Chapter IV. Jurisdictional and Choice of Law Issues in the Indirect Purchaser Action

Illinois Brick spurred state legislatures around the country to create
explicit indirect purchaser causes of action under state law. It also
generated an extensive body of case law in which both state and federal
courts examined state antitrust and consumer protection statutes for the
existence of an indirect purchaser remedy. The result, as described
throughout this Handbook, is a patchwork of substantive rights, laws,
and procedures that the antitrust litigator must learn to navigate.
Because the indirect purchaser claim arises under state law (no
federal question jurisdiction) and because these claims tend to be
relatively small (an insufficient amount in controversy and no diversity
jurisdiction), indirect purchaser damages actions historically have been
litigated primarily (though not exclusively, as will be explored later) in
state courts.254 Passage of the Class Action Fairness Act of 2005
(CAFA) likely will change this because under CAFA’s expansion of
diversity jurisdiction, many indirect purchasers will now be subject to
federal jurisdiction and will find their way into federal court.255 CAFA,
however, is not retroactive and does not apply to actions commenced
before the act’s passage.256 Moreover, the full effect of CAFA on state
254. Illinois Brick’s bar on indirect purchaser claims applies to compensatory
damages actions, not to claims for injunctive relief. Thus, indirect
purchasers generally may pursue claims for injunctive relief under § 16 of
the Clayton Act. See, e.g., Cargill, Inc. v. Monfort of Colorado, Inc., 479
U.S. 104, 111 n. 6 (1986) (stating that standing Clayton Act § 16, unlike
§ 4, raises no threat of multiple lawsuits or duplicative recoveries).
255. As described more fully in § D, infra, under CAFA, federal jurisdiction
may exist over any class action in which (1) any plaintiff is diverse from
any defendant; (2) the putative class contains at least 100 members; and
(3) the amount in controversy by the entire class action is at least $5
million. See 28 U.S.C. §§ 1332(d)(2), (d)(5), (d)(6).
256. Class Action Fairness Act of 2005 (CAFA), Pub. L. No. 109-2, 119 Stat.
4, § 9 (2005) (CAFA applies “to any civil action commenced on or after
the date of enactment [February 18, 2005]”); see also Exxon Mobil Corp.
v. Allapattah Servs., 545 U.S. 546, 571 (2005); Braud v. Transp. Serv.
Co., 445 F.3d 801, 804 (5th Cir. 2006) (CAFA not retroactive, but
addition of defendant constitutes “commencement”).
70 Indirect Purchaser Litigation Handbook
indirect purchaser litigation is not yet clear. Accordingly, indirect
purchaser actions commenced prior to CAFA’s passage, as well as those
actions that do not meet the act’s requirements (or fall under one of its
exceptions), are likely to be litigated in state court. The absence of any
state equivalent of the federal Multidistrict Litigation (MDL)
procedure257 can, and often does, mean that defendants must litigate what
in essence is the same indirect purchaser case in the courts of multiple
states.258 Although the claims may be brought by a different named
plaintiff and seek redress under different state statutes, they generally
involve the same defendants and arise from the same underlying set of
To analyze the unique jurisdictional and choice-of-law issues that
arise in the context of indirect purchaser litigation, this Chapter will
proceed in four principal parts. Part A will provide an overview of the
key jurisdictional and choice-of-law issues presented in indirect
purchaser litigation. Part B will discuss basic jurisdictional prerequisites,
such as personal and subject- matter jurisdiction, and the availability of a
federal forum for indirect purchaser claims. Part C will then examine
two scenarios: (1) the indirect purchaser complaint that seeks to certify a
multistate class on the basis on a single state’s law; and (2) the indirect
purchaser complaint brought on the basis of multiple states’ laws.259 Part
D will highlight the impact that CAFA is expected to have on
jurisdictional issues in indirect purchaser litigation going forward.
257. Under 28 U.S.C. § 1407, civil actions involving one or more common
questions of fact that are pending in different federal judicial districts
may be transferred by the Judicial Panel on Multidistrict Litigation to a
single district for coordinated or consolidated pretrial proceedings. There
is no formal procedure for consolidating related state cases in different
state jurisdictions. For further discussion of multidistrict litigation, see
Chapter VIII.
258. In addition to the indirect purchaser cases, the same defendants usually
must defend in federal court the direct purchaser actions that arise from
the same core allegations of wrongdoing.
259. Each of these scenarios creates its own set of risks and difficulties. While
much depends on the specific law of the state where the complaint is
filed, there is little doubt that the multistate indirect purchaser complaint
brought on the basis of a single state’s law will face serious, if not
insurmountable, constitutional challenges. Moreover, the indirect
purchaser complaint brought on the basis of multiple states’ laws is likely
to have serious difficulty meeting fundamental class certification
Jurisdiction and Choice of Law 71
A. Overview of Key Jurisdictional and Choice-of-Law Issues in
Indirect Purchaser Claims
Litigating the same alleged conduct potentially dozens of times in
different state courts can result in great inefficiencies for both the parties
and the courts, not to mention the risk of inconsistent, if not outright
contradictory, rulings. For example, courts in various states have
reached very different conclusions regareding class certification, even
though the certification standards from state to state often appear to be
similar. As a result, both plaintiffs and defendants jockey to push actions
forward in those states where they believe the law is more favorable,
while delaying actions in the less hospitable forums. This type of forum
shopping, or more accurately, forum pushing, adds another layer of
procedural complexity.
But what are the alternatives where there is no state equivalent of the
federal MDL process? The parties themselves can agree to coordinate
similar actions across different states by agreeing to manageable and
nonoverlapping briefing schedules and to limit duplicative discovery.
Another possibility is that state court judges can take the initiative on
their own (or upon request by the parties) to coordinate their respective
cases with actions pending in other states, not in a formal MDL sense,
but by agreeing to similar scheduling orders and other pretrial
With no formal procedural mechanism to transfer, consolidate, or
coordinate similar state court suits, plaintiffs sometimes have brought
actions that seek certification of a multistate or even nationwide indirect
purchaser class in a single state court. These actions, which have
become increasingly common in recent years, generally come in two
varieties. Plaintiffs may file a complaint seeking to certify a multistate
class under the law of a single state, such as the law of the forum state.
Or plaintiffs may file a single state complaint seeking to certify a
multistate class under the laws of multiple states.
Regardless of the relative merits of these two views, several
important constitutional and public policy considerations arise from
proposed multistate indirect purchaser actions.
Due Process Rights of Defendants: Are the due process rights of
defendants violated if they are forced to litigate claims that have no
connection or nexus to the forum in which they have been sued?
Federalism and the Commerce Clause: To what extent do
Constitutional provisions limiting the extraterritorial application of state
law and basic principles of constitutional federalism limit the ability of a

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