Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-05944/USCOURTS-cand-3_07-cv-05944-97/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 15:1 Antitrust Litigation

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United 

States District 

Court 

For the Northern District of California 

IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF CALIFORNIA 

IN RE: CATHODE RAY TUBE (CRT)

ANTITRUST LITIGATION 

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MDL No. 1917 

Case No. C-07-5944-SC 

ORDER GRANTING IN PART AND 

DENYING IN PART DEFENDANTS' 

JOINT MOTION FOR SUMMARY 

JUDGMENT

This Order Relates To: 

DIRECT PURCHASER CLASS ACTION 

CASES 

I. INTRODUCTION

This antitrust case arises from allegations that Defendants 

fixed the prices of cathode ray tubes ("CRTs"), which were common 

components of television sets and computer monitors before the 

advent of flat-panel screens. On December 12, 2011, Defendants 

filed a joint motion for summary judgment against nine members of a 

purported class of alleged direct purchaser plaintiffs ("Named 

DPPs").1 ECF No. 1013 ("MSJ"). The Named DPPs are retailers who 

 

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 The nine Named DPPs are: Arch Electronics, Inc.; Crago d/b/a Dash 

Computers, Inc.; Electronic Design Company; Meijer, Inc. and Meijer 

Distribution, Inc.; Nathan Muchnick, Inc.; Orion Home Systems, LLC; 

Radio & TV Equipment, Inc.; Royal Data Services, Inc.; and Studio 

Spectrum, Inc. The Named DPPs are only nine of the thirteen 

members of the entire putative DPP class. As explained in Section 

IV.A infra, the term "direct purchaser" is a misnomer as applied to 

the Named DPPs, who are actually indirect purchasers. However, the 

Court uses the term "DPP" to stay consistent with past orders and 

to differentiate the Named DPPs from a putative class called the 

indirect purchaser plaintiffs, as well as from the direct action 

plaintiffs. 

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purchased televisions and monitors containing CRTs (finished 

products or "FPs"), as opposed to purchasing the allegedly pricefixed CRTs directly. Defendants argue that, because the Named DPPs 

did not purchase CRTs directly, they lack antitrust standing under 

Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977). 

On May 31, 2012, the Special Master2

 recommended that the 

Court grant Defendants' motion and enter summary judgment against 

the Named DPPs. ECF No. 1221 ("R&R"). The Court ordered the 

parties to submit any briefs addressing the R&R simultaneously, and 

permitted a separate plaintiff group consisting of large retailers 

who declined to join the DPP class action, the direct action 

plaintiffs ("DAPs"), to participate in the briefing. ECF No. 1240. 

The Court received three briefs. Defendants move for the Court to 

adopt the R&R. ECF No. 1274 ("Defs. Brief"). The Named DPPs have 

filed an objection to the R&R under seal ("DPP Brief").3 The DAPs 

also object. ECF No. 1273 ("DAP Brief"). For the reasons set 

forth herein, the Court GRANTS Defendants' motion for summary 

judgment in part and DENIES it in part. 

II. BACKGROUND

The factual and procedural background of this case is familiar 

to the parties and the Court, so only a brief review is provided 

here. Defendants are allegedly manufacturers of CRTs and, in some 

 

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 On June 16, 2008, the Court appointed the Honorable Charles A. 

Legge, United States District Judge (Retired), as a Special Master 

to assist the Court with this litigation. ECF No. 302. 

3

 The Court received the Named DPPs' brief in chambers under seal. 

See ECF Nos. 1271 (motion to seal), 1276 (notice of errata and 

amended motion to seal), 1300 (order granting amended motion to 

seal). 

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cases, of FPs as well.4 They are alleged to have engaged in a 

conspiracy to fix the prices of CRTs. The thrust of the DPPs' 

allegations is that the allegedly price-fixed CRTs were 

incorporated into FPs like television sets and computer monitors 

and, hence, inflated the price of the FPs that the DPPs purchased. 

See generally ECF No. 436 ("DPP Compl."). The DPPs' complaint has 

already survived a motion to dismiss. CRT, 738 F. Supp. 2d 1011. 

After the Court denied Defendants' motion to dismiss, Defendants, 

pursuant to Federal Rule of Civil Procedure 11, moved to strike the 

DPPs' allegations of a conspiracy to fix the price of FPs. The 

Special Master issued a report recommending that the Court grant 

the Rule 11 motion. ECF No. 947. Before the Court ruled on the 

Special Master's recommendation, however, the parties stipulated to 

the DPPs' withdrawal of those allegations. Specifically, the 

stipulation withdrew and struck the DPPs' allegations of "a 

conspiracy encompassing Finished Products . . . provided, however, 

that the issue of the possible impact or effect of the alleged 

fixing of prices of CRTs on the prices of Finished Products shall 

remain in the case." ECF No. 996 ("Stip.") at 2. 

