Opinion ID: 155491
Heading Depth: 2
Heading Rank: 1

Heading: Antitrust Standing Generally

Text: 17 The district court granted summary judgment on the basis of lack of standing on behalf of Freeman and SRS, and therefore it did not address the merits of their claims. Accordingly, this appeal focuses on the issue of standing, and requires us to look at the concept of standing in relationship to the substantive claims. 18 To maintain standing to bring an antitrust claim under § 4 of the Clayton Act, 15 U.S.C. § 15, a plaintiff must show (1) an antitrust injury; and (2) a direct causal connection between that injury and a defendant's violation of the antitrust laws. As we have stated in earlier explanations of this two-pronged test: 19 [t]o meet the first prong [plaintiffs] must allege a business or property injury, an antitrust injury, as defined by the Sherman Act. An antitrust injury is defined as an injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants' acts unlawful. A violation of the Act without resultant injury to the [plaintiffs] is insufficient to confer standing. To establish the second prong of antitrust standing, [plaintiffs] must show the antitrust injury resulted directly from [defendants'] violation of antitrust law. 20 City of Chanute, 955 F.2d at 652 (internal citations and quotations omitted). Factors to consider in evaluating antitrust standing include: 21 (1) the causal connection between the alleged antitrust violation and the harm; (2) improper motive or intent of defendants; (3) whether the claimed injury is one sought to be redressed by antitrust damages; (4) the directness between the injury and the market restraint resulting from the alleged violation; (5) the speculative nature of the damages claimed; and (6) the risk of duplicative recoveries or complex damage apportionment. 22 Id. n. 14 (citing Reazin v. Blue Cross & Blue Shield of Kan., Inc., 899 F.2d 951, 962 n. 15 (10th Cir.1990)); see generally Associated Gen. Contractors v. California State Council of Carpenters, 459 U.S. 519, 534-45, 103 S.Ct. 897, 906-12, 74 L.Ed.2d 723 (1983). The enumerated factors are not black-letter rules, however, but merely give more specificity to the inquiry mandated by the two-part test. Sharp v. United Airlines, Inc., 967 F.2d 404, 406, 407 n. 2 (10th Cir.1992). 23 With regard to Freeman, the district court focused on the second prong of the standing test to find that he did not allege a direct injury and thus had no right to recovery. With regard to SRS, the district court concluded that SRS could show no antitrust injury based on the first prong. Standing is a question of law that we review de novo. See City of Chanute, 955 F.2d at 652. 24 To some extent, the standing analysis must take into account the type of antitrust claim being asserted. Plaintiffs' standing in this case is thus best understood in the context of their asserted claims--monopolization under Sherman Act § 2 and tying under Sherman Act § 1. As explained below, we agree with the district court that Freeman lacks standing to pursue the monopolization claim because he is an indirect purchaser, but by the same token, we conclude that SRS does have standing to assert the monopolization claim because it is the direct purchaser of cars and parts. Contrary to the district court's conclusion, allowing standing to the direct purchaser eliminates rather than creates speculation regarding injury because the amount of damages is the amount of overcharges to the direct purchaser, and any passing on of overcharges to the downstream buyers is ignored. We also conclude that as a potential competitor foreclosed from entering the market for Spec Racer cars and parts, SRS has standing to assert both the monopoly and tying claims. Further, we conclude that Freeman is not barred by the direct purchaser doctrine from pursuing the tying claim because he is the direct purchaser of the tying product and he was forced to purchase the tied product directly from the source dictated by defendants, even though defendants were not the direct seller of the tied product to Freeman. 25 The standing analysis in this case turns largely on application of the direct purchaser rule. SRS is the direct purchaser of cars and parts from Enterprises, which plaintiffs claim is both the product over which defendants exercise a monopoly and the tied product in their tying claim. Freeman is only an indirect purchaser of cars and parts because any cars and parts he purchased were purchased through SRS. However, he is a direct purchaser of SCCA's racing services, which plaintiffs claim is the tying product or service--that is, Freeman directly purchased SCCA's racing services when he sought to race in SCAA-endorsed races. 