Private Antitrust Suits

• Author: Ronan P. Harty
• Pages: 797-1043

797

CHAPTER 9

PRIVATE ANTITRUST SUITS

A. Introduction

Sections 4 and 16 of the Clayton Act create causes of action for private parties to

seek damages and injunctive relief for violations of the federal antitrust laws.1 This

chapter analyzes the elements of private antitrust claims under those statutes, the

principal affirmative defenses to such claims, and issues of practice and procedure

commonly encountered in the litigation of private actions under the federal

antitrust laws.

B. Elements of Private Damages Suits under Section 4 of the

Clayton Act

Section 4 of the Clayton Act establishes a private cause of action for damages under

the federal antitrust laws.2 It provides that “any person who shall be injured in his

business or property by reason of anything forbidden in the antitrust laws may sue . . .

and shall recover threefold the damages by him sustained,” as well as costs, including

reasonable attorneys’ fees.3 Courts also have discretionary authority to award

prejudgment interest on any actual damages, computed from the date of service of a

complaint, if th ey find that such an award is “just in the circumstances.”4 Punitive

damages are not allowed, however, because “[t]he enhancement of damages in an

antitrust case is the damages trebled.”5

Despite the sweeping language, a plaintiff’s right to sue for damages under Section

4 is limited by the text of the statute, as well as by judicial construction giving effect

to the purposes of the antitrust laws (the doctrine of antitrust injury), the ability of

courts to administer antitrust litigation (the doctrine of remoteness), and the problem

of deterring welfare-enhancing conduct.6 A plaintiff seeking to recover damages under

1. See 15 U.S.C. §§ 15(a), 26.

2. 15 U.S.C. § 15(a).

3. Id.

4. Id.

5. McDonald v. Johnson & Johnson Co., 722 F.2d 1370, 1381 (8th Cir. 1983); accor d Brown v.

Presbyterian Healthcare Servs., 101 F.3d 1324, 1332 (10th Cir. 1996).

6. See, e.g., RSA Media, Inc. v. Media Grp., Inc., 260 F.3d 10, 13-14 (1st Cir. 2001) (“Although the

statute is written broadly, the Supreme Court’s doctrine of antitrust standing has significantly

narrowed the number of persons entitled to bring suit.”); Serpa Corp. v. McWane, Inc., 199 F.3d 6,

10 (1st Cir. 1999) (observing that standing is restricted in antitrust cases, despite broad language of

§ 4, to avoid overdeterrence); Greater Rockford Energy & Tech. Corp. v. Shell Oil Co., 998 F.2d

391, 394 (7th Cir. 1993) (“Given the potential scope of antitrust violations and the availability of

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Section 4 must first meet the statutory definition of “person.” In addition, a plaintiff

must prove not only that it suffered injury-in-fact, but also that its alleged injury

constitutes “antitrust injury,” i.e., injury of the type the antitrust laws are intended to

prevent, and that the alleged injury is not too remote from any alleged antitrust

violation to allow for recovery. The remainder of this part addresses these

requirements. Similar requirements apply to claims for injunctive relief. A party

seeking injunctive relief, however, needs to show only threatened (not actual) injury,

and certain limits related to remoteness are relaxed for these claims. Those differences

are addressed in part E of this chapter.

1. Definitions of Statutory Terms

a. “ANY PERSON” DEFINED

(1) Actions by Private P ersons

Section 4 of the Clayton Act creates a cause of action in certain “persons.”7 Section

1 of the Clayton Act defines the term “person” or “persons” to include “corporations

and associations existing under or authorized by the laws of either the United States,

the laws of any of the Territories, the laws of any State, or the laws of any foreign

country.”8 In addition, courts have interpreted the term to include individuals9 and

partnerships.10 Several courts have held that a corporation’s entitlement to sue under

the federal antitrust laws may be jeopardized if its authorization under state law is

dissolved or compromised.11 An association may sue in its proprietary capacity,12 but

its standing is limited to injunctive relief when suing in a representative capacity on

behalf of its members.13

treble damages, an over-broad reading of § 4 could result in ‘overdeterrence,’ imposing ruinous costs

on antitrust defendants.”).