Following this stipulation, Defendants moved for summary 

judgment on the ground that DPPs who had purchased FPs but not the 

allegedly price-fixed CRTs -- that is, the nine Named DPPs -- 

lacked antitrust standing under Illinois Brick. MSJ at 1. The 

Special Master, after briefing and a hearing, recommended that the 

Court grant the motion. R&R at 12-13. The Special Master first 

 

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 Though the DPPs have sued entire corporate families and often 

refer to them by a single name, a particular corporate entity 

within a family may be dedicated to selling FPs rather than CRTs. 

See In re Cathode Ray Tube (CRT) Antitrust Litig., 738 F. Supp. 2d 

1011, 1019-1020 (N.D. Cal. 2010) (Conti, J.). 

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found that the Named DPPs had never purchased a CRT, as opposed to 

an FP containing a CRT. Id. at 5. He based this finding on both 

the evidentiary record and the admission of counsel at oral 

argument. Id. (citing hearing transcript). The Named DPPs do not 

challenge this finding in their objection. See DPP Brief at 16. 

Beginning from the premise that the Named DPPs purchased FPs 

only, the Special Master concluded that they lack standing under § 

4 of the Clayton Act. That statute provides that only a person 

"injured in his business or property by reason of anything 

forbidden in the antitrust laws" has standing to bring an antitrust 

suit. 15 U.S.C. § 15. "The Supreme Court has interpreted that 

section narrowly, thereby constraining the class of parties that 

have statutory standing to recover damages through antitrust 

suits." Delaware Valley Surgical Supply Inc. v. Johnson & Johnson, 

523 F.3d 1116, 1120 (9th Cir. 2008) (citing Illinois Brick, 431 

U.S. 720). Only "the overcharged direct purchaser, and not others 

in the chain of manufacture or distribution, is the party 'injured 

in his business or property' within the meaning of the section . . 

. ." Illinois Brick, 431 U.S. at 729. 

The Special Master emphasized the bright-line nature of the 

Illinois Brick rule and described the Supreme Court, the Ninth 

Circuit, and district courts within the Ninth Circuit as having 

rejected the creation of exceptions to this rule. R&R at 7-8 

(collecting appellate cases), 8-9 (collecting district court 

cases). The Special Master noted that the Named DPPs relied on 

exceptions to the Illinois Brick rule that the Third Circuit 

articulated in In re Sugar Industry Antitrust Litigation, 579 F.2d 

13 (3rd Cir. 1978) and In re Linerboard Antitrust Litigation, 305 

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F.3d 145 (3rd Cir. 2002). Id. at 10-11. The Special Master also 

observed that Judge Illston of this Court relied on the same Third 

Circuit opinions in several rulings in the closely related TFT-LCD 

antitrust litigation, rulings which, the Special Master noted, were 

in tension with his recommendations. Id. at 10. The Special 

Master distinguished the facts of the instant case from those 

before Judge Illston. Id. at 11. He also concluded that Sugar and 

Linerboard "are not the law of the Ninth Circuit." Id. 

Accordingly, the Special Master recommended that the Court enter 

summary judgment against the Named DPPs on the ground that, because 

they did not directly purchase the price-fixed CRTs, they were "at 

best" indirect purchasers who lacked antitrust standing. Id. at 

12-13. 

III. LEGAL STANDARD

The Court reviews the Special Master's factual findings for 

clear error and his legal conclusions de novo. Fed. R. Civ. P. 

53(f)(3), (f)(4); ECF No. 302 ("Order Appointing Special Master") ¶ 

18 (parties stipulated to "clear error" standard for factual 

findings). Entry of summary judgment is proper "if the movant 

shows that there is no genuine dispute as to any material fact and 

the movant is entitled to judgment as a matter of law." Fed. R. 

Civ. P. 56(a). Summary judgment should be granted if the evidence 

would require a directed verdict for the moving party. Anderson v. 

Liberty Lobby, Inc., 477 U.S. 242, 251 (1986). "A moving party 

without the ultimate burden of persuasion at trial -- usually, but 

not always, a defendant -- has both the initial burden of 

production and the ultimate burden of persuasion on a motion for 

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summary judgment." Nissan Fire & Marine Ins. Co., Ltd. v. Fritz 

Companies, Inc., 210 F.3d 1099, 1102 (9th Cir.2000). "In order to 

carry its burden of production, the moving party must either 

produce evidence negating an essential element of the nonmoving 

party's claim or defense or show that the nonmoving party does not 

have enough evidence of an essential element to carry its ultimate 

burden of persuasion at trial." Id. "In order to carry its 

ultimate burden of persuasion on the motion, the moving party must 

persuade the court that there is no genuine issue of material 

fact." Id.

IV. DISCUSSION

A. Illinois Brick and Its Exceptions

The Named DPPs do not challenge the Special Master's central 

finding that they never purchased a CRT, as opposed to a FP. 

Hence, absent a showing of clear error, the Court adopts this 

finding and bases its de novo review of the Special Master's legal 

conclusions on the factual premise that the Named DPPs purchased 

FPs containing the allegedly price-fixed CRTs but did not directly 

purchase CRTs themselves. Accordingly, the Named DPPs, though they 

are members of a putative class that has been denominated "direct 

purchaser plaintiffs" throughout this litigation, are in fact 

indirect purchasers for purposes of antitrust standing. 

This brings the Named DPPs squarely within the scope of the 

Illinois Brick rule. The rule is straightforward: "only direct 

purchasers have standing under § 4 of the Clayton Act to seek 

damages for antitrust violations." Del. Valley, 523 F.3d at 1120-

21. "[I]ndirect purchasers in a chain of distribution are 

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precluded from suing for damages based on unlawful overcharges 

passed on to them by intermediates in the distribution chain who 

purchased directly from the alleged antitrust violator." Arizona 

v. Shamrock Foods Co., 729 F.2d 1208, 1211-12 (9th Cir. 1984) 

(citing Illinois Brick, 431 U.S. at 746). In other words, Illinois 

Brick prevents the offensive use of a "pass-through" theory. 431 

U.S. at 729-35.5 Under the general rule, then, only the first 

party in the chain of distribution to purchase a price-fixed 

product has standing to sue. See, e.g., Shamrock Foods, 729 F.2d 

at 1212 (where plaintiffs who paid only retail price abandoned 

allegations of wholesale price-fixing but continued to allege 

retail price-fixing, Illinois Brick was no bar because no passthrough was alleged). 

"The underlying purposes for the [Illinois Brick] rule are (1) 

to eliminate the complications of apportioning overcharges between 

direct and indirect purchasers . . . ; (2) to eliminate multiple 

recoveries . . . ; and (3) to promote the vigorous enforcement of 

the antitrust laws . . . ." ATM Fee, 686 F.3d 741, 748 (internal 

quotation marks and citations omitted) (quoting Kansas v. UtiliCorp 

United, Inc., 497 U.S. 199, 208, 212, 214 (1990)). With respect to 

the first, "apportionment" rationale, Illinois Brick "sought to 

avoid increasing the cost and burden of antitrust actions with 

complicated damage theories necessitating massive evidence to 

determine how the overcharge was apportioned throughout the 

 

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 In Hanover Shoe, the Supreme Court barred the defensive use of a 

pass-through theory, thereby allowing antitrust plaintiffs to 

recover damages in excess of their actual losses. Hanover Shoe, 

Inc. v. United Shoe Mach. Corp., 392 U.S. 481, 491-94 (1968). 

Illinois Brick extended the holding of Hanover Shoe to the 

offensive context. E.g., Del. Valley, 523 F.3d at 1120 (citing 

Illinois Brick, 431 U.S. at 728). 

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distribution chain." Shamrock Foods, 729 F.2d at 1212 (citing 

Illinois Brick, 431 U.S. at 731-32). As to the second, "multiple 

recoveries" rationale, the Ninth Circuit has explained that 

"allowing every person along a chain of distribution to claim 

damages arising from a single violation of the antitrust laws would 

create a risk of duplicative recovery against the violator 

unintended by Congress." Id. (citing Illinois Brick, 431 U.S. at 

730). This risk is especially severe in light of the availability 

of treble damages. Cf. Illinois Brick, 431 U.S. at 729-730. As to 

the third, "enforcement" rationale, Illinois Brick, as well as 

Ninth Circuit cases following it, have recognized Congress's intent 

to utilize overcharged purchasers as "private attorneys general" to 

deter anticompetitive behavior and enforce the antitrust laws. See

id. at 745-46; Royal Printing Co. v. Kimberly–Clark Corp., 621 F.2d 

323, 325-26 (9th Cir. 1980); Shamrock Foods, 729 F.2d at 1212; Del. 

Valley, 523 F.3d at 1124. The Illinois Brick rule is intended to 

promote enforcement of the antitrust laws by conferring standing on 

the party most likely to bring suit. See Illinois Brick, 431 U.S. 

at 745-46 (concluding that Congressional intent to empower private 

attorneys general "is better served by holding direct purchasers to 

be injured to the full extent of the overcharge paid by them than 

by attempting to apportion the overcharge among all that may have 

absorbed a part of it"); see also Shamrock Foods, 729 F.2d at 1212 

(citing Illinois Brick, 431 U.S. at 746-47) ("[D]irect purchasers 

absorb at least some and often most of the overcharges and are more 

likely to come forward to collect their damages" than indirect 

purchasers.). 

