into this party as well.”

You have a situation in which many of these lawsuits are in direct competition with the agency and, in many instances, very directly interfering with what the agency is trying to do. The agencies are trying, in most instances, to reach a balanced resolution of a conflict: but often, the demands of private litigation go well beyond and, indeed, are inconsistent with the agency resolution.

Let me illustrate. Over the years, I’ve been involved in a number of class actions involving the motor vehicle industry. When the Department of Transportation opens an investigation, the target of that investigation can expect, as sure as the sun rises the next morning, three or four class actions to be filed around the country claiming that there’s a defect in the vehicle and that they need to do something about it. They mirror the exact same issue that the administrative agency is addressing.

In many instances, those investigations are resolved with the manufacturer agreeing to conduct a recall and to correct whatever issue the agency has identified. But what happens in the parallel class actions—and this has happened on many occasions—is that the class action counsel in those cases will go into court and seek an injunction against this remedial action proceeding.

They’ve been in court all this time, yelling about a great risk to public safety. Yet, when some action is taken by the administrative agency to correct the problem, they seek to stop that action. That great risk suddenly is something that can wait a while to be corrected.

Usually, the rationale for the injunction is that the proposed remedial action it needs to be reviewed by the court as well as the agency, and the class counsel need to be involved in that effort. But the real issue is that the class counsel haven’t gotten their fees yet for the class action that they filed.

Fortunately, more often than not, those sorts of intrusions on the administrative process are rejected. But there are some cases in which they have seriously impaired a proper agency resolution of a controversy.

Another major irony that our proverbial visitor from another planet would find curious is the involvement of courts in many issues that really are matters for administrative action. I want to make clear that courts do have a role in our administrative agency process. They are often the umpire in ensuring that administrative agencies are acting consistently with their empowering statutes that were passed by Congress or state legislatures, or in ensuring that the agencies have adhered to proper administrative procedures. Those are actions against the agency.

But what we’re talking about are class actions against regulated industries: basically, lawsuits that seek to replace the regulator. They are end runs around the regulator. The regulator is not invited to the party, so to speak. The lawsuit doesn’t name them, and the regulator usually is not included unless you have an enlightened regulator who concludes that this is a party to which he should be invited and decides to participate in the action, fundamentally to protect the turf of the agency and to ensure that the agency’s interests are considered in this private litigation.

Our visitor from another galaxy also would be amazed to see which courts are being asked to adjudicate these controversies.

We talk a lot about securities litigation and antitrust litigation, which does tend to find its way into federal court more often than not. But in the empirical research that several of us worked on with the Manhattan Institute—Rick referred to it earlier—what we were seeing is that the real influx of these cases is into state court and county courts. The anomaly is: not only is the entity that is deciding very complicated regulatory issues not the expert administrative agency; it is a court often sitting in a small county that is accountable only to the several thousand residents who elected that particular court.

That court usually has little or no factual nexus to the controversy. In the nationwide classes that are typically brought in those courts, 99.9 percent of the people in the proposed class whose interests are at stake don’t reside in that county. The defendant doesn’t reside there. None of the facts that are alleged in the case occurred there.

So you have a court that has absolutely no relationship to the controversy and no expertise on the subject, working together with a lay jury that has even less expertise on the subject, making very important decisions about national policy. And that is occurring day in and day out in the regulated industry context.

If you look at the cases that are being filed in those courts, the lion’s share are regulated industry cases, targeting the insurance and financial-services industries in particular.

Barbara pointed out that there has been a restraint in bringing these actions now because of impediments such as filed rate doctrine, but what you’re seeing in those state courts is that those doctrines don’t pose any impediment at all.

Several weeks ago, I was at a hearing of the Illinois State Judiciary Committee in Madison County, Illinois, one of the magnet state court counties covered in our research for the Manhattan Institute. There was a panel of the local plaintiffs’ counsel, who bring most of the class actions before that court. There have been hundreds of cases filed before that court in the last several years. One of the members of the committee asked, “Can you name a case in which class certification was ever denied by this court?” There was a long pause and then a lot of consultation back and forth.

This group of class action plaintiff’s counsel, which has been involved in all the cases before that court, finally came up with one case- just one case-in which class certification was denied, and that was because there had already been a billion-dollar judgment entered in a nationwide class action in the next county over in that particular instance. It is literally a no-lose proposition for the plaintiffs’ bar in some of those state courts where these cases are being heard.

That’s why we’re seeing a great migration of many of these regulated industry cases to those state courts.

MR. LAZIO: Let’s take some questions from the audience.

