Opinion ID: 2995956
Heading Depth: 1
Heading Rank: 5

Heading: Associated General Contractors

Text: AGC requires a court to examine through a case-by-case analysis the link between a plaintiff’s harm and a defen- ŒŒŒ The fact that the defendants were hoping to profit in the physical market, ultimately, through their manipulation of the separate futures market, also has implications for their arguments related to the so-called “umbrella standing” theory. The defendants object to the possibility that they might be held responsible for higher copper prices throughout the physical market, rather than just for the sales they made. If this were an ordinary cartel case, in which cartel members A and B sell to customers X and Y, and then non-cartel member firm C makes sales at or near the enhanced cartel price to customer Z, the question arises whether A and B are liable to Z for the overcharges it paid. See generally, ABA Section of Antitrust Law, 1 Antitrust Developments (Fourth) at 778-79 & n.128 (1997) (collecting cases on umbrella standing). Here, however, we have a conspiracy to rig prices for the entire physical market, accomplished through manipulation of the Comex futures market. Another possible analogy might be to rigging product standards, which affects everyone who tries to participate in a particular product market. In the latter case, the defendants who manipulated the standards cannot be heard to complain that they should be immune from damages for a product they did not sell. We leave this issue open for further exploration at the district court level, now that we have clarified how the direct purchaser rule and the remoteness doctrine of AGC apply here. Nos. 00-3979, 01-1148, 01-3229, 01-3230, 01-3485 21 dant’s wrongdoing. 459 U.S. at 535-36. We are to consider a number of factors in this analysis, notably (1) the causal connection between the violation and the harm; (2) the presence of improper motive; (3) the type of injury and whether it was one Congress sought to redress; (4) the directness of the injury; (5) the speculative nature of the damages; and (6) the risk of duplicate recovery or complex damage apportionment. Id. at 537-45; Sanner, 62 F.3d at 927. The defendants concede only the second factor: they admit that each of the plaintiffs has adduced evidence sufficient to survive summary judgment that they intended artificially to inflate the price of both copper futures and physical copper in order to reap millions of dollars in profits. They contest each of the other points. The first and third factors are discussed only cursorily by the defendants and can be dealt with adequately in the course of our analysis of the remaining three. For example, the defendants claim that there is no causal connection between their actions and any of the plaintiffs’ harms because the plaintiffs’ injuries are indirect (the fourth factor), and they argue that Congress had no intention of redressing this sort of injury because it is indirect and speculative (the fifth factor). We therefore devote our attention to the other three factors, considering in the case of each plaintiff whether its injury was indirect and unpredictable, risked duplicate recovery, and would lead to speculative and complex damage apportionment. We begin with the claims of the Scrap Dealers.
The Scrap Dealers face problems with all three of the contested AGC factors. First, whether or not they were in some sense original purchasers of physical copper, that fact alone is not enough to establish that their injury 22 Nos. 00-3979, 01-1148, 01-3229, 01-3230, 01-3485 flowed directly from the defendants’ market manipulations. An injury is still indirect if a plaintiff fails to establish a chain of causation between the harm it has suffered and the defendant’s wrongful acts. AGC, 459 U.S. at 541. The directness inquiry further focuses on the presence of more immediate victims of an antitrust violation in a better position to maintain a treble damages action. “The existence of an identifiable class of persons whose self-interest would normally motivate them to vindicate the public interest in antitrust enforcement diminishes the justification for allowing a more remote party . . . to perform the office of a private attorney general.” Id. at 542. There are numerous other parties who have suffered more direct injuries at the hands of the defendants than the Scrap Dealers suing here. Among them (though as we explain below not limited to them) are the Comex copper futures traders who have already filed and settled their claims with the defendants. But even in the physical copper market itself, the Scrap Dealers are quintessential examples of indirect victims of antitrust injury. Although the copper distribution chain is exceedingly complex, even in the simplest possible version, an integrated producer such as Asarco will refine copper into cathode and sell it to a manufacturer, such as Viacom, Emerson, or Ocean View. The manufacturer will in turn transform the cathode into some product using copper and sell it down to the retail level. In the process, it may generate unused scrap copper, at which point the Scrap Dealers finally appear on the scene to buy the scrap. It is for these last purchases that the plaintiffs seek to recover damages. But distributors and manufacturers have already entered into monetary transactions involving this same copper, and indeed we are faced in this very case with suits filed by some of those manufacturers. It is apparent that these companies at the least have suf- Nos. 00-3979, 01-1148, 01-3229, 01-3230, 01-3485 23 fered more direct injuries than the Scrap Dealer plaintiffs. This stands in marked contrast to