good morning ladies and gentlemen i want to announce for the record that judge chaney and i are joined this morning by judge rovner who will be on the video you will see her on a little monitor at the stand and we can see her right here so thank you your honor may please the core of the court question plaintiffs believe presented in two different contexts by this appeal is what does it mean in a price fixing case to be an indirect purchaser for one's own your house and not for resale to the dissenting justices in the illinois brick case to the supreme court of minnesota in the lawrence case to words of justice brennan who receives a windfall that's what loric says to in minnesota and other state courts if we put the whole and i trust claim into the hands of the direct purchaser from the buy later but let me say that of course we're familiar with illinois brick and that line of cases and also the fact that some states have illinois brick repeal or zz but associated general contractors deals with a somewhat different question there may be overlap to a certain degree but it deals more broadly with the direction is of an injury in that case unions it could be stockholders it could be employees who could be others and the general concept is at some point there's a remoteness factor that enters in above and beyond any indirect purchaser if you had manufacturer middlemen middlemen middlemen middlemen middleman and sign only somebody who makes a fabricated good where let's say just the sake of argument there's only a five percent value added from the original card ally's price i'm not sure the illinois brick the i just to come into that question through through this door the dissent in illinois broke and there in illinois brick repeal are states and lorax all say that the brunt of the injury is borne by the final indirect purchaser  sorry you are due to start what i was going to say is the dissenting opinions in illinois brick are written as are all all judicial opinions against the backdrop of the fact pattern that the court had before it and i'll just throw out one thing that yes i don't know about your tickler clients and that is since since the new and i'm going to get to the new definition of the of the products involved but under the new definition of the products involved you're talking about refrigerators you're talking about washing machines i don't know a couple of things about that i don't know what percentage of those products is accounted for by steel i don't know to what extent they're substitutes for steel such as aluminum or other kinds of molded plastic products or the like i don't know to what extent there's a list to city of supply from foreign suppliers there are lots of questions that would go to the degree to which you're even injured by the alleged cartel it's a degree to which you're injured varies with all those all component of the building here in the lord spoke but it was the purchaser of those blocks it wasn't all the way down it wasn't people who went to a starbucks in the building and the starbucks was paying more rent because the building was more expensive because of the current tell i agree or here there are three or four steps of distribution for our clients from me and your clients are fabricating the steel as an input product into a completely different final product in intermediate actor here are the you know the building that was purchased was different in lark's the product was and this is the minnesota law honor was a chemical that you treat rubber with when you make rubber that was actually consumed by the manufacturer is there but because that was price fixed that increased the cost it was passed down to three to seven depending on whether you believed everything that the man of steel that would be too insufficient to trigger standing i mean how about a product where ninety nine percent of the steel alternately came from a non defendants the most steel in them automobiles we allege that the demand for the product of the steel companies is soley from downstream and that we allege that these price increases to me the most about your case because i will grant you that the district court did not look state by state to see which states in direct purchase or repeal statutes may have allowed your case to go forward and which did not the other thing that district judge was concerned about was the sea change in the definition of steel products between your original complaint which were products manufactured by the defendants steel she court will galvanize sheeted cetera et cetera and the two thousand and fifteen definition of consumer steel products washing machines you know all all the rest of of that clothes dryers ovens air conditioner units barbecue grills and so forth i think that that is a very very significant change and one which the judge may not it at all have abused his discretion to say this is a completely new lawsuit and thus one that's late you know we do think and might i just add i have the very same question and if in fact the products that are described in the first complaint in the amended complaint are the same then why in the world with the nameplate you decide to  complaint and the brief but but the question is whether this change is something that so changed the lawsuit that it needs to be regarded a new for the statute of limitations and the answer to that question is found in the original definition of the complaint whether it in compost washing machines refrigerators and the other product and i can't see how in the world it did well it my washing machine doesn't look like a definition all but can i just hear i can i just respond on that but the direct purchasers had in their definition of steel products made by the defendants and all other products made by the defendants we didn't say that at the end of paragraph three on steel products here are we said and a variety of other products derived from raw steel and we cited in our reply brief to justice scalia's book on interpretation of where  and we put in include but not limited to and a variety of other products that if we had just said include that includes not a good judge schoolies example in his book justice scalia's example in the book was if there's if you say it includes three a it also includes the entire population of india i mean it could be three hundred lawyers in