7. 15 U.S.C. § 15(a).

8. 15 U.S.C. § 12.

9. See, e.g., Apple Inc. v. Pepper, 139 S. Ct. 1514, 1520 (2019); Reiter v. Sonotone Corp., 442 U.S.

330, 340-42 (1979); Brignac v. Yelp Inc., 2019 U.S. Dist. LEXIS 94581 (N.D. Cal. 2019) (plaintiff

can bring a federal antitrust suit on behalf of his sole proprietorship because a sole proprietorship

has no legal existence apart from its owner).

10. See, e.g., Coast v. Hunt Oil Co., 195 F.2d 870 (5th Cir. 1952); cf. United States v. Brookman Co.,

229 F. Supp. 862, 864 (N.D. Cal. 1964) (partnership is “person” subject to Sherman Act suit).

11. See, e.g., Hillis Motors v. Haw. Auto. Dealers’ Ass’n, 997 F.2d 581, 584 (9th Cir. 1993) (corporation

lacks capacity to sue after dissolution); Can. Ace Brewing v. Joseph Schlitz Brewing Co., 629 F.2d

1183, 1185-88 (7th Cir. 1980) (neither dissolved corporation nor former shareholders could maintain

§ 4 action where corporation and shareholder’s authority to sue under state law had expired).

12. See American Booksellers Ass’n v. Random House, 1996 U.S. Dist. LEXIS 12775, at *14 (S.D.N.Y.

1996) (association has standing to seek § 16 injunctive relief on behalf of its members); In re Brand

Name Prescription Drugs Antitrust Litig., 1995 U.S. Dist. LEXIS 4815, at *3-4 (N.D. Ill. 1995)

(association has standing to bring suit on behalf of its members); cf. Southwest Suburban Bd. of

Realtors v. Beverly Area Planning Ass’n, 830 F.2d 1374, 1380-81 (7th Cir. 1987) (recognizing in

dictum that associations can have proprietary or representational standing).

13. See Associated Gen. Contractors v. Otter Tail Power Co., 611 F.2d 684, 689 (8th Cir. 1979)

(associational standing “traditionally denied under § 4”); see also Sanner v. Board of Trade, 62 F.3d

918, 922-23 (7th Cir. 1995) (association of farmers would have standing to pursue injunctive relief

under § 16, but lacked standing to assert damage claims under § 4); United Union of Roofers v.

Insurance Corp. of Am., 919 F.2d 1398, 1400 (9th Cir. 1990) (union lacked associational standing

to bring suit to recover money damages representing members’ unpaid wages); National Athletic

Trainers’ Ass’n v. American Physical Therapy Ass’n, 2008 U.S. Dist. LEXIS 70131, at *12-16 (N.D.

Tex. 2008) (association had standing to pursue claims on behalf of members for injunctive and

declaratory relief only).

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As in any federal civil litigation, a person entitled to bring suit under Section 4 may

sue on behalf of a class of persons under Rule 23 of the Federal Rules of Civil

Procedure.14 A representative sometimes may sue on behalf of a “person” otherwise

entitled to maintain an action. For example, a stockholder may bring a shareholder

derivative suit alleging injury to the corporation.15 On the other hand, once a trustee in

bankruptcy has been appointed, only the trustee may bring suit on the bankrupt’s

claim.16

(2) Actions by Governments

Although the United States is not a “person” for purposes of Section 4,17 Section

4A of the Clayton Act18 authorizes the United States to sue on its own behalf and to

recover treble damages resulting from antitrust violations.19 A state is considered a

