Court Opinion

ID: 5128282
Source: CourtListenerOpinion
Date Created: 2021-11-22 16:00:20.836326+00
Date Added: 2024-06-11T08:23:06.076474
License: Public Domain

20–1766
In re American Express Anti-Steering Rules Antitrust Litigation

                           In the
               United States Court of Appeals
                       FOR THE SECOND CIRCUIT

                               AUGUST TERM 2020
                                 No. 20-1766

     IN RE AMERICAN EXPRESS ANTI-STEERING RULES ANTITRUST
                          LITIGATION,

               LAJOLLA AUTO TECH, INC., QWIK LUBE LLC,
                         Plaintiffs-Appellants,

 RITE AID CORPORATION, WALGREEN CO., FIREFLY AIR SOLUTIONS,
   LLC, PLYMOUTH OIL CORPORATION, RITE AID HEADQUARTERS
 CORP., JASA, INC., ON BEHALF OF THEMSELVES AND ALL SIMILARLY
  SITUATED PERSONS, ANIMAL LAND, INC., ROOKIES, INC., ITALIAN
COLORS RESTAURANT, COHEN RESE GALLERY, INC., LOPEZ-DEJONGE,
  INC., BAR HAMA LLC, MEIJER, INC., PUBLIX SUPER MARKET, INC.,
RALEY’S, SUPERVALU INC., CVS PHARMACY, INC., BI-LO, LLC, H.E.B.
   GROCERY COMPANY, THE KROGER CO., SAFEWAY INC., AHOLD
U.S.A. INC., ALBERTSON’S LLC, HY-VEE, INC., THE GREAT ATLANTIC
  & PACIFIC TEA COMPANY INC., TREEHOUSE, INC., IL FORNO, INC.,
 NATIONAL SUPERMARKETS ASSOCIATION, INC., ON BEHALF OF ITS
    MEMBERSHIP, AND ALL OTHER SIMILARLY SITUATED PERSONS,
 PLAINTIFFS, ALL CLASS PLAINTIFFS, THE MARCUS CORPORATION,
  BILL MCCAULEY, READ MCCAFFREY, HILLARY JAYNES, ANTHONY
 OLIVER, BERNADETTE MARTIN, BRYAN HUEY, JAMES EATON, PAUL
     KASHISHIAN, GIANNA VALDES, CHAD TINTROW, MATTHEW
  MORIARTY, ANDREW AMEND, IGOR GELMAN, ZACHARY DRAPER,
SHAWN O’KEEFE, FRANCISCO ROBLETO, JR., MICHAEL THOMAS REID,
            PLYMOUTH OIL CORP., CLAM LAKE PARTNERS LLC,
                             Plaintiffs,

                                       v.

     AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.,
                  AMERICAN EXPRESS COMPANY,
                       Defendants-Appellees,

                              SUSAN BURDETTE,
                                 Defendant,

    CIRCUIT CITY LIQUIDATING TRUST, THE RSH LIQUIDATING TRUST,
         HOLIDAY COMPANIES, GANDER MOUNTAIN COMPANY,
            COMMONWEALTH HOTELS, INC., KEILA RAVELO,
                            Intervenors. *

              On Appeal from the United States District Court
                   for the Eastern District of New York

                        ARGUED: DECEMBER 16, 2020
                        DECIDED: NOVEMBER 22, 2021

Before:         CHIN, BIANCO, and MENASHI, Circuit Judges.

         The plaintiffs-appellants are commercial merchants that sought
monetary and injunctive relief under both federal and California
antitrust laws against the defendants-appellees—American Express

*   The Clerk of Court is directed to amend the caption as set forth above.

                                        2
Travel Related Services Co., Inc., and American Express Co.—alleging
that the appellees’ anti-steering rules caused merchant fees to rise
across the market. The appellants do not accept American Express
cards and therefore proceeded under an “umbrella” theory of
liability. The district court considered the four “efficient enforcer”
factors, concluded that the appellants lacked antitrust standing, and
dismissed the claims. The appellants challenge that holding, arguing
that the four efficient-enforcer factors support antitrust standing for
the “umbrella” plaintiffs in this case.

      We disagree. The efficient-enforcer factors structure a
proximate cause analysis according to which there must be a
sufficiently close relationship between the alleged injury and the
alleged antitrust violation to establish antitrust standing. Here, that
relationship is lacking. After considering the efficient-enforcer factors
and the relevant state laws, we AFFIRM.

             SCOTT MARTIN, Hausfeld LLP, New York, NY (Michael
             D. Hausfeld, Hausfeld LLP, Washington, DC, and Irving
             Scher, Jeanette Bayoumi, and Kimberly Fetsick, Hausfeld
             LLP, New York, NY, on the brief), for Plaintiffs-Appellants.

             EVAN R. CHESLER (Peter T. Barbur, Kevin J. Orsini, and
             Rory A. Leraris, on the brief), Cravath, Swaine & Moore
             LLP, New York, NY, for Defendants-Appellees.

             Eric F. Citron, Goldstein & Russell, P.C., Bethesda, MD,
             for Amici Curiae Eighteen Professors of Antitrust Law.

                                    3
20–1766
In re American Express Anti-Steering Rules Antitrust Litigation

MENASHI, Circuit Judge:

       The appellants, on behalf of a class of commercial merchants,
allege that the Anti-Steering Rules promulgated by the appellees, the
American Express Company and American Express Travel Related
Services Company, Inc. (together, “Amex”), violate the antitrust laws.

       The appellants do not accept American Express cards but claim
to be harmed by Amex’s policies nevertheless. These merchants “seek
monetary and injunctive relief for overcharges paid to Visa,
MasterCard, and Discover,” not to Amex, “caused by Amex’s
imposition of ‘Anti-Steering Rules’ in its agreements with merchants
who accept Amex cards.” Appellants’ Br. 1-2. The appellants claim
that “Amex’s Anti-Steering Rules have stifled interbrand competition
throughout the relevant market, causing the credit card transaction
fees charged to Appellants by Visa, MasterCard, and Discover to
prevail at supracompetitive levels under Amex’s pricing umbrella.”
Id. at 2.

       The U.S. District Court for the Eastern District of New York
(Garaufis, J.) dismissed the appellants’ claims under Federal Rule of
Civil Procedure 12(b)(6) and ruled that the class lacked antitrust
standing because it did not include “efficient enforcers” of the
antitrust laws relative to Amex’s challenged anticompetitive conduct.
In re Am. Express Anti-Steering Rules Antitrust Litig., 433 F. Supp. 3d
395, 407-13 (E.D.N.Y. 2020). The appellants “seek reversal of the
district    court’s    dismissal      of   their    claims        because   Amex’s
anticompetitive conduct has directly injured them, and recognizing
their standing would ensure efficient enforcement of the antitrust
laws.” Appellants’ Br. 2. Amex contends that the district court was
correct that the appellants “lack antitrust standing because they are
not efficient enforcers” of the antitrust laws and the alleged damages
are “too indirect” and “speculative.” Appellees’ Br. 3-4.

       We affirm the district court’s judgment. To determine whether
a party can sue under the antitrust laws—whether the party has
“antitrust standing”—we apply the “efficient enforcer” test. The
efficient-enforcer test is an elaboration on the proximate cause
requirement of Associated General Contractors of California, Inc. v.
California State Council of Carpenters (AGC), 459 U.S. 519, 535-36 (1983).
In cases of economic harm, proximate cause is demarcated by the
“first step” rule, which limits liability to parties injured at the first step
of the causal chain of the defendants’ actions. See id. at 534. Here, at
the first step, Amex restrained trade to raise its own prices; only later
did its competitors follow suit. Because the appellants were harmed
at that later step, the claims here fail the first-step test. After
considering the four AGC factors, we conclude that—taking the
allegations of the complaint as true—the appellants are not efficient
enforcers of the antitrust laws and therefore lack antitrust standing.

                            BACKGROUND 1

       The appellants challenge Amex’s Anti-Steering Rules, or what
Amex calls its non-discrimination provisions, contained in its Card
Acceptance Agreement with merchants. The appellants allege that
“Amex’s Anti-Steering Rules unreasonably restrain interbrand price
competition with the other major [credit card] networks because the
Rules: (1) stifle interbrand competition among the networks;
(2) impose supracompetitive merchant fees, without corresponding

1For purposes of this appeal, we accept as true all facts alleged in the second
amended complaint (“SAC”). Henry v. County of Nassau, 6 F.4th 324, 328 (2d
Cir. 2021).

                                      5
offsetting credit card user economic benefits; (3) cause the overall
price of credit card transactions to rise above competitive levels
marketwide, because the other credit card networks would not
benefit competitively by reducing their merchant fees; and (4) raise
consumer retail prices throughout the economy, thereby reducing
output.” Appellants’ Br. 4; see also Am. Express Anti-Steering, 433
F. Supp. 3d at 401.

                                     I

      The credit card industry is divided among four competing
networks: Amex, Visa, MasterCard, and Discover. Ohio v. Am. Express
Co., 138 S. Ct. 2274, 2282 (2018). The market is characterized by high
barriers to entry. New entrants face a “chicken-and-egg” problem
because “merchants value a payment system only if a sufficient
number of cardholders use it and cardholders value a payment card
only if a sufficient number of merchants accept it.” 2

      Credit card networks such as Amex “operate what economists
call a ‘two-sided platform,’” which “offers different products or
services to two different groups who both depend on the platform to
intermediate between them.” Ohio, 138 S. Ct. at 2280. 3 Amex provides
credit-card services to both “merchants,” who accept Amex as
payment, “and cardholders,” who use Amex to make payments. Ohio,
138 S. Ct. at 2279-80. Both parties are necessary; “no credit-card

2Benjamin Klein, Andres V. Lerner, Kevin M. Murphy & Lacey L. Plache,
Competition in Two-Sided Markets: The Antitrust Economics of Payment Card
Interchange Fees, 73 ANTITRUST L.J. 571, 584 (2006).
3See also D. Daniel Sokol, Rethinking the Efficiency of the Common Law, 95
NOTRE DAME L. REV. 795, 803 (2019) (“The value of the two-sided market (or
platform) is the ability to make matches across both sides of the market.”).

                                     6
transaction can occur unless both the merchant and the cardholder
simultaneously agree to use the same credit-card network.” Id. at
2280.