there they have a lot of lawyers in india but it's that makes it meaningless there are other canons of construction that are equally respectable that suggests that when you have a list the items in the list are known by their neighbors to avoid the latin and it's all other products when you say it in the first definition that you use d your original complaint when you said and a variety of other products derived from ross steel that means it's been fabricated to the point of being a flat sheet a coil a beam a rail raw steel is is is molded into a number of shapes before it then goes on to be fabricated downstream you're on your just go back to the core to the core question the meaning of this and and if that's ok if the the answer is that we said that we are in direct purchasers of and for and use and not for resale of these steel products and we said that a paragraph twenty six that's the class definition and a paragraph thirty one we describe the effects on auto manufacturers appliance manufacturers and others and a paragraph twenty three was here amended no no no no of our original complaints are your honor to laugh but i i i'm sure in the original complaint the definition we gave is from paragraph three to paragraph twenty six to paragraph thirty one to paragraph twenty three it's not all in one place i apologize but what that says is i'll just repairing you think the defendant should have been on notice from your original complaint that every single product in the united states that's manufactured with steel as any amount of the component was what you intended to be suing about move and interpret in the complaint the plaintiff suits in compas is any consumers still product from refrigerators to washing machines to other consumer products it's more akin to a case for pizza from cheese and that is what these four paragraphs together say you honor and if i could just read twenty three briefly and you think that minnesota would allow that kind of completely unlimited case yes if it's an indirect purchaser case through three to seven levels the  three seven levels of of of pass on your the highest court said that doesn't trouble us at all what the court said was the visa type of case where you have some but there anybody can sue the retailer but they're not getting the credit card service if you're  why i come back to the change i mean you you are looking at just rule fifteen c but there is also this was not an amendment as a matter of course this was an amendment that you wanted to make with the permission of the court i think correct me if i'm wrong that we well the the motion to dismiss was filed and we did a stipulation to do it to complain had not been previously amended that it wasn't within twenty one i'm l no no you're right you're on it was there was permission there was a stipulation and permission right and so that's what takes me to the aspect of rule fifteen that leads me in the direction of thinking that there is some discretion here that it's not purely to novo review because if it's not an amendment as a matter of course under fifteen a one then what the rule says is in all other cases a party can amend only with written consent of the court's leave the court should freely give leave when justice so requires that phrase justice so requires connotes discretion to me your honor i understand i think that bridge was crossed and i think the key issue in the judge's opinion here was what does the complaint you original complaint what's in the new complaint does what's in the new complaint arise out of the drams actions occurrences or or conduct set forth or attempted to be set forth in the original complaint and paragraph twenty three says the plan of class is being squeezed by the deal mills market domination and shorting charger sought in which in direct consumers of steel products the people who consume them ultimately paid substantially more for the steel products during the conspiracy period than they would have paid in a truly competitive market environment that's right out of the supreme court dissenting opinion that it's passed down and we paid super competitive prices into it and that's actually both issues arise from this what does it mean to be an indirect purchaser we say paragraph three covers us but if paragraph three stops at some point your honor we still are the injuries consumers  it and if you can help me that degree well your are the our facts are that number one these defendants have eighty to eighty five percent of the market number two they restricted the supply  we go on for seventy or eighty paragraphs to show the magnitude of these meetings and restrictions then we allege what happened or paragraphs in the amended complaint you're really talking about now your are paragraphs one fifty three to one sixty one we go through these intermediary purchasers of steel appliances you don't show any minnesota you don't have any person from minnesota for example do we know that anyone in minnesota was injured by this at all yet well your hon r it's going to cover minnesota the end of the answer is going to cover minnesota we have class standing the court held below your are we have we don't have a name play but we have class standing to sue for these states and understand seventh circuit line of the court's decision below don't manufacture had to pay tax to get higher prices and had to try to pass it on and the myth and we quote many appliance manufacturers who did say that they passed on the prices due to the increase in the price of steel and the defendant it five percent is still in restricted the supply and they said they had shortages and so it's just it's a reasonable inference at that point your honor that the consumers pay the higher prices that that's how we traded sorry typical right thank you you will have a minute or so for  and they please the court counsel that there are two independent grounds on which this court can affirm the judgment below and with the court's permission i would like to begin with the limitations period that devoted most of the previous argument that there are several points to make here your honor the first is that a direct purchase or a complaint had been filed twelve days earlier and i recognize your honour's point that it needn't matter where the language came from but for purposes of context the direct purchaser