Filing
732
MEMORANDUM OPINION AND ORDER Signed by the Honorable Robert M. Dow, Jr on 6/29/2015. Mailed notice(cdh, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
IN RE: DAIRY FARMERS OF AMERICA, INC. )
CHEESE ANTITRUST LITIGATION
)
)
)
THIS DOCUMENT RELATES TO:
)
)
Indirect Purchaser Actions
)
Master File No. 9 CV 3690
MDL No. 2031
Judge Robert M. Dow, Jr.
MEMORANDUM OPINION AND ORDER
Before the Court is Defendants’ motion to dismiss Indirect Purchaser Plaintiffs’
Consolidated Class Action Complaint [497]. For the reasons state below, the Court grants
Defendants’ motion. In addition, putative Intervenors’ motion to intervene [723] is denied.
I.
Background
This multi-district litigation—composed of separate consolidated actions by both Direct
Purchaser Plaintiffs and Indirect Purchaser Plaintiffs—has been pending for approximately six
years now. Detailed descriptions of the underlying facts of the case can be found in Judge
Hibbler’s opinion on Defendants’ motion to dismiss the Direct Purchaser Plaintiffs’ complaint,
In re Dairy Farmers of Am., Inc. Cheese Antitrust Litig., 767 F. Supp. 2d 880, 885–90 (N.D. Ill.
2011) (hereinafter “DFA I”), and in this Court’s opinion on Defendants’ motion to dismiss
Indirect Purchaser Plaintiffs’ federal claims, In re Dairy Farmers of Am., Inc. Cheese Antitrust
Litig., 2013 WL 4506000, at *1–4 (N.D. Ill. Aug. 23, 2013) (hereinafter “DFA II”).
This opinion is closely related to the Court’s DFA II opinion, as it concerns Defendants’
motion to dismiss the Indirect Plaintiffs’ state-law claims as raised in their Consolidated Class
Action Complaint [483]. The Court adopts the detailed factual history of the case as set forth in
DFA I and DFA II, and highlights only those facts necessary to address the present motion.
A.
Factual Background
Indirect Plaintiffs allege that Defendants and Schreiber Foods, Inc. conspired to fix,
stabilize, raise, and maintain the prices of Class I & III milk and products containing Class I &
III milk. The basic allegation is that Defendants bought all of the Class III milk futures on the
Chicago Mercantile Exchange (“CME”) covering a certain period of time. Defendants then
monopolized the CME’s Cheese Spot market (i.e., the only commodity exchange market for
cheddar cheese in the United States), which allegedly caused an increase in the USDA’s milk
rate, which in turn increased the price of Defendants’ milk futures and the nationwide price for
finished dairy products sold to consumers. This chain of events allowed Defendants to profit
from both (a) the artificially high price of milk futures and (b) the artificially high price of
finished dairy products. Indirect Plaintiffs contend that Defendants’ scheme injured them by
forcing them to overpay for finished dairy products, namely various types of cheese. The named
Plaintiffs are citizens of eight states (Arkansas, California, Florida, Kansas, Michigan,
Minnesota, North Carolina, and New York) who allegedly purchased Defendants’ finished dairy
products during the relevant time periods in their respective states.
B.
Procedural Background
The “indirect” component of this MDL, as currently set forth in Indirect Plaintiffs’
Consolidated Class Action Complaint [483 (under seal)], is composed of four class-action
lawsuits brought by and on behalf of so-called indirect-purchaser Plaintiffs, filed at various times
in various courts: Rudman v. DFA, No. 2:09-cv-00134 (D. Vt. May 29, 2009); Waun v. DFA, No.
2:11-cv-00219 (D. Vt. Sept. 13, 2011); Asmann v. DFA, No. 11-cv-4428 (Kan. Dist. Ct. Dec. 15,
2011); and Rogers v. DFA, No. 5:13-cv-00034 (D. Vt. Feb. 19, 2013).
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In DFA II, the Court addressed Defendants’ motions to dismiss three of these class-action
complaints [160, 197, 287], granting the motions as they related to Indirect Plaintiffs’ federal
antitrust claims, but leaving open the question of whether the Court would exercise jurisdiction
over Indirect Plaintiffs’ related state-law claims. [365.] Approximately six months later, the
Court granted Indirect Plaintiffs’ request to file a Consolidated Class Action Complaint to
present their remaining state-law allegations to the Court. [476.] Indirect Plaintiffs filed their
Consolidated Class Action Complaint under seal on February 25, 2014, invoking various
antitrust, consumer-protection, and unjust-enrichment laws from the eight states at issue. [483.]
C.
Indirect Purchaser Plaintiffs’ Consolidated Class Action Complaint
Indirect Plaintiffs’ Consolidated Class Action Complaint wends its way through the
antitrust laws of eight states, picking up related consumer-protection and unjust-enrichment
claims along the way. All said, Indirect Plaintiffs raise three counts, which they label (1) State
Statutes, (2) Violation of State Statutes, and (3) Unjust Enrichment. Decoded, these counts are
best read as (1) Price-Fixing and Conspiracy, (2) Monopolization, and (3) Unjust Enrichment.
1.
Counts I and II: Antitrust and Consumer-Protection Claims
While Counts I and II of Indirect Plaintiffs’ Consolidated Class Action Complaint sound
in antitrust law, for various reasons, Indirect Plaintiffs were unable to bring claims under the
antitrust statutes of two of the eight states at issue: Arkansas and Florida. For those two states,
Indirect Plaintiffs brought their antitrust claims under the states’ consumer-protection statutes
instead. See Ark. Code § 4-88-107; Fla. Stat. § 501.204. Indirect Plaintiffs also invoked the
consumer-protection laws of California (Cal. Bus. & Prof. Code § 17200) and North Carolina
(N.C. Gen. Stat. § 75-1.1) in addition to their invocation of the antitrust statutes of those states.
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Although Indirect Plaintiffs have alleged violations of a mix of both state antitrust and
consumer-protection laws in Counts I and II, they do not distinguish between the two. For
purposes of this opinion, however, delineation is imperative. Accordingly, the following chart
provides a breakdown of Counts I and II, distinguishing Indirect Plaintiffs’ antitrust claims from
their consumer-protection claims.
State
Arkansas
California
Florida
Kansas
Michigan
Minnesota
New York
North
Carolina
Count I:
Price Fixing and Conspiracy
Consumer
Antitrust
Protection
Ark. Code
§ 4-88-107
Cal. Bus. & Prof.
Cal. Bus. & Prof.
Code § 16726
Code § 17200
Fla. Stat. § 501.204
Kan. Stat. Ann.
§ 50-112
Mich. Comp.
Laws § 445.772
Minn. Stat.
§§ 325D.51 &
325D.53
N.Y. Gen. Bus.
Law § 340
N.C. Gen. Stat.
N.C. Gen. Stat.
§ 75-1
§ 75-1.1
2.
Count II:
Monopolization
Consumer
Antitrust
Protection
Ark. Code
§ 4-88-107
Cal. Bus. & Prof.
Code § 17200
Fla. Stat. § 501.204
Mich. Comp.
Laws § 445.773
Minn. Stat.
§ 325D.52
N.C. Gen. Stat.
§ 75-2.1
Count III: Unjust Enrichment Claims
Without specifying the laws of any particular state, Indirect Plaintiffs allege in Count III
that Defendants were unjustly enriched by the Indirect Plaintiffs’ overpayments for Defendants’
finished dairy products. Indirect Plaintiffs ask the Court to disgorge Defendants of their unjust
profits and return the overpayments to them in restitution.
II.
Legal Standard on Motion to Dismiss
The purpose of a Rule 12(b) motion to dismiss is not to decide the merits of the case, but
rather to test the sufficiency of the complaint. Gibson v. City of Chicago, 910 F.2d 1510, 1520
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(7th Cir. 1990). In the context of a motion to dismiss, the Court takes as true the facts as set forth
in the complaint along with all reasonable inferences. Thulin v. Shopko Stores Operating Co.,
LLC, 771 F.3d 994, 995 (7th Cir. 2014). To survive a Rule 12(b)(6) motion to dismiss, the claim
first must comply with Rule 8(a) by providing “a short and plain statement of the claim showing
that the pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2), such that the defendant is given “fair
notice of what the * * * claim is and the grounds upon which it rests.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Second,
the factual allegations in the claim must be sufficient to raise the possibility of relief above the
“speculative level,” assuming that all of the allegations in the complaint are true. E.E.O.C. v.
Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Twombly, 550 U.S. at
555). “A pleading that offers ‘labels and conclusions’ or a ‘formulaic recitation of the elements
of a cause of action will not do.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly,
550 U.S. at 555). However, “[s]pecific facts are not necessary; the statement need only give the
defendant fair notice of what the * * * claim is and the grounds upon which it rests.” Erickson v.
Pardus, 551 U.S. 89, 93 (2007) (citing Twombly, 550 U.S. at 555).
III.
Antitrust Standing
In granting Defendants’ prior motion to dismiss the federal antitrust claims raised by
Indirect Plaintiffs in their (then three separate) class-action complaints, the Court held that
Plaintiffs lacked antitrust standing to bring those claims under the “directness inquiry” set forth
in Associated General Contractors of California, Inc. v. California State Council of Carpenters,
459 U.S. 519 (1983) (hereinafter “AGC”). DFA II, 2013 WL 4506000, at *9–14. But the Court
left open the questions of “whether and how the AGC factors apply to each of the various state
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antitrust claims that Plaintiffs seek to bring.” Id. at *15 (emphasis added). Those questions are
now before the Court.
Defendants argue that (1) the Court should apply AGC to the state-law claims, dismissing
them for lack of antitrust standing, (2) even if the Court does not apply AGC to the state-law
claims, the Court should still dismiss those claims under state-law remoteness principles, and
(3) the dismissal (under either theory) should apply to all of Plaintiffs’ claims (i.e., antitrust,
consumer protection, and unjust enrichment), not just the antitrust claims.
In deciding whether to apply AGC to state-law antitrust claims, the Court looks to
whether the relevant state supreme court or state legislature has spoken to the issue. See Erie
R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938); Jean v. Dugan, 20 F.3d 255, 260 (7th Cir. 1994).
“In the absence of guiding decisions by the state’s highest court, [federal courts] consult and
follow the decisions of intermediate [state] appellate courts unless there is a convincing reason to
predict [that] the state’s highest court would disagree.” ADT Sec. Servs., Inc. v. Lisle-Woodridge
Fire Prot. Dist., 672 F.3d 492, 498 (7th Cir. 2012).
Indirect Plaintiffs allege that Defendants have violated the antitrust laws of six states:
California, Kansas, Michigan, Minnesota, New York, and North Carolina. Defendants argue that
the state legislatures or the highest courts in each of these six states have issued clear directives
that courts interpreting their state’s antitrust statutes should follow federal law, and Indirect
Plaintiffs (predictably) disagree. But before beginning a state-by-state analysis, the Court notes
two general topics that are relevant in all six states: (1) harmonization provisions and (2) Illinois
Brick repealer statutes.
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A.
Harmonization Provisions
A harmonization provision—which can either be statutory or derived from the common
law—says that a state’s antitrust laws should be read in harmony with federal antitrust laws. All
six of the states at issue have such provisions. Defendants point to these provisions as proof that
the states would apply AGC. Indirect Plaintiffs disagree, arguing that (1) harmonization
provisions apply to determine what qualifies as prohibited conduct, not who has standing to sue,
and (2) even if a state has a harmonization provision, there nonetheless must be clear guidance
under the state’s law for applying AGC.
Both parties are correct, depending on where you look. Some states have interpreted
harmonization provisions narrowly, excluding the incorporation of federal law regarding
antitrust standing. See Lorix v. Crompton Corp., 736 N.W.2d 619, 626 (Minn. 2007) (noting that
“[t]he desire for harmony between federal and state antitrust law relates more to prohibited
conduct than to who can bring a lawsuit,” such that state courts are “not required * * * to abide
by federal antitrust standing limitations” (citing Comes v. Microsoft Corp., 646 N.W.2d 440, 446
(Iowa 2002) (noting that the purpose of Iowa’s antitrust harmonization statute was to “achieve
uniform application of the state and federal laws prohibiting monopolistic practices,” not to
define who can sue under antitrust law))).
That being said, other courts have applied AGC to state antitrust law based solely on
harmonization provisions. See, e.g., In re Refrigerant Compressors Antitrust Litig., 2013 WL
1431756, at *10 (E.D. Mich. Apr. 9, 2013) (“This Court shall also apply the AGC test to the
claims asserted under the laws of the three relevant states with harmonization provisions * * *.”);
In re Dynamic Random Access Memory Antitrust Litig., 516 F. Supp. 2d 1072, 1095 (N.D. Cal.
2007) (hereinafter “DRAM”).
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Still other courts have played it safe, punting the issue absent clear guidance from the
state in question. See, e.g., In re Potash Antitrust Litig., 667 F. Supp. 2d 907, 943–44 (N.D. Ill.
2009) (“[T]his Court is hesitant to decide who may be a proper plaintiff under Michigan’s
antitrust laws without any signal from an authoritative judicial or legislative source.”), vacated
and remanded on other grounds, sub nom. Minn-Chem, Inc. v. Agrium Inc., 657 F.3d 650 (7th
Cir. 2011); In re Flash Memory Antitrust Litig., 643 F. Supp. 2d 1133, 1153 (N.D. Cal. 2009)
(“This Court, however, is reticent to adopt an across-the-board rule that a state’s harmonization
provision, whether created by statute or common law, is an appropriate means of predicting how
a state’s highest court would rule regarding the applicability of AGC to state law antitrust claims.
Neither party has provided the Court with the requisite, individualized analysis on a per state
basis to enable the Court to render such a determination.”); In re Pool Prods. Distrib. Mktg.
Antitrust Litig., 946 F. Supp. 2d 554, 564 (E.D. La. 2012) (“The AGC factors apply to standing
inquires under state antitrust laws only to the extent that a state has adopted them.”).
The Court is persuaded that the presence of a statutory harmonization provision (either
statutory or common law), absent any countervailing statutory law or case law from a state
appellate court, is sufficient to permit a district court to apply federal antitrust-standing law—
including AGC—to claims brought under that state’s antitrust laws.
First, the plain language of the harmonization statutes at issue—disseminated by the
states’ supreme courts and/or legislatures—offers no such limitation, instructing instead that each
respective state’s antitrust laws be read in harmony with federal antitrust laws, absent
contradictory state law or policy. See, e.g., Mailand v. Burckle, 572 P.2d 1142, 1147 (Cal. 1978)
(California); Kan. Stat. Ann. § 50-163(b) (Kansas); Mich. Comp. Laws § 445.784(2) (Michigan);
Minn. Twins P’ship v. State, 592 N.W.2d 847, 851 (Minn. 1999) (Minnesota); Sperry v.
8
Crompton Corp., 863 N.E.2d 1012, 1018 (N.Y. 2007) (New York); Madison Cablevision, Inc. v.
Morganton, 386 S.E.2d 200, 213 (N.C. 1989) (North Carolina). It seems odd, then, that a district
court would read a non-existent exception into a state’s harmonization provision as its prediction
of how the state’s highest court would rule on the issue. The safer prediction is to assume that the
state court would apply the plain language of the provision.
Second, (as discussed in more detail below), the fact that many state legislatures found it
necessary to repeal the Supreme Court’s Illinois Brick decision—a federal antitrust-standing
opinion—implies that absent the repeal, the Illinois Brick antitrust-standing rule would have
applied to the states’ laws under their respective harmonization provisions (i.e., if the states’
harmonization provisions didn’t incorporate federal antitrust-standing law, Illinois Brick repealer
statutes wouldn’t have been necessary).
Third, antitrust standing is not Article III standing; the very concept of antitrust standing,
which exists in addition to Article III standing,1 is so intertwined with substantive antitrust
principles that it would be counterintuitive to assume that states would not read this body of law
in harmony with the remainder of the Supreme Court’s substantive antitrust opinions. Indeed, the
entire premise of the judicially-created “antitrust standing” inquiry stems from the fact that the
plain language of the Clayton Act’s standing provision is exceedingly broad, and so the Supreme
Court derived a set of narrowing factors influenced by the same policies that gave birth to the
antitrust laws in the first place. See AGC, 549 U.S. at 536–38. Thus, as a threshold matter, the
Court will follow the plain language of the states’ harmonization provisions and adopt federal
antitrust-standing law in applying the states’ antitrust laws absent contrary authority.
But to be clear, a harmonization provision does not guarantee that a state will apply AGC.
Even states with a harmonization provision have the authority to reject the application of AGC if
1
See, e.g., Loeb Indus., Inc. v. Sumitomo Corp., 306 F.3d 469, 480–81 (7th Cir. 2002).
9
AGC conflicts with existing state law (statutory or common law). For example, in Lorix, the
Minnesota Supreme Court first rejected the broader notion that its common-law harmonization
provision automatically incorporated federal antitrust-standing law, and then, in a separate
analysis, specifically rejected the application of AGC under Minnesota antitrust law. Lorix, 736
N.W.2d at 626–29 (“Even viewed as guideposts rather than requirements, the AGC factors are
not harmonious with our antitrust law.”). It is this sort of analysis that makes the Court’s decision
more academic than effectual, since the identification of a harmonization provision is only the
first step in deciding whether a state supreme court would apply the AGC factors, with an
assessment of the state’s extant antitrust-standing law a necessary follow-up.
B.
Illinois Brick Repealer Statutes
Although the standing provision in § 4 of the Clayton Act is broad—permitting civil suits
by “any person who shall be injured in his business or property by reason of anything forbidden
in the antitrust laws,” 15 U.S.C. § 15—the Supreme Court has endorsed several limiting
principles such that not every person, however tangentially injured by an antitrust violator, has
standing to sue. See Blue Shield of Virginia v. McCready, 457 U.S. 465, 472–75 (1982); Hawaii
v. Standard Oil Co., 405 U.S. 251, 263 n.3 (1972) (observing that the lower federal courts were
“virtually unanimous in concluding that Congress did not intend the antitrust laws to provide a
remedy in damages for all injuries that might conceivably be traced to an antitrust violation”).
One such limiting principle (of particular relevance here) came from the Supreme Court’s
Illinois Brick decision, where the Court held that indirect purchasers of bricks lacked antitrust
standing where their alleged damages were measured by the amount of overcharge passed onto
them from the direct purchasers. Illinois Brick, 431 U.S. at 730–31; McCready, 457 U.S. at 474
(“[T]he Court found unacceptable the risk of duplicative recovery engendered by allowing both
10
direct and indirect purchasers to claim damages resulting from a single overcharge by the
antitrust defendant. The Court found that the splintered recoveries and litigative burdens that
would result from a rule requiring that the impact of an overcharge be apportioned between
direct and indirect purchasers could undermine the active enforcement of the antitrust laws by
private actions.” (citations omitted)); AGC, 459 U.S. at 912 (“We observed that potential
plaintiffs at each level in the distribution chain would be in a position to assert conflicting claims
to a common fund, the amount of the alleged overcharge, thereby creating the danger of multiple
liability for the fund and prejudice to absent plaintiffs.”); see also Loeb, 306 F.3d at 481
(“Illinois Brick holds that the direct purchaser from the alleged antitrust violator(s) is the one
with the right of action; those further removed from the illegal arrangement may not (under the
federal antitrust laws, at least) bring their own actions.”); Int’l Bhd. of Teamsters, Local 734
Health & Welfare Trust Fund v. Philip Morris Inc., 196 F.3d 818, 825 (7th Cir. 1999) (“[O]nly
the immediate purchaser of goods may sue under the antitrust laws.”).
Since Illinois Brick came down in 1977, antitrust defendants have tried to stretch its
application to stand for the proposition that “a defendant cannot be sued under the antitrust laws
by any plaintiff to whom it does not sell (or from whom it does not purchase),” but, as the
Seventh Circuit has noted, “[s]uch a rule would eliminate in one fell swoop all competitor suits
based on exclusionary practices,” which is “a step that the Supreme Court has never taken.”
Loeb, 306 F.3d at 481. And the Supreme Court subsequently clarified that “the chain-ofdistribution inquiry in Illinois Brick was meant only to preclude duplicate recovery.” Id. (citing
McCready, 457 U.S. at 468–70); see also id. at 482 (“The reason the plaintiffs’ suit in Illinois
Brick failed was not because the defendants did not sell to them. Rather, it was because the
defendants did sell to a third party who * * * could recover for any injury they claimed.”).
