The “DOGMAS” of Antitrust Actions: A New Perspective

• Author: Allan N. Littman,Ronald E. Van Buskirk
• DOI: 10.1177/0003603X7902400402
• Published date: 01 December 1979
• Date: 01 December 1979

The Antitrust Bulletin/Winter 1979

THE

IIDOGMAS

II

OF

ANTITRUST ACTIONS:

A

NEW

PERSPECTIVE

by

ALLAN

N.

LITTMAN

and

RONALD

E.

VAN

BUSKIRK*

In his classic book, The

Common

Law, Oliver Wendell

Holmes,

Jr.,

long before he became a justice of theSupreme

Court of the United States, wrote:

Any legal standard must, in theory, be one which

would apply to all men,not specially excepted under the

same circumstances.

It

is not intended

that

the

public

force should fall upon an individual accidentally, or

at

the

whim of any body ofmen.'

This principle has been ignoredin the

antitrust

law, where

the combination of a number of "doctrines" does permit enor-

mous damage claims to be concentrated upona single business,

at thewhim of plaintiffs and their lawyers.The purpose of

this article is to examine these doctrines, andto suggest

that,

individually, they are either unsound or overbroad, and their

combined effect hasdistorted the just administration of the

antitrust laws.

The doctrines to be considered are as follows:

1. Pretrial procedures will effectively exonerate innocent

defendants without undue burden, expense or risk.

*Members of theBar, SanFrancisco, California.

AUTHORS' NOTE:The authors express their appreciation toMr. Wil-

liam O. Fisher andMr. John Deacon fortheir invaluable research in

preparing this article.

1Holmes, The

Common

Law (1881), 44thprinting, at 110.

(cj

1980 by Federal Legal Publications,Inc.

687

688 THE ANTITRUST BULLETIN

2. Only slightevidence is necessarytoconnect aperson

with a conspiracy, once a conspiracy is shown.

3. Conspirators are liable fordamagescaused by other

conspirators before theyjoined theconspiracy.

4.Conspiracies areusually self-concealing, andthe theory

of fraudulent concealment easily extendsthe four-year

statute of limitations for antitrust actions.

5.A corporation is vicariously liable for all of itsemploy-

ees' acts.

6. Antitrust defendants have no rights of apportionment

of damages.

7. Antitrust defendants have no rights of contribution.

8.Mere allegations of an antitrust conspiracy justify class

actions against any alleged memberof theconspiracy.

These doctrines arebeing appliedin antitrust cases in a

pattern

that

hasbecome familiartoantitrust practitioners.

Private antitrust class action complaintsfiled onbehalf of

thousands of purchasers,naming as defendants mostof the

manufacturers in an entire industry, havenowbecome com-

mon. They allege in verygeneral terms

that

the defendants

conspired to fix, raise, maintain or stabilize prices;

that

the

conspiracy caused injury anddamages to theclass over a pe-

riod of 10 to 20 years; and

that

during this period the defen-

dants "fraudulently concealed" their conspiracy. The damage

theory of such complaints is frequently

that

defendants' con-

ductincreasedprices by "X" percent(say,3 percent)on all

sales by all manufacturers in theentire industry, including

those of nonconspirators.Therefore, it is claimed

that

as the

sales of

the

entire industry were approximately $1,000,

000,000 ayear,the trebledamageclaim peryear is $90,000,

000, or $900,000,000 for 10 years,and$1,800,000,000 for 20

years!

It

is also claimed

that

each individual defendant may be

held jointly and severally liable forthis

entire

amount.

"DOGMAS" OF ANTITRUST ACTION689

When the management, accountants and auditors of a com-

pany named in such a complaintask fortheir lawyers' opinions

of themerits of the case, and whether thecompany should

settle or defend, they are often surprised to learn

that

the

meritsare immaterial.Any chance oflosing $1,800,000,000,

however small, requires management toconsider the riskof

virtual destruction of its business.A 90percent chance of

winning a lawsuitshouldnormally dictate resistance on princi-

ple, andtodeter other suchactions.Facedwitha 10 percent

chance of losing theentire company should a jurydisagree

with a company's belief

that

it is innocent,prudence, however,

may dictate settlement of whatwould otherwisebe aplainly

unmeritorious case.

Such huge claims serve primarilyas a threat to induce

large settlements. The threat is based on theassumption

that

defendants cannot risk a trial. That assumption in turn is

based on thepremise

that

the antitrust laws permit huge

aggregationsof trebledamageclaims tobe collected fromany

single defendant who may befoundtohave beena"conspira-

tor,"

regardless of

that

defendant's individual responsibility for

the damages alleged.

It

is also based on thepremises

that

the

only effectof asettlement in an antitrust case isadeduction

of the settlement payment fromthetrebledclaim or judgment,

and

that

there are no rights of contribution among defendants

in antitrust cases.

Against thebackgroundof such risks,a plaintiffs settle-

ment strategy is often implementedby announcing

that

a "dis-

count" will be givento quicksettlers, based on the multi-

plication of an arbitrary dollar figure per "market share" by

the defendant's share of sales.' Once theinitial settlements are

2For example, suppose

that

of 20 defendants namedin a private

trebel damage antitrust class actionclaiming $900,000,000 in trebled

damages, the top four have market sharesof 20 percent, 15 percent,

10 percent and 5 percent:

that

none of theremainingdefendants has

over 5 percent, and

that

some have a market sharebelow 1 percent.

Plaintiffs counsel may offer $2,000,000 "perpoint" for thefirst

settlements, with the threat of higher demandsfor later settlements.