Opinion ID: 358101
Heading Depth: 1
Heading Rank: 2

Heading: Judicial Decisions Business or Property.

Text: 28 The meaning and scope of business or property in section 4 have generally been discussed by the courts in contexts other than consumer standing. 9 There has been some recognition that an injury to property is different and, perhaps, broader than a business injury. 10 See generally Note, Standing to Sue for Treble Damages Under Section 4 of the Clayton Act, 64 Colum.L.Rev. 570, 577-78 (1964). 29 In Chattanooga Foundry and Pipe Works v. City of Atlanta, 203 U.S. 390, 396, 399, 27 S.Ct. 65, 66, 67, 51 L.Ed. 241 (1906), the Court, through Mr. Justice Holmes, discussed business or property. 30 The facts gave rise to a cause of action under the Act of Congress.    (The City) was injured in its property, at least, if not in its business of furnishing water, by being led to pay more than the worth of the pipe. A person whose property is diminished by a payment of money wrongfully induced is injured in his property. 31 A man is injured in his property when his property is diminished. 32 On its face, the Court's language suggests that consumers forced to pay more for a product by virtue of anticompetitive activity suffer injury to their property. The City of Atlanta, however, had commenced the action against two companies that allegedly had combined to keep the price of iron water pipe artificially high. As a result, the cost to the city of supplying water to its residents was increased. Thus, the city's claim arguably sought recovery for a business injury. 33 Neither the Supreme Court nor a federal appellate court has specifically addressed whether ordinary consumers who purchase a product for personal use at a higher price because of anticompetitive activity suffer an injury to property under section 4 of the Clayton Act. 11 The Supreme Court has intimated that such injury, in order to be legally cognizable, must be of a commercial nature. 34 Like the lower courts that have considered the meaning of the words business or property, we conclude that they refer to commercial interests or enterprises. (Hawaii v. Standard Oil Co., supra, 405 U.S. at 264, 92 S.Ct. at 892 (1972).) 35 In Hawaii, the state had brought a Parens patriae action on behalf of its citizens as the representative of a class of all purchasers in the state. The Court denied standing to the state to sue for injuries to the general economy. 36 When the State seeks damages for injuries to its Commercial interests, it may sue under § 4. But where, as here, the State seeks damages for other injuries, it is not properly within the Clayton Act. (Id. (emphasis supplied).) 12 37 This circuit has approved language suggesting that, in order to be recoverable, the injury to business or property must be a competitive one. See Ragar v. T. J. Raney & Sons, 388 F.Supp. 1184, 1187 (E.D.Ark.), Aff'd, 521 F.2d 795 (8th Cir. 1975) (Per curiam ). Ragar involved an antitrust action by property owners against investment banking firms who had conspired to keep interest rates on municipal bonds higher than they otherwise would have been. The district court, finding that plaintiff's injury was remotely related to the alleged violation, held that plaintiffs lacked standing to sue. Alternatively, the court said the plaintiffs had not been injured in their business or property because that phrase requires a competitive injury. 38 Since the purpose of the antitrust laws is the prevention of restraints to free competition in business and commercial transactions,    it follows that only those persons injured in their competitive positions in a business in which they are engaged should be permitted standing to sue under the Clayton Act. (388 F.Supp. at 1187.) 39 Other circuits have similarly suggested that section 4 requires a competitive or commercial injury. In GAF Corp. v. Circle Floor Co., 463 F.2d 752 (2d Cir. 1972), Cert. denied, 413 U.S. 901, 93 S.Ct 3058, 37 L.Ed.2d 1045 (1973), one company alleged that another company was attempting a takeover in order to monopolize the industry. The court, concluding that the policy favored by the Act is competition, sustained the district court's dismissal of the complaint for failure to state a claim. 40 The Supreme Court has consistently reiterated that (t)he Sherman Act was    aimed at preserving free and unfettered Competition as the rule of trade, and that the policy unequivocally laid down by the Act is competition.    The courts, in interpreting § 4 of the Clayton Act and its predecessor, have endeavored, although with some inconsistency and conflict, to promote the policy of competition established by the Sherman and Clayton Acts by interpreting § 4 as allowing treble damages only to those who have suffered some diminution of their ability to compete. Whether viewed in terms of lack of standing or the absence of Antitrust damages, the courts, in denying recovery to various kinds of plaintiffs, have sought to confine recovery to those who have been injured by restraints on competitive forces in the economy. 41 Not all persons who may be able to trace an economic loss to a violation of the antitrust laws can recover under those laws. The Supreme Court has stated that, in determining who may sue under § 4, the central question is one of Competitive injury. (Id. at 757-58 (emphasis in original).) 13 42 In In re Multidistrict Vehicle Air Pollution M. D. L. No. 31, 481 F.2d 122 (9th Cir.), Cert. denied, 414 U.S. 1045, 94 S.Ct. 551, 38 L.Ed.2d 336 (1973), the Ninth Circuit, citing Hawaii v. Standard Oil Co., supra, also expressed the view that the phrase business or property limits standing to those engaged in commercial ventures and enterprises. 