Sanner, where the soybean farmers were clearly the most directly injured participants in the cash market because they were the only cash sellers of soybeans. Sanner, 62 F.3d at 927. The speculative nature of the damages the Scrap Dealers have suffered also supports our conclusion that they cannot maintain this action. See id. at 542-43 (denying a claim that rested on an “abstract conception or speculative measure of harm”). The Scrap Dealers’ economic experts have stated that they can tie a rise in the price of copper futures directly to price increases for physical copper through econometric analysis. Defendants argue to the contrary that a host of other factors are also at play, destroying the closeness of any link. Even accepting the Scrap Dealers’ position on this point, as we must at this stage of the litigation, it is difficult to know whether they have suffered any economic loss at all as a result of the defendants’ actions. After all, the Scrap Dealers, middlemen who resell their scrap copper soon after they purchase it, are alleging that the defendants’ market manipulations caused the price of copper to increase steadily from 1994 to 1996. Therefore, on most or all the sales the Scrap Dealers made in that time frame, which they contend are inflexibly linked to prevailing Comex prices, they should have made a slight profit because of Sumitomo’s actions. Only when the price of copper plummeted in June 1996 would the Scrap Dealers have taken a bath in the resale market. And depending on how much copper the Scrap Dealers had on hand as compared to the number of transactions they made as the price of copper was increasing, it is possible that some of them may have suffered no true economic loss at all. In short, the exact nature of the damages they have suffered is speculative. 24 Nos. 00-3979, 01-1148, 01-3229, 01-3230, 01-3485 The Scrap Dealers attempt to counter this problem by arguing that damages can be set simply by computing the difference between the price of copper that should have prevailed on a given day absent Sumitomo’s manipulations and the actual price for every copper transaction. This assertion, however, plunges the Scrap Dealers headlong into conflict with the sixth AGC factor, the problems of duplicate damage recovery and complex damage apportionment. The Scrap Dealers argue that they—and all other commercial purchasers of physical copper—should be permitted to recover damages equal to three times the overcharge caused by Sumitomo’s scheme for every single sale of copper in the mid-1990s. But this proposition ignores the fact that the same piece of physical copper may be resold many times in a given year as it is refined, distributed, turned into scrap, sold between scrap dealers, re-refined, and sold for scrap again. As mentioned above, every time a scrap dealer resold scrap copper during the two years at issue, it recouped the vast majority of its losses. Since defendants are not permitted to mount any sort of cost recovery defense along these lines, see Hanover Shoe, 392 U.S. at 491-94, this would cause the Scrap Dealers to receive a damages award far in excess of any economic loss the defendants caused them. While Sanner permitted farmers to recover their soybean losses, it did not let millers, wholesalers, or retailers of soybeans also assert claims. It would be a significant extension of Sanner to allow these plaintiffs to sue, and it is one we decline to make. The Scrap Dealers repeatedly argue that there are no duplicate damages in this case because their pricing decisions are based exclusively on Comex prices rather than a pass-on of historical costs. We fail to see why this fact should lead us to ignore the Supreme Court’s command to prevent the duplicate recovery of antitrust injuries wherever possible. AGC, 459 U.S. at 544; Greater Nos. 00-3979, 01-1148, 01-3229, 01-3230, 01-3485 25 Rockford Energy & Tech. Corp. v. Shell Oil Co., 998 F.2d 391, 396 (7th Cir. 1993). The Scrap Dealers’ contention that absent a pass-on of historical costs their injuries are “separate and distinct” defies economic reality. If a scrap dealer purchased a ton of copper when the Comex price was artificially inflated by $400, and the price subsequently rose another $200 prior to resale, it has reaped a $200 gain, not a $400 loss. The Scrap Dealers’ own witnesses admitted that there is no pass-on only “if the current Comex price has moved in an adverse direction.” Yet the evidence shows that Sumitomo’s actions caused the Comex price to rise throughout the period at issue in this case, making us skeptical that the Scrap Dealers have suffered any real loss at all. The fact that the Scrap Dealers here are further down the chain of copper users than others also will increase the economic complexity of apportioning damages. Even the marketing manager of Loeb admitted that such factors as “freight costs, the sizing, sorting, packaging, purity requirements, length of time it took to get paid, [and] the risk of getting paid” all factored into Loeb’s pricing decisions. While it might be possible for economists to factor out each of these considerations for all prior sales involving copper, the Supreme Court has decreed a simpler solution: simply restrict the right to recover to those who are more directly affected by the defendants’ actions. UtiliCorp, 497 U.S. at 208-11 (noting policy rationales for denying recovery even to those plaintiffs whose damages could be easily calculated). This description applies fully to the plaintiffs here. Because the Scrap Dealers have suffered an indirect injury causing them at best speculative damages that would lead to a strong possibility of duplicative recovery, we agree with the district court that they may not pursue their claims. 26 Nos. 00-3979, 01-1148, 01-3229, 01-3230, 01-3485

