Opinion · Court of Appeals for the Third Circuit

Merican, Inc. And Merican Curtis, Inc. And Merican Curtis, Ltd. v. Caterpillar Tractor Co. Caterpillar Tractor Co.

Merican, Inc. & Merican Curtis, Inc. & Merican Curtis, Ltd. v. Caterpillar Tractor Co. Caterpillar Tractor Co., 713 F.2d 958 (3d Cir. 1983)

Type
Opinion
Court
Court of Appeals for the Third Circuit
Jurisdiction
Federal
Date
1983-07-26
Topic
bankruptcy

How later courts describe this case

  • noting that "the Supreme Court has recognized two types of limitations on the availability of the section 4 remedy which the courts must consider when examining whether a treble damage action may be maintained"
  • noting that "the Supreme Court has reco two types of limitations on the availability of the section 4 remedy which the cour consider when examining whether a treble damage action may be maintained"
  • weighing the policies against double recovery and overly-complex damage claims in holding that an unauthorized dealer who purchased from an authorized dealer does not have standing to sue the manufacturer for treble damages
  • “On a § 1292(b) appeal we consider all grounds which might require a reversal of the order appealed from.”
  • refusing to limit Illinois Brick to cases of horizontal price-fixing
  • applying the Supreme Court’s decision in Associated General Contractors

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UpLaw has not yet analyzed Merican, Inc. And Merican Curtis, Inc. And Merican Curtis, Ltd. v. Caterpillar Tractor Co. Caterpillar Tractor Co.. The absence of a flag is not a finding that it is good law.

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pending
Cited by
76 opinions
MERICAN, INC. v. CATERPILLAR TRACTOR CO.,713 F.2d 958(3rd Cir. 1983)
MERICAN, INC. AND MERICAN CURTIS, INC. AND MERICAN CURTIS, LTD. v.
CATERPILLAR TRACTOR CO. CATERPILLAR TRACTOR CO., APPELLANT.
No. 82-1577.
United States Court of Appeals, Third Circuit.
Argued April 12, 1983.
Decided July 26, 1983.
Page 959
John DeQ. Briggs, III (argued), David C. Murchison, William E. Wallace, III, Albert C. Loebe, Howrey Simon, Washington, D.C., for appellant.

Robert G. Levy (argued), Berryl A. Speert, Allan P. Hillman, John M. Belferman, Frank, Bernstein, Conaway Goldman, Baltimore, Md., for appellees.
Appeal from the United States District Court for the Eastern District of Pennsylvania.Page 960
Before HUNTER, HIGGINBOTHAM, Circuit Judges and GERRY,fn*District Judge.
[1]OPINION OF THE COURT
JAMES HUNTER, III, Circuit Judge:
[2] This interlocutory appeal requires us to address the limits imposed byIllinois Brick Co. v. Illinois,431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977), on liability for treble damages under section 4 of the Clayton Act, 15 U.S.C.A. § 15 (West Supp. 1983). The issue arises in an action filed by plaintiff-appellees Merican, Inc., Merican Curtis, Inc., and Merican Curtis, Ltd. ("Appellees") against defendant-appellant Caterpillar Tractor Company ("Caterpillar"). Appellees allege that Caterpillar violated section 1 of the Sherman Act,15 U.S.C. § 1(1976), by illegally imposing a penalty on its dealers in order to eliminate the source of supply of Caterpillar products to Appellees and other independent marketers. Following the district court's denial of Caterpillar's motion to dismiss, we granted appellate review under28 U.S.C. § 1292(b) (1976) to address the question of whether Appellees are precluded from maintaining a private damage action by operation of the rule ofIllinois Brick.We hold that the district court misconstrued the scope ofIllinois Brickand its progeny and that it erred by refusing to grant Caterpillar's motion to dismiss Appellees' claims for damages.
I
A
[3] This case involves the international sale and distribution of electric generator sets designed, manufactured, and marketed by Caterpillar.1To distribute its generator sets Caterpillar employs a world-wide network of authorized Caterpillar dealers who function generally as retail sellers of Caterpillar products. Each of those dealers enters into a Distribution Agreement with Caterpillar which provides for,inter alia,the promotion, distribution, installation, and servicing of Caterpillar-manufactured products by the dealers. Under that agreement each dealer has an area of service responsibility in which he agrees to maintain one or more suitable places of business, to maintain adequate service facilities, to employ trained salesmen to market Caterpillar's products, and to employ trained technicians and mechanics to render diagnostic and mechanical service to all users of Caterpillar products in the dealer's service area. In addition each dealer agrees to provide, free of charge to the user, delivery, inspection, and warranty services with respect to all Caterpillar products that receive their "initial substantial use" in that dealer's service territory, regardless of when, where, or by whom the product may have been sold.

[4] Under the Distribution Agreement in effect in 1978, Caterpillar agreed to sell new generator sets to its dealers at a discount of 25% off the list price. Caterpillar allocated 5% of that discount as reasonable compensation for the dealer's obligation to assume the responsibility of providing delivery, inspection, and warranty services described above. If a dealer sold a generator set that received its initial substantial use in a second dealer's service territory, the selling dealer was not entitled to the 5% "service fee" and thus was only entitled to keep a 20% discount. Under the Distribution Agreement the selling dealer was required to return the 5% to Caterpillar, which in turn transferred it to the dealer responsible for providing service, if that dealer filed an appropriate claim. Caterpillar had a practice of returning the service fee to the selling dealer if the servicing dealer did not claim the fee within one year.2Thus if aPage 961selling dealer sold a generator set for use outside his territory to an independent marketer who provided full warranty service, the selling dealer could adjust his price down knowing that another Caterpillar-authorized dealer would not have to provide service and accordingly would not claim the fee.

[5] In 1978 Caterpillar instituted a new system for collecting the 5% service fee from its dealers. Under the new system Caterpillar no longer returned the service fee to a selling dealer when the servicing dealer made no claim for the fee. Instead the company retained all unclaimed service fees as miscellaneous income. The practical result of Caterpillar's new system was that its dealers could not provide as large a price reduction off the list price when they sold a generator set to an independent marketer for resale outside of the selling dealer's service area.

[6] Appellees are general trading companies engaged in the international marketing and servicing of numerous products. In the mid-1970's Appellees began to trade in Caterpillar electric generator sets by purchasing them in the United States and then reselling them in the international market. Appellees purchased the sets primarily from Ohio Machinery Company ("OMCO"), a Caterpillar-authorized dealer located in Cleveland, Ohio. They would then resell them in competition with Caterpillar-authorized dealers in Europe and the Middle East, specifically Zahid Tractor and Heavy Machinery Company ("Zahid"), Caterpillar's authorized dealer in Saudi Arabia. Appellees or their reseller-customers performed the necessary delivery, installation, inspection, and warranty service for the users of the generator sets.

