STATE OF CALIFORNIA, ET AL., APPELLANTS V. ARC AMERICA CORPORATION,
ET AL.
   No. 87-1862
   In the Supreme Court of the United States
   October Term, 1987
   On Appeal from the United States Court of Appeals for the Ninth
Circuit
   Brief for the United States as Amicus Curiae
            TABLE OF CONTENTS
   Question Presented
   Interest of the United States
   Statement
   Discussion
   Conclusion
                          QUESTION PRESENTED
   Whether Section 4 of the Clayton Act, 15 U.S.C. 15, construed by
this Court in Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), to
bar treble damage actions by indirect purchasers under the federal
antitrust laws, preempts state indirect-purchaser statutes.
                     INTEREST OF THE UNITED STATES
   The United States has primary responsibility for enforcing the
federal antitrust laws.  Many States also have antitrust laws, which,
like the federal statutes, seek to deter anticompetitive conduct.  The
question presented in this case is whether the Clayton Act, which has
been construed to provide no remedy to "indirect purchasers" in most
cases, should be construed to preclude the States from giving a remedy
to indirect purchasers.  Because that question is ultimately one of
congressional intent underlying a statute that the United States
enforces, and because the answer may affect federal antitrust
enforcement, the United States has a particular interest in its
correct resolution.
                               STATEMENT
   1. In 1976 and 1977, 35 actions were filed in 12 federal district
courts against numerous cement manufacturers alleging a nationwide
conspiracy to fix prices of cement (J.S. App. A3).  Appellants --
California, Minnesota, Alabama, and Arizona -- filed four of those
actions;  each State sought to represent a class that included all the
governmental entities within the State that had purchased cement or
products containing cement (see id. at A63-A137).  The States'
complaints alleged violations of Section 1 of the Sherman Act, 15
U.S.C. 1, and state statutes.  California, Minnesota, and Alabama
sought recovery for indirect purchases of cement;  they based those
claims on state statutes that indisputably permit indirect-purchaser
suits.  /1/ Arizona made a similar claim, but the question whether its
statute permits indirect-purchaser suits is disputed (J.S. 9).  /2/
   In September 1977, all pending actions were transferred to the
United States District Court for the District of Arizona for
coordinated pretrial proceedings (J.S. App. A3).  Earlier that year,
this Court had issued its decision in Illinois Brick Co. v. Illinois,
431 U.S. 720 (1977), holding that indirect purchasers have no claim
under the federal antitrust laws for damages resulting from
overcharges passed on to them by suppliers who purchased from members
of an illegal conspiracy.
   On March 9, 1979, the district court certified the actions as class
actions and established three classes of cement purchasers.  /3/ The
broadest of those three classes, the National Cement Class, consisted
of all those who purchased cement during the relevant time period,
other than the defendants and the members of the other two classes.
J.S. App. A3.
   All three cement-purchaser classes entered into settlements with
several defendants between July 1979 and October 1981, creating a
settlement fund in excess of $32 million (J.S. App. A4).  The
settlement agreements provided that the plaintiffs release all claims
"of any nature whatsoever * * * pertaining to any direct or indirect
purchase of cement or cement-containing products from any cement
manufacturer or producer * * * which claims * * * are asserted under
any federal or state antiturst or unfair competition or business law"
(Calif. C.A. Br. 4;  see J.S. App. A141, A153, A154-A155).  The
agreements also provided that the "allocation and distribution of the
Settlement Fund shall be in accordance with the provisions of any
agreements or plans approved by the (District) Court" (J.S. App. A11).
 In subsequent proceedings involving distribution of the fund, direct
purchasers challenged the States' rights to be compensated for their
indirect purchasers of cement, relying on Illinois Brick.  In January
1985, the district court disallowed the claims of indirect purchasers.
 It held that the state statutes on which the indirect purchasers'
claims were based were preempted by the Clayton Act, as interpreted by
Illinois Brick. J.S. App. A30-A31.
   2. On appeal to the Ninth Circuit, the States argued that this
Court's decision in Illinois Brick to disallow indirect purchaser
suits under the federal statutes did not represent a congressional
policy to foreclose the States from providing antitrust remedies to
indirect purchasers.  /4/ The court of appeals affirmed the denial of
the indirect-purchaser claims on the basis of Illinois Brick.  The
court reasoned that such claims would "complicate antitrust
enforcement" (J.S. App. A21);  "could also limit the recoveries of
direct purchasers and thus reduce their incentives to bring antitrust
actions" (id. at A22);  and would "conflict most directly with federal
policy because they create the risk of multiple liability for
defendants" (id. at A22-A23).  The court of appeals reasoned that it
was "bound by the Supreme Court's pronouncements" concerning the
policy against multiple liability (id. at A23).
                              DISCUSSION
   Appellants have properly invoked this court's appellate
jurisdiction under 28 U.S.C. 1254(2).  /5/ In our view, the question
presented is substantial, and the decision below is wrong.
   In Illinois Brick, the Court construed the Clayton Act as not
permitting indirect purchasers to recover damages under that statute
in most circumstances.  We agree that this construction best serves
the public interest in effective antitrust enforcement.  But the
States, many of which have their own antitrust laws, may have
different views about effective enforcement and may adopt different
enforcement policies and remedies unless Congress has required
uniformity.
   In a decision that conflicts with the one other appellate decision
squarely in point /6/ and with the views of most commentators, /7/ the
court of appeals here held state law invalid even though there is no
evidence of a congressional intent to preempt.  This decision, which
invalidates the laws of at least three (possibly all four) appellant
States and casts doubt on the validty of laws adopted by at least 12
other jurisdictions, /8/ erroneously turns policy considerations that
led this Court to a particular construction of a federal statute into
federal barriers to contrasting state approaches.
   1. "The critical question in any pre-emption analysis is always
whether Congress intended that federal regulation supersede state
law." Louisiana Public Service Comm'n v. FCC, 476 U.S. 355, 369
(1986);  see also California Federal Savings & Loan Ass'n v. Guerra,
No. 85-494 (Jan. 13, 1987), slip op. 7. "(I)n any pre-emption
analysis, '"(t)he purpose of Congress is the ultimate touchstone."'"
Metropolitan Life Insurance Co. v. Massachusetts, 471 U.S. 724, 747
(1985) (citations omitted);  see Fort Halifax Packing Co. v. Coyne,
No. 86-341 (June 1, 1987), slip op. 6.  Thus, federal law will preempt
state law only when Congress has expressly chosen to occupy a given
field;  when a scheme of federal regulation is sufficiently
comprehensive to make reasonable the inference that Congress left no
room for state regulation;  or when state law is in actual conflict
with federal law (Guerra, slip op. 7).
   The Sherman and Clayton Acts contain no statement of congressional
intent to preempt state antitrust remedies.  Nor have they ever been
understood to occupy the field of antitrust law.  The regulation of
business practices stems from the common law and has traditionally
been undertaken by the States.  /9/ The Sherman Act was intended to
supplement, not to displace, the States' efforts to control "dangerous
combinations." 21 Cong. Rec. 2456 (1890) (remarks of Sen. Sherman).
As this Court noted in Southern Motor Carriers Rate Conf., Inc. v.
United States, 471 U.S. 48, 56 n.19 (1985), statements in the
legislative history affirmatively express a desire not "to invade the
legislative authority of the several States." See H.R. Rep. 1707, 51st
Cong., 1st Sess. 1 (1890).  See generally Cantor v. Detroit Edison
Co., 428 U.S. 579, 632-634 (1976) (Stewart, J., dissenting).  Thus,
the States retain extensive authority to legislate in the antitrust
field.  Watson v. Buck, 313 U.S. 387, 403 & n.6 (1941);  1 P. Areeda &
D. Turner, Antitrust Law paragraph 208, at 58 (1978);  see Exxon Corp.
v. Governor of Maryland, 437 U.S. 117, 133 (1978);  see also Puerto
Rico v. Shell Co., 302 U.S. 253 (1937) (Section 3 of the Sherman Act
(15 U.S.C. 3) does not preempt similar Puerto Rican antitrust law).
/10/
   As the Court said in Parker v. Brown, 317 U.S. 341, 351 (1943),
"(i)n a dual system of government in which, under the Constitution,
the states are sovereign, save only as congress may constitutionally
subtract from their authority, and unexpressed purpose to nullify a
state's (regulatory scheme) is not lightly to be attibuted to
Congress." In the absence of an express intent to preempt or an
occupation of the field by a federal regulatory scheme, an inference
of preemption is only justified when there is clear inconsistency or
conflict between federal and state law.  Cloverleaf Co. v. Patterson,
315 U.S. 148, 156 (1942).  There is no suggestion here, however, that
the state statutes mandate or authorize conduct that violates federal
law or that they place "'irresistible pressure on a private party to
violate the antitrust laws.'" See Fisher v. City of Berkeley, 475 U.S.
260, 265 (1986) (quoting Rice v. Norman Williams Co., 458 U.S. 654,
661 (1982));  see also California Retail Liquor Dealers Ass'n v.
Midcal Aluminum, Inc., 445 U.S. 97 (1980);  Schwegmann Bros. v.
Calvert Distillers Corp., 341 U.S. 384 (1951).  Indeed, the regulation
of conduct is not what is at issue:  the question before the Court
pertains only to the remedies that a State may provide for conduct
that is made unlawful by both state and federal law.
   The court of appeals held that the state statutes, insofar as they
permit indirect-purchaser suits, are preempted by federal antitrust
law because they "stand() as an obstacle to the accomplishment and
execution of the full purposes and objectives of Congress." See Hines
v. Davidowitz, 312 U.S. 52, 67 (1941) (footnote omitted);  CTS Corp.
v. Dynamics Corp. of America, No. 86-71 (Apr. 21, 1987), slip op. 8.
We think the court of appeals overexteded that principle.  There are
circumstances in which state law, while not imposing directly
conflicting requirements, so clearly frustrates the intended operation
of a federal statute that preemption must be inferred.  See, e.g.,
Michigan Canners & Freezers Ass'n v. Agricultural Marketing &
Bargaining Bd., 467 U.S. (1984).  But the Davidowtiz principle only
bars state frustration of federal regulation;  it does not require the
States to conform their "purposes" and "objectives" to those of
Congress.  Nor does the principle justify preemption simply to
eliminate some inconvenience to the courts in administering the state
and federal regulations.  A determination that the purposes of a
federal statute give that statute a certain reach does not, without
substantially more, demonstrate that Congress wanted to preclude the
States from enacting laws that reach further.
   When Congress legislates in a field in which the States have
traditionally regulated, there is a presumption that the historic
police powers of the States are not to be superseded unless that
purpose is clearly manifested.  Florida Lime & Avocado Growers, Inc.
v. Paul, 373 U.S. 132, 146-147 (1963);  Jones v. Rath Packing Co., 430
U.S. 519, 525 (1977);  Rice v. Santa Fe Elevator Corp., 331 U.S. 218,
230 (1947);  Hillsborough County v. Automated Medical Laboratories,
Inc., 471 U.S. 707, 715 (1985);  CTS Corp. v. Dynamics Corp. of
America slip op. 15-16;  Puerto Rico Dep't of Consumer Affairs v. Isla
Petroleum Corp., No. 86-1406 (Apr. 19, 1988), slip op. 4, 7.  In
particular, state law is not preempted merely because it provides
additional or different remedies from those chosen by Congress.  See,
e.g., Silkwood v. Kerr-McGee Corp., 464 U.S. 238 (1984) (state-law
tort remedies for nuclear incidents are available, despite
congressional determination that safety regulation is the exclusive
concern of federal law, because Congress was aware of state remedies
and apparently intended to tolerate the tension between the two);
California v. Zook, 336 U.S. 725, 736 (1949) (California might impose
more serious penalties than Congress "if the California legislature
deemed it wise").  /11/
   2. It would be particularly difficult to conclude that States may
not adopt antitrust remedies differing from federal remedies.  The
state and federal antitrust statutes at issue here have similar
objectives, a factor that generally counsels against preemption.  See
Exxon Corp. v. Governor of Maryland, 437 U.S. at 132;  Guerra, slip
op. 15.  Like the state laws at issue, the Sherman Act prohibits the
price fixing alleged in this case.  The purposes of the state and
federal private damage remedies correspond as well:  Congress and the
States intended to compensate victims of antitrust violations and to
enhance the effectiveness of enforcement through deterrence.  Union
Carbide Corp. v. Superior Court, 36 Cal. 3d at 20-22, 679 P.2d at
17-18, 201 Ca. Rptr. at 583-584;  Illinois Brick, 431 U.S. at 746;
Crown Oil Corp. v. Superior Court, 177 Cal. App. 3d at 607, 223 Cal.
Rptr. at 165.  Although the Clayton Act has been construed to create
means of achieving compensation and deterrence that differ from the
means chosen by the appellant States, it does not for that reason
preclude the States from making their different choice.  /12/
   Congress has repeatedly shown its awareness of state antitrust
remedies and its understanding that, in the absence of specific
congressional action to preempt them, they will coexist with federal
remedies.  For example, the legislative history of the exemption for
agricultural cooperatives under the federal antitrust laws
(Capper-Volstead Act, 7 U.S.C. 291, 292) indicates that "(i)n States
where it is illegal to operate an association such as the ones
permitted under this bill, it will * * * be practically impossible to
operate under this legislation, as the bill only grants the right to
operate in interstate and foreign commerce.  That is the only power
that Congress can confer upon such associations." H.R. Rep. 24, 67th
Cong., 1st Sess. 2 (1921).  In more recent legislation granting
limited exemptions from the federal antitrust laws, Congress chose
expressly to preempt state antitrust remedies.  See National
Cooperative Research Act of 1984, 15 U.S.C. (Supp. IV) 4303(c);  /13/
Export Trading Company Act of 1982, 15 U.S.C. 4016, 4002(a)(7).  /14/
These express preemption provisions reflect Congress's understanding
that, in the absence of express preemption, the States would be free
to authorize independant and potentially conflicting private remedies.
