Indirect purchaser litigation: ARC America's chickens come home to roost on the Illinois Brick wall

Antitrust Law Journal

Volumn 65, Issue 2, 1997, Pages 375-406

  Davis, Ronald W ^a  

^a New York and Georgia Bars ^*  (Georgia)

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EID: 0031481081     PISSN: 00036056     EISSN: None     Source Type: Journal    
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References (116)

1. California v. ARC America Corp., 490 U.S. 93 (1989).
2. Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977).
3. Hanover Shoe, Inc. v. United Shoe Mach. Corp., 392 U.S. 481 (1968).
4. See In re Amino Acid Lysine Antitrust Litig., 1996 U.S. Dist. LEXIS 8879 (N.D. Ill. June 21, 1996); 927 F. Supp. 273 (N.D. Ill. 1996); 1996 U.S. Dist. LEXIS 6186 (N.D. Ill. May 6, 1996); 1996 U.S. Dist. LEXIS 3178 (N.D. Ill. Mar. 14, 1996); 918 F. Supp. 1190 (N.D. Ill. 1996) (addressing remand and other matters in connection with indirect purchaser actions in Alabama, California, and Georgia).
5. See infra notes 12, 25, 26, 27, 29 & 35.
6. See In re Citric Acid Antitrust Litig., 1996 U.S. Dist. LEXIS 3149 (N.D. Cal. 1996) (remanding Alabama indirect purchaser action); Seven Up Bottling Co. of Jasper v. Archer Daniels Midland Co., No. CV436-80 (Cir. Ct. Walker Co., Ala. Oct. 31, 1966), appeal docketed.
7. Pertinent cases are cited infra note 35.
8. See Borgeson v. Archer Daniels Midland Co., 909 F. Supp. 709 (C.D. Cal. 1995) (remanding California indirect purchaser action).
9. See infra notes 15, 18, 22, 23, 24, 25, & 35.
10. Hammons v. Alcan Aluminum Corp., No. SACV 96-319 (C.D. Cal. July 1, 1996), 71 Antitrust & Trade Reg. Rep. (BNA) 11 (July 4, 1966).
11. Robinson v. EMI Music Distribution, Inc., 1996-2 Trade Cas. (CCH) ¶ 71,510 (Cir. Ct. Blount County Tenn. 1996).
12. McLaughlin v. Abbott Labs., No. CV95-0628 (Super. Ct. Yavapai Co. Ariz. July 9, 1996), special action jurisdiction declined, No. 1 CA-SA 96-0215 (Ariz. Ct. App. 1996), app. docketed. (Many of the cases discussed herein name Abbott Laboratories, which makes both infant formula and brand-name prescription drugs - probably the most active of the pending state actions.)
13. ARIZ. REV. STAT. ANN. § 44-1412 (1994).
14. See State of Arizona's Amicus Curiae Brief in Support of Petition for Review, Abbott Labs. v. Superior Ct., No. CA-SA 96-0215.
15. Mack v. Bristol-Myers Squibb Co., 673 So.2d 100 (Fla. Dist. Ct. App. 1996).
16. FLA. STAT. ANN. § 501.203(3) (West 1977).
17. 15 U.S.C. § 45.
18. Hyde v. Abbott Labs., 473 S.E.2d 680 (N.C. Ct. App.), review denied, 478 S.E.2d 5 (N.C. 1996).
19. N.C. GEN. STAT. § 75-16 (1996).
20. Hyde, 473 S.E.2d at 687-88 (citation omitted).
21. MASS. GEN. L. ch. 93A, § 2 (Law Co-op. 1985).
22. Boos v. Abbott Labs., 925 F. Supp. 49 (D. Mass. 1996).
23. Blake v. Abbott Labs., 1995-1 Trade Cas. (CCH) ¶ 71,369 (Tenn. Ct. App. 1996). The court noted in dictum, however, that the complaint was subject to dismissal if it later appears from discovery that "the acts complained of predominantly affect interstate commerce." Id. at 76,858. At least in some states, state actions challenging alleged national or international conspiracies, as distinguished from local home-grown conspiracies, may be vulnerable, in that they exceed the geographic reach, as intended by the legislature, or, possibly, on federal constitutional grounds. Issues relating to extraterritorial application of state antitrust law are beyond the scope of this article.
