Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481 (1968), involved an antitrust treble-damages action
In Hanover Shoe this Court rejected as a matter of law this defense that indirect rather than direct purchasers were the parties injured by the antitrust violation. The Court held that, except in certain limited circumstances,
In this case we once again confront the question whether the overcharged direct purchaser should be deemed for purposes of § 4 to have suffered the full injury from the overcharge; but the issue is presented in the context of a suit in which the plaintiff, an indirect purchaser, seeks to show its injury by establishing pass-on by the direct purchaser and in which the antitrust defendants rely on Hanover Shoe's rejection of the pass-on theory. Having decided that in general a pass-on theory may not be used defensively by an antitrust violator against a direct purchaser plaintiff, we must now decide whether that theory may be used offensively by an indirect purchaser plaintiff against an alleged violator.
Petitioners manufacture and distribute concrete block in the Greater Chicago area. They sell the block primarily to masonry contractors, who submit bids to general contractors for the masonry portions of construction projects. The general contractors in turn submit bids for these projects to customers such as the respondents in this case, the State of Illinois and 700 local governmental entities in the Greater Chicago area, including counties, municipalities, housing authorities, and school districts. See 67 F. R. D. 461, 463 (ND Ill. 1975); App. 16-48. Respondents are thus indirect purchasers of concrete block, which passes through two separate levels in the chain of distribution before reaching respondents. The block is purchased directly from petitioners by masonry contractors and used by them to build masonry structures; those structures are incorporated into entire buildings by general contractors and sold to respondents.
Respondent State of Illinois, on behalf of itself and respondent local governmental entities, brought this antitrust treble-damages action under § 4 of the Clayton Act, alleging that
Petitioner manufacturers moved for partial summary judgment against all plaintiffs that were indirect purchasers of concrete block from petitioners, contending that as a matter of law only direct purchasers could sue for the alleged overcharge.
We granted certiorari, 429 U.S. 938 (1976), to resolve a conflict among the Courts of Appeals
The parties in this case agree that however § 4 is construed with respect to the pass-on issue, the rule should apply equally to plaintiffs and defendants—that an indirect purchaser should not be allowed to use a pass-on theory to recover damages from a defendant unless the defendant would be allowed to use a pass-on defense in a suit by a direct purchaser. Respondents, in arguing that they should be allowed to recover by showing pass-on in this case, have conceded that petitioners should be allowed to assert a pass-on defense against direct purchasers of concrete block, Tr. of Oral Arg. 33, 48; they ask this Court to limit Hanover Shoe's bar on pass-on defenses to its "particular factual context" of overcharges for capital goods used to manufacture new products. Id., at 41; see id., at 36, 47-48.
Before turning to this request to limit Hanover Shoe, we consider the substantially contrary position, adopted by our dissenting Brethren, by the United States as amicus curiae, and by lower courts that have allowed offensive use of pass-on, that the unavailability of a pass-on theory to a defendant
First, allowing offensive but not defensive use of pass-on would create a serious risk of multiple liability for defendants. Even though an indirect purchaser had already recovered for all or part of an overcharge passed on to it, the direct purchaser would still recover automatically the full amount of the overcharge that the indirect purchaser had shown to be passed on; similarly, following an automatic recovery of the full overcharge by the direct purchaser, the indirect purchaser could sue to recover the same amount. The risk of duplicative recoveries created by unequal application of the Hanover Shoe rule is much more substantial than in the more usual situation where the defendant is sued in two different lawsuits by plaintiffs asserting conflicting claims to the same fund. A one-sided application of Hanover Shoe substantially increases the possibility of inconsistent adjudications—and therefore of unwarranted multiple liability for the defendant —by presuming that one plaintiff (the direct purchaser) is entitled to full recovery while preventing the defendant from using that presumption against the other plaintiff; overlapping recoveries are certain to result from the two lawsuits
Second, the reasoning of Hanover Shoe cannot justify unequal treatment of plaintiffs and defendants with respect to the permissibility of pass-on arguments. The principal basis for the decision in Hanover Shoe was the Court's perception of the uncertainties and difficulties in analyzing price and output
It is argued, however, that Hanover Shoe rests on a policy of ensuring that a treble-damages plaintiff is available to deprive antitrust violators of "the fruits of their illegality," id., at 494, a policy that would be furthered by allowing plaintiffs but not defendants to use pass-on theories. See, e. g., In re Western Liquid Asphalt Cases, 487 F.2d 191, 197 (CA9 1973), cert. denied sub nom. Standard Oil Co. of Cal. v. Alaska, 415 U.S. 919 (1974); Brief for United States as Amicus Curiae 4-6, 12-13, 17-19.
