Clayworth v. Pfizer

Antitrust, cartels: In Hanover Shoe v. United Shoe Mach. (1968) 392 U.S. 481 (Hanover Shoe), the United States Supreme Court held antitrust violators ordinarily could not assert as a defense that any illegal overcharges had been passed on by a plaintiff direct purchaser to indirect purchasers.  Instead, the full measure of the overcharge is recoverable by the direct purchaser.  In a related decision nine years later, the Supreme Court concluded only direct purchasers, not indirect purchasers, could sue for price fixing.  (Illinois Brick Co. v. Illinois (1977) 431 U.S. 720 (Illinois Brick).)

Under state antitrust law, only the first question—who may sue—is settled.  In 1978, in direct response to Illinois Brick, the Legislature amended the state’s Cartwright Act (Bus. & Prof. Code, § 16700 et seq.) to provide that unlike federal law, state law permits indirect purchasers as well as direct purchasers to sue (§ 16750, subd. (a)).  This left open the further question how damages should be allocated.  Does the Cartwright Act permit a pass-on defense, or in this respect are state and federal law the same?

We conclude that under the Cartwright Act, as under federal law, generally no pass-on defense is permitted; Hanover Shoe’s view of how properly to measure damages was not novel; as Justice White pointed out, a long line of Holmes and Brandeis opinions had adopted the same understanding.  (See Hanover Shoe, supra, 392 U.S. at pp. 489-490.); “Parens patriae,” literally “parent of the country,” refers traditionally to [the] role of [the] state as sovereign and guardian of persons under legal disability [¶] . . .  [¶] State attorney generals [sic] have parens patriae authority to bring actions on behalf of state residents for anti-trust offenses and to recover on their behalf.’ ”  (Pacific Gas & Electric Co. v. County of Stanislaus (1997) 16 Cal.4th 1143, 1148, fn. 6.); in some instances those same damages might already have been recovered by direct purchasers under the Hanover Shoe rule prohibiting a pass-on defense (see Hanover Shoe, supra, 392 U.S. at p. 494).  The problem of potential double recovery under Hanover Shoe was solved by a Senate amendment excluding from parens patriae damage awards any amount that “duplicates amounts which have been awarded for the same injury.”  (15 U.S.C. § 15c(a)(1); see Sen.Rep. No. 94-803, 2d Sess., p. 44 (1976).); the Legislature moved quickly to incorporate the remedial framework of the Hart-Scott-Rodino Act into the Cartwright Act, enacting a statute that precisely tracked the federal act and authorized the Attorney General to sue for Cartwright Act violations on behalf of consumers. (§ 16760, added by Stats. 1977, ch. 543, § 1, p. 1747.); nowhere in this or any other committee report did the Legislature suggest reconciliation could or should instead occur by repudiating Hanover Shoe under the Cartwright Act.  Rather, the existence of the Hanover Shoe rule was taken as a given; the relevant debate was whether indirect purchaser suits could be accommodated in a world where Hanover Shoe was the law. The Legislature, like the Illinois Brick dissent, apparently preferred procedural devices to a blanket ban on indirect purchaser suits and passed Assembly Bill No. 3222 to clarify that that preference was part of existing Cartwright Act law. (See Assem. Com. on Judiciary, Analysis of Assem. Bill No. 3222 (1977-1978 Reg. Sess.) as introduced Mar. 27, 1978, p. 2 [measure is “declarative of existing law”].)  As with the passage of Assembly Bill No. 1162 (1977-1978 Reg. Sess.) the previous year, the Legislature’s adoption of this amendment indicates acceptance of Hanover Shoe, supra, 392 U.S. 481; while a pass-on defense is generally precluded, a few instances remain in which it will still be available. First, Hanover Shoe recognized an exception for “cost-plus” contracts (Hanover Shoe, supra, 392 U.S. at p. 494) and, given the Legislature’s endorsement of Hanover Shoe, that exception would apply to the Cartwright Act as well; cases may arise where application of the Hanover Shoe rule raises the prospect of duplicative recovery.  In instances where multiple levels of purchasers have sued, or where a risk remains they may sue, trial courts and parties have at their disposal and may employ joinder, interpleader, consolidation, and like procedural devices to bring all claimants before the court. In such cases, if damages must be allocated among the various levels of injured purchasers, the bar on consideration of pass-on evidence must necessarily be lifted; defendants may assert a pass-on defense as needed to avoid duplication in the recovery of damages (Cal. S. Ct., 12.07.10, Clayworth v. Pfizer, S166435).

Antitrust : cartels : comparaison entre le droit fédéral et le droit californien : droit d'action des consommateurs : dans la jurisprudence Hanover Shoe v. United Shoe, la Cour Suprême fédérale a jugé que l’auteur d’une violation du droit contre les trusts ne pouvait ordinairement pas, à titre de moyen de défense, se prévaloir du fait que le surcoût illégal avait été transmis de l’acheteur direct à l’acheteur indirect. En outre, la pleine mesure du surcoût peut être récupérée par l’acheteur direct. Dans une décision relative au même sujet rendue neuf ans plus tard, la Cour Suprême fédérale a jugé que seuls les acheteurs directs, et non les acheteurs indirects, pouvaient agir en justice pour fixation de prix illégale. En droit antitrust californien, le législateur a amendé le Cartwright Act en ce sens que contrairement au droit fédéral, le droit californien autorise à agir en justice les acheteurs indirects aussi bien que les acheteurs directs. En outre, selon cet Act, comme selon le droit fédéral, l’auteur de l’infraction ne peut soutenir valablement, à titre de moyen de défense, que l’acheteur direct a transféré le surcoût à l’acheteur indirect. Le législateur californien, pour éviter des indemnisations à double, a en effet préféré l’usage d’institutions de procédure (jonctions de causes, etc.) plutôt que d’interdire le droit d’action de l’acheteur indirect. Dans le cadre de l'allocation du dommage aux différents lésés, les moyens de preuve qui n'appartiendraient qu'à l'un des lésés à l'exclusion des autres seront pris en considération, pour permettre une répartition équitable de l'indemnité entre les différents lésés. L'Attorney general dispose d'un droit d'agir en faveur des consommateurs.