 See S. Rep. 98-427, 98th Cong., 2d Sess. 14 (1984) ("(t)he
protections afforded by title II to joint R&D programs from treble
damages under Federal law would be largely vitiated by continuing
treble damage exposure under State law").
   3. This Court's decisions construing Section 4 of the Clayton Act
(15 U.S.C. 15) as not permitting damage suits by indirect purchasers
in most circumstances do not suggest that Congress intended to require
state conformity on this point, as the court of appeals believed.  See
Illinois Brick Co. v. Illinois, supra;  Hanover Shoe, Inc. v. United
Shoe Machinery Corp., 392 U.S. 481 (1968).  Neither Illinois Brick nor
Hanover Shoe contains any reference to state law or a congressional
intent to preempt.  Indeed, although the Court was engaged in a task
of statutory interpretation, its decisions rested on a weighing of
competing policy concerns rather than an analysis of statutory text
and legislative history.
   In Hanover Shoe, the Court held that a defendant in an antitrust
action may not invoke a "pass-on" defense.  Recognizing that "(a) wide
range of factors influence a company's pricing policies," the Court
was loath to inject into treble-damage actions "additional long and
complicated proceedings involving massive evidence and complicated
theories" (392 U.S. at 492-493).  As a corollary, the Court said that
the effectiveness of treble-damage actions as a deterrent would be
substantially reduced if indirect purchasers were allowed to sue.  The
Court reasoned that if effective measures for allocating overcharges
in the chain of distribution could be fashioned, recoveries by
indirect purchasers would diminish the damages recoverable by direct
purchasers, but since the ultimate victims of the illegal charge,
consumers, would have only a tiny stake in a lawsuit and little
incentive to sue, the overall deterrent would be reduced (id. at 494;
see also Illinois Brick, 431 U.S. at 725-726).
   Subsequently, in Illinois Brick, indirect purchasers sought to use
the "pass-on" theory offensively.  The Court acknowledged that
indirect purchasers may come within the language of Section 4 of the
Clayton Act, but it nevertheless denied recovery (431 U.S. at
746-747).  Citing its prior rule should govern offensive and defensive
pass-on theories rather than overrule it, citing state decisis (431
U.S. at 736-737) and the "absence of a convincing demonstration that
the Court was wrong in Hanover Shoe" with respect to deterrence (id.
at 729).  The Court indicated, however, that passing-on theories might
be permitted in cases in which market forces had been superseded, such
as those involving preexisting cost-plus contracts or a direct
purchaser owned or controlled by its customer (id. at 732 n.12, 736
n.16).
   4. The court of appeals in this case discerned from this Court's
decisions three policies served by its construction of the Clayton Act
"in this context":  "(1) avoiding unnecessarily complicated
litigation;  (2) providing incentives to direct purchasers to bring
private damages actions;  and (3) avoiding multiple liability for
defendants" (J.S. App. A20-A21).  The court concluded that these
policies are impermissibly infringed by the state statutes.
   A policy -- invoked in construing a federal statute -- against
complicating litigation is not a basis for finding preemption of a
state statute in the absence of an affirmative indication that
Congress intended to force such a policy on the States.  This Court
was justifiably reluctant in Illinois Brick and Hanover Shoe to accept
a construction of the Clayton Act that would result in complication of
federal proceedings, but the reluctance stemmed from general concerns
about complexity and judicial economy, not from any identifiable
anti-complexity policy of the Clayton Act.  State legislatures cannot
lose their power to enact antitrust remedies merely because those
remedies may make proceedings more complex than the judiciary would
prefer.  /15/
   The policy against undercutting the incentives of potential
plaintiffs to bring Sherman Act suits raises much more legitimate
preemption concerns.  /16/ A state statute that squarely undermined
those incentives might frustrate the federal scheme and be preempted.
But that is not the case here.  Direct purchasers' entitlement under
federal law to recover overcharges that they paid, without a deduction
for passed-- on overcharges, cannot be affected by state
indirect-purchaser statutes.  /17/ Those statutes merely give
additional plaintiffs the right to sue the defendants for additional
sums, thus enhancing the deterrence of antitrust violations.
   Finally, this Court in Hanover Shoe and Illinois Brick invoked a
policy against duplicative recoveries.  We assume for the purpose of
analysis that some or all of the indirect purchasers' claims in this
case are duplicative of direct purchasers' claims.  /18/ We submit,
however, that there is nothing in the Clayton Act that deprives the
States of the power to permit such recoveries.
