### In the 

# United States Court of Appeals For the Seventh Circuit

____________________ No. 18

- 2619
M C G ARRY & M C G ARRY , LLC, Plaintiff

- Appellant ,

v.

B ANKRUPTCY M ANAGEMENT S OLUTIONS , I NC

. , Defendant

- Appellee

.

____________________ Appeal from the United States District Court for the Northern District of Illinois , Eastern Division

. No. 17 CV 5779

— Joan H. Lefkow
, Judge

.

____________________
A RGUED N OVEMBER 7, 2018

— D ECIDED S EPTEMBER 5, 2019

____________________

Before R OVNER , S YKES , and B ARRETT , Circuit Judges

. S YKES , Circuit Judge

. McGarry & McGarry, LLC, a c reditor in a closed Chapter 7 bankruptcy case , tried three times to bring a price

- fixing claim against Bankruptcy Management Solutions, I nc. (“ BMS ” ), the trustee ’ s software

- services provider

. In t he first suit , McGarry alleged claims under the Sherman Act and the Illinois Antitrust Act

. Because McGarry is not a direct purchaser of bankruptcy software services, the district court dismissed the Sherman Act claim , see Il l. Brick2 No. 18

- 2619

Co. v. Illinois , 431 U.S. 720 (1977) , and relinquished jurisdiction over the state

- law claim. McGarry tried a different tack and moved to re open the bankruptcy proceedings

. The bankruptcy court denied that request because the case had been closed for more than three years

. Undeterred, McGarry filed a new lawsuit in state court alleging a stand

- alone claim under the Illinois Antitrust Act . The state statute has an “ Illinois Brick repealer ” provision that permits indirect purchaser s to sue

. B MS removed the case to federal court and moved to dismiss. T he district judge granted the motion because McGarry is n ot

even an indirect purchaser of bankruptcy software services ; it does not purchase these services at all

. McGarry appealed.
We affirm. McGarr y is a one

- time creditor in a closed Chapter 7 bankruptcy case. It does not participate in the market for bankruptcy software services in any way that would make it a proper plaintiff to bring a n antitrust claim against a firm that provide s those services to bankruptcy
trustee s

. I. Background
A Chapter 7 bankruptcy petition creates a bankruptcy estate, which becomes the temporary legal owner of the debtor’s property. 11 U.S.C. § 541(a)

. When a petition is filed , the Executive Office of the U .S. Trustee ( a d ivision of the U.S. Department of Justice ) appoints a trustee to administer the estate. The trustee collect s and liquidate s nonexempt estate assets to max imize the return to creditors. The trustee also file s periodi c reports with the bankruptcy court and the U.S. Trustee. Id. § 704.No. 18

- 2619 3

The reports are prepared on special software , and trustee s typically use one of three providers to supply these services

. B MS is the largest supplier of bankruptcy software services

. T he complaint alleges that BMS has a market share of approximately 50% as measured by the total number of bankruptcy trustees in the country

. Epiq Systems and Trust eSolutions have 35% and 15%, respectively. A t rustee normally do es not use more than one software

- services provider at any one time. For many years BMS partnered with banks to jointly deliver services to the estate. Under this model BMS directed the trustee to deposit the estate’s funds into a partner bank , and in retur n the trustee receiv ed integrated case

management and banking services. The bank earned money from the deposit and paid interest to the estate and a fee to BMS

. Th is business model relied on the existence of a “spread” between the interest the bank could c harge its borrowers and the interest it paid to its depositors. The model worked well as long as interest rates remained high enough to support the bank’s flexibility to work within the spread, allowing all parties to prosper.

But th e model collapsed with the economic downturn in 2008

. I nterest rates declined precipitously from more than 4% in late 2007 to near 0 % one year later , so t he spread evaporated. B MS had to adapt to a new reality. It soon designed a different business model: it would sell its software services in combination with banking services (as it ha d in the pas t) , but the bank would charg e a set percenta ge of the estate’s funds as a fee for the combined services and pay a portion of that fee to BMS

. For this new model to work , however, BMS had to ov ercome two obstacles. First, it4 No. 18

- 2619

needed its competitors to also adopt the new arrangement

. The complaint alleges that s ometime before 2011 BMS approached Epiq Systems and TrusteSolutions and proposed the ne w billing model

. B oth agreed to implement a similar system

. Second , BMS needed the Executive Office of the U.S. Trustee t o suspend its rule prohibiting trustee s from using estate funds to pay bank fees. All three providers asked the Executive O ffice to do so . I n April 2011 the agency suspended the rule

