Bunker's Glass Co. v. PILKINGTON, PLCBunker's Glass Co. v. PILKINGTON, PLC
Lead Opinion
¶ 1 The Arizona Antitrust Act provides that “[a] person ... injured in his business or property by a violation of this article may bring an action for ... damages sustained.” Ariz.Rev.Stat. (“A.R.S.”) § 44-1408(B) (2003). The Defendants in these consolidated cases ask us to hold that an indirect purchaser who is able to prove injury to business or property from an antitrust violation does not fall within the scope of this provision. We conclude that Defendants’ interpretation contravenes the language of the statute, the goals of antitrust regulation expressed in the Arizona Constitution, and sound policy.
PROCEDURAL HISTORY OF THE CASE
¶2 Plaintiffs in these consolidated cases filed separate class action suits against various flat glass and tobacco manufacturers for alleged violations of the Arizona Antitrust Act. See
DISCUSSION
¶ 3 This case continues the debate over whether indirect purchasers should be allowed to sue for injury resulting from antitrust violations, or whether such suits should be restricted to direct purchasers of goods. One goal of antitrust law is to prevent entities that possess monopoly power from using that power to illegally overcharge purchasers. Presumably this goal has force whether the purchasers buy directly from the manufacturer, and hence are direct purchasers, or
¶ 4 This case turns upon the interpretation of a provision of the Arizona Antitrust Act that permits a “person” to sue to redress an antitrust injury.
¶ 5 The Defendants’ main argument, however, does not rely on the plain language of
¶ 6 As the court of appeals observed in Gray, the “limitation [to direct purchasers] was imposed by Illinois Brick based more on policy considerations than on an interpretation of the actual words of the federal statute.” Gray, 2 CA-CV 2001-0121, slip op. at 6, ¶ 10. We consider those policy matters later in this opinion. For now, we simply note that nothing in the plain language of
¶ 7 Our current antitrust statutes were adopted from the Uniform State Antitrust Act in 1974, three years before Illinois Brick was decided. See 1974 Ariz. Sess. Laws, ch. 26, § 1. Section 44-1412 contains a sentence from the Uniform Act and a sentence added by the Arizona legislature. The first sentence states: “This article shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this article among those states that enact it.” Id. To this “uniformity clause” the legislature added a sentence that we shall call the “federal guidance clause”: “It is the intent of the legislature that in construing this article, the courts may use as a guide interpretations given by the federal courts to comparable federal antitrust statutes.” Id.; Unif. State Antitrust Act § 12, 7C U.L.A. 369 (2000). The Defendants argue that the federal guidance clause directs the court to follow the Supreme Court’s holding in Illinois Brick and precludes indirect purchasers from asserting a private right of action. We find that argument unpersuasive for several reasons.
¶ 8 First, we do not read the federal guidance clause as manifesting a legislative intent to rigidly follow federal precedent on every issue of antitrust law regardless of whether differing concerns and interests exist in the state and federal systems, and irrespective of whether uniformity among the states or between the states and the federal system could be achieved by doing so.
¶ 9 Second, by using the word “may” in drafting the statute, the legislature made the application of
¶ 10 We find it instructive that two states with similar right-of-action provisions but no federal guidance clauses have also rejected judicial attempts to constrict the range of persons injured by illegal activity who may maintain a state-law-based antitrust cause of action in state court. See Hyde v. Abbott Labs., Inc.,
¶ 11 Third,
¶ 12 Fourth,
¶ 13 Fifth, construing the guidance clause to mandate following Illinois Brick would result in a construction that thwarts the legislative intent. As mentioned earlier,
¶ 14 Although Delaware is listed in Uniform Laws Annotated as having adopted the Uniform Act, its legislature changed it significantly from the uniform provision. The section allowing a private right of action was omitted altogether, and the attorney general was authorized to sue on behalf of Delaware citizens injured by illegal conduct.
¶ 15 If the legislature’s goal in enacting the uniformity clause was to foster national uniformity in antitrust laws, the picture becomes even more idiosyncratic. Twelve states have no rule regarding indirect purchasers.
¶ 16 Thus, the quest for uniformity is a fruitless endeavor and Arizona’s ruling one way or the other neither fosters nor hinders national uniformity. The court cannot, by any holding in this case, contribute significantly to national uniformity on this issue.
¶ 17 Sixth, it is debatable whether the legislature’s desire for uniformity applies to this particular issue. The Prefatory Note to the Uniform Act discusses uniformity. Unif. State Antitrust Act Prefatory Note, 7C U.L.A. at 352. As the Defendants have vociferously argued, consistency with federal law is part of the uniformity encouraged. But nothing in the Uniform Act suggests that the uniformity sought relates to the issue of standing to sue in state court on a state-law-based right of action.