[7] Appellees allege that Caterpillar changed its fee system in 1980 because of Appellees' competition in selling generator sets in Saudi Arabia. Appellees claim that the new system was the result of a combination and conspiracy between Caterpillar and Zahid "to allocate customers and territories for the sale of Caterpillar electric generator sets and to foreclose [Appellees] and other generator set marketers from engaging in price competition with defendant's authorized dealers." Complaint ¶ 21, app. at 18B.3Appellees allege that the service fee in effect became an "automatic penalty" imposed on dealers who sold generator sets for use outside their territory. They claim that because of Caterpillar's new policy, they have suffered substantial losses in sales and profits and have been restrained from securing new business. Appellees also allege that prices of electric generator sets have been artificially stabilized and maintained, that competition in the sale of the generator sets has been substantially lessened or eliminated, that Caterpillar's authorized dealers have been prevented from distributing generator sets in territories and to customers of their choosing, and that purchasers of the generator sets have been deprived of the opportunity to purchase those products from suppliers of their own choice at competitive prices.
B
[8] On September 25, 1980, Appellees filed this action in the United States District Court for the Eastern District of Pennsylvania. They filed an amended complaint on May 26, 1981. In their amended complaint Appellees claimed that Caterpillar's service fee system violated section 1 of the Sherman Act,15 U.S.C. § 1(1976).4Appellees sought monetary and injunctive relief under sections 4 and 16 of the Clayton Act, 15Page 962U.S.C.A. § 15 (West Supp. 1983);15 U.S.C. § 26(1976 Supp. II 1978).

[9] On March 1, 1982, Caterpillar filed a motion to dismiss5based on the rule ofIllinois Brickthat "indirect purchasers" are precluded from suing for passed-on damages under section 4 of the Clayton Act.See Illinois Brick,431 U.S. at 746, 97 S.Ct. at 2074-75.6After hearing argument the district court issued an order from the bench on July 2, 1982, denying Caterpillar's motion. While recognizing Appellees' status as indirect purchasers, the district court held that based on the then-recent opinion ofBlue Shield of Virginia v. McCready,457 U.S. 465, 102 S.Ct. 2540, 73 L.Ed.2d 149 (1982), it was improper "to just mechanically apply theIllinois Brickdoctrine and thereby exclude in every case anybody who is not a direct purchaser from the original seller or the manufacturer." App. at 451I. Because the Appellees had alleged that they were the "direct target[s] of an unlawful conspiracy," the district court held that underIllinois Brick,as interpreted byBlue Shield,Appellees could maintain their action for damages. App. at 452I-53I. On August 16, 1982, the district court entered an amended order denying Caterpillar's motion to dismiss and certifying a controlling question of law for immediate appeal pursuant to28 U.S.C. § 1292(b) (1976).7We granted Caterpillar's petition for permission to file an interlocutory appeal on September 20, 1982.
II
[10] Section 4 of the Clayton Act provides a treble damage remedy to "any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws." 15 U.S.C.A. § 15 (West Supp. 1983). On its face section 4 is written very broadly. If read literally it is expansive enough to encompass any injury that could be attributed directly or indirectly to the consequences of an antitrust violation. The Supreme Court has held, however, "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."AssociatedGeneral Contractors of California, Inc. v. California StateCouncil of Carpenters,___ U.S. ___, 103 S.Ct. 897, 907, 74 L.Ed.2d 723 (1983) (quotingHawaii v. Standard Oil Co.,405 U.S. 251, 263 n. 14, 92 S.Ct. 885, 891, 31 L.Ed.2d 184 (1972)). Rather section 4 claims must be considered in light of the statutory purposes behind the awardingPage 963of treble damages: to deter antitrust violators and deprive them of "the fruits of their illegality," and to compensate victims of antitrust violations for their injuries.Pfizer Inc. v.Government of India,434 U.S. 308, 314, 98 S.Ct. 584, 588, 54 L.Ed.2d 563 (1978). In light of those statutory policies, the Supreme Court has recognized two types of limitations on the availability of the section 4 remedy which courts must consider when examining whether a treble damage action may be maintained.Blue Shield of Virginia v. McCready,457 U.S. 465, 472, 102 S.Ct. 2540, 2545-46, 73 L.Ed.2d 149 (1982);see In reCoordinated Pretrial Proceedings in Petroleum Products AntitrustLitigation,691 F.2d 1335, 1340 n. 6 (9th Cir. 1982).

[11] The first limitation on section 4 damage actions is drawn fromHawaii v. Standard Oil Co.,405 U.S. 251, 92 S.Ct. 885, 31 L.Ed.2d 184 (1972), andIllinois Brick Co. v. Illinois,431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977).Blue Shield,102 S.Ct. at 2546. InHawaii v. Standard Oilthe Supreme Court held that section 4 did not authorize a state to sue in itsparens patriaecapacity for damages to its "general economy." 405 U.S. at 264, 92 S.Ct. at 892.8InIllinois Brickthe Court held that indirect purchasers in a chain of distribution were precluded from bringing a damage action based on overcharges passed on to them by the direct purchasers of an antitrust violator. 431 U.S. at 746, 97 S.Ct. at 2074.9Those cases recognize that there are certain classes of plaintiffs who, although able to trace an injury to an antitrust violation, are generally not within the group of "private attorneys general" Congress created to enforce the antitrust laws under section 4.Illinois Brick,431 U.S. at 746, 97 S.Ct. at 2074;Hawaii v.Standard Oil,405 U.S. at 262, 92 S.Ct. at 891;see BlueShield,102 S.Ct. 2545-46. The Court in bothHawaii v. StandardOilandIllinois Brickrelied on two distinct policies to conclude that a section 4 claim was unavailable. First, it "focused on the risk of duplicative recoveryPage 964engendered by allowing every person along a chain of distribution to claim damages arising from a single transaction that violated the antitrust laws."Blue Shield,102 S.Ct. at 2546. Second, it sought "to avoid burdening § 4 actions with damages issues giving rise to the need for `massive evidence and complicated theories,' where the consequences would be to discourage vigorous enforcement of the antitrust laws by private suits."Id.at n. 11.10Applying those policies the Court concluded that it was inconsistent with the broader remedial purposes of the antitrust laws to allow the plaintiffs in either case to maintain a treble damage action.