24. Abbott Labs. v. Segura, 907 S.W.2d 503 (Tex. 1995).
25. Stifflear v. Bristol-Myers Squibb Co, 1996-1 Trade Cas. (CCH) ¶ 71,399 (Colo. Ct. App. 1996) (infant formula); Schendzielos v. Abbott Labs., No. 95 CV 2443 (Dist. Ct. Denver Co., Colo. Jan. 23, 1996) (brand name prescription drugs). These courts were aided in reaching a result contrary to indirect purchasers by the approach taken by the Colorado legislature in reenacting the state antitrust law in 1992.
26. Levine v. Abbott Labs., No. 117320/95 (Sup. Ct. N.Y. Co., N.Y. Nov. 25, 1996), appeal docketed.
27. Blewett v. Abbott Labs., 1995-2 Trade Cas. (CCH) ¶ 71,246 (Super. Ct. King County, Wash. 1995), appeal docketed. There is also a federal decision construing South Carolina law as not permitting indirect purchaser claims. In re Wiring Device Antitrust Litig., 498 F. Supp. 79 (E.D.N.Y. 1980).
28. Illinois did enact an Illinois Brick repealer, but with the proviso that only the attorney general could institute a class action in state court on behalf of indirect purchasers. 740 ILL. COMP. STAT. ANN. 10/7(2) (West 1992). A recent appellate court decision holds that indirect purchasing consumers unrepresented by the attorney general may not engage in what the court saw as an end run around that restriction by making an antitrust claim under a different statute, the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILL. COMP. STAT. ANN. 505/1 et seq. (West 1994). Gaebler v. New Mexico Potash Corp., 1996-2 Trade Cas. (CCH) ¶ 71,659 (Ill. App. Ct. 1996).
29. See Brief of Amicus Curiae State of Washington, Blewett v. Abbott Labs., No. 37526-1 (Wash. Ct. App.). Several years ago a New York State enforcement official advocated construing the Donnelly Act to permit claims by ndirect purchasers. See Robert E. Roach, Revitalizing Indirect Purchaser Claims: Antitrust Enforcement Under New York Law, 13 PACE L. REV. 9 (1993).
30. For example, as the proponents of an unsuccessful attempt to repeal Illinois Brick at the federal level put it, "multiple liability is fundamentally offensive to notions of simple justice." H.R. REP. No. 95-1397, 95th Cong., 2d Sess. 12 (1978).
31. Maybe the price fix resulted in less demand for widgets and the distributors or retailers lost sales as a result, but put that aside and focus instead on whether the manufacturer is liable to the retailer for the overcharge that was passed along from the wholesaler to the distributor to the retailer - and that the retailer in turn passed right along to the consumer.
32. Minnesota v. Philip Morris Inc., 551 N.W.2d 490 (Minn. 1996).
33. K-S Pharmacies, Inc. v. Abbott Labs., No. 94 CV 2384 (Cir. Ct. Dane Co., Wis. May 17, 1996).
34. B.W.I. Custom Kitchen v. Owens-Illinois, Inc., 235 Cal. Rptr. 228, 236 (Cal. App. 1987). An ABA monograph suggests that while some states have explicitly elected to repeal Hanover Shoe along with Illinois Brick, a plain-vanilla repealer "presumably leaves Hanover Shoe intact; that is, it does not allow the defendant to claim that the direct-purchaser plaintiff passed the overcharge on to others." ABA SECTION OF ANTITRUST LAW, MONOGRAPH NO. 15, ANTITRUST FEDERALISM: THE ROLE OF STATE LAW 29 n.190 (1988). No basis for the presumption is stated, and I respectfully dissent, for such a rule obviously risks duplicative liability. Absent specific legislative history, why would one presume that a legislature intended to create such a result? See Milton Handler & Michael D. Blechman, Antitrust and the Consumer Interest: The Fallacy of Parens Patriae and a Suggested New Approach, 85 YALE L.J. 626, 649 (1976) ("There appears to be a consensus among all courts that have considered the matter that the problems of proving pass-on must be handled in such a way as to avoid duplicative recoveries for the same alleged overcharge.").
