Opinion ID: 3015125
Heading Depth: 4
Heading Rank: 2

Heading: Is there a “complete

Text: involvement” defense? We hold that a general co-conspirator exception would only exist if the complete involvement defense barred the middlemen from bringing a claim against their former coconspirator—the manufacturer. However, our Court has not decided where the complete involvement defense even exists. We thus examine this question. In Perma Life, the Supreme Court held that “the doctrine of in pari delicto . . . is not to be recognized as a defense to an antitrust action.” 392 U.S. at 140.16 But as previously mentioned, the Court expressly did “not decide . . . whether . . . truly complete involvement and participation in a monopolistic scheme could ever be a basis . . . for barring a plaintiff’s cause 16 The Court explained that “[a]lthough in pari delicto literally means ‘of equal fault,’ the doctrine has been applied . . . in a wide variety of situations in which a plaintiff seeking damages or equitable relief is himself involved in some of the same sort of wrong doing.” Perma Life, 392 U.S. at 138. 44 of action.” Id. Further, in concurrences, five members of the Perma Life Court favored barring suit by antitrust plaintiffs who were involved in a conspiracy at a high enough level.17 Further, every Court of Appeals that has decided the issue has held that antitrust plaintiffs who were involved in a conspiracy at a requisite level are barred from suing. See, e.g., Sullivan v. Tagliabue, 34 F.3d 1091, 1107 (1st Cir. 1994); Columbia Nitrogen Corp. v. Royster Co., 451 F.2d 3, 16 (4th Cir. 1971); Gen. Leaseways, Inc. v. Nat’l Truck Leasing Ass’n, 830 F.2d 716, 720-23 (7th Cir. 1987); Javelin Corp. v. Uniroyal, Inc., 546 F.2d 276, 279 (9th Cir. 1976). But cf. Greene v. Gen. Foods Corp., 517 F.2d 635, 646-47 (1975) (“seriously question[ing]” whether antitrust plaintiffs should ever be barred 17 See Perma Life, 392 U.S. at 146 (White, J., concurring) (“I would deny recovery where plaintiff and defendant bear substantially equal responsibility for injury resulting to one of [the co-conspirators] . . . .”); id. at 147 (Fortas, J., concurring) (Suit should be barred when “the fault of the parties is reasonably within the same scale.”); id. at 149 (Marshall, J., concurring) (“I would hold that where a defendant in a private antitrust suit can show that the plaintiff actively participated in the formation and implementation of an illegal scheme, and is substantially equally at fault, the plaintiff should be barred from imposing liability on the defendant.”); id. at 153 (Harlan, J., concurring in part and dissenting in part) (Stewart, J., joining) (“[P]roperly used[, in pari delicto] refers to a defense that should be permitted in antitrust cases.”). 45 from suing because of their “unclean hands”). In Link, our Court recognized that co-conspirators who were completely involved in a conspiracy might be barred from suing. 788 F.2d at 932. However, we did not decide the issue because we concluded that the co-conspirators in that case were not completely involved in the conspiracy. Id. We recognize that the weight of authority favors barring suit by antitrust plaintiffs who were involved in a conspiracy at a high enough level. We also recognize, however, the strong policy argument in favor of allowing suits by co-conspirators even when their involvement in a conspiracy was large. The Ninth Circuit has recognized that “[t]he formulation of the ‘complete involvement’ defense reflects a somewhat uneasy balance between the compelling policy of enforcement of the antitrust laws and the natural desire of any court to recognize the equities as between parties.” THI-Hawaii, Inc. v. First Commerce Fin. Corp., 627 F.2d 991, 995 (9th Cir. 1980). It is notable, however, that, while the courts who have adopted the c o m p le te in v o lv e m e nt def e n se h a v e s tru c k th e “enforcement/equities balance” in favor of equities, the Supreme Court in the holdings of Illinois Brick and Perma Life struck the balance in favor of enforcement. In Illinois Brick, the Court conclude[d] that the legislative purpose in creating a group of ‘private attorneys general’ to 46 enforce the antitrust laws under § 4 [of the Clayton Act] is better served by holding direct purchasers to be injured to the full extent of the overcharge paid by them than by attempting to apportion the overcharge among all that may have absorbed a part of it. 431 U.S. at 746 (citation and quotation marks omitted). Thus the Illinois Brick Court made the balancing decision to deny (some might argue inequitably18 ) injured indirect purchasers standing to recover while granting direct purchasers the windfall of the entire overcharge in order to further efficient antitrust law enforcement. In Perma Life, the Court believed that allowing the in pari delicto defense in an antitrust action would “threaten the effectiveness of the private action as a vital means for enforcing . . . antitrust policy.” 392 U.S. at 136. It noted that it had “often indicated the inappropriateness of invoking broad common-law 18 See Areeda, supra, ¶ 346k, at 378 (“The obvious difficulty with denying damages for consumers buying from an intermediary is that they are injured, often more than the intermediary, who may also be injured but for whom the entire overcharge is a windfall. The indirect purchaser rule awards greatly overcompensate interm ediaries and greatly undercompensate consumers in the name of efficiency in the administration of the antitrust laws.”). 47 barriers to relief where a private suit serves important public purposes.” Id. at 138. It concluded that [t]he plaintiff who reaps the reward of treble damages may be no less morally reprehensible than the defendant, but the law encourages his suit to further the overriding pubic policy in favor of competition. A more fastidious regard for the relative moral worth of the parties would only result in seriously undermining the usefulness of the private action as a bulwark of antitrust enforcement. Id. at 139 (emphases added). Thus, the Court chose to allow the inequity of letting plaintiffs, though as “morally reprehensible” as defendants, sue in order to foster antitrust law enforcement. We further point out that a rule prohibiting antitrust plaintiffs who were completely involved in a conspiracy to sue co-conspirators need not be absolute and could be crafted to maximize antitrust enforcement and cartel instability. For example, the law might allow the first, but only the first, completely involved co-conspirator the right to sue its fellow coconspirators. This would give each co-conspirator incentive to be the first to defect from a cartel and enforce the antitrust laws because (1) each would want to be the one and only coconspirator to gain the right to recover treble damages and (2) each would be afraid that if it did not defect, another would, and 48 it would then be liable for treble damages. Under such a rule, the incentive to defect and cartel instability would increase, and cartel breakdown and failure should become more common. Further, if potential co-conspirators knew their potential cartel had a decreased chance of succeeding, they would be less likely to form a cartel in the first place. Regardless, as we will explain, it turns out that we need not resolve whether there is a complete involvement defense to antitrust actions in order to determine whether Plaintiffs come within a general co-conspirator exception.