Opinion ID: 2379970
Heading Depth: 3
Heading Rank: 1

Heading: Restitution to Indirect Purchasers

Text: [¶ 22] Indirect purchasers are individuals who do not deal directly with those engaging in the unfair trade practice or activity. Rather, indirect purchasers are injured when the costs of illegal activities are passed down the distribution chain. Robert F. Roach, Revitalizing Indirect Purchaser Claims: Antitrust Enforcement Under New York Law, 13 PACE L. REV. 9, 11 (1993). The United States Supreme Court addressed the issue of indirect purchaser recovery in Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977), and in California v. ARC America Corp., 490 U.S. 93, 109 S.Ct. 1661, 104 L.Ed.2d 86 (1989). [¶ 23] In Illinois Brick Co., indirect purchasers [2] brought an antitrust action against manufacturers of concrete blocks. 431 U.S. at 726, 97 S.Ct. 2061. The indirect purchasers alleged that the manufacturer had engaged in a price-fixing conspiracy. Id. Citing a number of policy concerns, the Supreme Court held that the indirect purchasers were not entitled to recover. Id. at 730-35, 97 S.Ct. 2061. The Court reasoned that allowing indirect purchasers to recover would: (1) create a serious risk of multiple liability for defendants; [3] (2) create evidentiary complexities; [4] and (3) not be the most effective method of enforcing the antitrust laws. [5] Id. [¶ 24] In California v. ARC America Corp ., Alabama, Arizona, California, and Minnesota alleged that cement manufacturers had engaged in a nationwide conspiracy to fix cement prices. 490 U.S. at 97, 109 S.Ct. 1661. The states, which were indirect purchasers of the cement, asserted that their respective state antitrust laws permitted indirect purchasers to recover all of the overcharges passed on to them by the direct purchasers. Id. at 98, 109 S.Ct. 1661. Alabama, California, and Minnesota's antitrust laws expressly authorize recovery to indirect purchasers. Id. at 98 n. 3, 109 S.Ct. 1661. Arizona's antitrust statute, like Maine's UTPA, is guided by federal law. Id. The Supreme Court determined that although antitrust recovery is limited to direct purchasers under federal law, indirect purchasers may recover under state antitrust laws. Id. at 101-03, 109 S.Ct. 1661. [¶ 25] In FTC v. Mylan Laboratories, Inc., 62 F.Supp.2d. 25 (D.D.C.1999), the District Court addressed the issue of indirect purchaser recovery under Maine's UTPA. In that case, the FTC and thirty-two states brought an action against drug companies for federal and state antitrust law violations. Id. at 32. The District Court initially found that indirect purchasers in Maine were not entitled to recovery under the UTPA. Id. at 48. Upon a motion for reconsideration, the Mylan court reinstated Maine's claims for restitution on behalf of ... indirect purchasers under the Maine Unfair Trade Practices Act (UTPA). FTC v. Mylan Lab, Inc., 99 F.Supp.2d 1, 7 (D.D.C.1999). [¶ 26] ARC and Mylan establish that indirect purchasers may recover pursuant to Maine's UTPA. In addition, 5 M.R.S.A. § 209 gives the court authority to make orders or judgments as may be necessary to restore to any person who has suffered any ascertainable loss by reason of the use or employment of such unlawful method, act or practice, any moneys or property, real or personal, which may have been acquired by means of such method, act or practice. 5 M.R.S.A. § 209 (emphasis added). Each claim for violation of the UTPA and recovery of restitution must be judged on its own facts. Binette, 688 A.2d at 906. Based on the particular facts of this case, the indirect purchasers of Weinschenk/RWB houses are not entitled to restitution. [¶ 27] There is evidence that the direct purchasers of Weinschenk/RWB houses reasonably relied on Weinschenk and RWB's representations to them that their houses would be of good quality and that they sustained a substantial injury when the houses delivered were not of the promised construction quality. There is no evidence that the indirect purchasers relied on Weinschenk or RWB's misrepresentations or that the indirect purchasers sustained either a substantial injury or an ascertainable loss as a result of Weinschenk and RWB's misrepresentations. Rather, indirect purchasers had the opportunity to inspect the houses before purchasing them. The indirect purchasers may have relied on representations made by the original purchasers, but they did not rely on misrepresentations made by Weinschenk or RWB. Furthermore, while direct purchasers may have overpaid for Weinschenk/RWB houses, because they believed they were purchasing high quality houses free from substantial defects, there is no evidence that the overcharge was passed on to the indirect purchasers. The indirect purchasers may have received a discounted price as a result of the indicated defects. If so, they would have suffered no ascertainable loss, and a restitution payment would be a windfall. [¶ 28] Only the direct purchasers, Mullen, Tufts, Thibodeau, and Novotny, are entitled to recover restitution.