A Supreme Court Nominee Alert to the Dangers of Big Business

Far from reflexively favoring big corporations over small competitors, Judge Neil Gorsuch has a nuanced view of antitrust law.

Aaron Bernstein / Reuters

As Judge Neil Gorsuch’s Supreme Court confirmation hearings begin Monday, Democratic senators, led by Chuck Schumer, are preparing to argue that President Trump’s nominee favors big business over small business and capital over labor.

The Center for American Progress argues that “if he becomes a justice, the Supreme Court would very likely continue its trend of ruling in favor of big business.” The Constitutional Accountability Center warns that confirming Gorsuch on the Court “would further solidify the hold that big business has on the Court, as exemplified by the increasing success of the U.S. Chamber of Commerce before the Roberts Court.” The Chamber of Commerce, by contrast, has celebrated his nomination as “fantastic.”

Gorsuch’s supporters respond, plausibly, that in many of the cases in which he ruled on behalf of corporations or against workers, he was following the letter of the law, or was bound by Supreme Court precedents. And in other cases, he has ruled in favor of workers and against corporations—in suits alleging racial or gender discrimination, for example. He wrote the panel opinion in 56 of the 177 labor-rights cases he heard during his 10 years on the bench. None of these opinions had a dissent, and 33 were joined by at least one judge appointed by a Democratic president.

Since liberal as well as conservative justices have embraced the pro-business inclinations of the Roberts Court, Gorsuch was bound to follow its often-unanimous pro-business precedents as a lower-court judge. But to get a sense of whether he will simply join this bi-partisan pro-business consensus or move the Court in a more or less pro-corporate direction, it may be helpful to focus on his views in a single area: antitrust suits against big corporations.

On that front, Gorsuch’s record is more interesting than his critics allow. While many conservative judges focus exclusively on the question of whether deals harm or benefit consumers, Gorsuch has suggested that combinations that give firms too much market power can be problematic for other reasons, such as discouraging competition.

In other words, Gorsuch is skeptical of too much judicial oversight of business in the same way the justices of all ideological stripes tend to be. But, like Republican and Democratic presidents and justices of the Progressive era, from William Howard Taft to Woodrow Wilson, he has challenged monopoly power by focusing on the importance of increasing competition and innovation as well as economic efficiency.

In the election of 2016, both Donald Trump and Hillary Clinton promised vigorous antitrust enforcement: Trump promised, in particular, to break up big banks, block the AT&T merger, and check the excesses of Amazon. This apparent bi-partisan consensus on the importance of checking the power of what Louis Brandeis unforgettably called “the curse of bigness” calls to mind the election of 1912, in which all three candidates—Woodrow Wilson, Theodore Roosevelt, and William Howard Taft—agreed on the necessity of using antitrust law to check the power of giant corporations, although they disagreed about whether the corporations should be regulated, as Roosevelt suggested, prosecuted, and Taft insisted, or broken up, which was the preferred solution of Wilson and his antitrust advisor, Brandeis.

Gorsuch’s views call to mind those of America’s most constitutionally-minded president, William Howard Taft, who achieved his lifelong dream of becoming chief justice after leaving the presidency. In an address to Congress in 1911, Taft defended himself against Theodore Roosevelt’s charge that he was anti-business because he brought nearly twice as many anti-trust prosecutions in one term as Roosevelt had brought in two. Taft was not against legitimate business, he insisted, but only against anti-competitive monopolies. “Mere size is no sin against the law,” he said. The Sherman Act applied to the accumulation of “large capital in business enterprises” only when its purpose was to “stifle competition.”

Like Taft, who had been a judge and a practicing lawyer before becoming president and chief justice, Gorsuch has extensive practical experience in antitrust law—more than any other justice including Justice Stephen Breyer, who taught the subject at Harvard Law School.

For a decade, Gorsuch worked at Kellogg Huber in Washington, D.C., where he litigated antitrust cases. In 2002, he won what was then the largest affirmed antitrust verdict against a corporation in American history, a $1.05 billion verdict against the American Tobacco company. He went on to oversee competition cases in the Bush Justice Department as principal deputy to the associate attorney general and, after being confirmed to the U.S. Court of Appeals for the Tenth Circuit, Gorsuch taught antitrust law and ethics at the University of Colorado, where he earned respect by banning laptops and requiring students to take notes. And on the Tenth Circuit, Gorsuch wrote three important antitrust opinions that favored big corporations in some cases and their smaller competitors in others. Throughout, Gorsuch showed a litigators’ perspective on how antitrust law operates in practice, and his appreciation for the perspective of both big and small businesses that may help to restore some pragmatism to the Court’s approach to economic competition.