¶ 18 Instead, the Prefatory Note to the Uniform Act suggests that the uniformity sought relates to standards by which to determine anti-competitive conduct, and, in turn, the methods for enforcing compliance with the Uniform Act: “If state antitrust legislation is to form an integral part of our overall antitrust policy, the burden of compliance with the antitrust laws of the several states must be abated by the adoption of a uniform state antitrust act.” Unif. State Antitrust Act Prefatory Note, 7C U.L.A. at 352. The phrase “the burden of compliance” is significant because it implies compliance with substantive provisions of antitrust law.
¶ 19 The intent of the Uniform Act to create nationwide substantive standards for the enforcement of antitrust law becomes more clear in this passage from the Prefatory Note:
Since the Act parallels the federal antitrust structure in its basic prohibitions, the following of federal antitrust precedent should be encouraged. Of course, the judiciaryat either level must remain independent, free to avoid the misjudgments of the other, for this is one of the advantages of federalism. Given this [Ujniform Act paralleling substantive federal antitrust [law,] compliance with federal law will be tantamount to compliance with all antitrust law.
Id. (emphasis added).
¶ 20 Thus the goal of the Uniform Act appears to be uniformity in the standard of conduct required, not necessarily in procedural matters such as who may bring an action for injuries caused by violations of the standard of conduct. This is the precise approach to uniformity taken by the Iowa Supreme Court:
The purpose behind both state and federal antitrust law is to apply a uniform standard of conduct so that businesses will know what is acceptable conduct and what is not acceptable conduct. To achieve this uniformity or predictability, we are not required to define who may sue in our state courts in the same way federal courts have defined who may maintain an action in federal court. Rather, our guiding principle in interpreting the Iowa Competition Law is to do so in such a way as to prohibit “restraints of economic activity and monopolistic conduct.” Harmonizing our construction and interpretation of state law as to what conduct is governed by the law satisfies the harmonization provision.
Comes v. Microsoft Corp.,
¶21 The Supreme Court has also considered uniformity in the type of plaintiff who has a private right of action and found it unnecessary. The Court explained that Illinois Brick does not preclude states from allowing indirect purchaser suits:
It is one thing to consider the congressional policies identified in Illinois Brick and Hanover Shoe in defining what sort of recovery federal antitrust law authorizes; it is something altogether different, and in our view inappropriate, to consider them as defining what federal law allows States to do under their own antitrust law. ... We construed § 4 as not authorizing indirect purchasers to recover under federal law because that would be contrary to the purposes of Congress. But 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.
ARC Am. Corp.,
¶22 Defendant Flat Glass Manufacturers asserts that “Arizona’s appellate courts have, to date, consistently regarded federal interpretations of the Sherman and Clayton Acts as dispositive in interpreting the Arizona Antitrust Act.” In support, they cite three eases extolling the importance of following federal interpretation. Their statement is correct, but incomplete. What is omitted are the holdings of the cases. In each case, the Arizona court followed federal law in determining the standard of conduct required by antitrust law. See All Am. Sch. Supply Co. v. Slavens,
¶ 23 In a further attempt to persuade this court to follow Illinois Brick, the Defendants point out that most of the states allowing indirect purchaser actions have done so by Illinois Brick repealer statutes. They suggest that to now allow indirect purchaser suits would involve the court in “judicial activism.” However, we do not view our rejection of Illinois Brick as judicial activism
¶ 24 The Arizona statute broadly grants a right of action to any “person” injured in business or property by the anti-competitive acts of another.
¶ 25 The Defendants also use the Illinois Brick repealer statutes as the standard for uniformity, asserting that uniformity mandates that the court leave it to the legislature to depart from federal law. This argument elevates form over substance. The law in most of the states that have considered the issue provides that indirect purchasers may bring a private action. The importance of uniformity lies in the rule of law, not in how that law came into effect.
¶26 The question remains whether any sound reasons justify following Illinois Brick and limiting the range of plaintiffs who may sue to remedy state antitrust violations. We find none compelling.