26 The Supreme Court has consistently held that only direct purchasers suffer injury within the meaning of § 4 of the Clayton Act. The Court first addressed this issue in Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481, 88 S.Ct. 2224, 20 L.Ed.2d 1231 (1968). In that case, Hanover alleged that United Shoe had monopolized the shoe manufacturing machinery industry, and it sought damages for overcharges it paid for leasing machinery from United Shoe. United Shoe defended in part on the ground that Hanover had passed on the overcharge to its customers and therefore suffered no injury. See id. at 487-88, 88 S.Ct. at 2228. The Court rejected this defense, holding that the injury occurs and is complete when the defendant sells at the illegally high price (even if the buyer is only an intermediate buyer), see id. at 489, 88 S.Ct. at 2228-29, and that it would be unworkably difficult, considering the variety of factors that affect pricing policies, to try to determine the amount of the overcharge that the intermediate buyer passed on to the end user. See id. at 492-93, 88 S.Ct. at 2231. Thus, the Court held that the antitrust claim properly lay with the direct (or first) purchaser from the defendant, without reduction for any pass-on recoupment that buyer might realize. We think it sound to hold that when a buyer shows that the price paid by him for materials purchased for use in his business is illegally high and also shows the amount of the overcharge, he has made out a prima facie case of injury and damage within the meaning of § 4. Id. at 489, 88 S.Ct. at 2229. 27 In Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977), the Court confronted the attempted offensive use of a pass-on theory by indirect purchasers. Illinois Brick and other concrete block manufacturers had sold concrete blocks to masonry subcontractors who in turn sold them to general contractors working for the State of Illinois. The state was thus an indirect purchaser of the blocks in the sense that it did not directly purchase the blocks from the antitrust defendants. The state brought an action under § 1 of the Sherman Act alleging that the manufacturers had conspired to fix and raise the price of blocks, which artificially high price was ultimately passed down to it as the ultimate buyer. The Court concluded that whatever rule is to be adopted regarding pass-on in antitrust damages actions, it must apply equally to plaintiffs and defendants. Id. at 728, 97 S.Ct. at 2066. Rejecting the state's claim, the Court concluded that there was no reason to abandon the Hanover Shoe rule; rather, the full antitrust damages should be recoverable by the direct purchaser from the antitrust defendant, and no subsequent purchasers should be allowed to sue to recover any such damages, even though the direct purchaser may have successfully passed on to a subsequent purchaser part or all of the illegally inflated price for the product in question. The court observed that allowing indirect purchasers to sue for the passed-on portion of damages suffered by the direct purchaser would create a risk of multiple liability for defendants, see id. at 730, 97 S.Ct. at 2066-67, create extremely complex damages determinations requiring difficult apportionment efforts, see id. at 731-32, 737, 97 S.Ct. at 2067-68, 2070, and create unwieldy multiparty litigation, see id. at 737-41, 97 S.Ct. at 2070-72. Instead, the policy of encouraging vigorous private enforcement of the antitrust laws is better served by holding direct purchasers to be injured to the full extent of the overcharge paid by them than by attempting to apportion the overcharge among all that may have absorbed a part of it. Id. at 746, 97 S.Ct. at 2075. As such, the Court held that antitrust claims are properly brought only by direct and not by indirect purchasers from the antitrust defendants. 28 Kansas v. UtiliCorp United, Inc., 497 U.S. 199, 110 S.Ct. 2807, 111 L.Ed.2d 169 (1990), strongly reaffirmed Illinois Brick and its underlying reasoning in a situation involving overcharges passed on to utility consumers through a regulated utility. The plaintiffs in UtiliCorp were the states of Kansas and Missouri who sued a pipeline and five gas production companies for conspiracy to inflate the price of gas. The states were acting as parens patriae and were asserting the claims of the ultimate purchasers/consumers of the gas. The ultimate purchasers, however, were indirect purchasers from the antitrust defendants because they purchased the gas from utility companies who had purchased it from the defendants. The plaintiffs contended that the Illinois Brick rule should not apply here because the direct purchasers were regulated utilities who passed on all of the overcharges to their customers. Noting that the rationale underlying Illinois Brick and Hanover Shoe might not apply in all cases, the Court nevertheless declined to create an exception, stating that the possibility of allowing an exception, even in rather meritorious circumstances, would undermine the [direct purchaser] rule and would result in an unwarranted and counterproductive exercise to litigate a series of exceptions. UtiliCorp, 497 U.S. at 216-17, 110 S.Ct. at 2817. 29