   Congress has established no policy against requiring an antitrust
defendant to pay state and federal penalties cumulating to more than
three times the total overcharge.  Indeed, under federal law alone a
defendant may be required to pay criminal fines in addition to treble
damages.  E.g., New York v. Hendrickson Bros., 840 F.2d 1065, 1086 (2d
Cir. 1988).  /19/ And under ordinary principles of preemption, state
penalties that are more onerous than federal penalties are not
precluded in the absence of evidence of a congressional intention to
preclude them.  California v. Zook, 336 U.S. 725, 736 (1949);  Agency
Rent-A-Car, Inc. v. Connolly, 686 F.2d 1029, 1037, 1039 (1st Cir.
(1982).  Although a single plaintiff usually will not be able to claim
damages under federal and state law for the same injury, /20/ nothing
in federal law protects defendants from having to pay damages equal to
more than (or more than three times) their total overcharges in order
to compensate a plaintiff a State chooses to protect as well as the
plaintiffs who may recover under federal law.  The state
indirect-purchaser statutes therefore do not create such an
"irreconcilable conflict" (Rice v. Norman Williams Co., 458 U.S. at
659) with the policies enunciated in Illinois Brick that the state
remedies can be said to frustrate the intended operation of the
remedial scheme of the Clayton Act.  /21/
   To be sure, allowing such duplicative recoveries will be a harsh
result for the defendants in cases in which such duplicative
recoveries are actually obtained.  Our own view is that the Court was
wise in Illinois Brick, 431 U.S. at 731 n.11, to deem "not * * *
acceptable" within the federal shceme itself the risk of multiple
recoveries in a case in which no legislature had clearly provided for
such recoveries.  But the legislatures of the States are entitled to
find acceptable that which this Court, in construing a federal
statute, finds unacceptable, so long as they do not flout the will of
Congress.  And it appears that the legislatures of California,
Minnesota, Alabama, and perhaps Arizona think it better that there
might be multiple recovery in some cases than that they and their
citizens go uncompensated for economic injuries.  /22/ Congress has
done nothing to prevent those legislatures from supplementing the
remedial scheme of the federal antitrust laws.
   In these circumstances, there is no basis for a conclusion that the
Clayton Act preempts state indirect-purchaser statutes.  The lower
courts cited no direct evidence -- and we are aware of none -- to
indicate that Congress in enacting Section 4 of the Clayton Act had
any intention of limiting the freedom of the States to adopt
additional damage remedies for conduct prohibited by state as well as
federal law.  Nor is there any reason to conclude that damage claims
by indirect purchasers would so frustrate the intended operation of
the federal antitrust laws that they must be prohibited.
facts of the case." R. Stern, E. Gressman & S. Shapiro, Supreme Court
                              CONCLUSION
   Probable jurisdiction should be noted.
   Respectfully submitted.
   CHARLES FRIED
      Solicitor General
   CHARLES F. RULE
      Assistant Attorney General
   LOUIS R. COHEN
      Deputy Solicitor General
   KENNETH G. STARLING
      Deputy Assistant Attorney General
   ROY T. ENGLERT, JR.
      Assistant to the Solicitor General
   CATHERINE G. O'SULLIVAN
   ANDREA LIMMER
      Attorneys
   JUNE 1988
   /1/ See Cal. Bus. & Prof. Code Section 16750(a) (West 1987 & Supp.
1988) (action to recover "three times the damages sustained * * * may
be brought by any person who is injured in his business or property *
* * regardless of whether such injured person dealt directly or
indirectly with the defendant");  Minn. Stat. Ann. Section 325D.57
(Supp. 1988) ("(a)ny person * * * injured directly or indirectly * * *
shall recover three times the actual damages sustained");  Ala. Code
Section 6-5-60(a) (1975) ("(a)ny person * * * injured or damaged by an
unlawful trust, combine or monopoly, or its effect, direct or
indirect, may, in each instance of such injury or damage, rocover the
sum of $500.00 and all actual damages").  The California and Minnesota
statutes were enacted in response to this Court's decision in Illinois
Brick Co. v. Illinois, 431 U.S. 720 (1977).  See Union Carbide Corp.
v. Superior Court, 36 Cal. 3d 15, 19, 679 P.2d 14, 16, 201 Cal. Rptr.
580, 582 (1984).
   /2/ Ariz. Rev. Stat. Ann. Section 44-1408 (1987) provides that the
State or any other person "threatened with injury or injured in his
business or property by a violation of this article may bring an
action for * * * amages sustained."
   /3/ The district court also certified a class of entities that
purchased ready-mix concrete for delivery within the State of Arizona
(J.S. App. A3).