35. B.W.I. Custom Kitchen v. Owens-Illinois, Inc., 235 Cal. Rptr. 228, 236 (Cal. App. 1987). An ABA monograph suggests that while some states have explicitly elected to repeal Hanover Shoe along with Illinois Brick, a plain-vanilla repealer "presumably leaves Hanover Shoe intact; that is, it does not allow the defendant to claim that the direct-purchaser plaintiff passed the overcharge on to others." ABA SECTION OF ANTITRUST LAW, MONOGRAPH NO. 15, ANTITRUST FEDERALISM: THE ROLE OF STATE LAW 29 n.190 (1988). No basis for the presumption is stated, and I respectfully dissent, for such a rule obviously risks duplicative liability. Absent specific legislative history, why would one presume that a legislature intended to create such a result? See Milton Handler & Michael D. Blechman, Antitrust and the Consumer Interest: The Fallacy of Parens Patriae and a Suggested New Approach, 85 YALE L.J. 626, 649 (1976) ("There appears to be a consensus among all courts that have considered the matter that the problems of proving pass-on must be handled in such a way as to avoid duplicative recoveries for the same alleged overcharge.").
36. Recent indirect purchaser class certification decisions include the following: Alabama: McCarter v. Abbott Labs., No. CV 91-050 (Cir. Ct. Shelby Co., Ala. Apr. 9, 1993) (Alabama infant formula purchasers, no); Price v. American Home Prods. Co., 1994 U.S. Dist. LEXIS 16658 (N.D. Ill. Nov. 15, 1994) (Alabama brand-name prescription drug purchasers, no); Harbin v. Johnson & Johnson Vision Prods., Inc., No. CV 94-2872 (Cir. Ct. Mobile Co., Ala. Sept. 12, 1995) (Alabama contact lens purchasers, no); Durden v. Abbott Labs., No. CV 93-663 (Cir. Ct. Calhoun Co., Ala. Jan. 16, 1996) (Alabama infant formula purchasers, no); California: Feitelberg v. Abbott Labs., No. 953865 (Super. Ct. San Francisco Co., Cal., June 23, 1995) (certain California brand-name prescription drug purchasers, yes); Preciado v. Abbott Labs., No. 962294 (Super. Ct. San Francisco Co., Cal. Aug. 16, 1995) (certain California brand-name prescription drug purchasers, yes); Lethbridge v. Johnson & Johnson Vision Prods., Inc., No. BC 113271 (Super. Ct. L.A. Co., Cal. June 26, 1996) (California contact lens purchasers, no); District of Columbia: Goda v. Abbott Labs., Civ. No. 01445-96 (D.C. Super. Ct. Feb. 3, 1997) (D.C. pharmaceutical consumers, yes). Kansas: Donelan V. Abbott Labs., No. 94 C 709 (Dist. Ct. Sedgwick Co., Kan. May 3, 1995) (Kansas infant formula purchasers, yes); Michigan: Holmes v. Abbott Labs., No. 94-744 CP (Cir. Ct. Calhoun Co., Mich. May 22, 1995) (Michigan infant formula purchasers, no); Minnesota: Fischenich v. Abbott Labs., No. MC-94-6868 (Dist. Ct. Hennepin Co., Minn. May 26, 1995) (Minnesota infant formula purchasers, no); Wisconsin: Carlson v. Abbott Labs., No. 94-CV-002608 (Cir. Ct. Milwaukee Co., Wis. Mar. 23, 1995) (Wisconsin infant formula consumer purchasers, yes); K-S Pharmacies, Inc. v. Abbott Labs., No. 94 CV 2384 (Cir. Ct. Dane Co., Ws. May 17, 1996) (Wisconsin brand-name prescription drug purchasers, yes).