¶ 27 A principal reason motivating the Supreme Court to disallow indirect purchaser suits was the complexity of proof of damages in such cases. Ill. Brick,
¶28 In Illinois Brick, the Court determined that use of pass-on evidence by indirect purchasers against defendants who could not present that same evidence in their defense against direct purchasers created a risk of multiple liability, increased the complexity of proving damages, and undercut direct purchasers’ incentive to bring antitrust actions. Id. at 745,
¶ 29 Defendants maintain that, as the Supreme Court did in Illinois Brick, the Arizona Court of Appeals also precluded a defendant from employing a pass-on defense to a suit by an indirect purchaser of liquid petroleum gas. N. Ariz. Gas Serv., Inc. v. Petrolane Transp., Inc.,
¶ 30 The risk of multiple liability for Defendants — that is, being subject to a direct purchaser action and also an indirect purchaser state case — is a legitimate and important concern. It is not, however, a problem that our trial courts are incompetent to handle. Indeed, most of the Illinois Brick repealer statutes leave the solution to the double-recovery problem to the courts. E.g., 740 Ill. Comp. Stat. 10/7(2) (“[I]n any case in which claims are asserted against a defendant by both direct and indirect purchasers, the court shall take all steps necessary to avoid duplicate liability for the same injury including transfer and consolidation of all actions.”);
¶31 The complexity of proving damages through multiple levels of sales is a daunting task, but one to which our courts are equal. The plaintiffs bear the burden of proving the damages caused by a defendant’s wrongful conduct. If the plaintiffs cannot present admissible and convincing proof, they cannot recover. For the purposes of these cases, in which we are compelled to accept the allegations of the complaints as true, see Donnelly Constr. Co.,
¶ 32 The Defendants have correctly pointed out that in other contexts Arizona courts have found damages to be too speculative or too tenuously connected to the alleged wrongdoing to be recoverable. However, we cannot say, based on the state of this record, that damages to indirect purchasers are too speculative because they are difficult to measure and prove. See Edmund H. Mantell, Denial of a Forum to Indirect-Purchaser Victims of Price Fixing Conspiracies: A Legal and Economic Analysis of Illinois Brick, 2 Pace L.Rev. 153, 204-10 (1982) (presenting a formula for calculating damages and arguing that the suggested difficulties for such calculations are exaggerated); Robert G. Harris & Lawrence A. Sullivan, Passing on the Monopoly Overcharge: A Comprehensive Policy Analysis, 128 U. Pa. L.Rev. 269, 315 (1979) (suggesting that “reasonable estimation of passing on which will closely approximate the truth in the majority of cases requires no mystical powers or elaborate, extensive economic analysis”). Commenting on another form of antitrust treble damages claims, the Supreme Court has acknowledged that reasonable estimates of damages may suffice:
[E]ven where the defendant by his own wrong has prevented a more precise computation, the jury may not render a verdict based on speculation or guesswork. But the jury may make a just and reasonable estimate of the damage based on relevant data, and render its verdict accordingly. In such circumstances “juries are allowed to act on probable and inferential as well as [upon] direct and positive proof.” [Citations omitted.] Any other rule would enable the wrongdoer to profit by his wrongdoing at the expense of his victim. It would be an inducement to make wrongdoingso effective and complete in every case as to preclude any recovery, by rendering the measure of damages uncertain.
Bigelow v. RKO Radio Pictures,
¶33 In the years that have passed since the Illinois Brick decision, experience has shown that the courts can manage the complexity of indirect purchaser recovery in antitrust cases. Defendants raise the concern regarding the difficulty of the proof of damages, but fail to provide examples of cases of unresolvable complexity. Our research has similarly revealed none. In contrast, recent developments in multistate litigation show that plaintiffs may be able to produce satisfactory proof of damages. Cf. In re S.D. Microsoft Antitrust Litig.,
Response to the Dissent
¶ 34 Our dissenting colleague urges that we must follow Illinois Bñck to ensure uniformity. On that point, we note that the legislature’s “general purpose” was to make uniform the law among the states that adopted the Uniform Act.
¶ 35 There is, however, no uniformity whatsoever between the governing law of the four “Uniform Act” jurisdictions and the federal law. Despite language in the Uniform Act suggesting allegiance to federal law, all four uniform act states permit indirect purchasers to sue, rejecting the federal rule prohibiting such suits. Thus, there is no uniformity between the four Uniform Act states and the federal law on this point, although the Uniform Act, according to the dissent “clearly” requires such uniformity.
¶36 The dissent also urges following the federal law absent compelling reasons not to do so. We believe, however, that the guidance of the framers of Arizona’s Constitution provides sufficient reason to depart from the federal path. The framers, keenly aware of the harmful effects of monopoly power, enjoined the legislature to enact laws to protect Arizona citizens from anti-competitive practices such as price fixing and manipulating supply and demand.