This perspective differs dramatically from the late Justice Antonin Scalia’s views on antitrust. In his own confirmation hearings in 1986, Scalia joked that in law school, he “never understood” antitrust law, and later learned that he “should not have understood it because it did not make any sense then.”

Fordham University law professor Zephyr Teachout argues that “the joke was on American democracy: Scalia proceeded to undermine basic tenets of competition law for the next 30 years,” notably in the Verizon v. Trinko case, where he narrowed the Sherman Antitrust Act by holding that Verizon didn’t have to share its network. According to Teachout, “the ruling had a chilling effect on prosecutions [and] Trinko is part of the reason a handful of big companies now dominate U.S. markets for cable, drugs, hospital beds, seeds, eyeglasses, office supplies, milk, beer and books.” And yet as Ed Whalen notes in National Review, Trinko was a unanimous opinion, joined by Justices Ginsburg and Breyer, confirming that any pro-corporate tendencies in the current Supreme Court’s approach to antitrust are bi-partisan.

Gorsuch, by contrast, approaches antitrust law from the perspective of an experienced litigator, not an ideological law professor. Here is his full description, in his Senate questionnaire, of his experience winning the historic $1.05 billion judgment against the American Tobacco company in private practice:

The U.S. Court of Appeals for the Sixth Circuit upheld a $1.05 billion treble damages award on behalf of my client, Conwood, against United States Tobacco Company (UST) after a jury concluded that UST had engaged in illegal monopolization. Conwood alleged that UST, which controlled nearly 80% of the U.S. market for moist snuff smokeless tobacco, had attempted to exclude competing products by entering into exclusive deals with retailers, removing competitors’ sales racks, burying competitors’ products in UST racks, and destroying point-of-sale advertising (the industry’s primary marketing medium). The verdict, reached after a four-week jury trial, was believed to be the largest affirmed private damages award in the history of U.S. antitrust laws as of 2002. In its verdict, the jury also rejected UST’s counterclaims seeking millions of dollars in damages. After trial, the court took additional evidence, conducted additional motions practice, and granted a four-year injunction against certain anticompetitive conduct by UST, a result also affirmed on appeal. UST petitioned for review in the Supreme Court, we opposed the petition, and the Supreme Court ultimately denied review. The case involved scores of depositions and massive discovery, as well as ancillary proceedings in several jurisdictions. I helped manage and run the case at all stages, from the pre-suit investigation through the drafting of the complaint; the discovery process; pre-trial motions practice; trial, where I served as second chair and handled many witnesses on direct and cross; post-trial motions practice; and the preparation of appellate briefs.

Randy Stuntz of the progressive American Antitrust Institute concludes that Gorsuch’s record suggests that he is “arguably not as doctrinaire as Justice Scalia,” although his record “largely fits a conservative mold.” The American Antitrust Institute summarizes his argument in the Tobacco case approvingly:“His brief in that case argued that conduct can be sufficiently exclusionary and harmful to support antitrust liability if it impairs the opportunities of rivals yet does nothing to benefit competition on the merits, without regard to profit sacrifice.” And the fact that the American Antitrust Institute has not yet spoken out more strongly against Gorsuch is a testament to the complexity and nuance of his antitrust record.

As Gorsuch’s former law partner, Mark C. Hansen, told Law 360, the experience in the American Tobacco case gave Gorsuch sensitivity to the perspective of both sides in antitrust cases. “I don’t think he’s afraid of antitrust; he understands it and is comfortable with it,” Hansen said. “He’s quite familiar with both sides of the v. in the antitrust world.”

The same balanced perspective informed Gorsuch’s three antitrust cases on the Tenth Circuit.