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Six years later, in 1983, the Supreme Court issued another opinion on antitrust
standing—AGC—providing a six-factor test for examining the link between a plaintiff’s harm
and a defendant’s wrongdoing: (1) the causal connection between the violation and the harm;
(2) the presence of improper motive; (3) the type of injury and whether it was one Congress
sought to redress; (4) the directness of the injury; (5) the speculative nature of the damages; and
(6) the risk of duplicate recovery or complex damage apportionment. Loeb, 306 F.3d at 484
(citing AGC, 459 U.S. at 537–45). The “broad proposition” emanating from AGC is that “a party
cannot recover when others more directly injured are better able to state a claim.” Id. at 489.
At first glance, there appears to be some overlap between the Illinois Brick doctrine and
the AGC six-factor test. In general, both tests relate to the directness of a plaintiff’s injury. And
specifically, several of the AGC factors—especially factor number six—echo the Court’s ruling
in Illinois Brick. See Lorix, 736 N.W.2d at 628 (holding that the “complexity of apportionment
and risk of duplicative recoveries” factor “was at the heart of Illinois Brick’s bar to indirect
purchaser suits”). However, other courts have been quite clear in holding that Illinois Brick and
AGC present separate, distinct inquiries. See Int’l Bhd. of Teamsters, Local 734 Health &
Welfare Trust Fund v. Philip Morris Inc., 196 F.3d 818, 825 (7th Cir. 1999) (noting that the
“direct-purchaser doctrine of Illinois Brick and the direct-injury doctrine of Associated General
Contractors are analytically distinct” and are “independent obstacle[s] to recovery”); Loeb, 306
F.3d at 475 (“We find that Illinois Brick presents no obstacle to any of the plaintiffs’ claims but
that the claims of the scrap copper dealers are precluded under AGC.”); DFA II, 2013 WL
4506000, at *14 (noting that AGC, and specifically its “directness inquiry,” “presents a separate
hurdle to Indirect Purchasers’ claims”); see also Southard v. Visa USA Inc., 734 N.W.2d 192,
12
198–99 (Iowa 2007) (adopting AGC despite its repealer statute); Kanne v. Visa USA Inc., 723
N.W.2d 293, 298–300 (Neb. 2006) (same).
This delineation between Illinois Brick and AGC is important because in reaction to
Illinois Brick, multiple state legislatures—including the legislatures of all but one of the states at
issue here—passed “repealer statutes” abrogating the Supreme Court’s prohibition of indirectpurchaser actions as articulated in Illinois Brick. The key question is how, if at all, these repealer
statutes impact the Court’s application of AGC under each state’s law.
To answer that question fully, the Court must (and will) review the language of the
repealer statutes at issue, as well as the relevant case law interpreting those statutes. But the
Court notes that while at least 25 states enacted repealer statutes in response to Illinois Brick (see
Lorix, 736 N.W.2d at 627), the Court is not aware of any legislative action by any state expressly
rejecting AGC. The fact that so many states took action in response to Illinois Brick shows that
states are quite capable of rejecting federal antitrust law when they see fit to do so. Illinois Brick
was decided in 1977 and AGC in 1983, so state legislatures have had ample time to pass
equivalent “repealer statutes” regarding AGC. On the other hand, the Court recognizes that by
enacting a repealer statute, each state has taken some action to differentiate its antitrust-standing
law from the federal landscape. In addition, despite the Seventh Circuit’s recognition that Illinois
Brick and AGC represent separate and distinct hurdles, this Court cannot overlook the overlap
between some of the AGC factors and the Illinois Brick inquiry, which is not surprising since the
AGC test was, at least in some ways, influenced by Illinois Brick. See, e.g., Wrobel v. Avery
Dennison Corp., No. 05-cv-1296, 2006 WL 7130617 (Kan. Dist. Ct., Feb. 1, 2006) (state court
opinion), available at [574-1, at 6] (“Because ‘AGC incorporates, rather that repudiates, the
principles of Illinois Brick,’ one could argue that jurisdictions rejecting Illinois Brick would also
13
reject the AGC standing test since its broad application would preclude most, if not all, indirect
purchaser suits. In other words, applying AGC in a jurisdiction that recognizes indirect purchaser
suits could effectively negate the legislative or judicial rejection of Illinois Brick.” (quoting
McCarthy v. Recordex Serv., 80 F.3d 842, 851 (3d Cir. 1996))). But see id. (“Although this
argument has some intuitive appeal, it fails to consider that ‘AGC and Illinois Brick address two
analytically distinct aspects of antitrust standing.” (quoting McCarthy, 80 F.3d at 851)).
Ultimately, while the Court recognizes that similar policy concerns may have motivated both
Illinois Brick and AGC, they remain separate and distinct tests. Accordingly, to determine
whether a state’s repealer statute has any impact on the state’s willingness to apply AGC, the
Court must review the specific language of the repealer statute and any associated case law.
C.
State-by-State Analysis
With assistance from the parties, the Court now “undertake[s] the back-breaking labor
involved in deciphering the state of antitrust standing in each of th[e] states on this motion” to
determine whether to apply the AGC factors that the Court applied in dismissing Indirect
Plaintiffs’ federal antitrust claims. In re Flash Memory Antitrust Litig., 643 F. Supp. 2d at 1153.
1.
California
Standing Provision:
Much like the standing provision in the Clayton Act, California’s Cartwright Act is broad
in scope, permitting “[a]ny person who is injured in his or her business or property by reason of
anything forbidden or declared unlawful by this chapter” to bring an antitrust action. Calif. Bus.
& Prof. Code § 16750 subd. (a).
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Harmonization Provision:
California’s harmonization provision is based in common law, and is well-recognized in
the California Supreme Court. Clayworth v. Pfizer, Inc., 233 P.3d 1066, 1082 n.18 (Cal. 2010)
(explaining that the Illinois Brick repealer statute was necessary because federal antitrust cases
are otherwise treated as applicable and authoritative on Cartwright Act questions); Mailand v.
Burckle, 572 P.2d 1142, 1147 (Cal. 1978); Marin Cty. Bd. of Realtors, Inc. v. Palsson, 549 P.2d
833, 835 (Cal. 1976) (noting that a “long line of California cases” has recognized that federal
cases interpreting the Sherman Act are applicable to state antitrust cases because “both statutes
have their roots in the common law”); Cnty. of Tuolumne v. Sonora Cmty. Hosp., 236 F.3d 1148,
1160 (9th Cir. 2001) (“[T]he Cartwright Act, Cal. Bus. & Prof. Code § 16700 et seq., was
modeled after the Sherman Act.”). The California Supreme Court has rejected arguments that
judicial interpretations of the Sherman and Clayton Acts “apply fully” to California’s antitrust
laws, noting that “[i]nterpretations of federal antitrust law are at most instructive, not conclusive,
when construing the Cartwright Act.” Aryeh v. Canon Business Solutions, Inc., 292 P.3d 871,
877 (2013); see also Samsun Electronics Co., Ltd. v. Panasonic Corp., 747 F.3d 1199, 1205 n.4
(9th Cir. 2014).
Illinois Brick Repealer Statute:
The California legislature took action “[w]ithin months of the decision,” (i.e., prior to the
AGC decision), introducing Assembly Bill No. 3222 (1977–1978 Reg. Sess.) to prevent Illinois
Brick “from having any effect on judicial interpretation of the Cartwright Act.” Clayworth, 233
P.3d at 1082. The bill passed unanimously, and added a provision to the Act’s standing provision
stating that a person injured by an antitrust violator may bring suit “regardless of whether such
injured person dealt directly or indirectly with the defendant.” Calif. Bus. & Prof. Code § 16750
15
subd. (a), added by Stats. 1978, ch. 536, § 1, p. 1693; see also Clayworth, 233 P.3d at 1082
(citing Union Carbide Corp. v. Superior Court, 679 P.2d 14, 19–20 (Cal. 1984)).
Supreme Court/Appellate Court Law:
California’s intermediate appellate court has endorsed the application of the AGC factors
in interpreting California’s antitrust laws, despite the state’s Illinois Brick repealer statute. See
In re Flash Memory Antitrust Litig., 643 F. Supp. 2d at 1151–52 (applying AGC under California
law, noting that while the California Supreme Court has not reached the issue, at least one of its
intermediate appellate courts has applied AGC to its antitrust laws (citing Vinci v. Waste Mgmt.,
Inc., 43 Cal. Rptr. 2d 337, 338–39 (Cal. 1995))). But see In re Capacitors Antitrust Litig., 2015
WL 3398199, at *13 (N.D. Cal. May 26, 2015) (“The application of AGC to California state
antitrust claims has recently become murky, and that murkiness persuades the Court AGC should
not be applied.”). The Ninth Circuit has also applied the AGC factors to assess standing under
California antitrust law (albeit “more liberally”), noting only that the scope of the directness
inquiry is broader under California law based on the state’s repeal of Illinois Brick. See
Knevelbaard Dairies v. Kraft Foods, Inc., 232 F.3d 979, 987–91 (9th Cir. 2000); see also
Clayworth, 233 P.3d at 1077 (citing AGC and Vinci as cases that dealt with antitrust causation,
and then noting that these cases have “nothing to say on the general topic that concerns us: when
(as here) causation has been properly alleged, how are antitrust damages to be measured?”).
Analysis:
The Court agrees with the In re Flash Memory Antitrust Litigation court, which followed
Vinci in applying the AGC factors to antitrust claims brought under the Cartwright Act. The
Court is mindful that, as the Ninth Circuit mentioned, California’s antitrust-standing provision is
broader in some respects than federal antitrust-standing law because of California’s repealer
16
statute, but the Court also recognizes that California’s repealer statute applied only to Illinois
Brick, and Illinois Brick and AGC are separate inquiries. See In re Refrigerant Compressors
Antitrust Litig., 2013 WL 1431756, at *10. Absent any binding California law to the contrary,
the appellate court decision in Vinci and the moderately-deferential harmonization provision
remain the best indicators of how the California Supreme Court would address the issue, and
both lean in favor of applying AGC to claims brought under the Cartwright Act.
2.
Kansas
Standing Provision:
Kansas also has a broadly-worded antitrust-standing provision, stating that a cause of
action “may be brought by any person who is injured in such person’s business or property by
reason of” an antitrust violation. Kan. Stat. Ann. § 50-161(b).
Harmonization Provision:
Kansas is one of the two states at issue with a statutory harmonization provision. See
Kan. Stat. Ann. § 50-163(b) (“Except as otherwise provided in subsections (d) and (e), the
Kansas restraint of trade act shall be construed in harmony with ruling judicial interpretations of
federal antitrust law by the United States [S]upreme [C]ourt. If such judicial interpretations are
in conflict with or inconsistent with the express provisions of subsection (c), the provisions of
subsection (c) shall control.”). The harmonization provision also is echoed in Kansas’s case law.
See O’Brien v. Leegin Creative Leather Prods., Inc., 321 P.3d 799, at *5 (Kan. Ct. App. 2014)
(noting the Kansas legislature’s recent amendment of the Kansas Restraint of Trade Act, and the
legislature’s instruction that “its provisions will be ‘construed in harmony’ with the United States
Supreme Court’s antitrust decisions” (citing Kan. State. Ann. 2013 Supp. 50-163(b), (c))); Smith
v. Philip Morris Cos., Inc., 335 P.3d 644, 652 (Kan. Ct. App. 2014) (same). The Supreme Court
17
of Kansas has noted that while it is “certainly foreseeable” that it would apply federal antitrust
law in interpreting Kansas’s antitrust laws and that such law would be “persuasive authority,”
ultimately federal antitrust law “is not binding upon any court in Kansas interpreting Kansas
antitrust law.” Bergstrom v. Noah, 974 P.2d 520, 531 (Kan. 1999).
Illinois Brick Repealer Statute:
Similar to other states, Kansas’s repealer statute provides that a cause of action may be
brought “regardless of whether such injured person dealt directly or indirectly with the
defendant.” Kan. Stat. Ann. § 50-161(b).
Supreme Court/Appellate Court Law:
Neither the parties nor the Court have located any appellate court decisions in Kansas
discussing antitrust standing. At least one Kansas district court (i.e., Kansas’s trial court) has
addressed the issue, concluding that Kansas courts should apply AGC despite its repealer statute:
Because “AGC incorporates, rather than repudiates, the principles of
Illinois Brick,” one could argue that jurisdictions rejecting Illinois Brick would
also reject the AGC standing test since its broad application would preclude most,
if not all, indirect purchaser suits. In other words, applying AGC in a jurisdiction
that recognizes indirect purchaser suits could effectively negate the legislative or
judicial rejection of Illinois Brick.
Although this argument has some intuitive appeal, it fails to consider that
“AGC and Illinois Brick address two analytically distinct aspects of antitrust
standing.” In AGC, the Court was primarily concerned with the remoteness of the
plaintiff’s injury and whether it was too far removed from the antitrust injury to
warrant a section 4 remedy. “This inquiry, akin to the determination of ‘proximate
cause’ in the negligence context, is subtle and resists the use of hard-and-fast
‘black letter’ rules.” In Illinois Brick, however, the Court created a bright-line rule
that focused “exclusively on the risk of duplicative recovery and potential for
overly-complex damages and apportionment calculations.” Viewed in this
context, the Court finds that the AGC standing test may be applied to this action
even though the KRTA specifically contemplates indirect purchaser suits. The
Court, therefore, agrees with Defendants that “the KRTA does not implicitly grant
standing to every antitrust plaintiff who characterizes himself as an ‘indirect
purchaser.’”
18
Wrobel, No. 05-cv-1296, 2006 WL 7130617, available at [574-1, at 6–7] (internal citations
omitted). Several federal courts have also applied AGC to antitrust-standing questions under
Kansas law. See, e.g., Orr v. Beamon, 77 F. Supp. 2d 1208, 1212 (D. Kan. 1999); DRAM, 516 F.
Supp. 2d at 1094; Sahagian v. Genera Corp., 2009 WL 9504039, at *6 (C.D. Cal. July 6, 2009);
In re Refrigerant Compressors Antitrust Litig., 2013 WL 1431756, at *10.
Analysis:
In Kansas, the only known state court to cite to AGC elected to adopt and apply the AGC
test, despite the state’s repeal of Illinois Brick. See Wrobel, No. 05-cv-1296, 2006 WL 7130617,
available at [574-1, at 6] (“[T]he Court finds that the AGC standing test may be applied to this
action even though the KRTA specifically contemplates indirect purchaser suits.”); see also Orr,
77 F. Supp. 2d at 1211 (“In finding no Kansas cases to the contrary, the court concludes that
standing under the Kansas antitrust statutes requires an antitrust injury similar to that required
under the Sherman and Clayton Acts.”); DRAM, 516 F. Supp. 2d at 1093–94 (holding that
Kansas courts “would support application of the AGC test in assessing antitrust standing”).
Although the court in In re Potash Antitrust Litigation elected not to follow Wrobel, Orr,
or DRAM in its decision not to apply AGC in interpreting Kansas’s antitrust laws, see 667 F.
Supp. 2d at 944, the court did not cite any authority contradicting those cases, and simply found
the supporting authority to be insufficient. This Court is not persuaded by the Potash analysis,
and instead finds the well-reasoned Wrobel opinion to be more indicative of how the Kansas
Supreme Court would address the application of AGC.
Nor is the Court persuaded by the Kansas cases that mention the fact that federal antitrust
law is not binding on Kansas courts. See, e.g., Bergstrom, 974 P.2d at 531; O’Brien v. Leegin
Creative Leather Prods., Inc., 277 P.3d 1062, 1068 (Kan. 2012). First off, these are not antitrust-
19
standing cases, and they do not address AGC. But perhaps more persuasively, since the
Bergstrom and O’Brien decisions, the Kansas legislature has amended KRTA to provide that it
“shall be construed in harmony with ruling judicial interpretations of federal antitrust law by the
United States supreme court.” Kan. Stat. Ann. § 50-163(b). Accordingly, and absent any binding
authority to the contrary, the Court is persuaded that the Kansas Supreme Court would apply
AGC in interpreting antitrust standing under KRTA.
3.
Michigan
Standing Provision:
Michigan affords a right to sue under its antitrust reform act to “[a]ny * * * person
threatened with injury or injured directly or indirectly in his or her business or property by a
violation of th[e] act.” Mich. Comp. Laws § 445.778(2).
Harmonization Provision:
Michigan is the other state at issue with a statutory harmonization provision. See Mich.
Comp. Laws § 445.784(2) (“It is the intent of the legislature that in construing all sections of this
act, the courts shall give due deference to interpretations given by the federal courts to
comparable antitrust statutes, including, without limitation, the doctrine of per se violations and
the rule of reason.”); Salmon v. City of Cadillac, 2005 WL 3416119, at *5 (Mich. Ct. App. Dec.
13, 2005) (“[B]ecause Michigan’s antitrust legislation is patterned after federal antitrust
legislation, federal court decisions applying the Sherman Act are persuasive authority in
interpreting the [Michigan Antitrust Reform Act].”); Mercy Mem’l Hosp. v. Porter, 1999 WL
33326821, at *3 (Mich. Ct. App. Dec. 21, 1999) (same); Elias v. Fed. Home Loan Mortg. Corp.,
581 F. App’x 461, 468–69 (6th Cir. 2014).
20
Illinois Brick Repealer Statute:
Michigan’s repealer statute extended antitrust standing to any person “threatened with
injury or injured directly or indirectly.” Mich. Comp. Laws § 445.778(2).
Supreme Court/Appellate Court Law:
The only opinion from a Michigan court citing AGC is a circuit court opinion (i.e., not an
appellate-court decision), where the court applied AGC despite Michigan’s repealer statute:
[T]his Court agrees with Defendants that it does not necessarily follow that
Michigan’s repeal of the Illinois Brick rule also eliminated the Associated
General Contractors standing requirements. The Supreme Court in Illinois Brick
made clear that its decision addressed only whether there should be a bar on
“indirect purchaser” suits. It expressly “d[id] not address the standing issue,”
explaining that the “indirect purchaser” question is “analytically distinct from the
question of which persons have sustained injuries too remote to give them
standing to sue.”
Stark v. Visa U.S.A. Inc., 2004 WL 1879003, at *4 (Mich. Cir. Ct. July 23, 2004) (citing Illinois
Brick, 431 U.S. at 728 n.7.). The Stark court also noted that “while Michigan appellate courts
have not developed a test for determining when a plaintiff’s injury is too remote to permit suit
under [the Michigan Antitrust Reform Act], the Act requires courts to give ‘due deference to
interpretations given by the federal courts to comparable antitrust statutes.’” Id. (citing Mich.
Comp. Laws § 445.784(2)). This nuanced understanding of the distinction between Illinois Brick
and AGC, coupled with this application of the plain language of Michigan’s harmonization
provision, have inspired other courts to apply AGC to questions of antitrust standing under
Michigan law. See, e.g., In re Ductile Iron Pipe Fittings Indirect Purchaser Antitrust Litig., 2013
WL 5503308, at *15 (D.N.J. Oct. 2, 2013); In re Cathode Ray Tube Antitrust Litig., 2013 WL
4505701, at *9 (N.D. Cal. Aug. 21, 2013); In re Refrigerant Compressors Antitrust Litig., 2013
WL 1431756, at *10; Sahagian, 2009 WL 9504039, at *6; DRAM, 516 F. Supp. 2d at 1094.
21
Analysis:
The combination of the Stark decision and Michigan’s harmonization provision
persuades the Court that the Michigan Supreme Court would apply the AGC factors to assess
antitrust standing, and the Court sees no evidence to the contrary, binding or otherwise.
4.
Minnesota
The Court need not delve heavily into Minnesota law, as the Minnesota Supreme Court
has already made clear that the AGC factors conflict with Minnesota antitrust law.
Standing Provision:
“Any person” injured by an antitrust violation may sue under Minnesota’s antitrust law.
Minn. Stat. § 325D.57.
Harmonization Provision:
“Minnesota law is generally interpreted consistently with federal antitrust law.” Lorix,
736 N.W.2d at 626 (citing Minn. Twins P’ship v. State, 592 N.W.2d 847, 851 (Minn. 1999)).
Illinois Brick Repealer Statute:
“In 1984, our legislature added the words ‘directly or indirectly’ to Minn. Stat. § 325D.57
to make clear that, contrary to Illinois Brick, Minnesota antitrust law permits indirect purchasers
to recover.” Lorix, 736 N.W.2d at 626–27.
Supreme Court/Appellate Court Law:
The Minnesota Supreme Court is the only known state supreme court to reject (in most
part, at least) the adoption of the AGC factors. Lorix, 736 N.W.2d at 632 (“The AGC factors
* * * do not provide the benchmark for standing under Minnesota antitrust law.”).
22
Analysis:
In light of Lorix, the Court will not apply the AGC factors to Plaintiffs’ claims under
Minnesota law.
