The limits of state indirect purchaser suits: Class certification in the shadow of Illinois Brick

Antitrust Law Journal

Volumn 67, Issue 1, 1999, Pages 1-38

  Page, William H ^a  

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References (189)

1. 431 U.S. 720 (1977).
2. Id. at 734. The Court acknowledged that there may be exceptions when the direct sale is pursuant to a pre-existing cost-plus contract or when the direct purchaser is controlled by the seller. Id. at 736 & n.16. See generally Herbert Hovenkamp, The Indirect-Purchaser Rule and Cost-Plus Sales, 103 HARV. L. REV. 1717 (1990).
3. The Supreme Court has rebuffed efforts to create additional exceptions to the rule. Kansas v. Utilicorp United, Inc., 497 U.S. 199 (1990) (rejecting a regulation exception). And most lower courts interpret existing exceptions narrowly. See, e.g., Labrador, Inc. v. ams Co., 105 F.3d 665 (9th Cir. 1996). Cf. In re Brand Name Prescription Drugs Antitrust Litig., 123 F.3d 599, 605-06, 613-14 (7th Cir. 1997) (Posner, J.) (reversing district court's ending that that drug wholesalers were within "control" exception to Illinois Brick, but also reversing summary judgment as to wholesalers on the ground that they may have been co-conspirators of the manufacturers).
4. See 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).
5. See 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).
6. Robert G. Harris & Lawrence A. Sullivan, Passing on the Monopoly Overcharge: A Comprehensive Policy Analysis, 128 U. PA. L. REV. 269 (1979); Edmund H. Mantell, Denial of a Forum to Indirect-Purchaser Victims of Price Fixing Conspiracies: A Legal and Economic Analysis of Illinois Brick, 2 PACE L. REV. 153 (1982); William F. Watson, Bad Economics in the Antitrust Courtroom: Illinois Brick and the 'Pass-On' Problem, 9 ANTITRUST L. & ECON. REV. 69 (1977).
7. Robert G. Harris & Lawrence A. Sullivan, Passing on the Monopoly Overcharge: A Comprehensive Policy Analysis, 128 U. PA. L. REV. 269 (1979); Edmund H. Mantell, Denial of a Forum to Indirect-Purchaser Victims of Price Fixing Conspiracies: A Legal and Economic Analysis of Illinois Brick, 2 PACE L. REV. 153 (1982); William F. Watson, Bad Economics in the Antitrust Courtroom: Illinois Brick and the 'Pass-On' Problem, 9 ANTITRUST L. & ECON. REV. 69 (1977).
8. Robert G. Harris & Lawrence A. Sullivan, Passing on the Monopoly Overcharge: A Comprehensive Policy Analysis, 128 U. PA. L. REV. 269 (1979); Edmund H. Mantell, Denial of a Forum to Indirect-Purchaser Victims of Price Fixing Conspiracies: A Legal and Economic Analysis of Illinois Brick, 2 PACE L. REV. 153 (1982); William F. Watson, Bad Economics in the Antitrust Courtroom: Illinois Brick and the 'Pass-On' Problem, 9 ANTITRUST L. & ECON. REV. 69 (1977).
9. See generally Ronald W. Davis, Indirect Purchaser Litigation: ARC America's Chickens Come Home to Roost on the Illinois Brick Wall, 65 ANTITRUST L.J. 375, 390 (1997); George J. Benston, Indirect Purchasers' Standing to Claim Damages in Price Fixing Antitrust Actions: A Benefit/Cost Analysis of Proposals to Change the Illinois Brick Rule, 55 ANTITRUST L.J. 213, 213-16 (1986).
10. See generally Ronald W. Davis, Indirect Purchaser Litigation: ARC America's Chickens Come Home to Roost on the Illinois Brick Wall, 65 ANTITRUST L.J. 375, 390 (1997); George J. Benston, Indirect Purchasers' Standing to Claim Damages in Price Fixing Antitrust Actions: A Benefit/Cost Analysis of Proposals to Change the Illinois Brick Rule, 55 ANTITRUST L.J. 213, 213-16 (1986).
11. See Benston, supra note 6, at 214 & nn.5-11.
12. See Davis, supra note 6, at 391-93, 395, which describes passage of Illinois Brick repealer provisions in California, CAL. BUS. & PROF. CODE § 16750(a) (West 1997); Wisconsin, WIS. STAT. ANN. § 133.18(1)(a) (West 1989); New Mexico, N.M. STAT. ANN. § 57-1-3 (Michie 1995); Michigan, MICH. COMP. LAWS § 445.778(2) (1989); Minnesota, MINN. STAT. ANN. § 325D.57 (West 1995); Kansas, KAN. STAT. ANN. § 50-801 (b) (1994); South Dakota, S.D. CODIFIED LAWS § 37-1-33 (Michie 1994); the District of Columbia, D.C. CODE ANN. § 28-4509 (1996); Maine, ME. REV. STAT. ANN. tit. 10 § 1104 (West 1997); and North Dakota, N.D. CENT. CODE ANN. § 51-08.1-08(3)-(4) (1989). More limited provisions were enacted in Illinois, ILL. COMP. STAT. ANN. 10/7(2) (West 1993) (allowing only attorney general suits on behalf of indirect purchasers, see Gaebler v. New Mexico Potash Corp., 676 N.E.2d 228, 221 (Ill. App. Ct. 1996)); Maryland, MD. CODE ANN., COM. LAW § 11-209(b)(2)(ii) (1990) (allowing government suits); Rhode Island, R.I. GEN. LAWS § 6-36-12(g) (1992) (allowing parens patriae action with set-off for previously awarded damages); and Hawaii, HAW. REV. STAT. § 480-14(a), (b) & (c) (1993) (allowing attorney general suits and nonclass indirect purchaser actions for single damages).
13. See, e.g., Hyde v. Abbott Labs., 473 S.E.2d 680 (N.C. Ct. App.), review denied, 478 S.E.2d 5 (N.C. 1996) (interpreting state counterpart of Sherman Act to authorize indirect purchaser suits); McLaughlin v. Abbott Labs., No. CV 95-0628 (Ariz. Super. Ct. Yavapai Co. July 9, 1996) (same); Blake v. Abbott Labs., 1996-1 Trade Cas. (CCH) ¶ 71,369 (Tenn. Ct. App. Mar. 27, 1996) (same); Mack v. Bristol-Myers Squibb Co., 673 So.2d 100 (Fla. Dist. Ct. App. 1996) (interpreting state deceptive practices act to authorize indirect purchaser suits). Some states long ago enacted statutes that specifically authorize suits by those suffering "direct or indirect" injuries. See ALA. CODE § 6-5-60 (1993); MISS. CODE ANN. § 75-21-9 (1991). But see Blewett v. Abbott Labs., 938 P.2d 842 (Wash. 1997) (finding no right of action for indirect purchasers under state antitrust law); Abbott Labs. v. Segura, 907 S.W.2d 503 (Tex. 1995) (same); Stifflear v. Bristol-Myers Squibb Co., 931 P.2d 471 (Colo. Ct. App. 1996) (same).
14. 490 U.S. 93 (1989). For analysis, see 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).
15. See generally Davis, supra note 6. In many of these cases, the actions follow federal court suits by direct purchasers. Id. at 376 nn.4-9.
16. See Benston, supra note 6, at 218-19 (1986) (estimating the share that indirect purchaser consumers would have recovered from the major price-fixing settlements in the six years following Illinois Brick).
