Responses to the Illinois Brick Decision

Illinois Brick Co. v. Illinois1 stood for the proposition that
indirect purchasers, even if they were injured, had no remedy (at least
not under federal law).2 Although the Supreme Court articulated the
rationale for its decision, the stark propositionthat people who, by
extension, have suffered an actual injury are left without remedy
did not sit well with many state legislatures and the judiciary. State
legislatures and Congress tried various approaches to overturn or
limit the scope of Illinois Brick, and even without state legislative
action, a number of state courts interpreted their laws to permit
indirect actions. This chapter first describes the initial and
subsequent, intermittent efforts in Congress to respond to Illinois
Brick; next, it briefly describes the views of the Antitrust
Modernization Commission; then it describes post-Illinois Brick
federal judicial interpretations that limited at least some of the
harshness of that decision; finally, this chapter turns to the state
legislative and judicial responses, providing a brief survey of the
approaches taken by different states. (A state-by-state assessment of
the law appears as Appendix A.)
A. Congressional Responses
There have been at least seven instances of proposed federal
legislation attempting to modify or repeal the Illinois Brick decision.
In 1983, members of both the House and the Senate introduced bills
that would have granted the United States, a state (suing either for an
injury to the state itself or as parens patriae on behalf of natural
persons residing in such state), or a political subdivision of the state
the right to maintain indirect purchaser actions.3 Both bills also
included provisions authorizing the pass-through defense,4 although
they differed in scope. The House bill would have prohibited any
plaintiff proceeding under section 4, 4A, or 4C of the Clayton Act
1. 431 U.S. 720 (1977).
2. Id. at 730-31.
3. See H.R. 2244, 98th Cong. (1983); S. 915, 98th Cong. (1983).
4. A “pass-through” defense, discussed in greater detail in Chapter VI,
Section D, is a defense asserted by an indirect purchaser defendant
based on the premise that the indirect purchaser (to whom some
portion of an overcharge was passed on) in turn passed on some of
the overcharge to its own customer.
4 Indirect P urchaser Litigation Ha ndbook
from recovering for any overcharge paid or underpayment received
that duplicated the recovery of another plaintiff in the action or any
other action based upon the same conduct of the defendant.5 Thus,
the House bill would have allowed the “pass-through” defense only if
another plaintiff had already recovered the same damages claimed by
the plaintiff in the instant action.6 On the other hand, the Senate bill
would have allowed defendants to prove as a partial or complete
defense to an action that “some or all of what otherwise would
constitute [the] plaintiff’s damages has been passed on to others, who
are themselves entitled to maintain an action or on whose behalf the
Attorney General of the United States or of any State is entitled to
maintain an action.”7
In 1985, Senate members proposed amendment no. 1069 to the
Agriculture, Food, Trade, and Conservation Act, which would have
been a much more limited repeal of Illinois Brick.8 That amendment
provided that an action under section 4, 4A, or 4C for damages
“resulting from any underpayment received on the sale of agricultural
products shall not be barred because the person seeking such
damages is not a direct seller to the defendant.”9 It additionally
allowed a defendant in such an action to claim, as a defense, that the
underpayment “has been passed on [to] other persons, who
themselves are entitled to recover damages for such
Between 1986 and 1987, the Senate attempted three more times
to repeal Illinois Brick. The first bill (S. 2022) would have amended
Section 4C to allow the U.S. Attorney General, the Federal Trade
Commission (FTC), or the attorney general of any state to maintain
an indirect purchaser action, parens patriae, on behalf of injured
residents of the United States or the state, as appropriate.11 Upon the
initiation of such an action, the U.S. Attorney General, FTC, or
attorney general would have been required to provide “reasonable
public notice” of the allegations in the suit and “a general description
of any direct purchasers who may be entitled to maintain an action
under section 4.”12 Direct purchasers would then be entitled to
intervene in the indirect purchaser action.13
5. H.R. 2244.
6. Id.
7. S. 915.
8. 131 CONG. REC. S15,931 (daily ed. Nov. 20, 1985).
9. Id.
10. Id.
11. S. 2022 , 99th Cong. (1986).
12. Id.
13. Id.

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