Source: https://caselaw.findlaw.com/ca-court-of-appeal/1211311.html
Timestamp: 2019-04-22 17:27:25+00:00

Document:
James CLAYWORTH, et al., Plaintiffs and Appellants, v. PFIZER, INC., et al., Defendants and Respondents.
Alioto Law Firm, Joseph M. Alioto, Theresa D. Moore, Angelina Alioto-Grace, Joseph M. Alioto, Jr., Thomas P. Pier, San Francisco; Law Offices of James M. Dombroski, James M. Dombroski, Petaluma; Law Offices of Jeffery K. Perkins, Jeffery K. Perkins, San Francisco; Law Offices of John H. Boone, John H. Boone, San Francisco; Foreman & Brasso, Russell F. Brasso, San Francisco; Gary D. McCallister & Associates (pro hac vice), Thomas A. Kelliher (pro hac vice), Chicago, IL, Eric I. Unrein (pro hac vice), Topeka, KS; Jaime Goldstein, Chicago, IL, for Plaintiffs and Appellants. Winston & Strawn, Tyler M. Paetkau, Nicole P. Dogwill, San Francisco, Susan A. Pipal, Chicago; Eimer Stahl Klevorn & Solberg, David M. Stahl, J. Cunyon Gordon, Chicago, IL, A. Oyenbanji; Davis Polk & Wardwell, Amelia Starr, Arthur F. Golden (pro hac vice), William J. Fenrich (pro hac vice), Daniel J. Schwartz (pro hac vice), New York, NY; Filice Brown Eassa & McLeod, Peter A. Strotz, William El Steimle, Paul R. Johnson, Oakland; Kaye Scholer, Aton Arbisser, Bryant S. Delgadillo, Los Angeles, Saul P. Morgenstern, New York, NY; Covington & Burling, Theodore Voorhees (pro hac vice), Jr., Thomas J. Cosgrove (pro hac vice), Washington, DC; Elizabeth Abigail Brown, Anita Fern Stork, San Francisco; Gibson, Dunn & Crutcher, Jeffrey T. Thomas, James N. Knight, Irvine; Oppenheimer Wolff & Donnelly, Gary Hansen (pro hac vice), David P. Graham (pro hac vice), Aaron Mills Scott (pro hac vice), Minneapolis, MN; Reed Smith, Michele Diane Floyd, San Francisco; Folger Levin & Kahn, Beatrice Bich-Dao Nguyen, Samuel Ray Miller, San Francisco; Patterson Belknap Webb & Tyler, William Cavanaugh Jr., New York, NY; Cleary Gottlieb Steen & Hamilton, George Cary, Sara D. Schotland, Washington, DC; Irell & Manella, Alexander F. Wiles, John C. Keith, Los Angeles; Dickstein, Shapiro, Peter J. Kadzik, Bernard Nash, Maria Colsey Heard, Milton Marquis, Washington, DC, Andres Colin; Nossaman, Gunther, Knox & Elliott, Scott DeVries, Katrina June Lee, San Francisco; Drinker, Biddle & Reath, H. Christian L'Orange, Paul H. Saint-Antoine, David J. Antczak, Philadelphia, PA; Hughes Hubbard & Reed, John M. Townsend, Robert P. Reznick, Washington, DC; Hughes Hubbard & Reed, Rita M. Haeusler, Los Angeles; Cravath, Swaine & Moore, Elizabeth L. Grayer, Evan R. Chesler, Jessica Buturla, New York, NY, Jeffrey B. Korn; Sedgwick, Detert, Moran & Arnold, Paul J. Riehle, Matthew A. Fischer, San Francisco; Latham & Watkins, Margaret M. Zwisler, Steven H. Schulman, Washington, DC; Latham & Watkins, Charles H. Samel, Belinda S. Lee, Jennifer A. Carmassi, Los Angeles; Arnold & Porter, Douglas L. Wald (pro hac vice), Mark R. Merley, Anne P. Davis (pro hac vice), Washington, DC; Ronald C. Redcay, Los Angeles, Daniel R. Waldman, Washington, DC; Ryan Z. Watts (pro hac vice), Washington, DC; Hogan & Hartson, Joseph H. Young, Baltimore, MD; Faegre & Benson, James A. O'Neal, Minneapolis, MN, Kim J. Walker, Des Moines, IA; Mayer, Brown, Rowe & Maw, Steven Oliver Kramer, Los Angeles, Donald M. Falk, Palo Alto, for Defendants and Respondents.
