By Bryan Koenig

Law360 (January 29, 2021, 10:31 PM EST) -- Federal Trade Commission staffers urged the commission not to delay an upcoming in-house virtual trial against tobacco manufacturer Altria's $12.8 billion investment in electronic cigarette company Juul, calling hopes of an in-person, COVID-free proceeding "highly speculative."

In a filing Thursday to the agency's commissioners, the FTC's trial staff said that by pushing for a three-month delay from the current April 13 start, Juul Labs Inc. and Altria Group Inc. "unrealistically speculate" that it will be safe by mid-July to hold an in-person trial on FTC staff allegations that Altria shut down its own e-cigarette business to pave the way for the investment, in the process eliminating competition in violation of antitrust laws, according to the opposition brief.

The correct response, according to the FTC's complaint counsel, is to hold steady on the mid-April start and keep the proceedings virtual. Neither justification the companies offer — the rollout of vaccines and the current worsening of the pandemic — "justify a further delay," complaint counsel said.

"While the vaccine news is promising, the timetable for the chief administrative law judge and his staff, witnesses, and counsel to receive vaccinations is highly uncertain at this time. And, while complaint counsel shares respondents' concerns regarding the severity of the pandemic, these concerns can be remedied by proceeding with a virtual hearing," staffers said.

Juul and Altria sought the delay Jan. 15, arguing that the trial already previously moved from Jan. 5 to mid-April because of the pandemic should be moved again because widespread vaccination is expected by "late June or early July." Starting a virtual proceeding in April may not mitigate the current health risk anyway, the companies said, because their attorneys "would still need to gather in person to plan for the hearing, prepare numerous witnesses, and ultimately try a lengthy and important antitrust case" amid the worsening pandemic.

Additionally, they said a virtual hearing would diminish the chief ALJ's "ability to assess the credibility of the testifying witnesses — something that is critical to ensuring a fair trial and which is one reason why both the Federal Trade Commission Act and the commission itself recognize the importance of an in-person hearing," the companies said.

Complaint counsel countered Thursday, however, that even if moved to July 12, there's no guarantee an in-person trial would be safe. Herd immunity, they said, means only that enough of the population has been inoculated to start the virus spread on the decline, not that risk of contagion would be totally negated. And even promises of vaccination "remains highly uncertain as ongoing vaccination efforts face substantial logistical hurdles and delays," the FTC counsel said, noting that many attorneys working the trial are likely to be last in line for the vaccine and warning that many witnesses might hesitate to travel to D.C. for in-person proceedings.

The companies' objections to an entirely-virtual proceeding, staffers said, are "baseless," noting that while the FTC Act imagines in-person proceedings, the 1914 law was written when even telephones were not a universal commodity.

Nor are in-person evidentiary proceedings required so the administrative law judge can make determinations on witness credibility, according to the brief, which also assailed the notion that trial prep requires attorneys to meet in person.

"As respondents acknowledge, complaint counsel has been engaged in full-time telework since March 2020, and in this time, has adjusted and prepared for the 'new normal' that is conducting our work, including hearings and trials, remotely," staffers said. "It defies reason for respondents to argue that although the entire legal profession has adapted to remote proceedings and preparations for proceedings, the five law firms representing Altria and JLI are unable to do so."

Counsel for the companies declined comment Friday and the FTC did not immediately respond to a press inquiry.  

The FTC is represented by Jennifer Milici, James Abell, Dominic Vote, Peggy B. Femenella, Erik Herron, Joonsuk Lee, Meredith Levert, Kristian Rogers, David Morris, Michael Blevins, Michael Lovinger and Frances A. Johnson.

Altria is represented by Beth Wilkinson, James Rosenthal and J.J. Snidow of Wilkinson Stekloff LLP, Jonathan M. Moses, Kevin S. Schwartz and Adam L. Goodman of Wachtell Lipton Rosen & Katz and Debbie Feinstein, Robert J. Katerberg, Justin P. Hedge, Francesca M. Pisano, Adam Pergament and Le-Tanya Freeman of Arnold & Porter Kaye Scholer LLP.

Juul is represented by David I. Gelfand, Jeremy Calsyn, Matthew I. Bachrack, Linden Bernhardt and Jessica Hollis of Cleary Gottlieb Steen & Hamilton LLP and Michael L. Sibarium and Robert C.K. Boyd of Pillsbury Winthrop Shaw Pittman LLP.

The case is In the Matter of Altria Group/Juul Labs, file number 191-0075, before the Federal Trade Commission.

--Additional reporting by Al Barbarino and Dave Simpson. Editing by Jay Jackson Jr.

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