We thus decline to construe § 4 to permit offensive use of a pass-on theory against an alleged violator that could not use the same theory as a defense in an action by direct purchasers. In this case, respondents seek to demonstrate that masonry contractors, who incorporated petitioners' block into walls and other masonry structures, passed on the alleged overcharge on the block to general contractors, who incorporated the masonry structures into entire buildings, and that the general contractors in turn passed on the overcharge to respondents in the bids submitted for those buildings. We think it clear that under a fair reading of Hanover Shoe petitioners would be barred from asserting this theory in a suit by the masonry contractors.
In Hanover Shoe this Court did not endorse the broad exception that had been recognized in that case by the courts below—permitting the pass-on defense against middlemen who did not alter the goods they purchased before reselling them.
We are left, then, with two alternatives: either we must overrule Hanover Shoe (or at least narrowly confine it to its facts), or we must preclude respondents from seeking to recover on their pass-on theory. We choose the latter course.
In considering whether to cut back or abandon the Hanover Shoe rule, we must bear in mind that considerations of stare decisis weigh heavily in the area of statutory construction, where Congress is free to change this Court's interpretation of its legislation. See Edelman v. Jordan, 415 U.S. 651, 671 (1974); Burnet v. Coronado Oil & Gas Co., 285 U.S. 393, 406-408 (1932) (Brandeis, J., dissenting). This presumption of adherence to our prior decisions construing legislative enactments would support our reaffirmance of the Hanover Shoe
Permitting the use of pass-on theories under § 4 essentially would transform treble-damages actions into massive efforts to apportion the recovery among all potential plaintiffs that could have absorbed part of the overcharge—from direct purchasers to middlemen to ultimate consumers. However appealing this attempt to allocate the overcharge might seem in theory, it would add whole new dimensions of complexity to treble-damages suits and seriously undermine their effectiveness.
As we have indicated, potential plaintiffs at each level in the distribution chain are in a position to assert conflicting claims to a common fund—the amount of the alleged overcharge —by contending that the entire overcharge was absorbed at that particular level in the chain.
Opponents of the Hanover Shoe rule have recognized this need for compulsory joinder in suggesting that the defendant could interplead potential claimants under 28 U. S. C. § 1335.
See Notes of Advisory Committee on 1966 Amendment to Rule 19, 28 U. S. C. App., p. 7760; 7 C. Wright & A. Miller, supra, §§ 1604, 1618; 3A J. Moore, Federal Practice ¶ 19.08 (1974). The plaintiff bringing the treble-damages action would be required, under Fed. Rule Civ. Proc. 19 (c), to "state the names, if known," of these absent potential claimants; they should also be notified by some means that the action was pending.
It is unlikely, of course, that all potential plaintiffs could or would be joined. Some may not wish to assert claims to the
There is thus a strong possibility that indirect purchasers remote from the defendant would be parties to virtually every treble-damages action (apart from those brought against defendants at the retail level). The Court's concern in Hanover Shoe to avoid weighing down treble-damages actions with the "massive evidence and complicated theories," 392 U. S., at 493, involved in attempting to establish a pass-on defense against a direct purchaser applies a fortiori to the attempt to trace the effect of the overcharge through each step in the distribution chain from the direct purchaser to the ultimate consumer. We are no more inclined than we were in Hanover Shoe to ignore the burdens that such an attempt would impose on the effective enforcement of the antitrust laws.
