States Seek Revival of Facebook Antitrust Case at D.C. Circuit

Before the holiday weekend, a coalition of 46 state attorneys general and those of the District of Columbia and Guam, filed an appellate brief arguing that the trial court wrongly dismissed their antitrust claims against Facebook. The move comes days after Judge James E. Boasberg, who also presided over the states’ case, refused to dismiss the Federal Trade Commission’s (FTC) parallel action against the company.  

The complaint, which largely tracks the FTC’s own and was simultaneously filed, includes claims for the illegal monopolization of the personal social networking services market in violation of the Sherman Act, and unlawful acquisitions of Instagram and WhatsApp in violation of the Clayton Act.

For relief, the states seek a declaration that Facebook’s conduct violates these laws and an injunction preventing Facebook’s continued anticompetitive conduct and future high-value acquisitions without Hart-Scott-Rodino Act notification. In addition, the plaintiffs request other relief “needed to restore competition and prevent future violations, such as divestiture as appropriate.”

Last June, the district court dismissed the suit as barred by the equitable doctrine of laches, a defense asserted to protect defendants from unduly delayed litigation. While the states’ claims were tossed with prejudice, the court ruled that the doctrine did not apply to the FTC.

The plaintiffs now argue that the court was wrong to apply the doctrine to state enforcers pursuing actions in the public interest. In particular, the plaintiffs assert that Judge Boasberg assumed that divestiture of Facebook’s acquisitions was the only available relief and that such divestiture would substantially prejudice Facebook.

Even if it does apply, they argue, “the district court failed to give adequate deference to the States’ enforcement prerogatives and improperly assumed prejudice to Facebook and unreasonable delay by the States in dismissing the acquisition-based claims on laches grounds.” Finally, the plaintiffs say that the laches question is fact-intensive and as such, unripe for disposition at the dismissal stage.

Among other questions on appeal, the plaintiffs ask the appellate court to consider whether injunctive relief is available. The brief argues that Facebook has not stopped its anticompetitive conduct and the corollary deleterious effects continue, and as such, injunctive relief would be an effective and available remedy.

The plaintiffs are represented by their attorneys general and Facebook by Kellogg, Hansen, Todd, Figel & Frederick P.L.L.C.