          While credit card companies often charge cardholders an
annual fee, all credit card companies charge merchants a fee for every
transaction processed. 4 According to the appellants, Amex charges
higher merchant fees than its competitors. To avoid the higher fees,
merchants—in the absence of any restraint prohibiting the practice—
might “steer” their customers toward using another form of payment.
“Steering” could be done in different ways, such as simply by asking,
offering benefits for using other payment methods, or imposing a
surcharge on the use of Amex cards. 5

          Steering allows for price signals between merchant and
customer. Without steering, “consumers do not internalize the full
costs of their choice of payment system.” 6 Steering also may prevent
Amex from charging higher fees because merchants will steer
customers toward cards with lower fees. In sum, “American Express
dislikes steering; the merchants like it; and the shoppers may benefit
from it, whether because merchants will offer them incentives to use

4See Timothy J. Muris, Payment Card Regulation and the (Mis)application of the
Economics of Two-Sided Markets, 2005 COLUM. BUS. L. REV. 515, 522 (2005).
5   See Klein et al., supra note 2, at 586-87.
6 Adam J. Levitin, Priceless? The Social Costs of Credit Card Merchant
Restraints, 45 HARV. J. ON LEGIS. 1, 11 (2008); see also id. at 3 (“[S]ome
consumers end up paying higher or lower prices for the transaction than
they would have if the merchant charged prices that varied with the cost of
accepting payment.”).

                                           7
less expensive cards or in the form of lower retail prices overall.” Ohio,
138 S. Ct. at 2292 (Breyer, J., dissenting).

      Amex has discouraged steering by inserting anti-steering
provisions into its contracts with merchants. Pursuant to Amex’s
Anti-Steering Rules, merchants may not:

      • indicate or imply that they prefer, directly or
          indirectly, any Other Payment Products over Amex
          Cards;

      • try to dissuade cardholders from using their Amex
          Card;

      • criticize or mischaracterize the Amex Card or any of
          Amex’s services or programs;

      • try to persuade or prompt cardholders to use any
          Other Payment Products or any other method of
          payment (e.g., payment by check);

      • impose any restriction, conditions, or disadvantages
          when the Card is accepted that are not imposed
          equally on all Other Payment Products, except for
          ACH funds transfer, cash, and checks;

      • engage in activities that harm Amex’s business or the
          American Express Brand (or both);

      • or promote any Other Payment Products (except the
          Merchant’s own private label card that they issue for
          use solely at their Establishments) more actively than
          the Merchant promotes Amex.

Am. Express Anti-Steering, 433 F. Supp. 3d at 404 (alterations omitted).

                                     8
       The appellants allege that these Anti-Steering Rules, when
combined with Amex’s higher merchant fees, have raised fees
throughout the industry. Competing networks “have no economic
incentive to compete in the market by offering lower merchant fees
[because] merchants cannot educate cardholders and [steer]
transactions to the cards with lower fees.” Appellants’ Br. 7. Because
“lower-fee competitor[s] cannot gain market share” by competing on
price, all competing networks raise prices. Id. This effect is
widespread because “most large merchants, according to Plaintiffs,
do accept Amex, meaning that the credit card companies would have
little incentive to tailor contracts for relatively insignificant individual
merchants who do not.” Am. Express Anti-Steering, 433 F. Supp. 3d at
415.

                                     II

       The Anti-Steering Rules have been litigated for over a decade.
Merchants have been filing suits since the 2000s. See generally Rite-Aid
Corp. v. Am. Express Travel Related Servs. Co., 708 F. Supp. 2d 257, 260
(E.D.N.Y. 2010). “In October 2010, the Department of Justice and the
attorneys general of eighteen states filed the Government Action
against Amex, MasterCard, and Visa” challenging each company’s
version of the Anti-Steering Rules. In re Am. Express Anti-Steering
Rules Antitrust Litig., No. 08-CV-2315, 2016 WL 748089, at *2 (E.D.N.Y.
Jan. 7, 2016). “Visa and MasterCard entered into consent decrees with
the Government on the same day that the Government Action was
initiated. Only Amex remained as a defendant.” Id. at *2 n.5. After a
bench trial, the district court ruled for the government, concluding
that it had shown by a preponderance of the evidence that the Anti-
Steering Rules violated § 1 of the Sherman Act. United States v. Am.
Express Co., 88 F. Supp. 3d 143, 238 (E.D.N.Y. 2015). Our court
                                     9
reversed that judgment, holding that the district court erred in not
requiring the government to show harm to consumers “accounting
for consumers on both sides of the platform.” United States v. Am.
Express Co., 838 F.3d 179, 206-07 (2d Cir. 2016). The Supreme Court
then affirmed. Ohio, 138 S. Ct. at 2290.

      “Following the Supreme Court’s affirmance of the dismissal of
the Government Action, matters resumed in the [Merchant Plaintiff]
Actions.” Am. Express Anti-Steering, 433 F. Supp. 3d at 405. The
merchant plaintiffs—including the appellants here—filed the SAC on
December 17, 2018. The SAC sought monetary and equitable relief
“on behalf of two putative classes: (1) a class of merchants who accept
Amex cards … (the ‘Amex Class’); and (2) a class of merchants who
do not accept Amex cards and who have no contract with Amex (the
‘Non-Amex Class’).” Id. at 401. Within both classes, subclasses of
plaintiffs sought relief under California law. Id. at 402, 405.