Under an array of simplifying assumptions, economic theory provides a precise formula for calculating how the overcharge is distributed between the overcharged party (passer) and its customers (passees). If the market for the passer's product is perfectly competitive; if the overcharge is imposed equally on all of the passer's competitors; and if the passer maximizes its profits, then the ratio of the shares of the overcharge borne by passee and passer will equal the ratio of the elasticities of supply and demand in the market for the passer's product.
More important, as the Hanover Shoe Court observed, 392 U. S., at 493, "in the real economic world rather than an economist's hypothetical model," the latter's drastic simplifications generally must be abandoned. Overcharged direct purchasers often sell in imperfectly competitive markets. They often compete with other sellers that have not been subject to the overcharge; and their pricing policies often cannot be explained solely by the convenient assumption of profit maximization.
It is quite true that these difficulties and uncertainties will be less substantial in some contexts than in others. There have been many proposals to allow pass-on theories in some of these contexts while preserving the Hanover Shoe rule in others. Respondents here argue, not without support from some lower courts,
We reject these attempts to carve out exceptions to the Hanover Shoe rule for particular types of markets.
More generally, the process of classifying various market situations according to the amount of pass-on likely to be
The concern in Hanover Shoe for the complexity that would be introduced into treble-damages suits if pass-on theories were permitted was closely related to the Court's concern for the reduction in the effectiveness of those suits if brought by indirect purchasers with a smaller stake in the outcome than that of direct purchasers suing for the full amount of the overcharge. The apportionment of the recovery throughout the distribution chain would increase the overall costs of recovery by injecting extremely complex issues into the case; at the same time such an apportionment would reduce the benefits to each plaintiff by dividing the potential recovery among a much larger group. Added to the uncertainty of how much of an overcharge could be established at trial would be the uncertainty of how that overcharge would be apportioned among the various plaintiffs. This additional uncertainty would further reduce the incentive to sue. The combination of increasing the costs and diffusing the benefits of bringing a treble-damages action could seriously impair this important weapon of antitrust enforcement.
We think the longstanding policy of encouraging vigorous private enforcement of the antitrust laws, see, e. g., Perma Life Mufflers, Inc. v. International Parts Corp., 392 U.S. 134, 139 (1968), supports our adherence to the Hanover Shoe rule, under which direct purchasers are not only spared the burden
It is true that, in elevating direct purchasers to a preferred position as private attorneys general, the Hanover Shoe rule denies recovery to those indirect purchasers who may have been actually injured by antitrust violations. Of course, as MR. JUSTICE BRENNAN points out in dissent, "from the deterrence standpoint, it is irrelevant to whom damages are paid, so long as some one redresses the violation." Post, at 760. But § 4 has another purpose in addition to deterring violators and depriving them of "the fruits of their illegality," Hanover Shoe, 392 U. S. at 494; it is also designed to compensate victims of antitrust violations for their injuries. E. g., Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 485-486 (1977). Hanover Shoe does further the goal of compensation to the extent that the direct purchaser absorbs at least some and often most of the overcharge. In view of the considerations supporting the Hanover Shoe rule, we are unwilling to carry the compensation principle to its logical extreme by attempting to allocate damages among all "those within the defendant's chain of distribution," post, at 761, especially
MR. JUSTICE BRENNAN, with whom MR. JUSTICE MARSHALL and MR. JUSTICE BLACKMUN join, dissenting.
Respondent State of Illinois brought this treble-damages civil antitrust action under § 4 of the Clayton Act on behalf of itself and various local governmental entities in the Greater Chicago area alleging that an overcharge in the price of concrete block used in the construction of public buildings was made by the petitioners, manufacturers and sellers of concrete block, pursuant to a price-fixing conspiracy in violation of § 1 of the Sherman Act, 15 U. S. C. § 1.
