Chapter III. Liability for Indirect Purchaser Claims
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CHAPTER III
LIABILITY FOR INDIRECT PURCHASER CLAIMS
To say that an indirect purchaser may bring suit under state law to
redress an alleged upstream antitrust violation is to make a statement
about a particular type of plaintiff’s standing—not about the nature of
conduct that may form the basis for liability or the causes of action
available to the plaintiff.97 Indirect purchaser lawsuits simply represent
an extension of antitrust standing to a more remote type of plaintiff. In
most indirect purchaser cases, both the theory of liability and the proof
necessary to establish a violation of the relevant antitrust statute (as
distinct from the fact and amount of injury) are the same as if the case
had been brought by a direct purchaser or an enforcement agency under
federal law. That is because most states’ substantive antitrust regimes
are patterned on the federal antitrust laws, and because state courts
typically follow federal court interpretations of comparable federal
laws.98 Therefore, an indirect purchaser who brings an action for price-
fixing or monopolization under state law will be required to show the
same conduct as would a direct purchaser, a rival of the defendant, or a
government enforcement agency in an action brought under the federal
antitrust laws. Of course, an indirect purchaser must also show an
overcharge that was passed through the chain of distribution, but that is
more properly treated as a question about whether the plaintiff can show
injury, not whether the defendant can be held liable for a particular type
of conduct.
The first section of this Chapter briefly reviews the two bases for
indirect purchaser standing under state antitrust laws—statutory grants of
standing to indirect purchasers to sue under the antitrust laws (Illinois
Brick repealers) and judicial interpretations of generally worded remedy
statutes that are silent on the question of indirect purchasers—and
discusses the elements of liability in a typical indirect purchaser suit.
1996) (bar to indirect purchaser suits under the federal antitrust laws
reflects a decision by the Supreme Court to deny standing).
98. 1 RALPH FOLSOM, STATE LAW & ANTITRUST PRACTICE xxxiii (1996)
(referring to “general tendency of state law to follow federal precedent”);
WILLIAM LIFLAND, STATE ANTITRUST LAW § 1.06, at 1-19 (2006) (noting
states that encourage reliance on federal precedents). Where the state
statute differs materially from the federal statute, however, some states
may choose not to defer to federal law. Id.
30 Indirect Purchaser Litigation Handbook
The Chapter then notes the few jurisdictions where indirect purchasers
must be aware of liability rules that differ from the federal scheme, and
discusses the availability of collateral estoppel to enable indirect
purchasers to rely on findings made in prior direct purchaser or
government enforcement litigation.
While indirect purchasers historically have brought claims alleging
restraint of trade under an antitrust statute, plaintiffs in jurisdictions that
bar indirect purchasers from suing under the antitrust statute have turned
to state consumer protection statutes and the common law theory of
unjust enrichment as alternative theories of relief. Whether indirect
purchasers may pursue these theories for conduct traditionally thought to
be within the scope of antitrust laws can raise difficult questions about
the applicability of Illinois Brick. The second section of the Chapter
considers the availability of alternative theories of liability.
Regardless of whether an indirect purchaser case proceeds under an
antitrust statute, a consumer protection statute, or the common law theory
of unjust enrichment, it is clear that general antitrust principles limiting
suits by excessively “remote” plaintiffs places a limit on how “indirect” a
plaintiff can be. For example, all would agree that a law firm that
purchased Microsoft Windows from a retail store is not too remote an
indirect purchaser for purposes of bringing a claim that Microsoft
monopolized the market for Windows. But would clients of every law
firm that purchased Windows also have standing to sue Microsoft on the
theory that the price of legal services was increased as a result of
passing-on of cost of the software?
While most would recognize that the clients’ injury is conceptually
more attenuated than that of the law firm’s (indeed, the clients are hardly
“purchasers” of the software), such a plaintiff might be able to offer
some proof that the firm actually did raise fees in direct response to the
increase in the cost of Windows—thus resulting in a quantifiable injury.
Or, to take a fact pattern common in many modern indirect purchaser
cases, are consumers who purchase finished products indirect purchasers
of the raw materials used to make those products? Again, it is easy to
see that such plaintiffs are more remote from the antitrust violation than
if the defendants’ product made its way to the plaintiff unchanged, but
consumers may be able to demonstrate that the finished product price
reflected a passed-through overcharge in the original raw material.
Articulating a limiting principle has been difficult in the context of
statutes and judicial decisions that refer generically to those who “dealt
directly or indirectly” with the antitrust violator. Courts have struggled to
draw the appropriate line in indirect purchaser cases much as they have
Liability for Indirect Purchaser Claims 31
long struggled with issues of proximate causation in tort. Thus, the last
section of the Chapter considers the limits of indirect purchaser standing
in light of traditional antitrust standing principles.
A. Standing and Liability
1. Basis for Standing
Indirect purchaser standing derives either from an explicit statutory
text or from a judicial precedent that interprets the generally worded
remedy provisions of a state antitrust statute to include persons who are
indirectly injured by the defendant. Explicit state statutes — so-called
“Illinois Brick repealers” — usually provide that anyone injured directly
or indirectly by an antitrust violation may bring suit.99 The avowed
purpose of these statutes was to adopt the dissenting view in Illinois
Brick and ensure that indirect purchasers have a remedy.100
99. See, e.g., CAL. BUS. & PROF. CODE § 16750(a) (“[an antitrust] action may
be brought by any person who is injured in his or her business or property
by reason of anything forbidden or declared unlawful by this chapter,
regardless of whether such injured person dealt directly or indirectly with
the defendant”); 740 ILL. COMP. STAT. 10/7(2) (“[n]o provision of this
Act shall deny any person who is an indirect purchaser the right to sue for
damages”); MICH. COMP. LAWS § 445.778 (“Any other person threatened
with injury or injured directly or indirectly in his or her business or
property by a violation of this act may bring an action for appropriate
injunctive or other equitable relief against immediate irreparable harm,
actual damages sustained by reason of a violation of this act . . . .”);
MINN. STAT. § 325D.57 (“[a]ny person, any governmental body, or the
state of Minnesota or any of its subdivisions or agencies, injured directly
or indirectly by a violation of [the state antitrust statute] shall recover
three times the actual damages sustained”); N.Y. GEN. BUS. LAW § 340
(“[i]n any action pursuant to this section, the fact that . . . any person who
has sustained damages by reason of violation of this section has not dealt
directly with the defendant shall not bar or otherwise limit recovery”). In
a few states, the Illinois Brick repealer applies only when the attorney
general has brought the lawsuit as parens patriae on behalf of the state’s
citizens. See HAW. REV. STAT. § 480-14; IDAHO CODE 48-108(2). For a
more complete discussion of the different patterns for these statutes, see
Chapter II, supra, and Appendix A, infra.
(Cal. 1984); A&M Supply Co. v. Microsoft Corp., 654 N.W.2d 572, 580
(Mich. Ct. App. 2002).
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