Court Opinion

ID: 9474687
Source: CourtListenerOpinion
Date Created: 2023-08-05 05:05:19.570693+00
Date Added: 2024-06-11T17:44:14.758926
License: Public Domain

GIBBONS, Circuit Judge,
dissenting:
Gregory Marketing Corp. is engaged in interstate commerce as an independent food broker, acting as a sales intermediary between primary line food packagers and food retailers. Its business is separate from and independent of both the food packagers it represents and the food retailers to which it sells. Gregory alleges that a food retailer, Wakefern Food Corp., to whom it sold products packaged by a primary line food packager, Red Cheek, Inc., went behind Gregory’s back and exacted from that packager a discriminatory price discount in violation of section 2(a) of the Clayton Act, as amended by section 1 of the Robinson-Patman Act, 15 U.S.C. § 13(a) (1982). There is no question that the facts alleged amount to a violation of that Act, and the majority does not suggest otherwise.
Gregory’s complaint seeks money' damages, and “such further relief as this Court may deem just and equitable.” Joint Appendix 6-7. Fairly read, however, it does not seek injunctive relief pursuant to section 16 of the Clayton Act, 15 U.S.C. § 26 (1982). It pleads reliance only on section 4 of the Clayton Act, 15 U.S.C. § 15 (1982). Thus the majority’s affirmance of the district court’s dismissal of Gregory’s complaint for lack of standing does not reach the question whether an intermediary in a chain of distribution would have standing to seek injunctive relief against violations of the Robinson-Patman Act. If that ques*99tion were to arise, I assume that it would be controlled by Mid-West Paper Products Co. v. Continental Group, Inc., 596 F.2d 573, 589-94 (3d Cir.1979). I read the majority opinion, therefore, only as an interpretation of section 4 of the Clayton Act, which authorizes recovery of money damages.
Of course, those cases that interpret section 4 to be limited by judge-made standing rules of necessity also interpret to some extent the substantive antitrust laws that establish the appropriate standard of conduct in the marketplace and give rise to the underlying violation. Thus section 4 standing has been held to vary depending on whether the antitrust law that has been violated is one aimed at potential or actual injury to competition. See Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 97 S.Ct. 690, 50 L.Ed.2d.701 (1977). Like section 7 of the Clayton Act, 15 U.S.C. § 18 (1982), which was the section dealt with in Brunswick, section 2(a) of the Clayton Act is a prophylactic statute. A violation can be proved by the mere showing that the effect of the targeted conduct may be to substantially lessen competition. J. Truett Payne Co. v. Chrysler Motors Corp., 451 U.S. 557, 561, 101 S.Ct. 1923, 1926, 68 L.Ed.2d 442 (1981).
Because the interpretation of section 4 varies depending upon the substantive law underlying the plaintiffs claim, it seems appropriate to consider what areas of competition are intended to be protected by the substantive law relied upon in this ease. The Robinson-Patman Act was adopted by Congress in 1936 specifically as an effort to curb the market power possessed by chain retailers such as Wakefern Corp.1 Section 1 of the Robinson-Patman Act, however, was only enacted as an amendment to section 2 of the Clayton Act. See ch. 323, § 2, 38 Stat. 730, 730-31 (1914), as amended by the Robinson-Patman Act, ch. 592, § 1, 49 Stat. 1526, 1526-28 (1936) (current version at 15 U.S.C. § 13(a)-(f) (1982)). Section 2 of the Clayton Act had the much broader purpose of prohibiting those predatory pricing practices that were injurious to competition at any level.2 Thus section 2 forbade price discrimination “where the effect ... may be to substantially lessen competition or tend to create a monopoly in any line of commerce.” 38 Stat. at 730. The RobinsonPatman Act carried forward from the 1914 statute the italicized language “in any line of commerce.” See 15 U.S.C. § 13(a). Thus section 2(a) of the Clayton Act, as amended by the Robinson-Patman Act, prohibits price discrimination “where the effect ... may be substantially to lessen competition ... in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly received the benefit of such discrimination or with customers of either of them____” Id.
Consistent with its plain language, courts have construed the statute to be aimed at protecting competition at all levels: primary, secondary, and tertiary. Long before the 1936 amendment the Supreme Court had observed, “The phrase is comprehensive and means that if the forbidden effect or tendency is produced in one out of all the various lines of commerce, the words ‘in any line of commerce’ literally are satisfied.” Van Camp & Sons Co. v. American Can Co., 278 U.S. 245, 253, 49 S.Ct. 112, 113, 73 L.Ed. 311 (1929) (rejecting construction that section 2 only protected primary line competition between the discriminator and its competitors). Since the 1936 amendment the Supreme *100Court has reconfirmed this broad interpretation of the statute. See, e.g., Federal Trade Commission v. Anheuser Busch, Inc., 363 U.S. 536, 543-45, 80 S.Ct. 1267, 1271-72, 4 L.Ed.2d 1385 (1960) (competitors of the discriminating seller are protected).
Gregory is engaged in commerce as a food broker. As such it competes with others in the economy who actually and can potentially perform the same intermediary function that it performs. The discrimination of which Gregory complains has an effect upon retail level competitors of Wakefern Corp. It has an effect on food processor level competitors of Red Cheek, Inc. It also has an effect upon Gregory. The complaint alleges that while the discrimination was going on unknown to Gregory, Gregory was deprived of commission revenue, and that if Gregory would have continued to countenance it there would have been further revenue losses.
Whether that deprivation of revenue at the intermediate level of distribution is one that is likely to lessen competition or to tend to create a monopoly in Gregory’s line of commerce is not a matter that can be decided on the pleadings. Certainly under the complaint Gregory could attempt to prove that the price discrimination of which it complains would have the tendency to substantially lessen competition in the intermediary market in which it competes. For example, Gregory could attempt to prove that in order to sustain the price discrimination over time the manufacturer would be likely to take over the distribution function that Gregory performed, thereby eliminating it as a competitor in the intermediate market.
