Court Opinion

ID: 9470953
Source: CourtListenerOpinion
Date Created: 2023-08-05 03:21:41.782007+00
Date Added: 2024-06-11T17:42:12.444394
License: Public Domain

A. LEON HIGGINBOTHAM, Jr., Circuit Judge,
dissenting.
I agree with the majority’s conclusion that in focusing only on plaintiffs’ standing to sue, the district court failed properly to determine whether, under Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977), the potential for double recovery and excessive complexity bars plaintiffs from recovering treble damages under § 4 of the Clayton Act. I also agree that Illinois Brick cannot be mechanically applied so that an antitrust plaintiff’s ability to recover turns upon the affixing of handy labels to the nature of the wrong alleged or to the plaintiff’s position in the marketing hierarchy. The majority and I differ, however, on whether the policies underlying § 4 and Illinois Brick would be advanced by denying plaintiffs the opportunity to continue with this action. In my view, the prosecution of this suit would be both consistent with Illinois Brick and necessary to avoid immunizing the anti-competitive tactic that plaintiffs allege. Moreover, this court’s discussion of the sweep of Illinois Brick in Mid-West Paper Products Co. v. Continental Group, Inc., 596 F.2d 573 (3d Cir.1979), supports my conclusion that plaintiffs’ injuries are not of the kind contemplated by the Illinois Brick Court.
I begin with the Supreme Court’s recent decision in Blue Shield of Virginia v. McCready, 457 U.S. 465, 102 S.Ct. 2540, 73 L.Ed.2d 149 (1982). There, in the course of determining that the plaintiff-patient had standing to sue the insurer selected by her employer, the Court demonstrated its reluctance to allow alleged anti-competitive conduct to go unchallenged merely for want of a direct relationship between plaintiff and defendant. In discussing Illinois Brick, the Blue Shield Court noted:
If there is a subordinate theme to our opinions in [Hawaii v. Standard Oil Co., 405 U.S. 251, 92 S.Ct. 885, 31 L.Ed.2d 184 (1972)] and Illinois Brick, it is that the feasibility and consequences of implementing particular damages theories may, in certain limited circumstances, be considered in determining who is entitled to prosecute an action brought under § 4. Where consistent with the broader remedial purposes of the antitrust laws, we have sought to avoid burdening § 4 actions with damages issues giving rise to the need for “massive evidence and complicated theories,” where the consequence would be to discourage vigorous enforcement of the antitrust laws by private suits.
457 U.S. at 475 n. 11, 102 S.Ct. at 2546 n. 11 (quoting Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481, 493, 88 S.Ct. 2224, 2231, 20 L.Ed.2d 1231 (1968)) (emphasis added). Thus, we should be mindful not only of the twin concerns behind the Illinois Brick rule, but also of the overarching policy favoring “compensating victims of antitrust violations for their injuries and deterring violators by depriving them threefold of ‘the fruits of their illegality,’ while at the same time furthering the overriding goal of the antitrust laws — preserving competition.” Mid-West Paper Products, 596 F.2d at 583 (footnotes omitted).
Illinois Brick concerned horizontal price-fixing above market price; here, however, plaintiffs alleged the existence of a vertical price-fixing conspiracy. Although the majority correctly determines that mere nomenclature cannot magically obviate consideration of the Illinois Brick issue, the differences between the injuries alleged here and those contemplated in Illinois Brick, require us to ask whether the goals of avoiding duplicative recovery and excessive complexity would be advanced by barring this suit.