Decisions of the Court defining the reach of § 4 have been consistent with its broad objectives: to compensate victims of antitrust violations and to deter future violations. The Court has stated that § 4 "does not confine its protection to consumers, or to purchasers, or to competitors, or to sellers . . . [but] is comprehensive in its terms and coverage, protecting all who are made victims of the forbidden practices by whomever they may be perpetrated." Mandeville Island Farms, Inc. v. American Crystal Sugar Co., 334 U.S. 219, 236 (1948).
Today's decision flouts Congress' purpose and severely undermines the effectiveness of the private treble-damages action as an instrument of antitrust enforcement. For in many instances, the brunt of antitrust injuries is borne by indirect purchasers, often ultimate consumers of a product, as increased costs are passed along the chain of distribution.
In Hanover Shoe, supra, the Court held that a defendant in a treble-damages action could not escape liability, except in very limited circumstances,
The Court correctly discerned that the difficulty of reconstructing
Hanover Shoe thus confronted the Court with the choice, as had been true in Darnell-Taenzer, of interpreting § 4 in a way that might overcompensate the plaintiff, who had certainly suffered some injury, or of defining it in a way that underdeters the violator by allowing him to retain a portion of his ill-gotten overcharges. The Court chose to interpret § 4 so as to allow the plaintiff to recover for the entire overcharge. This choice was consistent with recognition of the importance
Despite the superficial appeal of the argument that Hanover Shoe should be applied "consistently," thus precluding plaintiffs and defendants alike from proving that increased costs were passed along the chain of distribution, there are sound reasons for treating offensive and defensive passing-on cases differently. The interests at stake in "offensive" passing-on cases, where the indirect purchasers sue for damages for their injuries, are simply not the same as the interests at stake in the Hanover Shoe, or "defensive" passing-on situation. There is no danger in this case, for example, as there was in Hanover Shoe, that the defendant will escape liability and frustrate the objectives of the treble-damages action. Rather, the same policies of insuring the continued effectiveness of the treble-damages action and preventing wrongdoers from retaining the spoils of their misdeeds favor allowing indirect purchasers to prove that overcharges were passed on to them. Hanover Shoe thus can and should be limited to cases of defensive assertion of the passing-on defense to antitrust liability, where direct and indirect purchasers are not parties in the same action.
Today's decision goes far to frustrate Congress' objectives in creating the treble-damages action. Treble-damages actions were first authorized under § 7 of the Sherman Act, 26 Stat. 210. The legislative history of this section shows that it was conceived primarily as a remedy for "[t]he people of the United States as individuals," especially for consumers. See, e. g., 21 Cong. Rec. 1767-1768 (1890) (remarks of Sen. George); see also id., at 2612 (Sens. Teller and Reagan), 2615 (Sen. Coke), 2640 (Sen. Spooner).