In 2009, Gorsuch wrote the opinion in Four Corners Nephrology Assocs., P.C. v. Mercy Med. Ctr. of Durango. He held that a hospital’s refusal to allow a physician to use its inpatient nephrology facilities because it had an exclusive agreement with another physician did not violate the Sherman Antitrust Act, passed in 1890, which forbids combinations “in restraint of trade.” In a unanimous decision joined by two judges appointed by Democratic presidents, Gorsuch agreed with the district court that the hospital’s exclusivity agreement benefited consumers. As Gorsuch put it:

The Supreme Court has recently emphasized the general rule that a business, even a putative monopolist, has "no antitrust duty to deal with its rivals at all." … This presumption should hardly surprise. Allowing a business to reap the fruits of its investments "is an important element of the free-market system": it is what "induces risk taking that produces innovation and economic growth." … Having made a substantial investment in developing its own nephrology practice—indeed, having even tried to secure Dr. Bevan's services for that practice—Mercy is entitled to recoup its investment without sharing its facilities with a competitor.

Emphasizing the importance of competition as an antitrust principle, Gorsuch noted that before the medical provider granted the exclusive practice "there were no full-time nephrologists in Durango"; now there were two. "As a result, the consumers—the people of Durango and members of the Southern Ute tribe—have greater access to nephrology services."

In 2011, by contrast, Gorsuch made it easier for competitors to sue alleged monopolists. He wrote the opinion in Kay Elec. Coop. v. City of Newkirk, reversing the district court's ruling that the city’s conduct was immune from antitrust suits under the state action immunity doctrine. Two companies, Newkirk and Kay Electric both provided electricity to Oklahoma consumers, with  Newkirk serving customers inside the city and Kay, a rural electrical cooperative, serving customers outside the city.

When a new jail was being built just outside Newkirk, Kay offered to provide electricity more cheaply, but the city still chose to buy electricity from Newkirk. As Gorsuch explained colorfully, “Why? Because Newkirk is the only provider of sewage services in the area and it refused to provide any sewage services to the jail—that is, unless the jail also bought the city's electricity. Finding themselves stuck between a rock and a pile of sewage, the operators of the jail reluctantly went with the city's package deal.” Kay responded by suing Newkirk, alleging that the city had engaged in unlawful tying and attempted monopolization in violation of the Sherman Act. The district court found Newkirk immune from liability.

In reversing the claim, Gorsuch wrote candidly about the competing views of economics that have informed the Court’s construction (critics have called it evisceration by “judicial legislation”) of the Sherman Anti-Trust Act since it was passed in 1890:

The Sherman Act has little to say about municipal immunity, at least directly. It contains only the broadest and barest of proscriptions against anticompetitive activity — declaring unlawful any contract, combination, or conspiracy in restraint of trade and forbidding any monopoly or attempt to monopolize. Over the last 120 years, however, much judicial embroidery has stitched out the scope of permissible and impermissible competitive activity under the Act, handiwork that's often been informed by evolving (if sometimes competing) schools of economic thought.

Gorsuch’s conclusion: “At the end of the day a municipality shares the state's ‘immunity’ when but only when it is implementing anticompetitive policies authorized by the state.” Applying this to the electricity case, Gorsuch found that “the Oklahoma legislature has spoken with specificity to the question whether there should be competition for electricity services in annexed areas. And it has expressed a clear preference for, not against, competition.”

In 2012, the Supreme Court, in a unanimous opinion written by Justice Sotomayor, later cited Gorsuch’s opinion and adopted its reasoning.

Gorsuch’s final, and most significant antitrust opinion is Novell, Inc. v. Microsoft Corp. Novel, which makes Word Perfect, wanted to embed the word processing program in Microsoft’s Windows 95 operating system. When Microsoft refused to share the software development tools for Windows 95 with its rivals, Novel objected that Microsoft, which makes the competing word processing program Word, had violated the Sherman Act.

In another unanimous panel opinion, Gorsuch disagreed, concluding that forcing firms to share information with their rivals could cause “injuries to consumers and the competitive process alike.” Because both the big and small companies would have less incentive to create in the first place, Gorsuch held, forced information sharing could prop up inefficient competitors and reduce innovation. Once again, Gorsuch used the case the explore the broader purposes of antitrust law:

Many antitrust values lie behind the boundary line the law sketches here. If the law were to make a habit of forcing monopolists to help competitors by keeping prices high, sharing their property, or declining to expand their own operations, courts would paradoxically risk encouraging collusion between rivals and dampened price competition—themselves paradigmatic antitrust wrongs, injuries to consumers and the competitive process alike. Forcing firms to help one another would also risk reducing the incentive both sides have to innovate, invest, and expand—again results inconsistent with the goals of antitrust. The monopolist might be deterred from investing, innovating, or expanding (or even entering a market in the first place) with the knowledge anything it creates it could be forced to share; the smaller company might be deterred, too, knowing it could just demand the right to piggyback on its larger rival.