[12] The second limitation on section 4 damage actions identified by the Court is analytically distinct from the issue of what class of persons can sue for treble damages. It "is the conceptually more difficult question `of which persons have sustained injuriestoo remote[from an antitrust violation] to give them standing to sue for damages under § 4.'"Blue Shield,102 S.Ct. at 2547 (emphasis in original) (quotingIllinois Brick,431 U.S. at 728 n. 7, 97 S.Ct. 2065 n. 7). Through this concept of "antitrust standing,"see Associated General Contractors,103 S.Ct. at 907 n. 31,11the Court has engrafted on section 4 an analysis akin to "proximate cause" to determine whether a particular injury is too far removed from an alleged violation to warrant a section 4 remedy.12Because of the infinite variety of claims that arise under the antitrust statutes, however, it has refused to fashion a black-letter rule for determining standing in every case.Associated General Contractors,103 S.Ct. at 907-08 n. 33;Blue Shield,102 S.Ct. at 2547 n. 12. Instead each situation must be analyzed on its facts in light of several factors: the causal connection between an antitrust violation and the injured party,13the nature of the plaintiff's alleged injury,14and the directness or indirectnessPage 965of the asserted injury.15Associated GeneralContractors,103 S.Ct. at 907-13.16The Court's case-by-case approach reflects the fact that " § 4 standing analysis is essentially a balancing test comprised of many constant and variable factors and that there is no talismanic test capable of resolving all § 4 standing problems."Bravman v.Bassatt Furniture Industries,552 F.2d 90, 99 (3d Cir.),cert. denied,434 U.S. 823, 98 S.Ct. 69, 54 L.Ed.2d 80 (1977) (standing determined by "factual matrix");see Mid-WestPaper Products Co. v. Continental Group, Inc.,596 F.2d 573, 581-82 (3d Cir. 1979);Cromar Co. v. Nuclear Materials andEquipment Corp.,543 F.2d 501, 508-09 (3d Cir. 1976).

[13] The two types of limitations on the section 4 remedy discussed above represent the judiciary's attempts to give shape to the statute's broad mandate in light of congressional intent and statutory policy.17They are not hard and fast rules that will dictate the result in every case. Rather they are principles "that circumscribe and guide the exercise of judgment in deciding whether the law affords a remedy in specific circumstances."Associated General Contractors,103 S.Ct. at 908. Only by the careful application of those principles to the multitude of claims that potentially are swept within the scope of section 4 can courts properly effectuate Congress' antitrust policies of deterring antitrust violators and compensating victims of anticompetitive behavior.
III
A
[14] In its motion to dismiss before the district court, Caterpillar urged that Appellees were indirect purchasers of Caterpillar's products and thus, under the rule ofIllinois Brick,were not within the class of persons able to maintain a treble damage action under section 4. Specifically Caterpillar argued that Appellees claims were based on a pass-on theory —i.e.that Appellees suffered some form of economic injury only when and if an independent Caterpillar-authorized dealer made a decision to raise his prices in response to the smaller discount given on sales of generator sets to be used outside his service territory. Thus, Caterpillar argued that even assuming Appellees could prove that a "penalty" was passed on to them by OMCO,18as indirect purchasers ofPage 966Caterpillar's products, Appellees are barred from suing Caterpillar byIllinois Brick.App. at 88D-89D.

[15] In denying Caterpillar's motion, however, the district court based its conclusion thatIllinois Brickdid not act as a bar to Appellees' suit on the analytically distinct issue of whether Appellees had "standing" to maintain an action for damages. The district court assumed that Appellees were the "direct targets" of an unlawful conspiracy and that, as a result of that conspiracy, they were forced out of business. It then concluded that "[i]f it is looked at from that light, . . . clearly [Appellees] would be entitled to recover and would have standing to maintain an action for damages" underIllinois BrickandBlue Shield.App. at 452I.

[16] We think that the district court misconstrued the inquiry to be conducted under the rule ofIllinois Brick.The issue is not whether Appellees have sustained injuries too remote to give them standing or whether they are the direct targets of an alleged conspiracy, but rather whether they are in the class of persons considered to be injured in their business or property under section 4 by an antitrust violation.Blue Shield,102 S.Ct. at 2546-47;Illinois Brick,431 U.S. at 728 n. 7, 97 S.Ct. at 2065 n. 7. To make the latter inquiry, a district court must focus on the possibility of duplicative recovery and the potential for overly-complex damage claims if a damage suit is allowed.BlueShield,102 S.Ct. at 2546 n. 11. Although those concerns were mentioned in oral argument at the hearing,seeapp. at 415I-16I, 443I, the district court did not explicitly address either of those two concerns when denying Caterpillar's motion, app. at 450I-53I. We hold that that omission was error. To consider properly the issue raised by Caterpillar's motion the inquiry must be whether, in light of the policies underlyingIllinois Brick,are Appellees in the group of private attorneys general created by Congress to redress Caterpillar's assumed antitrust violation through use of the treble damage remedy?19
B
[17] Appellees make two arguments whyIllinois Brickis not a bar in the instant case. First they assert that it is simply inapplicable to the restraints alleged in their complaint. They argue that the rule ofIllinois Brickis limited to the facts of that case — a claim of horizontal price fixing brought by indirect purchasers. In support of their very narrow reading of the rule's scope, Appellees seize upon language inMid-WestPaper Products Co. v. Continental Group, Inc.,596 F.2d 573(3d Cir. 1979).Mid-West Paper Productswas a suit brought by several groups of plaintiffs against manufacturers of consumer bags. In our opinion in that case, we observed thatIllinoisBrickallowed a direct purchaser to sue defendants who had fixed prices above the competitive market price because the benefit derived by the defendants was readily ascertainable. Thus a damage action "would [not] transform [that] antitrust litigation into the sort of complex economic proceeding that theIllinoisBrickCourt was desirous of avoiding if at all possible." 596 F.2d at 585 (footnote omitted). We went on to state in a footnote:
A different problem is presented where prices are fixed below the competitive market price or where defendants engage in other forms of anticompetitive conduct, such as group boycotts, vertical restrictions, or monopolization, since defendants' benefits in those instances are not so readily ascertainable, and may not be sufficient to compensate "those individuals whose protection is the primary purpose of the antitrust laws." In such circumstances courts have awarded damages based upon the amount of injury suffered by the plaintiff rather than the benefits derived by the defendants.


[18]Id.at n. 47. Appellees read footnote forty-seven as holding that claims of below-marketPage 967price fixing, boycotts, vertical restrictions, and monopolization areper seoutside the purview ofIllinois Brick.Characterizing their claim as a challenge to Caterpillar's "effort to boycott and to eliminate plaintiffs' class of competitors from competing in the market . . . through the innovative mechanism of a vertically-imposed economic penalty," Brief of Appellees at 25, they conclude that this case is outside the rule ofIllinois Brick.