This case presents an issue of first impression in California antitrust law: whether the pass-on defense is available to defendants accused of price-fixing. We hold that it is.
Retail pharmacies (plaintiffs) sued pharmaceutical companies (defendants) alleging price-fixing, asserting claims for violation of the Cartwright Act (Bus. & Prof.Code, §§ 16700, et seq.),1 and for restitution and injunctive relief under the California Unfair Competition Law (UCL) (§§ 17200, et seq.). Defendants asserted as an affirmative defense that plaintiffs “passed-on” all of the claimed overcharges to their customers. Discovery demonstrated that they did pass on the charges, and plaintiffs further admitted that they sought no other damages, such as lost or delayed sales, aside from the claimed overcharges.
Plaintiffs moved for summary adjudication on the pass-on defense, contending that it is not recognized in California, relying primarily on Hanover Shoe v. United Shoe Mach. Corp. (1968) 392 U.S. 481, 88 S.Ct. 2224, 20 L.Ed.2d 1231 (Hanover Shoe ), which rejected the pass-on defense, and the legislative history of the Cartwright Act. Defendants filed their own motion, contending that California never adopted the Hanover Shoe holding and that the language of the Cartwright Act makes clear that plaintiffs in an antitrust action cannot recover for an overcharge passed on to a subsequent purchaser.
The trial court decided the cross-motions in favor of defendants, concluding that the pass-on defense is available in California, and that plaintiffs did not suffer any compensable injury within the meaning of section 16750 and thus could not recover on the Cartwright Act claim. The court also concluded that plaintiffs lacked standing to bring a UCL claim because they had not lost money or property and, alternatively, were not eligible for restitution. The trial court thus granted summary judgment. We affirm.
Plaintiffs are retail pharmacies located in California.2 Defendants are, with two exceptions, companies that manufacture, market, and/or distribute brand-name pharmaceutical products throughout the United States.3 Defendants also manufacture, market, and/or distribute similar brand-name pharmaceutical products in Canada where, unlike in the United States, the products are subject to government-imposed pricing limitations.
Plaintiffs' action sought treble damages, restitution, and injunctive relief, alleging that defendants fixed the prices of their brand-name pharmaceuticals in violation of the Cartwright Act and the UCL. The case came at issue on the third amended complaint, which alleged that plaintiffs were injured by defendants' purported price-fixing “because they have paid more than they otherwise would have or should have paid in the absence of the [d]efendants' violations ․”; specifically, plaintiffs alleged that defendants conspired “to eliminate price competition and fix prices” in the U.S. market by, among other things, using Canadian prices as a “floor” or minimum price for defendants' U.S. products.
Each defendant filed a separate answer, denying plaintiffs' allegations and asserting as an affirmative defense that plaintiffs' claims were barred on the ground plaintiffs passed on any alleged overcharge to third parties and therefore did not suffer a compensable injury.
The case was designated as complex and assigned to the Honorable Ronald M. Sabraw.
The resulting narratives, as well as deposition testimony of the persons most knowledgeable and plaintiffs' responses to written discovery, revealed the following salient facts, which are essentially undisputed.
Plaintiffs sell the drugs to two groups of customers, also on the basis of the AWP: (1) those with “third-party” insurance or a drug benefit plan offered by either a private entity or the government, which in turn pay customers' claims on their behalf; and (2) uninsured (or “cash-paying”) customers. The vast majority of customers are covered by third-party payers, which reimburse plaintiffs at a contractually or statutorily fixed amount, predetermined as a percentage of the AWP plus a dispensing fee, which provides plaintiffs a percentage profit above their acquisition cost. As to the sales to cash-paying customers, plaintiffs charge a set percentage of the AWP, and sometimes a dispensing fee, which could result in plaintiffs' receiving a price above their acquisition cost. The result of this is that each time defendants increase their prices for a product, plaintiffs increase the price they charge their customers by at least the same amount. And the higher defendants' prices, the higher plaintiffs' revenues-and the higher their gross profits.
In sum, discovery demonstrated two undisputed facts: (1) plaintiffs passed on to their customers all claimed overcharges, and (2) plaintiffs waived any claims for damages not based on the alleged overcharge, claiming no lost or delayed sales, or any other diminution in business.4 Stated conversely, the only damages plaintiffs sought to recover were the claimed overcharges.
