Opinion ID: 4033619
Heading Depth: 2
Heading Rank: 3

Heading: Defining Federal Common Law

Text: We begin with the Restatement. Consistent with Gulfstream’s requirement that an “intention” to assign a federal antitrust claim be manifested expressly, 995 F.3d at 438-39, the Restatement states: “It is essential to an assignment of a right that the obligee manifest an intention to transfer the right to another person . . . .” Restatement (Second) of Contracts § 324 (Am. Law Inst. 1981). And in discussing “Assignments and Delegation,” the Second 15 We also recognize that the Restatement may lose some of its persuasive force if it can be demonstrated that there has been a fundamental shift in the status of the law on a given topic in the years since the Second Restatement’s publication in 1981. We have not detected any such tectonic shift in the law of assignments at issue in this case. 23 Restatement expressly addresses gratuitous assignments— that is, assignments given without consideration.16 Restatement (Second) of Contracts § 332. Specifically, it provides: “Unless a contrary intention is manifested, a gratuitous assignment is irrevocable if . . . the assignment is in writing.” Id. In other words, so long as an assignment is written and express, it is valid under the Restatement, even absent consideration. Appellees object that the Second Restatement’s discussion of assignments is “limited to rights, duties, and conditions arising under a contract or for breach of a contract” such as “debts, rights to non-monetary performance and rights to damages and other contractual remedies,” and does not extend to what were historically known as “choses in action,” which include “debts of all kinds, tort claims, and rights to recover ownership or possession of real or personal property”—i.e., non-contractual causes of action. Restatement (Second) of Contracts § 316 & cmt. a (“The 16 Appellees’ strained argument that “gratuitous” and “without consideration” are inherently different is foreclosed by the Restatement’s description of a gratuitous assignment, Restatement (Second) of Contracts § 332 (defining a gratuitous assignment as any assignment “unless it is given or taken . . . in exchange for a performance or return promise that would be consideration for a promise”), and by the definition of “gratuitous” in Black’s Law Dictionary, Black’s Law Dictionary 143, 816 (10th ed. 2009) (defining “gratuitous” as “given without consideration in circumstances that do not otherwise impose a duty” and “gratuitous assignment” as “[a]n assignment not given for value”). 24 rules stated here may have some application to noncontractual choses in action, but the transfer of noncontractual rights is beyond the scope of the Restatement of this Subject.”). The Restatement itself, however, makes clear that this limitation is based on an antiquated distinction between contractual rights and choses in action that no longer has a significant effect on the common law. In § 317, which defines “what can be assigned or delegated,” the Restatement explains that “the historical common-law rule that a chose in action could not be assigned has largely disappeared.” Id. § 317 cmt. c; accord id. Chapter 15 Introductory Note (“The historic rule in the common-rule courts of England was that a ‘chose in action’ could not be assigned. The scope of that rule was progressively narrowed . . . . Little remains of it today.”). Moreover, while not citing the Restatement for this purpose, we similarly noted in In re Fine Paper Litigation, which dealt with the assignment of an antitrust claim, that “[a]lthough the common law did not favor the assignment of causes of action, by and large that attitude has been overcome.” 632 F.2d at 1090. Thus, what Appellees attempt to erect as a historical and definitional roadblock, we resolve with a short detour, concluding that the Second Restatement remains the most persuasive authority for assessing whether assignment of an antitrust claim requires consideration. Having concluded that it does not, we proceed to consider whether such a rule comports with the underlying purposes of antitrust law generally and the doctrine of direct purchaser standing specifically. See Gulfstream, 995 F.2d at 438. Illinois Brick directs us to prioritize three goals with regard to direct purchaser standing: avoiding duplicitous litigation, streamlining damages calculations, and preventing 25 disincentives for private antitrust suits. 431 U.S. at 730-32, 745-47. While our requirement that assignments of federal antitrust claims be express advances these goals, see Gulfstream, 995 F.2d at 440, requiring consideration does not. As such, adopting the Restatement rule as our federal common law rule in this context is in line with the “overall purposes of the antitrust statutes.” Id. at 438. Conversely, requiring consideration for the assignment of a federal antitrust claim could discourage private enforcement of the antitrust laws in derogation of Illinois Brick. Part of creating incentives for private antitrust suits is making federal courts a welcome forum for such litigation, and erecting the barrier of consideration threatens to shut out otherwise meritorious suits from resolution. True, in some circumstances, consideration could spur such private suits because an assignee who pays valuable consideration for the right to sue might be more likely to actually bring suit in order to recoup its investment. But in situations like the one at issue in this case, if a direct purchaser is uninterested in pursuing its claims, whether because it deems them valueless or because it cannot afford the expense of litigation, an otherwise willing and interested assignee might be discouraged from pursuing the suit in the direct purchaser’s stead if it were required to provide consideration. Here, for example, the record reflects that R&R assigned its antitrust claim to Tauro in part because it believed—in error—that because it had sold its trucks to Tauro, it no longer had any claim itself. Had R&R not assigned its claim, it is far from clear that it ever would have pursued its direct purchaser claims. In short, because requiring consideration could hinder the private enforcement of antitrust laws, that rule would not accord with the goals Illinois Brick. 26 Appellees counter that our requirement in Gulfstream that assignments be express was intended to “create[] an additional obstacle for assigning direct-purchaser antitrust claims,” and, as a result, it would “flout the antitrust policy considerations animating Gulfstream’s holding” to allow assignments to proceed absent consideration by “mak[ing] it easier for a direct purchaser to assign its claims.” Appellees’ Br. 20. Gulfstream, however, is not such a blunt tool. We imposed the “express assignment” requirement in that case not to signal that courts should erect as many hurdles to assigning antitrust claims as possible, but rather in an effort to bring our case law in line with the rationales underlying Illinois Brick. See 995 F.2d at 438-40. Specifically, we reasoned that an effective assignment must directly reference antitrust claims in order to ensure that any transfer of direct purchaser status is crystal clear, thereby “eliminat[ing] any problems of split recoveries or duplicative liability.” Id. at 440. While requiring an express assignment therefore advances the Supreme Court’s goal to prevent duplicative liability (and, in so doing, advances another Illinois Brick goal: streamlining damages calculations), we are not persuaded that requiring the parties to an assignment to exchange consideration has the same effect. On the contrary, while Appellees point out the possibility of duplicitous liability in federal and state courts if federal common law does not require consideration yet state law does, their proposed requirement of consideration only gives rise to the mirror image of that same problem—i.e., an assignment given with consideration in a state that does not require consideration would empower an assignee to bring a state antitrust claim and an assignor to bring any federal claims. Our disposition today thus does not eliminate the 27 possibility that an assignment in some instances will be valid for federal but not for state claims, but that is a necessary consequence of our federalist system of government, and the resolution we adopt better comports with the goals of federal antitrust law. Our task, after all, is to create a federal rule applicable regardless of the assignment’s state of origin. If we are constrained to rules that in no way impact or depart from state law, then federal common law would simply track state law—an outcome foreclosed by Gulfstream’s exhortation to national uniformity. In sum, we conclude that consideration has little role to play in advancing the goals of Illinois Brick and requiring it could affirmatively undermine one of them by, in certain circumstances, discouraging private enforcement of the federal antitrust laws. We therefore hold, consistent with the Second Restatement of Contracts, that consideration is not required under federal common law to give effect to an otherwise express assignment.