. A ll three providers then changed their billing model. Now the standard agreement requir es the estate to pay a combined fee for software and banking services based on a percentage of the funds in its bank account

. In May 2011 Integrated Genomics, Inc., a software developer specializing in genome analysis , filed a Chapter 7 petition in the U.S. Bankruptcy Court for the Northern District of Illinois. The U.S. Tr ustee appointed Eugene Crane

as t rustee. Crane contract ed with BMS for software services and deposited the e state’s funds with Rabobank , BMS ’ s partner bank. Crane also contract ed directly with Rabobank, authorizing it to automatically withdraw a fee from the

e state’s account.McGarry & McGarry, a Chicago law firm and an unsecured creditor of Integrated Genomics, filed a claim in the Chapter 7 proceeding

. O n August 30, 2013, Crane filed his final report listing a service

- fee payment of $514.16 to Rabobank , which deducted that sum from the e state’s
account . McGarry did not object to the fee . The e state’s funds w ere disbursed , and the case was closed in April 2014. McGarry received $12,472 of i ts allowed claim of $78,308.No. 18

- 2619 5

Two years l ater M cGarry learned that most, if not all, of the $514.16 fee went to BMS

. In September 2016 McGarry filed a class

- action lawsuit against BMS in the Northern District of Illinois alleging violat ions of the Sherman Act , 15 U.S.C. § 1, and the Illinois Antitrust Act , 740 I LL

. C OMP

. S TAT . 10/3 (2018)

. T he district judge granted BMS’s motion to dismiss, applying the “indirect purchaser” doctrine announced in Illinois Brick . There the Supreme Court explained that indirect purchasers are not proper parties to bring a price

- fixing claim under the Sherman Act ; the claim belongs to the direct purchaser

. Illinois Brick Co. , 431 U.S. at 735. McGarry was neither a direct nor an indirect purchaser of bankruptcy software s ervices , so the judge dismissed th e federal claim with prejudice. She then relinquished supplemental jurisdiction over the state

- law claim , dismiss ing it without prejudice . McGarry did not appeal.
Instead , McGarry moved to reopen the Chapter 7 proceeding with the aim of raising the issue there

. B ecause the motion was not made within a reasonable time , the bankruptcy judge denied it

. McGarry filed a new class

- action complaint against BMS , this time in Cook County Circuit Court . This second suit a lleg ed a stand

- alone p rice

- fixing claim under the Illinois Antitrust Act

. BMS removed the case to federal court , where it was assigned to the judge who handled the first case

. A motion to dismiss followed, see F ED

. R. C IV

. P

. 12(b)(6), and the judge dismis sed the case for failure to state a claim

. Referring back to her earlier order, the judge reasoned that alt hough t he Illinois antitrust statute permits indirect purchasers to sue , that feature of the law d oes “nothing to help McGarry ... for it has admitted that it is not a purchaser at all. ”6 No. 18

- 2619

II. Discussion
We review a dismissal order de novo. Deppe v. Nat ’ l Collegiate Athletic Ass ’ n , 893 F.3d 498, 500 (7th Cir. 2018 )

. The Illinois Antitrust Act prohibits any ag reement to fix, maintain, or stabilize the price of any commodity or service. 740 I LL

. C OMP

. S TAT . 10/3. The Act expressly requires harmonization with federal antitrust law as interpreted by the federal courts , see id . § 10/11, so Illinois courts interpret the state antitrust law in harmony with “[ f] ederal case law
constru ing analogous provisions of [f] ede ral legislation ”

— here , S ection 1 of the Sherman Act. People ex rel. Scott v. Coll. Hills Corp. , 435 N.E.2d 463, 469 (Ill. 1982) . McGarry alleges a conspiracy to fix the price of bankruptcy software services , a per se violation of federal and Illinois antitrust law

. See, e.g. , Catalano, Inc. v. Target Sales, Inc. , 446 U.S. 643, 647 (1980) ; Baker v. Jewel Food Stores, Inc. , 823 N.E. 2d 93, 100 (Ill. App. Ct. 2005).