Importantly, though, despite holding that the lower courts “erred in applying AGC,” the
Lorix court nonetheless noted that its rejection of AGC “d[id] not necessarily mean that Lorix
ha[d] standing.” Lorix, 736 N.W.2d at 630. Thus—although the Court is jumping the gun a bit by
addressing this here—it is relevant to understand what antitrust-standing rules Minnesota does
apply before deciding whether Plaintiffs’ claims would pass muster in that court.
In spite of its refusal to adopt AGC, the Lorix court still acknowledged that some of the
AGC factors overlap with Minnesota’s antitrust-standing inquiry. Specifically, the court noted
that “[w]hile Minnesota courts should analyze an alleged injury’s relation to the goals of antitrust
law by identifying the markets involved, the market analysis is not the focus of the standing
inquiry.” Lorix, 736 N.W.2d at 628. The court also noted that “whether the damages are
speculative[] is relevant to standing under the Minnesota antitrust law.” Id. And most
importantly here, the court conceded that despite the broad language of its antitrust provision,
“there are injuries so remotely related to antitrust violations that courts simply cannot provide
relief,” such that “[s]tanding under Minnesota antitrust law must be defined by some prudential
limits informed by foreseeability, proximate cause, remoteness, and relation of the injury to the
purposes of the antitrust law; otherwise, almost any antitrust violation would provide almost any
citizen with a cause of action arising from the resulting ripples of harm throughout the state’s
economy.” Id. at 631.
Lorix (the indirect purchaser) bought tires that were manufactured with price-fixed
chemicals. Lorix, 736 N.W.2d at 622–23. Refusing to define the outer limits of standing under
23
Minnesota law, the court held that Lorix had standing because “she is an end user of a consumer
good whose price was inflated by anticompetitive conduct earlier in the chain of manufacture,”
and that “as an end user, Lorix is the party most likely to be injured by an anticompetitive
overcharge because she is the only party in the chain of purchase who cannot pass on part or all
of that overcharge.” Id. at 631. The court affirmatively rejected any “market-participant
requirement,” and held that “indirect purchasers of goods manufactured with price-fixed
components” had standing to sue under Minnesota law. Id. at 628. However, the court did give
one example of an indirect-purchaser injury that would be too remote to establish standing:
namely, the Visa/Mastercard litigation cases where consumers alleged that they paid more for
consumer goods due to Visa and Mastercard’s illegal tying of debit card services with credit card
services. Id. at 632 (citing Gutzwiller v. Visa USA, Inc., 2004 WL 2114991 (Minn. Dist. Ct. Sept.
15, 2004)). It was the fact that the overcharges stemming from these violations “were passed on
to consumers in the form of higher prices on essentially every good sold in the state of
Minnesota” that led the Lorix court to declare that consumer standing should not “allow[] every
person in the state to sue for an antitrust violation simply by virtue of his or her status as a
consumer.” Id.
To round out this analysis, the Court must predict whether the Minnesota Supreme Court
would find that Indirect Plaintiffs have antitrust standing under Minnesota law without relying
on the AGC factors. As a starting point, the injury here is certainly more remote than the injury in
Lorix. In Lorix, the alleged antitrust-violators (i.e., the chemical manufacturers) sold chemicals
to tire manufacturers, who produced tires that were eventually sold to consumers. The path from
the price-fixed thing (i.e., tire chemicals) to the end product (i.e., consumer tires) was short and
narrow (or, as the Lorix court described it, “relatively focused”), and the list of affected
24
individuals and entities (e.g., tire manufacturers, tire wholesalers/distributors/retailers, and tire
consumers) was small. Here, the alleged antitrust-violators dealt in spot cheese and milk futures
bought and sold on a commodities exchange, which allegedly translated to higher prices in the
physical markets of milk and cheese products (finished dairy products) across the country. The
leap from the commodities exchange to the vast end-user market here is sizeable, and making
that leap would result in a grant of standing to any individual who purchased any product
containing milk or cheese in the United States. To be clear, the ubiquity of the end-user product
is not the problem (i.e., there is no too-big-to-sue doctrine), but such a scenario presents a red
flag as to the potential remoteness of the alleged injury. For example, while the chain in Lorix
could be described as pyramidal (increasing in size from the original violators to the secondary
and tertiary markets), the chain that Indirect Plaintiffs present begins with a similar pyramid but
adds an exponentially larger tier to the bottom that overshadows the actual offense. In other
words, by extending the alleged antitrust violation across markets and then further extending it to
include all consumers of finished dairy products, Indirect Plaintiffs have transformed a
“relatively focused” antitrust scheme into a distorted and overly broad arrangement that masks
the underlying violation and highlights the remoteness of Indirect Plaintiffs’ injury.
In addition, Lorix was a “component” case, where the price-fixed product was a
component of the end-user product. Id. at 633 (“Antitrust laws * * * provide a remedy for
consumers who have purchased goods manufactured with price-fixed components.”). But here,
the spot cheese and milk futures are not components of finished milk products. See DFA II, 2013
WL 4506000, at *14 n.13 (noting that “the causal connection is even more attenuated and
complicated here * * * because the allegedly price-fixed products are not components of the
finished goods.”). Further, in addition to conceding that it would still consider certain of the AGC
25
factors, the Minnesota Supreme Court favorably cited the Minnesota district court’s Gutzwiller
decision, which denied standing to a plaintiff who was “not a consumer * * * in the allegedly
restrained market.” Gutzwiller, 2004 WL 2114991, at *6; see also Lorix, 736 N.W.2d at 628
(noting that while it’s not “the focus of the standing inquiry,” “courts should analyze an alleged
injury’s relation to the goals of antitrust law by identifying the markets involved”); id. at 626
(noting that “the purposes of Minnesota and federal antitrust law are the same,” and that “[t]he
primary purpose of antitrust laws is to protect interbrand competition” (citing State Oil Co. v.
Khan, 522 U.S. 3, 14 (1997))). And regarding Lorix’s instruction that the court focus on the
purpose of the antitrust laws in assessing standing, as the Gutzwiller court noted, “this is
obviously not a situation where the [alleged] antitrust violators will go unpunished,” 2004 WL
2114991, at *9, which is a sentiment that this Court has already articulated. See DFA II, 2013
WL 4506000, at *14 (“[B]y denying Indirect Plaintiffs leave to proceed with their * * * antitrust
claims, the Court would not ‘leave a significant antitrust violation undetected or unremedied.’”
(quoting Kochert v. Greater Lafayette Health Servs., 463 F.3d 710, 718–19 (7th Cir. 2006))).
The facts here align more with the facts in the Visa/Mastercard cases (including
Gutzwiller) than the facts in Lorix, implying that even the Minnesota Supreme Court would draw
a line somewhere along this extended, mixed-market chain. Ultimately, despite the Lorix court’s
refusal to adopt AGC, the Court is nonetheless persuaded by the court’s citation to Gutzwiller as
well as its concession that any assessment of antitrust standing must be “informed by
foreseeability, proximate cause, remoteness, and relation of the injury to the purposes of the
antitrust law” in holding that the Indirect Plaintiffs’ injuries are too remote and speculative to
afford standing under Minnesota antitrust law. Lorix, 736 N.W.2d at 629.
26
5.
New York
Standing Provision:
Similar to the other standing provisions reviewed herein, New York law extends standing
to “any person who shall sustain damages by reason of any violation” of the state’s antitrust act
(called the Donnelly Act). N.Y. Gen. Bus. Law § 340.
Harmonization Provision:
New York’s top court recently clarified that while New York courts generally construe
the Donnelly Act in harmony with federal antitrust case law, it is “well settled” that New York
courts interpret the Donnelly Act differently “where State policy, differences in the statutory
language or the legislative history justify such a result.” Sperry v. Crompton Corp., 863 N.E.2d
1012, 1018 (N.Y. 2007); see also Anheuser-Busch, Inc. v. Abrams, 520 N.E.2d 535, 539 (N.Y.
1988) (“Although we do not move in lockstep with the Federal courts in our interpretation of
antitrust law, the Donnelly Act—often called a ‘Little Sherman Act’—should generally be
construed in light of Federal precedent and given a different interpretation only where State
policy, differences in the statutory language or the legislative history justify such a result.”
(internal citations omitted)).
Illinois Brick Repealer Statute:
New York’s repealer statute specifies that a person who sustains damages as a result of
an antitrust violation shall not have his or her recovery limited due to the fact that the person
“has not dealt directly with the defendant.” See N.Y. Gen. Bus. Law § 340.
Supreme Court/Appellate Court Law:
New York’s Court of Appeals, its highest court, has not weighed in on the application of
the AGC factors under the Donnelly Act. New York’s Appellate Division, its second-highest
27
court, has endorsed the lower court’s application of the AGC factors in two indirect-purchaser
cases. See Ho v. Visa USA, Inc., 793 N.Y.S.2d 8, 8–9 (N.Y. App. Div. 2005) (affirming the
dismissal of plaintiffs’ antitrust claims due to “the remoteness of their damages from the alleged
injurious activity”), aff’g, 787 N.Y.S.2d 677 (N.Y. Sup. Ct. 2004) (applying the AGC factors in
determining that “plaintiffs’ alleged injury is far too remote to provide antitrust standing under
the Donnelly Act”); State ex rel. Spitzer v. Daicel Chem. Indus., Ltd., 840 N.Y.S.2d 8, 12 (N.Y.
App. Div. 2007) (affirming the dismissal of claims where the plaintiff’s injury was “too remote”
from the alleged wrongdoing), aff’g in relevant part, sub nom. State v. Daicel Chem. Indus., Ltd.,
2005 WL 6056054 (Sup. Ct. Aug. 9, 2005); see also Williams v. Citigroup, Inc., 954 N.Y.S.2d
762, at *4 (N.Y. Sup. Ct. 2012) (finding that plaintiffs “damages [we]re too remote ‘from the
alleged injurious activity’ to confer standing,” citing Ho).
Other courts have followed suit in finding that New York’s highest court would likewise
apply the AGC factors to issues of antitrust standing under the Donnelly Act. See, e.g., In re
Refrigerant Compressors Antitrust Litig., 2013 WL 1431756, at *10; Sahagian v. Genera Corp.,
2009 WL 9504039, at *6 (C.D. Cal. July 6, 2009) (applying AGC under New York law, noting
that “where state courts and legislatures have indicated that they would look to federal antitrust
precedent in applying [their antitrust law], it seems that at the very least courts would require
plaintiffs in antitrust actions to plausibly allege that they were participants in the relevant product
market where the alleged anti-competitive activity took place.”); Nichols v. Mahoney, 608
F. Supp. 2d 526, 545 (S.D.N.Y. 2009) (“[I]f the plaintiffs do not have standing to assert a federal
antitrust claim, they do not have standing to bring a Donnelly Act claim.”). But see In re Ductile
Iron Pipe Fittings Indirect Purchaser Antitrust Litig., 2013 WL 5503308, at *16 (“The Court is
not persuaded that the AGC test applies to New York * * * antitrust law. In reaching this
28
conclusion, the Court notes that Defendants have not cited any state appellate cases to show that
the highest court in [New York] would apply the AGC factors in th[at] state[].”)
Analysis:
New York’s lower- and mid-level courts have consistently endorsed the application of the
AGC factors in assessing antitrust standing, in accordance with the state’s harmonization
provision. The Court has no reason to believe that New York’s highest court would not do the
same. Accordingly, the Court will apply the AGC factors in determining whether Indirect
Plaintiffs have standing under New York’s Donnelly Act.
6.
North Carolina
Standing Provision:
North Carolina grants standing to “any person” injured by an antitrust violation. N.C.
Gen. Stat. § 75-16.
Harmonization Provision:
North Carolina’s harmonization provision, arising from common law, is similar to the
New York provision, which recognizes the federal opinions interpreting the Sherman Act are
instructive, but not binding, when interpreting its antitrust statute. Madison Cablevision, Inc. v.
Morganton, 386 S.E.2d 200, 213 (N.C. 1989) (citing Rose v. Vulcan Materials Co., 194 S.E.2d
521, 520 (N.C. 1973)).
Illinois Brick Repealer Statute:
North Carolina does not have a repealer statute, although the North Carolina Court of
Appeals deemed such a provision unnecessary, claiming that North Carolina’s standing provision
is broad enough to incorporate indirect purchasers. See Hyde v. Abbott Labs., Inc., 473 S.E.2d
680, 684–87 (N.C. Ct. App. 1996) (“We find that a slight risk of multiple liability is greatly
29
outweighed by the benefit of advancing the aforementioned policies of [North Carolina’s
Antitrust Act].”). In addition, the “legislative history also leads to the conclusion that the General
Assembly intended to create indirect purchaser standing to sue under the state antitrust laws.”
Crouch v. Crompton Corp., 2004 WL 2414027, at *11 (N.C. Super. Ct. Oct. 28, 2004). The
Crouch court nonetheless realized that this broad reading of North Carolina’s standing provision
conflicts with the states harmonization provision, resolving that “unless and until Hyde is
overruled by the Supreme Court or new legislation is passed, this Court is bound by the decision
in Hyde to the extent that it holds that indirect purchasers have standing under the North Carolina
antitrust laws.”
Supreme Court/Appellate Court Law:
There are two North Carolina cases that discuss the application of AGC. First is the
appellate court case of Teague v. Bayer AG, 671 S.E.2d 550 (N.C. Ct. App. 2009). While Teague
did not reject the application of AGC in general, it did reject its application to the facts of that
case.2 Id. at 556–57. The court (somewhat questionably) distinguished the facts of its case from
those in AGC “in several relevant ways,” noting that “the plaintiff in AGC was not an indirect
purchaser, * * * was not a person injured by reason of an antitrust violation * * * [and] alleged
breach of a collective-bargaining agreement and not antitrust violations.” Id. at 556. Because the
court viewed its case as one that involved indirect-purchaser standing, it applied its reasoning in
Hyde in holding that allowing indirect-purchaser standing would “best advance the legislative
intent that such violations be deterred, and that aggrieved consumers have a private cause of
action to redress [antitrust] violations.” Id. at 558.
2
Teague relied on an Iowa district court decision that rejected the AGC factors in determining an indirect
purchaser’s standing because “AGC did not involve price fixing and because the plaintiffs in AGC were
competitors rather than purchasers.” 671 S.E.2d at 557 (citing Anderson Contracting, Inc. v. Gayer AG,
2005 WL 6939352 (Iowa Dist. Ct. May 31, 2005)). Two years later, the Iowa Supreme Court made clear
that AGC applies under Iowa law. Southard, 734 N.W.2d at 198–99.
30
Despite its sometimes-dubious and often-difficult-to-follow analysis, Teague cannot be
interpreted as a wholesale rejection of AGC. The indirect plaintiffs in Teague alleged that
defendants engaged in a price fixing scheme over a synthetic rubber product called EPDM,
which was a key component in many rubber-based products that defendants manufactured,
marketed, sold, and/or distributed to plaintiffs, including certain roofing materials. Id. at 553. At
a minimum, Teague is distinguishable as a single-market component case involving indirect
purchasers, as opposed to a mixed-market case where the price-fixed thing is not a component of
end-user product and the Indirect Purchaser Plaintiffs are not—at least under the Teague
standard—indirect purchasers. See, e.g., Teague, 671 S.E.2d at 556–57 (distinguishing several
cases that applied the AGC factors, noting that the plaintiffs in those cases were not indirect
purchasers because “plaintiffs did not end up with a product supplied by the defendants”).
More persuasive is the North Carolina Superior Court’s decision in Crouch v. Crompton
Corp., 2004 WL 2414027. Although a lower-court decision, this densely-packed and wellsupported opinion reconciles Hyde and the legislative history of the North Carolina Antitrust Act
with the Illinois Brick and AGC opinions, resolving to apply a modified version of the AGC test
to determine antitrust standing that retains the proximate-cause inquiry inherent in AGC while
still respecting Illinois Brick’s ban on indirect-purchaser actions. Id. at *19 (discussing the
modified five-factor inquiry in detail). The facts of Crouch mirror those of the Lorix case from
Minnesota, where the indirect plaintiffs were purchasers of tires made with an allegedly pricefixed rubber component (i.e., a mixed-market scheme involving both the chemicals market and
the rubber market). Recognizing that “[t]here is no bright line test” and that “each situation must
be considered on its facts and the factors applied” where “[d]ifferent factors might be important
in different cases,” id. at *20, the court ultimately found that the indirect purchasers lacked
31
antitrust standing based on a combination of all five AGC factors, all of which weighed against
standing to some extent. Id. at *24–25.
Other courts have reviewed North Carolina’s case law and statutory provisions in
determining that North Carolina’s highest court would apply the AGC factors, including at least
one case decided after Teague. See, e.g., Sahagian, 2009 WL 9504039, at *6; DRAM, 516 F.
Supp. 2d at 1087–89.
Analysis:
Based predominantly on Crouch and the distinguishing facts of Teague, the Court is
persuaded that the North Carolina Supreme Court would adopt and apply the AGC factors, at
least in modified form. Despite its precedential value, the Court finds that the Teague opinion—
which rejects a strict application of the AGC factors—is both distinguishable on its facts and
questionable in its failure to recognize the analytical distinction between the Illinois Brick and
AGC inquiries. While casting Crouch in a negative light, Teague did not expressly overrule that
opinion, and because Crouch is both the better-reasoned of the two opinions and the case most
factually-similar to Indirect Plaintiffs’ position, it is likely that North Carolina’s highest court
would follow Crouch and AGC in determining whether Indirect Plaintiffs lack antitrust standing
under North Carolina antitrust law.
D.
Antitrust Standing Analysis
To recap, the Court has concluded that the highest courts in five of the six states at issue
(California, Kansas, Michigan, New York, and North Carolina) would apply AGC, with
Minnesota being the one outlier. But the Court also determined that despite its rejection of AGC,
the Minnesota Supreme Court nonetheless recognizes prudential limits to antitrust standing such
that it would likely find Indirect Plaintiffs’ injuries too remote and speculative to award standing.
32
With regard to the five AGC-applying states, the Court reaffirms its prior reasoning with
regards to Indirect Plaintiffs’ federal antitrust claims in holding that Indirect Plaintiffs lack
antitrust standing under AGC. See DFA II, 2013 WL 4506000, at *9–14. This remains true even
under a modified AGC test that takes into account the many repealer statutes at play in the states
at issue, as well as any common-law protections afforded to indirect purchasers. This decision is
driven by several key factors, including (1) that this is a mixed-market case, where damages
inflicted on the physical commodity market are not derivative of injuries in the futures market
and the price-fixed products are not components of the finished goods, (2) the remoteness of
Plaintiffs’ injuries, highlighted by the long chain of more-immediate victims that precede
Plaintiffs, and (3) the rapid and over-inclusive expansion of the causal chain required to reach
Plaintiffs. And while the Direct Purchasers here were in a better position to remedy the alleged
antitrust violation (and likewise to ensure that an alleged antitrust violation will not go
undetected), the Court does not hold that Direct Purchasers are necessarily the only actors in the
causal chain who have antitrust standing to sue; rather, the Court holds only that Indirect
Plaintiffs’ injuries are too remote and speculative to afford them antitrust standing.
E.
Remoteness Doctrine in Monopolization Claims
Indirect Plaintiffs alleged both price-fixing and monopolization claims under various
states’ antitrust laws. Although the parties do not directly address the issue, the Court must
decide whether its antitrust-standing analysis applies equally to both types of antitrust claims.
Judge Hibbler touched on this issue in DFA I, concluding that there was no precedent
“suggest[ing] that the standing analysis should differ between claims under § 1 and § 2 simply
because monopolization plaintiffs must prove the existence of a relevant market.” DFA I, 767
F. Supp. 2d at 907. And other courts have applied the AGC antitrust-standing test to claims under
33
§ 2 of the Sherman Act (i.e., the monopolization provision) without alteration. See, e.g., In re
DDAVP Direct Purchaser Antitrust Litig., 585 F.3d 677, 687–92 (2d Cir. 2009); NicSand, Inc. v.
3M Co., 507 F.3d 442, 449–50 (6th Cir. 2007) (en banc); Angelico v. Lehigh Valley Hosp., Inc.,
784 F.3d 273–75 (3d Cir. 1999); see also Verizon Commc’ns Inc. v. Law Offices of Curtis V.
Trinko, LLP, 540 U.S. 398, 416–18 (2004) (Stevens, J., dissenting) (endorsing the dismissal of a
monopolization claim for lack of antitrust standing, citing AGC).
The Court sees no reason why Indirect Plaintiffs’ shortcomings in failing to establish
antitrust standing for their price-fixing claims should not preclude them from raising their
monopolization claims as well. Accordingly, because Indirect Plaintiffs lack antitrust standing,
their price-fixing claims brought under state antitrust laws (i.e., Cal Bus. & Prof. Code § 16726,
Kan. Stat. Ann. § 50-112, Mich. Comp. Laws § 445.772, Minn. Stat. §§ 325D.51 and 325D.53,
N.Y. Gen Bus. Law § 340, and N.C. Gen Stat. § 75-1), and their monopolization claims brought
under state antitrust laws (Mich. Comp. Laws § 445.773, Minn. Stat. § 325D.52, and N.C. Gen.