Gorsuch expressed concern about judges as "central planners,”—a role, he wrote, “for which we judges lack many comparative advantages and a role in which we haven't always excelled in the past.”

The bottom line, then, is that antitrust evinces a belief that independent, profit-maximizing firms and competition between them are generally good things for consumers. Just as courts have held particular forms of antitrust conduct per se illegal because experience teaches that they are almost always destructive of competition, so too courts have fashioned rules of presumptive legality for certain forms of conduct that experience teaches almost never harm consumers. Experience teaches that independent firms competing against one another is almost always good for the consumer and thus warrants a strong presumption of legality. Acknowledging as much in the form of a general rule gives a degree of predictability to judicial outcomes and permits reliance by all market participants, themselves goods for both the competitive process and the goal of equal treatment under the law.

An article at the Lexology blog article concludes: “With background in representing plaintiffs and defendants and deciding cases in favor of both sides, Gorsuch’s policies about antitrust laws are not entirely clear. However, in his most recent and well-known case, Novell v. Microsoft, Gorsuch stated ‘[t]he antitrust laws don’t turn private parties into bounty hunters entitled to a windfall anytime they can ferret out anticompetitive conduct lurking somewhere in the marketplace.’This language may indicate a preference for a less interventionist approach to competitor conduct relating to its intellectual property.”

The counter argument, however, is that Gorsuch acknowledged in the Novel case that Microsoft had been held “liable for a rich diversity of antitrust misdeeds in the 1990s,” the Obama administration didn’t support the petition for review to the Supreme Court, and the Supreme Court denied the petition.

For much of American history, there was a bipartisan consensus about the evils of monopoly power. Thomas Jefferson proposed an anti-monopoly amendment to the U.S. Constitution and the Jeffersonian antitrust tradition was carried on by Democrats ranging from Andrew Jackson, Woodrow Wilson, and Harry Truman and Republicans like Theodore Roosevelt and William Howard Taft.

It is remarkable to recall that the election of 1912 was fought largely over technical details of antitrust enforcement. Roosevelt accused Taft of being too aggressive in enforcing the Sherman Act; their Democratic rival, Woodrow Wilson, argued that big banks and big corporations should be prevented from forming in the first place, rather than regulated, as Roosevelt argued, or broken up, as Taft insisted.

It’s unfortunate that, ever since the rise of the Chicago School of economics in the 1970s, which argues that the only legitimate purpose of antitrust law is the promotion of consumer welfare, academically trained judges, from Richard Posner to Robert Bork, have tended to ignore this powerful constitutional tradition, By contrast, the more moderate Harvard School of antitrust presumes the illegality of combinations that allow firms to gain market power, regardless of the benefits to consumers.

In the Novel opinion, Gorsuch repeatedly cites the hornbook written the guru of the Harvard School, Phillip Areeda, who favored more vigorous antitrust enforcement and emphasized competition rather than consumer welfare above all. And yet, as it happens, Gorsuch didn’t study antitrust law at all when he was at Harvard Law School, learning the subject in the courtroom, through the school of hard knocks. This may have increased his tendency to view antitrust cases through the lens of facts rather than academic theories.

Far from reflexively favoring big corporations over small competitors, in other words, Gorsuch has a nuanced view of antitrust, closely informed by his unique experience as an antitrust litigator winning a large verdict against the Tobacco monopoly. The greatest foe of corporate bigness of the 20th century, Justice Louis Brandeis, also had his views on competition shaped by his experience litigating cases against large corporations as “the People’s Lawyer” in Boston at the turn of the century.

Although antitrust law has shifted too dramatically in the past century to hope that Gorsuch will resurrect Brandeis’s crusading Jeffersonian opposition to the curse of bigness, his record suggests that he will at least give big and small businesses a fair hearing, attempting to promote competition and innovation in the spirit of that champion of vigorous antitrust enforcement, William Howard Taft.