Many of the successful arguments from Loeb are echoed by the defendants in the Viacom action, but after a careful review of the record we find that the facts of the latter case compel a different result. The defendants’ first argument for denying recovery to Viacom and Emerson (to whom we will refer as “Viacom” except when distinctions between the two companies are important) is that Viacom has shown no evidence of direct and predictable harm stemming from the defendants’ conduct. As we stated earlier, directness relates to the question whether there exists a chain of causation between a defendant’s action and a plaintiff’s injury or (in contrast) if the connection is based instead only on “somewhat vaguely defined links.” AGC, 459 U.S. at 540. Global and CLR, the only defendants remaining in the Viacom action after Sumitomo’s settlement, begin their attack by pointing out that the prices of copper cathode on the LME and Comex often diverged. We fail to see why this matters. Sumitomo purchased futures on Comex to drive up the price on that particular exchange artificially, and the prices Viacom paid for copper were directly based on Comex prices. The fact that Sumitomo also bought and sold futures on the LME and may have caused additional harms to physical copper purchasers who based their decisions on LME prices has no impact on Viacom’s ability to recover under the AGC factors. Next, the defendants rely on the fact that Viacom’s purchases included not only a price linked to Comex but “a variety of discounts or premiums that, in response to changes in supply and demand, varied over time and among suppliers.” The defendants’ experts have opined that, through adjustments of premiums in response to supply and demand factors, the actual impact on the physi- Nos. 00-3979, 01-1148, 01-3229, 01-3230, 01-3485 27 cal copper market of their illegal futures market activities is likely to be indirect and unpredictable. While all of this might be so as a theoretical matter, on summary judgment it is our duty to evaluate the evidence in the record that Viacom presented. And that evidence paints a starkly different picture. Viacom has introduced into the record both its contracts and its suppliers’ published premiums. After a careful review of these materials, we are convinced that Viacom has established direct injury. In its contracts, Viacom purchased all but a de minimis amount of copper through the two-part formula we described earlier, consisting of (1) a base price equal to the Comex first position copper settlement price, and (2) a cathode premium, negotiated on a monthly or quarterly basis. Over the six years at issue here, the settlement price fluctuated from about 75¢ to $1.40 per pound. During the same years, the premium ranged from 2.75 to 3.50¢/lb. (Viacom does not seek recovery based on changes in premium prices; the complaint is based only on those caused by variations in the base price.) The district court ruled that the base price and cathode premium were “inseparable.” After a careful review of the record in the light most favorable to the plaintiffs, we are unable to agree with this characterization. All of the contracts specify that the payment price is determined by adding these two separately described components, and the values of both numbers throughout the relevant time period should be available through discovery. The district court also seems to have thought that the premium could in some cases be a discount off the Comex price. There is no evidence to support this; to the contrary, all of the evidence, including defendants’ counsels’ concession at oral argument, indicates that the premium was always a positive number. While Viacom appears to have been awarded volume and cash payment discounts in some instances, there is no indication that 28 Nos. 00-3979, 01-1148, 01-3229, 01-3230, 01-3485 these discounts were tied to market conditions, and the defendants do not focus on such discounts in their briefs. Furthermore, the cathode premium was a small fraction of the Comex price. In fact, the evidence shows that as the Comex price increased, the premium also increased. Thus, there is no possibility that the two components “offset” or that the premium somehow compensated for the defendants’ manipulated price inflation. (Even if, counterfactually, the Comex price had for example risen by 65¢ and, to compensate, the base price dropped a penny, this could at best represent a mitigation of damages. But this would not make the injury any less direct.) The district court’s conclusion on this point, which relied mainly on the testimony of an expert who had not even looked at Viacom’s contracts, is both factually mistaken and fails to take the evidence in the light most favorable to Viacom. The presence of a small cathode premium does not negate the fact that the prices of cathode and cathode futures “tend to move in lockstep.” Instead, the price reference in Viacom’s contracts supports just such lockstep linkage. Our case law has never required that the cash and futures prices be identical to support recovery. It is only necessary that the relationship be direct, as it is here. See Sanner, 62 F.2d at 929. Furthermore, the experts note that Comex quotes 24 different exchange prices at any given time and that the defendants’ actions could have affected each of those prices differently. Accepting the truth of this statement, we do not see why it compels a finding that Viacom’s injury is indirect. According to the record evidence, out of this menu of prices, Viacom used just one (the monthly settlement price) as the basis for all but a minuscule number of its contract purchases, and Emerson used only two. While acknowledging this, the defendants contend that other cathode purchasers could have used different or widely varying systems. Perhaps they did, and if so perhaps they should be found to be improper plaintiffs Nos. 00-3979, 01-1148, 01-3229, 01-3230, 01-3485 29 under the antitrust laws, though that is an issue for another day. But this fact does not weaken the direct causal chain between the defendants’ actions and these particular plaintiffs’ harm and is no more reason to deny Viacom and Emerson recovery than the fact that some purchasers might have bought cathode at prices not tied to those on either Comex or the LME. Similarly, we reject the defendants’ argument that because a number of Viacom’s contracts contained clauses permitting the parties to renegotiate the base price if they believed that Comex prices did not accurately reflect market conditions, Viacom’s injuries are somehow remote and indirect. It is undisputed that, because of the success of the defendants’ conspiracy, Viacom and its integrated suppliers were never aware of the artificial Comex inflation and so never took advantage of this clause. Instead, Viacom based all of the purchases for which it seeks recovery directly on Comex. We also believe that, contrary to the defendants’ contentions, our holding on this point is entirely consistent with the Second Circuit’s decision in Reading Indus., Inc. v. Kennecott Copper Corp., 631 F.2d 10, 13-14 (2d Cir. 1980). There, the plaintiff, a refiner of scrap copper, alleged that the defendant-integrated producers had conspired to keep the price of refined copper low and that this conspiracy injured it by artificially raising the price of scrap. Id. at 12. The court found the injury indirect because it “depend[ed] upon a complicated series of market interactions,” including the actions and pricing decisions of refiners, fabricators, dealers, speculators, and consumers of copper. Id. at 13. Such “conjectural theories of injury and attenuated economic causality” were enough to render Reading’s injury indirect. Id. at 14. Other than the fact that both Reading and the present case involve price-fixing conspiracies in the physical cop- 30 Nos. 00-3979, 01-1148, 01-3229, 01-3230, 01-3485 per market, we find little similarity between them. The injury here does not depend on the speculative actions of innumerable market decision makers. It flows instead directly from the contracts between Viacom and its suppliers. It is this contractual linkage, absent in Reading, that prevents other market variables from miring a trier of fact here in “intricate efforts to recreate the possible permutations in the causes and effects of a price change.” Id. In sum, Viacom’s contracts and the other record evidence establish a direct relation between the defendants’ illegal scheme and Viacom’s harm. The contract price it paid its suppliers for copper was directly and explicitly based on the Comex monthly settlement price, and therefore the defendants’ manipulations directly and predictably had an impact on that price. Amarel v. Connell, 102 F.3d 1494, 1512 (9th Cir. 1997) (injury direct where price of milled rice directly affected price of paddy rice); Sanner, 62 F.3d at 929. Any variations in the cathode premium moved in the same direction as the manipulation and could not have limited or mitigated this harm. For these reasons, Viacom has established the directness element of AGC.
We turn next to the district court’s other major reason for granting the defendants summary judgment: its belief that opening the door to Viacom’s suit would inevitably lead to either duplicate recovery or complex damage apportionment. See AGC, 459 U.S. at 544. The court cited at least three manifestations of this problem, all involving Viacom’s integrated suppliers, such as Asarco. First, it believed that Viacom’s claim would duplicate Asarco’s because Asarco could assert claims for its raw material purchases from third parties, and those raw material Nos. 00-3979, 01-1148, 01-3229, 01-3230, 01-3485 31 prices are tied to Comex. Second, because Asarco purchased some cathode from third parties, both it and Viacom would be permitted to recover and duplicate each other’s damages. Third, Viacom’s claim would duplicate Asarco’s because Asarco hedged by purchasing put options on Comex. In addition to those three points, the court noted that Asarco has recovered damages in a California state court class action, and it thought that this too should preclude Viacom from recovering. We begin with the defendants’ claim that Asarco’s purchase of raw materials, such as ore, concentrate, blister, and anode, all of which it transformed into cathode, should bar recovery. This does not follow. Practically every product is created through the use of some kind of raw materials, but that fact does not prevent the direct purchaser of the finished product from suing its manufacturer under the antitrust laws, as long as the direct purchaser is not trying to attack a price-fixing arrangement at the raw materials level. The defendants’ own experts testified that while raw material prices “may be indirectly affected” by price manipulations, a squeeze or corner on cathode—the only copper product traded on Comex and the LME—would not directly harm purchasers of these raw materials. Instead, raw material prices vary widely and contain various discounts off the Comex price to account for such factors as the expected cost of conversion into cathode, which in turn varies based on supply, demand, and current refining and smelting capacity. We agree