Damages and Remedies

One of the most active areas under state antitrust law is private
antitrust actions for damages. Over half of the states have passed
legislation authorizing “indirect purchaser actions” for damages,
which are not permitted under federal law after Illinois Brick Co v.
Illinois (“Illinois Brick”).1 The statutes themselves come in a variety
of forms, some of which are more permissive than others. Kansas’s
repealer statute allows “any person who may be damaged” by a
violation of the state’s antitrust statute, “r egardless of whether such
injured person dealt directly or indirectly with the defendant,” to “sue
for and recover treble the damages sustained,” without regard to
potential duplicative recovery from the defendant.2 Nebraska’s
statute similarly allows any purchaser, direct or indirect, to collect
damages without heed of other suits brought against the defendant,
but it limits recovery t o “actual damages . . . and the costs of the
suit,” not treble damages.3 In stark contrast to those statutes,
Maryland only allows indirect purchaser actions if they are brought
by the state attorney general, and then only if the defendant sold “any
drug, medicine, cosmetic, food, food additive, or commercial feed . .
. or medical device.”4 The statute also permits the defendant to make
use of the pass-on defense “to avoid duplicative liability.”5 Some
state courts have affirmed indirect purchaser remedies for damages.
Most jurisdictions permitting indirect purchaser actions provide for
treble damages.
Indirect purchasers typically allege t hat the defendants’ conduct
violates state antitrust, consumer protection, and unjust enrichment
laws. Courts in a few states have found that indirect purchasers can
sue only under consumer protection statutes,6 whereas in a number of
other states, indirect purchasers may bring claims under both antitrust
and consumer protection statutes.
The nature and extent of remedies available in indirect purchaser
actions varies from state to state. For example, some state statutes
explicitly either require trial courts to prevent recovery of d uplicative
damages (that is, damages already recovered by other purchasers) or
1. 431 U.S. 720 (1977).
2. KAN. STAT. ANN. § 50-161(b)(c).
3. R.R.S. NEB. § 59821.
4. MD. CODE ANN. HEALTH-GEN. § 211114.
5. Id.
6. See, e.g., Ciardi v. F. Hoffmann-LaRoche, Ltd., 762 N.E.2d 303
(Mass. 2002).
150 Indirect P urchaser Litigation Ha ndbook
at least allow the trial court to consider ways in which to avoid such
duplication. Other state statutes provide no such remedies or
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.
Under Shady Grove Orthopedic Associates PA v. Allstate
Insurance Co.,7 federal courts can hear certain state law claims as
class actions, even if class action treatment would be prohibited
under state law. There, a medical provider and an insurance company
disputed New York’s statutory penalty for the late payment of
medical claims.8 The provider sued the insurance company for a
penalty amount on the allegedly late-paid medical claims and also
sued on behalf of a class of all other persons who were owed a
statutory penalty from the insurance company.9 The district court
dismissed the complaint on the grounds that a separate New York
statute, N.Y. Civ. Prac. Law Ann. § 901(b), expressly prohibited
claims for statutory penalties from proceeding as class actions.10 The
Second Circuit affirmed, finding that § 901(b)’s class action block
represented a “substantive” rule of state law that must be applied by a
district court sitting in diversity.11 The Court, by a plurality decision,
held that § 901(b)’s class action block conflicted with the class action
requirements of Federal Rules of Civil Procedure 23.12 Rule 23
provides a “one-size-fits-all formula for deciding the class action
question in federal court.”13
A. Types 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 themspecifically, the difference between the price actually
paid and the price that would have been paid in the absence of the
7. 449 U.S. 393 (2010).
8. Id. at 397.
9. Id.
10. Id.
11. See 549 F.3d 137 (2d Cir. 2008).
12. 559 U.S. at 399.
13. Id.
Damages a nd Remedies 151
antitrust violation. For example, in a conspiracy case, the plaintiffs
“must demonstrate that the prices they paid were higher than the
prices would have been absent the conspiracy.”14 As the Michigan
Court of Appeals noted:
[A] plaintiff must first prove that the prices the defendant charged
the direct purchasers were consistently higher tha n the prices it
would have 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 . . . .15
As discussed in sections B and C of this chapter, calculating and
proving the overcharge damages suffered by indirect purchaser
plaintiffs is often a complex, multilayered process.
Plaintiffs have an affirmative obligation to establish that at least
some portion of the overcharge was passed on to them through the
upstream purchasers.16 Courts and legislatures have taken different
14. William H. Page, The Limits of State Indirect Purchaser Suits: Class
Certification in the Shadow of Illinois Brick, 67 ANTITRUST L.J. 1, 12
15. A&M Suppl y 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.); see also In r e
Florida Cement & Concrete Antitrust Litig., 278 F.R.D. 674, 682
(S.D. Fla. 2012) (noting “double burden” of proving initial
overcharge and pass-through of the overcharge in indirect purchaser
16. See, e.g., In re New Motor Vehicle Can. Exp. Antitrust Litig., 522
F.3d 6, 28 (1st Cir. 2008) (“plaintiffs’ theory . . . must include so me
means of determining that each member of the class was in fact
injured”); In r e TFT-LCD (Flat Panel) Antitrust Litig., 267 F.R.D.
583, 601 (N.D. Cal. 2010) (quoting In re Methionine Antitrust Litig.,
204 F.R.D. 161, 164 (N.D. Cal. 2001)) (observing that plaintiffs have
the burden of demonstrating that “there is a reasonable method for
determining on a class-wide basis whether and to what extent that
overcharge was passed on to each of the [indirect purchasers] at all
levels of the distribution c hain”); So mers v. Apple, Inc., 258 F.R.D.
354, 358 (N.D. Cal. 2009) (quoting In re Graphics Processing Units
Antitrust Litig., 253 F.R.D. 478, 507 ( N.D. Cal. 2008)) (indirect
purchasers must offer “‘a reliable method for proving common
impact on all purc hasers of [the] defendant’s products throughout the
chain of distribution’”); In re Static Random Access Memory

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