   /4/ The States also asserted that, since the release of state
indirect-purchaser claims had formed part of the inducement of the
defendants to settle, indirect purchasers should not, as a matter of
contract law, be precluded from sharing in the settlement fund.  The
court of appeals rejected that claim (J.S. App. A25-A26), and it is
not at issue on this appeal.
   /5/ The decision of the court of appeals invalidates, under the
Supremacy Clause, the state indirect-purchaser statutes at least as
applied to this case.  "(I)t is sufficient for Section 1254(2) appeal
purposes that the state law was held unconstitutional as applied to
the
Practice 52 (6th ed. 1986) (citing Dutton v. Evans, 400 U.S. 74, 76
n.6(1970);  Malone v. White Motor Corp. 435 U.S. 497, 499 (1978)).
This case is not like Silkwood v. Kerr-McGee Corp., 464 U.S. 238
(1984), and California Coastal Comm'n v. Granite Rock Co., No. 85-1200
(Mar. 24, 1987), in which the Court held that it lacked appellate
jurisdiction, where lower courts had invalidated state actions taken
pursuant to state statutes but, in each case, "the statute * * * (had
been) left untouched" (Silkwood, 464 U.S. at 247).
   /6/ Crown Oil Co. v. Superior Court, 177 Cal. App. 3d 604, 223 Cal.
Rptr. 164 (1986), appeal dismissed, No. 86-287 (Oct. 14, 1986).  State
indirect-purchaser statutes also were assumed to be valid, without any
mention of preemption, in In re Chicken Antitrust Litigation, 669 F.2d
228, 238-239 (5th Cir. 1982), and were stated in dicta not to be
preempted in In re Sugar Antitrust Litigation, 588 F.2d 1270, 1273
(9th Cir. 1978), cert. denied, 441 U.S. 932 (1979).  The preemption
question was discussed but not resolved in Union Carbide Corp. v.
Superior Court, 36 Cal. 3d at 24 & n.3, 679 P.2d at 20 & n.3, 201 Cal.
Rptr. at 586 & n.3.
   /7/ See Note, Indirect Purchaser Suits Under State Antitrust Laws:
A Detour Around the Illinois Brick Wall, 34 Stan. L. Rev. 203 (1981);
Note, State Indirect Purchaser Statutes:  The Preemptive Power of
Illinois Brick, 62 B.U.L. Rev. 1241 (1982);  Floyd, Control of
Break-Away State Antitrust Litigation:  An Issue of Federalism, 35
Hastings L.J. 1, 16 & n.107, 45 (1983);  Comment, The California
Legislature Steers the Antitrust Cart Right off the Illinois Brick
Road, 11 Pac. L.J. 121, 126-127 (1979).
   /8/ At least 12 other jurisdictions have indirect-purchaser
statutes like those of California, Minnesota, and Alabama, that
expressly give indirect purchasers standing to sue. Colo. Rev. Stat.
Section 6-4-106 (1974 & Supp. 1987);  D.C. Code Ann. Section
28-4509(a) (1981);  Hawaii Rev. Stat. Section 480-14 (1984);  Ill.
Ann. Stat. ch. 38 Paragraph 60-7 (Smith-Hurd Supp. 1988);  Kan. Stat.
Ann. Section 50-801(b) (Supp. 1987);  Md. Com. Law Code Ann. Section
11-209 (1983 & Supp. 1987);  Mich. Comp. Laws Ann. Section 445-778
(West Supp. 1987);  Miss. Code Ann. Section 75-21-9 (1973);  N.M.
Stat. Ann. Section 57-1-3(A) (Supp. 1987);  R.I. Gen. Laws Section
6-36-12(g) (1985);  S.D. Codified Laws Ann. Section 37-1-33 (1986);
Wis. Stat. Ann. Section 133.18 (West Supp. 1987).  Other jurisdictions
have statutes, like that of Arizona, that could be interpreted to
permit indirect purchaser suits, but they generally appear to be
interpreted to preclude recovery by indirect purchasers, following
this Court's reasoning in Illinois Brick.  See In re Wiring Device
Antitrust Litigation, 498 F. Supp. 79, 87 (E.D.N.Y. 1980) (construing
South Carolina law);  Russo & Dubin v. Allied Maintenance Corp., 95
Misc. 2d 344, 407 N.Y.S.2d 617 (Sup. Ct. 1978);  Commonwealth of
Massachusetts v. Massachusetts CRINC, 1984-1 Trade Cas. (CCH)
Paragraph 66,057, at 68,684 n.7 (Mass. 1984);  Keating v. Philip
Morris, Inc., 417 N.W.2d 132, 136 (Minn. Ct. App. 1987) (following
Illinois Brick in suits based on pre-1984 statute that did not contain
express indirect-purchaser provision);  see also Tip Top Farms, Inc.
v. Park Lane Dairies, Inc., 114 A.D.2d 12, 16, 497 N.Y.S.2d 99, 101
(1985) (dismissing indirect purchasers' suits based on "breach of
contract or for money had and received" by indirect purchasers against
direct purchasers who had recovered antitrust damages, reasoning that
"recovery would undermine overriding Federal antitrust policies"),
aff'd, 69 N.Y.2d 625, 503 N.E. 2d 692, 511 N.Y.S.2d 227 (1986), cert.
denied, No. 86-1484 (Apr. 27, 1987).
