Reconsidering Indirect-Purchaser Class Actions

Few issues have proven more vexing to private antitrust enforcement than those related to indirect-purchaser class actions. The current dual system of enforcement—federal and state—exacerbates the difficulty of litigating indirect-purchaser claims by layering procedural complexity on top of substantive complexity and by explicitly allowing (perhaps even incentivizing) duplicative recovery. Almost all commentators are in substantial agreement that reform is necessary, but Congress appears unlikely to take action on the issue in the near future. This Note proposes a procedural solution that would consolidate litigation in a single federal court based on the limited-fund class action model of Federal Rule of Civil Procedure 23(b)(1)(B). Under the limited-fund model, the purpose of consolidated litigation is to determine liability before turning to the apportionment of damages. This Note also advocates for a presumption that damages are appropriately allocated to purchasers on a pro rata basis, consistent with common practice in the limited-fund class action context. Proper allocation would depend on the purchaser’s position in the supply chain, with direct purchasers receiving the largest share of the recovery. This Note’s proposal provides three primary advantages: (1) it eliminates the possibility of duplicative litigation; (2) it aligns the interests of all the potential plaintiffs to better incentivize vigorous antitrust enforcement; and (3) it reduces the need for complex damages calculations. INTRODUCTION 914 I. INDIRECT-PURCHASER STANDING 917 A. A History of Indirect-Purchaser Standing Under Federal Law 918 * J.D., Candidate 2015, University of Florida Levin College of Law; M.A. 2009, Eastern Michigan University; B.S. 2006, Eastern Michigan University. I would like to thank the staff of the Florida Law Review and all the members, especially the editors on this Note: William Cochran, Andrew Daeschsel, Lauren Evans, Jordan Horowitz, Kimberly Kelley, Angela Korge, Suh Lee, Krista Mackay, Ryan McConnell, Maris Snell, Marla Spector, and Megan Testerman. Any mistakes are, of course, my own, but their selfless efforts deserve recognition. I also owe a sincere debt of gratitude to the faculty of the University of Florida Levin College of Law, including Professor E. Lea Johnston for her support and guidance, Professor Elizabeth T. Lear for her insights and expertise in civil procedure, Professor William Page for his engaging seminar on class actions and course on antitrust law, and Professor Sharon Elizabeth Rush for her inspiring course on the federal courts. Lastly, I must thank my family for their love and support, and Lindsay Vecchio to whom this Note is dedicated with love. 1 Carr: Reconsidering Indirect-Purchaser Class Actions Published by UF Law Scholarship Repository, 2016 914 FLORIDA LAW REVIEW [Vol. 67 1. Illinois Brick and Offensive and Defensive Pass-On 919 2. Reaction to the Rule of Illinois Brick 923 B. Indirect-Purchaser Standing: Where Are We Now? 924 II. THE LIMITED-FUND APPROACH 926 A. An Introduction to Limited-Fund Class Actions 927 1. Unique Features of Limited-Fund Class Actions 928 2. Challenges of Litigating Limited-Fund Class Actions 930 B. The Ortiz Factors 931 III. LIMITED-FUND CLASS ACTIONS APPLIED TO ANTITRUST CLAIMS 932 A. Eliminate Duplicative Litigation 934 B. Improved Enforcement 935 C. Pro Rata Distribution 936 CONCLUSION 938