      On January 15, 2020, the district court ruled in Amex’s favor.
Id. at 417. It first granted Amex’s motion to compel arbitration of the
Amex Class’s claims. See id. at 405-07. It then granted Amex’s motion
to dismiss the Non-Amex Class’s claims. See id. at 407-16. Specifically,
the district court held that “the Non-Amex Class has not established
federal antitrust standing.” Id. at 413. Applying the “efficient
enforcer” test, id. at 408; see Balaklaw v. Lovell, 14 F.3d 793, 797 n.9 (2d
Cir. 1994) (endorsing the efficient-enforcer test), the district court
concluded that all four efficient-enforcer factors indicated that the
appellants lacked antitrust standing. Am. Express Anti-Steering, 433
F. Supp. 3d at 407-13. For similar reasons, the district court concluded
that the appellants lacked antitrust standing under California’s
Cartwright Act and Unfair Competition Law as well. Id. at 413-16. On
May 14, 2020, the district court entered an order of partial final
                                    10
judgment pursuant to Federal Rule of Civil Procedure 54(b). On June
8, 2020, the appellants timely appealed.

                            DISCUSSION

      “We review a district court’s grant of a motion to dismiss de
novo, accepting as true all factual claims in the complaint and drawing
all reasonable inferences in the plaintiff’s favor.” Henry, 6 F.4th at 328
(internal quotation marks omitted). The appellants argue that the
district court erred when it dismissed their claims under the Clayton
Act and under California antitrust law. We address each claim in turn.

                                    I

      The appellants contend that the district court erred in
dismissing their federal antitrust claim. The appellants brought that
claim under the Clayton Act, which provides a private right of action
for injuries “by reason of anything forbidden in the antitrust laws.”
15 U.S.C. § 15(a). The district court dismissed the claim on the ground
that the appellants lacked antitrust standing. See Am. Express Anti-
Steering, 433 F. Supp. 3d at 407-08. We agree with the district court’s
conclusion.

      “It is a well-established principle that, while the United States
is authorized to sue anyone violating the federal antitrust laws, a
private plaintiff must demonstrate ‘standing.’” Daniel v. Am. Bd. of
Emergency Med., 428 F.3d 408, 436 (2d Cir. 2005). We have explained
that “[a]ntitrust standing is a threshold, pleading-stage inquiry” and
that “when a complaint by its terms fails to establish this requirement
we must dismiss it as a matter of law.” Gatt Commc’ns, Inc. v. PMC
Assocs., L.L.C., 711 F.3d 68, 75 (2d Cir. 2013) (quoting NicSand, Inc. v.
3M Co., 507 F.3d 442, 450 (6th Cir. 2007) (en banc)). This requirement

                                   11
“prevents private plaintiffs from recovering damages under” the
Clayton Act “merely by showing injury causally linked to an illegal
presence in the market.” Id. at 76 (internal quotation marks and
alteration omitted).

      To demonstrate antitrust standing, a private plaintiff must
show both that (1) “it suffered a special kind of antitrust injury” and
that (2) “it is a suitable plaintiff to pursue the alleged antitrust
violations and thus is an efficient enforcer of the antitrust laws.” Id.
(internal quotation marks omitted). Whether a plaintiff is an “efficient
enforcer” depends on the four factors the Supreme Court identified
in AGC. 459 U.S. at 540-45. Those factors are (1) “the directness or
indirectness of the asserted injury”; (2) “the existence of more direct
victims” or the “existence of an identifiable class of persons whose
self-interest would normally motivate them to vindicate the public
interest in antitrust enforcement”; (3) the extent to which the claim is
“highly speculative”; and (4) “the importance of avoiding either the
risk of duplicate recoveries on the one hand, or the danger of complex
apportionment of damages on the other.” Id.; see also Gelboim v. Bank
of Am. Corp., 823 F.3d 759, 772 (2d Cir. 2016). “[T]he weight to be given
the various factors will necessarily vary with the circumstances of
particular cases.” Daniel, 428 F.3d at 443.

      In this case, the appellants claim to have antitrust standing
under a so-called “umbrella” theory. The classic “umbrella” scenario
occurs when “[a] cartel cuts output, which elevates price throughout
the market.” U.S. Gypsum Co. v. Ind. Gas Co., 350 F.3d 623, 627 (7th Cir.
2003). Because of that price umbrella, “customers of fringe firms
(sellers that have not joined the cartel) pay this higher price, and thus
suffer antitrust injury, just like customers of the cartel’s members.” Id.
In other words, the umbrella theory “seeks to hold price-fixers liable
                                   12
for harm allegedly flowing from the illegal conduct even though the
price-fixing defendants received none of the illegal gains and were
uninvolved in their competitors’ pricing decisions.” In re Coordinated
Pretrial Proceedings in Petroleum Prods. Antitrust Litig., 691 F.2d 1335,
1339 (9th Cir. 1982). The appellant merchants in this case do not have
a contractual relationship with Amex such that the Anti-Steering
Rules apply to the appellants directly. Rather, the appellants argue
that—as in a classic umbrella scenario—Amex’s practices provide an
umbrella under which the other credit card companies that do have a
relationship with the appellants also raise prices.