with the broad proposition that a party cannot recover when others more directly injured are better able to state a claim. AGC, 459 U.S. at 544-45. Indeed, we have just applied this very principle to deny recovery to the Scrap Dealers, who are farther down the chain of resale, even though scrap prices too are tied to Comex. For parallel reasons, raw materials purchasers are also ill- 32 Nos. 00-3979, 01-1148, 01-3229, 01-3230, 01-3485 suited to bring an antitrust claim. Permitting both raw materials purchasers and cathode purchasers in the same line of distribution to recover would lead to duplicate damages in violation of the Illinois Brick rule. The solution to this problem, however, is not to deny a right to recover to everyone. Such a draconian rule would give a green light to antitrust scofflaws to conspire to fix prices in a particular market and would create incentives to engage in antitrust conspiracies in markets with complicated distribution structures. Instead, the proper course is to recognize only the best of the several potential plaintiffs who otherwise satisfy the requirements for bringing suit under the antitrust laws. Because raw materials prices will vary in comparison to Comex prices much more than will the price of physical cathode, physical cathode purchasers such as Viacom are better situated than raw materials purchasers to pursue a claim in the physical market. This logically implies that raw materials purchasers up the chain from cathode sales could not satisfy AGC, just as we found to be the case for the downstream Scrap Dealers. In between, however, lies the physical market transaction at the heart of the defendants’ scheme—the purchase of cathode. There are no better parties than these purchasers to pursue a claim, and it is therefore they who are proper plaintiffs. More bite lies in the argument that recovery should be denied because some of the cathode Asarco sold Viacom was purchased before, although this claim is not as strong as it might at first appear. As the district court noted, some if not most of the cathode Viacom purchased had never before been purchased in cathode form. Asarco sold Viacom 510 million pounds of cathode between 1990 and 1996. During that time frame, Asarco refined 6.4 billion pounds of cathode and purchased 153 million pounds from third parties, about 2.3% of its output. Because copper is fungible, one cannot tell whether any given Viacom Nos. 00-3979, 01-1148, 01-3229, 01-3230, 01-3485 33 purchase of cathode consisted of cathode refined by Asarco or previously purchased product. We do not believe the mere existence of third-party cathode presents such a risk of duplicate recovery as to justify the extreme step of denying recovery altogether. Had the Board of Trade in Sanner produced evidence that farmers on some rare occasions bought soybeans from neighboring farms and then resold them along with the soybeans they grew themselves, that would not have provided a reason to deny recovery entirely. Similarly, if Viacom can prove at trial that 97.7% of all copper Asarco sold it was cathode it had refined itself, then Viacom should be permitted to recover 97.7% of its proved damages from cathode purchases. Cf. Paper Sys., Inc. v. Nippon Paper Indus. Co., 281 F.3d 629, 633 (7th Cir. 2002) (carving out indirect purchases while still leaving open possibility of recovery for direct purchases). The physical copper market is complicated, but not so complicated that one cannot estimate to a reasonable degree of accuracy the amount of damage a party has sustained. It is certainly acceptable through expert economic testimony to make a reasonable estimation of actual damages through probability and inferences. See Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 124 (1969). “Where the tort itself is of such a nature as to preclude the ascertainment of the amount of damages with certainty it would be a perversion of fundamental principles of justice to deny all relief to the injured person.” Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 563 (1931). While we are not permitted to make complex damage apportionments in antitrust cases, AGC, 459 U.S. at 544, nothing about these calculations is inordinately complex. One need only know two pieces of information: the amount of cathode purchased by Viacom and the amount of cathode purchased and sold by those who sold cathode to Viacom. From there, reasonable estimates of damages 34 Nos. 00-3979, 01-1148, 01-3229, 01-3230, 01-3485 are the order of the day. Because this estimation is not overly complex and will not lead to duplicate damages, it provides a sufficient basis at this stage for the case to proceed to the merits. The defendants’ next major attack rests on hedging. Commodities exchanges function in part to protect participants in a physical market by shifting some of the risk (and damage) caused by fluctuations in price to participants in the futures market. Extending this principle, Global and CLR claim that through an extremely complicated set of economic interactions between the cash and futures markets, the damages experienced in the physical cathode market will be duplicated in their entirety by damages suffered in the futures market. Therefore, only futures traders, and not cash market participants, should be permitted to recover. The hedging theories advocated by the defendants are based on economic theory, with no specific application of that theory here that would correlate sales in the cash market and sales in the futures market. Notably, Viacom’s individual purchases from its suppliers were not hedged. Neither Viacom nor Asarco purchased a futures contract as a hedge every time they exchanged