17. See Davis, supra note 6, at 396: What we have . . . is a jerry-rigged legal structure with one ad hoc legal solution balanced precariously on the next. It is, moreover, a structure that could evolve into a powerful engine to encourage settlements, regardless of the factual merits of a case. For it is no secret that if the complaint is not dismissed and if the trial court certifies the class, defendants, by and large, are disinclined to take their chances with a jury.
18. The following list expands and updates the list in Davis, id. at 381 n.5. It includes certification decisions under state antitrust law since 1981. Unpublished opinions are on file with the author. For a table summarizing the results by state and by product, see Appendix. Alabama: Ashley v. Archer Daniels Midland Co., No. CV 95-336-R (Ala. Cir. Ct. DeKalb Co. Mar. 13, 1998) (lysine) (denied); Durden v. Abbott Labs., No. CV 93-663 (Ala. Cir. Ct. Calhoun Co. Jan. 16, 1996) (infant formula) (denied); Harbin v. Johnson & Johnson Vision Prods., No. CV 94-2872 (Ala. Cir. Ct. Mobile Co. Sept. 12, 1995) (contact lenses) (denied); In re Brand Name Prescription Drugs Antitrust Litig. (Price v. American Home Prods.), No. 94 C 897, 1994 WL 663590 (N.D. Ill. Nov. 18, 1994) (Alabama prescription drugs) (denied); McCarter v. Abbott Labs., No. CV 91-050 (Ala. Cir. Ct. Shelby Co. Apr. 9, 1993) (infant formula) (denied). California: Lethbridge v. Johnson & Johnson Vision Prods., Inc., No. BC 113271 (Cal. Super. Ct. Los Angeles Co. June 26, 1996) (contact lenses) (denied); Feitelberg v. Abbott Labs., No. 953865 (Cal. Super. Ct. San Francisco Co. June 23, 1995) (prescription drugs) (granted); Preciado v. Abbott Labs., No. 962294 (Cal. Super. Ct. San Francisco Co., Aug. 16, 1995) (prescription drugs) (granted); B.W.I. Custom Kitchen v. Owens-Illinois, Inc., 235 Cal. Rptr. 228 (Ct. App. 1987) (glass containers) (granted). District of Columbia: Goda v. Abbott Labs., 1997-1 Trade Cas. (CCH) ¶ 71,730, 1997 WL 156541 (D.C. Super. Feb. 3, 1997) (prescription drugs) (granted). Florida: Execu-Tech Business Sys., Inc. v. Appleton Papers, Inc., No. 96-9636 CACE 05 (Fla. Cir. Ct. Broward Co. Dec. 15, 1997) (thermal fax paper) (denied). Kansas: Donelan v. Abbott Labs., No. 94 C 709 (Kan. Dist. Ct. Sedgwick Co., May 3, 1995) (infant formula) (granted). Maine: Karofsky v. Abbott Labs., No. CV-95-1009 (Maine Super. Ct. Cumberland Co., Oct. 15, 1997) (prescription drugs) (denied). Michigan: Wilcox v. Archer-Daniels-Midland Co., No. 96-82473-CP (Mich. Cir. Ct., Ingham Co., Sept. 29, 1997) (high-fructose corn syrup and citric acid) (denied); Wood v. Abbott Labs., 1997-2 Trade Cas. (CCH) ¶ 72,014, 1997 WL 824019 (Mich. Cir. Ct. Sept. 11, 1997) (prescription drugs) (denied); Holmes v. Abbott Labs., No. 94-744 CP (Mich. Cir. Ct. Calhoun Co. May 22, 1995) (infant formula) (denied). Minnesota: Kerr v. Abbott Labs., 1997-1 Trade Cas. (CCH) ¶ 71,776, 1997 WL 314419 (Minn. Dist. Ct. Feb. 19, 1997) (prescription drugs) (denied); Fischenich v. Abbott Labs., No. MC-94-6868 (Minn. Dist. Ct. Hennepin Co. May 26, 1995) (infant formula) (denied); City of St. Paul v. FMC Corp., 1990-2 Trade Cas. (CCH) ¶ 69,283, 1990 WL 259683 (D. Minn. Nov. 4, 1990) (caustic soda and chlorine) (denied); Keating v. Philip Morris, Inc., 417 N.W.2d 132 (Minn. Ct. App. 1987) (cigarettes) (denied). Mississippi: Borden, Inc. v. Universal Indus. Corp., 88 F.R.D. 708, 710 (N.D. Miss. 1981) (sugar) (denied on alternate ground). South Dakota: Hagemann v. Abbott Labs., Civ. No. 94-221 (S.D. Cir. Ct. 6th Dist. Nov. 21, 1995) (infant formula) (granted). Tennessee: Robinson v. EMI Music Dist., 1996-2 Trade Cas. (CCH) ¶ 71,510, 1996 WL 495551 (Tenn. Cir. Ct. July 8, 1996) (compact discs) (granted). Wisconsin: K-S Pharmacies, Inc. v. Abbott Labs., No. 94 CV 2384 (Wis. Cir. Ct. Dane Co. May 17, 1996) (prescription drugs) (granted); Carlson v. Abbott Labs., No. 94-CV-002608 (Wis. Cir. Ct. Milwaukee Co. Mar. 23, 1995) (infant formula) (granted).
19. See infra part II.B. When federal courts have faced indirect purchaser (or similar) classes, the results have not been as favorable as those involving direct purchasers. Sugai Prods, v. Kona Kai Farms, Inc., 1997-2 Trade Cas. (CCH) ¶ 72,008, at 80,999-81,000, 1997 WL 824022, at *13 (D. Haw. 1997) (suit by Kona coffee farmers against coffee retailers alleging retailers' sales of counterfeit Kona coffee farmers; certification denied on grounds that "passed back" harm raised predominantly individual issues); In re Coordinated Pretrial Proceedings in Petroleum Prods. Antitrust Litig., 691 F.2d 1335, 1342-43 (9th Cir. 1982) (indirect purchaser class action under any exception to Illinois Brick would involve predominantly individual issues); Boshes v. General Motors Corp., 59 F.R.D. 589, 599-600 (N.D. III. 1973) (recognizing consumer standing to sue auto manufacturer (pre-Illinois Brick) but denying certification on grounds that a class of 17 million would be unmanageable and that proof of harm would present individualized issues); Ralston v. Volkswagenwerk, A.G., 61 F.R.D. 427 (W.D. Mo. 1973); Philadelphia v. American Oil Co., 53 F.R.D. 45 (D.N.J. 1971). But see In re Sugar Indus. Antitrust Litig., 73 F.R.D. 322, 353-54 (E.D. Pa. 1976) (certifying class including direct and indirect purchasers).
20. The class must meet all four of the requirements of Rule 23(a): numerosity, commonality, typicality, and adequacy. In addition, it must meet the requirements of one of the subparts of Rule 23(b). Because indirect purchaser actions are for damages, they are brought under Rule 23(b)(3), which requires that questions common to the class predominate over individual questions, and that a class action is superior to other methods of resolving the dispute. The question of whether the common issues predominate over individual issues is critical in indirect purchaser cases.
21. See, e.g., Boshes, 59 F.R.D. at 599-600 (recognizing indirect purchaser standing, pre-Illinois Brick, but insisting that requirements for class certification be met, even where denial of certification denied any remedy); American Oil, 53 F.R.D. at 72-74 (same).