On September 15, 2006, defendants filed a joint opposition to plaintiffs' motion. They also filed a joint cross-motion for summary judgment or, in the alternative, summary adjudication regarding pass-on issues. Defendants argued that the plain language of the Cartwright Act demonstrates plaintiffs cannot recover damages they did not sustain and that Hanover Shoe has not been adopted in California. Alternatively, defendants argued that “even if a pass-on defense is not generally available under California law, such a defense should be permitted here where it is easy to prove that plaintiffs have not been damaged.” 6 Defendants also argued that the pass-on theory defeated plaintiffs' UCL claim.
The motions came on for hearing on December 15, 2006. Judge Sabraw heard lengthy argument, following which he took the motions under submission.
On December 19, 2006, Judge Sabraw issued a 26-page order containing a comprehensive analysis of the issues presented, concluding that defendants could assert the pass-on defense to defeat plaintiffs' antitrust claims: “[I]n defending a claim under the Cartwright Act, a defendant can present evidence that it has no liability or that its damages are lessened because the plaintiff has passed on the alleged price overcharge and therefore has either suffered no injury or has limited its damages.” This ruling was “based primarily on the language of the statute, which limits recovery to ‘recovery three times the damages sustained.’ ” Judge Sabraw read the phrase “damages sustained” as referring to the “actual loss incurred by the [p]laintiffs,” and concluded that because “[the] undisputed facts demonstrate that if [d]efendants ever overcharged [p]laintiffs as a result of the alleged conspiracy, the [p]laintiffs sustained no damages because they increased their prices to their customers ‘by at least the same dollar amount.’ [¶] ․ If [p]laintiffs have not sustained actual damages, then they cannot prevail on their claim.” Judge Sabraw thus granted summary adjudication for defendants on the Cartwright Act claims.
As to the UCL claim, Judge Sabraw concluded that plaintiffs lacked standing to pursue this claim because they had not “ ‘lost money or property’ as required for standing under section 17204.” Alternatively, he concluded that plaintiffs could not be awarded monetary relief under section 17203 because they did not “have an ownership interest in whatever funds they paid as a result of any overcharge” and thus were ineligible for restitution. Judge Sabraw thus granted summary adjudication for defendants on the UCL claim. Having disposed of all of plaintiffs' claims, Judge Sabraw granted summary judgment for defendants.
Judgment pursuant to the December 19, 2006 order was entered on January 4, 2007, from which plaintiffs filed a timely appeal.
Though Hanover Shoe focused on antitrust defendants and the proper limits of defensive arguments, it nevertheless suggested something about the nature of antitrust injury and the category of purchasers who might be viewed as having experienced it. Nine years later, the Supreme Court addressed the issue directly in Illinois Brick, supra, 431 U.S. 720, 97 S.Ct. 2061.
The first case was B.W.I. Custom Kitchen, supra, 191 Cal.App.3d 1341, 235 Cal.Rptr. 228, which involved a class of indirect purchasers of glass containers who alleged that the corporate manufacturers of glass containers had engaged in a conspiracy to set noncompetitive prices for the containers in violation of the Cartwright Act and the UCL. (Id. at p. 1345, 235 Cal.Rptr. 228.) The trial court denied class certification. Our colleagues in Division Five reversed.
We now answer that open question.
As quoted above, section 16750, subdivision (a) provides that “[a]ny person who is injured in his or her business or property by reason of anything forbidden or declared unlawful by this chapter, may sue therefor ․ and ․ recover three times the damages sustained by him or her․” Recovery for the antitrust plaintiff is three times the “damages sustained.” What does that phrase mean?
The term “damages sustained” is not defined in the Cartwright Act. However, it is in other places and cases and, as will be seen, those authorities hold that the phrase refers to actual financial loss suffered. But two early California cases addressing the issue of damages in the context of the Cartwright Act also bear on the question, and we begin with discussion of those cases.
