Opinion ID: 195406
Heading Depth: 3
Heading Rank: 1

Heading: The Nature of the Injury: Is it Antitrust Injury?

Text: 20 Sullivan contends that he has suffered antitrust injury, that is, the type of injury that the antitrust laws were designed to prevent. He relies principally on McCready, 457 U.S. at 465, 102 S.Ct. at 2540, and Los Angeles Coliseum, 791 F.2d at 1356, to support this claim. 21 The Supreme Court first articulated the concept of antitrust injury in Brunswick Corp. v. Pueblo Bowl-O-Mat, 429 U.S. 477, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977). In Brunswick, several small bowling centers brought suit, challenging the acquisition of several of their competitors by the much larger Brunswick Corporation as an anticompetitive merger under Section 7 of the Clayton Act, 15 U.S.C. Sec. 18, and seeking treble damages under Section 4 for profits they would have made had the acquired centers gone out of business. Id. at 480-81, 97 S.Ct. at 693. 22 Although plaintiffs had alleged that Brunswick had engaged in predatory practices designed to lessen competition in the markets it had entered, they could prove only that Brunswick's acquisitions had deprived them of profits they would have made had the acquired firms closed. Id. at 488, 490 & nn. 15, 16, 97 S.Ct. at 697, 698 & nn. 15, 16. The Court noted that, in essence, plaintiffs were not complaining that Brunswick's actions had reduced competition, but preserved it, thereby depriving plaintiffs of the benefits of increased concentration. Id. at 488, 97 S.Ct. at 697. Rejecting the lower court's holding that any loss causally linked to the mere presence of the violator in the market was compensable, id. at 486-87, 97 S.Ct. at 696, the Court found that plaintiffs' injury was not of  'the type the [antitrust laws] were intended to forestall,'  429 U.S. at 487-88, 97 S.Ct. at 696-97 (citation omitted). The Court held that to recover treble damages under Section 4, a plaintiff must prove antitrust injury, which is to say injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants' acts unlawful. Id. at 489, 97 S.Ct. at 697 (emphasis in original). 23 In Blue Shield of Virginia v. McCready, 457 U.S. 465, 102 S.Ct. 2540, 73 L.Ed.2d 149 (1982), the first case explicitly to address antitrust standing, the Court incorporated a focus on antitrust injury into its Section 4 standing inquiry. The plaintiff in McCready was a subscriber of Blue Shield, a health insurance plan that did not provide reimbursement for psychotherapy treatment rendered by psychologists (unless prescribed by and billed through a medical doctor), while providing reimbursement for the same treatment if given by a psychiatrist. McCready was treated by a psychologist, and Blue Shield refused to reimburse her for this treatment. McCready brought suit, alleging that Blue Shield and an association of psychiatrists had engaged in an unlawful conspiracy  'to exclude and boycott clinical psychologists from receiving compensation under'  the Blue Shield plans, and that Blue Shield's failure to reimburse was in furtherance of this conspiracy. McCready, 457 U.S. at 470, 102 S.Ct. at 2543. 24 The defendants argued that McCready had not suffered antitrust injury because her injury did not reflect the anticompetitive effect of the alleged antitrust violation. Id. at 481-82, 102 S.Ct. at 2549-50. McCready had not paid inflated fees for psychotherapy to psychiatrists, the supposed beneficiaries of the conspiracy; nor had she alleged that her psychologists' bills were higher than they would have been had the conspiracy not existed. Id. at 481, 102 S.Ct. at 2549. 25 The Court, however, refused to so limit recovery. While not a competitor of the conspirators, the injury McCready suffered--sanction in the form of the unreimbursed psychologists' services--was inextricably intertwined with the injury the conspirators sought to inflict on the market. Id. at 483-84, 102 S.Ct. at 2550-51. McCready suffered injury by virtue of the role she played in Blue Shield's anticompetitive scheme. Denying reimbursement to patients of psychologists was the very means by which Blue Shield coerced her to choose between becoming an unwilling participant in its illegal campaign to boycott the services of psychologists, or to pay the costs of treatment for the therapist of her choice from her own pocket. The harm to McCready was thus a necessary step in effecting the ends of the alleged illegal conspiracy. Id. at 479, 102 S.Ct. at 2548. The Court therefore found that McCready's injury  'flow[ed] from that which makes defendants' acts unlawful,' within the meaning of Brunswick, falling squarely within the area of congressional concern. Id. at 484, 102 S.Ct. at 2551. 26 Sullivan argues that the logic of McCready supports his standing. In Sullivan's view, the NFL rule at issue affected competition in the market for football stadia by preventing SMC from obtaining refinancing to pay for renovations that would have led the Patriots to extend their lease, and by interfering with the Patriots' capacity to invest money in the maintenance of their stadium, thus undermining SMC's ability to keep the Patriots from breaking their lease with SMC and moving to another location. Further, the injury to SMC was inextricably intertwined with that to the owner of the New England Patriots, since SMC expected to benefit from a joint proposal to conduct a public offering of a minority ownership in the team; and was an integral aspect of the conspiracy against the owner of the Patriots and was likely to result from the implementation of that conspiracy. 