22. See Amchem Prod., Inc., v. Windsor, 117 S. Ct. 2231, 2246 (1997) (class actions allow small claimants to sue by "aggregating the relatively paltry potential recoveries into something worth someone's (usually an attorney's) labor") (quoting Mace v. Van Ru Credit Corp., 109 F.3d 338, 344 (7th Cir. 1997)). On the value of antitrust class actions, see Hawaii v. Standard Oil Co., 405 U.S. 251, 262 & 266 (1972). See also Dando B. Cellini, An Overview of Antitrust Class Actions, 49 ANTITRUST L.J. 1501 (1981).
23. See, e.g., Califano v. Yamasaki, 442 U.S. 682, 700-01 (1979). On the role of class actions in antitrust cases, see Hawaii v. Standard Oil Co., 405 U.S. 251, 266 (1972).
24. 7B CHARLES A. WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 1785 (2d ed. 1986) (discussing the timing and procedural requirements of the class certification decision).
25. The issue whether a conspiracy exists among the defendants is often conceded to be common to the class. See, e.g., Ashley v. Archer Daniels Midland Co., No. CV 95-336-R , slip op. at 28 n.19 (Ala. Cir. Ct. Mar. 13, 1998). But cf. Alabama v. Blue Bird Body Co., Inc., 573 F.2d 309, 321-23 (5th Cir. 1978) (evidence in record inadequate to find that a conspiracy could be established as to all members of a class by a common method). The issue of whether the restraint injured each member of the class may be either common or individualized, depending upon the type of proof necessary in the particular case. Execu-Tech Bus. Sys., Inc. v. Appleton Papers, Inc., No. 96-9636 CACE 05, slip op. at 3 (Fla. Cir. Ct. Dec. 15, 1997) ("'Fact of injury' or 'impact' is the critical element for class certification purposes.").
26. See Karofsky v. Abbott Labs., No. CV-95-1009, slip op. at 22 (Me. Super. Ct. Oct. 15, 1997); McCarter v. Abbott Labs., No. CV 91-050, slip op. at 7 (Ala. Cir. Ct. Apr. 9, 1993); Durden v. Abbott Labs., No. CV 93-663, slip op. at 10 (Ala. Cir. Ct. Jan. 16, 1996). But cf. Wilcox v. Archer-Daniels-Midland Co., No. 96-82473-CP, slip op. at 3-4 (Mich. Cir. Ct. Sept. 29, 1997), which held that the question whether a conspiracy existed predominated over all issues of injury and damages. Nevertheless, the court denied certification because the class was unmanageable, id. at 5, and it would be impossible to compute damages. Id. at 6.
27. See, e.g., McCarter, slip op. at 9-11.
28. See Karofsky, slip op. at 7 (proof of impact essential to liability and predominance); McCarter, slip op. at 11 (proof of fact of injury necessary to establish liability). In Ashley the court distinguished fact of injury from impact, slip op. at 28, but it refused to certify the class solely for trial of liability, requiring plaintiff to offer a method of proving damages by common proof in order to obtain certification. Id. at 36-39.
29. Just as the standards for summary judgment are influenced by the ultimate burden of proof, the standards for certification are influenced by the requirements for proof of impact. Thus, the degree of certainty with which proof of impact must be shown at the certification stage depends in part upon the standards for proof of impact at trial.
30. See generally ABA SECTION OF ANTITRUST LAW, PROVING ANTITRUST DAMAGES: LEGAL AND ECONOMIC ISSUES 31-35 (William H. Page ed., 1996).
31. Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 562 (1931).
32. See Bigelow v. RKO Radio Pictures, Inc., 327 U.S. 251, 264-66 (1946); Story Parchment, 282 U.S. at 563; see also Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 114 n.9 (1969)
33. See, e.g., Sciambra v. Graham News, 892 F.2d 411, 415 (5th Cir. 1990) (proof of violation and fact of damage establishes liability and therefore right to attorney's fees).
34. Eastman Kodak Co. v. Southern Photo Materials Co., 273 U.S. 359, 379 (1927).
35. J. Truett Payne Co. v. Chrysler Motors Corp., 451 U.S. 557, 566-67 (1981).
36. See Roger D. Blair & William H. Page, "Speculative" Antitrust Damages, 70 WASH. L. REV. 423, 435-36 (1995).
37. See id. at 436-38.
38. See Zenith Radio, 395 U.S. at 123-24.
39. See Blair & Page, supra note 32, at 440-41.
40. See Note, Private Treble Damage Antitrust Suits: Measure of Damages for Destruction of All or Part of a Business, 80 HARV. L. REV. 1566, 1573 (1967) ("In some cases, evidence establishing the violation will support the inference that plaintiff must have suffered some harm. . . .").
41. See, e.g., Murphy Tugboat Co. v. Crowley, 658 F.2d 1256, 1262 (9th Cir. 1981).
42. Bigelow v. RKO Radio Pictures, Inc., 327 U.S. 251, 264 (1946); see also Texaco, Inc. v. Hasbrouck, 496 U.S. 543, 573 n.31 (1990) (collecting cases).
43. See Blair & Page, supra note 32, at 442.
44. General Tel. Co. v. Falcon, 457 U.S. 147, 160-61 (1982) (stating the "rigorous analysis" requirement for federal courts); Castano v. American Tobacco Co., 84 F.3d 734, 740 (5th Cir. 1996) (same).
45. See George L. Priest, Procedural Versus Substantive Controls of Mass Tort Class Actions, 26 J. LEGAL STUD. 521 (1997).
46. See, e.g., Citicorp Acceptance Co. v. McIlwain, No. 1951977, 1997 WL 773360 (Ala. Sup. Ct. Dec. 16, 1997) (reversing certification that was granted based solely on plaintiffs' allegations); In re Potash Antitrust Litig., 159 F.R.D. 682, 693 (D. Minn. 1995) ("A mere allegation of price fixing will not satisfy Rule 23(b)'s predominance requirement.").
47. On the requirement of a hearing, see 7B WRIGHT ET AL., supra note 20, § 1785. See also In re Domestic Air Transp. Antitrust Litig., 137 F.R.D. 677, 681-82 (N.D. Ga. 1991) (describing hearing on class certification); McCarter v. Abbott Labs., No. CV 91-050, slip op. at 2 (Ala. Cir. Ct. Apr. 9, 1993) (two-day hearing with six witnesses, exhibits, documents, and briefs).
48. See Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177-78 (1974).
49. Coopers & Lybrand v. Livesay, 437 U.S. 463, 469 n.12 (1978); see also Karofsky v. Abbott Labs., No. CV-95-1009, slip op. at 6 (Me. Super. Ct. Oct. 15, 1997) (court must "walk the fine line between a rigorous analysis of the basic claims and methods of proof presented by the plaintiffs and the inappropriate delving into an assessment of the merits of those claims"). See generally 7B WRIGHT ET AL., supra note 20, § 1785, at 14 (Supp. 1998): In order to effectively make the Rule 23(b)(3) inquiry, it is necessary for the court to consider what will have to be proved at trial and thus whether those matters can be presented by common proof or whether individual proof will be required. Although that inquiry does require an examination of the elements of the claims and defenses, it does not result in an impermissible examination of the merits of the claims.
50. In re Polypropylene Carpet Antitrust Litig., 178 F.R.D. 603, 621 (N.D. Ga. 1997) (Polypropylene Carpet I) (comparing approaches).