The majority, although focusing upon section 4 rather than section 2(a) of the Clayton Act, seems implicitly to hold that Gregory is not within the zone of protection of the latter section. The opinion notes that “Gregory is neither a consumer nor a competitor in the apple juice market, and thus is not ‘within that area of the economy ... endangered by [that] breakdown of competitive conditions’.” Typescript at 95 (quoting Blue Shield of Virginia, Inc. v. McCready, 457 U.S. 465, 480-81, 102 S.Ct. 2540, 2548-49, 73 L.Ed.2d 149 (1982)). The majority is simply wrong. There is a potential for the breakdown of competitive conditions at the intermediary level in the chain of distribution of apple juice, and section 2(a) of the Clayton Act is as much concerned with that level as with the manufacturing or retail level. The majority’s reference to Gregory not being a consumer is completely irrelevant for purposes of section 2(a) of the Clayton Act.
Unlike the majority, I start with the premise that Gregory is engaged in a line of commerce with which section 2(a) of the Clayton Act is concerned. Turning to the question whether section 4 should be interpreted as affording it the opportunity to seek relief, there are no reasons relevant to the antitrust laws suggesting that it should not be.
It is settled that a section 4 suit predicated upon a violation of section 2(a) of the Clayton Act requires proof of injury to business or property other than or apart from the amount of the price discrimination. J. Truett Payne, 451 U.S. at 561-63, 101 S.Ct. at 1926-1928. A primary line competitor of the discriminator must prove injury to its business or property. A retail level competitor must prove injury to its business or property. An intermediary in the chain of distribution must prove injury to its business or property. None of these competitors can recover damages that the others might recover. The suggestion by the majority that there is a possibility of duplicate recovery, therefore, is simply false. This case is not at all like Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977), which involved increased prices arguably passed through to consumers. No consumer purchasing from Wakefern Corp. could show an injury to business or property from being charged less than he would otherwise be charged. No retail competitor of Wake-fern could recover the damages incurred by Gregory. No apple juice manufacturer could recover the damages incurred by *101Gregory or by Wakefern’s retail competitor. In sum, the majority’s suggestion that these parties would have to be joined in Gregory’s section 4 lawsuit is utterly fanciful.
The majority’s reliance on the “indirectness” of Gregory’s injury is equally misplaced. The complaint alleges two injuries that in a proximate cause sense are as direct as they can be: lost revenue which presumably translates into lost profits, and lost opportunity to continue as an intermediary in the apple juice market.
Gregory pleads that it has a business interest entirely separate from any other potential plaintiff. It alleges, and at the pleading stage we must assume it can prove, proximate cause between Wake-fern’s inducement of a section 2(a) violation and an injury to its business. Permitting Gregory to recover presents no problem of duplicate recovery because each potential plaintiff must satisfy the actual injury test announced in J. Truett Payne, 451 U.S. at 561-63, 101 S.Ct. at 1926-27. Gregory’s proof of damages will be no more complex than would be the proof of damages required by any other potential primary line or retail level plaintiff. Of all the potential plaintiffs who may have been injured by the violation of section 2(a), Gregory has perhaps the strongest incentive for enforcement. All these factors suggest that Gregory should have section 4 standing.
The only factor arguably supporting the proposition that Gregory should not have standing is that section 4 damage remedies should never be used where the underlying substantive violation, while resulting in an actual injury to business or property, results only in a potential rather than actual injury to competition. It is well-settled, however, that violations of section 2(a) do support section 4 recovery in cases where the plaintiff is in the zone of interest protected by that section and can show injury to business or property from the violation. See Jefferson County Pharmaceutical Association, Inc. v. Abbott Laboratories, 460 U.S. 150, 103 S.Ct. 1011, 74 L.Ed.2d 882 (1983); J. Truett Payne. Co., Inc. v. Chrysler Motors Corp., 451 U.S. 557, 101 S.Ct. 1923 (1981); Utah Pie Co. v. Continental Baking, 386 U.S. 685, 87 S.Ct. 1326, 18 L.Ed.2d 406 (1967).
The majority in this case has ignored the plain language of section 2(a), which protects potential competition at all levels of distribution. Its analysis of section 4 standing is an unfortunate retrogression to the bad old days when this court used “standing” as a means of shutting the door on private antitrust enforcement for reasons which were essentially subjective and concealed. I had hoped that Cromar Co. v. Nuclear Materials and Equipment Corp., 543 F.2d 501, 508 (3d Cir.1976), had signalled the end of that era.
The order dismissing Gregory’s complaint for lack of standing should be reversed.

. See Federal Trade Comm’n v. Morton Salt Co., 334 U.S. 37, 43, 68 S.Ct. 822, 826, 92 L.Ed. 1196 (1948); H.R.Rep. No. 2287, 74th Cong., 2d Sess. (1936); S.Rep. No. 1502, 74th Cong., 2d Sess. (1936); Federal Trade Commission, Final Report on the Chain-Store Investigation, S.Doc. No. 4,74th Cong., 1st Sess. (1935); C. Austin, Price Discrimination and Related Problems under the Robinson-Patman Act, 8-11 (2d rev. ed. 1959); J. Palamountain, The Politics of Distribution, 188-234 (1955); Rows, The Evolution of the Robinson-Patman Act: A Twenty-Year Perspective, 57 Colum.L.Rev. 1059 (1957); Report of the Attorney General’s National Committee to Study the Antitrust Laws, 155-56 (1955).

. See H.Rep. No. 627, 63d Cong., 2d Sess. 8 (1914).