“person” and can assert antitrust claims on behalf of itself.20 Under Section 4C,21 a state

may also assert antitrust claims as parens patriae on behalf of its citizens who are

“natural persons” (as opposed to corporations) and recover “monetary relief threefold

the total damage sustained.”22 A foreign government is considered a person,23 but

14. See part H.4 of this chapter.

15. See FED. R. CIV. P. 23.1; see also Kauffman v. Dreyfus Fund, 434 F.2d 727, 734-35 (3d Cir. 1970)

(holding that a mutual fund shareholder may bring derivative antitrust action on behalf of funds in

which he was a shareholder, but may not do so for similarly situated funds in which he was not a

shareholder); Ramsburg v. American Inv. Co., 231 F.2d 333, 339 (7th Cir. 1956) (allowing

shareholder derivative suit under Section 7 of the Clayton Act). But cf. Cosentino v. Carver-

Greenfield Corp., 433 F.2d 1274, 1277 (8th Cir. 1970) (Omaha citizens could not sue on a derivative

theory for injury to their municipality arising from alleged antitrust violations).

16. See Burkett v. Shell Oil Co., 487 F.2d 1308, 1310 (5th Cir. 1973).

17. See U.S. Postal Serv. v. Flamingo Indus. (USA), 540 U.S. 736, 745 (2004); United States v. Cooper

Corp., 312 U.S. 600, 614 (1941). Other governmental entities may be treated as distinct from the

United States for determining “personhood” under § 4. See, e.g., United States v. GE, 209 F. Supp.

197, 205 (E.D. Pa. 1962) (finding Tennessee Valley Authority to be a corporate agency distinct from

United States and allowing it to sue for treble damages as person); cf. In re Uranium Indus. Antitrust

Litig., 458 F. Supp. 1223, 1227-28 (J.P.M.L. 1978) (allowing transfer of TVA’s antitrust claims

because TVA is not the equivalent of the United States).

18. 15 U.S.C. § 15a.

19. Prior to its amendment by Pub. L. No. 101-588, § 5, 104 Stat. 2880 (1990), § 4A permitted the United

States to recover only actual damages. Section 4A now also authorizes an award of prejudgment

interest if such an award is “just in the circumstances.” 15 U.S.C. § 15a. The statute identifies four

criteria for courts to consider in making that determination, including whether either party in the suit

engaged in bad faith or dilatory conduct, and whether interest is “necessary to compensate the United

States adequately for the injury sustained by the United States.” Id. §§ 15a(1)-(4).

20. See Standard Oil Co. v. Arizona, 738 F.2d 1021, 1023 (9th Cir. 1984) (“it is well established that

states are ‘persons’ capable of bringing treble damages actions under the Sherman and Clayton

Acts”).

21 15 U.S.C. § 15c.

22. See In re Electronic Books Antitrust Litig., 14 F. Supp. 3d 525, 529-35 (S.D.N.Y. 2014) (citations

omitted) (thirty-one states, the District of Columbia, and Puerto Rico had standing under Clayton 4C

to pursue damages action based on their own direct injuries and injuries to their citizens); In r e

Packaged Seafood Products Antitrust Litig., 338 F. Supp. 3d 1079, 1091-92 (S.D. Cal 2018)

(dismissing parens patriae complaint brought by the Cherokee Nation under Section 4C of the

Clayton Act, holding plaintiff did not have standing to bring a non-monetary (i.e., injunctive relief)

claim). A state may also collect interest if “just in the circumstances.” 15 U.S.C. § 15c(a)(1)-(2). The

states’ enforcement of the civil antitrust laws is further discussed in Chapter 8.C.2.a.

23. See Pfizer Inc. v. Government of India, 434 U.S. 308, 318-20 (1978). But cf. Republic of Vietnam v.

Pfizer Inc., 556 F.2d 892, 894 (8th Cir. 1977) (foreign government could not sue where it had become

“defunct” upon withdrawal of recognition by the United States).