Opinion ID: 399873
Heading Depth: 2
Heading Rank: 2

Heading: Derivative Injury

Text: 23 Defendants have constructed a derivative injury argument which is in part not a standing argument at all but a request for summary judgment on the factual issue of injury. First, they examine the relationship between the three corporate plaintiffs: plaintiff FPC, a Hong Kong corporation, was wholly owned by plaintiff Indonesia Industrial, another Hong Kong corporation; all of Indonesia Industrial's stock was owned by two other Hong Kong companies which held the stock in trust for the American parent, plaintiff Industrial Investment. Next, defendants point out that the forestry concession was to be operated by a never-formed Indonesian corporation to be owned by FPC and Telaga Mas. Beginning their legal argument, defendants declare that the only possible restraint on commerce caused or intended by their destruction of the joint venture between FPC and Telaga Mas was a restraint on the tree-harvesting business in Indonesia. Invoking the rule that a corporate shareholder has no standing to sue for antitrust injury to the corporation, see Martens v. Barrett, 245 F.2d 844, 846 (5th Cir. 1957), defendants argue that FPC's only injury was as a shareholder of the never-formed Indonesian corporation; that Indonesia Industrial's only injury was as a shareholder of FPC; and that Industrial Investment's only injury was as a shareholder of its Hong Kong subsidiaries. Finally, going beyond the pleadings, defendants question Indonesia Industrial's and Industrial Investment's claims that they would be directly involved in the export and marketing of logs and lumber products. 24 We reject defendants' argument for several reasons. First, defendants' contention that the only restraint was on the Indonesian tree-harvesting business is simply their own revision of plaintiffs' pleadings. Plaintiffs have alleged that defendants were attempting to restrain competition in the harvesting, acquisition, export and marketing of logs from Indonesia, business activities in which the defendants are allegedly involved. Defendants cannot determine the intent and effect of the alleged conspiracy by ipse dixit. 25 Second, defendants read Martens v. Barrett too broadly when they contend that it deprives FPC of standing to seek damages for defendants' efforts to keep it out of the harvesting business. In Martens v. Barrett, two plaintiffs, the sole shareholders of a corporation that owned and operated a gas station, brought an antitrust action against the station's former distributor. We held that where the business or property allegedly interfered with by forbidden practices is that being done and carried on by a corporation, it is that corporation alone, and not its stockholders ..., who has a right of recovery. 245 F.2d at 846. 10 We do not question that holding; it is fully consistent with one of the purposes of the doctrine of antitrust standing: avoiding the problems of double recovery. Hawaii v. Standard Oil Co., 405 U.S. 251, 264, 92 S.Ct. 885, 892, 31 L.Ed.2d 184 (1972). Had we allowed the shareholders in Martens to recover, there would have been no assurance that the corporation would not later have sought damages in its own name. Moreover, there was no justification in Martens for not having the corporation bring suit. 26 The situation is vastly different when defendants' own actions are alleged to have aborted the entity which defendants claim has sole standing to sue. The antitrust standing inquiry is not a search for labels; it is a search for the most direct targets of the anticompetitive acts. Jeffrey v. Southwestern Bell, 518 F.2d at 1131 (citing Martens ); cf. Tugboat, Inc. v. Mobile Towing Co., 534 F.2d 1172, 1176 (5th Cir. 1976) ((t)he key question is whether plaintiffs themselves are within the target area, not whether they are employees of a business within the target area). There was no more direct target of defendants' alleged activity than FPC. Since the joint venture corporation was never formed, there is no possibility of double recovery. We hold that FPC has standing to challenge the alleged restraint in the harvesting business. 11 27 Third, neither Indonesia Industrial nor Industrial Investment claims damages for injury to the value of its interest in another corporation. Each alleges injury by reason of a restraint on a business activity it claims it was preparing to enter. 28 Fourth, even if some of the damages from lost business claimed by Indonesia Industrial or Industrial Investment could be viewed as deriving from their relationship with FPC, it would not defeat their standing in this case. Each plaintiff alleges that it was plaintiffs' very competition that defendants were attempting to exclude. There is evidence in the record that supports these allegations, particularly the allegation that it was the American parent that defendants wanted to keep away from Indonesian timber. When a person is the direct target of an anticompetitive act, he has standing to sue for injury to his business. See Perkins v. Standard Oil Co., 395 U.S. 642, 649-50, 89 S.Ct. 1871, 1875, 23 L.Ed.2d 599 (1969); 12 Hayes v. Solomon, 597 F.2d 958, 981 (5th Cir. 1979), cert. denied, 444 U.S. 1078, 100 S.Ct. 1028, 62 L.Ed.2d 761 (1980). 13 29 Finally, defendants' contention that plaintiffs would not have been engaged in the businesses they claim is not a standing argument; it is a request for summary judgment on the fact of injury. We simply note that even if defendants had asked for summary judgment on this ground, they would not be entitled to it. The evidence in the record is sufficient to raise a genuine issue of fact.