¶ 37 The concerns that motivate the federal government at times differ from those that motivate state legislatures. While the Supreme Court may have wished to protect federal courts from the burden of resolving nationwide class actions potentially involving hundreds of thousands of indirect purchaser plaintiffs, this court is confident that Arizona’s courts are up to the task of ascertaining damages and protecting Arizona citizens.
¶38 Our dissenting colleague also disagrees that whether indirect purchasers can
¶39 Regarding the dissent’s iteration of the Supreme Court’s comments on standing, we urge caution. The Court observed that the question “which persons have been injured by an illegal overcharge” differs from the question “which persons have sustained injuries too remote to give them standing to sue for damages under § 4.” Illinois Brick,
¶ 40 The fears expressed by the Supreme Court in Illinois Brick and those arguing for extension of that rule to the states are not new to us. We do not minimize the difficulties of ascertaining damages, but as this court has stated before in another context: ‘We acknowledge that the system will not handle each case perfectly, but we think it better to adopt a rule which will permit courts to attempt to achieve justice in all cases than to continue to rely on one which guarantees injustice in many cases.” Brannigan v. Raybuck,
CONCLUSION
¶41 The court of appeals’ decisions are affirmed. The cases are remanded for proceedings consistent with this opinion.
. Before Illinois Brick, six of the seven federal circuit courts ruling on the issue held that indirect purchasers could sue for damages caused by violations of the federal antitrust laws. Illinois v. Ampress Brick Co.,
. Alaska, Arkansas, Delaware, Georgia, Montana, Ohio, Pennsylvania, South Carolina, Utah, Virginia, West Virginia, and Wyoming. As recently as 1999, the attorneys general of Arkansas, Ohio, South Carolina, Utah, and West Virginia filed suit seeking damages under each respective state’s antitrust laws on behalf of indirect purchasers. See FTC v. Mylan Labs., Inc.,
. For purposes of this analysis, we do not distinguish between the forms of indirect purchaser suits allowed. For example, some jurisdictions allow individual indirect purchaser actions, while others limit the right to sue to the attorney general as parens patriae. See supra n. 4. Both are counted as allowing indirect purchaser suits. Any allowance for indirect purchaser suits demonstrates that the jurisdiction does not believe that allowing these suits will unduly complicate antitrust litigation.
. Alabama,
. Iowa, Comes v. Microsoft Corp.,
. Connecticut, Vacco v. Microsoft Corp.,
. Connecticut, Massachusetts, Missouri, New Jersey, Oklahoma, and Texas. In addition, the Washington statute provides that Washington courts shall "be guided by” federal law.
. The dissent argues that the issue is not one of standing, but rather one of injury. See Dissent ¶¶ 52-53. We import our terminology from the academic literature, which speaks of the problem in terms of standing, and view the question as deciding who may sue. See Joseph P. Bauer, The Stealth Assault on Antitrust Enforcement: Raising the Barriers for Antitrust Injury and Standing, 62 U. Pitt. L.Rev. 437 (2001); Roger D. Blair & Jeffrey L. Harrison, Reexamining the Role of Illinois Brick in Modem Antitrust Standing Analysis, 68 Geo. Wash. L.Rev. 1 (1999); William M. Landes & Richard A. Posner, Should Indirect Purchasers Have Standing to Sue Under the Antitrust Laws? An Economic Analysis of the Rule of Illinois Brick, 46 U. Chi. L.Rev. 602 (1979). While the Supreme Court describes the question as deciding who has been injured,
. The Supreme Court also reasoned that antitrust suits were more apt to be brought if damages were concentrated in direct purchasers. Illinois Brick,
Dissenting Opinion
dissenting.
¶ 42 I respectfully dissent. I depart from the majority opinion on two central points. First, I would follow the legislature’s expressed intent in adopting the Arizona Antitrust Act and interpret Arizona Revised Statutes (A.R.S.) section 44-1408.B consistently with comparable federal law. Second, I disagree with the majority’s characterization of the question whether the plaintiffs can bring their actions as involving simply a procedural question of standing. I regard the question as one of substantive law: Did the plaintiffs suffer an antitrust injury as defined by the Arizona Antitrust Act? I believe they did not.
A.
¶ 43 When we construe a statute, our goal is to interpret it in a manner that effectuates the legislature’s intent in adopting the statute. Hohokam Irrigation & Drainage Dist. v. Ariz. Pub. Serv. Co.,
¶ 44 But the legislature did not stop with that step. To emphasize the importance the legislature placed upon uniformity, and presumably to make certain that the courts understood the legislative intent to achieve uniformity, the legislature adopted
This article shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this article among those states that enact it. It is the intent of the legislature that in construing this article, the courts may use as a guide interpretations given by the federal courts to comparable federal antitrust statutes.
