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California v. Arc America Corporation

Court Documents

United States Supreme Court

490 U.S. 93

California  v.  Arc America Corporation

No. 87-1862  Argued: Feb. 27, 1989. --- Decided: April 18, 1989


Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707, held that, generally, only overcharged direct purchasers, and not subsequent indirect purchasers, are entitled to recover treble damages under § 4 of the Clayton Act for price fixing violative of § 1 of the Sherman Act. Appellant States-who are, at least in part, indirect purchasers of cement-brought class actions against various cement producers in the appropriate federal courts seeking treble damages under the federal antitrust laws for an alleged nationwide conspiracy to fix cement prices and damages for alleged violations of their respective state antitrust laws, which arguably allow indirect purchasers to recover for all overcharges passed on to them by direct purchasers. The cases were transferred to the District Court in Arizona for coordinated pretrial proceedings, and a settlement was reached with several major defendants. When appellants sought payment out of the settlement fund for their state indirect purchaser claims, appellees, class members who are direct purchasers, objected. The court refused to allow the claims, ruling that the state statutes are pre-empted by federal law because they are clear attempts to frustrate Congress' purposes and objectives, as interpreted in Illinois Brick. The Court of Appeals affirmed, holding that, depending on how they were construed, the state statutes would either conflict directly with federal law under Illinois Brick or would impermissibly interfere with the three federal antitrust policy goals that the court identified as having been defined by Illinois Brick and Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481, 88 S. t. 2224, 20 L.Ed.2d 1231; avoiding unnecessarily complicated litigation; providing direct purchasers with incentives to bring private antitrust actions; and avoiding multiple liability of defendants.

Held: The rule limiting federal antitrust recoveries to direct purchasers does not prevent indirect purchasers from recovering damages flowing from state antitrust law violations. Pp. 100-106.

(a) The state indirect purchaser statutes are not pre-empted by the federal antitrust laws. There is no claim of express pre-emption or of congressional occupation of the field. The claim that the state laws are inconsistent with, and stand as an obstacle to, effectuating the congressional purposes identified in Hanover Shoe and Illinois Brick misunderstands these cases, which merely construed the federal antitrust laws and did not consider state-law or pre-emption standards or define the interrelationship between the federal and state law. Nothing in Illinois Brick suggests that it would be contrary to congressional purposes for States to allow indirect purchasers to recover under their own antitrust laws. Pp. 100-103.

(b) In any event, the state indirect purchaser statutes do not interfere with accomplishing the federal-law purposes as identified in Illinois Brick. First, the state statutes will not engender unnecessarily complicated federal antitrust proceedings, since they cannot and do not purport to affect available federal-law remedies; since claims under them could be brought in state court, separately from federal direct purchaser actions; and since federal courts have discretion to decline to exercise pendent jurisdiction over burdensome state claims. Second, claims under the state statutes will not reduce the incentives of direct purchasers to bring private federal antitrust actions by reducing their potential recoveries. Illinois Brick was not concerned with the risk that a federal plaintiff might not be able to recover its entire damages award or might be offered less to settle. Rather, it was concerned that requiring direct and indirect purchasers to apportion the recovery under a single statute-§ 4 of the Clayton Act-would result in no one plaintiff having a sufficient incentive to sue under that statute. The state statutes at issue pose no similar risk. That direct purchasers' recoveries may be reduced because they will have to share the settlement fund with indirect purchasers is not due to the impermissible operation of the state statutes but is, rather, a function of the fact and form of the settlement, which was intended to dispose of all claimants, whether claiming under federal or state law and whether direct or indirect purchasers. Third, claims under the state statutes will not contravene any express federal policy condemning multiple liability for antitrust defendants, since Illinois Brick and similar cases simply construed § 4, and did not identify a federal policy against imposing state liability in addition to that imposed by federal law. Pp. 103-106.

817 F.2d 1435, (C.A.9 1987) reversed.

WHITE, J., delivered the opinion of the Court, in which all other Members joined, except STEVENS and O'CONNOR, JJ., who took no part in the consideration or decision of the case.

Thomas Greene, for appellants.

Roy T. Englert, Jr., Washington, D.C., for U.S., as amicus curiae in support of appellants, by special leave of Court.

Theodore B. Olson, Washington, D.C., for appellees.

[Amicus Curiae Information from pages 95-96 intentionally omitted]

Justice WHITE delivered the opinion of the Court.


This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).