The so-called "Illinois Brick wall," Kendall v. Visa U.S.A., 

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Inc., 518 F.3d 1042, 1049 (9th Cir. 2008), looms as an imposing 

barrier for antitrust plaintiffs who, like the Named DPPs here, 

rely on a pass-through theory. The wall is not impassable, 

however, for although "the Supreme Court has expressed reluctance 

in carving out exceptions to the Illinois Brick rule, limited 

exceptions do exist." ATM Fee, 686 F.3d at 749. These exceptions, 

when applicable, permit indirect purchasers to pursue private 

treble-damages claims notwithstanding the usual prohibition of 

Illinois Brick. Hence, the question of whether the Named DPPs have 

standing does not turn solely on their status as direct or indirect 

purchasers. As indirect purchasers, their standing depends on 

whether any of the recognized exceptions apply. 

In ATM Fee, which was decided after the Special Master issued 

his report, the Ninth Circuit outlined the three recognized 

exceptions to Illinois Brick in systematic fashion. First, the 

panel explained that the Supreme Court has "recognized standing for 

indirect purchasers when a preexisting cost-plus contract with the 

direct purchaser exists." Id. (citing Illinois Brick, 431 U.S. at 

736; UtiliCorp, 497 U.S. at 217–18). "Second, indirect purchasers 

may have standing under a 'co-conspirator' exception." Id. (citing 

2A Phillip E. Areeda et al., Antitrust Law ¶ 346h (3d ed. 2007)). 

Under this exception, "an indirect purchaser may bring suit where 

he establishes a price-fixing conspiracy between the manufacturer 

and the middleman." Id. (quoting Del. Valley, 523 F.3d at 1123 

n.1). "However, for the indirect purchaser to merit standing under 

this exception, the conspiracy must fix the price paid by the 

plaintiffs." Id. (citing Shamrock Foods, 729 F.2d at 1211). 

Finally, under the third exception, "indirect purchasers may sue 

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when customers of the direct purchaser own or control the direct 

purchaser . . . or when a conspiring seller owns or controls the 

direct purchaser . . . ." Id. (citing Illinois Brick, 431 U.S. at 

736 n.16; Royal Printing, 621 F.2d at 326). "For example, an 

indirect purchaser may sue if the direct purchaser is a division or 

subsidiary of the price-fixing seller." Id.6

Importantly, these exceptions are not based on market-specific 

factors; indeed, courts regularly acknowledge Illinois Brick's 

warning against carving out exceptions for certain kinds of 

markets. E.g., UtiliCorp, 497 U.S. at 216 (citing Illinois Brick, 

431 U.S. at 744); Del. Valley, 523 F.3d at 1124 (same). Neither do 

they depend on case-specific factors. See UtiliCorp, 497 U.S. at 

216-17 (observing that Illinois Brick's rationale "will not apply 

with equal force in all cases" and that its economic assumptions 

"might be disproved in a specific case," but affirming its brightline rule regardless). The exceptions cover situations where 

either Illinois Brick's concern over multiple recovery and 

apportionment does not apply, or its policy of encouraging private 

antitrust suits would be stymied by mechanical application of its 

bright-line rule. See Shamrock Foods, 729 F.2d at 1214 (holding 

"that the policy considerations identified in Illinois Brick do not 

apply" in co-conspirator cases); Royal Printing, 621 F.2d at 326 

n.7 (establishing ownership and control exception because "blind 

 

6

 Before ATM Fee, the case law hinted at the possible existence of 

a fourth exception that would apply when "there is no realistic 

possibility that the direct purchaser will sue." 686 F.3d at 749 

(quoting Freeman v. San Diego Ass'n of Realtors, 322 F.3d 1133, 

1145-46 (9th Cir. 2003)). The ATM Fee panel explained, however, 

that Freeman did not create a fourth exception. It simply restated 

the ownership and control exception already established by Royal 

Printing. See id. at 756. 

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application of the Illinois Brick rule would eliminate the threat 

of private enforcement" in such cases). Thus, in the instant case, 

the Court must attend carefully to the contours of the exceptions 

recognized by the Ninth Circuit, as well as to the policies of 

Illinois Brick justifying those exceptions. 

To begin, the Named DPPs do not allege that they had a 

preexisting cost-plus contract with any of the Defendants, so the 

first Illinois Brick exception clearly does not apply. See ATM 

Fee, 686 F.3d at 750. The other two exceptions, the co-conspirator 

exception and the ownership and control exception, bear more 

extended discussion, and the Court turns now to them. 

B. The Co-Conspirator Exception

The co-conspirator exception allows an indirect purchaser to 

sue when the direct purchaser conspires horizontally or vertically 

to fix the price paid by the plaintiffs. ATM Fee, 686 F.3d at 750 

(citing Shamrock Foods, 729 F.2d at 1211). Put another way, "the 

co-conspirator exception applies when the conspirators set the 

price paid by the consumer." Id. at 751 (citing Kendall, 518 F.3d 

1042); see also Shamrock Foods, 729 F.2d at 1211. Conversely, the 

exception does not apply if the plaintiff's "theory of recovery 

depends on pass-on damages." Id. at 755. The rationale for the 

exception is that co-conspirator cases do not implicate two key 

policies underlying the Illinois Brick rule -- the elimination of 

multiple recoveries by successive tiers of plaintiffs, as well as 

of the complicated apportionment of damages among them -- because 

the co-conspirator exception confers standing on only a single tier 

of plaintiffs, those who directly pay the fixed price. See

Shamrock Foods, 729 F.2d at 1213-14. Indeed, as the Ninth Circuit 

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recently explained, "this co-conspirator exception is not really an 

exception at all," but rather a straightforward application of 

Illinois Brick in situations where the direct purchaser is part of 

the price-fixing conspiracy and the plaintiff directly pays the 

price set by the conspiracy. See ATM Fee, 686 F.3d at 750. 