complaint had been filed twelve days later this complaint is filed that is largely verbatim with the direct purchaser complaint including for the most part the definition of the steel products am to mr lovell says though that beyond the definition you did get notice from that first indirect purchaser complaint that the downstream market was in play and your honor we respectfully disagree with mr wattles point paragraph twenty three speaks of purchasers but this is an indirect purchaser complaint and so what the complaint has done is said that to the extent that individuals have purchased quail and sheep and other products from the mills mill output as referred in briefs to the extent in those are being purchased indirectly then indeed they are representing the indirect purchasers and it is their own market or are there intermediaries who purchase mill output and then resell to others sure your honor in fact the one hundred seventy one dollars worth of steel tubing that day that the plaintiff here the original plaintiffs supreme auto purchased in response to an interlocutory said yes i purchased this and gives the name of the retailer that from which he purchased  entity from which he purchased that steel tubing the case proceeds and i should add he's referring to paragraphs thirty and thirty one in addition to paragraph twenty three thirty and thirty one if anything reinforce the notion that they're talking about middle output when they're talking about what they're in direct purchasers are buying thirty talks about raw steel and what it can be made into and then thirty one talks about steel products the defined term that that the indirect purchasers have bought talks about steel products being used in a multitude of manufacturing industries talking about auto in train and ship this only makes sense this too is taken from the direct purchaser complaint and it only makes sense if we're talking about indirect purchasers of mi output so when according to you did you first become aware that the plaintiffs were expanding beyond mill output to final consumer products is it when the depositions were sought or at the discovery sure honor it so to provide a bit of context and answer the it that the short answer is it started in december of two thousand and fifteen the context for that is starting with an order from the court in late two thousand and nine and this is dock seventy six in the docket sheet below and that was granting a agreed motion which is stock sixty seven of the the court's order permitted discovery to proceed in our indirect case basically  happening in the direct case the plaintiffs were permitted access and so forth to what was being exchanged again on all fours with the notion that these two are essentially in tandem with the exception of the fact that these are in direct purchasers of mill output the agree order permitted the plaintiffs to seek additional discovery to the extent that it would depart from the direct purchase or discovery that didn't happen until we get to december of twenty fifteen so now we're nearly eleven years after the start of the class period which is january first two thousand and five and we're more than seven years after the original complaint was filed longest limitations period for any of the states for any of the claims the six so at that point were now seven plus years later they started issuing third party subpoenas to the likes of whirlpool lowe's home depot seeking information about the purchase and sale of a variety of steel products at this point the defendants are for the first time on notice that the plaintiffs have construed their definition of products to include something not just beyond mill output but indeed something that substitutes for mill out so i theory that in any injuries purchasers to you have to be talking about the exact product that the direct that the alleged cartel astray the alleged monopolist has created so mill output here and that intermediate products down the line somehow break that chain we want to we have a separate argument and there's a separate basis for the judgment below that this is too attenuated and i'm very happy to discuss where we would draw that line as well you're right what they're related they are sense that if if if that's not your thing well if your theory is just a pure look at so they sent in get out and somebody else put it in a warehouse and somebody else saw it and so it's all that same ingots in the divine and or stand out and right it's very easy to see that the change in definition would be a very material change right but also very easy to see you know why that's a rather narrow view indirect purchase or suit that you are the direct purchaser product you know there are a lot of states that have these laws exactly your honor and even as as late as two thousand and twelve there was a motion that was filed in the course this  there's not a lot going on in this case but one thing that does occur in two thousand and twelve there's an agreed motion by the two parties to move a case that's pending in tennessee and other indirect purchaser case to the northern district and in that agreed motion the parties embrace language from tennessee district court the date that says these two complaints should be consolidated because they have virtually the same product class and the attached complaint to fine steel products in no uncertain terms to be materials sold by the defendants so this is the this is the events that are transpiring everyone is on the same page that we're talking about mill output being resold to indirect purchasers there is an additional layer here and this goes to your honor's point about  abuse of discretion judge shaw was well aware of the prejudice that said issue it's this is not an academic distinction between one very narrow product universe and an entirely new it's not even an expansion entirely new product universe of consumer products everything from indeed this pen to a toaster to a bicycle to a washing machine and a toaster and there was no noticed until december of two thousand and fifteen that this was going to be in play what happens when you shift to that sort of product universe all of a sudden the information held exclusively by those interim manufacturers distributers retailers and so on becomes the showcase of what  what are they how much are they paying well