The court reasoned that plaintiff did not allege he suffered an injury as a result of a restraint in trade. At most, he alleged that he suffered an injury as a result of the “wrongful acts” of the defendants, which does not constitute a cause of action under the Cartwright Act. Rather, the court explained, “To be ‘injured in business or property,’ within the contemplation of [the Cartwright Act] ․ is where the injury has directly resulted from the fact of the existence of the trust-that is to say, where the business or property has directly sustained injury solely by reason of the restrictions in trade or commerce which are fostered by such trust or combination. In other words, while one whose business or property has been injured solely because of the restrictions in trade carried out by a trust organized and maintained for that purpose may maintain an action under the provisions of the anti-trust law for double the damages he has actually suffered from the injury so inflicted, yet he could not maintain an action based upon said law if the injury, although directly the result of the wrongful acts of the trust or the constituent members thereof, did not arise by reason of the restrictions in trade or commerce carried out by such trust or combination.” (Krigbaum, supra, 23 Cal.App. at p. 433, 138 P. 364.) Importantly for our purposes, the court recognized that recovery was only available for the damages the plaintiff actually suffered as a result of the antitrust violation.
Overland holds that an antitrust plaintiff must have “special damage.” It also teaches that a plaintiff who benefits from the alleged collusion lacks a Cartwright Act cause of action. This is the situation here, where the result of the passing on of the claimed overcharges is that plaintiffs' gross profits are higher. In sum, the only two Cartwright Act cases remotely addressing the issue demonstrate the plaintiffs' action has no merit.
CACI No. 3440, the Judicial Council of California Civil Jury Instruction on damages under the Cartwright Act, is instructive. It provides: “If you decide that [name of plaintiff ] has proved [his/her/its] claim against [name of defendant ], you also must decide how much money will reasonably compensate [name of plaintiff ] for the harm. This compensation is called ‘damages.’ [¶] The amount of damages must include an award for all harm that was caused by [name of defendant ], even if the particular harm could not have been anticipated. [¶] [Name of plaintiff ] must prove the amount of [his/her/its] damages․ [¶] The following are the specific items of damages claimed by [name of plaintiff ]: [¶] 1. [Loss of reasonably anticipated sales and profits]; [¶] 2. [An increase in [name of plaintiff ]'s expenses]; [¶] 3. [Insert other applicable item of damage ].” This instruction clearly contemplates that the damages recoverable under the Cartwright Act are intended to compensate the injured plaintiff for actual monetary loss suffered.
Our conclusion finds further support in the cases applying the term “damages sustained” in contexts other than the Cartwright Act. Thus, for example, Carter v. Agricultural Ins. Co. (1968) 266 Cal.App.2d 805, 807, 72 Cal.Rptr. 462, where, construing “damages sustained” in suits brought under former Code of Civil Procedure section 539, the court interpreted the term to mean “those [damages] suffered by [the plaintiff], his actual damages, to compensate him for the losses he has endured.” Likewise Scally v. W.T. Garratt & Co. (1909) 11 Cal.App. 138, 151, 104 P. 325, where, construing “damages sustained” in a jury instruction, the court stated that a plaintiff “could, manifestly, sustain such damages only as amounted to an actual loss to him.” Two old Supreme Court cases are to the same effect: Utter v. Chapman (1869) 38 Cal. 659, 663, 1869 WL 822 [absent fraud, “it is always the aim of the Court to give damages, and such damages only as will compensate the plaintiff for his loss”]; and De Costa v. Massachusetts Mining Company (1861) 17 Cal. 613, 617, 1861 WL 838 [plaintiff “could not recover beyond the injury sustained”]. While these cases do not involve antitrust claims or the Cartwright Act, nothing there, or elsewhere, suggests that the Legislature intended the phrase “damages sustained” to mean something different in the antitrust context.
Plaintiffs attempt to distinguish the above authorities on a variety of grounds. They argue Krigbaum, supra, 23 Cal.App. 427, 138 P. 364, and Overland, supra, 57 Cal.App. 366, 207 P. 412, are unpersuasive because neither case interpreted the phrase “damages sustained.” They object to reliance on non-Cartwright Act cases, complaining that as contract or tort actions they do not take into account the Act's “three-pronged policy objective.” They take exception to consideration of the phrase “damages sustained” in other statutes, claiming that it violates principles of statutory construction. And they criticize any reliance on cases that post-date the enactment of the Cartwright Act, deeming it “implausible” that such cases influenced the drafters of the Cartwright Act. None of these arguments is convincing.
