Opinion ID: 2087240
Heading Depth: 3
Heading Rank: 1

Heading: Federal Antitrust Law

Text: Federal antitrust law does not provide a remedy for every injury flowing from an antitrust violation. Standing under federal antitrust law, rather, has prudential limits based on remoteness of injury and complexity of proof. `An antitrust violation may be expected to cause ripples of harm to flow through the Nation's economy; but `despite the broad wording of § 4 there is a point beyond which the wrongdoer should not be held liable.' AGC, 459 U.S. at 534, 103 S.Ct. 897 (quoting Blue Shield of Va. v. McCready, 457 U.S. 465, 476-77, 102 S.Ct. 2540, 73 L.Ed.2d 149 (1982)). `It is reasonable to assume that Congress did not intend to allow every person tangentially affected by an antitrust violation to maintain an action to recover threefold damages for the injury to his business or property.' Id. at 535, 103 S.Ct. 897 (quoting Blue Shield, 457 U.S. at 477, 102 S.Ct. 2540). The Supreme Court explored the scope of federal antitrust law injury and standing in Hanover Shoe, Illinois Brick, and AGC. In Hanover Shoe, the Court held that an antitrust defendant could not argue that a plaintiff was not injured because the plaintiff had passed on any illegal overcharges to downstream consumers. 392 U.S. at 491-92, 88 S.Ct. 2224. The case involved a treble damages action by a shoe manufacturer against a manufacturer of shoe machinery. Id. at 483, 88 S.Ct. 2224. The Court rejected the defendant's pass-on defense as a matter of law (with limited exceptions not relevant here) for two reasons. Id. at 492-94, 88 S.Ct. 2224. First, the defense would burden courts with attempts to trace the effects of an overcharge through the entire chain of purchase and apportion the damages among direct and indirect purchasers. Id. at 492-93, 88 S.Ct. 2224. Second, direct purchasers are better situated to sue for antitrust violations, because any individual indirect purchaser would have an insufficient stake in the lawsuit to prompt her to pursue relief. Id. at 494, 88 S.Ct. 2224. In Illinois Brick, the Court held that an indirect purchaser of price-fixed goods was not a party injured in his business or property within the meaning of section 4 of the Clayton Act, 15 U.S.C. § 15 (2000). 431 U.S. at 728-29, 97 S.Ct. 2061. The plaintiffs, various state and local government entities, alleged a price-fixing conspiracy among manufacturers of concrete blocks. 431 U.S. at 726, 97 S.Ct. 2061. The plaintiffs did not purchase concrete blocks directly, but did purchase buildings made with the blocks. Id. The plaintiffs alleged that overcharges from the manufacturers were passed to them through masonry contractors and general contractors. Id. at 726-27, 97 S.Ct. 2061. The Court refused to recognize this offensive pass-on theory for two policy reasons. Id. at 730, 97 S.Ct. 2061. First, allowing offensive but not defensive use of pass-on would create a serious risk of multiple liability for defendants because a direct purchaser could recover an overcharge that had been passed on to an indirect purchaser, who could also recover it. Id. Second, the evidentiary complexities and uncertainties that precluded a pass-on defense in Hanover Shoe were multiplied in the offensive use of pass-on by a plaintiff several steps removed from the defendant in the chain of distribution. Illinois Brick, 431 U.S. at 732, 97 S.Ct. 2061. Faced with the choice of overturning Hanover Shoe or barring federal indirect purchaser suits, the Court chose the latter. Illinois Brick, 431 U.S. at 736-37, 97 S.Ct. 2061. The Court noted that the question of which persons have been injured by an illegal overcharge for purposes of § 4 is analytically distinct from the question of which persons have sustained injuries too remote to give them standing to sue for damages under § 4. Id. at 728, n. 7, 97 S.Ct. 2061. Illinois Brick thus did not address federal antitrust standing. Id. Justice Brennan, joined by Justices Marshall and Blackmun, dissented in Illinois Brick. Id. at 748, 97 S.Ct. 2061. Justice Brennan argued that the majority's bar to indirect purchaser suits flouts Congress' purpose and severely undermines the effectiveness of the private treble-damages action as an instrument of antitrust enforcement by precluding injured consumers from recovering damages while leaving middlemen, who may pass on any illegal overcharges, with little incentive to sue. Id. at 749, 97 S.Ct. 2061 (Brennan, J., dissenting). Conceding that despite the broad wording of § 4 there is a point beyond which the wrongdoer should not be held liable, Justice Brennan concluded that if the broad language of § 4 means anything, surely it must render the defendant liable to those within the defendant's chain of distribution. It would indeed be `paradoxical to deny recover[y] to the ultimate consumer while permitting the middlemen a windfall recovery.' Id. at 760-61, 97 S.Ct. 2061 (Brennan, J., dissenting) (quoting P. Areeda, Antitrust Analysis: Problems, Text, Cases 75 (2d ed.1974)). The Supreme Court provided its most comprehensive statement on federal antitrust standing in AGC. The Court held that a labor union lacked standing to sue a contractors' association under the Sherman Act for an alleged conspiracy to restrain the union's business activities. AGC, 459 U.S. at 520-21, 103 S.Ct. 897. The Court noted that when Congress enacted the Sherman Act, it intended established common-law limits on liability to shape the scope of antitrust liability. AGC, 459 U.S. at 532, 103 S.Ct. 897. The AGC Court, accordingly, undertook to evaluate the plaintiff's harm, the alleged wrongdoing by the defendants, and the relationship between them. Id. at 535, 103 S.Ct. 897. The factors addressed by the Court included: (1) whether the plaintiff is a consumer or competitor in the allegedly restrained market; (2) whether the injury alleged is direct or indirect; (3) whether there are more directly injured plaintiffs with motivation to sue; (4) whether the damages claims are speculative; and (5) whether the plaintiff's claims risk duplicative recoveries and would require a complex apportionment of damages. [1] Id. at 538-45, 103 S.Ct. 897. The Court counseled against across-the-board rules, suggesting that courts should analyze each situation in light of the factors set forth in the opinion. Id. at 536 n. 33, 103 S.Ct. 897. Applying all the factors, the Court concluded that the labor union had not suffered an injury compensable under federal antitrust law. Id. at 545, 103 S.Ct. 897. Many state courts, including a Minnesota state district court, have since applied the AGC factors to determine if an antitrust plaintiff has standing. See, e.g., Gutzwiller v. Visa U.S.A., Inc., No. C4-04-58, 2004 WL 2114991, at -6 (Minn.Dist.Ct. Sept.15, 2004).