37. Chattanooga Foundry & Pipe Works v. City of Atlanta, 203 U.S. 390 (1906).
38. See Clark Oil Co. v. Phillips Petroleum Co., 148 F.2d 580 (8th Cir.), cert. denied, 326 U.S. 734 (1945), and other cases cited therein.
39. United States v. Socony-Vacuum Oil Co., 310 U.S. 150 (1940).
40. Miller Motors, Inc. v. Ford Motor Co., 252 F.2d 441 (4th Cir. 1958); Wolfe v. National Lead Co., 225 F.2d 427 (9th Cir.), cert. denied, 350 U.S. 915 (1955).
41. Atlantic City Elec. Co. v. General Elec. Co., 226 F. Supp. 59 (S.D.N.Y.), appeal denied, 337 F.2d 844 (2d Cir. 1964).
42. As to the no-injury-is-no-injury-is-no-injury argument that had been so persuasive to the courts in the Oil Jobber cases, the judges dealing with the Electrical Equipment cases saw the matter somewhat differently. It seemed to them that the Oil Jobber cases' "pragmatic" view of damages was not really so pragmatic after all, for it only afforded the defendant manufacturers an opportunity to bog the litigation down in matters of much complexity and considerable imponderability. Perhaps, then, it would be best not to take such a superficially pragmatic, commonsense approach as that of the Oil Jobber courts, but instead to view the damages conceptually and to hold that the person who pays a price-fixed price is injured is injured is injured, whether she recoups all of the loss by marking up the price to her customers, or recoups none of it, or (as is almost surely the case) recoups some amount between all and none. In reaching this result the Electrical Equipment courts did a good job of cobbling together precedents from tort law and other legal sources as well as adumbrations in cases like Chattanooga Foundry. One may, however, hazard the guess that what really made the difference was that the oil jobbers came into court looking like opportunists eager to reap where they had not sown, while the utilities came into court looking like genuine victims - and it was the defendants who were perceived, rightly or wrongly, as opportunistically attempting to complicate matters while continuing to enjoy their allegedly ill-gotten gains.
43. 392 U.S. 481 (1968).
44. United Shoe Mach. Corp. v. United States, 347 U.S. 521 (1954).
45. Hanover Shoe, 392 U.S. at 492.
46. Id. at 492-94 (emphasis added; footnote omitted). The Court went on to state that situations such as a preexisting cost-plus contract might justify an exception to its holding. Id. at 494.
47. In 1972 the Supreme Court held that the State of Hawaii could not pursue a parens patriae claim against four oil refiners said to have conspired in restraint of trade and, thus, to have damaged the state's general economy. Hawaii v. Standard Oil Co. of Cal., 405 U.S. 251 (1972). A primary basis for the Court's concern was fear of "duplicative recovery" - not duplicative claims by Hawaii, on the one hand, and direct buying wholesalers and retailers, on the other, but rather duplicative claims by the State of Hawaii and by individual Hawaiians as "consumers, for which they may recover themselves under [Clayton Act] § 4." Id. at 264. The Court held that, absent specific congressional direction, it could not infer from the Clayton Act the right of a state to pursue a claim such as Hawaii's. The Court's reasoning in Hawaii v. Standard Oil was troublesome and problematic. On the one hand, the Court emphasized antitrust's goal of protecting the consumer against overcharges - a goal that had seemed impractical four years earlier in Hanover Shoe and was to be deemed unimportant (by comparison with other objectives) five years later in Illinois Brick. But, having proclaimed the importance of consumer protection as an antitrust goal, the Court, ironically, went on to deprive consumers of a procedural mechanism that many thought well adapted to vindicate their interest in being free from the effects of conspiratorial conduct. Four years later Congress answered this challenge by enacting the Hart-Scott-Rodino Antitrust Improvements Act (HSR), which added a new § 4C to the Clayton Act, 15 U.S.C. § 15c(a)(1), providing that any state attorney general may bring an action in federal district court as parens patriae on behalf of natural persons residing in such State . . . to secure monetary relief as provided in this section for injury sustained by such natural persons to their property by reason of any violation of [the Sherman Act]. The court shall exclude from the amount of monetary relief awarded in such action any amount of monetary