B oth Article III and the Sherman Act impose threshold barriers on a part y bringing an antitrust sui t in federal court

. Article III limits “ the judicial power of the United States to the resolution of ‘ Cases ’ and ‘ Controvers ies

. ’” Hein v. Freedom From Religion Found. , Inc. , 551 U.S. 587, 597 (2007). To satisfy the case

- or

- controversy requirement, a plaintiff must establish standing to sue. Id . at 598. Three elements comprise the “ irreducible constitutional minimum ” of standing : (1) a concrete and particularized injury in fact that is (2) fairly
tracea ble to the alleged action of the defendant and (3) likely to be redressed by a favorable decision

. Lujan v. Defenders of Wildlife , 504 U.S. 555, 560 (1992)

. McGarry has pleaded sufficient facts to support Article III standing , though just barely

. The comp laintNo. 18

- 2619 7

alleges that the $514.16 fee Rabobank deducted from the Integrated Genomics Chapter 7 account and paid to BMS

w as greater than it would have been absen t the price

- fixing conspiracy. T he inflated fe e reduced the pot of money from which unsecured credi tors were paid, and McGarry alleges it received a smaller distribution as a result

. If true, t he difference is likely quite small given the modest amount of the fee . Still, “ f inancial injuries are prototypical of [Article III] injuries. ” Milwaukee Police Ass ’ n v. Flynn , 863 F.3d 636, 639 (7th Cir. 2017) ; see also Korte v. Sebelius , 735 F.3d 654, 667 (7th Cir. 2013). And there is a causal connection between the injury and the alleged conspiracy that can be remedied by a favorable judicial d ecision.
But the “ Sherman Act has additional rules for determining ‘ whether the plaintiff is the proper party to bring a private antitrust action

. ’ ” Loeb Indus. , Inc. v. Sumitomo Corp. , 306 F.3d 469 , 481 (7th Cir. 2002) ( quoting Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters , 459 U.S. 519, 535 n.31 (1983) )

. These requirements have been

“ incautiously lumped together under the umbrella term of

‘ antitrust standing. ’” Id. at 480. But this nomenclature, like that o f its cousins “ prudential standing ” and “ statutory standing, ” is a “ misnomer

. ” Lexmark Int'l, Inc. v. Static Control Components, Inc. , 572 U.S. 118, 12 7 (2014) ; see also id. at 128 n.4 (describing “ statutory standing ” as “ an improvement ” over “ prudential s tanding ” because it “ correctly places the focus on the statute ” but is nevertheless “ misleading ”).
We ’ ve previously noted our concern with the term “ antitrust standing ” because of its potential for confusion with Article III standing. See U.S. Gypsum Co. v. Ind. Gas Co. ,8 No. 18

- 2619

350 F.3d 623, 627 (7th Cir. 2003)

. The latter, of course, is a necessary requirement for a justiciable case or controversy. The former, on the other hand, concerns a different issue: which pl aintiffs may bring the cause of action. See Hammes v. AAMCO Transmissions, Inc. , 33 F.3d 774, 778 (7th Cir. 1994) (“‘[ A]ntitrust standing ’ is not a jurisdictional requirement

... .”).

F ederal antitrust law p rovides a treble

- damages remedy
to “ any person

... injured in his business or property by reason of anything forbidden in the antitrust laws

. ” 15 U.S.C. § 15(a)

. Though broadly phrased, the Supreme Court has c onstrued this language “ to limit the parties who may bring an antitrust action to ( 1) those who have suffered the type of injury that the antitrust laws were intended to prevent and (2) those who se injuries are a result of the defendant ’ s unlawful conduct. ” Serfecz v. Jewel Food Stores , 67 F.3d 591, 595 (7th Cir. 1995) (citing Brunswick Corp. v. Pueblo Bowl

- O

- Mat, Inc. , 429 U.S. 477, 489 (1977)). B ecause antitrust violations “ may be expected to cause ripple s of harm to flow through the Nation ’ s economy, ” the Court has held that “ Congress did not intend to allow every person tangentially a ffected by an antitrust violation to maintain an action to recover threefold damages for the injury to his business or property

. ” Blue Shield of Va

. v. Mc Cr eady , 457 U.S. 465, 476

– 77 (1982). S ome injuries are “ too remote from the violation and the purposes of the antitrust laws to form the predicate for a suit

. ” Id

. at 477. For price

- fixing claims in particular, t he Supreme Court long ago held that persons downstream in the distribution chain are not proper plaintiffs . The “ indirect purchaser ” doctrine announced in Illinois Brick “ forbids a customer ofNo. 18

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the purchaser who paid a cartel price to sue the cartelist, even if his seller

— the direct purchaser from t he cartelist

— passed on to him some or even all of the cartel ’ s elevated price. ” Motorola Mobility LLC v. AU Optronics Corp. , 775 F.3d 816, 821 (7th Cir. 2015). As we ’ ve noted, t he district judge invoked the Illinois Brick principle in dismiss ing the Sherma n Act claim in McGarry ’ s first suit

