Legal enforcement and limitations

A. Statutory Framework
1. Civil Enforcement of Federal Antitrust Law by State Attorneys
States, cities, and other political subdivisions are considered
“persons” for purposes of the Clayton Act.1 Thus, a state attorney
general, on behalf of the state and other public entities or on behalf of
citizens who are directly harmed by antitrust violations, can sue for
damages under Section 4 of the Clayton Act and for injunctive relief
under Section 16 of the Clayton Act.2 States also have the authority
under Title III of the Hart-Scott-Rodino Antitrust Improvements Act of
1976 (HSR Act)3 to bring suit as parens patriae. This authority is
discussed in more detail in Part B.1 of this Chapter.
a. Treble Damages Lawsuits
States often sue under Section 4 of the Clayton Act to recover
damages they have incurred in their proprietary capacity as direct
purchasers of goods or services. In most of these lawsuits, the states
allege various forms of price-fixing and seek the overcharged amounts as
their damages.4 When the direct purchaser is not a state itself, but a state
1. See, e.g., Hawaii v. Standard Oil Co., 405 U.S. 251, 26061 (1972);
Georgia v. Pa. R.R. Co., 324 U.S. 439, 447 (1945). A state acting as a
sovereign is generally not a “person” capable of violating the Sherman
Act. See Parker v. Brown, 317 U.S. 341, 35051 (1943).
2. See 15 U.S.C. §§15, 26.
3. 15 U.S.C. §§15c15h.
4. See, e.g., New York v. Julius Nasso Concrete Corp., 202 F.3d 82 (2d Cir.
2000) (affirming summary judgment for plaintiff in bid-rigging case);
Complaint at 4243, Florida, v. Hitachi-LG Data Storage, Inc., No. 3:13-
cv-01877 (N.D. Cal. April 24, 2013); Complaint, Washington v. AU
Optronics Corp., No. 10-2-29164-4 (King Cty. Super. Ct. Aug. 11, 2010) ;
California v. Infineon T echs. AG, 531 F. Supp. 2d 1124, 1130 (N.D. Cal.
State Antitrust Enforcement Handbook
agency or institution, state law addresses whether the purchaser is
sufficiently related to the state to allow the attorney general to pursue
damages in the name of the state alone.5 If a state is otherwise a proper
plaintiff, its attorney general, acting pursuant to Rule 23 of the Federal
Rules of Civil Procedure, can pursue a class action on behalf of other
plaintiffs who have a right of action under Section 4 of the Clayton Act.6
The class can include political subdivisions of the state.7 There are
instances when federal law allows a state to bring a class action, but state
2007); In re Compact Disc Minimum Advertised Price Antitrust Litig.,
216 F.R.D. 197, 201, 207 (D. Me. 2003) (approving settlement with retail
stores in vertical case); cf. In re Petro leum Prods. Antitrust Litig., MDL
No. 150 AWT, 1992 WL 2207531992, at *24 (C.D. Cal. July 16, 1992)
(denying plaintiffs’ motion to allow state to recover damages as indir ect
purchaser of allegedly price-fixed gasoline).
5. See, e.g., In re Fine Paper Antitrust Litig., 82 F.R.D. 143, 156 (E.D. Pa.
1979), aff’d, 685 F.2d 810 (3d Cir. 1982); see also Alas ka v. Chevron
Chem. Co., 669 F.2d 1299, 1302 (9th Cir. 1982) (noting that Alaska law
authorizes attorney general to sue when state instrumentality is proper
party); In re N ASDAQ Market-Makers Antitrust Litig., 169 F.R.D. 493,
50608 (S.D.N.Y. 1996) (noting that New York can sue on behalf of its
retirement systems, but state law does not allow attorney general to act as
real party in interest).
6. See, e.g., In re Cardizem, 218 F.R.D. 508, 52022 (E.D. Mich. 2003)
(approving settlement class that included all state attorneys general); In re
Lorazepam & Clorazepate Antitrust Litig., 205 F.R.D. 369, 387 n.25
(D.D.C. 2002) (approving settlement class of consumers represented by
state attorneys general from jurisdictions that lack statutory or judge-
made parens patriae authority); Davis v. S. Bell Tel. & Tel. Co., 149
F.R.D. 666, 671 (S.D. Fla. 1993) (allowing attorney general to intervene
as class representative, but not to sue as parens patriae).
7. See, e.g., Alabama v. Blue Bird Body Co., 573 F.2d 309, 329 (5th Cir.
1978) (affirming certification of “state class” that included state and local
educational authorities); Illinois v. Bristol-Myers Co., 470 F.2d 1276,
1277 (D.C. Cir. 1972) (noting that Illinois Attorney General can sue on
behalf of state subdivisions and private purchasers) ; New York v. Cedar
Park Concrete Corp., 665 F. Supp. 238, 24142 (S.D.N.Y. 1987)
(explaining that a state can sue on behalf of state subdivisions, but
subdivisions must be identified and must authorize action); cf. In re
Anthracite Coal Antitrust Litig., 78 F.R.D. 709, 715 (M.D. Pa. 1978)
(holding that proposed class of 141 public entities in Pennsylvania did not
meet numerosity requirement).
State Antitrust Merger Enforcement
law limits the state’s power to do so.8 Some courts have held that a state
attorney general can recover damages incurred by cities, counties, and
other political subdivisions without joining them as parties and without
seeking class certification.9 Most lawsuits by states as direct purchasers
allege bid rigging or other horizontal restraints. Some of these lawsuits
invoke federal antitrust law alone;10 others plead parall el claims under
federal and state antitrust statutes.11
Prior to the Supreme Court’s decision in Leegin Creative Leather
Prods. v. PSKS,12 states often challenged resale price maintenance
schemes under federal law, and they continue to challenge other vertical
8. See Fine Paper, 82 F.R.D. at 156 (noting that a uthority of attorney
general is a question of state law); In re Sugar Indus. Antitrust Litig.,
MDL No. 201, 1976 WL 1374, at *16 (N.D. Cal. May 21, 1976) (noting
that state law did not authorize plaintiff states to rep resent class that
included other states and their political subdivisions).
9. See, e.g., Florida ex rel. Shevin v. Exxon Corp., 526 F.2d 266, 268, 274
(5th Cir. 1976) (holding that Fl orida Attorney Gener al may sue on behalf
of government entities without their specific authorization); Michigan ex
rel. Kelley v. C.R. Equip. Sales, 898 F. Supp. 509, 514 (W.D. Mich.
1995) (deciding that Michiga n Attorney General had st anding to sue on
behalf of over 500 school districts because every Michigan taxpayer had
an interest in case). But see, e.g., Fine Paper, 82 F.R.D. at 156 (holding
that state-law authority to act for political subdivi sion must yield to need
for uniform procedure in federal class actions); New Jersey v. Gen.
Motors Corp., MDL No. 65, 1974 WL 958, at *1 (N.D. Ill. Mar. 7, 1974)
10. See, e.g., In re Petroleum Prods. Antitrust Liti g., 906 F.2d 432 (9th Cir .
1990) (resurrecting four parallel lawsuits by states under § 1 of the
Sherman Act, each of which alleged price fixing and output reduction).
11. See, e.g., In re Cardizem, 218 F.R.D. at 514 (approving $80 million
settlement agreement between twenty-seven litigating states and drug
manufacturers); New York v. Feldman, 210 F. Supp. 2d294, 298
(S.D.N.Y. 2002) (denying defendants’ motion to dismiss complaint that
alleged bid rigging at stamp auctions).
12. 551 U.S. 877 (2007).

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT