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, 1988

   On appeal from the United States Court of Appeals for the Ninth
Circuit

   Brief for the United States as Amicus Curiae supporting Appellants

            TABLE OF CONTENTS
   Question Presented
   Interest of the United States
   Statement
   Summary of argument
   Argument:
      Congress did not preempt state statutes affording damage
      remedies to indirect purchasers
      A. Congress did not intend to interfere with the broad authority
         of the States to enact and enforce antitrust laws in aid of
         their police powers
      B. State statutes affording indirect purchasers a damage remedy
         do not create an irreconcilable conflict with federal law
   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.  This case presents the question whether the
Clayton Act, which has been construed to provide no remedy to
"indirect purchasers" in most cases, preempts state antitrust statutes
that give a remedy to indirect purchasers.  Because that question
requires determination of congressional intent underlying federal
antitrust laws enforced by the United States, and because the
determination in this case may affect federal antitrust enforcement,
the United States has a particular interest in its correct resolution.

                               STATEMENT

   Beginning in 1976, 35 actions were filed in 12 federal district
courts against a number of cement manufacturers, alleging a nationwide
conspiracy to fix prices (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 governmental
entities within the State that had purchased either cement or products
containing cement (see id. at A73, A94, A110-A111, A127).  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, basing their claims
on state statutes that indisputably permit indirect-purchaser suits.
/1/ Arizona made a similar claim, /2/ but the question whether its
statute permits indirect-purchaser suits is disputed (J.S. 9).

   In September 1977, the Judicial Panel on Multidistrict Litigation
transferred all pending actions to the District of Arizona for
coordinated pretrial proceedings (J.S. App. A3).  In March 1979, the
district court certified the actions as class actions and established
three classes of cement purchasers.  /3/ The second and third classes
consisted, respectively, of California and Oregon and their political
subdivisions.  The first and broadest class was made up of all others
who purchased cement during the relevant time period.  Ibid.

   Between July 1979 and October 1981, the three classes entered into
a series of settlement agreements with seven of the major defendants,
which produced a settlement fund of more than $32 million (J.S. App.
A4).  /4/ The settlement agreements left distribution of the
settlement fund for later resolution, subject to approval by the
district court (id. at A4, A11).

   By an order dated January 21, 1985 (J.S. App. A27-A33), the
district court approved a plan distributing the settlement fund.  In
response to claims by the direct purchasers that the States could not
be compensated for their indirect purchases of cement because of this
Court's intervening decision in Illinois Brick Co. v. Illinois, 431
U.S. 720 (1977), the district court disallowed the claims of indirect
purchasers.  It held, without further discussion, that the state
statutes on which Alabama, California, and Minnesota were relying to
recover for indirect purchases "are clear attempts to frustrate the
purposes and objectives of Congress, as interpreted by the Supreme
Court in Illinois Brick, and, accordingly, are preempted by federal
law" (J.S. App. A30-A31).

   The Ninth Circuit affirmed (J.S. App. A1-A26).  It first suggested
(id. at A21) that the state indirect-purchaser statutes could be
construed to limit direct purchasers' recoveries under federal law to
the amount of any overcharge that the direct purchaser itself had
absorbed -- a construction that would "directly conflict with federal
law." The court of appeals then concluded (ibid.) that, even if the
state indirect-purchaser statutes were construed only as permitting
indirect purchasers to bring claims in addition to the claims brought
by direct purchasers, the indirect-purchaser claims asserted in this
case would impermissibly interfere with the "policy goals" of Hanover
Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481 (1968), and
Illinois Brick.  In particular, the court of appeals concluded 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 discerned in this Court's opinions "an express federal policy
condemn(ing) multiple liability for antitrust defendants" (id. at
A23).  It concluded (ibid.) that, if state indirect-purchaser statutes
were valid, then in certain circumstances (for example, if liability
had been previously imposed under the state statute) the application
of federal law could result in imposition of multiple liability in
contravention of the holding of Illinois Brick.

                          SUMMARY OF ARGUMENT

   In Illinois Brick and Hanover Shoe, this Court construed Section 4
of the Clayton Act, 15 U.S.C. 15, generally to preclude proof that the
customer of an antitrust violator has passed on the overcharge to
subsequent purchasers, and thus to preclude indirect purchasers from
obtaining a treble damage remedy in most circumstances.  We agree with
those holdings, both as a matter of statutory interpretation and as a
matter of antitrust policy.  A number of the States have reached a
different conclusion, however, and have afforded indirect purchasers a
damage remedy under state antitrust laws.  Such divergent state
approaches are not preempted unless there is a clear indication that
Congress intended to make federal antitrust liability exclusive.

   The legislative history of the federal antitrust laws demonstrates
a congressional intent to supplement, and not to displace, state
antitrust enforcement.  And Congress, as well as this Court, has
repeatedly indicated in the years since a recognition that States
enjoy broad authority to enact and provide for the enforcement of
their own antitrust laws.

   The court of appeals based its conclusion that state
indirect-purchaser statutes are preempted on the policies articulated
by this Court in construing Section 4 of the Clayton Act.  But neither
Illinois Brick nor Hanover Shoe involved state law;  nor does either
decision refer to any congressional intent to preclude the States from
adopting their own approaches.  The court of appeals improperly
equated policies appropriately taken into account by this Court in
construing a federal statute with an affirmative congressional
intention to require the States to conform their statutory remedies to
the federal model.

   Thus, although this Court took account of the additional complexity
that would be introduced into antitrust litigation by allowing proof
that damages were passed on, as well as the deterrent effect of
concentrating the right of recovery in the direct purchaser, no
"irreconcilable conflict" (Rice v. Norman Williams Co., 458 U.S. 654,
659 (1982)) with Congress's purposes would be created by allowing the
States to adopt remedies that will make the enforcement of their laws
more complicated than related federal laws.  The federal courts can
refuse to exercise pendent jurisdiction over state claims if they will
unduly complicate federal litigation (United Mine Workers v. Gibbs,
383 U.S. 715, 725-726 (1966)), and in any event this Court's focus on
the complexity of proceedings that would result if an ambiguous
federal statute were interpreted a certain way does not suggest that
state legislatures are powerless to enact unambiguous statutes that
require complex proceedings for their enforcement.

   Under the Supremacy Clause, state laws cannot affect the right of
direct purchasers to recover under federal law.  In any event, the
court of appeals' concern about lessening the incentives of direct
purchasers to bring suit was misdirected, because this Court's goal in
Hanover Shoe and Illinois Brick was to enhance the deterrent effect of
the antitrust laws, not to favor direct purchasers as such.  The goal
of deterrence is if anything probably furthered, not impeded, by
permitting indirect purchasers to sue under state law.

   Similarly, the risk of multiple liability, on which the court of
appeals relied heavily, creates no basis for preemption.  There is no
indication that Congress intended to establish federal antitrust
remedies as a ceiling on the total liability a defendant must pay as a
result of its anticompetitive activity.  Under established principles
of preemption, state and federal jurisdictions can exact separate
penalties for a single act.

                               ARGUMENT

 CONGRESS DID NOT PREEMPT STATE STATUTES AFFORDING DAMAGE REMEDIES TO
INDIRECT PURCHASERS

   In Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), the Court
concluded that Section 4 of the Clayton Act, 15 U.S.C. 15, does not
permit indirect purchasers to recover damages under that statute in
most circumstances.  We fully support that result, and agree that this
construction of the federal Act best serves the goal of antitrust
enforcement.  But the States have independently considered the issue
of recovery by indirect purchasers, and a number have reached a
different conclusion.  /5/ Unless Congress has required, either
explicitly or implicitly, that federal antitrust laws be the exclusive
model for liability for anticompetitive activity, the States are free
to adopt their own enforcement policies and remedies.  Because we can
discern no such intent on the part of Congress, we believe that,
whatever one may think of the wisdom of affording antitrust remedies
to indirect purchasers, the States are not precluded by federal law
from pursuing such a course.  The court below confused the policy
considerations that properly informed this Court's construction of the
federal statute with an affirmative congressional decision to preclude
the States from pursuing different approaches.

   A. Congress Did Not Intend to Interfere With the Broad Authority of
the States To Enact and Enforce Antitrust Laws In Aid of Their Police
Powers

   1. In any preemption analysis, "'(t)he purpose of Congress is the
ultimate touchstone.'" Malone v. White Motor Corp., 435 U.S. 497, 504
(1978);  see also Fidelity Federal S & L Ass'n v. De la Cuesta, 458
U.S. 141, 152 (1982);  Schneidewind v. ANR Pipeline Co., No. 86-986
(Mar. 22, 1988), slip op. 6.  Congress may explicitly define the
extent to which its enactments preempt state law (see, e.g., Shaw v.
Delta Air Lines, Inc., 463 U.S. 85, 95-96 (1983)), or it may indicate,
either explicitly or implicitly, an intention to occupy a field to the
exclusion of state law.  And, even if Congress has not entirely
displaced state regulation in a particular field, state law may be
preempted to the extent it conflicts with federal law.  See Hines v.
Davidowitz, 312 U.S. 52, 67 (1941);  Florida Lime & Avocado Growers,
Inc. v. Paul, 373 U.S. 132, 142-143 (1963);  Schneidewind v. ANR
Pipeline Co., No. 86-986 (Mar. 22, 1988), slip op. 6-7.

   Federal regulation will not be deemed to preempt state regulatory
power, however, "in the absence of persuasive reasons -- either that
the nature of the regulated subject matter permits no other
conclusion, or that the Congress has unmistakably so ordained"
(Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. at 142).
Courts may not seek out a conflict where none clearly exists, or
concern themselves with hypothetical possibilities.  Exxon Corp. v.
Governor of Maryland, 437 U.S. 117, 130-131 (1978);  Huron Portland
Cement Co. v. Detroit, 362 U.S. 440, 446 (1960).  Moreover, if state
regulation is in aid of the usual police powers of the State, there is
a presumption that Congress did not intend to interfere with state
regulation.  Jones v. Rath Packing Co., 430 U.S. 519, 525 (1977);
Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. at 144-147;
California v. Zook, 336 U.S. 725, 734 (1949);  Rice v. Santa Fe
Elevator Corp., 331 U.S. 218, 230 (1947).  "This assumption provides
assurance that the 'federal-state' balance, United States v. Bass, 404
U.S. 336, 349 (1971), will not be disturbed unintentionally by
Congress or unnecessarily by the courts." Jones v. Rath Packing Co.,
430 U.S. at 525.

   This Court's approach, "supported by decisions extending back to
the turn of the century," is to temper any implied-preemption analysis
"by the conviction that the proper approach is to reconcile 'the
operation of both statutory schemes with one another rather than
holding one completely ousted.'" Merrill Lynch, Pierce, Fenner &
Smith, Inc. v. Ware, 414 U.S. 117, 127 & n.8 (1973) (quoting Silver v.
New York Stock Exchange, 373 U.S. 341, 357 (1963));  accord De Canas
v. Bica, 424 U.S. 351, 357-358 n.5 (1976).  The Court therefore "is
generally reluctant to infer preemption" (Exxon Corp. v. Governor of
Maryland, 437 U.S. at 132).

   2. Neither the Sherman Act nor the Clayton Act expressly preempts
state antitrust laws and remedies.  And it is well settled that
Congress did not intend to displace state regulation of
anticompetitive practices, which has traditionally been undertaken by
the States in the exercise of their police powers (see L. Sullivan,
Antitrust 155-156 (1977)).

   In 1890, when the Sherman Act was enacted, 21 States had
supplemented the common law with statutory antitrust legislation.  See
Mosk, State Antitrust Enforcement and Coordination with Federal
Enforcement, A.B.A. Sec. Antitrust L. Proc., Aug. 6-10, 1962, at 358,
363;  21 Cong. Rec. 2456 (1890).  /6/ Congress acted because the
various state laws were perceived as inadequate to deal with
nationwide and regional anticompetitive combinations.  See, e.g., 21
Cong. Rec. 2456, 2457, 2459-2460, 2568 (1890).  The Sherman Act was
intended to complement the States' efforts to control "the great evil
that now threatens us." 21 Cong. Rec. 2456-2457 (1890) (remarks of
Sen. Sherman).  Senator Sherman stated:  "Each State can and does
prevent and control combinations within the limit of the State.  This
we do not propose to interfere with." Id. at 2456.  Congress's purpose
was "to aid the States in declaring null and void these combinations
and agreements in restraint of trade." 21 Cong. Rec. 2563 (1890)
(remarks of Sen. Sherman).  "No attempt (was) * * * made to invade the
legislative authority of the several States or even to occupy doubtful
grounds." H.R. Rep. 1707, 51st Cong., 1st Sess. 1 (1890).

   Indeed, because of the narrow view of the federal government's
Commerce Clause powers generally recognized in 1890 (see generally
Cantor v. Detroit Edison Co., 428 U.S. 579, 632-637 (1976) (Stewart,
J., dissenting)), Senator Sherman believed that a substantial number
of conspiracies in restraint of trade would continue to be subject
only to state regulation.  See, e.g., 21 Cong. Rec. 2462 (1890);  see
also id. at 4091, 4099 (Reps. Culberson and Bland stating that States
had a duty to supplement the federal Act to cover anticompetitive
activity outside the federal sphere);  H.R. Rep. 1707, 51st Cong., 1st
Sess. 1 (1890) (same statement).  Congress's intent was simply "to arm
the Federal courts within the limits of their constitutional power
that they may co-operate with the State courts in checking, curbing,
and controlling the most dangerous combinations." 21 Cong. Rec. 2457
(1890) (remarks of Sen. Sherman).  Today, because of expanded
interpretations of the Commerce Clause, the federal and state spheres
overlap substantially.  But to construe state remedies as preempted by
federal remedies because of the expanded scope of the modern Commerce
Clause would "transform() a generous principle of judicial
construction -- namely the 'retroactive' expansion of the
jurisdictional reach of the Sherman Act to the limits of an expanded
judicial conception of the commerce power -- into a transgression of
the clearly expressed congressional intent not to intrude on the
regulatory authority of the States." Cantor v. Detroit Edison Co., 428
U.S. at 637 (Stewart, J., dissenting).

   In the years since 1890, Congress repeatedly has indicated its
understanding that state antitrust remedies may coexist with federal
antitrust remedies.  For example, in considering the Capper-Volstead
Act of 1921, 7 U.S.C. 291, 292 (which contains an exemption for
agricultural cooperatives from federal antitrust laws, but no express
preemption of state antitrust laws regulating such organizations),
Congress indicated that it expected state law to continue to forbid
some such cooperatives, notwithstanding the federal decision to permit
them.  /7/ In more recent amendments to the Omnibus Crime Control and
Safe Streets Act of 1968, Congress has provided seed money to the
States to fund antitrust enforcement programs, thus recognizing the
States' power to pursue such programs (see Act of Oct. 15, 1976, Pub.
L. No. 94-503 Tit. I, Section 116, 90 Stat. 2415).  And, in still more
recent legislation granting limited exemptions from the federal
antitrust laws, Congress has chosen to preempt state antitrust
remedies expressly.  See National Cooperative Research Act of 1984, 15
U.S.C. (Supp. IV) 4303(c);  Export Trading Company Act of 1982, 15
U.S.C. 4016, 4002(a)(7).  These express preemption provisions reflect
Congress's understanding that, in the absence of such provisions, the
States would be free to pursue independent 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").