relief (A) which duplicates amounts which have been awarded for the same injury, or (B) which is properly allocable to (i) natural persons who have [opted out], and (ii) any business entity. Neither Hawaii v. Standard Oil nor Congress's legislative response directly addresses the question whether consumers who happen to have bought directly from the conspirators stand on a different footing from consumers who bought through intermediaries. Even so, the legislative impulse behind the HSR Act is difficult to square with the thought that vindicating the interests of indirect purchasing consumers ought to take a back seat to other policy objectives - particularly when so high a proportion of the manufactured products we acquire as consumers are bought through retail stores or other intermediaries. Note further that in the legislation quoted above Congress not only solved the duplicative damages issue identified in Hawaii v. Standard Oil (by establishing a mechanism for consumers to opt out of parens patriae actions) but also directed the courts to deduct which are "properly allocable to . . . any business entity." That is, of course, tantamount to automatic opt-out from state parens patriae actions by business firms in their capacity as ultimate consumers (e.g., of coffee for the coffee room). Read literally, however, Congress's language reached further and attempted in a sort of half-hearted, not to say half-baked, manner to deal with the Hanover Shoe pass-on problem. In (A) above, Congress implied that if the intermediary purchasers get to court first, they may collect the entire overcharge, no matter how much they have actually passed on to the consumers represented by the tardy state attorney general. By contrast, (B) seems to say, if the AG wins the race to the courthouse, then there is to be a partial repeal of Hanover Shoe, with the conspiring manufacturers allowed to take a shot at proving that some of the overcharges are "properly allocable . . . to any business entity" such as a wholesaler or retailer intermediate between the manufacturer and the consumer; arguably, defendants are permitted to offer such proof whether or not the intermediaries have actually brought suit, let alone been joined in the parens patriae consumer case.
48. In re Western Liquid Asphalt Cases, 487 F.2d 191 (9th Cir. 1973), cert. denied, 415 U.S. 419 (1974).
49. To like effect was a pre-Hanover Shoe case, Armco Steel Corp. v. North Dakota, 376 F.2d 206 (8th Cir. 1967), upholding the state's right to recover as indirect purchaser for overcharges on certain products used in its highways.
50. 440 F.2d 1079 (2d Cir.), cert. denied, 404 U.S. 871 (1971)).
51. 440 F.2d at 1084.
52. Id. at 1088.
53. 438 F.2d 1187 (3d Cir. 1971), aff'g Philadelphia Housing Auth. v. American Radiator & Standard Sanitary Corp., 50 F.R.D. 13 (E.D. Pa. 1970).
54. 438 F.2d at 1188. Translating from the Latin, that means the court could not bring itself to believe that someone who paid $30,000 for the building with the price-fixed plumbing would, in the but-for world, have paid a mere $29,990. That thought just did not compute. There was another little problem, too. Like Carmen Sandiego, it can be tough to find this elusive "ultimate consumer" whom we wish to "compensate" for the upstream conspiracy. Suppose, for the sake of argument, we are reasonably sure that the building owner who actually paid $30,000 really would have received a $10 discount but for the conspiracy. Where does the buck stop - or, more precisely, where do the ten bucks stop? What if the person who bought the building resold it to someone else? What if the owner rents the building? Is the tenant the one who is really out of pocket? And suppose the tenant is itself a business enterprise. Maybe the customers of that business are the "real" victims. There are many things to be said about this scenario. One is that it is not far-fetched at all. Another is that there comes a point when the attorneys' fees for all of these various levels of indirect purchasers will eat up the amount that even a terrified defendant is willing to pay in settlement, or a court is willing to award as a judgment.
55. 431 U.S. 720 (1977).
56. The terms employed for the three perceived alternatives are my own invention, but they are intended to capture the Court's thinking.
57. In Illinois Brick the plaintiff proposed limiting Hanover Shoe to "overcharges for capital goods used to manufacture new products." 431 U.S. at 729.