Stat. § 75-2.1) [see 483, ¶¶ 103(b), (d)–(h), 104(d)–(f)] are dismissed.
F.
Remoteness Doctrine in Consumer-Protection Claims
Because of variances in the relevant states’ price-fixing and monopolization laws, in
addition to invoking claims under various state antitrust statutes, Indirect Plaintiffs also raised
price-fixing and monopolization claims under several states’ consumer-protection statutes.
Specifically, Indirect Plaintiffs have raised price-fixing claims under four consumer-protection
statutes (Ark. Code § 4-88-107 (Arkansas Deceptive Trade Practices Act), Cal. Bus. & Prof.
Code § 17200 (California Unfair Competition Law), Fla. Stat. § 501.204 (Florida Deceptive and
Unfair Trade Practices Act), and N.C. Gen Stat. § 75-1.1 (North Carolina Unfair and Deceptive
Trade Practices Act) and monopolization claims under three consumer-protection statutes (Ark.
34
Code § 4-88-107, Cal. Bus. & Prof. Code § 17200, and Fla. Stat. § 501.204). [See 483,
¶¶ 103(a)–(c), (h), 113(a)–(c).] In two instances, Indirect Plaintiffs raised price-fixing claims in
the alternative, invoking both the states’ antitrust and consumer-protection provisions (i.e.,
California and North Carolina). [See 483, ¶ 103(b), (f), (h).]
The question is whether Indirect Plaintiffs’ lack of antitrust standing also disposes of
their price-fixing and monopolization claims brought under the states’ consumer-protection
statutes. In short, there is no legal principle saying that a finding of remoteness in the antitrust
context functions, as a matter of law, as a bar to any related consumer-protection claims.
However, the directness inquiry in antitrust-standing law is predicated on the well-known
concept of proximate causation. See McCready, 457 U.S. at 477 (“In the absence of direct
guidance from Congress, and faced with the claim that a particular injury is too remote from the
alleged violation to warrant § 4 standing, the courts are thus forced to resort to an analysis no
less elusive than that employed traditionally by courts at common law with respect to the matter
of ‘proximate cause.’”); DFA II, 2013 WL 4506000, at *12 (“Because the concept of antitrust
standing was developed with common law proximate causation standards in mind, directness is a
particularly important factor in the Court’s analysis.”). Because causation also plays a role in
consumer-protection claims, the Court must assess each state’s consumer-protection laws to
determine if the remoteness of Indirect Plaintiffs’ injury precludes their ability to raise such
claims.
1.
Arkansas
Indirect Plaintiffs allege both price-fixing and monopolization claims under § 4-88-107
of the Arkansas Deceptive Trade Practices Act.3 The Act “provides a private right of action to
3
Section 4-88-107 lists ten examples of actionable violations under the ADTPA, none of which is
recognizable as an antitrust violation (e.g., price fixing or monopolization). However, the statute does
35
‘any person’ who suffers actual damage or injury as a result of a violation of the Act.” Forever
Green Athletic Fields, Inc. v. Lasiter Const., Inc., 384 S.W.3d 540, 552 (Ark. Ct. App. 2011)
(quoting Ark. Code Ann. § 4-88-113(f)). And “[b]ased on the language of section 4-88-113(f),
there must be a causal connection between the violation of the Deceptive Trade Practices Act
and the injury.” Id.; see also Independence Cnty. v. Pfizer, Inc., 534 F. Supp. 2d 882, 888 (E.D.
Ark. 2008) (dismissing a claim under the ADTPA based on causation issues and the overall
remoteness of the injury). Separate from the causation requirement, “Arkansas law recognizes
the remoteness doctrine” as applied to claims under the ADTPA, favoring suits by those directly
injured over more-indirect victims. See Independence Cnty., 534 F. Supp. 2d at 888 (“‘[D]irectly
injured victims can generally be counted on to vindicate the law as private attorneys general,
without any of the problems attendant upon suits by plaintiffs injured more remotely.’” (quoting
Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258, 269–70 (1992))).
In light of the importance of causation under Arkansas law, Indirect Plaintiffs’
remoteness problems in the antitrust context also preclude their rebranded antitrust claims
brought under the Arkansas Deceptive Trade Practices Act, requiring dismissal of those claims.
2.
California
Indirect Plaintiffs allege price-fixing and monopolization claims under § 17200 of the
California Unfair Competition Law. The causation element makes its way into the UCL through
the standing requirement, whereby “[a] private person * * * has standing to assert a UCL claim
only if he or she (1) ‘has suffered injury in fact,’ and (2) ‘has lost money or property as a result
contain a catch-all provision that proscribes “[e]ngaging in any other unconscionable, false, or deceptive
act or practice in business, commerce, or trade,” Ark. Code Ann. § 4-88-107(a), and courts have
interpreted this catch-all broadly so as to include antitrust claims. See, e.g., Independence Cnty. v. Pfizer,
Inc., 534 F. Supp. 2d 882, 888 (E.D. Ark. 2008), aff’d, sub nom. Ashley Cnty. v. Pfizer, Inc., 552 F.3d 659
(8th Cir. 2009).
36
of the unfair competition.’” Hall v. Time, 70 Cal. Rptr. 3d 466, 469 (Cal. Ct. App. 2008). The
second prong of the standing test “imposes a causation requirement. The phrase ‘as a result of’ in
its plain and ordinary sense means ‘caused by’ and requires a showing of a causal connection or
reliance on the alleged misrepresentation.”4 Id.; see id. at 471 n.2 (“We use the word ‘causation’
to refer both to the causation element of a negligence cause of action * * * and to the justifiable
reliance element of a fraud cause of action.”). This causation requirement was refined in 2004 by
the passage of Proposition 64, which made it so that “a private person has standing to sue only if
he or she ‘has suffered injury in fact and has lost money or property as a result of such unfair
competition.” In re Tobacco II Cases, 93 Cal. Rptr. 3d 559, 571 (citing UCL § 17203); see also
Kwikset Corp. v. Superior Court, 246 P.3d 877, 887–88 (explaining the causation element).
Noting that “the voters clearly intended to restrict UCL standing,” the Supreme Court of
California nonetheless found that indirect antitrust plaintiffs “who had had business dealings
with a defendant and had lost money or property as a result of the defendant’s unfair business
practices” had standing under the UCL. Clayworth v. Pfizer, Inc., 233 P.3d 1066, 1087 (Cal.
2010) (noting that “indirect purchases may support UCL standing”). But despite its liberal
approach to standing, the Clayworth court noted that the intent of Proposition 64 “was to confine
4
The parties dispute whether Indirect Plaintiffs must allege reliance to state a claim under the UCL. In
Kwikset Corp. v. Superior Court, the Supreme Court of California addressed a claim “based on a fraud
theory involving false advertising and misrepresentations to consumers,” and noted that “in accordance
with well-settled principles regarding the element of reliance in ordinary fraud actions,” plaintiffs were
required to “demonstrate actual reliance on the allegedly deceptive or misleading statements.” 246 P.3d at
888 (citations omitted); see also Hall, 70 Cal. Rptr. 3d at 471 n.2 (“In a fraud case, justifiable reliance is
the same as causation * * *.”). Here, however, Indirect Plaintiffs’ UCL claim is based on an “unlawful” or
“unfair” antitrust violation, not a “fraudulent” misrepresentation. In re Tobacco II Cases, 207 P.3d 20,
29–30, 38 (Cal. 2009) (noting that “there are three varieties of unfair competition: practices which are
unlawful, unfair or fraudulent,” and requiring a showing of actual reliance for a fraud-based UCL claim).
Accordingly, the Court is not persuaded that Indirect Plaintiffs must allege reliance on an alleged
misrepresentation. But see Lorenzo v. Qualcomm Inc., 603 F. Supp. 2d 1291, 1303–04 (S.D. Cal. 2009)
(dismissing UCL claims for lack of standing where the antitrust plaintiff did not allege that he relied on
any misrepresentations made by defendant (citing Laster v. T-Mobile USA, Inc., 407 F. Supp. 2d 1181,
1183 (S.D. Cal. 2005))).
37
standing to those actually injured by a defendant’s business practices and to curtail the prior
practice of filing suits on behalf of clients who have not used the defendant’s product or service,
viewed the defendant’s advertising, or had any other business dealing with the defendant.” Id. at
1086–87 (internal citations omitted). In Clayworth, the price-fixing manufacturers sold the pricefixed medications to wholesalers, who then sold them to the plaintiff pharmacies. Thus,
plaintiffs—one step removed from the alleged price-fixers—actually used defendants’ products
and had indirect dealings with defendants. Here, Indirect Purchasers did not use the allegedly
price-fixed commodities and had no business dealings with defendants in the relevant markets.
See, e.g., Troyk v. Farmers Grp., Inc., 90 Cal. Rptr. 3d 589, 626 n.33 (Cal. Ct. App. 2009)
(refusing to define the extent of the UCL’s causation requirement, but noting that defendant’s
conduct “must be more than a remote or trivial factor” in causing the injury (emphasis added)).
These facts counsel against a broad application of Clayworth and Proposition 64.
In addition, the Court is also mindful of the fact that “the breadth of § 17200 does not
give a plaintiff license to ‘plead around’ the absolute bars to relief contained in other possible
causes of action by recasting those causes of action as ones for unfair competition,” as Indirect
Plaintiffs have done here. Glenn K. Jackson Inc. v. Roe, 273 F.3d 1192, 1203 (9th Cir. 2001)
(citing Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co., 973 P.2d 527, 541 (Cal. 1999)).
Somewhat related, Indirect Plaintiffs based their price-fixing and monopolization
claims—regardless of whether those claims were brought under state antitrust laws, consumerprotection provisions, or both—on the same set of facts, theories, and allegations. In other words,
Indirect Plaintiffs made no attempts to distinguish their antitrust claims from their consumerprotection claims. And under California law, because Indirect Plaintiffs failed to adequately
plead their antitrust claims, their state claims must also fail. See Formula One Licensing, B.V. v.
38
Purple Interactive Ltd., 2001 WL 34792530, at *4 (N.D. Cal. Feb. 6, 2001) (“Where a plaintiff
fails to state an antitrust claim, and where an unfair competition claim is based upon the same
allegations, such state claims are properly dismissed.” (citing Kentmaster Mfg. Co. v. Jarvis
Prods. Corp., 146 F.3d 691, 695 (9th Cir. 1998))); see also In re Wellpoint, Inc., Out-of-Network
UCR Rates Litig., 903 F. Supp. 2d 880, 927–28 (C.D. Cal. 2012) (dismissing UCL claims based
on a lack of antitrust standing for plaintiffs’ Sherman Act claims).
For all of these reasons, the Court finds that Indirect Plaintiffs lack standing to bring their
claims under the UCL.
3.
Florida
Indirect Plaintiffs allege price-fixing and monopolization claims under § 501.204 of the
Florida Deceptive and Unfair Trade Practices Act. A consumer claim for damages under
FDUTPA has three elements: “(1) a deceptive act or unfair practice; (2) causation; and (3) actual
damages.” Soper v. Tire Kingdom, Inc., 124 So.3d 804, 806 (Fla. 2013) (citing Rollings, Inc. v.
Butland, 951 So.2d 860, 869 (Fla. Dist. Ct. App. 2006)).
Although causation is a necessary element of a FDUTPA claim, Defendants do not press
the expected argument, which is that the remoteness of Indirect Plaintiffs’ injuries is insufficient
to satisfy the FDUTPA causation requirement. See, e.g., 2P Commercial Agency S.R.O. v. SRT
USA, Inc., 2013 WL 246650, at *4 (M.D. Fla. Jan. 23, 2013) (noting that causation under
FDUTPA “must be direct, rather than remote or speculative”).
Instead, Defendants approach this issue indirectly, arguing that Florida courts regularly
dismiss FDUTPA claims that are “merely a repackaging of the allegations offered for [failed]
antitrust claims.” QSGI, Inc. v. IBM Global Fin., 2012 WL 1150402, at *4 (S.D. Fla. Mar. 14,
2012) (“When * * * a plaintiff’s FDUTPA claim is based on the same allegations as its antitrust
39
claim, failure to establish a violation of the antitrust law is sufficient to conclude that the plaintiff
has also failed to state a FDUTPA claim.”); JES Props., Inc. v. USA Equestrian, Inc., 2005 WL
1126665, at *19 & n.23 (M.D. Fla. May 9, 2005) (“Plaintiffs concede that their FDUTPA claims
‘survive’ or ‘fall’ with their antitrust claims.”); Hunter v. Bev Smith Ford, LLC, 2008 WL
1925265, at *9 (S.D. Fla. Apr. 29, 2008); Natural Answers, Inc. v. SmithKline Beecham Corp.,
529 F.3d 1325, 1332–33 (11th Cir. 2008) (dismissing a Lanham Act claim because, inter alia,
“the injury claims [wa]s far more remote” than what the statute requires, and then dismissing a
related FDUTPA claim on the same grounds).
But Defendants’ “repackaging” theory has only been applied where the underlying
antitrust claims were rejected for substantive reasons, not simply due to a lack of standing.
Indirect Plaintiffs’ argument, then, is that a state consumer-protection claim should not be
automatically rejected because the plaintiff lacked standing to bring a corresponding federal
antitrust claim. While this argument has facial appeal, it fails to appreciate (a) the importance of
antitrust standing, and (b) the nuances of Florida’s antitrust laws. To the former, this Court has
already distinguished antitrust standing from Article III standing by noting that antitrust standing
is intertwined with substantive antitrust principles, thus requiring the importation of federal
antitrust-standing law into state antitrust-standing law where the state has a harmonization
provision. And to the latter, the reason why Indirect Plaintiffs brought their claims under
FDUTPA is because Florida still adheres to the “direct purchaser” rule articulated in Illinois
Brick. See Mack v. Bristol-Myers Squibb Co., 673 So.2d 100, 102 (Fla. Dist. Ct. App. 1996). In
other words, Indirect Plaintiffs avoided bringing their antitrust claim under Florida’s antitrust
laws knowing that such a claim would be doomed. The contours of Florida’s antitrust laws
40
would be rendered moot were the Court to allow Indirect Plaintiffs to repackage their dead-onarrival antitrust claims as FDUTPA claims.
In light of these concerns, the Court is persuaded that the Florida Supreme Court would
either adopt the federal court’s repackaging theory or read FDUTPA’s causation requirement
narrowly so as to preclude injuries that are too remote from the alleged antitrust violation. See,
e.g., In re Wellpoint, Inc., Out-of-Network UCR Rates Litig., 903 F. Supp. 2d at 927–28
(dismissing a California consumer-protection claim where plaintiffs lacked antitrust standing to
raise Sherman Act claims). Either way, Indirect Plaintiffs’ FDUTPA claims must be dismissed.
4.
North Carolina
In addition to its antitrust claim under § 75-1 of the North Carolina Unfair and Deceptive
Trade Practices Act, Indirect Plaintiffs also allege a price-fixing claim under § 75-1.1 of the Act.
The Act declares unlawful “[u]nfair methods of competition in or affecting commerce, and unfair
or deceptive acts or practices in or affecting commerce.” N.C. Gen. Stat. § 75-1.1. To state a
claim under NCUDTPA, a plaintiff must show: “(1) an unfair or deceptive act or practice, or an
unfair method of competition, (2) in or affecting commerce, (3) which proximately caused injury
to the plaintiff or to his business.” Furr v. Fonville Morisey Realty, Inc., 503 S.E.2d 401, 408
(N.C. 1998); Dalton v. Camp, 548 S.E.2d 704, 711 (N.C. 2001); Stetser v. TAP Pharma. Prods.,
Inc., 598 S.E.2d 570, 583–84 (N.C. Ct. App. 2004) (applying the same prima facie case to an
antitrust claim brought under the consumer-protection statute). Again, the obvious (and perhaps
most persuasive) argument is that Indirect Plaintiffs’ alleged injuries are too remote to satisfy
NCUDTPA’s proximate-causation requirement.
But similar to their arguments regarding Indirect Plaintiffs’ claims under FDUTPA,
Defendants instead argue that Indirect Plaintiffs’ claim under NCUDTPA should be dismissed
41
because it is premised on the same allegations as Plaintiffs’ insufficiently-pled price-fixing
claims (both state and federal). See, e.g., In re Digital Music Antitrust Litig., 592 F. Supp. 2d
435, 450–51 (S.D.N.Y. 2008) (dismissing consumer protection claims under, inter alia,
California, Florida, and North Carolina law, noting that “[the courts] conclusion that Plaintiffs
have not adequately alleged [a federal antitrust] violation necessarily precludes their attempt to
recast that violation as an unfair business practice”), vacated and remanded on other grounds,
sub nom. Starr v. Sony BMG Music Entm’t, 592 F.3d 314 (2d Cir. 2010); see also R.J. Reynolds
Tobacco Co. v. Philip Morris Inc., 199 F. Supp. 2d 362, 396 (N.D.N.C. 2002) (“Because
Plaintiffs do not allege any facts that suggest that Defendant’s conduct is unlawful beyond the
conduct that is the basis for their failed federal [antitrust] claims, Plaintiffs’ state common law
and statutory claims fail as well.”). This argument is also persuasive, although rather broad in
application.
Interestingly though, the Fourth Circuit has construed NCUDTPA—a statute modeled
(verbatim) after § 5 of the FTC Act—consistently with the Sherman Act in assessing the merits
of an antitrust claim brought under the guise on a consumer-protection claim, noting that the
FTC Act “sweeps within its prohibitory scope conduct also condemned by § 1 of the Sherman
Act,” ultimately finding “no reason to conclude that, given the opportunity, North Carolina’s
Supreme Court would construe its state’s act any differently.” ITCO Corp. v. Michelin Tire
Corp., Commercial Div., 722 F.2d 42, 48 (4th Cir. 1983). True, “the Federal Trade Commission
Act was designed to supplement and bolster the Sherman Act and the Clayton Act” such that the
FTC has the power “to arrest trade restraints in their incipiency without proof that amount to an
outright violation” of the federal antitrust laws, see FTC v. Brown Shoe Co., 384 U.S. 316, 321
42
(1966) (citations omitted), but this is not one of those cases that would evade regulation but for
the breadth of the FTC Act and its related state provisions.
The Fourth Circuit’s rationale in ITCO adds credence to the broad-sweeping rule
articulated in In re Digital Music Antitrust Litigation and R.J. Reynolds Tobacco Co. v. Philip
Morris Inc., and counsels in favor of reading NCUDTPA’s causation requirement narrowly so as
to preclude Indirect Plaintiffs from repackaging their failed antitrust claim as an unfaircompetition claim. See, e.g., Miller v. W.H. Bristow, Inc., 739 F. Supp. 1044, 1055 (D.S.C. 1990)
(noting that “[w]hile it is true that an anticompetitive practice falling short of a Sherman Act or
Clayton Act violation may nonetheless violate the FTC Act, the scope of the FTC Act is directly
linked to the antitrust laws,” and holding that because “the relationship between the parties does
not violate the Sherman Act * * * plaintiff has failed to show how the circumstances of this case
bring it within the reach of the FTC Act”). For these reasons, the Court dismisses Indirect
Plaintiffs’ price-fixing claim under § 75-1.1 of NCUDTPA.
In summary, the same causation issue that plagued Indirect Plaintiffs’ state-law antitrust
claims also provides grounds for dismissal for Indirect Plaintiffs’ state-law consumer-protection
claims under Arkansas, California, Florida, and North Carolina law.
G.
Remoteness Doctrine in Unjust Enrichment Claims
Defendants next argue that the same “remoteness” issue troubling Indirect Plaintiffs’
antitrust and consumer-protection claims also precludes Indirect Plaintiffs from raising their
related state-law unjust enrichment claims. Indirect Plaintiffs raised their unjust enrichment
claims generally without reference to the unjust enrichment law of any particular state, and thus
the Court will review the law under all eight states.
43
As an initial matter, although there is some dispute on this issue, the general consensus is
that California law does not recognize a cause of action for unjust enrichment. See Melchior v.
New Line Prods., Inc., 131 Cal. Rptr. 2d 347, 357 (Cal. Ct. App. 2003) (“[T]here is no cause of
action in California for unjust enrichment.”); Hill v. Roll Int’l Corp., 128 Cal. Rptr. 3d 109, 118
(Cal. Ct. App. 2011) (“Unjust enrichment is not a cause of action, just a restitution claim.”).