      The district court declined to determine whether the appellants
had established an antitrust injury because it concluded that the
appellants were not efficient enforcers of the antitrust laws and for
that reason lacked antitrust standing. We likewise need not address
antitrust injury. Because the four efficient-enforcer factors do not
establish antitrust standing, we affirm the district court’s judgment.

                                     A

      The first efficient-enforcer factor asks whether “the violation
was a direct or remote cause of the injury.” Gelboim, 823 F.3d at 772.
This factor turns on “familiar principles of proximate causation.”
Lotes Co. v. Hon Hai Precision Indus. Co., 753 F.3d 395, 412 (2d Cir. 2014).

      Proximate cause stands for the proposition that “the judicial
remedy cannot encompass every conceivable harm that can be traced
to alleged wrongdoing.” AGC, 459 U.S. at 536. It encompasses “the
judicial tools used to limit a person’s responsibility for the
consequences of that person’s own acts” and “reflects ideas of what
justice demands, or of what is administratively possible and
convenient.” Holmes v. Sec. Inv. Prot. Corp., 503 U.S. 258, 268 (1992)

                                    13
(internal quotation marks omitted). This principle limits antitrust
liability beyond a certain point. Given the “ripples of harm” that
antitrust violations may have in the economy, the Supreme Court has
said that “[i]t 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.” Blue Shield of Va. v. McCready, 457 U.S. 465, 476-
77 (1982). Therefore, “despite the broad wording of § 4 [of the Clayton
Act] there is a point beyond which the wrongdoer should not be held
liable.” Id. at 477 (quoting Ill. Brick Co. v. Illinois, 431 U.S. 720, 760
(1977) (Brennan, J., dissenting)).

       In the context of antitrust standing, proximate cause generally
follows the first-step rule. When the Clayton Act was enacted, the
Supreme Court has explained, Congress understood “the judicial
gloss” expressed by Justice Holmes: “The general tendency of the law,
in regard to damages at least, is not to go beyond the first step.” AGC,
459 U.S. at 534 (quoting S. Pac. Co. v. Darnell-Taenzer Lumber Co., 245
U.S. 531, 533 (1918) (Holmes, J.)). 7 The first-step rule requires “some

7 In other words, the law “does not attribute remote consequences to a
defendant,” even if those consequences are foreseeable. Darnell-Taenzer, 245
U.S. at 533. Barring liability for foreseeable harms is not unusual. Such
limits on liability can be found, for example, in the economic loss rule, see
Akron Corp. v. M/T Cantigny, 706 F.2d 151, 153 (5th Cir. 1983) (noting that “a
party may not recover for economic losses not associated with physical
damages” so as “to prevent limitless liability for negligence and the filing
of law suits of a highly speculative nature”); see also RESTATEMENT (THIRD)
OF TORTS: LIAB. FOR ECON. HARM § 1 cmt. c(1) (Am. L. Inst. 2020) (noting that
one of the rationales for limiting tort liability for economic loss is that
“[e]conomic losses proliferate more easily than losses of other kinds” even
though such losses “may be at least generally foreseeable to the person who
commits the negligent act”), and other limitations on liability for

                                     14
direct relation between the injury asserted and the injurious conduct
alleged.” Bank of Am. Corp. v. City of Miami, 137 S. Ct. 1296, 1306 (2017)
(quoting Holmes, 503 U.S. at 268). Under the rule, injuries that happen
at the first step following the harmful behavior are considered
proximately caused by that behavior. Accordingly, “[d]irectness in
the antitrust context means close in the chain of causation.” Gatt
Commc’ns, 711 F.3d at 78 (quoting IBM Corp. v. Platform Sols., Inc., 658
F. Supp. 2d 603, 611 (S.D.N.Y. 2009)). As Justice Stevens, the author of
AGC, observed, the Supreme Court’s “interpretation of § 4 has …
adhered to Justice Holmes’ observation that the ‘general tendency of
the law, in regard to damages at least, is not to go beyond the first
step.’” Verizon Commc’ns Inc. v. Law Offs. of Curtis V. Trinko, LLP, 540
U.S. 398, 417 (2004) (Stevens, J., concurring in the judgment) (quoting
S. Pac. Co., 245 U.S. at 533).

       Our court has repeatedly followed the first-step rule in the
antitrust context. In Paycom Billing Services. v. MasterCard International,
Inc., we held that a merchant, Paycom, did not suffer a direct injury

negligence, see 532 Madison Ave. Gourmet Foods, Inc. v. Finlandia Ctr., Inc., 96
N.Y.2d 280, 289 (2001) (“Absent a duty running directly to the injured
person there can be no liability in damages, however careless the conduct
or foreseeable the harm.”), and for negligent misrepresentation, see
RESTATEMENT (THIRD) OF TORTS: LIAB. FOR ECON. HARM § 5 cmt. b
(“Liabilities that expand as easily as words travel would … become
indeterminate and unduly widespread in many cases.”). Even when the law
extends a right to recover for derivative injury—such as emotional distress
from witnessing another’s accident—that right is often confined to close
relations and excludes others in ways unrelated to foreseeability. Robert L.
Rabin, Tort Recovery for Negligently Inflicted Economic Loss: A Reassessment,
37 STAN. L. REV. 1513, 1522 (1985). The “specter of collateral claims, virtually
unlimited in number, as a result of any given accident”—not
foreseeability—informs these limitations. Id. at 1525.

