Appendix A. Survey of State Indirect Purchaser Jurisprudence and Legislation

• Pages: 305-341

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APPENDIX A

SURVEY OF STATE INDIRECT PURCHASER

JURISPRUDENCE AND LEGISLATION

Indirect purchaser claims are creatures of state law, which varies

from jurisdiction to jurisdiction. This Handbook has described generally

the principal ways in which state law varies. This Appendix provides

information on each of the 50 states, the District of Columbia, Guam,

and Puerto RiCo.

a. Alabama

Alabama has adopted an Illinois Brick repealer that expressly grants

standing to any person who been injured “by an unlawful trust, combine

or monopoly, or its effect, direct or indirect” to sue to recover “the sum

of $500 and all actual damages.”1149 The effect of Alabama’s repealer

may be limited in view of case law declaring that the Alabama antitrust

law is concerned only with intrastate activity.1150

Alabama has a class certification rule that is substantially similar to

Federal Rule 23, but its courts and legislature have added unique facets

to the certification process.1151 In the mid 1990s, the Alabama courts

struggled with the race to the courthouse by class action plaintiffs. The

Court of Appeals authorized ex parte conditional class certification,

which allowed the court in which the first claim was filed to certify the

class conditionally and thus retain sole jurisdiction over the claim.1152

The state Supreme Court replaced this procedure with a rule that an

Alabama court cannot hear a class action claim if there is a prior-filed

action in another court involving substantially identical class

allegations.1153

1149. ALA. CODE § 6-5-60 (a); In re Chicken Antitrust Litig. Am. Poultry, 669

F.2d 228, 239, n.18 (5th Cir. 1982).

1150. Archer Daniels Midland Co. v. Seven Up Bottling Co. of Jasper, Inc., 746

So. 2d 966 (Ala. 1999); see also Griffiths v. Blue Cross & Blue Shield,

147 F. Supp. 2d 1203, 1220 (N.D. Ala. 2001)(“. . . [I]f the restraint itself

can be characterized as crossing state lines, then it would be outside the

regulation of the Alabama antitrust statutes.”).

1151. See ALA. R. CIV. P. 23.

1152. Ex parte Voyager Guar. Ins., 669 So. 2d 198 (Ala. Civ. App. 1995).

1153. Ex parte First Nat’l Bank, 717 So. 2d 342 (Ala. 1997); see also Ex parte

Equity Nat’l Life Ins., 715 So. 2d 192, 196 (Ala. 1997).

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The state legislature also added requirements to the class certification

procedure. It required judges to establish a discovery schedule for the

class certification issue, similar to the process under Federal Rule of

Civil Procedure 16, and gave parties a right to request an evidentiary

hearing on class certification.1154 The statute also codified the Alabama

courts’ “rigorous analysis” of the elements of class certification.1155 The

rigorous analysis requires that, when certifying a class, a judge must

identify each of the four prerequisite elements of Rule 23(a) and the

additional element in Rule 23(b), explaining in detail how the proponents

of class certification have proven each element.1156 This rigorous

analysis has resulted in denial of certification for most classes of indirect

purchasers.1157

b. Alaska

The Alaska Restraint of Trade and Monopolies Act1158 does not

explicitly address the Illinois Brick issue. It allows private actions for

treble damages by “a person who is injured in business or property” and

by the state or other governmental entities “injured by reason of a

violation.”1159 Alaska’s Attorney General has maintained a suit for

restitution on behalf of indirect purchasers under the state’s unfair trade

practice statute.1160

c. Arizona

The Arizona Supreme Court has interpreted the state’s antitrust

statute to accord standing to sue to indirect purchasers. In Bunker’s

Glass Company v. Pilkington, PLC,1161 the majority of the court rejected

Illinois Brick, relying heavily on the standing provisions of its statute

1154. ALA. CODE § 6-5-641(b), (c).

1155. ALA. CODE § 6-5-641(e).

1156. Gen. Motors Acceptance Corp. v. City of Red Bay, 825 So. 2d 746 (Ala.

2002).

1157. William Page, The Limits of State Indirect Purchaser Suits: Class

Certification in the Shadow of Illinois Brick, 67 Antitrust L.J. 1, 24

(1999) (citing cases that show Alabama courts take a “skeptical view”

towards class certification of indirect purchasers).

1158. ALASKA STAT. § 45.50.562 et seq.

1159. ALASKA STAT. § 45.50.576 (a), (b).

1160. See FTC v. Mylan Labs., 99 F. Supp. 2d 1, 5 (D.D.C. 1999) (Alaska

attroney general action under ALASKA STAT. §§ 45.50.471(a), 45.50.571).

1161. 206 Ariz. 9, 75 P. 3d 99 (Sup. Ct. Ariz. 2003) (en banc).

Appendix A 307

which permit a “person” to sue for antitrust violations and noting that an

individual, included within the category of “person,” is rarely a direct

purchaser from a manufacturer.1162

Nearly two decades before Bunker’s Glass was decided, an Arizona

appellate rejected the availability of the pass-through defense in a breach

of contract case in which the defendant sought to prevent an award of

damages on the grounds that his customer—the plaintiff—had passed

through to its own customers any overcharge that it had paid. In

Northern Arizona Gas Service v. Petrolane Transport, Inc.,1163 an

Arizona intermediate appellate court rejected the pass-on defense for two

principal reasons, with significant guidance from Hanover Shoe. First,

the plaintiff’s customers had no right to recover from defendant, so

permitting the pass-on defense would permit the wrongdoer to keep its

illegal profits.1164 Second, as a practical matter, proof of the amount of

pass-through would be complex, requiring “sophisticated analysis of

market forces,” and would be “speculative.”1165

More recently, however, the appellate court decision in Bunker’s

Glass Co. v. Pilkington PLC,1166 may cast doubt on Northern Arizona

Gas Service’s holding with respect to the pass-through defense. In

rejecting Illinois Brick and holding that indirect purchasers could sue in

Arizona, the court of appeals addressed defendants’ claim that the

Northern Arizona court had already rejected the arguments for permitting

a cause of action for indirect purchasers.1167 Bunker’s Glass

distinguished Northern Arizona as nondispositive “because the pass-

through defense is not at issue.” Even though the defense was

technically not at issue, however, the Bunker’s Glass opinion may have

1162. The Pilkington court observed that Arizona adopted the Uniform State

Antitrust Act in 1974, three years before Illinois Brick, at a time when six

federal circuits had held that indirect purchasers had standing to sue. At

that time, the Ninth Circuit had also decided that indirect purchasers had

standing to sue under Arizona antitrust law. In re W. Liquid Asphalt

Cases, 487 F.2d 191, 200 (9th Cir. 1973). It asserted that jurisprudential

adoption of the rule of Illinois Brick would do little to accomplish

uniformity, given the already wide divergence of state rules on this issue.

The case contains a discussion of many of the rationales for and against

according standing to indirect purchasers which may be useful for

counsel in states that have not yet declared their position.

1163. 702 P.2d 696, 704 (Ariz. App. 1984).

1164. Id. at 704.

1165. Id.

1166. 47 P.3d 1119 (Ariz. App. 2002).

1167. Id. at 1127.