51. In re Disposable Contact Lens Antitrust Litig., 170 F.R.D. 524, 530-31 (M.D. Fla. 1996) (citing 7B WRIGHT ET AL., supra note 20, § 1781); see also Transamerican Refining Corp. v. Dravo Corp., 130 F.R.D. 70, 76 (S.D. Tex. 1990): Defendants' primary contention is that Plaintiffs cannot prove what they believe they will be able to prove. This Court must not prejudge the merits of a case when deciding the class certification issue. While Plaintiffs may not ultimately be successful they have made a threshold showing sufficient to convince the Court that what proof they offer will be sufficiently generalized in nature that the class action device will provide a tremendous savings in time and effort to the judiciary and to the parties. See also Lumco Indus. v. Jeld-Wen, Inc., 171 F.R.D. 168, 173-74 (E.D. Pa. 1997); Domestic Air Transp., 137 F.R.D. at 687-88.
52. In re Disposable Contact Lens Antitrust Litig., 170 F.R.D. 524, 530-31 (M.D. Fla. 1996) (citing 7B WRIGHT ET AL., supra note 20, § 1781); see also Transamerican Refining Corp. v. Dravo Corp., 130 F.R.D. 70, 76 (S.D. Tex. 1990): Defendants' primary contention is that Plaintiffs cannot prove what they believe they will be able to prove. This Court must not prejudge the merits of a case when deciding the class certification issue. While Plaintiffs may not ultimately be successful they have made a threshold showing sufficient to convince the Court that what proof they offer will be sufficiently generalized in nature that the class action device will provide a tremendous savings in time and effort to the judiciary and to the parties. See also Lumco Indus. v. Jeld-Wen, Inc., 171 F.R.D. 168, 173-74 (E.D. Pa. 1997); Domestic Air Transp., 137 F.R.D. at 687-88.
53. See NATIONAL CONSUMER LAW CENTER, CONSUMER CLASS ACTIONS 88 (3d ed. 1995) (discussing In re Corrugated Container Antitrust Litig., 80 F.R.D.244, 250 (S.D. Tex. 1978)).
54. See NATIONAL CONSUMER LAW CENTER, CONSUMER CLASS ACTIONS 88 (3d ed. 1995) (discussing In re Corrugated Container Antitrust Litig., 80 F.R.D.244, 250 (S.D. Tex. 1978)).
55. See Polypropylene Carpet I, 178 F.R.D. at 621 ("it is proper to assess the validity of the proposed methodology to show impact, but arguments relying on the veracity or authenticity of facts to be 'plugged into' the formulas are inappropriate"). See also this court's opinion following a later hearing on certification at which expert testimony concerning impact was examined in detail. In re Polypropylene Carpet Antitrust Litig., 998 F. Supp. 18, 26 (N.D. Ga. 1997) (Polypropylene Carpet II) ("At the class certification stage, the Court simply examines whether [the plaintiffs' expert's] methodology, as proposed, will comport with the basic principles of econometric theory, will have any probative value, and will primarily use evidence that is common to all members of the proposed class.").
56. See PROVING ANTITRUST DAMAGES, supra note 26, at 171-80.
57. See., e.g., Lumco, 171 F.R.D. at 171-74; Rozema v. The Marshfield Clinic, 174 F.R.D. 425, 442-43 (W.D. Wis. 1997) (alleged market-allocation conspiracy); In re Citric Acid Antitrust Litig., 1996-2 Trade Cas. (CCH) ¶ 71,595 (N.D. Cal. Oct. 2, 1996); In re Amino Acid Lysine Antitrust Litig., No. 95 C 7679, MDL 1083, 1996 WL 69699 (N.D. Ill. Feb. 13, 1996); In re NASDAQ Market-Makers Antitrust Litig., 169 F.R.D. 493, 522 (S.D.N.Y. 1996); In re Industrial Diamonds Antitrust Litig., 167 F.R.D. 374, 381-83 (S.D.N.Y. 1996); In re Potash Antitrust Litig., 159 F.R.D. 682, 693 (D. Minn. 1995) ("[A]s a general rule in antitrust price-fixing cases, questions common to the members of the class will predominate over questions affecting only individual members."). But see Burkhalter Travel Agency v. MacFarms Int'l, Inc., 141 F.R.D. 144 (N.D. Cal. 1991).
58. Cf. 4 HERBERT B. NEWBERG & ALBA CONTE, NEWBERG ON CLASS ACTIONS (3d ed. 1992) ("As a rule, the allegation of a price-fixing conspiracy is sufficient to establish predominance of common questions."). But see Polypropylene Carpet I, 178 F.R.D. at 618 ("Plaintiffs must show they will prove, with a fair degree of certainty, impact as to each member of the proposed class without resorting to lengthy individualized examinations.").
59. Cf. 4 HERBERT B. NEWBERG & ALBA CONTE, NEWBERG ON CLASS ACTIONS (3d ed. 1992) ("As a rule, the allegation of a price-fixing conspiracy is sufficient to establish predominance of common questions."). But see Polypropylene Carpet I, 178 F.R.D. at 618 ("Plaintiffs must show they will prove, with a fair degree of certainty, impact as to each member of the proposed class without resorting to lengthy individualized examinations.").
60. Nevertheless, the plaintiff must be able to articulate a theory by which it can prove impact by generalized proof. For a detailed review (and approval) of such a showing, see Transamerican Ref. Corp. v. Dravo Corp., 130 F.R.D. 70, 74-76 (S.D. Tex. 1990). If the product is particularly customized to each purchaser, mere proof of a price-fixing conspiracy may be inadequate to establish impact on a class-wide basis. The plaintiff must be able to show not only an agreement to fix prices but some theory of what the competitive price would be. Nichols v. Mobile Bd. of Realtors, Inc., 675 F.2d 671, 678-79 (5th Cir. 1982).
61. See, e.g., Dry Cleaning & Laundry Inst., v. Flom's Corp., 1993-2 Trade Cas. (CCH) ¶ 70,408 (E.D. Mich. Oct. 19, 1993) (denying certification because of product heterogeneity and regional variations in cost and competitive conditions); Butt v. Allegheny Pepsi-Cola Bottling Co., 116 F.R.D. 486, 490-92 (E.D. Va. 1987) (denying certification because individualized issues predominated); In re Beef Indus. Antitrust Litig., 1986-2 Trade Cas. (CCH) ¶ 67,277, at 61,414 (S.D. Tex. June 3, 1986) (denying certification based on wide-spread variations in price).
62. See In re Polypropylene Carpet Antitrust Litig., 998 F. Supp. 18 (N.D. Ga. 1997) (certifying class of carpet purchasers, despite heterogeneity and regional variations, except as to custom-made carpet); Lumco Indus. v. Jeld-Wen, Inc., 171 F.R.D. 168, 171-74 (E.D. Pa. 1997) (certifying class despite alleged regional differences and negotiation of discounts from list prices); In re Domestic Air Transp. Antitrust Litig., 137 F.R.D. 677, 690-91 (N.D. Ga. 1991) (common proof of impact from conspiracy to fix airline ticket prices possible despite "regional and competitive forces that may affect the yields in some instances, as well as variances in the fare and passenger mix"); In re Wirebound Boxes Antitrust Litig., 128 F.R.D. 268, 272 (D. Minn. 1989) ("Common proof of impact is possible even though prices of industrial boxes are individually negotiated and prices of agricultural boxes are standardized.").