[19] We disagree. We do not readMid-West Paper Productsas holding that claims other than those of above-market horizontal price fixing are always outside the scope ofIllinois Brick.Instead we read footnote forty-seven as observing that in certain situations the measure of damages for direct purchasers is based upon the injury suffered by the plaintiff, not the benefit obtained by the defendant. When defendants engage in below-market price fixing, group boycotts, vertical restraints, or monopolization, their benefits are sometimes not "readily ascertainable" and thus damages sought by proper plaintiffs must be measured by other means.

[20] Our refusal to limit the rule ofIllinois Bricksolely to claims of certain horizontal price restraints is consistent with decisions in this and other courts. InEdward J. Sweeny Sons,Inc. v. Texaco, Inc.,637 F.2d 105(3d Cir. 1980),cert.denied,451 U.S. 911, 101 S.Ct. 1981, 68 L.Ed.2d 300 (1981), we held that underIllinois Brickindirect purchasers could not assert claims for damages under sections1 and 2of the Sherman Act. 637 F.2d at 122;accord In re Beef Industry AntitrustLitigation,600 F.2d 1148, 1157 (5th Cir. 1979) ("Absent exceptional circumstances,Illinois BrickandHanover Shoelimit the use of passing-on theory in antitrust actions without regard to the parties' characterization of the offense."),cert.denied,449 U.S. 905, 101 S.Ct. 280, 66 L.Ed.2d 137 (1980);cf.Hanover Shoe,392 U.S. at 487, 88 S.Ct. at 2228 (monopolization case). InZinser v. Continental Grain Co.,660 F.2d 754, 760-61 (10th Cir. 1981),cert. denied,455 U.S. 941, 102 S.Ct. 1434, 71 L.Ed.2d 652 (1982), the court relied onIllinois Brickto bar indirect sellers from challenging a below-market price fixing scheme. InStein v. United Artists Corp.,691 F.2d 885, 895 (9th Cir. 1982), the court appliedIllinois Brickto bar a claim for damages based on an allegation that a defendant had illegally boycotted a corporation of which plaintiffs were creditors and guarantors. All of those cases recognize that the availability of the section 4 remedy depends not on the plaintiff's characterization of the illegal activity but on whether the problems identified inIllinois Brickwould be avoided if relief were allowed.See Blue Shield,102 S.Ct. at 2546 (Court examines underlying policies to determine whetherIllinoisBrickbars damage suit for alleged illegal boycott).20Thus the scope ofPage 968Illinois Brick'srule barring treble damage actions by certain persons must be determined in each case by examining whether allowing those persons to sue could create the possibility of duplicative recovery and overly-complex damage claims.21

[21] Appellees' second argument is that even examining their claims in light of the policy concerns ofIllinois Brick,they should not be barred from seeking treble damages. Appellees do not contend that they fall within any of the recognized exceptions to theIllinois Brickrule.22Instead they rely on an affidavit executed by OMCO's president and offered by Caterpillar in support of its motion to dismiss. That affidavit states in pertinent part:
Neither the existence of the 5% [service fee] nor any changes in Caterpillar's administration thereof, including the 1978 or 1980 changes, has had any apparent effect on Ohio Machinery's incentive or ability to sell Caterpillar electric generators sets outside its service territory generally or in Saudi Arabia specifically.


[22] App. at 110E. Appellees contend that OMCO's affidavit "denies absolutely that OMCO suffered any damage from Caterpillar's warranty fee system. OMCO has thereby vitiated any opportunity it might have had to sue successfully for damages as a result of the same purchases which are the subject of the present action." Brief of Appellees at 34. Appellees argue that the possibility of duplicative damages is thus avoided.

[23] First, Appellees make no claim in theircomplaintthat OMCO would not sue in the instant case. Appellees allege that Caterpillar and its co-conspirators have imposed an unlawful penalty upon OMCO which has prevented OMCO from distributing generator sets in territories and to customers of its own choosing. Without deciding the issue,Page 969we note that it is possible that OMCO could make out a cause of action under the antitrust laws on those facts.See Eiberger v.Sony Corp. of America,622 F.2d 1068(2d Cir. 1980). Second, it is not clear to us that OMCO's affidavit precludes it from suing Caterpillar. The fact that Caterpillar's service fee did not affect OMCO's ability to sell generator sets does not necessarily mean OMCO was not damaged by Caterpillar's policy. It could merely reflect that demand for the sets in Saudia Arabia was relatively inelastic with respect to price. OMCO could still claim that its profit margin was less due to imposition of the fee. Third, the Supreme Court recognized inIllinois Brickthat it was possible that direct purchasers might not sue their suppliers in all cases. "But on balance . . . we conclude that the legislative purpose in creating a group of `private attorneys general' to enforce the antitrust laws under § 4 . . . is better served by holding direct purchasers to be injured to the full extent of the overcharge paid by them than by attempting to apportion the overcharge among all that may have absorbed a part of it." 431 U.S. at 746, 97 S.Ct. at 2074. We do not know if, in fact, OMCO is going to sue Caterpillar. If it does, however, it would be claiming treble damages for injuries arising from the very same transactions involved in this case. Thus the risk of duplicative recovery is clearly present in this case, a danger the Court sought to avoid through application of theIllinoisBrickrule.23

[24] Appellees also contend that their damage claim does not present a problem of "massive evidence and complicated theories."Illinois Brick,431 U.S. at 741, 97 S.Ct. at 2072 (quotingHanover Shoe,392 U.S. at 493, 88 S.Ct. at 2231). To prove any damages, however, Appellees would have to calculate the service fee on each generator set purchased by OMCO, determine how the imposition of the fee and market forces affected the price paid by Appellees,24and finally estimate how any increased price affected Appellees' profits and sales in light of competitive market forces in Saudi Arabia. That type of calculation was the very analysis the Supreme Court sought to avoid inIllinoisBrick,431 U.S. at 741-43, 97 S.Ct. at 2072-73. We recognize that damage analysis in antitrust actions is often difficult and complex. The instant case, however, presents damage issues which are sufficiently uncertain so as to impair the effectiveness of the section 4 remedy.
IV
[25] We hold that, based on facts alleged in their complaint, Appellees are barred from seeking treble damages under section 4 of the Clayton Act by operation of the rule ofIllinois Brick.The possibility of duplicative recovery if the direct purchaser brings suit and the potential for complex apportionment of damages lead us to conclude that Appellees are not persons injured in their business or property by reason of a violation of the antitrust laws within the meaning of section 4. Our analysis is tempered by our recognition that the antitrust laws are written broadly to ensure rigorous enforcement of congressional policy. On the facts of this case, however, we find that the policies underlyingIllinois Brickpreclude Appellees from maintaining suit.Page 970

[26] We will reverse the district court's order of July 2, 1982, as amended on August 16, 1982, and we will remand the case for further proceedings consistent with this opinion.
[27] A. LEON HIGGINBOTHAM, Jr., Circuit Judge, dissenting.
[28] I agree with the majority's conclusion that in focusing only on plaintiff's standing to sue, the district court failed properly to determine whether, underIllinois Brick Co. v. Illinois,431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977), the potential for double recovery and excessive complexity bars plaintiffs from recovering treble damages under § 4 of the Clayton Act. I also agree thatIllinois Brickcannot be mechanically applied so that an antitrust plaintiff's ability to recover turns upon the affixing of handy labels to the nature of the wrong alleged or to the plaintiff's position in the marketing hierarchy. The majority and I differ, however, on whether the policies underlying § 4 andIllinois Brickwould be advanced by denying plaintiffs the opportunity to continue with this action. In my view, the prosecution of this suit would be both consistent withIllinoisBrickand necessary to avoid immunizing the anti-competitive tactic that plaintiffs allege. Moreover, this court's discussion of the sweep ofIllinois BrickinMid-West Paper Products Co.v. Continental Group, Inc.,596 F.2d 573(3d Cir. 1979), supports my conclusion that plaintiffs' injuries are not of the kind contemplated by theIllinois BrickCourt.

[29] I begin with the Supreme Court's recent decision inBlueShield of Virginia v. McCready,457 U.S. 465, 102 S.Ct. 2540, 73 L.Ed.2d 149 (1982). There, in the course of determining that the plaintiff-patient had standing to sue the insurer selected by her employer, the Court demonstrated its reluctance to allow alleged anti-competitive conduct to go unchallenged merely for want of a direct relationship between plaintiff and defendant. In discussingIllinois Brick,theBlue ShieldCourt noted:
If there is a subordinate theme to our opinions in [Hawaii v. Standard Oil Co.,405 U.S. 251, 92 S.Ct. 885, 31 L.Ed.2d 184 (1972)] andIllinois Brick,it is that the feasibility and consequences of implementing particular damages theories may, in certain limited circumstances, be considered in determining who is entitled to prosecute an action brought under § 4.Where consistent with the broader remedial purposesof the antitrust laws,we have sought to avoid burdening § 4 actions with damages issues giving rise to the need for "massive evidence and complicated theories,"where the consequence would be todiscourage vigorous enforcementof the antitrust laws by private suits.


[30] 457 U.S. at 475 n. 11, 102 S.Ct. at 2546 n. 11 (quotingHanoverShoe, Inc. v. United Shoe Machinery Corp.,392 U.S. 481, 493, 88 S.Ct. 2224, 2231, 20 L.Ed.2d 1231 (1968)) (emphasis added). Thus, we should be mindful not only of the twin concerns behind theIllinois Brickrule, but also of the overarching policy favoring "compensating victims of antitrust violations for their injuries and deterring violators by depriving them threefold of `the fruits of their illegality,' while at the same time furthering the overriding goal of the antitrust laws — preserving competition."Mid-West Paper Products,596 F.2d at 583 (footnotes omitted).

[31]Illinois Brickconcerned horizontal pricefixing above market price; here, however, plaintiffs alleged the existence of a vertical price-fixing conspiracy. Although the majority correctly determines that mere nomenclature cannot magically obviate consideration of theIllinois Brickissue, the differences between the injuries alleged here and those contemplated inIllinois Brick,require us to ask whether the goals of avoiding duplicative recovery and excessive complexity would be advanced by barring this suit.

[32] This court observed inMid-West Paper Productsthat "when defendants have fixed prices above the competitive market price, where the benefit derived by them is readily ascertainable, the objectives of the treble damage action are fulfilled when the defendants are required to pay the direct purchasers three times the overcharge."Id.at 585 (footnote omitted). In the classicIllinois Brickcircumstance, the price-fixer'sPage 971benefit is commensurate with the purchasers' injury. Thus, if both direct purchaser and indirect purchaser seek recovery of the amount of the overcharge, duplicative recovery is likely.ZenithRadio Corp. v. Matsushita Electric Industrial Co.,494 F. Supp. 1246, 1255 (E.D.Pa. 1980) (Becker, J.) (discussingMid-West Paper Products). The same is not necessarily true, however, where the wrong alleged differs from the kind of anti-competitive act that was the focus ofIllinoisBrick:
A different problem is presented where prices are fixed below the competitive market price or where defendants engage in other forms of anticompetitive conduct, such as group boycotts, vertical restrictions, or monopolization, since defendants' benefits in those instances are not so readily ascertainable, and may not be sufficient to compensate "those individuals whose protection is the primary purpose of the antitrust laws." In such circumstances courts have awarded damages based upon the amount of injury suffered by the plaintiff rather than the benefits derived by the defendants.


[33]Mid-West Paper Products,596 F.2d at 585 n. 47 (quotingCromarCo. v. Nuclear Materials and Equipment Corp.,543 F.2d 501, 505 (3d Cir. 1976)). The majority, apparently focusing on the second quoted sentence, reads this discussion inMid-West PaperProductsas dealing only with the appropriate measure of damages.Seemajority opinion, at 968-969. I disagree. I think it is clear from the context of footnote 47 and from its emphasis on compensating the antitrust plaintiff that where an indirect purchaser has suffered injury other than incurring the cost of the passed-on overcharge, neither the policy of compensating injury nor that of deterring anti-competitive conduct can be realized unless the indirect purchaser can bring action against the seller. In the instant case, for example, plaintiffs alleged loss of sales and profits, reduction in the value of goodwill, and destruction of a significant portion of their businesses. Complaint at 14,reprinted inapp. at 20B. Many of these alleged injuries are unique to the plaintiffs, and their complaint comprises more damage than the intermediary Ohio Machinery Company could recover were it to bring its own action. By putting treble damages outside of plaintiffs' reach, the majority effectively places complete recovery outside of anyone's reach. Under the majority's approach, plaintiffs cannot be made whole — notwithstanding the impossibility of duplicative recovery — and defendants cannot be made to give up the fruits of an alleged illegality.