58. The Court entertained another thought as well: just keep the Hanover Shoe rule against defensive pass-on theory but let indirect purchasers make unfettered use of offensive pass-on. The Court thought that result, which seems to be exerting some limited appeal today in the state courts, was too absurd to consider, even in an expansive menu of policy options. Id. at 730-35.
59. See Illinois v. Ampress Brick Co., 536 F.2d 1163, 1165-66 (7th Cir. 1976) ("The District of Columbia, Second, Fourth, Fifth, and possibly the Sixth Circuits also [i.e., in addition to the Ninth Circuit in Western Liquid Asphalt and the Eighth Circuit in Armco Steel] seem hospitably inclined to the rule that ultimate purchasers may sue under Section 4 of the Clayton Act to recover damages incurred as a result of a price-fixing conspiracy."), rev'd sub nom. Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977).
60. See supra note 46.
61. 431 U.S. at 731-32 (citation and footnote omitted).
62. See id. at 740.
63. Id. at 730.
64. The Court dismissed - too glibly, some would argue - the view that different solutions might properly be applied in different economic circumstances. Id. at 743-44.
65. Although I have used the term "Absolutely No Pass-on" as a shorthand way of describing the alternative chosen by the Illinois Brick majority, in fact the Court recognized two limited exceptions: (a) a case where a direct purchaser passes on an overcharge to an indirect purchasing plaintiff with a preexisting cost-plus contract, and (b) a case where the direct and indirect purchaser are commonly owned or controlled. Id. at 736 & n.16. Thus, a more accurate but less felicitous description of the result would be to say that the majority embraced the Hardly Ever Any Pass-on Solution.
66. Id. at 746.
67. 15 U.S.C. § 15c; see supra note 46.
68. 431 U.S. at 734 n.14.
69. See Stephen Calkins, Illinois Brick and its Legislative Aftermath, 47 ANTITRUST L.J. 967 (1978).
70. See Robert G. Harris S: Lawrence A. Sullivan, Passing on the Monopoly Overcharge: A Comprehensive Policy Analysis, 128 U. PA. L. REV. 269 (1979); William M. Landes & Richard A. Posner, Should Indirect Purchasers Have Standing to Sue Under the Antitrust Laws? An Economic Analysis of the Rule of Illinois Brick, 46 U. CHI. L. REV. 602 (1979); William M. Landes & Richard A. Posner, The Economics of Passing On: A Reply to Harris and Sullivan, 128 U. PA. L. REV. 1274 (1980).
71. See Robert G. Harris S: Lawrence A. Sullivan, Passing on the Monopoly Overcharge: A Comprehensive Policy Analysis, 128 U. PA. L. REV. 269 (1979); William M. Landes & Richard A. Posner, Should Indirect Purchasers Have Standing to Sue Under the Antitrust Laws? An Economic Analysis of the Rule of Illinois Brick, 46 U. CHI. L. REV. 602 (1979); William M. Landes & Richard A. Posner, The Economics of Passing On: A Reply to Harris and Sullivan, 128 U. PA. L. REV. 1274 (1980).
72. See Robert G. Harris S: Lawrence A. Sullivan, Passing on the Monopoly Overcharge: A Comprehensive Policy Analysis, 128 U. PA. L. REV. 269 (1979); William M. Landes & Richard A. Posner, Should Indirect Purchasers Have Standing to Sue Under the Antitrust Laws? An Economic Analysis of the Rule of Illinois Brick, 46 U. CHI. L. REV. 602 (1979); William M. Landes & Richard A. Posner, The Economics of Passing On: A Reply to Harris and Sullivan, 128 U. PA. L. REV. 1274 (1980).