63. See Karofsky v. Abbott Labs., No. CV-95-1009, slip op. at 23 (Me. Super. Ct. Oct. 15, 1997) (indirect purchaser cases involve "an entirely separate level of evidence and proof" that precludes any presumption of impact); Ashley v. Archer Daniels Midland Co., No. CV-95-336-R, slip op. at 29 (Ala. Cir. Ct. Mar. 13, 1998) ("[T]here is no presumption of class wide impact in an indirect purchaser case."); McCarter v. Abbott Labs., No. CV 91-050, slip op. at 6 (Ala. Cir. Ct. Apr. 9, 1993) (extent of passing on "will necessarily vary from purchaser to purchaser, from product to product, and from time to time, from place to place, from store to store, and will depend upon the price and quantity of the brand, type, form, and size of formula actually bought"); Durden v. Abbott Labs., No. CV 93-663, slip op. at 11 (Ala. Cir. Ct. Jan. 16, 1996) ("the question of injury is even more individualized" in indirect purchaser suits than in direct purchaser suits).
64. See H.L.A. HART & TONY HONORÉ, CAUSATION IN THE LAW 51-52 (2d ed. 1985).
65. See Sugai Prods. v. Kona Kai Farms, Inc., 1997-2 Trade Cas. (CCH) ¶ 72,008, at 80,999 (D. Haw. Nov. 19, 1997): While class actions have been certified in many "direct purchases" cases, the predominance requirement has frequently been found not to be satisfied in "indirect purchaser" cases, where, as here, the plaintiff and defendant are separated by multiple distribution levels. That is because whether any injury is "passed on" through such multiple levels of distribution frequently raises individual issues, depending on the conduct of the particular firms at each level.
66. Hanover Shoe, Inc. v. United Shoe Mach. Co., 392 U.S. 481 (1968) (rejecting a passing on defense in price-fixing suits by direct purchasers).
67. Goda v. Abbott Labs., 1997-1 Trade Cas. (CCH) ¶ 71,730, at 79,141 (D.C. Super. Ct. Feb. 3, 1997).
68. Illinois Brick, 431 U.S. at 742 n.25. On tax incidence analysis, see PAUL A. SAMUELSON, ECONOMICS 164-65 (11th ed. 1980): Who ultimately pays a particular tax? Does the burden stay on the person on whom it is first levied? One cannot assume that the people Congress says a tax is levied on will end up paying that tax. They may be able to shift the tax: shift it "forward" on their customers by raising their price as much as the tax; or shift it "backward" on their suppliers (wage earners, rent and interest receivers) who end up being able to charge them less than they would have done had there been no tax. Economists therefore say: We must study the final incidence of the tax - the way its burden ultimately is borne, the totality of its effects on commodity prices, factor-prices, resource allocation, efforts, and composition of production and consumption. Tax incidence is no easy problem and requires all the advanced tools of economics to help toward its solution.
69. Illinois Brick, 431 U.S. at 742 n.25. On tax incidence analysis, see PAUL A. SAMUELSON, ECONOMICS 164-65 (11th ed. 1980): Who ultimately pays a particular tax? Does the burden stay on the person on whom it is first levied? One cannot assume that the people Congress says a tax is levied on will end up paying that tax. They may be able to shift the tax: shift it "forward" on their customers by raising their price as much as the tax; or shift it "backward" on their suppliers (wage earners, rent and interest receivers) who end up being able to charge them less than they would have done had there been no tax. Economists therefore say: We must study the final incidence of the tax - the way its burden ultimately is borne, the totality of its effects on commodity prices, factor-prices, resource allocation, efforts, and composition of production and consumption. Tax incidence is no easy problem and requires all the advanced tools of economics to help toward its solution.
70. For more detailed diagrammatic presentations, see Joseph H. Anderson, Comment, A Legal and Economic Analysis of the Cost-Plus Contract Exception in Hanover Shoe and Illinois Brick, 47 U. CHI. L. REV. 743 (1980); Harris & Sullivan, supra note 5; Elmer J. Schaefer, Passing-On Theory in Antitrust Treble Damage Actions: An Economic and Legal Analysis, 16 WM. & MARY L. REV. 883 (1975).
71. For more detailed diagrammatic presentations, see Joseph H. Anderson, Comment, A Legal and Economic Analysis of the Cost-Plus Contract Exception in Hanover Shoe and Illinois Brick, 47 U. CHI. L. REV. 743 (1980); Harris & Sullivan, supra note 5; Elmer J. Schaefer, Passing-On Theory in Antitrust Treble Damage Actions: An Economic and Legal Analysis, 16 WM. & MARY L. REV. 883 (1975).
72. The share of the overcharge borne by the indirect purchaser bears the same proportion to the share borne by the direct purchaser as the elasticity of supply bears to the elasticity of demand. See Illinois Brick, 431 U.S. at 741; Schaefer, supra note 62, at 893. Thus, if the elasticity of supply is infinite, the indirect purchaser bears the entire burden; if the elasticity of demand is infinite, the direct purchaser bears the entire overcharge.
73. 2.
74. See JOAN ROBINSON, THE ECONOMICS OF IMPERFECT COMPETITION 76-91 (2d ed. 1969). If demand is linear and marginal costs are constant, under monopoly, the increase in price will be equal to half of the overcharge. If marginal costs are increasing, the price increase will be less than half of the overcharge; if marginal costs are declining, then the price increase will be greater than half of the overcharge. Id. at 77.
75. See id.
76. See id. at 81.
77. See SAMUELSON, supra note 61, at 484 ("The richness of possible outcomes [in oligopoly markets] would exhaust a specialized book on the subject.").
78. See Benston, supra note 6, at 216-17; Landes & Posner, supra note 4, at 605.
79. See Benston, supra note 6, at 234-35, 245-46.
80. See Illinois Brick, 431 U.S. at 740-41.
81. See id. at 745.
82. See id. at 730-31.
83. See Benston, supra note 6, at 222-23; Illinois Brick, 431 U.S. at 741-42. For a discussion of recent uses of elasticity estimates in antitrust analysis, see Thomas Overstreet et al., Understanding Econometric Analysis of the Price Effects of Mergers Involving Differentiated Products, ANTITRUST, Spring 1996, at 30.
84. See Benston, supra note 6, at 222-23; Illinois Brick, 431 U.S. at 741-42. For a discussion of recent uses of elasticity estimates in antitrust analysis, see Thomas Overstreet et al., Understanding Econometric Analysis of the Price Effects of Mergers Involving Differentiated Products, ANTITRUST, Spring 1996, at 30.
85. Hanover Shoe, Inc. v. United Shoe Mach. Co., 392 U.S. 481, 492-93 (1968); see also In re Brand Name Prescription Drugs Antitrust Litig., 123 F.3d 599, 605 (7th Cir. 1997) (Posner, J.) ("Tracing a price hike through successive resales is an example of what is called 'incidence analysis,' and is famously difficult.").