   This Court also has recognized the States' broad authority to
legislate in the antitrust field.  "That State legislatures have the
right * * * to prevent unlawful combinations to prevent competition
and in restraint of trade, and to prohibit and punish monopolies, is
not open to question." Waters-Pierce Oil Co. v. Texas, 212 U.S. 86,
107 (1909) (citing National Cotton Oil Co. v. Texas, 197 U.S. 115
(1905), and Smiley v. Kansas, 196 U.S. 447 (1905));  see also Watson
v. Buck, 313 U.S. 387, 403 n.6 (1941);  Southern Motor Carriers Rate
Conf. v. United States, 471 U.S. 48, 56 & n.19 (1985);  Exxon Corp. v.
Governor of Maryland, 437 U.S. at 133;  Puerto Rico v. Shell Co., 302
U.S. 253, 271 (1937) (criminal provisions of Sherman Act do not
preempt similar Puerto Rican law);  Standard Oil Co. v. Tennessee, 217
U.S. 413, 421-422 (1910) (upholding state antitrust law against claim
that it interfered with interstate commerce).  /8/

   B. State Statutes Affording Indirect Purchasers A Damage Remedy Do
Not Create An Irreconcilable Conflict With Federal Law

   Despite the clear authority of the States to enact and provide for
the enforcement of antitrust laws, the court of appeals held that
state indirect-purchaser remedies are preempted because they conflict
with federal law.  In our view, however, there is no "irreconcilable
conflict" (Rice v. Norman Williams Co., 458 U.S. 654, 659 (1982)).  It
is not a "physical impossibility" to comply with both federal and
state laws.  Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. at
142-143;  see Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 257 (1984)
(it is not physically impossible to pay federal fines and
state-imposed punitive damages for the same incident).  The state
statutes do not authorize or mandate conduct that violates the
antitrust laws or any other federal laws.  See Rice v. Norman Williams
Co., 458 U.S. at 661;  see also California Retail Liquor Dealers Ass'n
v. Midcal Aluminum, Inc., 445 U.S. 97 (1980);  Schwegmann Bros. v.
Calvert Corp., 341 U.S. 384 (1951).  Indeed, what is at issue in this
case is not the scope of liability but remedies.  /9/

   The fact that the substantive prohibitions of the state and federal
laws are in harmony makes it "particularly inappropriate" to infer
preemption (Exxon Corp. v. Governor of Maryland, 437 U.S. at 132).
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
both seek to compensate victims of antitrust violations and use
antitrust civil recoveries to deter future violations of the antitrust
laws.  Union Carbide Corp. v. Superior Court, 36 Cal. 3d 15, 20-22,
679 P.2d 14, 17-18, 201 Cal. Rptr. 580, 583-584 (1984);  Illinois
Brick, 431 U.S. at 746.

   The court of appeals, relying on the opinions in Illinois Brick and
Hanover Shoe, nevertheless held (J.S. App. A19, A25) that state
indirect-purchaser statutes "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.  Neither Illinois Brick nor Hanover Shoe, however,
contains any reference to state law or a congressional intent to
preempt.  Indeed, although the Court in those cases 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.

   Despite the limited nature of the inquiry undertaken by the Court
in Illinois Brick and Hanover Shoe, the court of appeals discerned in
those decisions three federal policies that it believed state
indirect-purchaser statutes would obstruct:  "(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 policies
to which the court of appeals referred are important and relevant to
the proper construction of a federal statute, especially in the
absence of specific evidence as to Congress's intent in enacting the
provision.  /10/ This Court's conclusion that those policies would be
served by its construction of the federal statute, however, does not
establish a congressional intent to preempt state statutes reflecting
differing policy judgments.

   The court of appeals' analysis would dramatically expand
Davidowitz, requiring the States not only to avoid interference with
Congress's affirmative purposes but also to refrain from adopting any
remedy that Congress declines to adopt for federal purposes.  But in
the absence of any evidence that Congress intended to make federal
remedies exclusive, Davidowitz does not require the States to adhere
to Congress's judgments as to the most efficacious remedies.  Viewed
from this perspective, the three policy considerations identified by
the court of appeals give rise to no conflict between federal and
state law.

   1. In Hanover Shoe, the Court held that a defendant in an antitrust
case may not invoke a "pass-on" defense -- that is, a defense that
alleges that the overcharge claimed by the plaintiff was passed on by
the plaintiff to others in the distribution chain and that the
overcharge therefore did not injure the plaintiff (see 392 U.S. at
487-488, 491-492).  Concluding that the pass-on defense "would require
a convincing showing of * * * virtually unascertainable figures" and
that "the task would normally prove insurmountable" (id. at 493), the
Court was unwilling to require federal courts enforcing a federal
statute to embark on such "long and complicated proceedings involving
massive evidence and complicated theories" (ibid.)

   Subsequently, in Illinois Brick, indirect purchasers sought to use
the pass-on theory offensively.  The Court decided that determined
that the rationale of Hanover Shoe -- "that the attempt to trace
complex economic adjustments to a change in the cost of a particular
factor of production would greatly complicate * * * already protracted
treble-damage proceedings" -- applies equally to assertion of pass-on
theories by plaintiffs (431 U.S. at 732).  It found the "costs to the
judicial system and the efficient enforcement of the antitrust laws"
(ibid.) that would result from allowing plaintiffs to use pass-on
theories to be unacceptably high.  See also id. at 741-745.