With regard to the remaining states, the Court notes at the outset that a failure to state an
antitrust claim does not categorically preclude a plaintiff from succeeding on a related unjust
enrichment claim. See, e.g., In re G-Fees Antitrust Litig., 584 F. Supp. 2d 26, 46 (D.D.C. 2008)
(“No reason or logic supports a conclusion that a state’s adherence to the rule of Illinois Brick
dispossesses a person not only of a statutory legal remedy for an antitrust violation, but also
dispossess the same person of his right to pursue a common law equitable remedy.”); D.R. Ward
Constr. Co. v. Rohm & Hass Co., 470 F. Supp. 2d 485, 506–07 (E.D. Pa. 2006) (stating that the
viability of an unjust enrichment claim “does not hinge upon the success of the state statutory
antitrust claims”); King Drug Co. of Florence v. Cephalon, Inc., 702 F. Supp. 2d 514, 540 (E.D.
Pa. 2010) (“Unjust enrichment claims * * * are viable regardless of the applicable state antitrust
laws.”). But see In re Flonase Antitrust Litig., 692 F. Supp. 2d 524, 542 (E.D. Pa. 2010)
(“[W]here an antitrust defendant’s conduct cannot give rise to liability under state antitrust and
consumer protection laws, [p]laintiffs should be prohibited from recovery under a claim for
unjust enrichment.”).
However, because state antitrust claims and unjust-enrichment claims have similar
elements, it may be that a fatal flaw in a plaintiff’s antitrust claim will also seal the fate of the
plaintiff’s corresponding unjust enrichment claim (as was the case with Indirect Plaintiffs’
consumer-protection claims). The elements for unjust enrichment claims under Arkansas,
44
Florida, Kansas, Michigan, Minnesota, New York, and North Carolina are essentially the same:
“plaintiff must establish that (1) plaintiff conferred a benefit on the defendant; (2) defendant
knew and received a benefit; and (3) defendant retained the benefit under circumstances that
make it unjust.” In re Potash Antitrust Litig., 667 F. Supp. 2d at 948 (summarizing the unjust
enrichment law of Michigan, Florida, and Kansas); see Dews v. Halliburton Indus., Inc., 708
S.W.2d 67, 69 (Ark. 1986); Fla. Power Corp. v. City of Winter Park, 887 So.2d 1237, 1242 n.4
(Fla. 2004); In re Estate of Sauder, 156 P.3d 1204, 1220 (Kan. 2007); Hudson v. Mathers, 770
N.W.2d 883, 887 (Mich. Ct. App. 2009); Caldas v. Affordable Granite & Stone, Inc., 820
N.W.2d 826, 838 (Minn. 2012); Corsello v. Verizon N.Y., Inc., 967 N.E.2d 1177, 1185 (N.Y.
2012); Booe v. Shadrick, 369 S.E.2d 554, 555–56 (N.C. 1988).
Akin to the remoteness inquiry in the antitrust and consumer-protection contexts, five of
the seven states (all but Arkansas and Minnesota) require that the plaintiff confer a direct benefit
on the defendant in order to state a claim for unjust enrichment. See Extraordinary Title Servs. v.
Fla. Power & Light Co., 1 So.3d 400, 404 (Fla. Dist. Ct. App. 2009) (affirming dismissal of
unjust enrichment claim where plaintiff could not “allege or establish that it conferred a direct
benefit” upon defendant); Spires v. Hosp. Corp. of Am., 289 F. App’x 269, 273 (10th Cir. 2008)
(noting that Kansas law does not support an “indirect unjust enrichment claim”); A & M Supply
v. Microsoft Corp., 2008 WL 540883, *2–3, (Mich. App. Ct. 2008) (concluding that the unjust
enrichment doctrine requires “direct receipt” of a benefit, and was therefore inapplicable to
“indirect purchasers”); New Dimension Dev., Inc. v. Orchard, Hiltz & McCliment, Inc., 2005 WL
2806234, at *6 (Mich. App. Ct. Oct. 27, 2005) (“[A]ny indirect benefit defendant derived from
plaintiffs was too attenuated to warrant imposing the equitable doctrine of unjust enrichment,
which must be ‘employed * * * with caution,’ because it ‘vitiates normal contract principles.’”
45
(quoting Kammer Asphalt Paving Co., Inc. v. East China Twp. Schs., 504 N.W.2d 635 (Mich.
1993))); Sperry v. Crompton Corp., 863 N.E.2d 1012, 1018 (N.Y. 2007) (holding that the
connection between the indirect plaintiffs and defendants in an antitrust action was “simply too
attenuated” to support a claim for unjust enrichment); Laydon v. Mizuho Bank, Ltd., 2014 WL
1280464, at * (S.D.N.Y. Mar. 28, 2014) (noting that under New York law, an unjust enrichment
claim “requires some type of direct dealing or actual, substantive relationship with a Defendant,”
citing relevant cases); Effler v. Pyles, 380 S.E.2d 149, 152 (N.C. Ct. App. 1989) (dismissing an
unjust enrichment claim where plaintiff failed to satisfy her “burden of showing that she
conferred a benefit directly on defendant”); see also In re Aftermarket Filters Antitrust Litig.,
2010 WL 1416259, at *2–3 (N.D. Ill. Apr. 1, 2010) (dismissing unjust enrichment claims under
the laws of Kansas, Michigan, and North Carolina because “plaintiffs [we]re unable to allege that
they have conferred a benefit on defendants except to argue that they are the ultimate end
users”).
Here, Indirect Plaintiffs argue that Defendants were unjustly enriched because, “[a]s a
result of the wrongful conduct, defendants charged resellers more for Finished Dairy Products,”
forcing Indirect Plaintiffs to “pay[] more for Finished Dairy Products” from the so-called
resellers. [483, ¶¶ 116–17 (emphasis added).] In other words, Indirect Plaintiffs did not
themselves confer any benefit directly on Defendants, and for that reason, they have failed to
state a claim for unjust enrichment under the laws of Florida, Kansas,5 Michigan, New York, and
North Carolina.
5
But see Wrobel, No. 05-cv-1296, 2006 WL 7130617, available at [574-1, at 9] (allowing indirect
plaintiff’s unjust enrichment claim to survive a motion to dismiss based on the fact that “Kansas
specifically allows indirect-purchaser claims,” but nonetheless noting that “there may be some limits that
would apply,” but that the court “d[id] not know, on the present pleadings, how far removed from directpurchaser status Plaintiff may be”). Here, six years into this MDL litigation, the Court has a much better
46
That leaves Indirect Plaintiffs’ unjust enrichment claims under Arkansas and Minnesota
law. Because those states do not require direct dealing between the plaintiff and defendant, and
because the Court has not adopted a categorical rule prohibiting unjust enrichment claims that
are modeled after failed antitrust and consumer-protection claims—see, e.g., In re Flonase
Antitrust Litig., 692 F. Supp. 2d at 542—the Court will not dismiss Indirect Plaintiffs’ Arkansas
and Minnesota unjust enrichment claims on causation/remoteness grounds.6
IV.
Statute of Limitations
Defendants argue that Indirect Plaintiffs’ statutory claims under California, Florida,
Minnesota, and North Carolina law are barred by those states’ four-year statutes of limitation.7
See Cal. Bus. & Prof. Code § 16750.1 (“Any civil action to enforce any cause of action for a
violation of this chapter shall be commenced within four years after the cause of action
accrued.); Fla. Stat. § 95.11(3)(f) (setting a four-year statute of limitations for “[a]n action
founded on a statutory liability”); Minn. Stat. § 325D.64 (“An action under sections 325D.49 to
325D.66 shall be forever barred unless commenced within four years of the date upon which the
cause of action arose.”); N.C. Gen Stat. § 75-16.2 (“Any civil action brought under this Chapter
to enforce the provisions thereof shall be barred unless commenced within four years after the
cause of action accrues.”). Defendants further argue that Indirect Plaintiffs’ unjust enrichment
claims under Arkansas and North Carolina law are barred by those states’ three-year statutes of
grasp on the extent of the remoteness between Indirect Plaintiffs and Defendants, and thus finds dismissal
appropriate at the motion-to-dismiss phase.
6
To avoid confusion, the Court notes that dismissal of Indirect Plaintiffs’ unjust enrichment claims under
Arkansas and Minnesota law is appropriate on other grounds, as discussed below.
7
Indirect Plaintiffs’ claims under Arkansas law as raised in the Rogers complaint were timely filed
because Arkansas law provides a five-year statute of limitations. See Ark. Code Ann. § 4-88-115. Indirect
Plaintiffs’ claims under New York, Michigan, and Kansas law—as raised in the Rudman, Waun, and
Asmann lawsuits—are not time barred because those named Plaintiffs had standing to raise those claims
when their respective suits were filed, which in each case was within the relevant limitations period.
47
limitations, see Ark. Code Ann. § 16-56-105(3) (stating that “[a]ll actions founded on any
contract or liability, expressed or implied” are subject to a three-year statute of limitations);
N.C. Gen. Stat. § 1-52(1) (stating that an action “[u]pon a contract, obligation or liability arising
out of a contract, express or implied,” is subject to a three-year statute of limitations), and their
Florida unjust enrichment claim is barred by that state’s four-year statute of limitations, see
Fla. Stat. § 95.11(3)(k) (setting a three-year statute of limitations for “[a] legal or equitable action
on a contract, obligation, or liability not founded on a written instrument”).
To assess this argument, the Court must first determine the date of accrual for the claims
at issue. Defendants argue that all of these claims accrued—at the latest—on December 16,
2008, when the Commodity Futures Trading Commission issued a publicly-available consent
decree announcing its findings regarding its investigation of DFA’s allegedly-manipulative
trading activities. [483, ¶ 91.] Indirect Plaintiffs do not object to this assertion, and thus the Court
will adopt December 16, 2008 as the date of accrual. Accordingly, absent any tolling (and
assuming that the various states’ statutes of limitations apply here), the filing deadlines at issue
under the relevant three- and four-year statutes of limitations are December 16, 2011 and 2012,
respectively.
Next, the Court must review when Indirect Plaintiffs filed their claims. As a reminder,
Indirect Plaintiffs’ Consolidated Class Action Compliant “consolidate[d] four already-pending
actions into one complaint.” [476, at 3.] Indirect Plaintiffs’ first-filed complaint, Rudman v.
DFA, originally filed on May 29, 2009 in the federal district court in Vermont, included claims
invoking the antitrust and unjust-enrichment laws of 25 states, including all of the states at issue
here. But the Rudman complaint was brought by a single named Plaintiff—Jacqueline Rudman, a
New York citizen—and did not include named plaintiffs from any of the other states whose laws
48
Ms. Rudman invoked in her complaint. Instead, it wasn’t until the fourth-filed complaint, Rogers
v. DFA, originally filed on February 19, 2013 in federal district court in Vermont, that Indirect
Plaintiffs included claims on behalf of actual citizens of the states at issue here: Arkansas (Brian
Rogers), California (Constantin Yiannacopoulos), Florida (Ann Miller), Minnesota (Mike
Jackson), and North Carolina (Cravon Williams). Thus, for purposes of this analysis, December
16, 2008 is the date of accrual and February 19, 2013 is the date of filing, leaving a gap of
approximately four years and two months.
To be clear, Indirect Plaintiffs do not argue that they validly stated claims on May 29,
2009 (i.e., upon filing the Rudman complaint). Instead, they argue that Vermont’s (the forum
state’s) choice-of-law provisions require the application of Vermont’s six-year statute of
limitations to many of the claims at issue, making the Rogers complaint timely without reference
to the earlier-filed Rudman complaint. Alternatively, Indirect Plaintiffs argue that even if
Vermont’s six-year statute doesn’t apply, their May 29, 2009 filing established placeholders for
the claims at issue that were later filled by the filing of the Rogers complaint (either via the
relation-back doctrine or a theory of tolling). The Court addresses each theory in turn.
A.
Choice of Law
Indirect Plaintiffs argue that their claims under Florida law and their unjust-enrichment
claims under all states’ laws are governed by Vermont’s six-year statute of limitations,8 making
the 2013 Rogers complaint timely as to those claims.
In an MDL, a court must apply the choice-of-law rules of the transferor forum. See, e.g.,
Ferens v. John Deere Co., 494 U.S. 516, 523 (1990); In re Air Crash Disaster Near Chicago, Ill.
8
The rationale behind Indirect Plaintiffs’ selection of these particular claims is based on their allegation
that these claims are governed by “general state statutes of limitations,” and Vermont’s so-called “general
statute of limitations” is six years. Vt. Stat. Ann. tit. 12, § 511. Assumedly Vermont would apply a shorter
statute of limitations to Indirect Plaintiffs’ other claims.
49
on May 25, 1979, 644 F.2d 594, 610 (7th Cir. 1981) (holding that in MDL’s “the choice-of-law
rules to be used are those choice-of-law rules of the states where the actions were originally
filed”); see also In re Welding Fume Prods. Liability Litig., at 2010 WL 7699456, at *12–13
(N.D. Ohio June 4, 2010) (explaining choice-of-law principles for MDLs). Here, both Rudman
and Rogers originated in Vermont’s federal district court (invoking the court’s diversity
jurisdiction under 28 U.S.C. § 1332(d)), and “[a] federal court sitting in diversity jurisdiction
applies the choice of law rules of the forum state.” Forest Park Pictures v. Universal Television
Network, Inc., 683 F.3d 424, 433 (2d Cir. 2012).
Vermont follows the Restatement (Second) of Conflict of Laws for claims that sound in
contract (e.g., unjust enrichment) and claims invoking consumer-protection laws. See Long v.
Parry, 921 F. Supp. 2d 269, 274 (D. Vt. 2013) (citing McKinnon v. F.H. Morgan & Co., 750
A.2d 1026, 1028 (2000)). While Vermont courts have not yet addressed whether they would
apply the Restatement to choice-of-law questions in antitrust actions, this seems to be the trend.
See Seidman v. Killington Ltd., 1990 WL 26680, at *4 (E.D. Pa. 1990) (debating which choiceof-law rule to apply under Vermont law and resolving to apply the Restatement based on “the
overall trend of Vermont choice of law doctrine”); Bryant v. Braithwaite, 2013 WL 877107, at
*4 (D. Vt. Mar. 8, 2013) (stating generally that Vermont “has adopted the Second Restatement of
Conflicts of Laws”). The alternative would likely be the lex loci delicti rule that Vermont
previously applied in tort and contract cases, which requires the court to apply the law of the
state where the injury occurred. See, e.g., Goldman v. Beaudry, 170 A.2d 636, 638 (1961). And
not to spoil the ending, but because Vermont has no interest in adjudicating cases that neither
involve any Vermont citizens nor invoke any Vermont laws, both approaches produce the same
50
result, meaning that the selection of which choice-of-law rule to follow is inconsequential. The
Court will nonetheless follow the Restatement’s choice-of-law approach to all claims.
Where, as here, there is a conflict between the laws of Vermont and other jurisdictions, a
court must “ascertain whether a specific section of the Restatement governs what law should
ordinarily apply to the particular action or legal issue.” Martineau v. Guertin, 751 A.2d 776, 778
(2000). “If such a section exists, generally the law of a particular state is presumed to be the
correct forum unless another state has a more significant interest in the litigation.” Id. Section
142 of the Restatement is on point:
[W]hether a claim will be maintained against the defense of the statute of
limitations is determined under the principles stated in § 6. In general, unless the
exceptional circumstances of the case make such a result unreasonable:
(1) the forum will apply its own statute of limitations barring the claim.
(2) The forum will apply its own statute of limitations permitting the claim unless:
(a) maintenance of the claim would serve no substantial interest of the
forum; and
(b) the claim would be barred under the statute of limitations of a state
having a more significant relationship to the parties and the occurrence.
Restatement (Second) of Conflicts § 142 (1988 revision). Here, the Court need not review the § 6
factors, as it is clear that the states at issue have a far-more significant relationship to the parties
and the occurrence than does Vermont. Juxtaposed against Vermont’s total lack of interest in this
lawsuit (Indirect Plaintiffs do not even mention the word “Vermont” in their Consolidated Class
Action Complaint) is the fact that the named Plaintiffs are citizens of the states at issue who
purchased allegedly price-fixed products in those states. And Indirect Plaintiffs enlisted named
Plaintiffs from the various states at issue solely to take advantage of the laws of those states. It
would be a sure misfire to allow Indirect Plaintiffs to benefit from the favorable aspects of
certain states’ laws and then scurry off to disinterested Vermont to avoid the less-favorable
51
aspects of those states’ laws. That would be an exercise in Forum Shopping 101, and neither this
Court nor a Vermont court would allow it. Thus, the applicable statutes of limitations are those
prescribed by the various states at issue, not Vermont.
B.
Relation-Back Doctrine
Indirect Plaintiffs argue in the alternative that the claims raised in the 2013 Rogers
complaint relate back to the 2009 Rudman complaint. “An amendment to a pleading relates back
to the date of the original pleading when the amendment asserts a claim or defense that arose out
of the conduct, transaction, or occurrence set out—or attempted to be set out—in the original
pleading.” Fed. R. Civ. P. 15(c)(1)(B).
Simply put, the Rogers complaint was filed as a stand-alone complaint, not as an
amendment to the Rudman complaint, and therefore the claims raised in the Rogers complaint
cannot relate back to the Rudman complaint. The consolidation of the four stand-alone
complaints does not reclassify the complaints as amendments of their earlier-filed companions so
as to justify a relation back.
Indirect Plaintiffs argue that a refusal to permit relating back in this instance would mean
that “many class actions would effectively be barred from substituting named plaintiffs.” [521, at
18 (citing Phillips v. Ford Motor Co., 435 F.3d 785, 787 (7th Cir. 2006)).] But Phillips doesn’t
apply here. The point in Phillips was that without allowing substitute-named-plaintiffs’ claims to
relate back to original-named-plaintiffs’ claims, a defendant could settle with a named plaintiff
after the statute of limitations runs and effectively bar the class from relief. But Indirect Plaintiffs
have not attempted to substitute the Rogers Plaintiffs for the Rudman Plaintiff, and even if they
did, they would face other insurmountable hurdles not addressed in Phillips (e.g., the Article III
52
standing issue discussed below). Indirect Plaintiffs cannot benefit from the relation-back
doctrine.
What Indirect Plaintiffs are seeking to invoke here is not the relation-back rule, but rather
a form of equitable tolling that would allow the state-law claims of named Plaintiffs in a laterfiled federal class action to take advantage of “placeholder” state-law claims in an earlier-filed
federal class action, which segues the Court to its next topic of discussion.
C.
Equitable Tolling
As one court put it, to determine which statute of limitations to apply in an MDL action,
(1) “the Court must first determine which state’s choice-of-law rules to apply in these cases,”
(2) “[t]hen, pursuant to those rules, it must choose the applicable statute of limitations,” and
(3) [l]astly, the Court must determine when each limitations period began to run and whether or
not the applicable statutes of limitations have been tolled, either by the pendency of class actions
or otherwise.” In re Vioxx Prods. Liability Litig., 2007 WL 3334339, at *2 (E.D. La. Nov. 8,
2007). The Court has now reached the final part of the last step in this analysis, where it must
determine whether the filing of the Rudman class-action complaint tolled the statute of
limitations for the claims raised in the later-filed Rogers class-action complaint.
Indirect Plaintiffs invoke “the doctrine of class-action tolling,” citing the Supreme
Court’s American Pipe decision in support of their argument that the first-filed class action tolled
the statute of limitations for any later-filed class actions where the plaintiffs in the later-filed
class actions fall within the class definition of the first-filed class action. See Am. Pipe & Constr.
Co. v. Utah, 414 U.S. 538, 554 (1974).
In American Pipe, the Supreme Court held that where a district court has denied class
certification—“at least where class action status has been denied solely because of failure to
53
demonstrate that the class is so numerous that joinder of all members is impracticable”—“the
commencement of the original class suit tolls the running of the statute [of limitations] for all
purported member of the class who make timely motions to intervene after the court has found
the suit inappropriate for class action status.” 414 U.S. at 553. The Supreme Court was
concerned that a contrary rule would “deprive Rule 23 class actions of the efficiency and
economy of litigation which is a principal purpose of the procedure” because “[p]otential class
members would be induced to file protective motions to intervene or to join in the event that a
class was later found unsuitable.” Id.; see also id. at 554 (“We are convinced that the rule most
consistent with federal class action procedure must be that the commencement of a class action
suspends the applicable statute of limitations as to all asserted members of the class who would
have been parties had the suit been permitted to continue as a class action.”). The Supreme Court
subsequently extended the doctrine to all putative class members, rather than solely intervenors.
Crown, Cork, & Seal Co. v. Parker, 462 U.S. 345, 350 (1983).