                                      15
from MasterCard’s practice of forbidding its member banks from
dealing with other card companies. 467 F.3d 283, 293 (2d Cir. 2006).
Paycom’s theory was that, absent that practice, MasterCard would
have faced more competition from Discover and American Express,
and it would have then adopted more favorable policies toward
Paycom. Id. That was not enough to establish antitrust standing; we
concluded that “any injury suffered by Paycom was indirect and
flowed from the injuries suffered by Discover and American
Express.” Id. We similarly held that the injury suffered in Gatt
Communications was indirect. 711 F.3d at 78-79. In that case, Gatt
Communications alleged that PMC Associates had formed a price-
fixing conspiracy for the sale of Vertex radio equipment to
government agencies, and when Gatt sought to defect, its “Dealer
Agreement”—through which it was able to sell that brand of radio
equipment in the first place—was terminated. Id. at 71-73. Gatt argued
that it was entitled to damages for the commissions it would have
received absent the anticompetitive conduct. Id. at 74. We held that
Gatt was harmed “only incidentally” and that “[i]f there are direct
victims of the alleged conspiracy, they are the state agencies, not
Gatt.” Id. at 78-79. Most recently, in IQ Dental Supply, Inc. v. Henry
Schein, Inc., we determined that IQ Dental Supply, though injured by
a boycott of the third-party online portal through which IQ sold its
goods, lacked antitrust standing to challenge that boycott. 924 F.3d 57,
65 (2d Cir. 2019). Because the harm to IQ “resulted from injury” to the
third-party portal, the antitrust claims were “derivative and indirect.”
Id.

      In this case, the appellants did not suffer a direct injury from
the alleged antitrust violation. At the first step, Amex raised the price
for Amex-accepting merchants through the Anti-Steering Rules.

                                   16
Amex did not raise the appellants’ fees. Nor could it have: the
appellants do not accept American Express cards. Similar to the
holdings in Gatt Communications and IQ Dental Supply, if there are
“direct victims,” those victims are the merchants to which Amex’s
Anti-Steering Rules applied. Gatt Commc’ns, 711 F.3d at 78-79; IQ
Dental Supply, 924 F.3d at 65. The appellants were allegedly injured
when Amex’s competitors, covered by Amex’s price umbrella, raised
their own prices. In the appellants’ words, Amex’s imposition of
increased merchant fees “enabled” the competitor companies “to
increase their own merchant fees.” Appellants’ Br. 10. Yet Amex
“enabl[ing]” other credit card companies to raise the appellants’ fees
does not establish the “direct relation” between injury and antitrust
violation that the first-step rule requires. Bank of Am. Corp., 137 S. Ct.
at 1306.

      Given the allegations in the SAC, we hold that the appellants’
injuries did not occur at the first step following Amex’s conduct. The
injuries, therefore, were not proximately caused by Amex; the alleged
antitrust violation was instead a “remote” cause of the injuries.

                                    B

      The second efficient-enforcer factor considers the “existence of
an identifiable class of persons whose self-interest would normally
motivate them to vindicate the public interest in antitrust
enforcement.” IQ Dental Supply, 924 F.3d at 65 (quoting Daniel, 428
F.3d at 443). For this factor, we ask whether “[d]enying the [plaintiff]
a remedy on the basis of its allegations” is “likely to leave a significant
antitrust violation undetected or unremedied.” AGC, 459 U.S. at 542;
see also Paycom, 467 F.3d at 294. “[T]he presence of plaintiffs who are
better situated to vindicate the antitrust laws,” though not

                                    17
dispositive, “is relevant to this second factor.” IQ Dental Supply, 924
F.3d at 66. The existence of such plaintiffs “diminishes the justification
for allowing a more remote party … to perform the office of a private
attorney general.” AGC, 459 U.S. at 542.

      This factor also counsels against antitrust standing here. In IQ
Dental Supply, we concluded that antitrust standing based on the
second factor was unlikely because “IQ [was] further removed from
the harm caused by the Defendants than the parties directly affected
by the boycott that have already sued the Defendants.” IQ Dental
Supply, 924 F.3d at 66. The same argument applies here. As noted, the
merchants who have a relationship with Amex were harmed at the
first step by Amex’s Anti-Steering Rules. And those merchants have
already sued Amex. Am. Express Anti-Steering, 433 F. Supp. 3d at 401-
02. We follow our precedent in holding that “the second efficient-
enforcer factor weighs against … antitrust standing” in this case. IQ
Dental Supply, 924 F.3d at 66.