The Court has interpreted § 4 broadly, this in recognition of the plainly stated congressional objective, Northern Pacific R. Co. v. United States, 356 U.S. 1, 4 (1958), that the private treble-damages action play a paramount role in the enforcement of the fundamental economic policy of the Nation, Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 130-131 (1969); Minnesota Mining & Mfg. Co. v. New Jersey Wood Finishing Co., 381 U.S. 311, 318 (1965), and has concluded that "the purposes of the antitrust laws are best served by insuring that the private action will be an ever-present threat to deter anyone contemplating business behavior in violation of the antitrust laws." Perma Life Mufflers, Inc. v. International Parts Corp., 392 U.S. 134, 139 (1968). The federal courts have accordingly been cautioned "not [to]
The recently enacted Hart-Scott-Rodino Antitrust Improvements Act of 1976 was expressly adopted to create "an effective mechanism to permit consumers to recover damages for conduct which is prohibited by the Sherman Act, by giving State attorneys general a cause of action [to sue as parens patriae on behalf of the States' citizens] against antitrust violators." S. Rep. No. 94-803, p. 6 (1976). Title III of the new Act responded to the holding of Hawaii v. Standard Oil Co. of Cal., 405 U.S. 251 (1972), that the Clayton Act does not authorize a State to sue for damages for an injury to its general economy allegedly attributable to a violation of the antitrust laws. The Senate Report accompanying the new Act expressly found that "[t]he economic burden of most antitrust violations is borne by the consumer in the form of higher prices for goods and services," S. Rep. No. 94-803, supra, at 39, and it is clear that the new Act is intended to provide a remedy
Representative Rodino, a sponsor, stated during the House debates:
It is difficult to see how Congress could have expressed itself more clearly. Even if the question whether indirect purchasers could recover for damages passed on to them was open before passage of the 1976 Act, and I do not believe that it was, Congress' interpretation of § 4 in enacting the parens patriae provision should resolve it in favor of their authority to sue. Indeed, the House Report accompanying the bill actually referred to the opinion of the District Court in this case as an example of the correct answer. N. 13, supra. The Court's tortuous efforts to impose a "consistency" upon this area of the law that Congress has so clearly rejected is a return to the "legal somersaults and twisting and turnings" of the Court's earlier opinions that ultimately led to the passage of the Clayton Act in 1914 to salvage the ailing Sherman Act., See 51 Cong. Rec. 9086 (1914) (remarks of Rep. Kelly).
Hanover Shoe correctly observed that the necessity of tracing a cost increase through several levels of a chain of distribution "would often require additional long and complicated proceedings involving massive evidence and complicated theories." 392 U. S., at 493. But this may be said of almost all antitrust cases. Hanover Shoe itself highlights this unavoidable complication, in that it requires the plaintiff to prove a probable course of events which would have occurred but for the violation.
Nor should the fact that the price-fixed product in this case (the concrete block) was combined with another product (the buildings) before resale operate as an absolute bar to recovery. It may well be true, as the State claims, that the cost of the block was included separately in the project bids and therefore can be factored out from the price of the building with relative certainty. In any case, this is a factual matter to be determined based on the strength of the plaintiff's evidence.
I concede that despite the broad wording of § 4 there is a point beyond which the wrongdoer should not be held liable. See, e. g., Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (1977); Hawaii v. Standard Oil Co. of Cal., 405 U.S. 251 (1972). Courts have therefore developed various tests of antitrust "standing," not unlike the concept of proximate cause in tort law, to define that point. The definition has been variously articulated, usually in terms of two tests. The more restrictive test focuses on the directness of the injury;
I acknowledge some abstract merit in the argument that to allow indirect purchasers to sue, while, at the same time, precluding defendants from asserting pass-on defenses in suits by direct purchasers, subjects antitrust defendants to the risk of multiple liability. But as a practical matter, existing procedural mechanisms can eliminate this danger in most instances. Even though, as the Court says, no procedure currently exists which can eliminate the possibility entirely, ante, at 731 n. 11, the hypothetical possibility that a few defendants might be subjected to the danger of multiple liability does not, in my view, justify erecting a bar against all recoveries by indirect purchasers without regard to whether the particular case presents a significant danger of double recovery. The "double recovery" specter was argued in the Congress that passed the Hart-Scott-Rodino Act, and was rejected. The Senate Report recorded the Act's purpose to codify the holding of the Court of Appeals for the Ninth Circuit in In re Western Liquid Asphalt Cases, supra:
Moreover, the possibility of multiple recovery arises in only two situations: (1) where suits by direct and indirect purchasers are pending at the same time but in different courts; and (2) where additional suits are filed after an award of damages based on the same violation in a prior suit.
True, there is a greater hypothetical danger of multiple recovery where suits are independently instituted after an earlier suit based on the same violation has proceeded to judgment.