But Indirect Plaintiffs face several sizable speedbumps in their attempt to extend
American Pipe to the facts at hand. First, there is a threshold issue as to whether Ms. Rudman’s
lack of standing to raise claims under the laws of any states but New York precludes her ability
to “place hold” on behalf of out-of-state plaintiffs. Second, the posture of this case is unlike that
of American Pipe and Crown, Cork & Seal because the Rogers Plaintiffs filed their successive
class action prior to any determination regarding the viability of Ms. Rudman’s first-filed class
action, making their suit a potentially-inappropriate “piggyback” class action. Third, American
Pipe applies only to claims under federal law for which the period of limitations is also federal,
whereas “[w]hen state law supplies the period of limitations, it also supplies the tolling rules.”
Hemenway v. Peabody Coal Co., 159 F.3d 255, 265 (7th Cir. 1998); Bd. of Regents of Tomanio,
54
446 U.S. 478, 485 (1980). Thus, the Court must look to the laws of the various states at issue to
determine whether those states recognize class-action tolling during the pendency of a federallyfiled action (i.e., whether the filing of a putative class action in federal court tolls the statutes of
limitation applicable to state law claims asserted by new plaintiffs in a subsequent putative class
action in federal court). See In re Linerboard Antitrust Litig., 223 F.R.D. 335, 345 (E.D. Pa.
2004) (referring to this as “cross-jurisdictional class action tolling”). The Court addresses each
issue in turn.
1.
Article III Standing
Defendants argue that the filing of the Rudman complaint only tolled the statute for New
York claimants because the only named Plaintiff in that action, Ms. Rudman, was a citizen of
New York who purchased allegedly price-fixed products in New York, and thus only had Article
III standing to raise claims under New York law, not the laws of any of the other states named in
her class action complaint. See, e.g., In re Carrier IQ, Inc., 2015 WL 274054, at *10 (N.D. Cal.
Jan. 21, 2015) (“[W]here a complaint includes multiple claims[,] ‘at least one named class
representative must have Article III standing to raise each claim’ and * * * in a class action[,]
‘each claim must be analyzed separately, and a claim cannot be asserted on behalf of a class
unless at least one named plaintiff has suffered the injury that gives rise to that claim.’” (quoting
Los Gatos Mercantile, Inc. v. E.I. DuPont De Nemours & Co., 2014 WL 4774611, at *4 (N.D.
Cal. Sept. 22, 2014))); In re Flash Memory Antitrust Litig., 643 F. Supp. 2d 1133, 1164 (N.D.
Cal. 2009) (“A class cannot assert a claim on behalf of an individual that they do not represent.
Where * * * a representative plaintiff is lacking for a particular state, all claims based on that
state’s laws are subject to dismissal.”); In re Countrywide Fin. Corp. Mortg.-Backed Sec. Litig.,
934 F. Supp. 2d 1219, 1230 (C.D. Cal. 2013) (“[A] class action only tolls the statute of limitation
55
for a claim when the name plaintiff had Article III standing with respect to that claim.” (citing
Walters v. Edgar, 163 F.3d 430, 432 (7th Cir. 1998))).
Before assessing this argument, there is a threshold question as to whether the Court can
consider the issue of standing before addressing class certification. While the Supreme Court has
deemed the resolution of class certification to be “logically antecedent” to Article III concerns,
see Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 612 (1997); Ortiz v. Fibreboard Corp., 527
U.S. 815, 831 (1999), “‘[t]here is currently a split among federal courts as to * * * the question
of whether standing can be considered prior to class certification in class action lawsuits.’” In re
Carrier IQ, Inc., 2015 WL 274054, at *9 (quoting In re Refrigerant Compressors Antitrust Litig.,
2012 WL 2917365, at *5 (E.D. Mich. July 17, 2012)). The Seventh Circuit has referred to the
Supreme Court’s language as a “directive” regarding order of operations, but that was based on
the larger concern that “[t]he certification of a class changes the standing aspects of a suit,
because ‘[a] properly certified class has a legal status separate from and independent of the
interest asserted by the named plaintiff.’” Payton v. Cnty. of Kane, 308 F.3d 673, 680 (7th Cir.
2002) (citation omitted). In other instances, though, the Seventh Circuit has deemed standing “an
antecedent legal issue” and thus considered it prior to evaluating class certification. Arreola v.
Godinez, 546 F.3d 788, 794 (7th Cir. 2008). Much like the Seventh Circuit and other courts in
this district, this Court concludes that “class certification issues are not always appropriate for a
pre-standing evaluation.” In re Plasma-Derivative Protein Therapies Antitrust Litig., 2012 WL
39766, at *4–5 (N.D. Ill. Jan. 9, 2012). Here, the class-certification issue is not logically
antecedent to the Article III issue because “[a] ruling as to [Ms. Rudman’s] standing depends in
no way upon the standing of proposed class members,” In re Wellbutrin XL Antitrust Litig., 260
F.R.D. 143, 155 (E.D. Pa. 2009), and thus the Court will proceed to assess whether
56
Ms. Rudman’s lack of standing to raise non-New York claims also bars her ability to create
tolled placeholders for those claims.
Indirect Plaintiffs argue that it would be unrealistic to charge class members with the task
of assessing whether the named plaintiffs in a putative class have Article III standing to raise
claims on their behalf, and any rule requiring such an undertaking would likely result in the
filing of additional (and potentially unnecessary) lawsuits. See, e.g., In re Wachovia Equity Sec.
Litig., 753 F. Supp. 2d 326, 372 (S.D.N.Y. 2011) (noting that withholding American Pipe tolling
where a named plaintiff was found to lack standing would “punish class members for relying on
the very thing Rule 23 is intended to provide: an efficient method for resolving class claims
common to a class of individuals without the need for wasteful and duplicative litigation”
(quotation omitted)). Indirect Plaintiffs also argue that if the goal of statutes of limitations is to
put defendants on notice (see, e.g., Crown, Cork & Seal, 462 U.S. at 355), then Ms. Rudman’s
allegations of a nationwide price-fixing conspiracy accomplished that feat, regardless of whether
she personally had standing to raise each and every claim stated in her class-action complaint.
In addition, Indirect Plaintiffs cite a string of cases allegedly endorsing these (and other)
pro-plaintiff policy positions. See, e.g., Haas v. Pittsburgh Nat’l Bank, 526 F.2d 1083, 1097 (3d
Cir. 1975); Griffin v. Singletary, 17 F.3d 356, 360 (11th Cir. 1994) (finding that American Pipe
tolls the statute of limitations for putative class members where the plaintiff lacks standing, and
noting that a contrary rule “‘would produce the very evil which the [Supreme] Court sought to
avoid in American Pipe and Crown, Cork & Seal’” because “class members uncertain of the
district court’s standing analysis * * * ‘would have every incentive to file a separate action prior
to the expiration of his own period of limitations’” (quoting Edwards v. Boeing Vertol Co., 717
F.2d 761, 766 (3d Cir. 1983))); Genesee Cnty. Emps.’ Ret. Sys. v. Thornburg Mortg. Sec. Trust
57
2006-3, 825 F. Supp. 2d 1082, 1132 (D.N.M. 2011) (adopting Griffin); Rose v. Ark. Valley Envtl.
& Util. Auth., 562 F. Supp. 1180, 1192–93 (W.D. Mo. 1983) (“I can see no more reason, as a
general matter, to require a passive class member to anticipate the existence of and ultimate
ruling upon [whether the plaintiff has standing] than to require him to do so with respect to
questions of ‘numerosity,’ ‘commonality’ or ‘typicality.’”); Popoola v. Md-Individual Practice
Ass’n, 230 F.R.D. 424, 430 (D. Md. 2005) (adopting Haas and Rose, noting that a contrary rule
would force individual class members to seek to intervene prior to the running of the statute to
preserve their rights); In re IndyMac Mortgage-Backed Sec. Litig., 793 F. Supp. 2d 637, 645–47
(S.D.N.Y. 2011); see also W. & S. Life Ins. Co. v. JPMorgan Chase Bank, N.A., 2014 WL
5308422, at *17–18 (S.D. Ohio Oct. 16, 2014) (“The American Pipe tolling analysis can be
extended to cases where the class action claims are dismissed for lack of standing.”); In re
Wachovia Equity Sec. Litig., 753 F. Supp. 2d 326, 371–72 (S.D.N.Y. 2011) (“Although the law
of the Second Circuit is far from settled on this issue, the failure to apply American Pipe tolling
to this case would undermine the policies of ‘efficiency and economy of litigation’ that underlie
Rule 23.”). The Court addresses each of Indirect Plaintiffs’ arguments in turn.
The Third Circuit’s Haas opinion is the most on point, but is nonetheless unpersuasive. In
that case, a Pennsylvania citizen brought class claims against three banks, although she only held
accounts with two of them. The court’s basis for tolling claims against the third bank (Equibank)
rested almost exclusively on the fact that defendants received adequate notice of the relevant
claim despite plaintiff’s lack of standing to bring it. The court observed that the missing plaintiffs
“were in existence at the time the action was originally brought and were described as claimants
in the complaint,” such that all that was needed to remedy the issue “was the prompt addition of
a nominal plaintiff who held an Equibank card.” 526 F.2d at 1097. The court’s analysis was
58
brief, and said nothing of the policy considerations on the other side of the coin (discussed
below) or Article III standing principles generally. While this decision was likely the most
practical decision for this case—i.e., triggering the “prompt addition of a nominal plaintiff” such
that the case could continue—it seems unlikely that the court would have reached the same
conclusion had Ms. Haas filed placeholder claims with respect to 50 banks instead of just one.
The most thought-provoking issue raised in the cases cited by Indirect Plaintiffs is
whether there is anything special or unique about a named plaintiff’s lack of standing that would
differentiate such a shortcoming from a named plaintiff’s failure to satisfy one of the Rule 23
categories (i.e., numerosity, commonality, and typicality), so as to justify requiring putative class
members to identify one but not the other in order to take advantage of American Pipe tolling.
See Rose, 562 F. Supp. at 1192–93 (“I can see no more reason, as a general matter, to require a
passive class member to anticipate the existence of and ultimate ruling upon [whether the
plaintiff has standing] than to require him to do so with respect to questions of ‘numerosity,’
‘commonality’ or ‘typicality.’”). One potential difference is that from a legal perspective, unlike
Rule 23 deficiencies, standing deficiencies are inexplicably linked to a court’s jurisdiction.
Another notable difference is that plaintiffs can exploit standing deficiencies (especially where,
like here, the deficiency is obvious) to their benefit, whereas a Rule 23 deficiency is an unlikely
vehicle for abuse. See Me. State Ret. Sys. v. Countrywide Fin. Corp., 722 F. Supp. 2d 1157,
1166–67 (C.D. Cal. 2010) (refusing to extend American Pipe tolling where the plaintiff lacked
standing because such a rule would “encourage filings made merely to extend the period in
which to find a class representative”). Also, from a practical perspective, standing deficiencies
such as these are often “apparent from the face of the complaints,” In re TFT-LCD (Flat Panel)
Antitrust Litig., 2012 WL 149637, at *2 n.3 (N.D. Cal. Jan. 18, 2012), whereas Rule 23
59
deficiencies are often not so obvious. At a minimum, standing deficiencies and Rule 23
deficiencies make unexpected bedfellows (at least in this context), and the Court is not
convinced that the American Pipe rule should transfer so easily from one category to the other
absent express authority to the contrary.
Regarding the argument that Ms. Rudman’s complaint sufficiently put Defendants on
notice of the Rogers claims—thus satisfying the core concern behind the existence of statutes of
limitations—were this the proper logic, then there would be nothing stopping plaintiffs from
raising claims under the laws of all 50 states at the time of filing, keeping the door open for any
plaintiffs that might filter in at any given time. Crown, Cork & Seal, 462 U.S. at 354–55 (noting
that “[t]he tolling rule of American Pipe is a generous one, inviting abuse,” and that “[i]t is
important to make certain, however, that American Pipe is not abused by the assertion of claims
that differ from those raised in the original class suit.”). The Court is concerned that these out-ofstate placeholder suits might qualify as the type of abuse that the Supreme Court presaged.
Next, several of the cases cited by Indirect Plaintiffs argue that a refusal to extend
American Pipe tolling to instances where the named plaintiffs lack of standing would incentivize
putative class members—unsure of whether the named plaintiff has standing to bring claims on
their behalf—to file duplicative and unnecessary suits prior to the expiration of the statute of
limitations in order to preserve their rights. See, e.g., Griffin, 17 F.3d at 360. While this is a
possibility, it requires little legal acumen (at least in this instance) to determine that
Ms. Rudman—a New York citizen who purchased allegedly price-fixed products in New York—
lacks standing to bring claims under the laws of other states. See In re TFT-LCD (Flat Panel)
Antitrust Litig., 2012 WL 149637, at *2 n.3. More relevant here, however, is the flipside of
Indirect Plaintiffs’ argument, which is that “extending American Pipe tolling to class action
60
claims the original named plaintiffs had no standing to bring will encourage filings made merely
to extend the period in which to find a class representative.” Me. State Ret. Sys. v. Countrywide
Fin. Corp., 722 F. Supp. 2d at 1166–67; accord FDIC v. Countrywide Fin. Corp., 2012 WL
5900973, at *9 (C.D. Cal. Nov. 21, 2012); cf. In re Crazy Eddie Sec. Litig., 747 F. Supp. 850,
856 (E.D.N.Y. 1990) (refusing to extend American Pipe tolling to successive class actions
following the dismissal of the original suit for lack of standing, noting that “[t]here appears to be
no good reason to encourage bringing of a suit merely to extend the period in which to find a
class representative”). And to further allay the fear that putative class members, unsure of the
named plaintiffs’ standing, might file duplicative lawsuits to protect their rights, courts should
maintain “scrupulous adherence to the requirement that the determination whether to certify a
suit as a class action be made ‘as soon as practicable after the commencement of the action.’”
Walters, 163 F.3d at 433 (quoting Fed. R. Civ. P. 23(c)(1)).
Most importantly, though, “[t]he Seventh Circuit has [already] decided the issue, holding
that the filing of a purported class-action complaint by a plaintiff who lacks standing does not
toll the statute of limitations for those who later seek to intervene as plaintiffs.” Palmer v.
Stassinos, 236 F.R.D. 460, 465 (N.D. Cal. 2006) (citing Walters, 163 F.3d at 432). In Walters, a
14-year-old class action brought by a number of Illinois inmates was suddenly dismissed after
the Supreme Court issued an opinion in an unrelated case that led to a finding that the named
plaintiffs in Walters lacked standing to sue. The named plaintiffs argued that rather than
dismissing the case, other class members should have been substituted as class representatives.
But the reality was that, in light of the Supreme Court’s ruling, the named plaintiffs lacked
standing from day one. The Seventh Circuit held that “if the named plaintiffs lacked standing
when they filed the suit, there were no other party plaintiffs to step into the breach created by the
61
named plaintiffs’ lack of standing,” thus dismissing the argument that “jurisdiction can be
preserved even though the named plaintiffs lacked standing when the suit was filed.” Id. at 432–
33.
Additionally, from a defense perspective, requiring the named plaintiffs to have standing
in order to activate American Pipe tolling would eliminate the concern over so-called
placeholder actions, which arguably give plaintiffs unearned leverage over defendants by
artificially raising the stakes while simultaneously buying time to piece together a more
formidable lawsuit. As one court put it:
The alternative proposed by the plaintiffs would allow named plaintiffs in a
proposed class action, with no injuries in relation to the laws of certain states
referenced in their complaint, to embark on lengthy class discovery with respect
to injuries in potentially every state in the Union. At the conclusion of discovery,
the plaintiffs would apply for class certification, proposing to represent the claims
of parties whose injuries and modes of redress they would not share. That would
present the precise problem that the limitations of standing seek to avoid. The
Court will not indulge in the prolonged and expensive implications of the
plaintiffs’ position only to be faced with the same problem months down the road.
In re Packaged Ice Antitrust Litig., 779 F. Supp. 2d 642, 654 (E.D. Mich. 2011) (quoting In re
Wellbutrin XL Antitrust Litig., 260 F.R.D. at 155); see also Crown, Cork & Seal, 462 U.S. at 354
(Powell, J., concurring) (reiterating that American Pipe “must not be regarded as encouragement
to lawyers * * * to frame their pleadings as a class action, intentionally, to attract and save
members of the purported class who have slept on their rights” (quoting Am. Pipe, 414 U.S. at
561)); see also In re Elscint, Ltd. Sec. Litig., 674 F. Supp. 374, 377–78 (D. Mass. 1987).
Because Ms. Rudman lacked standing to raise claims under the laws of any states other
than New York, her class action did not toll the statute of limitations for any such claims, making
the Rogers claims at issue untimely. While this finding is dispositive as to Indirect Plaintiffs’
claims, the Court will nonetheless address the remaining arguments regarding the alleged
untimeliness of certain of Indirect Plaintiffs’ claims for the sake of completeness.
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2.
Successive (“Piggyback”) Class Actions
According to most courts that have addressed the issue, plaintiffs may not “piggyback
one class action onto another,” Salazar–Calderon v. Presidio Valley Farmers Ass’n, 765 F.2d
1334, 1351 (5th Cir. 1985), “and thereby engage in endless rounds of litigation in the district
court.” Griffin, 17 F.3d at 359 (affirming that “Plaintiffs may not piggyback one class action onto
another and thus toll the statute of limitations indefinitely”); see also Andrews v. Orr, 851 F.2d
146, 149 (6th Cir. 1988) (“The courts of appeals that have dealt with the issue appear to be in
unanimous agreement that the pendency of a previously filed class action does not toll the
limitations period for additional class actions by putative members of the original asserted class.”
(citing cases)), overruled on other grounds, Hall v. Warden, Lebanon Corr. Inst., 662 F.3d 745,
749–50 (6th Cir. 2011).
There are really two legal concerns subsumed in these cases. The first, as the Seventh
Circuit has pointed out, is a concern regarding “the preclusive effect of a judicial decision in the
initial suit applying the criteria of Rule 23.” Sawyer v. Atlas Heating & Sheet Metal Works, Inc.,
642 F.3d 560, 563 (7th Cir. 2011). This concern applies to successive class actions (as opposed
to individual lawsuits) filed after the denial of class certification, where the concern is that the
new class may get an unwarranted second bite at the class-certification apple (depending, of
course, on the reason for denial of class certification the first go-round). See, e.g., McKowan
Lowe & Co. v. Jasmine, Ltd., 295 F.3d 380, 386 (3d Cir. 2002) (noting that “application of
American Pipe tolling to successive attempts to certify a previously rejected class would
sanction an endless succession of class filings” (emphasis added)). This concern has nothing to
do with American Pipe or tolling principles generally, and has no direct application here.
63
The second concern—which is relevant here—relates to the difference between the
tolling effect of a successive class-action complaint that is filed prior to any ruling on the
viability of the initial class-action complaint as opposed to one filed after a class-certification
ruling (as contemplated by American Pipe). Compare Wyser–Pratte Mgmt. Co. v. Telxon Corp.,
413 F.3d 553, 568–69 (6th Cir. 2005) (“[A] plaintiff who chooses to file an independent action
without waiting for a determination on the class certification issue may not rely on the American
Pipe tolling doctrine.”), with In re Vertrue Inc. Marketing & Sales Practices Litig., 719 F.3d
474, 480 (6th Cir. 2013) (distinguishing Wyser–Pratte as a case where “a putative class member
who initiated a lawsuit four months before a lead plaintiff’s motion for certification was
granted,” where tolling did not occur, from a case where “the district court had confirmed that it
would not address the class certification issue,” where tolling did occur).
The first appellate courts to address the issue found that American Pipe tolling does not
apply to successive individual actions filed prior to class certification. According to the Sixth
Circuit, “[t]he purposes of American Pipe tolling are not furthered when plaintiffs file
independent actions before decision on the issue of class certification” because the secondary
filing creates duplicative litigation. Wyser–Pratte, 413 F.3d at 569; see also Glater v. Eli Lilly &
Co., 712 F.2d 735, 739 (1st Cir. 1983) (“The policies behind Rule 23 and American Pipe would
not be served, in fact would be disserved, by guaranteeing a separate suit at the same time that a
class action is ongoing.”); In re Enron Corp. Sec., 465 F. Supp. 2d 687, 715–16 (S.D. Tex. 2006)
(collecting cases on both sides, and concluding that “the American Pipe tolling doctrine applies
only to opt-out plaintiffs after the district court makes the class certification determination,
regardless of whether it denies or grants certification”).
