Competition Law360
August 26, 2016
In a painstaking dissection of the “inextricably intertwined” standard often used by courts to determine whether plaintiffs can show they suffered “antitrust injury” if they neither purchased from, nor competed with, a defendant, the Second Circuit recently held that consumers that are used as tools to manipulate a defendant’s market can pursue damage claims suffered from manipulation in that market. However, the Second Circuit went on to hold, consumers that suffered the consequences of a defendant’s unlawful conduct in another market cannot because their injuries were not the “very means” by which defendants corrupted the market in which the defendants participated. In re Aluminum Warehousing Antitrust Litig., No. 14-3574(L), 2016 WL 4191132, at *8 (2d. Cir., Aug. 9, 2016).
This seems a bridge too far.
Under the facts as pled in the aluminum cases, consumers in the corrupted market should have no need to resort to any specialized doctrine to establish their right to pursue statutory claims because Congress enacted Section 4 specifically to “open[ ] the door of justice” to victims of antitrust violations. Reiter v. Sonotone Corp., 442 U.S. 330, 343 (1979). Denying standing to consumers in a disrupted market would therefore leave a significant antitrust violation “unremedied” and an entire category of American consumers exposed to anti-competitive conduct. Associated Gen. Contractors of Cal. Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 542 (1983) (“AGC”). As Justice Diane Wood of the Seventh Circuit wrote in a similar case, such a “draconian rule would give a green light to antitrust scofflaws to conspire to fix prices in a particular market and would create incentives to engage in antitrust conspiracies in markets with complicated distribution structures.” Loeb Industries Inc. v. Sumitomo Corp., 306 F.3d 469, 490 (7th Cir. 2002).
Fortunately, the recent Second Circuit decision will not be the last word on antitrust injury in the sprawling Aluminum case. It only disposed of claims brought by “downstream” purchasers of aluminum. The trial court previously denied motions to dismiss “upstream” purchasers. Defendants have already sought reconsideration of that ruling, arguing that “[a]ntitrust plaintiffs thus must allege more than that their injury was proximately caused by an antitrust violation.” In re Aluminum Warehousing Antitrust Litig., 13-md-2481-KBF-RLE, ECF No. 1050 at 13 (Aug. 17, 2016). The trial court will therefore have to decide whether the Second Circuit opinion mandates dismissal of all consumer claims. If it does, the Second Circuit will then be faced with the option of permitting a clear, nonspeculative harm to aluminum consumers to go unremedied or allowing the plaintiffs to go forward. The Seventh Circuit chose the latter. Loeb, 306 F.3d at 492. One hopes the Second Circuit (if not the trial court) would do the same.
Facts
The facts of the aluminum cases are complex and one can read the various opinions to delve into them. One does not need to digest any more than the following assumption, however, to consider the potentially broad implications of the Second Circuit’s decision. The plaintiffs...