   The court of appeals viewed these decisions as precluding recovery
under state indirect-purchaser statutes that would also "complicate
antitrust enforcement" (J.S. App. A21).  It observed, no doubt
correctly, that since plaintiffs will often bring federal and state
antitrust claims together in federal court, "complications are
unavoidable" (id. at A22).  But the Court's decisions in Illinois
Brick and Hanover Shoe were intended to promote efficient
administration of federal antitrust claims, by limiting the issues
that would be litigated under the federal statutes.  They did not
address the wisdom of state legislatures in submitting state antitrust
recovery to "long and complicated proceedings" (392 U.S. at 493).
There is no Clayton Act policy to limit the complexity of antitrust
proceedings under state law.

   To the extent that the Court in Illinois Brick and Hanover Shoe
discerned a congressional policy to limit the demands placed on the
federal judiciary by a federal statute, such a policy is not relevant
here.  /11/ As the court of appeals acknowledged (J.S. App. A21-A22),
indirect-purchaser claims will not complicate federal damage claims if
brought in a state court.  To be sure, the state indirect-purchaser
claims at issue in this case were before the district court as pendent
state claims (J.S. App. A64, A87, A104, A122).  But whether the
federal court should accept jurisdiction of those claims is governed
by the body of law dealing with pendent jurisdiction, not by the
policies of the Clayton Act.  It is well established that a federal
court may decline to exercise pendent jurisdiction if the state claims
impose significant additional burdens.  United Mine Workers v. Gibbs,
383 U.S. 715, 725-726 (1966);  see also 13B C.A. Wright, Federal
Practice and Procedure Section 3567.1, at 122-132 (1984).  It is one
thing to say that, because rights created by state law require
complicated proceedings for their enforcement, the federal courts will
not enforce those rights themselves in an exercise of pendent
jurisdiction but will instead leave the matter to state courts.  It is
quite a different thing to say, as the Ninth Circuit did here, that
the complicated proceedings required to vindicate state-created rights
are a justification for holding that the State has no power to create
those rights at all.

   Moreover, even if one accepts the court of appeals' gloomy view
that federal courts will inevitably be drawn into complex proceedings
that require them to sort out direct and indirect purchasers' claims
under federal and state law, the court of appeals was still wrong to
treat that as a justification for holding that the State has no power
to create indirect-purchaser recovery rights.  The reason why avoiding
complicated proceedings was an important consideration in Hanover Shoe
and Illinois Brick is that Congress itself had provided no clear
guidance on the indirect-purchaser question.  Therefore, concerns of
public policy that would be relatively insignificant if Congress's
intent were readily ascertainable took on greater weight.  As this
Court subsequently described its Hanover Shoe and Illinois Brick
holdings (Blue Shield v. McCready, 457 U.S. 465, 475 n.11 (1982)
(emphasis added), quoting Hanover Shoe, 392 U.S. at 493)),

         (T)he feasibility and consequences of implementing particular
      damages theories may, in certain limited circumstances, be
      considered in determining who is entitled to prosecute an action
      brought under Section 4.  Where consistent with the broader
      remedial purposes of the antitrust laws, we have sought to avoid
      burdening Section 4 actions with damages issues giving rise to
      the need for "massive evidence and complicated theories," where
      the consequence would be to discourage vigorous enforcement of
      the antitrust laws by private suits.

But the limited role that this Court has allowed this consideration to
play in determining the reach of the federal statute hardly supports
the notion of the court of appeals that the States are forbidden from
making a different policy choice about the desirability of complicated
proceedings than the one that has been made at the federal level.
Only by forgetting this Court's many reminders about the reluctance
with which preemption is to be inferred (see pp. 8-9, supra) could a
court find preemption on such a slender basis as this.

   2. The Court in Illinois Brick and Hanover Shoe also noted that
allowing pass-on theories in federal suits could reduce the deterrent
effect of private suits, by decreasing the incentive of direct
purchasers -- the class most likely to act as "private attorneys
general" -- to sue.  The Court reasoned that, if effective measures
for allocating overcharges in the chain of distribution could be
fashioned, direct purchasers' recoveries would be diminished by the
recoveries of indirect purchasers.  But, since the indirect purchasers
would have only a "tiny stake" and little incentive to sue, the
overall deterrent effect of federal civil damage suits would be
reduced.  Hanover Shoe, 392 U.S. at 494;  see also Illinois Brick, 431
U.S. at 725-726, 734-735, 745-746.

   This Court's decisions, however, do not elevate maximizing the
direct purchasers' incentives to sue into an end in itself.  Rather,
those decisions make clear that the direct purchasers' incentive to
sue is merely a means to an end -- enhancing the deterrent effect of
the antitrust laws.  The court of appeals therefore erred in
interpreting Illinois Brick and Hanover Shoe to favor a policy of
maximizing incentives for direct purchasers per se (see J.S. App.
A20-A21).  /12/ As between the two possibilities that the Court
seriously considered in Hanover Shoe and Illinois Brick -- allowing
direct purchasers and only direct purchasers to sue for the entire
amount of an overcharge, versus allowing both direct purchasers and
any indirect purchasers to sue, and requiring apportionment of the
overcharge among them -- we have little doubt that the Court correctly
discerned that the former alternative would provide the greater
deterrent effect, for the reasons the Court gave in its opinions.  But
those are not the alternatives here.