[34] Turning to the desire to avoid complexity, I consider it in its larger context. I do not readIllinois Brickto be concerned with protecting the courts from abstract economic theorizing so much as promoting vigorous policing of the marketplace. TheIllinois BrickCourt feared that tracing and allocating overcharges would seriously undermine the enforcement effectiveness of the treble damages action. 431 U.S. at 737, 745-47, 97 S.Ct. 2070, 2074-75. What I stated before in the context of antitrust standing bears equally on the issue now before us:
The Court inIllinois Brickwas concerned with allowing the injection of complex issues into antitrust actions because the injection of such complexity would increase the cost of litigation and thereby discourage the enforcement of the antitrust laws. . . .
. . . Where added complexity does not result in a disincentive to the enforcement of the antitrust laws, its potency as an argument against standing is seriously diminished.


[35]Mid-West Paper Products,596 F.2d at 599 (Higginbotham, J., dissenting). Likewise, allowing the instant suit to go forward is necessary to the attainment of the goal of deterrence. The anti-competitive conduct plaintiffs complain of cannot otherwise be policed. This is not a case where passed-on overcharges are so splintered that no indirect purchaser will be interested in pursuing relief; here, plaintiffs allege predatory destruction of their business — a complaint which only they may bring.

[36] Nor do I believe thatEdward J. Sweeney Sons, Inc. v.Texaco, Inc.,637 F.2d 105(3d Cir. 1980),cert. denied,451 U.S. 911, 101 S.Ct. 1981, 68 L.Ed.2d 800 (1981), compels a different result. The abbreviated, one-paragraph discussion of theIllinois BrickPage 972issue in that case includes no statement of rationale and no examination of the policies that underlie § 4 andIllinoisBrick.To the extent that it can be read to bar relief to any plaintiff who falls into the category of "indirect purchaser," I do not believe thatSweeneysurvives the Supreme Court's decision inBlue Shield.

[37] I would affirm the district court's denial of defendant's motion to dismiss.
  1. Honorable John F. Gerry, United States District Judge for the District of New Jersey, sitting by designation. ↩
  2. An electric generator set typically consists of a diesel engine, a generator, a battery, a governor, and transfer switches. It is used to provide "prime" power to buildings and clusters of buildings without access to central power sources and to provide "standby" power to hospitals, schools, or other buildings. Caterpillar has sold a number of generator sets outside of the United States, specifically in the Middle East, for use in areas isolated from central sources of electrical power. ↩
  3. Prior to 1978 many dealers who sold generator sets receiving their initial substantial use in another dealer's service territory would simply transfer the 5% service fee directly to the servicing dealers. In July of 1978, Caterpillar began insisting that its dealers strictly comply with the terms of the Distribution Agreement. Thus, as soon as a dealer knew that a generator set it was selling would receive its initial substantial use in another dealer's territory, he had to remit the 5% to Caterpillar, even if the servicing dealer had not yet claimed the fee. ↩
  4. Appellees allege that other unnamed corporations, firms, and individuals also participated as co-conspirators. Complaint at ¶ 9, app. at 9B. ↩
  5. Section 1 of the Sherman Act states in relevant part:
    Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.
    15 U.S.C. § 1(1976). ↩
  6. In the same motion Caterpillar also sought summary judgment claiming that the district court was without jurisdiction to hear Appellees' claims. The district court denied that part of Caterpillar's motion holding that it had jurisdiction over Appellees' claims. App. at 4521-531. We see no reason to disturb the district court's holding on that issue. ↩
  7. In its motion Caterpillar conceded that the rule ofIllinois Brickwould not bar Appellees from seeking injunctive relief under § 16 of the Clayton Act,15 U.S.C. § 26(1976). App. at 102D;see Mid-West Paper Prods. Co. v. Continental Group,Inc.,596 F.2d 573, 589-94 (3d Cir. 1979). ↩
  8. The question certified by the district court reads:
    When an alleged conspiracy between an electrical generator manufacturer and one of its authorized foreign dealers is formed to hinder and/or exclude intra-brand competition in the foreign market by an independent, non-factory authorized dealer who purchases from other authorized dealers for resale in the foreign market, whereby the manufacturer imposes a non-refundable "5% warranty service fee" on all sales by authorized dealers when the generators are to be installed for initial use outside of the authorized selling dealer's assigned geographical service territory, is the "target-victim" of the conspiracy (the independent non-factory authorized dealer) precluded from maintaining a private damage action against the manufacturer under Section 4 of the Clayton Act (15 U.S.C. § 15) by operation of the rule ofIllinois Brick Co. v. Illinois,431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977)?


    App. at 457J-58J.

    On a § 1292(b) appeal we consider all grounds which might require a reversal of the order appealed from.Murphy v.Heppenstall Co.,635 F.2d 233, 235 n. 1 (3d Cir. 1980),cert.denied,454 U.S. 1142, 102 S.Ct. 999, 71 L.Ed.2d 293 (1982);Katz v. Carte Blanche Corp.,496 F.2d 747, 754 (3d Cir.) (en banc),cert. denied,419 U.S. 885, 95 S.Ct. 152, 42 L.Ed.2d 125 (1974);Johnson v. Alldredge,488 F.2d 820, 822-23 (3d Cir. 1973),cert. denied,419 U.S. 882, 95 S.Ct. 148, 42 L.Ed.2d 122 (1974);seeC. Wright A. Miller,Federal Practice andProcedure§ 3931 (1977 Supp. 1983). ↩
  9. Hawaii v. Standard Oilwas a suit by the State of Hawaii against several producers of petroleum. Hawaii alleged that the producers had entered illegal contracts, conspired to restrain trade, and attempted to monopolize the market. It sought damages in its proprietary capacity for overcharges to the State itself, asparens patriaefor overcharges to the State's citizens, and as a class representative for all overcharged purchasers in Hawaii. 405 U.S. at 253, 92 S.Ct. at 886. The Court held that the injury asserted by Hawaii in itsparens patriaecapacity was not an injury to its "business or property" under § 4. 405 U.S. at 264, 92 S.Ct. at 892. ↩
  10. Illinois Brickwas an action brought by the State of Illinois against manufacturers and distributors of concrete block in the Greater Chicago area. The concrete block manufacturers sold the blocks to masonry contractors who used them to build masonry structures; those structures were incorporated into entire buildings by general contractors, and the buildings were then sold to the State. The State claimed that the concrete block manufacturers had engaged in a combination and conspiracy to fix the prices of concrete block in violation of § 1 of the Sherman Act,15 U.S.C. § 1(1976).Illinois Brick,431 U.S. at 726-27, 97 S.Ct. at 2064-65. The Court held that the State, as an indirect purchaser of the concrete block, was not an "injured person" under § 4.Id.at 746, 97 S.Ct. at 2074.