MR. LORITZ: I’m Ed Loritz, from the Long Island chapter of the Federalist Society. I found it interesting that John said that the regulators under administrative law are basically throwing chum into the water for ATLA. But my question is for Mr. Barr bar: in a hypothetical development where the Supreme Court of the United States changes its complexion in the next several years, is there any rational expectation that there could be a sound claim under the Takings Clause of the Fifth Amendment against some of the impositions on the telecommunications industry such as you described in the 1996 Act, for instance, having to provide property to another party without just compensation?

MR. BARR: Obviously, our position is that the prices we are being given for turning over our network are confiscatory. That claim was presented to the Supreme Court in a challenge to the FCC rules. The Court dodged that issue on the grounds that we were not challenging a specific set of rates, but the general methodology that was used to calculate those rates. This left open our ability to say that a particular set of rates are confiscatory. That case is going to work its way up to the Supreme Court, and by the time it gets there, the complexion of the court will be different.

Right now, the case is fairly clear. I don’t know of a Wall Street analyst who doesn’t believe that our rates are far below cost by a factor of 40–60 percent. So in our view, those are confiscatory rates. There are many examples of those rates that are ripe now to challenge and bring takings cases on, and I think that’s going to be happening over the next few years.

MR. COPLAND: I’m Jim Copland, and I too have a question for Mr. Barr. In Trinko—this is of personal interest, since I clerked recently on the Second Circuit—who were the judges on the panel? Second, given the apparent conflict with Goldwasser, I assume that you filed a cert petition. If not, why not? And if so, what is the status of that?

MR. BARR: We will be filing a cert petition. The interesting thing about Trinko is that the particular issue that arose here of Essential Facilities was not briefed to the Second Circuit. They went out and created what we think is a radical expansion of this doctrine without any briefing or argument on the issue. We went back to the court and asked for a rehearing and the opportunity to brief this issue and have it argued because it was such a novel decision. That motion was denied.

MR. LAZIO: Barbara, do you want to share your perspective on Trinko?

MS HART: As I said earlier, the Trinko decision is not at all a breakthrough decision. The Essential Facilities Doctrine is not often implicated in cases. But the standing decision is squarely within the Illinois Brick and McCready decisions, and the clear repugnancy doctrine (holding the idea that the application of the Sherman Act had to be precluded because there was obvious hostility between its application and that of the Telecommunications Act) just wasn’t called for. It’s quite well reasoned in that regard.

As I said, the court shows restraint in regard to its examination of the request for injunctive relief, in light of the regulations.

MS. RABITEAU: I’m Marsha Rabiteau, with the Hartford. Barbara, you mentioned that one benefit that the class action bar brings to consumers is that you can return money to consumers that the agencies don’t. Would you address the issue of the coupon settlements, particularly those that have very low redemption rates? And how do you view the social policy purpose for those kinds of class actions?

MS. HART: It’s interesting in today’s environment that we can circle back to the issue of plaintiffs’ lawyers’ fees and abuses of the class action bar as tried and true ways to try to beat back the plaintiffs’ class action bar, especially in light of the real issues that we have on Wall Street and the lack of independence and the issues that Eliot Spitzer is bringing to light regarding analysts being swayed by the investment-banking interests of Merrill Lynch and others. Yet we can go back to these kinds of red herrings such as coupon settlements and plaintiffs’ lawyers’ fees as the issues of the day in order to put the plaintiffs’ class action bar on its heels.

In regard to coupon settlements, you’ll find that many firms have misgivings about coupon settlements. And firms such as ours have misgivings about entering into negotiated fee arrangements with clients such as my client, the treasurer’s office of the state of Connecticut, for whom we litigated the waste-management case and reached a $457 million settlement. It works out to about a 7.9 percent fee—a far cry from the 30 or 33 percent fees that people like to hold up as the scandalous and shocking amounts of money that plaintiffs’ class action lawyers receive.

Coupon settlements are an issue. Redemption is a problem in that class members don’t redeem. As they say, you can drag the horse to water but you can’t make it drink. So if you have a settlement for $10 million in coupons, you generally get your fee only off what is actually redeemed.

So there should be incentives. Generally, when we’re engaged in cases in which the defendant cries that they don’t want to pay cash, they push a coupon settlement. It’s cheaper for them and increases their sales.

So to abolish it is ultimately to abolish a certain means of resolution that defendants often look to as a way out. But we often try to make sure that the coupons are transferable from one party to another. They’re convertible for cash at some kind of discounted rate, if we’re in a situation in which coupons are the only way that we’re going to be able to achieve a settlement.