. Th e analogous provision in the Illinois A ntitrust Act is phrased in terms similar to its federal counterpart , but there is one notable difference: Illinois has adopted an “ Illinois Brick repealer ” clause that permits in direct purchasers to

sue

. 740 I LL

. C OMP

. S TAT . 10/7(2). But t hat provision doesn ’ t apply here

. As the district judge noted, McGarry isn ’ t even

an indirect purchaser of bankruptcy software services. The law firm is just a former creditor of a Chapter 7 debtor in a closed bankruptcy case. It doesn ’ t purchase bankruptcy software services at all.
The inapplicability of the Illinois Brick repealer provision in the state statute raises the possibility that the judgment in McGarry ’ s first case has preclusive effect in this second suit

.

“ W hen an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determinat ion is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim. ” R ESTATEMENT (S ECOND ) OF J UDGMENTS : I SSUE P RECLUSION

– G ENERAL R ULE § 27 ( A M

. L AW I NST . 1980), quoted in B &B Hardware, Inc. v. Hargis Indus., Inc. , 135 S. Ct. 1293, 1303 (2015). The Illinois Antitrust Act ’ s harmonization provision, 740 I LL

. C OMP

. S TAT

. 10/11 , bolsters the case for preclusion. But BMS hasn ’ t10 No. 18

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developed a preclusion argument along these lines , so we proceed to the main thrust of McGarry ’ s appeal. McGarry argues that although it is not a purchaser of bankruptcy software services, it is nonetheless a proper plaintiff to bring this price

- fixing claim under the multi

factor test derived from the Supreme Court ’ s decision i n Associated General Contractors , 459 U.S. at 537

– 44. As we ’ ve synthesized it in earlier cases , the test examines several factors to determine whether the plaintiff has demonstrated the necessary “ direct link ” bet ween the alleged antitrust violation and the claimed antitrust injury. Sanner v. Bd . of Trade of Chi. , 62 F.3d 918, 926

– 27 (7th Cir. 1995).
Th e Associated General Contractors factors include : (1) T he causal connection b etween the alleged anti trust violatio n and the harm to the plaintiff; (2) I mproper motive; (3) W hether the injury was of a type that Congress sought to redress with the antitrust laws; (4) T he directness between the injury and the market restraint; (5) T he speculative nature of the damages; [and] (6) T he risk of duplicate recoveries or complex damages apportionment.
Id. at 927 (quotation marks omitted)

. Together, t he first three factors relate to what courts commonly refer to as “ antitrust injury. ” Nelson v. Monroe Reg ’ l Med. Ct r

. , 9 25 F.2d 1555, 1563

– 64 (7th Cir. 1991) ; see also Novell, Inc. v. Microsoft Corp. , 505 F.3d 302, 311 (4th Cir. 2007) . T he remaining factorsNo. 18

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address whether the plaintiff is among those “ who can most efficiently vindicate the purposes of the antitrust laws

. ” Serfecz , 67 F.3d at 5 98 (quot ation marks omitted ).

T he factors are neither strict requirements nor exclusive analytical tools

. The y simply illustrate the areas of inquir y that may be relevant to a case

- specific evaluation of “ the plaintiff ’ s harm, the alleged wrongdoing by the defendant[], and the relationship between them. ” Associated Gen. Contractors of Cal. , 459 U.S. at 535

. To put the inquiry m ore generally, McGarry must demonstrate that its injury is “ of the type the antitrust laws were intended to prevent. ” Brunswick Corp. , 429 U.S. at 489

. It ’ s not enough to allege that the injury is merely causally linked to the alleged anticompetitive behavior. Id. McGarry must also demonstrate that its i njury “ is attributable to an anti

- competitive aspect of the practice under scrutiny. ” Atl. Richfield Co. v. USA Petroleum Co. , 495 U.S. 328, 334 (1990). In other words, the injury must flow directly “ from higher prices or lower output, the principal vices proscribed by the antitrust laws. ” Popp v. Cash Station, Inc. , 613 N.E.2d 1150, 1158 (Ill. App. Ct. 1992) (quot ation marks omitted ). McGarry hasn ’ t alleged the type of injury the antitrust laws were meant to prevent . It claims that absent the conspiracy, BMS would not have been able to charge a percentage of the e state ’ s funds as a fee for its bankruptcy software services . But of course McGarry is not a participa n t in the market for bankruptcy softwa re services. Instead its alleged injury is quite attenuated from the claimed price

