This blog recently covered an interesting antitrust case that upheld the Supreme Court’s bright line rule established in Illinois Brick: indirect buyers are barred from pursuing money damages under the federal antitrust laws. The Sixth Circuit has now decided against rehearing the case en banc.
The denial, however, drew two dueling statements. Judge Bush agreed with the denial, but suggested that the case “may warrant the [Supreme] Court’s review to clarify the parameters of Illinois Brick” regarding indirect sellers in four ways. Judge Murphy, author of the panel opinion (along with Sutton & Kethledge) responded to each point.
First, Judge Bush wrote that the difficulty of calculating an indirect purchaser’s damage, a main concern in Illinois Brick, was not an issue in this case. Because United Allergy and the Primary Care Providers (PCPs) were in a joint venture, calculating the damages from the alleged antitrust harm would be rather straightforward: they are the profits United Allery would have made if they were not driven from the market by the defendants. Importantly, Judge Bush noted, a joint venture does not “create a partnership in the legal or technical sense of the term.” Judge Murphy responded that the interpretation of antitrust laws does not change based on the facts, meaning the relevant language cannot prohibit an indirect seller from suing in one instance but allow them to sue in another. An indirect seller is an indirect seller, he wrote, and they are barred from suing by Illinois Brick.
Second, Judge Bush criticized the panel’s approach as too formalistic, saying it ignored the “antecedent issue of how to define an indirect purchaser.” Rather than the panel’s yes/no approach, he argued for a pragmatic and market-centric view. Under his approach, United Allergy is not an indirect seller just because United Allergy and the PCPs jointly provided allergy testing. Judge Murphy responded that the Supreme Court has avoided formalistic line drawing when considering substantive issues of antitrust liability, but the Court has “stuck” to formalistic rules “even when it made little economic sense” when considering procedural issues like standing.
Third, Judge Bush felt the panel read Supreme Court precedent on proximate cause too literally, and he argued that “the mere existence of a corporate entity between the plaintiff and the defendant would not bar antitrust standing under Illinois Brick.” Judge Murphy responded that lower courts are not empowered to replace Illinois Brick’s bright-line rule with a general foreseeability test.
Finally, Judge Bush questioned whether Illinois Brick should apply be applied to injunctions, where the bar for relief “is much lower” than for damages. Judge Bush leaned on precedents from the Second, Third, and Ninth Circuits that held Illinois Brick cannot bar suits for an injunction. Judge Murphy responded that United Allergy never argued for, and therefore forfeited, the possibility of differing standards between a request for damages and a request for injunctive relief. He explained that if the Supreme Court takes this case, it should recognize the issue was resolved on forfeiture grounds and not on the merits.
A certiorari petition in this case seems likely. With a circuit split on these important issues, the Supreme Court will ultimately decide the bounds of Illinois Brick’s indirect seller rule.