64
However, three recent appellate-court decisions have gone against the First and Sixth
Circuits in finding that American Pipe tolling can be invoked in cases filed prior to a ruling on
class certification, albeit only in successive individual suits (i.e., not class actions). See In re
WorldCom Sec. Litig., 496 F.3d 245, 254–56 (2d Cir. 2007) (noting that while the American Pipe
Court had the benefits of judicial efficiency and economy on its mind, the case “was not meant to
induce class members to forgo their right to sue individually); In re Hanford Nuclear
Reservation Litig., 534 F.3d 986, 1009 (9th Cir. 2008) (echoing In re WorldCom and noting that
plaintiffs “have a right to file at the time of their choosing”); State Farm Mut. Auto. Ins. Co. v.
Boellstoff, 540 F.3d 1223, 1230–31 (10th Cir. 2008) (relying heavily on the Crown, Cork & Seal
rule that “[o]nce the statute of limitations has been tolled, it remains tolled for all members of the
putative class until class certification is denied” (quoting Crown, Cork & Seal, 414 U.S. at 554));
see also Rochford v. Joyce, 755 F. Supp. 1423, 1428 (N.D. Ill. 1990) (disagreeing with the First
Circuit’s Glater opinion based on the “clear” directive in Crown, Cork & Seal).
While the Court sees the appeal of the Wyser–Pratte and Glater decisions, it finds the
more-recent opinions on the matter to be more persuasive. That being said, the Court questions
whether the “plain language” of Crown, Cork & Seal that these more-recent decisions relied
upon is as plain as the courts suggest: “Once the statute of limitations has been tolled, it remains
tolled for all members of the putative class until class certification is denied. At that point, class
members may choose to file their own suits or to intervene as plaintiffs in the pending action.”
462 U.S. at 354 (emphasis added). To be sure, we are not “at that point” yet. But such an
interpretation of Crown, Cork & Seal would require the Court to hold that the statute is currently
tolled, but that plaintiffs cannot take advantage of this tolling unless and until the Court makes a
class-certification ruling. While there is an economic allure to such a rule, it comes at the cost of
65
sacrificing individual choice. As one district court put it, it would run contrary to any known
principle governing statutes of limitations “to say that [a successive plaintiff] must wait until the
dispute is more stale before he can file his individual case.” Lehman v. United Parcel Serv., Inc.,
443 F. Supp. 2d 1146, 1151 (W.D. Miss. 2006).
There is an ancillary issue as to whether successive class actions (as opposed to
individual suits) may proceed prior to a certification ruling in a preceding class action and still
take advantage of American Pipe’s tolling principle. As the Seventh Circuit noted, the factor that
distinguishes post-certification class actions from post-certification individual actions is the
potential for issue preclusion in successive class actions based on the court’s Rule 23 findings in
the initial class action. See Sawyer, 642 F.3d 560. But if a successive class action is filed before
any Rule 23 decision in the initial suit, then this concern over issue preclusion disappears (at
least until one of the cases reaches the class-certification stage). The Court sees no reason why
American Pipe’s tolling principle should apply only to successive individual actions, and not to
successive class actions.
Absent guidance to the contrary from the Seventh Circuit or the Supreme Court, this
Court is inclined to extend American Pipe tolling to successive class-action plaintiffs who
choose to file suit before a decision is rendered on class certification in the initial action. See,
e.g., McKowan, 295 F.3d at 389 (“[W]e see no good reason why class claims should not be tolled
where the district court had not yet reached the issue of the validity of the class.”). To be clear,
this sub-holding (a) ignores the dispositive effect of Ms. Rudman’s lack of Article III standing,
as discussed above, and (b) assumes that American Pipe tolling applies in the cross-jurisdiction
setting in the first place, which the Court addresses (and rejects) in the following section.
66
3.
Cross-Jurisdictional Tolling
The elephant in the room here is that both American Pipe and Crown, Cork & Seal
involve the tolling of federal statutes of limitations in class actions filed in federal courts, not the
tolling of state statutes of limitations in class actions filed in federal courts. As mentioned above,
“[w]hen state law supplies the period of limitations, it also supplies the tolling rules,”
Hemenway, 159 F.3d at 265, and thus the Court must look to the laws of the various states at
issue to determine whether those states recognize cross-jurisdictional class-action tolling. See In
re Linerboard Antitrust Litig., 223 F.R.D. at 345.
Relevant here are the tolling laws of Arkansas, California, Florida, Minnesota, and North
Carolina. Before reviewing those states’ laws, there is some low-hanging fruit to tend to.
Specifically, Indirect Plaintiffs raised claims under Cal. Bus. & Prof. Code § 17200, Minn. Stat.
§ 325D.53, and N.C. Gen. State. § 75-1.1 for the first time in their Consolidated Class Action
Complaint. But American Pipe does not apply to toll new claims. Crown, Cork & Seal, 462 U.S.
at 355 (Powell, J., concurring) (“It is important to make certain * * * that American Pipe is not
abused by the assertion of claims that differ from those raised in the original class suit.”); Spann
v. Cmty. Bank of N. Va., 2004 WL 691785, at *6 (N.D. Ill. Mar. 30, 2004) (“[T]he [first-filed]
complaint only tolled the statute of limitations as to those claims actually alleged against
[defendant] in the [first-filed] action.”). Because these three claims did not appear in the Rudman
complaint, they are time barred, and American Pipe tolling cannot save them.
As to the remaining states’ laws at issue (addressed in alphabetical order), the Ninth
Circuit has refused to import cross-jurisdictional tolling into California law. Clemens v.
DaimlerChrysler Corp., 534 F.3d 1017, 1025 (9th Cir. 2008) (“[T]he weight of authority and
California’s interest in managing its own judicial system counsel us not to import the doctrine of
67
cross-jurisdictional tolling into California law.”). Florida does not allow American Pipe tolling at
all, let alone in a cross-jurisdictional setting. See Becnel v. Deutsche Bank, AG, 507 F. App’x 71,
73 (2d Cir. 2013) (“Florida does not allow tolling during the pendency of class action lawsuits no
matter where they are filed.” (citing Fla. Stat. § 95.051(2))). Neither Minnesota nor North
Carolina has considered the issue of cross-jurisdictional tolling, and as the Ninth Circuit noted in
Clemens, “several federal courts have declined to import the doctrine into state law where it did
not previously exist.” 534 F.3d at 1025; In re Urethane Antitrust Litig., 663 F. Supp. 2d 1067,
1082 n.10 (D. Kan. 2009) (“Plaintiffs (and the Linerboard court) were able to identify courts in
only two states that have adopted cross-jurisdictional tolling.”).9 This Court likewise refuses to
import cross-jurisdictional tolling into the laws of a state that has not addressed the issue.
Because the states at issue do not apply cross-jurisdictional tolling, the federally-filed
Rudman class-action complaint did not toll the statute of limitations for statutory state-law
claims brought under the laws of California, Florida, Minnesota, or North Carolina or for unjust
enrichment claims brought under the laws of Arkansas, North Carolina, and Florida. This bar
exists independently of Indirect Plaintiffs’ Article III issues in bringing these claims, and moots
the Court’s decision to extend American Pipe tolling to successive class-action plaintiffs who
choose to file suit before a decision is rendered on class certification in the initial action.
9
The Illinois Supreme Court laid the foundation for why states should not adopt cross-jurisdictional
tolling, reasoning that “[u]nless all states simultaneously adopt the rule of cross-jurisdictional class action
tolling, any state which independently does so will invite into its courts a disproportionate share of suits
which the federal courts have refused to certify as class actions after the statute of limitations has run.”
Portwood v. Ford Motor Co., 701 N.E.2d 1102, 1103–05 (1998) (“[B]ecause state courts have no control
over the work of the federal judiciary, we believe it would be unwise to adopt a policy basing the length
of Illinois limitation periods on the federal courts’ disposition of suits seeking class certification.”). But
see In re Linerboard Antitrust Litig., 223 F.R.D. at 346 (“[D]eclining to adopt cross-jurisdictional class
action tolling will invite the filing of numerous protective, duplicative and in many cases, unnecessary,
suits by class members that want to consider filing claims under state antitrust law not included in a
federal class action complaint.”).
68
V.
Filed-Rate Doctrine
In ruling on Defendants’ motion to dismiss Direct Purchaser Plaintiffs’ Corrected
Consolidated Class Action Complaint, Judge Hibbler assessed the application of the filed-rate
doctrine to the case, and held that plaintiffs were barred from raising claims based on the
purchase of “products whose value is determined, at least in part, by the government minimum
rate” for milk, and thus dismissed Direct Plaintiffs’ “claims for damages stemming from the
purchase of products priced on the basis of the government minimum milk prices.” DFA I,
767 F. Supp. 2d at 894, 897. The filed-rate doctrine did not bar claims based on the purchase of
“products whose price was based on CME prices.” Id. at 896. This ruling is the law of the case.
Indirect Plaintiffs do not dispute the filed-rate doctrine’s applicability to state-law claims.
See, e.g., AT&T Co. v. Cent. Office Tel., Inc., 524 U.S. 214, 228 (1998). Instead, they attempt to
avoid Judge Hibbler’s ruling altogether by arguing that “the price of the products Plaintiffs
purchased (i.e., cheese) was determined solely by reference to the CME cheese spot market price
totally independent of the price set by any government entity,” and that “[t]he price of cheese
was set by adding a margin to the CME cheese spot market prices and nothing else is involved.”
[521, at 12 (citing Consol. Class Action Compl., 483, ¶ 75).] If this were true, then Indirect
Plaintiffs could potentially10 have positioned themselves outside of realm of forbidden claims as
explained in DFA I. But this is not what Indirect Plaintiffs’ alleged in their complaint. Instead,
paragraph 75 says that “[t]he price of Finished Dairy Products sold to resellers depends in whole
or large part on the Cheese Spot price, without reference to, and independent of, prices set by any
government agency.” [Consol. Class Action Compl., 483, ¶ 75 (emphasis added).] While the
10
The reason that such an allegation would only potentially save Indirect Plaintiffs’ claims is because the
claim is still dependent on the assumption that the entire class of indirect plaintiffs purchased finished
dairy products made exclusively out of the cheese that Defendants purchased on the CME cheese spot
market.
69
Court must make reasonable inferences in Indirect Plaintiffs’ favor, it would be pure speculation
to infer that the price of finished dairy products sold to consumers is not determined, even in
part, by government minimum milk prices.
Approaching this argument from a different angle, Indirect Plaintiffs divide the world of
finished dairy products into two categories—those that include milk that was priced based on a
government rate and those that do not—and argue that because Defendants produce their own
milk (at least in part), it is possible that the finished dairy products that Indirect Plaintiffs
purchased fall entirely into the latter (non-barred) category. But whether the finished dairy
products at issue contain government-priced milk is not the same inquiry as whether their prices
were determined, at least in part, by the government minimum rate. And Indirect Plaintiffs
repeatedly highlight the influence that the USDA rate had on finished dairy products nationwide,
noting that “minimum prices for raw farm milk bought by many cheese manufacturers are set
using a [USDA] pricing formula,” that “Cheese Spot prices are also used as a component for the
pricing of Class I Milk by, inter alia, the USDA and State of California,” that “[p]rivate industry
participants throughout the nation use the prices set by the USDA and State of California for
Class I Milk as the mechanism for pricing in their contracts for the sale/purchase of Class I Milk
and products containing Class I Milk,” and that Defendants’ “manipulation of the Cheese Spot
market or the Milk Futures market caused an artificial and unlawful increase in the prices of
Dairy Products including, but not limited to, Class I and III Milk prices set by the USDA and the
California Department of Food and Agriculture, throughout the United States.” [Consol. Class
Action Compl., 483, ¶¶ 77–78, 81.]
If the USDA pricing did not determine (at least in part) the price of Defendants’ finished
dairy products, it is curious why Indirect Plaintiffs put such an emphasis on this element of the
70
story in their complaint (especially in light of Judge Hibbler’s filed-rate ruling). This mystery
quickly unravels when one considers the core allegation in Indirect Plaintiffs’ complaint, which
is that Defendants’ actions in the commodities markets artificially raised the governmental price
for milk, which in turn artificially raised the national price of milk and cheese, which ultimately
allowed Indirect Plaintiffs to reap the benefit of the nationwide price increase in finished diary
products. Regardless of what inferences the Court may make in Indirect Plaintiffs’ favor, the
Court cannot ignore Indirect Plaintiffs’ allegation that Defendants’ activities raised the
governmental price of milk, and that governmental pricing in turn influenced the price of
finished dairy products nationwide; inferences do not overcome the big picture.
This holding also comports with the policies underpinning the filed-rate doctrine. The
theory behind the doctrine is that “any ‘filed rate’—that is, one approved by [a] governing
regulatory agency—is per se reasonable and unassailable in judicial proceedings brought by
ratepayers.” DFA I, 767 F. Supp. 2d at 893 (quoting Wegoland Ltd. v. NYNEX Corp., 27 F.3d 17,
18 (2d Cir. 1994)). The concern is that if an allegedly price-fixed product is priced based (even
in part) on a government rate, then “determining a hypothetically reasonable rate for the
purposes of calculating damages * * * would interfere with the regulatory agency’s ratemaking
authority.” Id. Indirect Plaintiffs argue that the Court will not have to involve itself with any
government rates in order to calculate damages in this case because the retailers that sold
products to Indirect Plaintiffs “are in a fiercely competitive market and pass on the price
increases incurred from the increases that defendants orchestrated on the CME cheese spot
market.” [521, at 12.] But this argument is belied by Indirect Plaintiffs’ statements regarding the
nationwide impact that governmental milk prices have on finished dairy products; Defendants’
ability to impact governmental milk pricing defines the nature of the scheme. See DFA I, 767 F.
71
Supp. 2d at 896–97 (citing Lower Lake Erie Iron Ore Antitrust Litig., 998 F.2d 1144, 1157 (3d
Cir. 1993)). As such, any calculation of damages resulting from the price of finished dairy
products would inevitably include, at least in part, an assessment of what governmental milk
prices would have been absent Defendants’ actions.11 Accordingly, Indirect Plaintiffs’ claims for
damages are barred by the filed-rate doctrine.12
VI.
Failure to State a Claim: Monopolization
Invoking the antitrust laws of Michigan, Minnesota, and North Carolina, and the
consumer-protection laws of Arkansas, California, and Florida, Indirect Plaintiffs allege that
Defendants wrongfully acquired and maintained monopoly power in the Cheese Spot market. In
response—and in addition to their arguments regarding Indirect Plaintiffs’ lack of standing to
raise these claims, as discussed above—Defendants argue that Indirect Plaintiffs failed to state a
claim for monopolization under each state’s law because (1) the purportedly monopolized
market—the Cheese Spot market—does not encompass all interchangeable substitute products,
11
Indirect Plaintiffs argue that a damages calculation will require them “to establish [1] what the price on
the CME cheese spot market would have been in the absence of the wrongful conduct; [2] how much that
caused the price Defendants charged for their branded cheese products to retailers or wholesalers to
increase; and [3] how much of that increase was passed on to Plaintiffs and other consumers.” [521, at
12.] It is the second step that necessarily involves a calculation of the government rate because
Defendants’ sale price was based on the going rate in the national market, which in turn was based, at
least in part, on government milk prices.
12
Indirect Plaintiffs argue that California’s Cartwright Act does not recognize the filed-rate doctrine for
rates set by state rate-making agencies. See Knevlarbaard Dairies v. Kraft Foods, Inc., 232 F.3d 979, 992
(9th Cir. 2000)). Defendants disagree, arguing that since Knevelbaard, the tide has changed in California.
See MacKay v. Superior Court, 115 Cal. Rptr. 3d 893, 910 (Cal Ct. App. 2010). The Court is not
convinced that MacKay—an insurance-rate case where the court noted “the limited nature of [its]
holding”—expressly overruled what was otherwise established California law. See In re Conseco Life Ins.
Co. Life Trend Ins. Marketing & Sales Practice Litig., 2012 WL 2917227, at *9–10 (N.D. Cal. July 17,
2012) (noting disagreement amongst California courts regarding the filed-rate doctrine and refusing to
apply it). As such, the Court will not apply the filed-rate doctrine to dismiss Indirect Plaintiffs’ damages
claims based on California law regarding rates set by the California Department of Food and Agriculture.
This is somewhat of a moot point, as the Court has already found dismissal of Indirect Plaintiffs’
California-law claims to be appropriate on other grounds.
72
and (2) Plaintiffs failed to allege that DFA had sufficient market power or excluded others from
participating in the CME cheese spot call. The Court addresses each argument in turn.
A.
Legal Standard
To state a claim for monopolization under federal law, Plaintiffs must plead “(1) the
possession of monopoly power in the relevant market and (2) the willful acquisition or
maintenance of that power.” DFA I, 767 F. Supp. 2d at 901. Michigan, Minnesota, and North
Carolina interpret their antitrust statutes in harmony with federal law, and the parties do not
dispute the applicability of this two-part test under those states’ laws.
However, Defendants do not allege that this two-part test applies to Indirect Plaintiffs’
monopolization claims brought under the consumer-protection laws of Arkansas, California, and
Florida, nor do they explain what the monopolization standards are in those states. Instead,
Defendants claim that Indirect Plaintiffs raised monopolization claims under these states’
consumer-protection statutes only because they are barred from bringing monopolization claims
under those states’ antitrust statutes. Defendants then argue that Indirect Plaintiffs should be
forbidden from circumventing those states’ legislatures’ limitations on antitrust recovery by
repackaging their antitrust claims as “ill-fitting” consumer protection claims. Even though this is
not a “failure to state a claim” argument (thus making it “ill-fitting” in regard to this section of
the Court’s opinion), the Court can dispose if it efficiently here.
Addressing the three states alphabetically, courts have interpreted the catchall provision
of the Arkansas Deceptive Trade Practices Act—which prohibits any “unconscionable, false, or
deceptive act or practice in business, commerce, or trade,” Ark. Code § 4-88-107(a)(10)—
broadly so as to encompass monopolization claims. See Sheet Metal Workers Local 441 Health
& Welfare Plan v. GlaxoSmithKline, PLC, 737 F. Supp. 2d 380, 404–05 (E.D. Pa. 2010).
73
Similarly, individual plaintiffs can bring monopolization claims under California’s Unfair
Competition Law (“CUCL”)—which prohibits “unlawful, unfair, or fraudulent business
practice[s],” Cal. Bus. & Prof. Code § 17200—such that a “decision to grand [defendants’]
motion to dismiss plaintiffs’ Cartwright Act monopolization claims does not in any way prevent
[a court] from allowing their CUCL claim to proceed.” Sheet Metal Workers, 737 F. Supp. 2d at
406. And plaintiffs have also been successful in bringing monopolization claims under the
Florida Deceptive and Unfair Trade Practices Act, which prohibits “[u]nfair methods of
competition, unconscionable acts or practices, and unfair or deceptive acts or practices in the
conduct of any trade or commerce,” Fla. Stat. § 501.204(1). Sheet Metal Workers, 737 F. Supp.
2d at 408–09. In summation, Indirect Plaintiffs’ consumer-protection claims under the laws of
Arkansas, California, and Florida are not dismissible simply because those states do not provide
a private right of action for monopolization claims under their respective antitrust statutes.
Accordingly, the Court will apply the two-part test to Indirect Plaintiffs’ monopolization
claims under Michigan, Minnesota, and North Carolina antitrust law, but because Defendants do
not allege that Indirect Plaintiffs failed to state a claim under the Arkansas, California, and
Florida consumer-protection statutes (or at least Defendants failed to provide the relevant legal
standards under those states’ laws), the Court will not address such arguments.
B.
Relevant Market
Under federal law, “[t]he outer boundaries of a product market are determined by the
reasonable interchangeability of use or the cross-elasticity of demand between the product itself
and substitutes for it.” Brown Shoe Co. v. United States, 370 U.S. 294, 325 (1962). “In other
words, the products in a market must have unique attributes that allow them to be substituted for
one another, but make them difficult to replace with substitute products from outside the
74
market.” DFA I, 767 F. Supp. 2d at 901. In most cases, proper market definition is a factintensive inquiry that is not suited for resolution on a motion to dismiss. Eastman Kodak Co. v.
Image Technical Servs., Inc., 504 U.S. 451, 482 (1992).
Indirect Plaintiffs allege in their Consolidated Class Action Complaint that DFA
wrongfully acquired and maintained monopoly power in the Cheese Spot market. [483, ¶ 108.]
Indirect Plaintiffs define this market as the only commodities exchange for cheddar cheese in the
United States [id. ¶ 30], explaining that the market provides a reference point for pricing for the
USDA and for many cheese manufacturers nationwide [id. ¶¶ 32, 75–78]. Indirect Plaintiffs also
note that the CME sets detailed trading rules for the Cheese Spot market that govern the quality
and color of the cheese, freight charges, packaging requirements, inspection specifications,
penalties for non-compliance, etc. [id. ¶¶ 31–34].