    The Court's opinion inIllinois Brickwas "logically compelled" by its earlier decision inHanover Shoe, Inc. v.United Shoe Mach. Corp.,392 U.S. 481, 88 S.Ct. 2224, 20 L.Ed.2d 1231 (1968).Mid-West Paper Prods. Co. v. Continental Group,Inc.,596 F.2d 573, 576 (3d Cir. 1979). InHanover Shoethe Court held as a matter of law that an antitrust violator generally could not interpose a defense that a direct purchaser has not been injured because it had passed on an illegal overcharge to its own customers.392 U.S. 494, 88 S.Ct. at 2232.Illinois Brickinvolved the offensive use of a pass-on theory by an indirect purchaser against an antitrust violator. Refusing to cut back on its holding inHanover Shoe,the Court held that symmetry required barring the offensive use of pass-on by indirect purchasers in the distribution chain.Id.at 736;seeMid-West Paper Products,596 F.2d at 576-77.

    InBlue Shield of Virginia v. McCready,457 U.S. 465,102 U.S. 2540, 73 L.Ed.2d 149 (1982), the Court recently reaffirmed the analysis inIllinois Brick. Blue Shieldinvolved a suit by a Blue Shield subscriber who alleged that Blue Shield's policy of reimbursing subscribers for psychotherapy provided by psychiatrists, but not by psychologists, violated § 1 of the Sherman Act. The Court discussed the policies underlyingIllinois Brickand held that, on the facts presented, the plaintiff was not barred from suit by operation of theIllinoisBrickrule. 102 S.Ct. at 2546. ↩
  11. The Court inBlue Shielddenoted the problem of disentangling complex damage theories as a "subordinate theme." 102 S.Ct. at 2546 n. 11. ↩
  12. Included within the general perimeter of antitrust standing appears to be the idea of "antitrust injury" articulated by Justice Marshall inBrunswick Corp. v. Pueblo Bowl-O-Mat,Inc.,429 U.S. 477, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977).SeeAssociated Gen. Contractors,103 S.Ct. at 908-09;Blue Shield,102 S.Ct. at 2550-51.See generallyPage,Antitrust Damagesand Economic Efficiency: An Approach to Antitrust Injury,47 U.Chi.L.Rev. 467 (1980). ↩
  13. The courts of appeals have formulated a number of tests as aids in determining whether an injured party has sufficient standing under the antitrust laws to recover under § 4. Some courts focus on the "directness" of the injury,e.g., ProductiveInventions, Inc. v. Trico Prods. Corp.,224 F.2d 678(2d Cir. 1955),cert. denied,350 U.S. 936, 76 S.Ct. 301, 100 L.Ed. 818 (1956);Volasco Prods. Co. v. Lloyd A. Fry Roofing Co.,308 F.2d 383(6th Cir. 1962),cert. denied,372 U.S. 907, 83 S.Ct. 721, 9 L.Ed.2d 717 (1963); on its "foreseeability,"e.g., In reWestern Liquid Asphalt Cases,487 F.2d 191(9th Cir. 1973),cert. denied,415 U.S. 919, 94 S.Ct. 1419, 39 L.Ed.2d 474 (1974);Twentieth Century Fox Film Corp. v. Goldwyn,328 F.2d 190(9th Cir.),cert. denied,379 U.S. 880, 85 S.Ct. 143, 13 L.Ed.2d 87 (1964); whether the injury "is arguably within the zone of interest protected by the antitrust laws."e.g., Malamudv. Sinclair Oil Corp.,521 F.2d 1142, 1152 (6th Cir. 1975); or whether the injured party was within the "target area" of the alleged antitrust conspiracy,e.g., Pan-Islamic Trade Corp. v.Exxon Corp.,632 F.2d 539(5th Cir. 1980),cert. denied,454 U.S. 927, 102 S.Ct. 427, 70 L.Ed.2d 236 (1981);EngineSpecialties, Inc. v. Bombardier Ltd.,605 F.2d 1(1st Cir. 1979),cert. denied,446 U.S. 983,449 U.S. 890, 100 S.Ct. 2964, 101 S.Ct. 248, 64 L.Ed. 839, 66 L.Ed.2d 116 (1980);CalderoneEnters. Corp. v. United Artists Theatre Circuit, Inc.,454 F.2d 1292(2d Cir. 1971),cert. denied,406 U.S. 930, 92 S.Ct. 1776, 32 L.Ed.2d 132 (1972). Application of those different tests, however, can lead to contradictory results.See generallyBerger Bernstein,An Analytical Framework for AntitrustStanding,86 Yale L.J. 809, 835, 843 (1977); Handler,The ShiftFrom Substantive to Procedural Innovation in Antitrust Suits,71 Colum.L.Rev. 1, 27-31 (1971). ↩
  14. Claims that a defendant specifically intended to harm the plaintiff, however, are not of controlling significance. Although a defendant's improper motive may sometimes support a damages claim under § 4, it "is not a panacea that will enable any complaint to withstand a motion to dismiss."Associated Gen.Contractors,103 S.Ct. at 908 nn. 25, 26. ↩
  15. A claimed injury must be of the type that Congress sought to redress in providing a private damage remedy, and it must flow "from that which makes defendants' acts unlawful."Blue Shield,102 S.Ct. at 2550 (quotingBrunswick Corp. v. Pueblo Bowl-O-Mat,Inc.,429 U.S. 477, 489, 97 S.Ct. 690, 697, 50 L.Ed.2d 701 (1979));see Associated Gen. Contractors,103 S.Ct. at 908-09. ↩
  16. Note that analyzing the directness or indirectness of the asserted injury for purposes of standing under § 4 implicates many of the same concerns identified inHawaii v. Standard OilandIllinois Brick.Those concerns include the existence of a separate class of persons whose self-interest will normally motivate them privately to enforce the antitrust laws through § 4, the speculative nature of damages resulting from indirect effects of antitrust violations, the potential for duplicative recovery, and the danger of complex apportionment of damages.Associated Gen. Contractors,103 S.Ct. at 910-12;seeHandler,Changing Trends in Antitrust Doctrines: AnUnprecedented Supreme Court Term—1977,77 Colum.L.Rev. 979, 994-97 (1977). Thus inMid-West Paper Productswe traced the policies ofIllinois Brickin determining whether a direct purchaser from an antitrust violator's competitors had standing to sue for treble damages allegedly resulting from those purchases. We held that under such an "umbrella" theory the direct purchasers of the defendant's competitor had no standing to sue.596 F.2d 573, 580-87 nn. 24, 25 (3d Cir. 1979);cf. Inre Coordinated Pretrial Proceeding,691 F.2d at 1339-41 n. 6 (Illinois Brickand not standing analysis applicable to action brought by indirect purchaser under "umbrella" theory). ↩
  17. InBlue Shieldthe Court stated:
    In applying [the] elusive concept [of § 4 standing] to this [antitrust] action, we look (1) to the physical and economic nexus between the alleged violation and the harm to the plaintiff, and, (2) more particularly, to the relationship of the injury alleged with those forms of injury about which Congress was likely to have been concerned in making defendant's conduct unlawful and in providing a private remedy under § 4.