In this case, the DPPs have alleged a conspiracy to fix the 

price of CRTs, but they have expressly stipulated to the withdrawal 

of their allegations of a conspiracy to fix the price of FPs 

incorporating those CRTs. Stip. at 2. Accordingly, the conspiracy 

alleged by the DPPs extends only far enough to fix the price of 

CRTs. As the Special Master found, and the Named DPPs do not deny, 

the price of CRTs is not the price the Named DPPs paid. The Named 

DPPs paid only for FPs. Accordingly, because the Named DPPs' 

"theory of recovery depends on pass-on damages," the co-conspirator 

exception does not and cannot apply to them. See ATM Fee, 686 F.3d 

at 755. 

The parties' stipulation eliminates any genuine question of 

material fact with respect to the Named DPPs' purchase of the 

allegedly price-fixed CRTs. With respect to the co-conspirator 

exception, Defendants have carried their burden of production by 

showing that the Named DPPs cannot produce evidence sufficient to 

establish their status as direct purchasers of CRTs. Further, for 

the reasons just stated, Defendants have shown that they would be 

entitled to judgment as a matter of law if the Named DPPs relied 

only on the co-conspirator exception. Accordingly, the Court 

GRANTS Defendants' motion for summary judgment against the Named 

DPPs to the extent that Defendants' motion challenges the Named 

DPPs' right to proceed under the co-conspirator exception. 

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C. The Ownership and Control Exception

Though Illinois Brick generally bars federal antitrust suits 

by indirect purchasers, Ninth Circuit precedent "allow[s] indirect 

purchasers to sue 'where a direct purchaser is a division or 

subsidiary of a co-conspirator.'" ATM Fee, 686 F.3d at 756 

(quoting Royal Printing, 621 F.2d at 326). "Royal Printing created 

an exception when parental control existed, because applying 

Illinois Brick would eliminate the threat of private enforcement . 

. . and close off every avenue for private enforcement." Id.

(internal quotation marks and citations omitted). As the Royal 

Printing court explained: 

There is little reason for the price-fixer to 

fear a direct purchaser's suit when the direct 

purchaser is a subsidiary or division of a coconspirator. Even if the pricing decisions of 

such a subsidiary or division are necessarily 

determined by market forces, its litigation 

decisions will usually be subject to parental 

control. The co-conspirator parent will forbid 

its subsidiary or division to bring a lawsuit 

that would only reveal the parent's own 

participation in the conspiracy. 

621 F.2d at 326 (footnote omitted). 

Defendants argue that the Court must distinguish Royal 

Printing from the instant case on the ground that some of the Royal 

Printing plaintiffs purchased the allegedly price-fixed product -- 

paper -- while, in this case, no Named DPP purchased the allegedly 

price-fixed CRTs, as opposed to FPs which incorporated them. Defs. 

Brief at 20 (citing Royal Printing, 621 F.2d at 326-27). The Court 

disagrees. For the reasons set forth below, the Court concludes 

that Royal Printing controls here and that the Named DPPs have 

antitrust standing under it. Because Royal Printing controls, the 

Court reviews its facts and holding at some length. 

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 1. Royal Printing's Facts and Holding 

In Royal Printing, two plaintiffs, a printer and a grocery 

store, brought a treble-damage antitrust suit against a group 

consisting of the nation's ten largest paper manufacturers. 621 

F.2d at 324. The manufacturers did not sell their paper directly, 

but rather distributed it through two kinds of wholesalers: (1) the 

manufacturers' own wholesaling divisions or wholly-owned wholesaler 

subsidiaries, and (2) independent, unaffiliated wholesalers. Id. 

The wholesalers thus were direct purchasers, because they bought 

paper directly from the accused manufacturers. See id. at 326-27. 

Each defendant-affiliated wholesaler sold paper manufactured by all 

of the defendants, "not limiting themselves to in-house products." 

Id. at 324. The court noted that wholesale prices were set by 

market conditions, meaning that the conspiracy alleged among the 

paper manufacturers did not extend to the wholesale level. See id.

at 324 n.1. 

Crucially, the printer and grocer never bought paper directly 

from the allegedly conspiring manufacturers. Id. at 324. They 

bought paper only from non-conspiring wholesalers. Thus, they were 

indirect purchasers whose suit Illinois Brick normally would bar. 