   /9/ In 1890, 21 States had their own antitrust laws.  Mosk, State
Antitrust Enforcement and Coordination with Federal Enforcement,
A.B.A. Sec. Antitrust L. Proc., Aug. 6-10, 1962, at 358, 363.
   /10/ Indeed, as appellants observe (J.S. 14-116), Congress
apparently has approved an indirect-purchaser statute enacted by the
District of Columbia.
   /11/ Indeed, the States generally may adopt standards of conduct
that are more or less exacting than those mandated by federal law,
unless the result is a frustration of the federal scheme.  See Florida
Lime & Avocado Growers, Inc. v. Paul, 373 U.S. at 141-142 (State may
impose more stringent standards for gauging the maturity of avocados
for shipment within its borders);  Exxon Corp. v. Governor of
Maryland, 437 U.S. 117 (1978) (potential conflict between
State-imposed gasoline marketing requirements and Robinson-Patman Act,
in that State might ban what federal law permits, is insufficient to
nullify state regulation);  CTS Corp. v. Dynamics Corp. of America,
slip op. 11 & n.7 (more onerous state regulations of tender offers
that do not "alter the balance * * * in any significant way" are not
preempted).
   /12/ Even when the regulation of conduct is at issue, the line of
"state action" cases beginning with Parker v. Brown, supra, holds that
the Sherman Act does not deprive States of their power to enact
statutes that displace competition altogether, even though the core
policy of the Sherman Act is to promote competition.  See, e.g.,
Hoover v. Ronwin, 466 U.S. 558, 567-568 (1984) ("under the Court's
rationale in Parker, when a state legislature adopts legislation, its
actions constitute those of the State * * * and ipso facto are exempt
from the operation of the (federal) antitrust laws").  Given this
latitude to depart from even the core procompetitive policy of the
Sherman Act, it is anomalous to suggest that States must invariably
conform to particular policies that this Court has invoked in
determining the scope of federal remedies for antitrust violations.
   /13/ 15 U.S.C. (Supp. IV) 4303(c) provides:
         Notwithstanding any provision of any State law providing
      damages for conduct similar to that forbidden by the antitrust
      laws, any person who is entitled to recovery on a claim under
      such provision shall not recover in excess of the actual damages
      sustained * * * .
   /14/ 15 U.S.C. 4016(a) provides:
         Except as provided in subsection (b) of this section, no
      criminal or civil action may be brought under the antitrust laws
      against a person to whom a certificate of review is issued * * *
      .
15 U.S.C 4002(a)(7) defines "antitrust laws" to include "any State
antitrust or unfair competiton law."
   /15/ In any event, as the court of appeals acknowledged (J.S. App.
A21-A22), indirect-purchaser claims based on state law would not
complicate federal damage claims if they were brought in state court.
And even if they were joined with federal claims, the federal courts
could decline to excericse pendent jurisdiction if the state claims
posed significant additional burdens.  United Mine Workers v. Gibbs,
383 U.S. 715, 725-726 (1966).
   /16/ The court of appeals misdescribed this Court's objective as
"providing incentives to direct purchasers to bring private damages
actions" (J.S. App. A20-A21 (emphasis added)).  This Court's objective
was to minimize the number of antitrust violations that would go
unpunished because no one had a sufficient incentive to sue, and the
Court determined that allowing direct purchasers to recover for all
overcharges, including those they had passed on to indirect
purchasers, would serve that goal better than would allowing the use
of both offensive and defensive passing-on theories.  See generally
Hanover Shoe, 392 U.S. at 494;  Illinois Brick, 431 U.S. at 746-747.
If the Court had thought otherwise -- i.e., had concluded that the
deterrent objectives of the antitrust laws would be best served by
allowing the use of passing-on theories -- it presumably would not
have cared that "incentives to direct purchasers" to sue were thereby
lessened.