copper. Had they done so, then perhaps one might be able to “match” each physical market transaction to a futures contract sale and argue that the opportunity for a trader to recover the overcharge in a federal lawsuit should preclude recovery for the overcharged physical market participant. Emerson’s supplier, Phelps Dodge, did hedge some of its sales to Emerson. On remand, the district court should explore further whether these hedging transactions would lead to some degree of duplicate recovery and a corresponding need to reduce damages. Nevertheless, since our review of the record indicates that not all of Phelps Dodge’s sales were hedged, we conclude that Emerson is an appropriate plaintiff for the same reasons as Viacom. Nos. 00-3979, 01-1148, 01-3229, 01-3230, 01-3485 35 In any event, the kind of futures matching the defendants’ postulate does not reflect the way that most hedging works in the copper futures market. Asarco did not buy futures. Instead, it purchased put options. Put options are strategic hedges designed to protect against a general risk of declining cathode prices. With a put option, Asarco had the right, but not the obligation, to sell a futures contract if the price fell below a certain “strike” price. See United States v. Catalfo, 64 F.3d 1070, 1072 (7th Cir. 1995). But as the defendants were artificially inflating the price of cathode throughout the period at issue here, the price never would have fallen below the strike price. Therefore, no sale ever would have gone forward and the only damages Asarco would have suffered from the conspiracy would have been the cost of the put option, or, more properly, the amount by which the price of the put option changed because the price of copper was artificially high. The defendants and their experts have made no at- tempt to correlate the damages Asarco could theoretically recover on the futures market for its put options to the specific damages sought here by Viacom, and the relationship is far from intuitively obvious. Instead, the experts trace the potential for hedging by numerous parties upstream and downstream from Viacom and contend that because so many participants in the copper industry use so many different forms of hedging there will be “inevitable” duplication between the cash and futures markets. This sort of potential duplication bears no resemblance to the duplication rejected in Illinois Brick and AGC, 459 U.S. at 544, nor do we think that it independently provides a reason to deny recovery to Viacom. In Illinois Brick, any “pass-on” of damages would (because of Hanover Shoe) already be taken into account in its entirety in the recovery to another potential party, the direct purchaser. 431 U.S. at 737-38. This simply is not the case here. Asarco strategically hedged only about half its output. The de- 36 Nos. 00-3979, 01-1148, 01-3229, 01-3230, 01-3485 fendants claim that potential hedging by those parties to whom Viacom sold and from whom Asarco purchased raw materials is also relevant, but this cannot be so under Sanner. There we held that injuries incurred in futures market purchases not linked to any particular cash market purchases did not “duplicate” and were not more “direct” than the cash market injuries. 62 F.3d at 929-30. Because there are two separate markets, each with compensable injuries, the opportunity for recovery in one market does nothing to alleviate the harm in the other. For similar reasons, the fact that Comex futures traders have received money in a now-settled lawsuit says nothing about the ability of Viacom or other similarly situated plaintiffs in the cash market to recover. Finally, the defendants note that Asarco and three of the manufacturers’ other suppliers have recovered in a lawsuit brought in California state court. This lawsuit was brought pursuant to California law, which permits suit by indirect purchasers. Union Carbide Corp. v. Superior Ct., 679 P.2d 14, 16 (Cal. 1984). However, the supposed “duplication” here comes from different bodies in our federal system seeking to remedy separate harms. It presents no risk of duplicate recovery for the same injury under the same law and is thus no bar to the plaintiffs’ recovery. See Browning-Ferris Indus. v. Kelco Disposal, Inc., 492 U.S. 257 (1989) (upholding award of both federal antitrust and state tort damages); California v. ARC Am. Corp., 490 U.S. 93 (1989) (permitting states to require offenders to pay both state damages to indirect purchasers and federal treble damages to direct purchasers). If the resolution of the state court action poses a problem at all to these plaintiffs, it would be in the nature of claim or issue preclusion. See Matsushita Electric Indus. Co. v. Epstein, 516 U.S. 367 (1996); Marrese v. American Acad. of Orthopaedic Surgeons, 470 U.S. 373 (1985). It is possible that the defendants have waived Nos. 00-3979, 01-1148, 01-3229, 01-3230, 01-3485 37 their right to assert any such defense; it is not mentioned in their briefs before this court. Accordingly, we express no opinion at this time on the merits of any preclusion argument. In sum, of all participants in the physical market, Viacom and other first purchasers of cathode are the only plaintiffs possibly situated to recover damages against the defendants for the anti-competitive harms they have inflicted on the physical market for copper cathode. Faced with the option of permitting a clear, non-speculative harm to the cash market to go unremedied or of allowing the plaintiffs’ suit to go forward, we elect the latter. As narrowed to first purchases, there is no danger of duplication of recovery, and so, under AGC and Sanner, the claim should proceed to trial.