See id. at 325; see also ATM Fee, 686 F.3d at 754 (to be a direct 

purchaser, "the price paid by plaintiffs must be the price set [by 

the conspiracy] (not merely 'fixed' in some broad sense)"). The 

printer, however, had purchased some paper from wholesalers owned 

or controlled by two of the defendants. Royal Printing, 621 F.2d 

at 325. The paper the printer bought from those wholesalers was 

not manufactured by the wholesalers' respective corporate parents; 

it was manufactured by some other defendant. See id. 

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The Ninth Circuit held that the printer had standing to sue 

under a theory of joint and several liability, regardless of its 

status as an indirect purchaser and regardless of which defendant 

had manufactured the purchased paper, but only to the extent that 

it purchased paper sold by defendant-owned or -controlled 

wholesalers. Id. at 327. The Ninth Circuit reasoned that, because 

all the manufacturers were highly unlikely to authorize their 

controlled wholesalers (i.e., the direct purchasers) to sue and 

thereby risk revealing the conspiracy, the deterrent effect and 

enforceability of the antitrust laws depended on the existence of 

antitrust standing for indirect purchasers situated like the 

printer. Id. at 326-27. The grocer, however, which had purchased 

defendants' paper only through unaffiliated wholesalers, was 

"truly" an indirect purchaser under Illinois Brick and therefore 

barred from suit. Id. Illinois Brick also barred the printer to 

the extent it had purchased defendants' paper from anyone other 

than a defendants' subsidiary or division. Id.

 2. Royal Printing Controls Here 

Put simply, the Court sees no meaningful distinction between 

the facts of Royal Printing and the facts of this case. In Royal 

Printing, neither plaintiff ever directly bought the price-fixed 

paper directly from the manufacturer.7 Likewise, here, the Named 

 

7

 It has been suggested that Royal Printing is distinguishable from 

this case because the Royal Printing plaintiffs purchased pricefixed paper while the Named DPPs never purchased a price-fixed CRT 

from anyone. See Defs' Brief at 20; R&R at 10, 11. The difficulty 

with this position is that the Royal Printing plaintiffs did not

purchase price-fixed paper. They paid the wholesale price, which 

was set by market forces. See Royal Printing, 621 F.2d at 324 

(plaintiffs bought only at wholesale), 326 n.4 ("[T]he wholesalers' 

pricing decisions are determined by market forces . . . ."). The 

Royal Printing plaintiffs, like the Named DPPs here, were indirect 

purchasers. Ninth Circuit cases distinguish between, on the one 

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DPPs never bought the price-fixed CRT directly from the alleged 

conspirators (since, to the extent that any named Defendants are 

wholesalers, they are, by stipulation, not alleged to have 

conspired to fix the price of any FPs they may have sold to the 

Named DPPs). In Royal Printing, the alleged conspiracy did not 

include the wholesalers who sold plaintiffs the paper, as shown by 

the market pricing evident at the wholesale level. Likewise, in 

this case, the conspiracy alleged among sellers of CRTs does not 

reach the sellers of FPs. In Royal Printing, the court held that, 

notwithstanding the plaintiffs' status as indirect purchasers, 

Illinois Brick did not bar their suit insofar as they paid a 

passed-on overcharge to a non-conspiring direct purchaser owned or 

controlled by any alleged conspirator. That holding applies here 

as well. The Named DPPs are indirect purchasers, but, under Royal 

Printing, they have standing to sue insofar as they purchased FPs 

incorporating the allegedly price-fixed CRTs from an entity owned 

or controlled by any allegedly conspiring defendant. 

Defendants suggest that Royal Printing is distinguishable 

because in that case "no other entity [was] in a position to sue if 

[the printer's] claims were dismissed on summary judgment." Defs. 

Brief at 20-21 (citing Royal Printing, 621 F.2d at 327). Here, as 

Defendants point out, the Named DPPs represent only nine of the 

thirteen members of the putative DPP class, so even if the Court 

 

hand, an overcharge directly set by and paid to the conspiracy and, 

on the other, a price paid farther along in the distribution chain 

which includes a passed-on overcharge. E.g., ATM Fee, 686 F.3d at 

754 (distinguishing between direct payment of the price set by 

conspiring defendants and indirect payment of that price via passthrough, the latter being "merely 'fixed' in some broad sense"). 

Making antitrust standing depend on whether a plaintiff bought the 

price-fixed product -- that is, whether plaintiff was a direct 

purchaser -- would wipe out the Royal Printing exception. 

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enters summary judgment against those nine parties, other parties 

stand ready to prosecute this action. The Special Master also 

relied on this fact, among others, when recommending that 

Defendants' motion be granted. See R&R at 11-12 (noting that the 

instant motion is not against all DPP class members; that this 

litigation includes a putative class of indirect purchasers relying 

on the antitrust laws of states that have passed so-called 

"Illinois Brick repealer" statutes; and that "the Antitrust 

Division of the Department of Justice has been pursuing criminal 

actions against some of these defendants"). 