Plaintiffs raise one final argument to attempt to dissuade us from holding that the language of section 16750 means what it says. Relying on Hughes v. Board of Architectural Examiners (1998) 17 Cal.4th 763, 776, 72 Cal.Rptr.2d 624, 952 P.2d 641 for the proposition that “[a] statute is regarded as ambiguous if it is capable of two constructions, both of which are reasonable,” plaintiffs argue that the United States Supreme Court in Hanover Shoe and Judge Sabraw here construed “virtually identical” language yet arrived at contradictory conclusions. As plaintiffs frame it: “The former read the language as excluding the pass-on defense; whereas the latter interpreted the statute as permitting it. For the language to be considered ambiguous, both readings must be ‘reasonable.’ The United States Supreme Court's reading must be considered at least ‘reasonable,’ given it has affirmed the reasoning on three separate occasions over the past four decades.” Plaintiffs' argument is unsound for several reasons.
The proof problems present in Hanover Shoe are not apparent in the record here. To the contrary, while plaintiffs resisted discovery on various grounds, Judge Sabraw specifically found that plaintiffs had not shown it was unduly burdensome or oppressive for them to produce data regarding purchases and sales of drugs, since the information was maintained electronically and could apparently be extracted and compiled with relative ease. Indeed, as early as 1978, commentators were noting the significance and utility of the computer in antitrust litigation. (See, for example, Board of Editors of the Federal Judicial Center, Manual for Complex Litigation (1978) § 2.717, p. 80.) And the technological developments in the ensuing 30 years can hardly be exaggerated.
Finally, Hanover Shoe relied on cases applying a privity rule that precluded indirect purchasers suits. (See 392 U.S. at pp. 489-490, 88 S.Ct. 2224, citing Southern Pac. Co. v. Darnell-Taenzer Co. (1918) 245 U.S. 531, 533-534, 38 S.Ct. 186, 62 L.Ed. 451.) In enacting the Illinois Brick repealer statute, the California Legislature confirmed in no uncertain terms that indirect purchaser suits are permissible in California.
In sum, the language of the Cartwright Act, all relevant case law, and all relevant statutes lead us to conclude that “three times the damages sustained” as used in section 16750 refers to actual monetary loss suffered by plaintiffs. Plaintiffs suffered no such loss, as the claimed overcharges were passed on, a pass-on that defeats plaintiffs here. In the language of the issue as framed by the parties, the pass-on defense is available in California.
In light of the result we reach, we perhaps need not engage in any further level of statutory interpretation. (MacIsaac, supra, 134 Cal.App.4th at p. 1083, 36 Cal.Rptr.3d 650.) But because the parties devote substantial portions of their briefs to the subject, we choose to address it and conclude that neither plaintiffs' extensive citation to legislative history nor their reliance on public policy supports any different conclusion.
In arguing that the legislative history supports their construction of section 16750, plaintiffs focus primarily on three distinct aspects of such history: the 1976 Hart-Scott-Rodino Act and the 1977 California equivalent, the 1978 Illinois Brick repealer amendment, and the California Attorney General's amicus brief in Illinois Brick.
The following year, the California Legislature passed Assembly Bill 1162 (AB 1162) which, according to the Bill Digest, was “modeled directly on federal law.” The bill codified the Hart-Scott-Rodino Act as California law, incorporating a parens patriae provision into the Cartwright Act. (§ 16760.) 16 The provision included language that was substantively identical to the Hart-Scott-Rodino Act's prohibition against duplicate recovery. (Cf., § 16760, subd. (a)(1) and 15 U.S.C. § 15c(a)(i).) The Assembly Bill Analysis confirmed that “AB 1162 would enact into law basically the same provisions enacted into federal law last year by the [C]ongress.” Plaintiffs also identify various writings suggesting AB 1162 was intended to parallel the Hart-Scott-Rodino Act, including letters from the Los Angeles and San Diego County District Attorneys.
According to plaintiffs, the foregoing establishes that (1) the Legislature intended AB 1162 to bring California law into line with the federal statute, (2) the federal statute was enacted to address the possibility of multiple liability, and (3) multiple liability can only occur if the pass-on defense is not permitted. Ergo, plaintiffs conclude, in passing AB 1162 the California Legislature implicitly recognized Hanover Shoe as the law in California. We are not persuaded.
First, and as Judge Sabraw observed, if the Legislature was in fact concerned with the threat of multiple liability, logically it would have included a safeguard against double recovery in section 16750 as well as in the parens patriae provision. Since it did not, one can reasonably conclude that it did not consider multiple liability in private actions a problem because the pass-on defense is available to defendants.
We cannot conclude that the legislative history of AB 1162 clearly demonstrates the Legislature's intent to reject the pass-on defense in California. Nor does the legislative history of Assembly Bill 3222 (AB 3222), the 1978 Illinois Brick repealer amendment.