that's my concern how much steel winds up in those products where did that steel come from absolutely and judge shot recognize and he says this fulfilled his original opinion and his opinion on denial of reconsideration that we're at this point now we're asking non parties who we don't control for specific data that is now eleven years old that we would need to defend against claims that all of this these alleged price increases are being passed through those would become the showcase of summary judgment and trial and so forth and now all of that data is in the hands of third parties and it's a decade plus old and so that prejudice that finding a prejudice is more than sufficient frankly  easily on abuse of discretion standard now turning to your honor's question unless the court has further questions about the limitations period i'll address your honor's question regarding the other basis for the district court's decision in this case is now clear from the reply brief as well that every state including minnesota which we agree by the way is not before the court now because we're moving merely to dismiss sixteen plaintiffs there their complaint and none of that she was announced i mean if the class were certified exactly under pain against county of cain and other similar cases and morrison correctly are absolutely right but in the absence of that they were just proceeding with you know we're moving to the smiths sixteen plaintiffs and none of them have any allege any connection whatsoever to minnesota but even putting that to one side isn't it troublesome that the district court didn't take the time to look at the law in each of these states because it seems clear to me that some of them have a more aggressive you let's say about direct purchase or suits and think that that's the best way to eight of the court's opinion the court does walk through to be sure the court collects it some into what we believe to be drug trial buckets but he does walk through each and every jurisdiction including those that aren't necessarily before the court although he treats them separately first treating the ones that represent the nine plaintiff repeal or states so i think the court here clearly did look at these and does treat each of these states albeit at times he collects them together again to sort of dock trying to roups the second point i would make is if we just look at more explore excess sort of the one case that has been talked about again it's not right case this court needs to grapple with frankly given that the nature of the plaintiffs here but let's take a quick look at more ex lorax makes clear on its face that proximate cause is required size as much or it's further makes clear that remoteness is an issue that all minnesota courts must consider in deciding whether there's standing or proximate cause for purposes of state into trust claims now can you think of any other case in the illinois brick line where somebody has said in one of the repeal or states you have to be of course going to repeal are states where somebody  said i can see that you're an indirect purchaser but this is too much for want of a nail the kingdom was lost you know you look you're just too far out down the line and and so we're going to cut you off for proximate cause reasons even though we can see you know that there was something chain of transactions that brought this down to you so there are there are a number to say indirectly there are certainly cases that we have cited in our brief like southard which is steps between the financial overcharge alleged there and what consumers were and i should add that works itself distinguishes the visa card cases not to say they were incorrectly decided but to warn that any case that results in every minnesotan being a potential plaintiff is probably a bridge too far and those words i think bear strongly on this case i'd it's very hard to imagine that that's the court who said those words would uphold this complaint in this although your theory has to be that if it's all kinds if it's all consumer products consumer steel products are actually consumer steel products for end use that would be hard to find a minnesotan that didn't have at least one yeah under that definition i think they have defined the class in a manner that runs afoul of what several federal courts and lawrence itself have warned against which is in listing every consumer as a potential antitrust plainti judge dow said in the dairy farmers case if you see that it's not this is it's not direct evidence that you have violated proximate cause but it's very strong evidence it's only certain that it's the state rules of proximate cause that apply here in that there no federal court dimension in other words you know if you're if you're pursuing this case in a federal court sure obviously we're talking about article three standing which i believe it or not but if we were then it wouldn't matter to us whether the state court was willing to entertain the federal court has to apply article three anyway so is there anything of that sort well at the ball and while we are being applied here and that's something that i think in be forgotten even though we're talking about the state law claims that the admonition from those decisions we're talking about rule eight pleading in a federal court i do parenthetically want to add to my answer to your honor's earlier question i believe in the in the california electric wholesale cases those you were we were talking about a single chain of distribution in the courts finding too much  issue or the proximate cause issue you know they don't offer us at the end of the day they don't offer anything other than the following this is the rule as close to a rule as they come which is to say they want the court to announce a rule that if you are an indirect purchaser as they d anywhere in the chain that's all you need to say in order to plead proximate cause even though there are at least six deficiencies that are present here even though in the combination of these six it's ok because they've said they're indirect purchasers they haven't told us which products they've purchased muscle at much less that what percentage and we hear from counsel that an acknowledgement as they must that the percentage matters it's going to determine the level of the product in this case is