                                    C

      The third efficient-enforcer factor concerns the extent to which
the claim is “highly speculative.” AGC, 459 U.S. at 542. “[H]ighly
speculative damages is a sign that a given plaintiff is an inefficient
engine of enforcement.” Gelboim, 823 F.3d at 779. Under this factor,
we ask whether there would be “a high degree of speculation in a
damages calculation.” IQ Dental Supply, 924 F.3d at 66-67. When an
injury is “derivative” rather than direct, the potential recovery is often
“highly speculative.” Id. at 67. We also consider whether the “alleged
effects on the [plaintiff] may have been produced by independent
factors.” AGC, 459 U.S. at 542.

                                   18
       Whether this factor weighs in favor of antitrust standing is a
close question. The SAC presents a compelling prima facie case of
foreseeable damages, given the allegation that Amex exercises market
power and the district court’s finding in the Government Action that
the “prohibitions on merchant steering” have “enabled … higher all-
in fees.” Am. Express Co., 88 F. Supp. 3d at 216. 8 Yet the fact that the
appellants have suffered an “indirect” injury, and the accompanying
uncertainty of how eliminating Amex’s Anti-Steering Rules would
affect its competitors’ merchant fees, suggest that a damages
calculation would rely on some speculation. See AGC, 459 U.S. at 542.

       In any event, the third factor does not confer antitrust standing
on the appellants. The four efficient-enforcer factors “need not be
given equal weight,” and “the relative significance of each factor will
depend on the circumstances of the particular case.” IQ Dental Supply,
924 F.3d at 65. In particular, the Supreme Court has noted that the
“potential difficulty in ascertaining and apportioning damages is not
… an independent basis for denying standing where it is adequately

8 In making this finding, the district court in the Government Action
explained that from 1997 to 2009, “prohibitions on merchant steering”
enabled Visa and MasterCard to “increase their average all-in merchant
rates … by more than 20% … without fear of other networks undercutting
their prices in order to gain [market] share.” 88 F. Supp. 3d at 216. Discover
was “forced to abandon its low-price strategy as a result of” prohibitions
on merchant steering and “was able to raise its rates with virtual impunity,
relying on the restraining effect of anti-steering rules to ensure that it would
not be undercut by a competitor offering a lower price to merchants.” Id.
“These examples provide further support for the [district] court’s finding
that without affording merchants the ability to influence their customers’
credit and charge card decisions” through steering, “there is little, if any,
downward pressure on the price charged to merchants.” Id. Ohio did not
question this finding.

                                      19
alleged that a defendant’s conduct has proximately injured an interest
of the plaintiff’s that the statute protects” because this factor is a
touchstone for “the proximate-cause requirement.” Lexmark Int’l, Inc.
v. Static Control Components, Inc., 572 U.S. 118, 135 (2014).

      Even if the injury is not speculative here, it does not establish
proximate cause. The appellants’ injury may have been foreseeable,
predictable, and even calculable, but proximate cause—especially in
the economic harm context—requires more than foreseeability. See
McCready, 457 U.S. at 476-77. In light of the other efficient-enforcer
factors, the third factor does not confer antitrust standing.

                                    D

      The fourth efficient-enforcer factor stresses the importance of
“avoiding either the risk of duplicate recoveries on the one hand, or
the danger of complex apportionment of damages on the other.”
AGC, 459 U.S. at 543-44. This factor reflects an administrative concern:
“massive and complex damages litigation not only burdens the
courts, but also undermines the effectiveness of treble-damages
suits.” Id. at 545. The concern arises when “[t]he damages to which
[the plaintiff] lays claim” are “exactly the same damages [other
parties] could have claimed.” IQ Dental Supply, 924 F.3d at 67.

      There is no risk of duplicate recoveries or complex
reapportionment of damages here. The damages that the Amex and
Non-Amex Classes seek do not overlap; each class alleges that the
respective card companies charged separately. This case does not
involve pass-on theories that would require a court to divide damages
from the same violation among multiple plaintiffs. See Ill. Brick Co.,
431 U.S. at 737-38; Hanover Shoe, Inc. v. United Shoe Mach. Corp., 392
U.S. 481, 493 (1968). Apportionment of damages here would neither

                                   20
“burden[] the courts” nor “undermine[] the effectiveness of treble-
damages suits.” AGC, 459 U.S. at 545. 9

       But the appellants’ success on this factor does not establish
antitrust standing. In AGC itself, the fourth factor was non-
dispositive. AGC, 459 U.S. at 545 n.52. Even though the Court
recognized that the “policy against duplicative recoveries may not
apply” to a harm the plaintiffs allegedly suffered, “the remote and
obviously speculative character of that harm [was] plainly sufficient
to place it beyond the reach of § 4.” Id. While the fourth factor
addresses a “strong interest … in keeping the scope of complex
antitrust trials within judicially manageable limits,” id. at 543, the
efficient-enforcer inquiry remains, fundamentally, one into proximate
cause, Lotes, 753 F.3d at 412; McCready, 457 U.S. at 476-77. Here, as in
AGC, that the line between the Amex plaintiffs’ and non-Amex
plaintiffs’ damages presents no additional difficulties does not pull
back the appellants’ injury from “beyond the reach of § 4.” 459 U.S. at
545 n.52. We therefore conclude that, given the allegations of the SAC,
the four efficient-enforcer factors do not establish antitrust standing. 10