   The right of direct purchasers to a full recovery without any
pass-on defense is guaranteed by federal law as construed in Hanover
Shoe and thus under the Supremacy Clause cannot be taken away by any
state statute.  /13/ Accordingly, the state statutes cannot themselves
be applied to require apportionment between direct and indirect
purchasers of any federal damages recovered.  /14/ The only question
here is whether federal law makes direct purchasers the only proper
antitrust plaintiffs, even in the face of state statutes giving
indirect purchasers the right to sue, or whether the indirect
purchasers' state-law rights will be recognized in addition to the
direct purchasers' federal-law rights.  As between those alternatives,
it cannot be maintained that the latter, which simply creates
additional liability for the same conduct and thus adds additional
disincentives to those that already exist under federal law,
meaningfully undermines the goal of deterrence.

   To be sure, there may be rare situations in which permitting
additional plaintiffs to sue for damages in addition to those already
available would marginally reduce rather than increase overall
deterrence.  The court of appeals focused (J.S. App. A22) on one
situation in which that might be true:  where the defendant has
insufficient assets to pay all the claims of the direct and indirect
purchasers.  In that scenario, each direct purchaser might recover
less than the full amount of its claim, and therefore the incentive of
each direct purchaser to sue would be less than it would be if only
direct purchasers could sue.  Conceivably, the deceased litigation
incentive of the direct purchasers in this situation could be large
enough to offset the increased litigation incentive of the indirect
purchasers, thus reducing the overall deterrent effect of the
antitrust laws.

   Such a hypothetical situation, however, provides no basis for
holding that state indirect-purchaser laws so frustrate federal
objectives that they are preempted.  The fact that a state law might
marginally reduce the deterrence of antitrust violations in rare cases
is no basis for holding that the same law, which in other cases could
increase the deterrence of antitrust violations, is on the whole so
contrary to federal policy as to justify its preemption in all cases.
The general thrust of state laws permitting indirect-purchaser suits
is consistent with the federal policy of deterring antitrust
violations, and that policy therefore provides no basis for holding
such laws to be preempted.

   In observing that state indirect-purchaser statutes are not
antithetical to federal antitrust law, we do not mean to suggest that
we agree with the States' decision that such statutes make for good
antitrust policy.  We do not regard as insufficient the deterrence
provided by the federal rule, as articulated in Hanover Shoe and
Illinois Brick.  Nor would we advocate as a matter of antitrust policy
a regime in which both direct and indirect purchasers are entitled to
recover for the same overcharge with all the added complexities that
entails.  The question here, however, is not whether the state
statutes are wise but whether they stand as an obstacle to
accomplishment of the purposes of Congress.

   3. The court of appeals found the "most direct()" conflict with
federal policy in "the risk of multiple liability for defendants" if
state indirect-purchaser statutes are not preempted (J.S. App.
A22-A23).  /15/ But there is no federal policy against antitrust
violators having to pay amounts cumulating to more than three times
the overcharge.  /16/ This Court determined only that Congress did not
intend an antitrust defendant to be held liable for more than one set
of treble damages under Section 4 of the Clayton Act.  See Note,
supra, 34 Stan. L. Rev. at 212.  There was no suggestion in Illinois
Brick or Hanover Shoe that this rule governs liabilities imposed by
separate sovereigns.  /17/

   It was well established before the Sherman Act was enacted in 1890
that state and federal sovereigns could simultaneously command
obedience to prohibitions relating to the same act, and that each
could impose sanctions for disobedience.  "Where a person owes a duty
to two sovereigns, he is amenable to both for its performance;  and
either may call him to account." Ex parte Siebold, 100 U.S. 371,
387-389 (1879).  "The people of the United States resident within any
State are subject to two governments:  one State, and the other
National;  but there need be no conflict between the two.  * * * The
citizen * * * owes allegiance to the two departments, so to speak, and
within their respective spheres must pay the penalties which each
exacts for disobedience to its laws.  In return, he can demand
protection from each within its own jurisdiction." United States v.
Cruikshank, 92 U.S. 542, 550-551 (1875).

   One consistent application of that principle has been this Court's
repeated holdings that it is not a violation of the Double Jeopardy
Clause for a State and the federal government both to prosecute and
punish a defendant for a single crime.  See United States v. Lanza,
260 U.S. 377, 382 (1922) (the States and the federal government are
"two sovereignties, deriving power from different sources, capable of
dealing with the same subject matter within the same territory," and
"an act denounced by * * * both national and state governments is an
offense against the peace and dignity of both and may be punished by
each");  Abbate v. United States, 359 U.S. 187 (1959);  United States
v. Wheeler, 435 U.S. 313, 316-317, 320 (1978);  Heath v. Alabama, 474
U.S. 82, 88-89, 92-93 (1985).  This Court's preemption cases also
support the principle that the States are not limited to the remedies
established by Congress but may provide additional or different
remedies for the same conduct.  See, e.g., Silkwood v. Kerr-McGee
Corp., 464 U.S. at 256 (state tort remedies are available for nuclear
incidents despite exclusive federal regulation of nuclear safety,
because Congress was aware of state remedies and tolerated tension
between state and federal schemes);  Florida Lime & Avocado Growers,
Inc. v. Paul, 373 U.S. at 141-142 (more stringent state standards for
locally shipped produce are acceptable);  Exxon Corp. v. Governor of
Maryland, 437 U.S. at 131 (state law bans what federal law permits,
but is not preempted);  see also California v. Zook, 336 U.S. at
729-732.

   The States and the federal government have established rules that,
in some circumstances, afford different parties causes of action
against the same antitrust violator for the same conduct.  Our own
view is that the federal rule is superior, for all the reasons
articulated in this Court's Illinois Brick and Hanover Shoe decisions.
 But some States, including California, Minnesota, and Alabama have
placed an emphasis on compensating all injured parties -- even at the
risk, apparently, of requiring antitrust violators to pay out more
than three times the overcharge.  /18/ Congress has indicated no
affirmative intention to preclude the establishment of such additional
causes of action under state law.  To the contrary, as we have noted
(see pp. 9-12, supra), the legislative history of the federal
antitrust laws demonstrates Congress's specific intention not to
interfere with state antitrust enforcement.  Accordingly, the usual
presumption that the federal government welcomes coordinate state
enforcement "to combat (a particular) evil" (California v. Zook, 336
U.S. at 737;  Union Brokerage Co. v. Jensen, 322 U.S. 202, 209 (1944))
applies with particular force here.

   As this Court observed 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, an unexpressed purpose
to nullify a State's control over its officers and agents is not
lightly to be attributed to Congress." Such an "unexpressed purpose"
cannot be inferred here, and accordingly, state statutes allowing
recovery by indirect purchasers for overcharges resulting from
anticompetitive activities are not preempted by the Clayton Act.  See
Crown Oil Corp. v. Superior Court, 177 Cal. App. 3d 604, 223 Cal.
Rptr. 164, appeal dismissed, 479 U.S. 879 (1986);  Note, supra, 34
Stan. L. Rev. at 212;  Note, State Indirect Purchaser Statutes:  The
Preemptive Power of Illinois Brick, 62 B.U.L. Rev. 1241 (1982).

                              CONCLUSION

   The judgment of the court of appeals should be reversed, and the
case remanded for further proceedings.

   Respectfully submitted.

   CHARLES FRIED

      Solicitor General

   CHARLES F. RULE

      Assistant Attorney General

   THOMAS W. MERRILL

      Deputy Solicitor General

   KENNETH G. STARLING

      Deputy Assistant Attorney General

   ROY T. ENGLERT, JR.

      Assistant to the Solicitor General

   CATHERINE G. O'SULLIVAN

   MARION L. JETTON

      Attorneys

   NOVEMBER 1988

   /1/ See J.S. App. A97 (citing Ala. Code Section 6-5-60 (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, recover the sum of $500.00 and all actual
damages"));  J.S. App. A116 (citing Cal. Bus. & Prof. Code Section
16720 et seq. and a state unfair competition statute);  see also 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 or her business or property * * *
regardless of whether such injured person dealt directly or indirectly
with the defendant");  J.S. App. A132 (citing Minn. Stat. Sections
325-8011-325-8028 (1978));  see also Minn. Stat. Ann. Section 325D.57
(West Supp. 1988) ("(a)ny person * * * injured directly or indirectly
* * * shall recover three times the actual damages sustained").

   /2/ See J.S. App. A80 (citing Ariz. Rev. Stat. Ann. Section
44-1402);  see also Ariz. Rev. Stat. Ann. Section 44-1408 (1987) (the
State or any other person "threatened with injury or injured in its
business or property by a violation of this article may bring an
action for * * * damages sustained").

   /3/ The court also certified a fourth class, entities that
purchased ready-mix concrete for delivery within the State of Arizona
(J.S. App. A3).

   /4/ Pursuant to the settlement agreements, the plaintiffs released
all claims, under state law or federal law, based on either direct or
indirect purchases of cement.  See, e.g., J.S. App. A141, A153,
A154-A155.

   /5/ At least 12 jurisdictions, in addition to California,
Minnesota, and Alabama, have indirect-purchaser statutes that
expressly give indirect purchasers standing to sue.  Others have
statutes that, like Arizona's, may be interpreted to permit
indirect-purchaser suits.  See U.S. Amicus Br. in support of
appellants' Jurisdictional Statement 6 n.8.

   /6/ The federal statute that the court of appeals held has
preemptive effect in this case, Section 4 of the Clayton Act, 15
U.S.C. 15, extends to victims of violations of any of the antitrust
laws the remedy originally provided under Section 7 of the Sherman
Act, 26 Stat. 210.  See H.R. Rep. 627, 63d Cong., 2d Sess. 14 (1914).
Section 7 of the Sherman Act was repealed in 1955 (Act of July 7,
1955, ch. 283, Section 3, 69 Stat. 283) on the ground that it was no
longer needed because Section 4 of the Clayton Act provides an
equivalent remedy.  See S. Rep. 619, 84th Cong., 1st Sess. 2-3 (1955).