transformed dramatically as it moves through a very very lengthy distribution chain that includes reshaping and creating essentially new products as it moves down the line we end up in a very different market i don't think anyone would contend that the market for sheet steel is the same as the market for pens or toasters and a number of district court cases including again in re dairy the do you ram case have treated changes of that nature as different markets you end up with every consumer in the country being a potential plaintiffs based on the breadth of the definition so can i ask you about your your idea is that they they need to show that it was one of the defendants who supplied the sea it is  understand it one of the defendants who who supplied the steel that is then later fabricated on down the chain still in some ways it's a commodity it's manufactured to different specifications in the light and we've seen this problem before where you know maybe eighty five percent of the market is covered by defendants and the other fifteen percent isn't and there are various theories of market share liability and others why do we need to trace you know exactly which defendant if the defendants have created a cartel price everybody else is going to price comfortably just under that cartel umbrella anyway why does it matter sure so it's to where they've been in part the answer is as simple as it's the way they put the case and paragraph thirty nine of their current complaint this is the amended complaint they define that's and the classes plaintiffs in the class have purchased steel products that contain steel manufactured by defendants so in essence that's what they have limited themselves to they have not played an umbrella  the second point i would make in this goes to the eighty to eighty five percent number that was used and a handful of occasions in the opening argument yes both the original and the amended complaint include the reference to eighty to eighty five percent of capacity and that again is borrowed from the original director purchaser complaint filed back in september of zero eight what we buy that that's a that's about raw steel output the relevant figure in our view and the one that we include in our pr the amount of steel that is consumed domestically how much of it comes from u s producers not just these defendants but all u s producers and what those statistics suggest is that between a third and a quarter of steel consumed domestically comes from  a very long history of that with anti dumping and countervailing duties and cetera yes there is a lot of foreign capacity right exactly and that we think would very much they would have to weed all of that out and the courts have held nearly alleging in a conclusory fashion plaintiffs refer to the fact that they make allegations in their complaint in paragraphs the one fifty one sixty s that the referring to public filings five various intermediaries suggesting that the price is in fact passed down the chain as we point out in our brief as many of those quotes actually show the contrary you have a number of intermediaries truthfully relating to their investors and to the marketplace that they may not be able to pass  e the amount of any overcharge in any of the raw materials that they used to make their profit may not even care if the steel is only five percent of the value added to the product might be something they could absorb correct and depending on the elasticities of demand whether that's even feasible and that's something that many of them quite candidly submit in those very filings that are quoted in the complaint so i you have on the one hand of very conclusory an adequate can you know statement that we can will figure out how to trace at the same time you have statements by the intermediary saying we actually may not be able to pass these any any overcharges the receive on for each of these reasons we would ask this court to affirm instructs the deficiencies in complaint should be exposed at the time of the minimum expenditure time and money by the parties and the court that time is now we are many many years into this and for either or both of the grounds relied upon by the district court we would ask any consumer still product complaint paragraph three they tied this and they went on and they said from refrigerators to washing machines to other consumer products defense didn't say anything about discovery think they cited saw it in the complaint it was a motion to the complaint and in discovery your honor if they thought that we had gone nine miles and there were explosives in them to liability they would have objected and they would have said you can't expose us to all this liability when you didn't plead originally instead they whirlpool and the others that the plaintiffs were actively pursuing discovery against these and use are products of your own we we did seek discovery from the defense at the outset a no no but from whirlpool and right yes your honor it wasn't until yourself were just asking for the hundred fifty some odd dollars or whatever it was for the you how do they know you're on we asked them for all their customers and we in the discovery we did we asked them for all their discoveries number one but number two if you go back to their own statement about paragraph three they can know they can't dismiss the complaint based on discovery they can only dismiss the complaint based on what's in the complaint they cited to this paragraph three which the plaintiffs say you know the way we interpret it your honor it's one way to have notice here the other is that the later complaint arises out of we think if you take paragraph three and their interpretation of paragraph three that they cite to in their own admission plus the indirect purchaser of the products plus the indirect consumers who are squeezed by this plus the allegations in the original complaint paragraph thirty one of how this is passed on to them the basis for their admission here and the basis for why they did that is the original complaint ok and i think  now just to conclude the reason i'm just want to say the reason we we switched we say that the stuff that's in the complaint now was always included but we acknowledged to try to limit it to all these products of steel to our not the products where this most of the steel went the defend