73. As a leading member of the plaintiffs' bar put it, I have to say that the important thing to me is Hanover Shoe. Illinois Brick is not something that appeals to my heart in the sense that I am opposed to Illinois Brick because there is something wrong with not allowing a person who has been hurt to collect in the courts. But if I have to choose between my heart and my head, in this case, I will take my head. My head is Hanover Shoe. Hanover Shoe says: "We are going to get antitrust enforcement." Illinois Brick says: "The wrong guys may collect." That is unfortunate. But I would rather throw the money down the cesspool than not collect it from the wrongdoer. Testimony of Perry Goldberg, reprinted in S. REP. No. 95-934 pt. 2, Minority Views at 32-33 (1978). An ABA Task Force likewise opposed repeal of Illinois Brick at the federal level. See Report of the ABA Section of Antitrust Law Task Force to Review Proposed Legislation to Repeal or Modify Illinois Brick, 52 ANTITRUST L.J. 841 (1983). This coincidence of views between the ABA Task Force and many members of the plaintiffs' bar illustrates the difficulties that anti-Illinois Brick congressmen faced in their unsuccessful effort to build a consensus against the Court's decision.
74. 497 U.S. 199 (1990).
75. Id. at 217.
76. CAL. BUS. & PROF. CODE § 16750(a) (West 1987). It is arguable that, in their pre-World War I antitrust statutes, the legislatures of Alabama and Mississippi, with remarkable prescience, anticipated the Illinois Brick controversy and elected to side with the dissent. See ALA. CODE § 6-5-60 (1993) and MISS. CODE ANN. § 75-21-9 (1991) (both referring to "direct or indirect effects" of combines or trusts).
77. WIS. STAT. ANN. § 133.18(1) (a) (West 1989).
78. N.M. STAT. ANN. § 57-1-3 (Michie 1995).
79. 740 ILL. COMP. STAT. ANN. 10/7(2) (West 1992).
80. S.D. CODIFIED LAWS § 37-1-33 (Michie 1994).
81. D.C. CODE ANN. § 28-4509 (1996).
82. Id. § 28-4509 (b).
83. Id. § 28-4509(c).
84. MD. CODE ANN., COM. LAW § II-209(b)(2)(ii) (1990).
85. MICH. COMP. LAWS § 445.778(2) (West 1989).
86. MINN. STAT. ANN. § 325D.57 (West 1995).
87. KAN. STAT. ANN. §50-801(b) (1995).
88. HAW. REV. STAT. § 480-14(b)-(c) (1993). Rhode Island has an even more restrictive Illinois Brick repealer, permitting only a parens patriae action by the attorney general, with the proviso that there may be no relief which duplicates that already accorded for the same injury. R.I. GEN. LAWS § 6-36-12(g) (1992).
89. HAW. REV. STAT. § 480-14(a)(1) (1993).
90. Crown Oil Corp. v. Superior Ct., 177 Cal. App. 3d 604, 613, 223 Cal. Rptr. 164, 169 (Cal. App.), appeal dismissed, 479 U.S. 879 (1986).
91. 235 Cal. Rptr. 228 (Cal. App. 1987).
92. Id. at 236.
93. See Borden, Inc. v. Universal Indus., 88 F.R.D. 708 (N.D. Miss. 1981) (denying class certification of a class of Mississippi indirect sugar purchasers); Keating v. Philip Morris, Inc., 417 N.W.2d 132 (Minn. Ct. App. 1987) (denying certification of a retailer class of indirect purchasers of cigarettes); Michigan v. Detroit Lumbermen's Ass'n, 1979-2 Trade Cas. (CCH) ¶ 62,990 (Mich. Cir. Ct. 1979) (state could not pursue claims of indirect purchasers of lumber as a parens patriae class action).
94. The author is likewise unaware of any unpublished decisions in which a court has decided a litigated issue as to how much illegal overcharge was passed on to an indirect purchaser or indirect purchasing class. To be distinguished are judicial authorities approving class action settlements in which attorneys for various tiers of direct and indirect purchasing classes have sat down together and whacked up the pie to their mutual satisfaction. See supra notes 49-51 and infra note 113 and accompanying text.
95. 490 U.S. 93 (1989).
96. See supra notes 49-51 and accompanying text.
97. In re Cement and Concrete Antitrust Litig., 1985-1 Trade Cas. (CCH) ¶ 66,459 (D. Ariz. 1985), aff'd, 817 F.2d 1435 (9th Cir. 1987), rev'd sub nom. California v. ARC America, 490 U.S. 93 (1989).
98. 490 U.S. at 101-02.