86. For a discussion of the skepticism of the Chicago School, see Frank Easterbrook, Workable Antitrust Policy, 84 MICH. L. REV. 1696 (1986)
87. See authorities cited in note 5, supra.
88. See Illinois Brick, 431 U.S. at 748-49, 754-55, 764 (Brennan, J., dissenting).
89. Id. at 758-59 (Brennan, J., dissenting).
90. Id. at 759-60 (Brennan, J., dissenting).
91. Goda v. Abbott Labs., 1997-1 Trade Cas. (CCH) ¶ 71,730, at 79,140 (D.C. Super. Ct. Feb. 3, 1997).
92. See James R. McCall et al., Greater Representation for California Consumers - Fluid Recovery, Consumer Trust Funds, and Representative Actions, 46 HASTINGS L.J. 797, 810-11 (1995).
93. Illinois Brick, 431 U.S. at 740. The court was primarily concerned with the effect of such actions on the incentives of direct purchasers to sue, but the problems such actions pose are also relevant to the certification issue.
94. 1997-1 Trade Cas. (CCH) ¶ 71,730, at 79,143 (D.C. Super. Ct. Feb. 3, 1997).
95. Mississippi allows suit by those indirectly harmed by restraints, but its procedural rules, otherwise patterned on the Federal Rules of Civil Procedure, contain no Rule 23.
96. For example, courts in three states have certified infant formula class action without offering any reasoning. See, e.g., Donelan v. Abbott Labs., No. 94 C 709 (Kan. Dist. Ct. May 3, 1995); Hagemann v. Abbott Labs., Civ. No. 94-221 (S.D. Cir. Ct. Nov. 21, 1995); Carlson v. Abbott Labs., No. 94-CV-002608 (Wis. Cir. Ct. Mar. 23, 1995). Goda refused to give precedential weight to Preciado v. Abbott Labs., No. 962294 (Cal. Super. Ct. Aug. 16, 1995), because "it rests entirely on ultimate conclusions of commonality and predominance without a reasoned basis of support." 1997-1 Trade Cas. (CCH) ¶ 71,730, at 79,142. Courts granting certification are not the only ones deficient in this respect. Although not entirely conclusory, the rationales for denying certification offered in Harbin v. Johnson & Johnson Vision Products, Inc., Case No. CV 94-002872 (Ala. Cir. Ct. Sept. 12, 1995) and Lethbridge v. Johnson & Johnson Vision Products, No. BC 113271 (Cal. Super. Ct. June 26, 1996) were so general that they were rejected as unpersuasive in In re Disposable Contact Lens Antitrust Litigation, 170 F.R.D. 524, 532 n.6 (M.D. Fla. 1996). Some states require class certification orders to provide a rigorous analysis of whether Rule 23's requirements are met. See, e.g., Ex parte American Bankers Life Assurance Co. of Fla., 715 So.2d 186 (Ala. 1997). On federal standards, see supra note 41.
97. See supra note 14 and the Appendix.
98. D.C. CODE ANN. § 28-4508(c) (1996): In any class action brought under this section . . . the fact of injury and the amount of damages sustained by members of the class may be proven on a class-wide basis, without requiring proof of such matters by each individual member of the class. The percentage of total damage attributable to a member of such class shall be the same as the ratio of such member's purchases or sales to the purchases or sales of the class as a whole.
99. Goda v. Abbott Labs., 1997-1 Trade Cas. (CCH) ¶ 71,730, at 79,140-141 (D.C. Super. Ct. Feb. 3, 1997).
100. Id. at 79,140 & 79,143.
101. The District of Columbia statute allows use of "expert formulae" to prove damages, Goda, 1997-1 Trade Cas. (CCH) ¶ 71,730, at 79,143, and "mandate[s] that we be solicitous to the class action remedy if it is otherwise in conformity with Rule 23 and is manageable." Id. at 79,145.
102. Id. at 79,144. The court also misleadingly cited the statement in PROVING ANTITRUST DAMAGES, supra note 26, at 184, that indirect purchasers will almost always be able to claim harm. The statement was a matter of abstract theory and said nothing about class certification.
103. Id.
104. Id.
105. See id. at 79,144 n.11 (citing law review expositions of the incidence theory). The court also noted that defendants' experts had testified in the retailers' federal class action that the retailers had passed on all of the overcharge. Id. at 79,144.
106. Id. at 79,146.
107. 235 Cal. Rptr. 228 (Ct. App. 1987).
108. Id. at 237.
109. Id. at 234.
110. Id. at 235-36.
111. See id. at 235 n.8.
112. No. 96-9636 CACE 05 (Fla. Cir. Ct. Dec. 15, 1997).
113. Id., slip op. at 3.
114. Id. Accord Durden v. Abbott Labs., No. CV 93-663, slip op. at 11 (Ala. Cir. Ct. Jan. 16, 1996) (class action damages "should not be based on speculation or a system of averaging. Rather, the compensation due each individual member of the class must necessarily reflect the damages actually suffered by the party.") (quoting Ralston v. Volkswagenwerk, AG, 61 F.R.D. 427, 432-33 (W.D. Mo. 1973)); Wilcox v. Archer-Daniels-Midland Co., No. 96-82473-CP, slip op. at 7 (Mich. Cir. Ct. Sept. 29, 1997): Plaintiff claims it would be easy to generalize the amount of damages in this case and to assume that everyone ate or drank the same amount of the various product [containing HFCS and citric acid] during the applicable time period. The Court rejects this notion. The purpose of this litigation would be to compensate those people who were damaged by the alleged illegal activities of the Defendants, and not just to fix some punishment for antitrust violations.
115. 417 N.W.2d 132 (Minn. Ct. App. 1987).
116. Id. at 137; accord Kerr v. Abbott Labs., 1997-1 Trade Cas. (CCH) ¶ 71,776, at 79,475 (Minn. Dist. Ct. Feb. 19, 1997); Fischenich v. Abbott Labs., No. MC-94-6868, slip op. at 8 (Minn. Dist. Ct. May 26, 1995); see also Ashley v. Archer Daniels Midland Co., No. CV-95-336-R, slip op. at 39 n.21 (Ala. Cir. Ct. Mar. 13, 1998) ("[T]he better policy is to have a firm understanding of the method and procedure to be employed for proving damages before a case is certified as a class action.").
117. Wood v. Abbott Labs., 1997-2 Trade Cas. (CCH) ¶ 72,014, at 81,024 (Mich. Cir. Ct. 1997). The court declined to follow Goda v. Abbott Laboratories, 1997-1 Trade Cas. (CCH) ¶ 71,730 (D.C. Super. Ct. Feb. 3, 1997), on the ground that it applied at unique statute, and declined to follow Preciado v. Abbott Laboratories, No. 962294 (Cal. Super. Ct. Aug. 16, 1995) because it was unsupported by reasoning.
118. McCarter v. Abbott Labs., No. CV 91-050 (Ala. Cir. Ct. Apr. 9, 1993).
119. Id., slip op. at 2-3.
120. Id. at 4.
121. Durden v. Abbott Labs., No. CV 93-663, slip op. at 8 (Ala. Cir. Ct. Jan. 16, 1996).
122. Id. at 14.
123. Id. at 15.
124. Id. at 8.
125. No. CV 95-336-R, slip op. at 29-30 (Ala. Cir. Ct. Mar. 13, 1998). In Fischenich v. Abbott Laboratories, No. MC 94-6868, slip op. at 8 (Minn. Dist. Ct. May 26, 1995), the plaintiff's expert testified that, although retailers sold at different percentage markups over the wholesale price, they consistently maintained their respective percentage markups, and all passed on 100% of the illegal overcharge. Id. at 6-7. The court, however, found that markups were not consistent and not all of the overcharge was passed on. Id. at 8.