¶ 45 The first sentence of
¶46 The legislature, however, enhanced Arizona’s opportunity to achieve uniformity in the field of antitrust law by adding a federal guidance clause as the second sentence to A.R.S.
¶ 47 Were we to follow the guidance clause and look to federal law for guidance in this instance, the plaintiffs could not proceed; federal law clearly bars their claims. The federal courts have interpreted a comparable federal antitrust statute. The language of section 44-1408.B is almost identical to its federal counterpart, section 4 of the Clayton Act. Section 4 provides, as does
¶ 48 In this instance, then, we can fulfill the legislature’s desire for a uniform approach in cases involving alleged antitrust injury by drawing from the federal experience. Instead, the majority has adopted an approach that ensures non-uniformity between state and federal law, without defining any compelling reason for doing so.
¶ 49 The majority does not explain why we should now depart from our prior practice of interpreting Arizona’s antitrust statutes consistently with comparable federal statutes. See All Am. Sch. Supply Co. v. Slavens,
¶ 50 The impact of today’s departure from our long-standing practice remains unclear. Apparently we now will interpret some provisions of the Arizona Antitrust Act consistently with federal law and, in other instances, disregard federal law, as we do today. The majority does not tell businesses, litigants, or courts how to discern which rule applies to any particular antitrust issue, a result that creates unnecessary and harmful uncertainty.
¶ 51 The majority relies, in part, on the Supreme Court’s decision in California v. ARC America Corp.,
B.
¶ 52 My second area of disagreement with today’s opinion results from the majority’s decision to characterize the issue whether an indirect purchaser can bring an action under section 44-1408.B as raising simply a question of standing. Op. ¶¶ 17-22. According to the majority, the federal guidance clause distinguishes between substantive and procedural matters of federal law, and indicates only that the legislature prefers uniformity among the former but not among the latter. Id. ¶ 20. Leaving aside the question whether the legislature intended to make any such distinction, I disagree that the legal issue before us is whether section 44-1408.B confers “standing” to sue upon an indirect purchaser. The question, rather, is whether an indirect purchaser has suffered an antitrust injury for the purposes of section 44-1408.B. That issue presents a question of substantive law.
¶ 53 In Illinois Brick, the Supreme Court explicitly described the distinction between-those questions that the majority fails to recognize: “[T]he question of which persons have been injured by an illegal overcharge for purposes of § 4 [of the Clayton Act] is analytically distinct from the question of which persons have sustained injuries too remote to give them standing to sue for damages under § 4.”
C.
¶ 54 The majority further justifies its decision to depart from our past practice of following federal antitrust law by concluding that permitting indirect purchaser actions furthers sound public policy. The majority may be right, but that decision is one that should be made by the legislature, rather than by this court. As the majority notes, twenty-three of the twenty-five states that opted to permit indirect purchaser actions did so by enacting statutes, see Op. ¶ 15 n.4, presumably after legislative debate and hearings. As a result of their deliberations, some of those states limited the circumstances under which indirect purchaser actions may proceed. For instance, not all states permit private party actions; several permit only the state to bring an action on behalf of indirect purchasers. Id. Today, without public hearings or debate, Arizona joins the tiny minority of states that have judicially interpreted antitrust statutes similar to section 44-1408.B as permitting indirect purchaser actions, thereby foreclosing consideration as to the parameters of indirect purchaser actions.
¶ 55 Nearly three decades have passed since the Illinois Brick decision. During all those years, the legislature took no action to expand the scope of section 44-1408.B to permit indirect purchaser actions or to indicate that this court should ignore its federal guidance clause. I fully concur with the majority that the question decided here involves
. The majority also concludes that, if the federal guidance clause signals that the legislature intended that we follow federal law at all, it could only have intended to follow the law as it existed when Arizona adopted the Arizona Antitrust Act. Op. ¶ 11. I discern no basis for concluding that the legislature intended to adopt an antitrust law frozen in time as of 1974. I think it more likely that the legislature intended that the federal guidance clause act as a fluid provision to keep Arizona law consistent with developing federal antitrust law.
. The Court pointed out that Arizona’s statutory cause of action "generally follows” mirrored section 4 of the Clayton Act and that the language could be construed as either permitting or prohibiting indirect purchaser suits. ARC America,
. The Court reaffirmed this principle in Blue Shield of Va. v. McCready, in which the Court proceeded with a standing analysis only after holding that a health care plan subscriber suffered an antitrust injury at the hands of her insurance company.