Key Rulings in Agency Lawsuits Expected in 2016

Key Rulings in Agency Lawsuits Expected in 2016 Photo: Diego M. Radzinschi/NLJ Tom Wheeler.
From net neutrality rules to the Sally Yates memo, federal agencies came out with major policy announcements and found themselves in high-stakes litigation in 2015. But by the year’s end, there was too little time left to see how those policies would be put into practice, or how lawsuits with potentially vast ramifications would be resolved.
Here are some of the top things to look out for in 2016 with four federal agencies: the Federal Trade Commission, Justice Department, Federal Communications Commission and the Consumer Financial Protection Bureau.
Federal Trade Commission
In February, the U.S. Supreme Court drilled a hole in the state action exemption to antitrust laws with a decision for the Federal Trade Commission in its case against the North Carolina State Board of Dental Examiners. The FTC had filed suit against the board over its practice of clamping down on non-dentists who offered teeth-whitening services, in part, by sending them cease and desist letters. The board argued that its actions fell under the “state action” exemption, but the FTC held that the board was not supervised by any state officials other than the practicing dentists on the board itself. With a 6-3 decision, the court found that boards must be supervised by the state to have antitrust immunity.
In 2016, the FTC and Justice Department are expected to continue sorting out how the decision applies to sectors that have historically been self-regulated. “With [North Carolina Board of Dental Examiners v. Federal Trade Commission] seeming to require that there be some disinterested higher level supervision before the state action exemption applies, that gives the agencies a number of areas that they’ll want to explore,” said Sidley Austin partner Bill Blumenthal, who once served as the FTC’s general counsel.
Meanwhile, the decision to clear or challenge a merger will remain one of the biggest the FTC can make as it grapples with structural changes in the healthcare industry. In the final weeks of 2015, the commission took steps to block the proposed merger of Advocate Health Care Network and NorthShore University HealthSystem — both leading providers of general acute care inpatient hospital services in the North Shore area of Chicago.
Earler in December, the commission asked for more information in its ongoing review of the proposed $17.2 billion deal to combine Walgreens and Rite Aid.
Department of Justice
It was the shot that could be heard throughout the financial sector. In September, the Justice Department issued new policies to put heightened focus on individual conduct and added pressure on companies to hand over evidence about their executives.
The so-called “Yates memo,” authored by Deputy Attorney General Sally Yates and titled “Indi­vidual Accountability for Corporate Wrongdoing,” immediately sent shockwaves through the white-collar community. But the practical effect of that announcement remains unclear.
2016 will begin to provide answers. In the first full year since the memo’s release, lawyers will be following whether the September announcement actually changes the Justice Department’s conduct and prosecutorial decisions.
Like the FTC, the DOJ’s antitrust plate will also be full. Assistant Attorney General Bill Baer, the leader of the department’s Antitrust Division, voiced skepticism in November about the benefits of consolidation in the healthcare industry. Speaking at a Yale Law School conference, he did not name any companies specifically, but some saw the remarks as a potential hurdle for the proposed merger of Anthem and Cigna, along with a pending deal between Aetna Inc. and Humana Inc.
Federal Communications Commission
The oral arguments over the Federal Trade Commission’s latest crack at net neutrality rules drew a packed courtroom in early December. That interest is likely to only intensify in anticipation of the decision from the U.S. Court of Appeals for the D.C. Circuit. But a final resolution is unlikely to come in 2016, as it is virtually certain that whichever side loses will take the case to the Supreme Court. In the meantime, the telecommunications community will be keeping a close eye on how the commission treats any enforcement matters that come onto its radar under the new rules.
“To date, there has not been any significant net neutrality matters at the commission since the rules became effective,” said Boies, Schiller & Flexner partner Robert Cooper. “That is likely to change in the year ahead.”
The FCC is also facing a challenge in the D.C. Circuit over the agency’s interpretation of the Telephone Consumer Protection Act, a 1991 law that put restrictions on the use automatic dialing equipment. In July, the commission came out with a 138-page order that was criticized for expanding the definition of an automatic dialing system and giving too little leeway for calls and messages to reassigned numbers that previously belonged to consenting customers. Sirius XM Radio Inc., the Internet Association and the U.S. Chamber of Commerce were among the companies and business groups that recently filed briefs opposing the commission’s July order.
Consumer Financial Protection Bureau
Since its inception in 2011, the Consumer Financial Protection Bureau has faced withering criticism. Sen. Ted Cruz, a GOP presidential candidate, introduced a bill in July to abolish the bureau, and another Texas congressman, Rep. Jeb Hensarling, has called it the “single most powerful and least accountable federal agency in all of Washington.”
With an election coming in November, some lawyers who frequently deal with the bureau are looking to see whether the agency — which is already seen as aggressive — will put the pedal to the metal with enforcement to help supporters stay in office.
In 2016, the bureau will also consider whether to propose rules that would ban consumer financial companies from using arbitration clauses to prevent class actions. Lawyers with financial sector clients are also keeping a close eye on rules for debt collection, payday lending and prepaid cards.
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