Emerging Trends In Indirect-Purchaser Antitrust Cases
By Christopher T. Micheletti and Patrick B. Clayton
Published in Competition Law360
Since the enactment of the Class Action Fairness Act (“CAFA”), 28 U.S.C. §1332(d),
federal district courts handling indirect purchaser price fixing and market allocation
cases have been confronted with arguments by defendants that indirect purchaser
plaintiffs asserting antitrust claims under federal and state law lack antitrust standing.
These arguments rely on the Supreme Court’s decision in Assoc. Gen. Contractors of
Cal. v. Cal. State Council of Carpenters (“AGC” )1, and assert, for example, that indirect
purchasers’ antitrust injuries are too remote from the defendants’ unlawful conduct or
are not the type of injury the antitrust laws were intended to prevent. This article
provides a general overview of the application of AGC in such cases, and describes
trends in indirect purchaser cases that may be of interest to antitrust practitioners
handling such matters.
AGC directed federal courts to apply a five-factor test to “evaluate the plaintiff’s harm,
the alleged wrongdoing by the defendants, and the relationship between them to
determine whether a plaintiff is a proper party to bring an antitrust claim.”2 These
factors are: “(1) the nature of the plaintiff’s alleged injury; that is, whether it was the
type the antitrust laws were intended to forestall; (2) the directness of the injury; (3) the
speculative measure of the harm; (4) the risk of duplicative recovery; and (5) the
complexity in apportioning damages.”3 AGC was decided several years after Illinois
Brick Co. v. Illinois, 431 U.S. 720 (1977), which held that, by and large, indirect
purchasers should not be permitted to maintain a claim for damages under federal
antitrust law. In response to Illinois Brick, many states created Illinois Brick “repealer”
provisions that permitted, by statute or case law, indirect purchasers to maintain
damages claims under state-law antitrust statutes. The Supreme Court later rejected a
preemption challenge to these “repealer” provisions, and affirmed the right of the states
to provide indirect purchasers with redress for their antitrust injuries.4
AGC Does Not Automatically Apply In Federal Court
Notwithstanding that AGC is the product of federal antitrust jurisprudence in which
indirect purchaser damages claims are largely absent, defendants continue to challenge
indirect purchaser claims in federal court on AGC grounds. Invariably, the first question
courts face is whether federal antitrust standing principles under AGC should be
applied, or whether antitrust standing principles under the applicable state law should
be applied. The vast majority of courts addressing this issue have questioned the broad
application of AGC to indirect purchaser claims under state law, have instead held that