   /7/ H.R. Rep. 24, 67th Cong., 1st Sess. 2 (1921) ("In 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.").

   /8/ In holding that Ohio's statutory scheme, which specifically
precludes the application of any statute of limitations to antitrust
suits under state law, was not preempted by the four-year statute of
limitations in Section 4B of the Clayton Act, 15 U.S.C. 15b, one court
of appeals remarked that, "(s)ince Congress was well aware that there
were state antitrust laws in effect and chose not to preempt them, we
believe that neither did it intend to preempt anything in them."
Pinney Dock & Transport Co. v. Penn Central Corp., 838 F.2d 1445, 1482
(6th Cir. 1988), cert. denied, No. 88-72 (Oct. 3, 1988).  Although the
court's absolutist statement may sweep too broadly, it properly
indicates that the presumption against preemption of state remedial
legislation in the antitrust field is well established.

   /9/ Even when the scope of liability is at issue, the line of
"state action cases" beginning with Parker v. Brown, 317 U.S. 341
(1943), 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 the States
must invariably conform to particular policies that this Court has
invoked in determining appropriate federal remedies for antitrust
violations.

   /10/ The court of appeals, however, misunderstood one of the
policies animating this Court's decisions in Hanover Shoe and Illinois
Brick.  See p. 19, infra.

   /11/ Congress itself on occasion has been willing to cope with the
complexities of calculating passed-on costs, and this Court has upheld
the constitutionality of requiring claimants of a tax refund to prove
that they did not pass on increased costs.  See Anniston Mfg. Co. v.
Davis, 301 U.S. 337, 347-356 (1937).

   /12/ The very same passages from those opinions that the court of
appeals relied on have been cited by this Court for a quite different
proposition (Blue Shield v. McCready, 457 U.S. 465, 473 n.10 (1982)):
"Only by requiring violators to disgorge the 'fruits of their
illegality' can the deterrent objectives of the antitrust laws be
fully served.  Hanover Shoe Inc. v. United Shoe Machinery Corp., 392
U.S. 481, 494 (1968).  See * * * Illinois Brick Co. v. Illinois, 431
U.S. 720, 746 (1977)."

   /13/ No one has suggested that the state statutes at issue in this
case would be construed to allow a passing-on defense against a direct
purchaser, in an action in which the direct purchaser asserts its
federal-law right to recover treble damages.  Nor would the state
statutes take away from the direct purchaser and give to the indirect
purchaser a portion of the damages recovered under the federal statute
that is attributable to passed-on overcharges.  If any state statute
is so construed, it would be preempted as so applied, as being in
direct conflict with the direct purchaser's federal recovery rights
set forth in Hanover Shoe.  See Note, Indirect Purchaser Suits Under
State Antitrust Laws:  A Detour Around the Illinois Brick Wall, 34
Stan. L. Rev. 203, 208 n.24 (1981);  Hines v. Davidowitz, 312 U.S. at
67.  In this regard, we agree with the court of appeals (J.S. App.
A21), but we believe the court was not at that point addressing the
genuine issues that would in fact be raised by application of the
state statutes.

   /14/ In this case, of course, there presumably will be some
reduction of the direct purchasers' recovery from the settlement fund
if the indirect purchasers are also allowed to share in the settlement
fund.  That result occurs, however, not because the state statutes
take anything away from the direct purchasers but because the direct
purchasers elected to participate in a settlement in which the
defendants' total liability is fixed and to leave for later resolution
the question whether they must share that fund with the indirect
purchasers.

   /15/ The court of appeals did not explain how closely the state
statute would have to resemble the federal antitrust laws for
liability to be considered duplicative.  Not only "little" Sherman
Acts, but other state laws providing damages for anticompetitive
actions, could be considered to duplicate Clayton Act damages.

   /16/ Essentially for the reasons given by the court of appeals
(J.S. App. A24), we assume for the purpose of analysis that some or
all of the indirect-purchaser claims in this case are duplicative of
direct-purchaser claims.  See U.S. Amicus Br. in support of
appellants' Jurisdictional Statement 15 & n.18.  Unlike the court of
appeals, however, we believe that the state statutes survive federal
scrutiny even on that assumption.

   /17/ Indeed, there is not even a rule protecting defendants against
additional liability under other federal provisions.  For example,
under federal law alone a defendant may be required to pay criminal
fines in addition to treble damages.  See, e.g., New York v.
Hendrickson Bros., 840 F.2d 1065, 1086 (2d Cir. 1988);  see also
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);  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).

   /18/ It is possible that the States' indirect-purchaser statutes
might be construed, as a matter of state 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 question of state
statutory construction (J.S. App. A24), nor do we.  This case does not
involve any issue about allowing a single plaintiff to recover damages
twice for the same overcharge, under both federal and state law.  Such
recovery would generally be barred by recognized principles concerning
merger and splitting causes of action.  See Restatement (Second) of
Judgments Sections 18, 24-25 (1982).  See also U.S. Amicus Br. in
support of appellants' Jurisdictional Statement 16 n.20 (collecting
cases).