The final broad claim of the defendants is that recovery of damages in this case simply would be too speculative and complex to warrant allowing this suit to proceed. Cf. AGC, 459 U.S. at 542. Based on the evidence adduced by Viacom, however, we disagree. The main complication will come from attempting to discern how much of the Comex price of copper at a given time represented an overcharge due to the defendants’ manipulation and how much stemmed from normal economic forces. This difficulty, however, occurs in every price-fixing case. It is no different from the task of gauging the damages recoverable by Comex futures traders, whom defendants have conceded to be proper plaintiffs. Through discovery, economic experts can evaluate the impact of the defendants’ illegal actions on the futures market and come to reasoned conclusions. Cf. Sanner, 62 F.3d at 930 (rejecting claim that damages analysis in a market manipulation is “beyond the ken of the federal courts”). At that point, 38 Nos. 00-3979, 01-1148, 01-3229, 01-3230, 01-3485 recovery could be calculated by reviewing all of Viacom’s contracts (assuming they are similar to the ones already in the record) and assessing damages based on the already computed overcharge. Since the only other factors involved in setting the price of Viacom’s cathode are items which have no relation to the Comex price, such as freight charges and cash payment discounts, and the cathode premium, for which Viacom does not seek to recover, there should be no problems as a theoretical matter with making these calculations. The mere fact that each individual transaction relevant to an antitrust scheme must be examined on a case-by-case basis to assess damages does not thereby render those damages speculative. American Ad Mgmt., Inc. v. General Tel. Co. of Cal., 190 F.3d 1051, 1059 (9th Cir. 1999). We fully recognize that perfecting such economic analysis, tracking every pound of cathode refined or purchased by Viacom’s suppliers, and locating every cathode contract Viacom entered into over a six-year span will not be easy. But complex litigation is hardly new for the federal courts, whether it is in the field of antitrust, environmental clean-ups, pension law, or accounting frauds. The key here is that the damages are not inherently speculative in the sense that AGC used that term. See 459 U.S. at 542. Nor, as in Illinois Brick or Hanover Shoe, is a party asking a jury or the district court to perform some form of econometric analysis to deduce whether all, some, or none of an overcharge was passed on down a chain of distribution. Illinois Brick, 431 U.S. at 727. Instead, one need only determine through available records what percentage of cathode bought by Viacom represents first purchases. This is not speculative or complex, only time-consuming, and we are confident that the parties and their counsel are up to the task. The defendants’ entire case theory, apparent not only here but also through their discussion of duplication Nos. 00-3979, 01-1148, 01-3229, 01-3230, 01-3485 39 and hedging, seems to be the troubling one because their scheme was so evil, went undetected for so long, and caused so much economic loss throughout the cash market, that we should simply give them a pass from the antitrust laws. This is not now and never has been the law. Since the days of Eastman Kodak Co. v. Southern Photo Materials Co., 273 U.S. 359, 379 (1927), it has been established that in complicated antitrust cases plaintiffs are permitted to use estimates and analysis to calculate a reasonable approximation of their damages. While we fully agree that we should not use the massiveness of defendants’ conspiracy as an excuse to punish them unduly (by, for example, permitting the Scrap Dealers in Loeb to recover for harms that would duplicate those of Viacom), the sensible solution is to let one—but only one—level of purchasers in the physical copper market recover. Based on all the evidence available on summary judgment, the best plaintiff in this market is the first purchaser of copper cathode, and Viacom and Emerson are prototypical examples of such plaintiffs. The district court erred in dismissing the case at this stage, and we must therefore reverse its judgment.