The Court today regrettably weakens the effectiveness of the private treble-damages action as a deterrent to antitrust violations by, in most cases, precluding consumers from recovering for antitrust injuries. For in many instances, consumers, although indirect purchasers, bear the brunt of antitrust violations. To deny them an opportunity for recovery is particularly indefensible when direct purchasers, acting as middlemen, and ordinarily reluctant to sue their suppliers,
MR. JUSTICE BLACKMUN, dissenting.
I regard MR. JUSTICE BRENNAN'S dissenting opinion as persuasive and convincing, and I joint it without hesitation.
I add these few sentences only to say that I think the plaintiffs-respondents in this case, which they now have lost, are the victims of an unhappy chronology. If Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481 (1968), had not preceded this case, and were it not "on the books," I am positive that the Court today would be affirming, perhaps unanimously, the judgment of the Court of Appeals. The policy behind the Antitrust Acts and all the signs point in that direction, and a conclusion in favor of indirect purchasers who could demonstrate injury would almost be compelled.
But Hanover Shoe is on the books, and the Court feels that it must be "consistent" in its application of pass-on. That,
A brief of amici curiae urging affirmance was filed by the Attorneys General and other officials for their respective States as follows: Bruce E. Babbitt, Attorney General, John A. Baade, Assistant Attorney General, and Kenneth R. Reed, of Arizona; William J. Baxley, Attorney General, and William T. Stephens, Assistant Attorney General, of Alabama; Avrum M. Gross, Attorney General, and Joseph K. Donohue, Assistant Attorney General, of Alaska; Bill Clinton, Attorney General, and Frank B. Newell, Deputy Attorney General, of Arkansas; J. D. MacFarlane, Attorney General, and Robert F. Hill, First Assistant Attorney General, of Colorado; Carl R. Ajello, Attorney General, and Gerard J. Dowling and Larry H. Evans, Assistant Attorneys General, of Connecticut; Richard R. Wier, Jr., Attorney General, and Regina M. Small, Deputy Attorney General, of Delaware; Robert L. Shevin, Attorney General, and Charles R. Ranson, Assistant Attorney General, of Florida; Arthur K. Bolton, Attorney General, and R. Douglas Lackey, Assistant Attorney General, of Georgia; Ronald Y. Amemiya, Attorney General, and Nelson S. W. Chang, Deputy Attorney General, of Hawaii; Wayne L. Kidwell, Attorney General, and Rudolf D. Barchas, Deputy Attorney General, of Idaho; Theodore L. Sendak, Attorney General, and Donald P. Bogard, of Indiana; Richard C. Turner, Attorney General, and Gary H. Swanson, Assistant Attorney General, of Iowa; Curt T. Schneider, Attorney General, and Thomas H. Brill, Assistant Attorney General, of Kansas; Robert F. Stephens, Attorney General, and W. Patrick Stallard, Assistant Attorney General, of Kentucky; William J. Guste, Jr., Attorney General, and John R. Flowers, Jr., Assistant Attorney General, of Louisiana; Joseph E. Brennan, Attorney General, and Cheryl Harrington, Assistant Attorney General, of Maine; Francis B. Burch, Attorney General, and Thomas M. Wilson III, Assistant Attorney General, of Maryland; Francis X. Bellotti, Attorney General, and Paula W. Gold, Assistant Attorney General, of Massachusetts; Frank J. Kelley, Attorney General, and Edwin M. Bladen, Assistant Attorney General, of Michigan; Warren R. Spannaus, Attorney General, and Alan H. Maclin, Special Assistant Attorney General, of Minnesota; A. F. Summer, Attorney General, and Donald Clark, Jr., Special Assistant Attorney General, of Mississippi; John Ashcroft, Attorney General of Missouri; Michael T. Greely, Attorney General, and Mike McGrath, Assistant Attorney General, of Montana; Paul L. Douglas, Attorney General, and Robert F. Bartle, Assistant Attorney General, of Nebraska; Robert List, Attorney General, and Donald Klasic, Deputy Attorney General, of Nevada; David