99. The Court elected not to take seriously any concern that, in the case at bar, letting the state plaintiffs have a piece of a settlement pie of fixed size necessarily meant that the direct purchasers would get less than they otherwise would. To the Court, this seemed merely an artifact of the way the settlement was structured, not a question of constitutional dimension.
100. Id. at 105-06.
101. ME. REV. STAT. ANN. tit. 10, § 1104 (West 1996).
102. N.B. CENT. CODE § 51-08.1-08(3)-(4) (1995).
103. See Durden v. Abbott Labs., slip op. at 13 n.6, No. CV 93-663 (Cir. Ct. Calhoun Co., Ala. Jan. 16, 1996) (citing result in Donelan v. Abbott Labs., No. 94 C 709 (Dist. Ct. Sedgwick Co., Kan. Dec. 6, 1995)).
104. Id. at 13.
105. Recall the discussion about Carmen Sandiego and the price-fixed plumbing, supra note 53.
106. See supra note 70.
107. Report of the ABA Section of Antitrust Law Task Force to Review the Supreme Court's Decision in California v. ARC America Corp., 59 ANTITRUST L.J. 273 (1990).
108. Id. at 288.
109. Id. at 289.
110. For example, Congress could leave Hanover Shoe and Illinois Brick intact at the federal level, and the current state of the law could remain unchanged at the state level, except for lawsuits brought under a new antitrust class action rule, providing for • bifurcation between a phase 1 in which counsel for all direct and indirect purchasers would seek to prove liability and total amount of the overcharge, and a phase 2 in which subclasses comprised of direct purchasers and each tier of indirect purchasers would seek to establish the amount of the passthrough at each level, • appropriate economic incentives for plaintiffs' counsel prevailing at the first phase, regardless of the result for their specific clients in the second phase, and • preemption of parallel or subsequent state actions by indirect purchasers, seeking to recover for the same alleged overcharge at issue in the special federal class action. Such a rule would: • address the litigation incentive issue that so concerned the Court in Hanover Shoe and Illinois Brick, • prevent inconsistent decisions in different fora on liability, total overcharge, and amount of pass-on, all of which are distinct possibilities under the present system, and • reduce the litigation burden and expense inherent in pursuing parallel litigation in federal court and in multiple state courts. The defense bar will not, of course, welcome such a proposal with open arms. The question is, however, whether it is superior to all other feasible alternatives, including the status quo.
111. See Earl E. Pollock, Automatic Treble Damages and the Passing-on Defense: The Hanover Shoe Decision, 13 ANTITRUST BULL. 1183, 1218 (1968).
112. For example, one commentator has urged the adoption of the following presumption, among others: "In antitrust suits initiated under state laws that involve public or commercial construction contracts, the buyers for whom the projects were constructed, whether direct or indirect purchasers, should be the preferred parties to recover damages for illegal overcharges." John Cirace, Apportioning Damages Between Direct and Indirect Purchasers in Consolidated Antitrust Suits: ARC America Unravels the Illinois Brick Rule, 35 VILL. L. REV. 283, 318 (1990). The problem of identifying the ultimate consumer (a question I have termed the Carmen Sandiego issue) could benefit from much additional scholarly attention and debate.
113. Herbert Hovenkamp, The Indirect-Purchaser Rule and Cost-Plus Sales, 103 HARV. L. REV. 1717 (1990).
114. Cirace, supra note 109.
115. Robert G. Harris & Lawrence A. Sullivan, Passing on the Monopoly Overcharge: A Comprehensive Policy Analysis, 128 U. PA. L. REV. 269 (1979). More recent commentary tends to be of the 'tis-and-t'ain't variety, focusing on whether indirect purchaser suits are a good thing or a bad thing, not on how to administer them if have them we must.
116. See minority views of H. Laddie Montague, Jr., ABA TASK FORCE REPORT, supra note 70, at 861 (providing information on two proceedings in which settlements apportioned recovery among various classes of direct and indirect purchasers, including In re Chicken Antitrust Litig., 699 F.2d 228 (5th Cir. 1982)).