We turn to the final plaintiff, Ocean View. We have already rejected the defendants’ principal argument for affirming summary judgment in this case, that the action is barred by the Illinois Brick direct purchaser rule. For the same reasons discussed in connection with Viacom’s action, there is no party along a chain of distribution between Ocean View and any of the defendants who can recover for an alleged overcharge. Therefore, Illinois Brick is inapplicable. Instead, this case is controlled by the basic premise of Sanner, 62 F.3d at 929-30, which holds that a cash market participant injured by 40 Nos. 00-3979, 01-1148, 01-3229, 01-3230, 01-3485 a party’s illegal actions in the futures market may, in some instances, sue that party under the federal antitrust laws. The controlling factors in this inquiry are those set out in AGC, 459 U.S. at 537-45. The defendants allege that under an analysis of these factors, Ocean View’s claim should still be precluded, while Ocean View contends that it should be entitled to recover for every copper rod it has ever purchased, or, in the alternative, that it may recover at least for those instances where it was the first purchaser of copper in cathode form. As with the Scrap Dealers, we must reject Ocean View’s proposition that it can recover for rod manufactured from cathode purchased by others, such as its semi-fabricators. Such an injury would be indirect because the semifabricator would serve as a more immediate victim of the antitrust violation intended to affect the cash and futures markets for cathode. AGC, 459 U.S. at 541-42; supra at 22-23. Semi-fabricators who purchased cathode would stand in shoes similar to those of Viacom, purchasing large quantities of cathode to reshape and sell as rod or wire. Because they are well-situated to bring any claim for inflation in the physical market, there is no need for Ocean View, as a more remote party, to step in “to vindicate the public interest in antitrust enforcement.” AGC, 459 U.S. at 542. Additionally, granting recovery to both a semi-fabricator for its cathode purchase and Ocean View for its purchase of that same cathode reshaped as rod would lead to either duplicate recovery or complex damage apportionment in violation of the principles underlying AGC. 459 U.S. at 544. We have already rejected the claim that the copper market should not be subject to a ban on duplicate recovery because copper pricing decisions are based on Comex and not a “pass on” of historical costs, supra at 24-25. To avoid such duplicate recovery one must either attempt to apportion damages along a chain of distribu- Nos. 00-3979, 01-1148, 01-3229, 01-3230, 01-3485 41 tion, forbidden by AGC, or deny the right to sue to all but one plaintiff along the chain of distribution. The best-situated plaintiff to recover is the first purchaser of copper cathode, the specific commodity the defendants targeted in their futures market conspiracy. For such a plaintiff, it is possible both to avoid duplicate recovery problems and at the same time to ensure that antitrust harm perpetrated in the cash market will not go unremedied. Based upon on our review of the record, we are satisfied that in at least some cases Ocean View did purchase cathode refined by integrated producers. The existence of such purchases is enough to get Ocean View in the door; recovery should not be denied simply because a plaintiff may not receive damages as high as it would like. The quantity of such sales, and thus the eventual damages Ocean View might get if it manages to prove the rest of its case, can await further discovery. Like Viacom, Ocean View will have the burden of ascertaining what percentage of the cathode sold by these producers was refined by them and not purchased from third parties. If, as defendants fear, many of these records are lost, that fact will come out in discovery, and they may move for a missing evidence instruction or perhaps even summary judgment on the merits. We have already rejected most of the other claims the defendants make for denying Ocean View recovery, including the proposition that the integrated producers’ purchase of copper raw materials should somehow render them improper plaintiffs, supra at 31, and the claim that hedging on the copper futures markets by some physical market participants renders the injury indirect or duplicative, supra at 34-36. Finally, we have found that the damages claimed are not too speculative or complex, supra at 37-38. At this point we can think of only one possible distinction between Ocean View and Viacom that deserves further comment. That is the fact that while Viacom purchased 42 Nos. 00-3979, 01-1148, 01-3229, 01-3230, 01-3485 cathode, Ocean View bought cathode that had been tolled into rod. The parties do not focus on this distinction much in their briefs, and the defendants concede that there is no physical difference between cathode and rod other than the product’s shape. Based upon our review of the contracts in the record, the price Ocean View paid its integrated producers for rod appears to be identical to that paid by Viacom for cathode except for the existence of an additional rod premium. We assume, since the defendants do not contend otherwise, that like the cathode premium, the rod premium is a small fraction of the total price paid and tends to increase as the Comex price increases, so that it does not in some way offset the Comex inflation or render the injury indirect. In that case, the similarities between cathode and rod are close enough that, in instances where the same integrated producer refines raw materials into cathode and then shapes it into rod, Ocean View, as the first purchaser after the materials are formed into cathode, can state a claim, regardless of whether that copper is then in the form of cathode or rod. Cf. In re Sugar Indus. Antitrust Litig., 579 F.2d 13, 17-18 (3d Cir. 1978) (finding no distinction for AGC purposes between price-fixed sugar and candy incorporating that price-fixed sugar sold into the market for the first time).