H. Souter, Attorney General, and Wilfred John Funk, Assistant Attorney General, of New Hampshire; William F. Hyland, Attorney General, and Elias Abelson, of New Jersey; Toney Anaya, Attorney General, and Robert N. Hilgendorf, Assistant Attorney General, of New Mexico; Louis J. Lefkowitz, Attorney General, and John M. Desiderio, Assistant Attorney General, of New York; Rufus L. Edmisten, Attorney General, and G. Jona Poe, Jr., Special Deputy Attorney General, of North Carolina; Allen I. Olson, Attorney General, and Lynn E. Erickson, Assistant Attorney General, of North Dakota; Larry Derryberry, Attorney General, and Paul C. Duncan, Assistant Attorney General, of Oklahoma; James A. Redden, Attorney General of Oregon; Robert P. Kane, Attorney General, and Vincent X. Yakowicz, Solicitor General, of Pennsylvania; Julius C. Michaelson, Attorney General of Rhode Island; Daniel R. McLeod, Attorney General, and Victor S. Evans, Deputy Attorney General, of South Carolina; William J. Janklow, Attorney General, and Thomas J. Welk, Assistant Attorney General, of South Dakota; Brooks McLemore, Attorney General of Tennessee; John L. Hill, Attorney General, and Lee C. Clyburn, of Texas; Robert B. Hansen, Attorney General, and William T. Evans, Assistant Attorney General, of Utah; M. Jerome Diamond, Attorney General, and Jay I. Ashman, Assistant Attorney General, of Vermont; Anthony F. Troy, Chief Deputy Attorney General, and John J. Miles, Assistant Attorney General, of Virginia; Slade Gorton, Attorney General, and Thomas L. Boeder, Assistant Attorney General, of Washington; Chauncey H. Browning, Jr., Attorney General, and Gene Hal Williams, Deputy Attorney General, of West Virginia; Bronson C. LaFollette, Attorney General, and Michael L. Zaleski, Assistant Attorney General, of Wisconsin; V. Frank Mendicino, Attorney General, Charles J. Carroll, Deputy Attorney General, and Jim Gusea, Assistant Attorney General, of Wyoming.
"Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefore in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee."
"A wide range of factors influence a company's pricing policies. Normally the impact of a single change in the relevant conditions cannot be measured after the fact; indeed a businessman may be unable to state whether, had one fact been different (a single supply less expensive, general economic conditions more buoyant, or the labor market tighter, for example), he would have chosen a different price. Equally difficult to determine, in the real economic world rather than an economist's hypothetical model, is what effect a change in a company's price will have on its total sales. Finally, costs per unit for a different volume of total sales are hard to estimate. Even if it could be shown that the buyer raised his price in response to, and in the amount of, the overcharge and that his margin of profit and total sales had not thereafter declined, there would remain the nearly insuperable difficulty of demonstrating that the particular plaintiff could not or would not have raised his prices absent the overcharge or maintained the higher price had the overcharge been discontinued. Since establishing the applicability of the passing-on defense would require a convincing showing of each of these virtually unascertainable figures, the task would normally prove insurmountable. On the other hand, it is not unlikely that if the existence of the defense is generally confirmed, antitrust defendants will frequently seek to establish its applicability. Treble-damage actions would often require additional long and complicated proceedings involving massive evidence and complicated theories." 392 U. S., at 492-493. (Footnote omitted.)
"Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal . . . ."
Moreover, even if ways could be found to bring all potential plaintiffs together in one huge action, the complexity thereby introduced into treble-damages proceeding argues strongly for retaining the Hanover Shoe rule. See part III, infra.
