Chapter VI. Damages and Remedies

• Pages: 127-150

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CHAPTER VI

DAMAGES AND REMEDIES

The nature and extent of remedies available in indirect purchaser

actions varies significantly from state to state. For example, some state

statutes explicitly either require trial courts to prevent recovery of

duplicative damages (that is, of damages already recovered by direct

purchasers or by other indirect purchasers) or at least allow the trial court

to consider ways in which to avoid such duplication. Other state statutes

provide no such guidance. Likewise, states vary on whether recovery

should be denied because the plaintiffs passed on to their own purchasers

any overcharge that plaintiffs may have paid. Discerning the law of

indirect purchaser damages is made more difficult because indirect

purchaser actions only rarely proceed to judgment, and thus appellate

courts have had little occasion to expound the law. The reported cases

generally address damages issues in the context of decisions relating to

class certification or motions for summary disposition. Despite the

paucity of reported cases, some general propositions about the law of

indirect purchaser damages can be stated.475

A. Type of Recovery Available in Indirect Purchaser Actions

The most common form of damages sought by indirect purchaser

plaintiffs is the amount of the unlawful overcharge that was passed on to

them—specifically the difference between the price actually paid and the

price that would have been paid in the absence of the antitrust violation.

For example, in a conspiracy case, the plaintiff “must demonstrate that

475. The Antitrust Modernization Commission is studying concerns that have

been raised that touch upon damages in indirect purchaser actions, such

as whether the Illinois Brick rule is an effective mechanism for

deterrence, whether it effectively provides compensation for injured

victims, the potential for the duplicative liability, and the difficulty of

determining and allocating damages between direct and indirect

purchasers. See Antitrust Modernization Commission Staff, Civil

Remedies—Indirect Purchaser Discussion Memorandum, at 12-19 (May

4, 2006) (available at http://www.amc.gov/pdf/meetings/CivRem-

IndP_DiscMemo060504-fin.pdf).

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the prices they paid were higher than the prices would have been absent

the conspiracy.”476 As the Michigan Court of Appeals noted:

[A] plaintiff must first prove that the prices the defendant charged the

direct purchasers were consistently higher than the prices it would have

been charged in a competitive environment. We label this an

“overcharge” requirement. Second, the plaintiff must prove the

overcharge, or some portion thereof, passed through the chain of

distribution to indirect purchasers. We label this a pass-on

requirement. We agree … that proving overcharge and pass-on are

essential to succeeding in an indirect purchaser suit …477

As discussed in Sections B and C of this Chapter, however, calculating

and proving the overcharge damages suffered by indirect purchaser

plaintiffs is often a complex, multilayered process.

While plaintiffs have an affirmative obligation to establish that at

least some portion of the overcharge was passed on to them through the

upstream purchasers,478 courts and legislatures have taken different

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

Certification in the Shadow of Illinois Brick, 67 ANTITRUST L. J. 1, 12

(1999).

477. A&M Supply Co. v. Microsoft Corp., 654 N.W.2d 572, 584 (Mich. Ct.

App. 2002) (reversing class certification decision on the grounds that the

plaintiff did not set forth a viable method for proving actual damages on a

class-wide basis as required by the Michigan Antitrust Reform Act,

MICH. COMP. LAWS § 445.771 et seq.).

478. See, e.g., In re Methionine Antitrust Litig., 204 F.R.D. 161, 164 (N.D.

Cal. 2001) (observing that under the Wisconsin antitrust statute’s actual

injury requirement, “plaintiff must prove that the ‘overcharge’ was passed

on to each member.”); City of St. Paul v. FMC Corp., 1990-2 Trade Cas.

(CCH) ¶ 69,283, 1990 WL 259683, *2 (D. Minn. Nov. 14, 1990)

(denying certification on the grounds that common questions did not

predominate in case where “the court would have to examine the

circumstances of each member individually to determine whether that

member has suffered an overcharge.”); B.W.I. Custom Kitchen v. Owens-

Ill., Inc., 191 Cal. App. 3d 1341, 1351 (Cal. Ct. App. 1987) (holding that

“in order to demonstrate that plaintiffs and the proposed class were

injured by the alleged conspiracy, plaintiff must demonstrate that

defendants’ illegal overcharges were passed on to them in the form of

higher prices for glass containers”); Goda v. Abbott Labs., 1997 WL

156541, *7-8 (D.C. Super. Ct. Feb. 3, 1997) (noting that, under the

District of Columbia antitrust statute, D.C. Code § 28-4509, the

“gravamen of plaintiff’s claim is the passing on of the conspiratorial

overcharge,” and finding that plaintiff’s expert’s proposed methodologies