9 The district court held that this fourth factor counseled against antitrust
standing, and in its discussion of the factor expressed concern over the
“obvious risk of disproportionate damages.” Am. Express Anti-Steering, 433
F. Supp. 3d at 412 (quoting In re London Silver Fixing, Ltd., Antitrust Litig.,
332 F. Supp. 3d 885, 906 (S.D.N.Y. 2018)). Yet the fourth efficient-enforcer
factor concerns not the size of the damages awarded but the difficulty
courts might face in dividing an award. We do not see such difficulty here.
10The appellants also seek injunctive relief under § 16 of the Clayton Act,
15 U.S.C. § 26. The appellants must demonstrate antitrust standing for that
requested relief. Eastman Kodak Co. v. Henry Bath LLC, 936 F.3d 86, 94 (2d
Cir. 2019). The Supreme Court has said that “the difference in the remedy
each section provides means that certain considerations relevant to a

                                      21
      In short, it is not the appellants’ status as umbrella plaintiffs or
otherwise that resolves the antitrust standing question but “the
relationship between the defendant’s alleged unlawful conduct and
the resulting harm to the plaintiff.” Am. Ad Mgmt., Inc. v. Gen. Tel. Co.
of Cal., 190 F.3d 1051, 1058 (9th Cir. 1999). We employ the efficient-
enforcer test to evaluate the relevant relationship. The key principle
underlying that test is proximate cause, and here the appellants fail to
show the required direct connection between the harm and the
alleged antitrust violation. The appellants are not efficient enforcers
of the antitrust laws and therefore lack antitrust standing. 11

                                     II

       Dismissal of the appellants’ federal antitrust claims does not
necessarily require the dismissal of their claims under the California
Unfair Competition Law (“UCL”) and California antitrust law,
known as the Cartwright Act. See Aryeh v. Canon Bus. Sols., Inc., 292

determination of standing under § 4 are not relevant under § 16.” Cargill,
Inc. v. Monfort of Colo., Inc., 479 U.S. 104, 111 n.6 (1986). In particular,
“standing under § 16 raises no threat of multiple lawsuits or duplicative
recoveries.” Id. Given that no damages are awarded under § 16, the third
factor’s inquiry into whether there is a “high degree of speculation in a
damages calculation” is inapplicable. IQ Dental Supply, 924 F.3d at 66.
Because the difference in remedies does not affect the proximate clause
analysis, we hold that the appellants lack antitrust standing for the request
for injunctive relief.
11This result does not mean that Amex could never be liable for allegedly
raising prices throughout the market. As the district court noted, the Amex
Class members can still litigate the Anti-Steering Rules through the
arbitration process. Am. Express Anti-Steering, 433 F. Supp. 3d at 411. In
addition, at least one circuit court has held that an antitrust defendant may
be held liable for umbrella effects on prices. See In re Processed Egg Prods.
Antitrust Litig., 881 F.3d 262, 276 (3d Cir. 2018).

                                     22
P.3d 871, 877 (Cal. 2013) (“Interpretations of federal antitrust law are
at most instructive, not conclusive, when construing the Cartwright
Act.”). Still, we conclude that the appellants’ California law claims fail
for similar reasons as the federal claims.

         “[W]e consider the language of the state intermediate appellate
courts to be helpful indicators of how the state’s highest court would
rule.” DiBella v. Hopkins, 403 F.3d 102, 112 (2d Cir. 2005). The
California district courts of appeals have discussed antitrust standing
under the Cartwright Act at length. In Kolling v. Dow Jones & Co., the
California court noted that “[t]he plaintiff in a Cartwright Act
proceeding must show that an antitrust violation was the proximate
cause of his injuries.” 187 Cal. Rptr. 797, 807 (Cal. Ct. App. 1982). In
the same opinion, that court described the “standing to sue”
requirement as preventing suits from parties only “incidentally
injured” by an antitrust violation. Id. More recently, a California court
observed that “[o]ne of the elements of standing to seek antitrust
damages … is a sufficient showing of injury with respect to,” among
other things, “the directness of the injury,” “the speculative measure
of the harm,” and “the risk of duplicative recovery.” Wholesale
Electricity Antitrust Cases I & II, 55 Cal. Rptr. 3d 253, 265 (Cal. Ct. App.
2007).

         These decisions indicate that the California legislature, like
Congress, was “familiar with the common-law rule” of proximate
cause, and California courts will not assume that the legislature
intended “to displace it sub silentio.” Lexmark, 572 U.S. at 132.

                                    23
Accordingly, the lack of proximate cause in this case means that the
appellants cannot state a claim under the Cartwright Act. 12

                                    ***

         For these reasons, we AFFIRM the judgment of the district
court.

12The district court properly concluded that “dismissal of an underlying
antitrust claim mandates dismissal of the UCL claim as well.” Am. Express
Anti-Steering, 433 F. Supp. 3d at 416. “The UCL permits any person acting
for the interests of itself, its members or the general public to initiate an
action … against a person or business entity who has engaged in any
unlawful, unfair, or fraudulent business act or practice.” Quelimane Co. v.
Stewart Title Guar. Co., 960 P.2d 513, 521-22 (Cal. 1998) (internal quotation
marks and citations omitted). Because the UCL claim is predicated on
violations of the Sherman and Cartwright Acts, we affirm the dismissal of
that claim as well.

                                     24