Finally, plaintiffs rely on Union Carbide, supra, 36 Cal.3d 15, 201 Cal.Rptr. 580, 679 P.2d 14 to support their position that the 1978 amendment reflected the Legislature's claimed adoption of the Illinois Brick dissenting opinion in its entirety, including recognition of Hanover Shoe. Such reliance is misplaced.
Plaintiffs in Union Carbide were indirect purchasers of industrial gas and alleged that defendants, producers of industrial gas, “conspired to fix prices of the gas, causing plaintiffs to pay more for it than they would have paid in the absence of the conspiracy.” As pertinent here, defendants “demurred to the complaint, claiming a defect of parties (Code Civ. Proc., § 430.10, subd. (d); see § 430.30, subd. (a)), and moved to dismiss under section 389 for absence of indispensable parties.” (Union Carbide, supra, 36 Cal.3d at p. 19, 201 Cal.Rptr. 580, 679 P.2d 14, footnote omitted.) The trial court overruled the demurrer and denied the motion.
Citing one paragraph in Union Carbide-a paragraph of dictum, no less-plaintiffs argue that “the Union Carbide court adopted the view of the dissent in Illinois Brick that the risk of multiple liability was remote and that it could in any event be addressed through existing procedural mechanisms [¶] ․ [¶][and] the fact that the Supreme Court recognized that a danger of multiple liability could exist in any situation at all (albeit remote and procedurally ameliorated) necessarily presumes the recognition of Hanover Shoe.” 17 Hardly.
To begin with, the issue in Union Carbide was one of joinder, not the pass-on defense. Moreover, the opinion begins by describing precisely which part of the Illinois Brick dissenting opinion the Legislature had approved in the 1978 amendment to the Cartwright Act, “that indirect purchasers are persons ‘injured’ by illegal overcharges passed on to them in the chain of distribution.” (36 Cal.3d at p. 20, 201 Cal.Rptr. 580, 679 P.2d 14.) Nothing in Union Carbide supports the contention that the 1978 amendment included codification of Hanover Shoe-which, not incidentally, is not even mentioned in the majority opinion.
In sum, the legislative history does not establish the Legislature's intent to adopt Hanover Shoe's rejection of the pass-on defense. Nor does the public policy argued by plaintiffs.
Plaintiff's argument ignores the principle which calls for the equal treatment of claims and defenses, a principle fundamental to the holding in Illinois Brick, supra, 431 U.S. at p. 728, 97 S.Ct. 2061: “[W]hatever rule is to be adopted regarding pass-on in antitrust damages actions, it must apply equally to plaintiffs and defendants.” This rule, called the “golden rule” by Judge Sabraw, finds support in California law, illustrated, for example, by Civil Code section 1717, which provides that in an action based on a contract containing a provision that affords attorney fees and costs to one party to the action, the prevailing party is entitled to reasonable attorney fees whether or not he or she is specified in the contract.
Plaintiffs' second public policy argument is that “where the choice is between a windfall to plaintiffs and letting guilty defendants go free, liability must be imposed.” As plaintiffs describe it, they “were involuntarily subjected to an illegal price-fixing agreement that forced them to pay more than they should have; [defendants] masterminded this unlawful scheme and now seek to escape liability with their illegal profits intact.” This result, plaintiffs submit, is “expressly forbid[den]” by California policy.
Citing nothing in support of the adjective “expressly,” plaintiffs go on to discuss the deterrent and disgorgement purposes of actions under the Cartwright Act as recognized in Bruno, supra, 127 Cal.App.3d at p. 132, 179 Cal.Rptr. 342. And while deterrence and disgorgement are no doubt significant considerations, plaintiffs' argument ignores the fact that “compensation is the primary rationale for the allowance of private antitrust lawsuits․” (Bruno, supra, 127 Cal.App.3d at p. 132, 179 Cal.Rptr. 342.) In essence, plaintiffs' reading of Bruno stands the case on its head, placing the goal of deterrence above that of compensation, despite Bruno's express language to the contrary.
Furthermore, overlooked by plaintiffs is the fact that they themselves have already been paid for the claimed overcharges, so any recovery of the overcharges from defendants-not to mention treble recovery-would be a windfall to plaintiffs. In other words, whether a windfall is to be tolerated apparently turns on who receives it. Finally, we cannot help but note that the only thing that would keep plaintiffs from having “damages sustained” is that they have passed on all the claimed overcharges. A plaintiff who passed on only some of these charges would maintain “damages” for which it could state a Cartwright Act claim.