Congress made clear, however, that this legislation did not alter the definition of which overcharged persons were injured within the meaning of § 4. It simply created a new procedural device—parens patriae actions by States on behalf of their citizens—to enforce existing rights of recovery under § 4. The House Report quoted above stated that the parens patriae provision "creates no new substantive liability"; the relevant language of the newly enacted § 4C (a) of the Clayton Act tracks that of existing § 4. showing that it was intended only as "an alternative means . . . for the vindication of existing substantive claims." H. R. Rep. No. 94-499, supra, at 9. "The establishment of an alternative remedy does not increase any defendant's liability." Ibid. Representative Rodino himself acknowledged in the remarks cited above that this legislation did not create a right of recovery for consumers where one did not already exist.
We thus cannot agree with the dissenters that the legislative history of the 1976 Antitrust Improvements Act is dispositive as to the interpretation of § 4 of the Clayton Act, enacted in 1914, or the predecessor section of the Sherman Act, enacted in 1890. post, at 756-758. The cases cited by MR. JUSTICE BRENNAN, post, at 765 n. 24, to support his reliance on this legislation all involved specific statutory language that was thought to clarify the meaning of an earlier statute. E. g., Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 380-381 (1969) (language in 1959 amendment to § 315 of the Communications Act approved fairness doctrine adopted by FCC under the "public interest" standard of the original Act). Here, by contrast, Congress borrowed the language of § 4 in adding the parens patriae section. The views expressed by particular legislators as to the meaning of that language in § 4 "cannot serve to change the legislative intent of Congress . . . `since the statements were [made] after passage of the [Clayton] Act.' " Regional Rail Reorganization Act Cases, 419 U.S. 102, 132 (1974), quoting National Woodwork Mfrs. Assn. v. NLRB, 386 U.S. 612, 639 n. 34 (1967).
While we do not lightly disagree with the reading of Hanover Shoe urged by these legislators, we think the construction of § 4 adopted in that decision cannot be applied for the exclusive benefit of plaintiffs. Should Congress disagree with this result, it may, of course, amend the section to change it. But it has not done so in the recent parens patriae legislation.
"A person who is subject to service of process and whose joinder will not deprive the court of jurisdiction over the subject matter of the action shall be joined as a party in the action if (1) in his absence complete relief cannot be accorded among those already parties, or (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest."
In any event, as we understand the dissenters' argument, it reduces to the proposition that because antitrust cases are already complicated there is little harm in making them more so. We disagree.
The dissenting opinion of MR. JUSTICE BRENNAN appears to suggest that the 1976 parens patriae legislation, see n. 14, supra, provides an answer to this problem of compensating indirect purchasers for small injuries. Post, at 764 n. 23. Quite to the contrary, the Act "recognizes that rarely, if ever, will all potential claimants actually come forward to secure their share of the recovery," and that "the undistributed portion of the fund . . . will often be substantial." H. R. Rep. No. 94-499, p.16 (1975). The portion of the fund recovered in a parens patriae action that is not used to compensate the actual injuries of antitrust victims is to be used as "a civil penalty . . . deposited with the State as general revenues," Clayton Act § 4E (2), 15 U. S. C. § 15e (2) (1976 ed.), enacted by the 1976 Act, or "for some public purposes benefiting, as closely as possible, the class of injured persons," such as reducing the price of the overcharged goods in future sales. H. R. Rep. No. 94-499, supra, at 16. That Congress chose to provide such innovative methods of distributing damages awarded in a parens patriae action under newly enacted § 4C of the Clayton Act, 15 U. S. C. § 15c (1976 ed.), does not eliminate the obstacles to compensating indirect purchasers bringing traditional suits under § 4.
The Court's opinion further observes that "[m]any of the indirect purchasers barred from asserting pass-on claims . . . have such a small stake in the lawsuit that even if they were to recover as part of a class, only a small fraction would be likely to come forward to collect their damages." Ante, at 747. Yet it was precisely because of judicially perceived weaknesses in the class action as a device for consumer recovery for antitrust violations that Congress enacted the parens patriae provision of the 1976 Act.