This court observed in Mid-West Paper Products that “when defendants have fixed prices above the competitive market price, where the benefit derived by them is readily ascertainable, the objectives of the treble damage action are fulfilled when the defendants are required to pay the direct purchasers three times the overcharge.” Id. at 585 (footnote omitted). In the classic Illinois Brick circumstance, the price-fixer’s *971benefit is commensurate with the purchasers’ injury. Thus, if both direct purchaser and indirect purchaser seek recovery of the amount of the overcharge, duplicative recovery is likely. Zenith Radio Corp. v. Matsushita Electric Industrial Co., 494 F.Supp. 1246, 1255 (E.D.Pa.1980) (Becker, J.) (discussing Mid-West Paper Products). The same is not necessarily true, however, where the wrong alleged differs from the kind of anti-competitive act that was the focus of Illinois Brick:
A different problem is presented where prices are fixed below the competitive market price or where defendants engage in other forms of anticompetitive conduct, such as group boycotts, vertical restrictions, or monopolization, since defendants’ benefits in those instances are not so readily ascertainable, and may not be sufficient to compensate “those individuals whose protection is the primary purpose of the antitrust laws.” In such circumstances courts have awarded damages based upon the amount of injury suffered by the plaintiff rather than the benefits derived by the defendants.
Mid-West Paper Products, 596 F.2d at 585 n. 47 (quoting Cromar Co. v. Nuclear Materials and Equipment Corp., 543 F.2d 501, 505 (3d Cir.1976)). The majority, apparently focusing on the second quoted sentence, reads this discussion in Mid-West Paper Products as dealing only with the appropriate measure of damages. See majority opinion, at 968-969. I disagree. I think it is clear from the context of footnote 47 and from its emphasis on compensating the antitrust plaintiff that where an indirect purchaser has suffered injury other than incurring the cost of the passed-on overcharge, neither the policy of compensating injury nor that of deterring anti-competitive conduct can be realized unless the indirect purchaser can bring action against the seller. In the instant case, for example, plaintiffs alleged loss of sales and profits, reduction in the value of goodwill, and destruction of a significant portion of their businesses. Complaint at 14, reprinted in app. at 20B. Many of these alleged injuries are unique to the plaintiffs, and their complaint comprises more damage than the intermediary Ohio Machinery Company could recover were it to bring its own action. By putting treble damages outside of plaintiffs’ reach, the majority effectively places complete recovery outside of anyone’s reach. Under the majority’s approach, plaintiffs cannot be made whole — notwithstanding the impossibility of duplicative recovery — and defendants cannot be made to give up the fruits of an alleged illegality.
Turning to the desire to avoid complexity, I consider it in its larger context. I do not read Illinois Brick to be concerned with protecting the courts from abstract economic theorizing so much as promoting vigorous policing of the marketplace. The Illinois Brick Court feared that tracing and allocating overcharges would seriously undermine the enforcement effectiveness of the treble damages action. 431 U.S. at 737, 745-47, 97 S.Ct. 2070, 2074-75. What I stated before in the context of antitrust standing bears equally on the issue now before us:
The Court in Illinois Brick was concerned with allowing the injection of complex issues into antitrust actions because the injection of such complexity would increase the cost of litigation and thereby discourage the enforcement of the antitrust laws....
... Where added complexity does not result in a disincentive to the enforcement of the antitrust laws, its potency as an argument against standing is seriously diminished.
Mid-West Paper Products, 596 F.2d at 599 (Higginbotham, J., dissenting). Likewise, allowing the instant suit to go forward is necessary to the attainment of the goal of deterrence. The anti-competitive conduct plaintiffs complain of cannot otherwise be policed. This is not a case where passed-on overcharges are so splintered that no indirect purchaser will be interested in pursuing relief; here, plaintiffs allege predatory destruction of their business — a complaint which only they may bring.
Nor do I believe that Edward J. Sweeney & Sons, Inc. v. Texaco, Inc., 637 F.2d 105 (3d Cir.1980), cert. denied, 451 U.S. 911, 101 S.Ct. 1981, 68 L.Ed.2d 800 (1981), compels a different result. The abbreviated, one-paragraph discussion of the Illinois Brick *972issue in that case includes no statement of rationale and no examination of the policies that underlie § 4 and Illinois Brick. To the extent that it can be read to bar relief to any plaintiff who falls into the category of “indirect purchaser,” I do not believe that Sweeney survives the Supreme Court’s decision in Blue Shield.
I would affirm the district court’s denial of defendant’s motion to dismiss.