   /17/ No one has suggested that the state statutes at issue in this
case would be construed to allow a passing-on defense in an action in
which a direct purchaser asserts its federal-law right to recover
treble damages, or to take away from the direct purchaser and give to
the indirect purchaser a portion of the recovered damages that is
attributable to passed-on overcharges.  If any statute were so
construed, it would be preempted as so applied.  See Note, supra, 34
Stan. L. Rev. at 208 n.24.
   #FN18
   /18/ The computation is complicated in this case because it was not
litigated to conclusion but was settled.  Appellants argue that any
multiple-liability issue dropped out of the case once the defendant's
liability became fixed (J.S. 19) and that the failure of certain
direct purchasers to come forward to claim their shares of the
settlement fund means at the least that honoring claims based on the
corresponding indirect purchases would present no issue of duplicative
recovery (J.S. 18).  In our view, however, the sounder analysis
requires the Court to meet head on the question whether the state
statutes are valid even if applied to permit different plaintiffs to
recover for the same over-charges.  This was a class action.  Every
direct purchaser was a member of one of the plaintiff classes
certified and had a right to share in the settlement fund, and every
claim based on an indirect purchase necessarily overlapped with a
valid claim that could have been made against the fund.  Nor did the
fact of settlement, by fixing the defendants' total liability, render
the existence of overlapping claims irrelevant.  The settlement, as
construed by the court of appeals (see J.S. App. A26), left open the
question whether the indirect purchasers' claims were valid.  If those
claims were invalid ab initio because they overlapped with direct
purchasers' claims, the settlement cannot have made them valid.
   /19/ See Clayton Act Section 5, 15 U.S.C. 16(a) (criminal
conviction can be used as prima facie evidence of antitrust violation
in subsequent civil suit);  see also 18 U.S.C. (Supp. IV) 3623(c)(1)
(repealed effective Nov. 1, 1987) (authorizing criminal penalties
amounting to twice the defendant's pecuniary gain or twice the
victim's pecuniary loss).
   /20/ A single plaintiff can recover from a defendant on multiple
damage theories, although he cannot obtain a "double recovery" for any
one injury.  See McDonald v. Johnson & Johnson, 722 F.2d 1370, 1381
(8th Cir. 1983) (en banc) (conpensatory damages for antitrust, fraud,
and breach of contract claims were not impermissibly duplicative but
punitive damages on fraud count were disallowed because deemed
duplicative of statutory trebled damages), cert. denied, 469 U.S. 870
(1984);  Woods Exploration & Producing Co. v. Aluminum Co. of America,
438 F.2d 1286, 1314-1315 (5th Cir. 1971) (recovery in federal
antitrust suit bars recovery in state antitrust suit since former
compensated plaintiff for total harm suffered), cert. denied, 404 U.S.
1047 (1972);  1047 (1972);  Colorado v. Asphalt Paving Co., 1987-1
Trade Cas. (CCH) Paragraph 67,473 (D. Colo. 1987) (State cannot
recover damage for bid rigging under both federal and state antitrust
laws);  Wynn Oil Co. v. Purolator Chemical Corp., 403 F. Supp. 226,
231 (M.D. Fla. 1974) (affirming award for treble damages under Sherman
Act as well as compensatory and punitive damages under state contract
and tort laws);  California v. National Ass'n or Realtors, 1981-1
Trade Cas. (CCH) Paragraph 64,102, at 76-647-76,648 & n.7 (Cal. Ct.
App. 1981) (multiple claims under separate state statutes permitted as
long as duplicative damages were not recovered on both claims).
   /21/ We agree with the student commentator who wrote (Note, supra,
34 Stan. L. Rev. at 212 (footnotes omitted)):
      In declining to allow duplicative recovery, the Court (in
      Illinois Brick) was simply unwilling to go beyond section 4 of
      the Clayton Act, which authorizes only the award of treble
      damages.  This decision does not prevent duplicative recovery;
      rather, it states the more limited policy of permitting only one
      treble damage recovery under the federal law.  The decision not
      to permit duplicative recovery, therefore, was simply a matter
      of interpretation of a federal antitrust statute.
         The majority opinion in Illinois Brick properly identified
      itself as a decision "in the area of statutory construction"
      involving "this Court's interpretation of (Congress's)
      legislation." The decision to avoid duplicative recovery and the
      complementary decision to deny indirect purchasers a cause of
      action were based on federal policy considerations and are
      limited in their effect to the federal law.  Noting in the
      Illinois Brick decision established a federal policy of
      preventing indirect purchaser suits under state law.
4##FN22
   /22/ Of course, it is possible that the States' indirect-purchaser
statutes might be construed, as a matter of state-law statutory
interpretation rather than federal preemption, to deny indirect
purchasers any recovery that would duplicate a direct purchaser's
recovery.  The court of appeals, however, did not address any such
questions of state statutory construction (J.S. App. A24), nor do we.