There has to be some proportionality between what’s ultimately redeemed and what the magnitude of the fees are. I’m in this for the long haul. I have institutional investors who are my clients. My credibility is of enormous significance as I’m going to make my career. Ending up in the Wall Street Journal as a proponent of a lousy coupon settlement is not what I want to see for myself. Can I say that the whole class action bar adheres to some level of propriety? No, I’m not an apologist for the whole class action bar. Or maybe I am, I don’t know. But that would be my answer: I think it’s a red herring. There are much larger scandals that we could think about here today.

MR. GREENBAUM: I’m Jeffrey Greenbaum, of Sills Cummis in Newark, New Jersey. Barbara, you said that one reason we need a strong plaintiffs’ bar in the class action area is because plaintiffs’ class action lawyers do not get appointed to be chair of the SEC and other regulatory agencies.

I suggest that the reason is a perception by the public that plaintiffs’ lawyers are getting compensated in great disproportion to the benefits that they are supposedly giving to individual class members.

I want to say this delicately and don’t want it to be an attack, but I don’t think it’s a false issue. A recent national study of jurors by Decision Quest found that, while corporations are not currently popular in the wake of Enron and WorldCom, plaintiffs’ lawyers are equally unpopular.

What are plaintiffs’ class action lawyers doing wrong? Can they do better in terms of dealing with this perception—or possibly, reality—that many times the compensation is excessive compared with the benefits received by individual class members?

MS. HART: Often, people misapprehend the magnitude of what the damages are. In any of these securities cases, e.g., JDS Uniphase, you’re talking billions of dollars of market loss. Now, is that damages? The whole telecommunications industry tanked. That’s part of the company’s defense, mind you: that they didn’t know: just because they sold $2.1 billion right before it tanked, they didn’t know it was going to tank.

But the shareholder says that it lost billions of dollars. JDS is in ongoing litigation, but let’s say that we were successful and got a $150 million recovery. My client there is the treasurer’s office of the state of Connecticut. We have a negotiated fee with Treasurer Nappier’s office, and Attorney General Blumenthal is the actual retaining official there. We have a negotiated fee. But on billions of dollars of loss, a $150 million cash settlement, I assure you, is not going to please shareholders. These people lost their retirement savings. My phone rings off the hook with JDS shareholders.

Waste Management, same thing. You could look at the Waste-Management case and say that there was $24 billion in market loss. We got the third-largest security settlement in history, $457 million. That was a lot of money. I assure you that Waste Management felt some pain. It’s real cash. But will everyone ultimately feel compensated? No.

There’s a disparity between how wronged shareholders feel and how much compensation we’re actually able to achieve. How could we ever make people whole?

MR. LURIE: My name is I’m Alvin Lurie and I’m an attorney in private practice. It seems that the issue that Mr. Barr and others on the panel have raised is the fact that you’ve got a basic regulatory statute in place, and then you have an overall overweening type of provision that conflicts with or certainly doesn’t mirror the objectives of the statute per se.

Possibly, this is a problem with underlying legislation; perhaps some preemptive mechanism should be built in to these statutes by Congress now or in the future, so that these kinds of conflicts don’t arise.  So did it never occur to Congress to enunciate a preemptive authority in a particular statute so that we don’t run into conflicts between regulatory regimes and private actions?

MR. BEISNER: I think that’s correct. Some of these regulatory regimes have not been thought through fully. We’ve been talking a lot about the securities area, and that is one where Congress did contemplate that there would be a private enforcement mechanism that lives side by side with the federal regulators. So your point is very well taken.

Another piece of that, though, is on the judicial side, and we need an exercise of better judicial judgment about what controversies to wade into. For several years, in the class actions that I’ve been in where there have been regulatory issues, we’ve been quite consistently making arguments under the superiority requirement of Rule 23 for class certification. Courts need to take very seriously the question of whether litigation is the superior method for resolving a given controversy. For years, that provision has been a dead-letter provision that we’ve been trying to bring back to life.

And wonder of wonders, the first places where that concept got saluted were the state court systems in California and in Florida, not exactly the first places that you’d expect to embrace it. But they did. A number of federal courts are now embracing that notion as well.

That’s part of the analysis as well, to look at these on a case-by-case basis. I agree with some of what Barbara has said here-- that there are areas where private litigation is perfectly appropriate within these regulatory regimes. But, before it certifies a class and embraces the idea of resolving these on a class wide basis, a court ought to put up front the question of whether this is a controversy that the court ought to be engaged in to begin with.  Judges should ask themselves: Is there an administrative agency looking at this issue that is capable of resolving it? Have the litigants gone to the administrative agency to try to get the relief that they seek or the direction that they need?  If the court imposes its own framework on this controversy, is it unraveling the regulatory “rules of the game” that the administrative agency in question may be trying to articulate?