481 F.2d at 131. See also Tugboat, Inc. v. Mobile Towing Co., 534 F.2d 1172, 1175 (5th Cir. 1976) (in order to be cognizable under section 4, the injury must be to commercial interests or enterprises); Cf. Reibert v. Atlantic Richfield Co., 471 F.2d 727, 730 (10th Cir.), Cert. denied, 411 U.S. 938, 93 S.Ct. 1900, 36 L.Ed.2d 399 (1973) (in order to satisfy section 4's business or property prerequisite, fired worker must demonstrate that his job (was) a commercial venture or enterprise). 43 Our review of the cases convinces us that the few courts specifically addressing the question have recognized that section 4 requires a commercial or competitive injury.III. Antitrust Improvements Act of 1976. 44 In 1976, Congress enacted the Hart-Scott-Rodino Antitrust Improvements Act. The new statute permits State attorneys general to recovery monetary damages on behalf of State residents injured by violations of the antitrust laws. H.R.Rep.No.94-499, 94th Cong., 2d Sess. 3, Reprinted in (1976) U.S.Code Cong. & Admin.News p. 2572. Congress intended in the new Act to provide a remedy for injured consumers. Illinois Brick Co. v. Illinois, 431 U.S. 720, 756-57, 97 S.Ct. 2061, 2080, 52 L.Ed.2d 707 (1977) (Brennan, J., dissenting). This Act represents a congressional response to the holding of Hawaii v. Standard Oil Co., supra (Clayton Act does not authorize a state to sue on behalf of its citizens for injury to its general economy). See Illinois Brick Co. v. Illinois, supra, 431 U.S. at 756, 97 S.Ct. 2061 (Brennan, J., dissenting). 45 According to the Act's legislative history, some members of Congress assumed, contrary to our construction of the statute, that ordinary consumers may currently sue for treble damages under section 4. 14 As the Supreme Court has noted, however, Congress made clear that the new legislation did not alter the definition of injured persons under section 4, See Illinois Brick Co. v. Illinois, supra, 431 U.S. 720 at 733-34 n. 14, 97 S.Ct. 2061, 52 L.Ed.2d 707, and the House Judiciary Committee acknowledged that the bill did not create new substantive liability. H.R.Rep.No.94-499, 94th Cong., 2d Sess. 9, Reprinted in (1976) U.S.Code & Admin.News pp. 2572, 2578. The views expressed by particular legislators    cannot    change the legislative intent (of section 4)    'since the statements were (made) after passage of the (Clayton) Act.'  Illinois Brick Co. v. Illinois, supra, 431 U.S. at 733-34 n. 14, 97 S.Ct. at 2069. 46 In the House Report accompanying the bill, the Judiciary Committee noted: 47 The economic burden of many antitrust violations is borne in large measure by the consumer in the form of higher prices for his goods and services.    48 Frequently, antitrust violations injure thousands or even millions of consumers, each in relatively small amounts.    49 Although the antitrust laws have the immediate goals of protecting and promoting competition, it is the consuming public that ultimately benefits from the enforcement of the antitrust laws. Nonetheless, Federal antitrust statutes do not presently provide effective redress for the injury inflicted upon consumers.    (This bill) fills this gap by providing the consumer an advocate in the enforcement process his State attorney general. (H.R.Rep.No.94-499, 94th Cong., 2d Sess. 4, Reprinted in (1976) U.S.Code Cong. & Admin.News pp. 2572, 2573-74.) 50 The Senate Judiciary Committee also noted that, in light of previously recognized judicial limitations, consumers had not been permitted to maintain antitrust actions. 51 (The new Act) is intended to assure that consumers are not precluded from the opportunity of proving the amount of their damage and to avoid problems with respect to (class action) manageability    Standing, privity, target area, remoteness, and the like. (Illinois Brick Co. v. Illinois, supra, 431 U.S. at 757, 97 S.Ct. at 2080, Citing S.Rep.No.94-803, 94th Cong., 2d Sess. 42 (1976) (emphasis in original).) 52 We think it significant that Congress, which sought to provide a meaningful remedy for consumers in the 1976 Act, did not seek to improve, clarify, or alter any existing private right of action for ordinary consumers. Congress did comment on the inappropriateness of the class action as a means of redressing consumers who pay higher prices because of anticompetitive activity. See H.R.Rep.No.94-499, 94th Cong., 2d Sess. 7, Reprinted in (1976) U.S.Code Cong. & Admin.News pp. 2572, 2576-77. 53 The goals and purposes of the antitrust laws may not be enhanced by permitting gigantic consumer class actions, many of which are never tried. In Handler & Blechman, Antitrust and the Consumer Interest: The Fallacy of Parens Patriae and A Suggested New Approach, 85 Yale L.J. 626, 627-30 (1976), the authors point out the failure, to date, of the class action vehicle to compensate aggrieved consumers. Judge Medina, of the Second Circuit, has noted: not a single one of these class actions including millions of indiscriminate and unidentifiable members has ever been brought to trial and decided on the merits. Eisen v. Carlisle & Jaquelin, 479 F.2d 1005, 1018-19 (2d Cir. 1973), Aff'd, 417 U.S. 156, 94 S.Ct. 2140, 40 L.Ed.2d 732 (1974). 15 Often, defendants who are unwilling or unable to defend such suits are compelled for economic reasons to settle actions otherwise meritless. The result of such settlements will inevitably be counterproductive when the costs to the defendant of defense and settlement are passed on to present and future consumers. Moreover, big firms are better able than small or medium-sized businesses to defend or settle such claims under similar circumstances. The ultimate result might be to preserve an oligopolistic economic climate. The deterrent impact of such suits, in our view, does not outweigh their potentially ruinous effect on American business. Deterrence exists in other antitrust remedies 16 as well as in the 1976 Act, which places responsibility for consumer actions upon state attorneys general. We agree with Congress that the new statute will effectively protect the interests of consumers without imposing upon the courts and the economy the risk and burden of nonmeritorious class actions. 17 54