Plaintiffs also argue that recognizing the pass-on defense will deprive plaintiffs of incentive to sue for an antitrust violation, claiming that the “availability of the pass-on defense would virtually wipe-out all but end-consumer overcharge cases.” Maybe it will deprive plaintiffs of incentive, at least in the circumstances here, but those with damages have incentive indeed. The Cartwright Act itself provides ample incentive, in the form of treble damages, prejudgment interest, attorney fees, and costs. There is, in addition, the parens patriae provision, which authorizes the government to bring enforcement actions on behalf of private individuals who may lack incentive to bring a lawsuit to obtain compensation for their individual injuries.
To the extent that plaintiffs' argument intimates that recognition of the pass-on defense may discourage lawsuits by indirect purchasers because of the amount of damages, such is belied empirically. We saw this firsthand in the consolidated class action cases in In re Vitamin Cases (2003) 110 Cal.App.4th 1041, 1046, 2 Cal.Rptr.3d 358 [class of indirect purchasers of vitamins; total settlement of $80 million]. Other courts have seen it, too, as in In re Microsoft I-V Cases (2006) 135 Cal.App.4th 706, 710, 37 Cal.Rptr.3d 660 [two classes of indirect acquirers of licenses; “billion-dollar settlement agreement”] and In re Natural Gas Anti-Trust Cases (2006) 137 Cal.App.4th 387, 390-391, 39 Cal.Rptr.3d 909 [seven coordinated class action lawsuits; settlement of $1.55 billion].
For each and all of the above reasons, we conclude that Hanover Shoe is not the law in California.
Defendants moved for summary adjudication on this claim on two different grounds. First, they argued plaintiffs were not eligible for restitution, the sole monetary remedy available to private plaintiffs under the UCL, because they did not have an ownership interest in any monies defendants wrongfully obtained from the overcharges. Defendants also argued plaintiffs lacked standing under section 17204 because they did not lose money or property as required by that section.
Granting summary adjudication, Judge Sabraw first addressed the standing argument, concluding that plaintiffs lacked standing because they had not “lost money or property.” Alternatively, he concluded that the court could not “award monetary relief under section 17203 because [p]laintiffs do not have an ownership interest in whatever funds they paid as a result of any overcharge” and were therefore not eligible for restitution. We agree on both counts, but address the issues in reverse order, as briefed by the parties.
Plaintiffs suggest that the overcharges at issue here fall within the meaning of restitution because there is no dispute that the overcharge was originally in their possession. They argue that “[i]f a defendant violates the law and extracts an overcharge from a plaintiff, it is taking ‘money that was once in his possession,’ which must be restored.” Plaintiffs then submit that “no California authority holding that restitution awards must be lessened to the degree they were mitigated.” Plaintiffs are wrong. Madrid is dispositive.
Plaintiff Madrid, a customer of an electric company, filed a class action on behalf of electricity customers against various entities involved in restructuring the electricity market, alleging among other things UCL violations. Madrid sought recovery of “ ‘restitution to restore all funds acquired by means of any act or practice declared by this Court to be an unlawful or unfair business act or practice’ ”; he also sought equitable and injunctive relief, alleging that “[d]efendants' unfair and unlawful business practices include conspiring to establish phoney strategies designed to ‘game’ the California markets.” (Madrid, supra, at pp. 445-446, 449, 30 Cal.Rptr.3d 210.) Defendants demurred, and the trial court sustained the demurrer without leave to amend.
Plaintiffs' argument here is in different words the same argument rejected in Madrid. We also reject it.
Shersher v. Superior Court (2007) 154 Cal.App.4th 1491, 65 Cal.Rptr.3d 634, the authority cited by plaintiffs after briefing was completed, is not to the contrary. There, a purchaser of a wireless product manufactured by Microsoft Corporation and purchased at a retail store sued Microsoft for, among other things, violations of the UCL. Microsoft moved to strike the restitution claim, arguing that only direct purchasers could assert a UCL claim. The trial court granted the motion, concluding that “the availability of restitution under the UCL was limited to direct purchasers and excluded plaintiffs such as the [consumer] in this case, who purchased Microsoft's product from a retailer.” (Id. at p. 1494, 65 Cal.Rptr.3d 634.) The Court of Appeal issued a writ of mandate ordering the trial court to vacate its order granting the motion to strike, concluding that the recovery of restitution was not conditioned on the customer having made direct payments to the manufacturer. (Id. at p. 1498, 65 Cal.Rptr.3d 634.) Shersher is of no help to plaintiffs, because the question is not whether they can assert a claim for restitution as indirect purchasers but whether such a claim is viable where they suffered no monetary loss.