MR. BARR: There are a lot of terrible bills that are passed that essentially confer power on the judiciary. That’s a fundamental problem and a problem in the Telecommunications Act itself.

My view, however, is not that just because an industry or a company is regulated, it should be immune from other obligations under the general laws. I’m not saying that class actions in a particular context may not be appropriate.

From the standpoint of this conference and the discussion of what the proper role is and what happens when you do have a regulatory regime, the issue is, are we really talking about a situation in which there is injury done to someone despite a regulatory regime? Are people injured by a drug, or are people defrauded in the market, despite regulatory regimes that are designed to have adequate disclosure or safe drugs marketed? And so forth. You have palpable harm done to individuals that is different from the generalized harm, but a group of individuals has suffered real injury, and you’re collectively now seeking redress to that injury.

Or is this just an effort to replace the regulator and pursue a broad public policy agenda outside the framework of the designated regulatory process?

In the telecommunications area, it’s clearly the latter. You had, after all, a lawful monopoly. In most states, in fact, people were prohibited from going into that market. You have a general statute that is designed to restructure an industry and create markets that can be contested. The question is, how do you move from monopolies to markets that other people can come in and contest? That’s a broad structural statute. The notion is that once you get to a market in which people are successfully competing, there will be public benefits from it.

In the context of doing so, we’re subject to a lot of micromanagement rules. We have to report 2 million metrics just to the state of New York every month: How long does it take us to answer our telephones? How long before certain messages are sent back and forth to people who are ordering? And so forth. Two million measurements. This creates a situation in which if you miss a measurement here or there, someone can say that you’re not fulfilling your obligations under this regulatory regime.

But what harm did Trinko suffer? He’s saying that the market isn’t moving at a satisfactory speed to a competitive state—that we are frustrating what the regulator is trying to accomplish. But this is precisely the assignment of the regulator: to determine compliance. It’s not really individual harm that these people have suffered.

What they’re saying is that you’re frustrating the statute that the FCC is supposed to engineer, moving from one state of the marketplace to another general state of the marketplace and deciding how to go about doing so in an economically sensible way. They are replacing the regulator and—because they’ve largely been unsuccessful in the regulatory arena—are now opening up another front.

A lot of this litigation is funded initially by rivals who are not bringing the lawsuits directly, but funding others to bring them.

MS. HART: I’ve never had that experience. And I don’t know of anyone in the plaintiffs’ bar who has ever had that experience.

MR. BARR: Which experience, Barbara?

MS. HART: Of being funded by a rival.

MR. BARR: It’s in open court--admission by a plaintiff that they are being funded by one of the largest companies in the United States. Thirty-five thousand dollars a month to bring a lawsuit. They’re selling interest in the lawsuits as well, to investors.

AUDIENCE MEMBER: In addition to the preemptive rule, what about deferential respect for the authority of the regulatory body?

MS. HART: Those doctrines are already in place in the form of implied repeal and filed rate. They’re significant impediments to bringing successful class action litigation. If the court finds that there’s a clear repugnancy between the regulatory scheme and the antitrust act, the court will not apply the antitrust act.

The Second Circuit found that there was no such clear repugnancy. It found that it was consistent with the objectives of the Telecommunications Act and the Sherman Act that victims that would not have seen the full competitive benefit that should have been present in the marketplace should receive compensation. It had not been brought about, and therefore, consumers were entitled to damages. That wasn’t clearly repugnant to the purposes of the Telecommunications Act. But the court evaluated that. It’s not that they aren’t addressing it.

panel 2 >>

 


Center for Legal Policy.

EMAIL THIS | PRINTER FRIENDLY

CENTER FOR LEGAL POLICY CONFERENCE

Welcome:

Judyth Pendell, Director, Center for Legal Policy at the Manhattan Institute

Brian P. Brooks, Co-Chair, Class Action Subcommittee, The Federalist Society for Law & Public Policy Studies

Panel 1: Are Class Action Lawyers Systematically Targeting Regulated Industries?

Panelists:

William P. Barr, Executive Vice President & General Counsel, Verizon Communications

John Beisner, O’Melveny & Myers LLP

Barbara Hart, Goodkind Labaton Rudoff & Sucharow LLP

Moderator: Rick Lazio, President & CEO, The Financial Services Forum

Panel 2: Regulators’ Roundtable

Panelists:

Bill Kovacic, General Counsel, Federal Trade Commission

John A. Rogovin, Deputy General Counsel, Federal Communications Commission

Lee Covington, Director, Ohio Department of Insurance

Moderator: Neal Wolin, Executive Vice President & General Counsel, Hartford Financial Services


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