126. Wood v. Abbott Labs., 1997-2 Trade Cas. (CCH) ¶ 72,014, at 81,022-023 (Mich. Cir. Ct. Sept. 11, 1997); see also Kerr v. Abbott Labs., 1997-1 Trade Cas. (CCH) ¶ 71,776, at 79,475-476 (Minn. Dist. Ct. Feb. 19, 1997) (also rejecting the testimony of the same expert as in Goda v. Abbott Labs., 1997-1 Trade Cas. (CCH) ¶ 71,730 (D.C. Super. Ct. Feb. 3, 1997) and distinguishing Goda). The Kerr court stated: In the present action, determining whether a consumer had been impacted by the alleged conspiracy would require the examination of myriad transactions at several levels of distribution to determine applicable dates of purchase, prices, generic substitutes available, and the terms of any rebates or discounts applicable at the time of the transaction. Such a procedure would need to be followed for each brand name prescription drug purchased by each class member. 1997-1 Trade Cas. (CCH) at 79,475.
127. Wood, 1997-2 Trade Cas. (CCH) ¶ 72,014, at 81,023. See also Karofsky v. Abbott Labs., No. CV-95-1009, slip op. at 24-25 (Me. Super. Ct. Oct. 15, 1997) (involving the same experts as in Wood, Kerr, and Goda, distinguishing Goda based on the unique District of Columbia statute, and following Wood, Kerr, and Price).
128. 1997-2 Trade Cas. (CCH) at 81,023.
129. Id. In Karofsky, slip op. at 27-28, the court was able to reject the same expert's proposed method of proof of impact on the simpler ground that the expert had not yet conducted any regressions involving Maine markets, and so could not predict what effect specific factors like time, geography, or brands would have on the pass-on.
130. Execu-Tech Bus. Sys., Inc. v. Appleton Papers, Inc., No. 96-9636 CACE 05, slip op. at 4 & 11 (Fla. Cir. Ct. Dec. 15, 1997) (citing Price, Kerr, Durden, and Wood).
131. See id. at 4.
132. Id.
133. Id. at 5.
134. Id.
135. Id. at 6.
136. Id. at 10-11 (citing Hanover Shoe).
137. See B.W.I. Custom Kitchen v. Owens-Illinois, Inc., 235 Cal. Rptr. 228, at 235 n.8 (Ct. App. 1987).
138. See Wood v. Abbott Labs., 1997-2 Trade Cas. (CCH) ¶ 72,014, at 81,023 (Mich. Cir. Ct. Sept. 11, 1997).
139. Id. at 81,023 n.3.
140. Execu-Tech Bus. Sys., Inc. v. Appleton Papers, Inc., No. 96-9636 CACE 05, slip op. at 7-8 (Fla. Cir. Ct. Dec. 15, 1997).
141. See id. at 8-9. Federal courts have faced similar issues in direct purchaser class actions. See Ralston v. Volkswagenwerk, AG, 61 F.R.D. 427, 432-33 (W.D. Mo. 1973) (individual negotiation of car prices in competitive market made class treatment impossible); Boshes v. General Motors Corp., 59 F.R.D. 589, 600 (N.D. Ill. 1973): Both parties admit that the retail automobile business is notorious for its haggling, and buyers "shop around" to get the best price. Competition among dealers in the same brand of automobile, in the same "price-range" or "class" of automobile manufactured by other companies, and within the overall automobile market varies considerably from one locale to another. Furthermore, each brand of GM automobile offers a number of models, each available with a wide range of optional equipment. Prices vary even among identical automobiles sold by different dealers. Prices vary considerably among the various makes, for example, Chevrolet and Cadillac. Hence, there does not appear to be any way to rationally and fairly distribute any damage "fund," assuming a violation by GM could be proved.
142. See Execu-Tech, slip op. at 9.
143. McCarter v. Abbott Labs., No. CV 91-050, slip op. at 5 (Ala. Cir. Ct. Apr. 9, 1993); see also id. at 7-8 (retailers used many different markup and marketing strategies, based on many factors; there was little correlation between wholesale and retail price movements; in some instances stores maintained or even reduced retail prices after wholesale price increases).
144. See id. at 7-8.
145. See id. at 5; see also Fischenich v. Abbott Labs., No. MC 94-6868, slip op. at 8 (Minn. Dist. Ct. May 26, 1995) (retailers do not pass on 100%, or any consistent percentage, of price increases for formula).
146. See Durden v. Abbott Labs., No. CV 93-663, slip op. at 6-7 (Ala. Cir. Ct. Jan. 16, 1996).
147. Id. at 6.
148. Note that this factor is often not enough to prevent certification classes of direct purchasers. See supra note 59.
149. Execu-Tech Bus. Sys., Inc. v. Appleton Papers, Inc., No. 96-9636 CACE 05, slip op. at 6 (Fla. Cir. Ct. Dec. 15, 1997).
150. Goda v. Abbott Labs., 1997-1 Trade Cas. (CCH) ¶ 71,730, at 79,142 (D.C. Super. Ct. Feb. 3, 1997) (single level, because wholesalers deemed part of conspiracy). Other courts have differed in the number of levels of intermediaries in brand name prescription drug cases. See Kerr v. Abbott Labs., 1997-1 Trade Cas. (CCH) ¶ 71,776 (Minn. Dist. Ct. Feb. 19, 1997) (two levels); Karofsky v. Abbott Labs., No. CV 95-1009, slip op. at 23 n.27 (Me. Super. Ct. Oct. 15, 1997) (two levels). In K-S Pharmacies v. Abbott Laboratories, No. 94 CV 2384 (Wis. Cir. Ct. May 17, 1996), the Wisconsin court certified a class of pharmacies alleging a conspiracy of drug manufacturers to increase the price of prescription drugs to pharmacies. In that case, the only intermediate purchasers were drug wholesalers. Defendants apparently did not contend that any wholesalers absorbed the entire price increase. The court held that the need for individualized proof of the amount of damages was not enough to preclude certification. Slip op. at 23 n.5.
151. See Illinois Brick, 431 U.S. at 732-33.
152. B.W.I. Custom Kitchen v. Owens-Illinois, Inc., 235 Cal. Rptr. 228, 235 (Cal. Ct. App. 1987).
153. See, e.g., City of St. Paul v. FMC Corp., 1990-2 Trade Cas. (CCH) ¶ 69,283, at 65,051 (D. Minn. Nov. 14, 1990) ("Because substantial value is added to the chlorine at various points in the chain of distribution, the court would have to examine the circumstances of each class member individually to determine whether that member has suffered an overcharge."). The court distinguished B.W.I. on this ground. Id.
154. No. 96-82473-CP (Mich. Cir. Ct. Sept. 29, 1997).
155. See Wilcox, slip op. at 7 ("[W]hile it is true that consumer goods have been the basis of several class actions, those cases were against the actual producer of the entire finished product and not against the producer of just one or two ingredients that may or may not have been used in any particular food item.").
156. Ashley v. Archer Daniels Midland Co., No. CV-95-336-R, slip op. at 32-35 (Ala. Cir. Ct. Mar. 13, 1998). The court rejected the expert's use of a show of hands by hog farmers at a convention to demonstrate the frequency of feed purchases. Id. at 35-36.
157. 442 U.S. 330, 343 (1979) (quoting ROBERT BORK, THE ANTITRUST PARADOX 66 (1978)).