The Court recognizes that, in the particular circumstances of 

this case, the enforcement goals of Illinois Brick appear already 

to have been met, which suggests that the policy rationale behind 

Royal Printing does not apply. Defendants urge the Court to 

decline to apply the Royal Printing exception for that reason. 

Defs. Brief at 20 n.10. Defendants, however, cite no case where a 

court has refused to apply Royal Printing on those grounds, and 

this Court is not inclined to become the first to do so. Though 

there is some intuitive appeal to refusing to apply the exception 

in cases where enforcement by other parties is ongoing or likely, 

the better course is to apply the Royal Printing exception to any 

plaintiff who meets the formal criteria. To do otherwise is to 

engage in the very case-by-case recalibration of Illinois Brick

that the cases so frequently disapprove. Having been warned 

against the ad hoc creation or expansion of exceptions, this Court 

sees no reason why ad hoc disregard or narrowing of the established 

exceptions is any more justifiable. Cf. Utilicorp, 497 U.S. at 

216-217 (recognizing that rationales behind Illinois Brick might 

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not be apply in all cases but standing by Illinois Brick

regardless). Moreover, Defendants' interpretation of Royal 

Printing would undermine the "vigorous private enforcement of the 

antitrust laws," a policy objective which both Illinois Brick and 

Royal Printing explicitly seek to vindicate. Illinois Brick, 431 

U.S. at 745; Royal Printing, 621 F.2d at 326 n.7. Defendants' 

position, if accepted, would bar private treble-damages actions 

against an antitrust defendant whenever the Department of Justice 

engaged in a criminal prosecution of that same defendant. Even in 

cases where no criminal charges are filed, Defendants' position 

would deny antitrust standing to any private plaintiff so long as 

the antitrust defendant could point to some other person who also 

could sue. That result cannot be squared with the goal of vigorous 

private antitrust enforcement. The Court therefore applies Royal 

Printing even though, in the circumstances of this case, other 

parties stand ready to enforce the antitrust laws.8

Defendants' other arguments are similarly unavailing. 

Defendants suggest that the physical differences between the paper 

at issue in Royal Printing and the CRTs at issue here support 

denial of antitrust standing to the Named DPPs. Defs. Brief at 16-

17. Defendants focus on how the paper in Royal Printing was "not 

changed in any way" between manufacture and wholesale, while in 

this case, "the products have been changed" because the CRTs were 

integrated into FPs. Id. Supposing that paper and CRTs differ in 

this way, the Court discerns no reason why the difference would 

 

8

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at preventing multiple recoveries even though "[t]he potential of 

possible multiple recoveries [was] not present in [that] case." 

431 U.S. at 763 n.22 (Brennan, J., dissenting). 

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matter for standing purposes. Cf. UtiliCorp, 497 U.S. at 216 

(quoting Illinois Brick, 431 U.S. at 744) (declining to apply 

Illinois Brick differently in "particular types of markets"). The 

policies underlying Illinois Brick and its exceptions apply with 

equal force regardless of whether or how a particular good is 

modified as it passes through the chain of distribution. For 

instance, the risk of multiple liability from indirect purchasers 

does not depend on whether a defendant sells paper or CRTs. 

Nothing suggests that CRT sellers are any more likely than paper 

manufacturers to permit direct purchasers over whom they exert 

ownership or control to bring a lawsuit that would reveal an 

alleged conspiracy. See Royal Printing, 621 F.2d at 326. Further, 

the Ninth Circuit has applied Illinois Brick and its exceptions 

without comment in cases involving fees, which obviously do not 

involve modification of any physical product. E.g., ATM Fee, 686 

F.3d 741; Freeman, 322 F.3d 1133. Physical differences between 

paper and CRTs supply no reason to refrain from applying the 

ownership and control exception here. 

Next, Defendants argue that the Court should disregard Royal 

Printing because its "underlying rationale . . . no longer carries 

the same force as it once did." Defs. Brief at 20-21. Defendants 

explain that, when the Ninth Circuit decided Royal Printing, its 

precedents denied indirect purchasers any remedy under state 

antitrust laws, whereas now indirect purchasers may seek such 

remedies and, in this case, have done so. Id. (citing In re Cement 

& Concrete Antitrust Litig., 817 F.2d 1435, 1447 (9th Cir. 1987) 

rev'd sub nom. California v. ARC Am. Corp., 490 U.S. 93 (1989)). 

According to Defendants, indirect purchasers' standing to bring 

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state antitrust actions obviates the need for the Royal Printing

exception. Id. at 21; see also id. at 23-24 (acknowledging 

existence of other direct purchasers, as well as ongoing criminal 

prosecution of some Defendants). Whatever the merits of 

Defendants' argument, it is better addressed to the Ninth Circuit, 

which not only has yet to overrule or narrow Royal Printing, but 

reaffirmed and clarified its holding just months ago in ATM Fee. 