- fixing violation . McGarry alleges that the conspiracy caused the

e state to pa y a higher fee for the combined banking and software services, which reduced the funds available in the12 No. 18

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Chapter 7 estate to pay claims (however modest the reduction ) , which caused unsecured cred itors like McGarr y to receive a smaller distribution . Th is alleged injury is too remote to serve as the predicate for an antitrust suit

. But even if we concluded that McGarry had adequately pleaded an an titrust injury, the law firm must also demonstrate th at it can “ efficiently vindicate the purposes of the antitrust laws. ” Kochert v. Greater Lafayette Health Servs., Inc

. , 463 F.3d 710, 716 (7th Cir. 2006) (quot ation marks omitted ). The fourth Associated General Contractors factor

— “ the directness between the injury and the market restraint ”

— weighs particularly heavily here. We usually presume that c ompetitors and consumers in the relevant market are the only p a rties who suffer antitrust injur ies and are in a position to efficiently vindicate the antitrust laws

. Associated Gen. Contractors of Cal. , 459 U.S. at 538; see also In re Aluminum Warehousing Antitrust Litig. , 833 F.3d 151, 158 (2d Cir. 2016) (collecting cases).
In Blue Shield of V irginia v. McCready , the Supreme Court

carve d out a narrow exception

. There the Court held that Carol McCready, a patient treated by a clinical psychologist , suffered an antitrust injury when her ins urer , allegedly in concert with a professional organization of psychiatrists, refus ed to reimburse her psychologist ’ s fees because the health plan covered only psychiatrists. McCready , 457 U.S. at 480

– 81

. The Court held that M cCready ’ s injury wa s “ inextricably intertwined with the injury the conspirators sought to inflict ” on the market. Id. at 4 84

. As the Court later described its holding, w hat matter ed was that the plaintiff wa s a participant in the market targeted by the alleged conspiracyNo. 18

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and wa s “ directly harmed by the [insurer ’ s] unlawful conduct. ” Associate d Gen. Contractors of Cal. , 459 U.S. at 529 n.19. McGarry, however, is not a participant in the market for bankruptcy software services

. I t i s simply a creditor of a Chapter 7 debtor

. McGarry ’ s alleged injury is thus entirely derivative of the estate ’ s injury

. We held decades ago that “[ m]erely derivative injuries su stained by employees, officers, stockholders, and c reditors of an injured company do not constitute ‘ antitrust injury ’ sufficient to confer antitrust standing. ” Sw. Suburban Bd. of Realtors, Inc. v. Beverly Area Planning Ass ’ n , 830 F.2d 1374, 1378 (7th Cir. 1987) (e mphasis added) ; see also Cong. Bldg. Corp. v. Loew ’ s , Inc. , 246 F.2d 587, 590 (7th Cir. 1957) (“ The courts have uniformly denied recovery to

... creditors

... who claimed injury as the result of alleged antitrust violations. ”) (citations omitted) . The Supreme Court has agreed in dicta. See A ssociated Gen. Contractors of Cal. , 459 U.S. at 533

– 34 ( citing with approval Loeb v. Eastman Kodak Co. , 183 F. 704, 709 (3d Cir. 1910), which held that a creditor of an injured company does not have antitrust standing ).

T here is, after all, a more appropriate p erson to pursue the claim should it be in the estate ’ s interest to do so : the trustee. Because a trustee in bankruptcy owes a fiduciary duty to an estate ’ s creditors, In re Salzer , 52 F.3d 708, 712 (7th Cir. 1995), the trustee could “ pursue the debtor ’ s claim against [ the alleged conspirators ] on behalf of all the debtor ’ s creditors equally, without preferenc e for any particular creditor. That injury is much more efficiently measured on behalf of the debtor, moreover, rather than in fortuitous segments claimed by those creditors who happen t o sue. ” IIA P HILLIP E. A REEDA ET AL

. , A NTITRUST L AW ¶ 353c , at 298

–14 No. 18

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99 (4th ed. 2014). “ The existence of an identifiable class of persons whose self

- interest would normally motivate them to vindicate the public interest in antitrust enforcement diminishes the justification for allowing a more remote party

... to perform the office of a private attorney general. ” Associate d Gen. Contractors of Cal. , 459 U.S. at 542. Because McGarry does not participate in th e market for bankruptcy software services in any meaningful way, it is not an appropriate plaintiff to b ring this price

- fixing claim. The case was properly dismissed

. A FFIRMED