In response, Defendants highlight Plaintiffs’ concession that the cheese traded on the
CME Cheese Spot call market accounts for less than 2% of the annual supply of cheddar cheese,
and argue that Plaintiffs’ recounting of the characteristics of the CME does not refute that
interchangeable substitute products—let alone the other 98% of the annual supply of cheddar
cheese—should also be included in the relevant market.
At this stage, Indirect Plaintiffs have adequately pled a relevant market. The key factor in
this decision relates to Plaintiffs’ claims that (a) the Cheese Spot market is the only cheddar
cheese market in the United States, and (b) purchases made on the Cheese Spot market are
highly influential in setting the national price for finished dairy products. This aspect of the
market makes it distinct from cheddar cheese purchases made outside of the Cheese Spot market,
and is enough to satisfy the pleading standard.
75
C.
Market Power / Exclusionary Conduct
In addition to establishing a relevant market, Indirect Plaintiffs must also plead that DFA
possessed monopoly power in the Cheese Spot market—i.e., that DFA possessed “the power to
control prices or exclude competition.” United States v. E.I. du Pont de Nemours & Co., 351
U.S. 377, 391 (1956). There are two methods for proving that a defendant possessed monopoly
power: (1) “through direct evidence of anticompetitive effects,” or (2) “by proving relevant
product and geographic markets and by showing that the defendant’s share exceeds whatever
threshold is important for the practice in that case.” Toys “R” Us, Inc. v. FTC, 221 F.3d 928, 937
(7th Cir. 2000). While “[t]he existence of [monopoly] power ordinarily may be inferred from the
predominant share of the market,” United States v. Grinnell Corp., 384 U.S. 563, 571 (1966), “in
markets with low barriers to entry, a large market share does not necessarily translate into power
over the prices in a market.” DFA I, 767 F. Supp. 2d at 902 (citing Ball Mem’l Hosp., Inc. v.
Mut. Hosp. Ins., Inc., 784 F.2d 1325, 1336 (7th Cir. 1986)).
The Cheese Spot market is an open market, although one where the buyer agrees to take
delivery of an actual product (i.e., cheese). In their Consolidated Class Action Complaint,
Indirect Plaintiffs describe it as a “thin market,” meaning it is one in which there are a small
number of traders and very few transactions, making it vulnerable to monopolization. [483,
¶ 37.] Indirect Plaintiffs allege that Defendants acquired every single contract for cheddar cheese
on the Cheese Spot market, paying artificially high prices for these contracts (and assuming a
loss in the process) with the goal of raising the national price on milk and cheese, thus allowing
them to recoup their losses on the milk futures market and in the sale of its finished dairy
products. [483, ¶¶ 38–39, 48–49, 75–82.] Defendants counter by arguing that Plaintiffs’
Consolidated Class Action Complaint does not contain a single allegation that DFA excluded
76
anyone from buying or selling cheese on the Cheese Spot market. The Court disagrees with
Defendants, and finds that Indirect Plaintiffs adequately alleged market power.13
VII.
Failure to State a Claim: Consumer “Fraud”
In addition to the arguments addressed above, Defendants also seek to dismiss Indirect
Plaintiffs’ consumer-protection claims (which Defendants refer to as “consumer fraud” claims),
arguing that Indirect Plaintiffs failed to allege unconscionable or deceptive conduct, and thus
failed to state a claim under each relevant state’s law. Defendants’ argument is, for the most part,
flawed.
As the Court already alluded to (see footnote 4, supra), three of the four state consumerprotection statutes at issue here (California, Florida, and North Carolina) proscribe not only
deceptive, fraudulent, and unconscionable business practices, but also unfair business practices.
See Cal. Bus & Prof. Code § 17200 (proscribing any “unlawful, unfair or fraudulent business act
or practice”); Fla. Stat. § 501.204(1) (proscribing “[u]nfair methods of competition,
unconscionable acts or practices, and unfair or deceptive acts or practices”); N.C. Gen. Stat.
§ 75-1.1 (proscribing “[u]nfair methods of competition in or affecting commerce, and unfair or
deceptive acts or practices in or affecting commerce”). And the prima facie requirements for
stating a claim under these provisions change depending on whether the plaintiff is alleging
fraudulent conduct or unfair conduct. See, e.g., In re Tobacco II Cases, 207 P.3d at 29–30
(differentiating between the “three varieties of unfair competition [under the UCL]: practices
which are unlawful, unfair or fraudulent”); Wrestlereunion, LLC v. Live Nation Television
Holdings, Inc., 2008 WL 3048859, at *3 (M.D. Fla. 2008) (noting that claims under the Florida
Act require plaintiffs to allege that defendants “engaged in unfair methods of competition,
13
Because the Court has already deemed Indirect Plaintiffs’ monopolization claims dismissible on other
grounds, the Court’s finding regarding their ability to state a claim for monopolization is inconsequential,
and the Court provides this ruling only for the sake of completeness.
77
unconscionable acts or practices, or unfair or deceptive acts or practices” (emphasis added));
Dalton v. Camp, 548 S.E.2d 704, 711 (N.C. 2001) (“In order to establish a prima facie claim for
unfair trade practices, a plaintiff must show: (1) defendant committed an unfair or deceptive act
or practice” where “[a] practice is unfair if it is unethical or unscrupulous, and it is deceptive if it
has a tendency to deceive.” (emphasis added)). Here, Indirect Plaintiffs do not allege fraud or
deception [see 521, at 21 (“[T]he CCAC does not allege any fraud on the part of defendants
* * *.”)], and thus need not plead deceptive or unconscionable conduct to state a claim under the
consumer-protection laws of California, Florida, or North Carolina.
The outlier is the Arkansas Deceptive Trade Practices Act (“ADTPA”), which proscribes
“unconscionable, false, or deceptive” business practices without reference to “unfair” business
practices. See Ark. Code § 4-88-107(a)(10). The ADTPA further notes that “[t]he deceptive and
unconscionable trade practices listed in this section are in addition to and do not limit the types
of unfair trade practices at common law or under other statutes of this state.” Id. § 4-88-107(b)
(emphasis added). Thus, claims under the ADTPA are limited to “instances of false
representation, fraud, or the improper use of economic leverage in a trade transaction.” Universal
Coops., Inc. v. AAC Flying Serv., Inc., 710 F.3d 790, 795–96 (8th Cir. 2013). The “improper use
of economic leverage” prohibition is animated by the statute’s proscription of “unconscionable”
business practices, id. at 795, such that “allegations of price fixing * * * are not the kind of
conduct prohibited under the[] statute[].” In re Graphics Processing Units Antitrust Litig.,
527 F. Supp. 2d 1011, 1030 (N.D. Cal. 2007) (dismissing indirect purchasers’ claims under the
ADTPA); see also Universal Coops., 710 F.3d at 795 (“An ‘unconscionable’ act is an act that
‘affront[s] the sense of justice, decency, or reasonableness.” (citation omitted)). In other words,
the Arkansas legislature has distanced the ADTPA from other state laws prohibiting unfair trade
78
practices, reserving the ADTPA for fraudulent and unconscionable acts. Upon review of Indirect
Plaintiffs’ Consolidated Class Action Complaint, the Court agrees with Defendants that Indirect
Plaintiffs failed to allege that Defendants’ conduct “affronts the sense of justice, decency, or
reasonableness” so as to rise to the level necessary to state a claim under the ADTPA.
Accordingly, Indirect Plaintiffs’ failure to state price-fixing or monopolization claims
under Ark. Code § 4-88-107 provides an alternative ground for dismissal of those claims. And
while Indirect Plaintiffs did state consumer-protection claims under California, Florida, and
North Carolina law, this discussion is presented only in the interest of completeness as the Court
has already dismissed those claims on other grounds.
VIII. Failure to State a Claim: Unjust Enrichment
The Court already concluded that all but two (Arkansas and Minnesota) of Plaintiffs’
unjust enrichment claims are untenable in light of the Court’s dismissal of the related antitrust
claims on remoteness grounds, and the Court also found dismissal of all unjust enrichment
claims appropriate under the filed-rate doctrine. The Court further noted that California law does
not recognize a cause of action for unjust enrichment. See Melchior, 131 Cal. Rptr. 2d at 357. In
addition to these grounds for dismissal, Plaintiffs fail to specify which states’ laws, if any, give
rise to their unjust enrichment claims, which presents another viable ground for dismissal. See,
e.g., In re Refrigerant Compressors Antitrust Litig., 2013 WL 1431756, at *23 (citing cases).
Defendants’ two remaining alternative arguments for dismissal of Indirect Plaintiffs’
unjust enrichment claims are less persuasive. First, Defendants argue that under Florida,
Minnesota, New York, and North Carolina law, unjust enrichment is not available as an
79
independent claim to a party with an adequate remedy at law.14 Indirect Plaintiffs contend that
they are entitled to plead in the alternative, see Fed. R. Civ. P. 8(d)(2), and Defendants counter
that “where the unjust enrichment claim relies upon the same factual predicates as a plaintiff’s
legal causes of action, it is not a true alternative theory of relief but rather is duplicative of those
legal causes of action.” In re Ford Tailgate Litig., 2014 WL 1007066, at *5 (N.D. Cal. Mar. 12,
2014) (quoting Licul v. Volkswagen Grp. of Am., Inc., 2013 WL 6328734, at *7 (S.D. Fla. Dec.
5, 2013)). While Defendants’ argument shows promise, it is not a widely-accepted theory for
dismissal at the motion-to-dismiss stage, and Defendants provide no support for its application
under the states’ laws at issue. Accordingly, the Court finds this argument to be premature at the
pleading stage. See, e.g., In re Light Cigarettes Mktg. Sales Practices Litig., 751 F. Supp. 2d
183, 191–93 (D. Me. 2010).15
Second, Defendants argue that the antitrust statutes in Minnesota, New York, and North
Carolina and the consumer-protection statutes in Arkansas and North Carolina limit a plaintiff’s
potential recovery to compensatory damages, making equitable relief unavailable. Although the
parties’ arguments lack depth and clarity on this issue, because Indirect Plaintiffs raised unjust
enrichment as an independent claim (and not merely as a remedy), the Court interprets
Defendants’ argument as saying that Indirect Plaintiffs’ unjust enrichment claims are barred
based on the remedies available under certain state statutes. But as with Defendants’ first
argument, this argument is also premature at the pleading stage, as Indirect Plaintiffs are entitled
14
See, e.g., Bowleg v. Bowe, 502 So.2d 71, 72 (Fla. Dist. Ct. App. 1987); ServiceMaster of St. Cloud v.
GAB Business Servs., Inc., 544 N.W.2d 302, 305 (Minn. 1996); Samiento v. World Yacht Inc., 883 N.E.2d
990, 996 (N.Y. 2008); Jefferson Standard Life Ins. Co. v. Guilford Cnty., 34 S.E.2d 430, 434 (N.C. 1945).
15
“Should plaintiffs ultimately be unable to recover under [an antitrust claim], it does not mean [that] a
legal remedy was unavailable (thereby justifying an equitable remedy of unjust enrichment), but only that
their claim lacks merit.” In re Ford Tailgate Litig., 2014 WL 1007066, at *5; see also United States v.
Bame, 721 F.3d 1025, 1030–32 (8th Cir. 2013) (noting how Minnesota courts regularly dismiss unjust
enrichment claims even where plaintiffs pursue legal and equitable claims in the alternative).
80
to plead in the alternative. See, e.g., In re Chocolate Confectionary Antitrust Litig., 749 F. Supp.
2d 224, 237–42 (M.D. Pa. 2010) (covering Minnesota, New York, and North Carolina law); see
also In re Cardizem CD Antitrust Litig., 105 F. Supp. 2d 618, 669 (E.D. Mich. 2000) (“[C]ourts
often award equitable remedies under common law claims for unjust enrichment in
circumstances where claims based upon contract or other state law violations prove
unsuccessful.”).
IX.
Schreiber Foods, Inc.
In their Consolidated Class Action Complaint, Indirect Plaintiffs (for the first time)
inculpate Schreiber Foods, Inc. into their allegations, listing Schreiber as a “co-conspirator” in
the price-fixing scheme. As a point of reference, Indirect Plaintiffs filed their Consolidated Class
Action Complaint [483 (Feb. 25, 2014)] approximately six months before the Court granted
Schreiber’s motion for summary judgment [652 (Aug. 18, 2014)], dismissing Schreiber as a
defendant in the Direct Purchaser action. Regardless, Indirect Plaintiffs have not sought to add
Schreiber as an actual defendant in their action, and thus there is no need for the Court to address
Indirect Plaintiffs’ allegations against non-party Schreiber.
X.
State Statutory Exemptions
Defendants argue that Indirect Plaintiffs’ antitrust claims under New York and Kansas
law are barred by express statutory exemptions. Again, the Court addresses these arguments only
in the interest of completeness, having already dismissed these claims on other grounds.
A.
New York Dairymen Exemption
The provision of New York’s Donnelly Act that proscribes anticompetitive conduct
contains an exemption for “cooperative associations, corporate or otherwise, of * * * dairymen
* * * [and] to contracts, agreements or arrangements made by such associations,” N.Y. Gen. Bus.
81
Law § 340(3), referred to as the “dairymen exemption.” Defendants argue that they are a
cooperative association of dairymen, and thus fall within the statute’s exemption.
In crafting the dairymen exemption, the New York legislature “intended to duplicate
Congress’[s] agricultural exemptions to the Capper-Volstead Act * * *, intend[ing] to exempt
from the operation of the antitrust laws only legitimate activities and agreements.” Agritronics
Corp. v. Nat’l Dairy Herd Ass’n, Inc., 914 F. Supp. 814, 827 (N.D.N.Y. 1996); see also People v.
Dairylea Coop., Inc., 452 N.Y.S.2d 282, 286 (N.Y. Sup. Ct. 1982) (“The exemption was
intended to protect and permit dairy cooperative associations * * * to function as such without
fear that doing so might be viewed as violating the statute * * * [and] was not intended to protect
carte blanche an act otherwise criminal and outside of that limited area of exemption.”).
In interpreting the exemption, New York’s highest court deemed “[t]he language of the
statutory exemption [to be] broad and unambiguous,” affirming the dismissal of a complaint
alleging “a violation of the Donnelly Act by means of an agreement or arrangement among
dairymen’s co-operatives and others involving the purchase and distribution of milk.” State v.
Glen & Mohawk Milk Ass’n, Inc., 460 N.E.2d 1091, 1093 (N.Y. 1984). The court went on to say
that this “legislative declaration, clear on its face, cannot be ignored.” Id. Because of this
exemption, “dairymen’s co-operatives and those with whom they contract or agree [are] free
from regulation under the Donnelly Act,” and instead are subject to the “pervasive” regulatory
scheme set forth in New York’s Agriculture and Markets Law. Id.; see also Margrove Inc. v.
Upstate Milk Coop., Inc., 357 N.Y.S.2d 392 (N.Y. Sup. Ct. 1974), aff’d, sub nom. Margrove Inc.
v. Wegman’s Food Markets, Inc., 373 N.Y.S.2d 1014 (N.Y. App. Div. 1975).
While the Court finds the binding precedent from New York’s highest court persuasive,
the parties have not provided the Court with enough information to determine whether
82
Defendants are, in whole or in part, members of a qualifying cooperative.16 Moreover, the New
York exemption is modeled after the federal Capper-Volstead Act,17 but the parties have not
provided any information about this Act or how interpretations of the Act impact Indirect
Plaintiffs’ claims here. While Defendants could ultimately prevail on this argument, the Court
cannot resolve this issue at the motion-to-dismiss stage.
B.
Kansas Dairymen Exemption
Similar to the New York exemption, the Kansas Restraint of Trade Act contains a
dairymen exemption, stating that the Act “shall not be construed to apply to [a]ny association”
organized under the state “cooperative marketing act” or “any association * * * governed by
* * * the Capper-Volstead act.” Kan. Stat. Ann. §§ 50-163(e)(1)–(2).
First, Indirect Plaintiffs argue that this provision, which took effect in April 2013, does
not apply retroactively to reach Defendants’ 2004 through 2006 conduct. But the statute says that
“K.S.A. 2014 Supp. 50-163 * * * shall be applied retroactively to any choses in action premised
on any provision of the Kansas restraint of trade act.” Kan. Stat. Ann. § 50-164.
Second, Indirect Plaintiffs argue that the exemption should be read narrowly to avoid
giving cooperatives a “free pass” when they engage in behavior that has nothing to do with the
cooperative. Unlike its New York counterpart, however, the Kansas dairymen exemption is
relatively new, and thus there is no case law interpreting the breadth of the exemption. Because
of Kansas’s harmonization provision, it would not be inappropriate for the Court to review
federal case law interpreting the Capper-Volstead Act to determine the boundaries of the
16
Indirect Plaintiffs admit in their complaint that DFA is a “vertically integrated cooperative of * * * raw
milk producers,” [483, ¶ 18], but this statement, standing alone, is insufficient to bring Defendants within
the scope of the dairymen exemption.
17
The Capper-Volstead Act provides protection for certain agricultural cooperatives, including dairymen,
from federal antitrust law. See, e.g., Case-Swayne Co. v. Sunkist Growers, Inc., 389 U.S. 384, 389 (1967).
83
exemption. But again, the parties have not provided the Court with sufficient information
regarding the contours of the Capper-Volstead Act or whether Defendants are a qualifying
cooperative, making any attempt to undertake this analysis premature.
Finally, Defendants remark in a footnote that Indirect Plaintiffs failed to allege that
Ms. Asmann purchased “articles imported into th[e] state” of Kansas, as required by the Kansas
Restraint of Trade Act. Kan. Stat. Ann. § 50-112. Indirect Plaintiffs do not dispute this, but
instead argue that they are entitled to discovery to determine the state of origin for Ms. Asmann’s
finished dairy products. Defendants disagree, arguing that because this is an affirmative element
of the claim, Indirect Plaintiffs must allege it in their complaint. But at the pleading stage,
“[s]pecific facts are not necessary; the statement need only give the defendant fair notice of what
the * * * claim is and the grounds upon which it rests.” Erickson, 551 U.S. at 93. Ms. Asmann
accomplished that feat, and thus her claim is not dismissible on this ground.
XI.
Motion to Intervene
Movants Timmy P. Tholp, Wayde R. Alright, Chelsey M. Penix, Amber Lambert, Lisa R.
Murphy, and Toni O’Dell filed a motion to intervene [723], although without specifying whether
the motion refers to the Direct Purchaser action (which has already settled) or the Indirect
Purchaser action (which is now dismissed). Regardless, Movants’ motion is denied.
First, Movants failed to meet the intervention standards in either Rule 24(a) (intervention
of right) or Rule 24(b) (permissive intervention). To the former, Movants have no statutory right
to intervention, and have not claimed an interest relating to the property or transaction that is the
subject of either the direct or indirect action. To the latter, Movants have no conditional right to
intervene by a federal statute, and do not share a claim or defense with either the direct or
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indirect action. In short, Movants’ motion lacks sufficient detail to apprise the Court of Movants’
interest, or how it relates to this litigation.
Second, Movants fail to comply with Federal Rule of Civil Procedure 24(c), which
requires prospective intervenors to “state the grounds for intervention” in their motion, and to
provide “a pleading that sets out the claim or defense for which intervention is sought.” Fed. R.
Civ. P. 24(c). Movants fail on both accounts, stating no grounds (other than conclusory ones) for
their intervention, and failing to attach the required pleading.
Third, to the extent that Movants were direct purchasers (which seems unlikely), their
claims would be governed by the approved settlement in that action, to which Movants did not
object. To the extent that Movants were indirect purchasers, their motion is moot in light of this
opinion dismissing the Indirect Purchaser action.
Vague statements that potential intervenors “have a common vested interest” in the
litigation or that they “will provide questions of laws [sic] and facts that are common” are
insufficient to trigger intervention. [723.] Defendant Dairy Farmers of America refers to
Movants as “serial filers of similar motions lacking merit,” and cites to several cases across the
country highlighting their “long and litigious history filing frivolous lawsuits in courts across the
country,” and other similar observations. [724 (citations omitted).] Based on the brevity and lack
of substance in Movants’ motion, it appears as though this may be another example of their
infamous work. Regardless, their motion [723] fails to meet the criteria for intervention as laid
out in the Federal Rules for Civil Procedure, and must be denied.
XII.
Conclusion
The Court finds dismissal of each of Indirect Plaintiffs’ claims to be appropriate on at
least two separate grounds. Accordingly, and for the reasons stated herein, the Court grants
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Defendants’ motion to dismiss Indirect Purchaser Plaintiffs’ Consolidated Class Action
Complaint [497]. In addition, putative Intervenors’ motion to intervene [723] is denied.
Dated: June 29, 2015
____________________________
Robert M. Dow, Jr.
United States District Judge
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