158. Goda v. Abbott Labs., 1997-1 Trade Cas. (CCH) ¶ 71,730, at 79,143 (D.C. Super. Ct. Feb. 3, 1997)
159. Reiter, 442 U.S. at 343.
160. See Wilcox, slip op. at 5-7 (class consisting of entire population of state unmanageable).
161. "These ultimate consumers, in today's case the buyers of single pairs of shoes, would have only a tiny stake in a lawsuit . . . ." Hanover Shoe, Inc. v. United Shoe Mach. Co., 392 U.S. 481, 494 (1968).
162. In Ashley, the court noted that "the cost of lysine comprises a tiny fraction of the total cost of animal feed, perhaps only 1.5%-2.0% of the cost of feed when it is included in the feed mix." Ashley, slip op. at 27.
163. See Durden v. Abbott Labs., No. CV 93-663, slip op. at 12-13 (Ala. Cir. Ct. Jan. 16, 1996) (noting that one class representative could not remember the brand of formula she purchased); Wilcox, slip op. at 7 (consumer may not even be aware that ingredient was in product; will have no records); Fischenich v. Abbott Labs., No. MC-94-6868, slip op. at 5 (Minn. Dist. Ct. May 26, 1995) ("[T]he plaintiffs in this matter have no idea how much they paid for formula and only a general idea how much formula was purchased.").
164. Durden, slip op. at 13 ("to simply declare that [the Court] had a fund . . . out of which thousands of retail consumers could essentially help themselves by the filing of a form would encourage fraud and perjury"). The court distinguished In re Domestic Air Transportation Antitrust Litigation, 137 F.R.D. 677 (N.D. Ga. 1991) on the ground that evidence of dates and points of travel was available for each consumer class member. Id. See also Ashley, slip op. at 40 (rejecting as "fundamentally flawed" plaintiffs proposal for creating a "common fund . . . against which farmers could file claims and be paid according to the extent and reliability of their documentation. Any unclaimed amount would be paid to a public interest group under the cy pres doctrine.").
165. B.W.I. Custom Kitchen v. Owens-Illinois, Inc., 235 Cal. Rptr. 228, 237 (Cal. Ct. App. 1987).
166. Id. See also K-S Pharmacies v. Abbott Labs., No. 94 CV 2384, slip op. at 24 (Wis. Cir. Ct. May 17, 1996). The K-S court, like the court in Goda v. Abbott Laboratories, 1997-1 Trade Cas. (CCH) ¶ 71,730 (D.C. Super. Ct. Feb. 3, 1997), also suggested that the state's adoption of indirect purchaser standing did not necessarily imply that there was a passing-on defense.
167. See B.W.I., 235 Cal. Rptr. at 236; K-S Pharmacies, slip op. at 24.
168. Wood v. Abbott Labs., 1997-2 Trade Cas. (CCH) ¶ 72,014, at 81,023 n.1 (Mich. Cir. Ct. 1997).
169. Durden, slip op. at 7.
170. McCarter v. Abbott Labs., No. CV 91-050, slip op. at 5 (Ala. Cir. Ct. Apr. 9, 1993).
171. Execu-Tech Bus. Sys., Inc. v. Appleton Papers, Inc., No. 96-9636 CACE 05, slip op. at 7 (Fla. Cir. Ct. Dec. 15, 1997).
172. See id.
173. See supra note 59.
174. See Davis, supra note 6, at 395-400.
175. Id. at 400. This result confirms earlier theoretical predictions. See Benston, supra note 6, at 233: If the Illinois Brick decision were changed to permit state attorneys general to sue in parens patriae, indirect-final
176. Some of the decisions granting certification are entirely conclusory. See supra note 86. One must suspect that these decisions were not based on a careful analysis of the requirements of Rule 23, and thus should be discounted. Nevertheless, even including these decisions, more of the cases surveyed denied certification than granted it.
177. Goda v. Abbott Labs., 1997-1 Trade Cas. (CCH) ¶ 71,730, at 79,144 (D.C. Super. Ct. Feb. 3, 1997).
178. For discussion of the complexities of evaluating win rates, see Kevin M. Clermont & Theodore Eisenberg, Do Case Outcomes Really Reveal Anything About the Legal System? Win Rates and Removal Jurisdiction, 83 CORNELL L. REV. 581 (1998). On the selection effect of settlements on win rates, see the authorities collected at id., 588 n.21, especially George L. Priest & Benjamin Klein, The Selection of Disputes for Litigation, 13 J. LEGAL STUD. 1 (1984). See also Keith N. Hylton, Asymmetric Information and the Selection of Disputes for Litigation, 22 J. LEGAL STUD. 187 (1993).
179. For discussion of the complexities of evaluating win rates, see Kevin M. Clermont & Theodore Eisenberg, Do Case Outcomes Really Reveal Anything About the Legal System? Win Rates and Removal Jurisdiction, 83 CORNELL L. REV. 581 (1998). On the selection effect of settlements on win rates, see the authorities collected at id., 588 n.21, especially George L. Priest & Benjamin Klein, The Selection of Disputes for Litigation, 13 J. LEGAL STUD. 1 (1984). See also Keith N. Hylton, Asymmetric Information and the Selection of Disputes for Litigation, 22 J. LEGAL STUD. 187 (1993).
180. For discussion of the complexities of evaluating win rates, see Kevin M. Clermont & Theodore Eisenberg, Do Case Outcomes Really Reveal Anything About the Legal System? Win Rates and Removal Jurisdiction, 83 CORNELL L. REV. 581 (1998). On the selection effect of settlements on win rates, see the authorities collected at id., 588 n.21, especially George L. Priest & Benjamin Klein, The Selection of Disputes for Litigation, 13 J. LEGAL STUD. 1 (1984). See also Keith N. Hylton, Asymmetric Information and the Selection of Disputes for Litigation, 22 J. LEGAL STUD. 187 (1993).
181. See David Kassler et al., Explaining Deviations from the Fifty-Percent Rule: A Multimodal Approach to the Selection of Cases for Litigation, 25 J. LEGAL STUD. 233, 242-43 (1996).
182. Some of the features of indirect purchaser suits that favor class treatment are also correlated with the existence of price fixing. For example, successful price-fixing conspiracies will tend to involve homogeneous products in which there is little negotiation over the selling price. The more heterogeneous the product and the greater buying power of the direct purchasers, the more difficult it will be for a cartel to police an agreement on price. Thus, successful cartels are to that extent more susceptible to class certification.
183. Southern Pac. Co. v. Darnell-Taenzer Lumber Co., 245 U.S. 531, 534 (1918).
184. In re Domestic Air Transp. Antitrust Litig., 137 F.R.D. 677, 694 (N.D. Ga. 1991).
185. See supra note 56.
186. Fischenich v. Abbott Labs., No. MC-94-6868, slip op. at 9 (Minn. Dist. Ct. May 26, 1995).
187. Hyde v. Abbott Labs., 473 S.E.2d 680, 687-88 (N.C. Ct. App.), rev. denied, 478 S.E.2d 5 (N.C. 1996).
188. See Davis, supra note 6, at 400-01.
189. The problem will, of course, be magnified if more courts certify multistate classes of indirect purchasers. See, e.g., Robinson v. EMI Music Dist., 1996-2 Trade Cas. (CCH) ¶ 71,510 (Tenn. Cir. Ct. July 8, 1996) (certifying a class of compact disc purchasers in every state that recognizes indirect purchaser standing).