27 Like McCready, Sullivan claims, neither the fact that SMC stood in a vertical relationship to the intended victim of the alleged antitrust violation (purchasers of NFL franchises), nor the fact that SMC's injuries might be characterized as indirect deprive SMC of standing. Likewise, Sullivan's failure to show an increase in price or a lessening of supply in the stadia market, and the fact that Sullivan's personal losses might be derivative of those suffered by SMC are not dispositive. Sullivan points out that McCready's losses, for example, were at least in part derivative of those suffered by her employer, who as the direct purchaser of the group health insurance from Blue Shield, presumably did not get the benefit of its bargain with Blue Shield. 28 We disagree that McCready favors Sullivan's right to sue. Sullivan is correct that McCready did stand, in part, for the Court's refusal to limit recovery to those whose injuries result from the anti-competitive effect of the violation, and to extend available recovery at least to some parties who stand in vertical relationship (such as customers) to the direct victim of an antitrust violation. 10 Thus, the fact that SMC was not a competitor in the market for professional football teams, the direct victim of the alleged antitrust violation, but in the related market for football stadia, does not by itself mean that he lacks standing here. See McCready at 472, 102 S.Ct. at 2544 (refusing to engraft artificial constraints on Section 4, stating that  'the statute does not confine its protection to consumers, or to purchasers, or to competitors, or to sellers' ) (internal citation omitted). 29 The circuits are split, however, over the question of whether a plaintiff must be either a consumer or competitor in the market harmed by the antitrust violation at issue in order to establish antitrust injury. Some courts have held that a plaintiff may establish antitrust injury by proof that he was a consumer or competitor in the relevant market, or by showing that his injury was inextricably intertwined with the injury to competition, in that the plaintiff was  'manipulated or utilized by [d]efendant as a fulcrum, conduit or market force to injure competitors or participants in the relevant product and geographic market.'  Province v. Cleveland Press Pub. Co., 787 F.2d 1047, 1052 (6th Cir.1986) (quoting Southaven, 715 F.2d at 1086); see Ostrofe v. H.S. Crocker Co., Inc., 740 F.2d 739, 745-46 (9th Cir.1984) (though neither a consumer nor competitor in the relevant market, fact that injury to plaintiff was a necessary means to achieve the conspirators' illegal end sufficient to establish antitrust injury); Ashmore v. Northeast Petroleum Division of Cargill, 843 F.Supp. 759, 769-70 (same); Donahue v. Pendleton Woolen Mills, 633 F.Supp. 1423, 1435-39 (S.D.N.Y.1986) (following Ostrofe ). 11 30 Other courts have interpreted Supreme Court caselaw and the antitrust laws more narrowly, holding that a plaintiff must be a market participant in order to establish antitrust injury. See Bichan v. Chemetron Corp., 681 F.2d 514, 519 (7th Cir.1982) (Section 4 protects only parties injured as customers or competitors in a defined market, or in a discrete area of the economy); see also Winther v. DEC International, Inc., 625 F.Supp. 100, 102-03 (D.Colo.1985). We need not resolve this conflict, because even under a broad reading of McCready, SMC cannot support its claim of antitrust injury. 31 Read broadly, McCready extends antitrust standing to parties who can establish that their injury was a necessary step and the means employed by the conspirators to achieve their illegal ends, regardless of the parties' direct market participation. See McCready, 457 U.S. at 479, 484 n. 21, 102 S.Ct. at 2548, 2551 n. 21; Ostrofe, 740 F.2d at 745-46; Ashmore, 843 F.Supp. at 768-70 & nn. 16, 18. Unlike McCready and her co-plaintiffs, neither Sullivan nor SMC were necessary instruments to effectuate the alleged conspiracy. Denying stadium refinancing was not a necessary step in restraining competition in the market for professional football franchises, nor the very means by which the defendants sought to do so. Indeed, according to plaintiff's own complaint, the purpose of the NFL policy was to exclude competitive entry into the business of professional football by ... television companies, motion picture producers, investment bankers, owners of other professional sports teams, home entertainment companies, and entertainment companies generally. The policy is not alleged to have a similar anticompetitive effect on stadia. Moreover, the instruments of the alleged conspiracy were the NFL and member club owners, not Sullivan or SMC. 32 Nor does the Ninth Circuit's holding in Los Angeles Coliseum bolster Sullivan's claim that he suffered antitrust injury. In that case, the Los Angeles Coliseum and the Oakland Raiders attempted to negotiate a deal to relocate the Raiders to Los Angeles to play in the Coliseum (the Rams' old home field), following the Rams' move to Anaheim. In its effort to block this move, the NFL invoked a league rule requiring three-fourths of the member teams to approve a team's relocation into another team's league territory. The Coliseum and the Raiders brought suit, claiming that this was an unlawful restraint of trade, in violation of Section 1 of the Sherman Act, 15 U.S.C. Sec. 1. A jury found that the NFL rule violated the antitrust laws, and awarded damages to both the Coliseum and the Raiders. 33 In holding that the Coliseum had standing to bring this antitrust action, the court found that the Coliseum had suffered antitrust injury, because the NFL had restrained competition ... among football stadia by restraining the Raiders['] attempt to move and operate in Los Angeles. 791 F.2d at 1364 (emphasis in original). Had the Raiders been permitted to move to Los Angeles, the Coliseum would have been able to bid effectively to have them as a tenant. The rule restraining such a move, the court held, was precisely of the type that the antitrust laws were designed to prevent. Id. 34 The rule at issue here posed no similar restraint on SMC's capacity to compete for a pro football team's tenancy. In fact, in 1987, the year of the attempted sale, SMC and the Patriots had a lease that ran until the year 2002, regardless of the team's ownership.