See 686 F.3d at 756-58. Royal Printing remains the law of this 

circuit and binding on this Court. 

Defendants next criticize the Named DPPs' reliance on two 

Third Circuit decisions, Sugar and Linerboard. Defs. Brief at 22. 

Defendants describe ATM Fee as having "expressly rejected the 

approach taken by the Third Circuit." Id. It is true that Sugar

and Linerboard conflict with Ninth Circuit law concerning the coconspirator exception. See ATM Fee, 686 F.3d at 755 n.7. However, 

the ATM Fee court specifically noted that Sugar "exemplifies the 

exception allowed when an upstream violator controls or owns the 

direct purchaser" -- that is, the Royal Printing exception. Id. 

ATM Fee makes clear that, while Sugar and Linerboard do not reflect 

the law of the Ninth Circuit where the co-conspirator exception is 

concerned, Sugar, at least, does exemplify the law of the Ninth 

Circuit where the ownership and control exception is concerned. 

Defendants characterize the Named DPPs' citation of Freeman

and the two Third Circuit cases as an impermissible attempt to 

fashion a new exception to Illinois Brick. Defs. Brief at 21-23. 

That characterization is inaccurate. As discussed earlier, Freeman

and Sugar are applications, not expansions, of the ownership and 

control exception already set forth in Royal Printing. 

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Defendants also argue that they are immunized from antitrust 

liability for the sole reason that CRTs are a "vital input" into 

FPs. Defs. Brief at 23. They emphasize a passage in ATM Fee which 

described Illinois Brick as having "rejected exceptions for markups 

by middlemen or when the price-fixed good is a vital input to a 

larger product." ATM Fee, 686 F.3d at 753 (citing Illinois Brick, 

431 U.S. at 743-45). Defendants' argument overshoots the mark. 

This passage in ATM Fee merely states the general prohibition 

against standing based on pass-on damages, and says nothing about 

"rejecting" established exceptions, such as the Royal Printing

exception. Indeed, rather than rejecting the three established 

exceptions, ATM Fee affirmed and applied each of them, making them 

part of the case's holding. Moreover, Defendants' interpretation 

of ATM Fee's "vital input" remark would create, in effect, an 

exception to the exceptions, one that would apply whenever the 

price-fixed good was a "vital input." Even assuming that one could 

define what makes some inputs "vital" and others not, this Court 

has already declined to narrow the established Royal Printing

exception for reasons unique to the particularities of this case or 

to the physical nature of CRTs. 

Lastly, Defendants suggest that standing should be denied to 

the Named DPPs because, as indirect purchasers, their claims would 

involve the complicated apportionment of damages warned against in 

Illinois Brick. Defs. Brief at 21-22. The concern is misplaced. 

Royal Printing explicitly addressed the issue of apportioning 

damages and held that, in cases proceeding under the ownership and 

control exception, no apportionment is needed; plaintiffs are 

permitted to sue "for the entire overcharge." 621 F.2d at 327. 

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The Court expresses no view as to whether the Named DPPs will 

be able to prove what is needed to win relief as indirect 

purchasers under the ownership and control exception. In their 

sealed brief and its supporting declarations, the Named DPPs 

present evidence based on the discovery they have taken so far. 

DPP Brief at 4-5, 13. This evidence raises a genuine issue of 

material fact as to whether the Named DPPs purchased FPs 

incorporating the allegedly price-fixed CRTs from some defendantowned or -controlled division or subsidiary. Accordingly, 

Defendants have not carried their summary judgment burden of 

showing an absence of evidence in support of applying the ownership 

and control exception. To the extent that Defendants' summary 

judgment motion challenges the Named DPPs' standing on that ground, 

the motion is DENIED. 

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V. CONCLUSION

For the foregoing reasons, Defendants' motion for summary 

judgment against Plaintiffs Arch Electronics, Inc.; Crago d/b/a 

Dash Computers, Inc.; Electronic Design Company; Meijer, Inc. and 

Meijer Distribution, Inc.; Nathan Muchnick, Inc.; Orion Home 

Systems, LLC; Radio & TV Equipment, Inc.; Royal Data Services, 

Inc.; and Studio Spectrum, Inc., is GRANTED IN PART and DENIED IN 

PART. Because these Plaintiffs did not purchase allegedly pricefixed CRTs directly, they are indirect purchasers and Illinois 

Brick bars their suit unless one of the three recognized exceptions 

applies. The Court concludes that the ownership-and-control 

exception of Royal Printing does apply. Therefore, the Named DPPs 

have standing to sue for alleged overcharges passed on to them when 

they purchased an FP containing an allegedly price-fixed CRT from 

an entity allegedly owned or controlled by any allegedly conspiring 

Defendant. The Named DPPs do not have standing, however, to sue 

for alleged overcharges passed on to them from any other seller of 

FPs. 

IT IS SO ORDERED. 

Dated: November 29, 2012 

UNITED STATES DISTRICT JUDGE

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