The summary judgment for defendants is affirmed.
1. All statutory references are to the Business and Professions Code unless otherwise noted.
2. Plaintiffs are James Clayworth, R.Ph., an individual, dba Clayworth Pharmacy and Clayworth Healthcare; Marin Apothecaries, Inc., dba Ross Valley Pharmacy; Golden Gate Pharmacy Services, Inc., dba Golden Gate Pharmacy; Pediatric Care Pharmacy, Inc.; Chimes Pharmacy, Inc.; Mark Horne, R.Ph., an individual, dba Burton's Pharmacy; Meyers Pharmacy, Inc.; Benson Toy, R.Ph., an individual, dba Marin Medical Pharmacy; Seventeen Fifty Medical Center Pharmacy, Inc.; Tony Mavrantonis, R.Ph., an individual, dba Jack's Drug; Julian Potashnick, R.Ph., an individual, dba Leo's Pharmacies; Jerry Shapiro, R.Ph., an individual, dba Uptown Drug, Co.; Tilley Apothecaries, Inc., dba Zweber's Apothecary; RP Healthcare, Inc.; Rohnert Park Drugs, Inc.; and JGS Pharmacies, Inc., dba Dollar Drugs.
3. Defendants are Abbott Laboratories; AstraZeneca LP; Novartis Pharmaceuticals Corp.; Allergan, Inc.; Boehringer Ingelheim Pharmaceuticals, Inc.; Eli Lilly & Company; Janssen Pharmaceutical, Inc.; Ortho McNeil Pharmaceutical, Inc.; Ortho Biotech, Inc.; GlaxoSmithKline; Pfizer, Inc.; Hoffman-LaRoche; Aventis Pharmaceuticals, Inc.; Amgen, Inc.; Purdue Pharma L.P.; Merck & Co., Inc.; Bristol-Myers-Squibb Company; Wyeth; Johnson & Johnson Health Care Systems Inc., which apparently does not manufacture, market, or distribute pharmaceutical products; and Pharmaceutical Research and Manufacturers of America, a U.S.-based nonprofit trade association.
5. Plaintiffs also sought summary adjudication on other affirmative defenses. These were not ruled on below, and are not at issue here.
6. This motion assumed arguendo that defendant did in fact engage in price-fixing. At the same time, defendants filed a motion for summary judgment on the merits of plaintiffs' claims, which motion was pending at the time the motions at issue here were decided.
7. Plaintiffs also filed a request for judicial notice in this court, asking us to take notice of two items from the litigation in the United States District Court in In re TFT-LCD (Flat Panel) Antitrust Litigation-This Document Relates to All Indirect Actions, Master File No. M-07-1827 SI, MDL No. 1827: (1) the amicus brief of the State of California filed by the Attorney General, and (2) request for judicial notice filed by the Attorney General. We granted the request at oral argument.
10. In the 40 years since Hanover Shoe, the Legislature has amended the Cartwright Act six times: Stats.1969 ch. 1234, p. 2395; Stats.1972 ch. 1140, p. 2207; Stats.1977 ch. 540, p. 1741; Stats.1978 ch. 536, p. 1693; Stats.1983 ch. 1069, p. 3772; and Stats.1987 ch. 865, p. 2742.
11. One Supreme Court case, Union Carbide Corp. v. Superior Court (1984) 36 Cal.3d 15, 201 Cal.Rptr. 580, 679 P.2d 14 (Union Carbide ), mentions Hanover Shoe, but only in the dissenting opinion; id. at p. 26, 201 Cal.Rptr. 580, 679 P.2d 14. We ourselves discussed Hanover Shoe in Crown Oil Corp. v. Superior Court (1986) 177 Cal.App.3d 604, 608-609, 223 Cal.Rptr. 164, where the issue was whether the 1978 amendment to the Cartwright Act was preempted by federal law.
We concur: KLINE, P.J., and HAERLE, J.

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