    102 S.Ct. at 2548. ↩
  18. While recognizing those two limitations, the Supreme Court was careful to state: "Consistent with the congressional purpose, we have refused to engraft artificial limitations on the § 4 remedy. . . . [I]n the absence of some articulable consideration of statutory policy suggesting a contrary conclusion in a particular factual setting, we have applied § 4 in accordance with its plain language and its broad remedial and deterrent objectives."Blue Shield,102 S.Ct. at 2545 (footnote omitted). ↩
  19. For the purposes of the instant appeal we must assume that Appellees can prove the facts alleged in their amended complaint.Associated Gen. Contractors,103 S.Ct. at 902. ↩
  20. We do not suggest that standing issues should have been ignored by the district court, only that they limit the § 4 remedy in a different way. For the purposes of this appeal, Caterpillar has conceded that Appellees would have standing if their claims are not barred byIllinois Brick.Brief of Appellant at 5 n. 4. ↩
  21. The cases relied on by Appellees,Zenith Radio Corp. v.Matsushita Elec. Indus. Co.,494 F. Supp. 1246(E.D.Pa. 1980), andRoyal Printing Co. v. Kimberly-Clark Corp.,621 F.2d 323(9th Cir. 1980), are inapposite. InZenithplaintiffs claimed that "virtually the entire Japanese consumer electronics product industry," had participated in a massive unitary conspiracy to flood the American market with inexpensive goods with the purpose of destroying the United States domestic consumer electronics product industry. Plaintiffs alleged violations of several statutes, including §§ 1 and 2 of the Sherman Act. The defendants moved to dismiss underIllinois Brick,claiming that Zenith could only prove it was injured by showing that the alleged injury directly inflicted on Zenith's distributors was passed on to Zenith through its distribution chain. In analyzing the motion the district court was careful to point out that Zenith's situation involved two manufacturers competing with each other and not, as in this case, theIllinois Bricksituation of a seller-purchaser relationship within a single chain of distribution. 494 F. Supp. at 1250, 1252-53, 1256. The court stated, "we perceive the principal teaching ofMid-Westto be that the applicability of theIllinois Brickrule to fact patterns which diverge from the model of a single distribution chain should be determined by assessing, in each factual situation, the weight of the policies articulated by the Supreme Court inIllinois Brickand by the Third Circuit inMid-West."Id.at 1253. After examining the unique facts of that case in light of those policies, the district court denied the motion. We findZenithcompletely consistent with our analysis that, in examiningIllinois Brickproblems, courts must evaluate each case in light of the policies underlying the rule.

    Nor doesRoyal Printingoffer support for Appellees' position. That case involved violations of § 1 of the Sherman Act alleged by several small retail businesses against ten of the nation's largest manufacturers of paper products. On a motion to dismiss underIllinois Brick,the court held that an indirect purchaser could sue for damages when it had made its purchases from a subsidiary or division of a co-conspirator, even if the pricing decision of such a subsidiary or division was determined by market forces. 621 F.2d at 326-27 n. 4. The court went on to hold that purchases made through independent wholesalers, however, were barred.Id.at 327-28. TheRoyal Printingdecision parallels the exception toIllinois Brickthat we recognized inIn re Sugar Indus. Antitrust Litig.,579 F.2d 13(3d Cir. 1979). In that case we held that an antitrust violator cannot evade liability "by the simple expedient of inserting a subsidiary between the violator and the first uncontrolled purchaser."Id.at 19. While our view of the exception is somewhat narrower than that of the Ninth Circuit,see Mid-WestPaper Prods.,596 F.2d at 589 (violator must dominate subsidiary's prices in accordance with the general price fixing conspiracy), the exception in any form is inapplicable to this case. In its complaint Appellees admit that OMCO, the direct purchaser in this case, is not a subsidiary of Caterpillar but rather an independent dealer. Complaint at ¶¶ 8, 13; app. at 9B, 11B. Thus under eitherRoyal PrintingorMid-West PaperProds.,Appellees would be barred by the rule ofIllinoisBrick. ↩
  22. Another difficulty with Appellees' argument is theirposthoccharacterization of Caterpillar's activity as a "boycott." Appellees' complaint does not allege that anyone ever refused to sell them generator sets, only that the sets cost more because of the service fee imposed by Caterpillar on OMCO. The primary act they challenge is the imposition of an unlawful penalty on Caterpillar's dealers, a claim very similar to the overcharges involved inIllinois Brick.Complaint ¶ 22, app. at 18B-19B;cf. Jewish Hosp. Ass'n v. Stewart Mechanical Enters., Inc.,628 F.2d 971, 977 (6th Cir. 1980) (court rejects belated attempt to recharacterize claim made in complaint so as to avoidIllinoisBrick),cert. denied,450 U.S. 966, 101 S.Ct. 1483, 67 L.Ed.2d 615 (1981). ↩
  23. The Supreme Court noted two exceptions inIllinoisBrick.Where there exists a fixed quantity, cost-plus contract between the direct purchaser and its customer or where the direct purchaser is owned or controlled by its customer the indirect purchaser would not be barred by the rule ofIllinois Brick.431 U.S. at 735-36 n. 16, 97 S.Ct. at 2069-70 n. 16. We relied on the latter in holding that in certain circumstances, an indirect purchaser could sue when it had purchased goods from the subsidiary of an antitrust violator.Mid-West Paper Prods.,596 F.2d at 577 n. 8, 589;In re Sugar Indus. Antitrust Litig.,579 F.2d at 18-19;seenote 22 supra. Some lower courts have recognized a third "vertical-conspiracy exception" toIllinoisBrick. See, e.g., Fontana Aviation, Inc. v. Cessna Aircraft Co.,617 F.2d 478, 481 (7th Cir. 1980);In re Mid-Atlantic ToyotaAntitrust Litig.,516 F. Supp. 1287, 1294-96 (D.Md. 1981). Because Appellees disavow any reliance on such an "exception," Brief of Appellees at 36 n. 26, we do not have to decide whether we would recognize its existence.See In re Coordinated PretrialProceedings,691 F.2d at 1341 n. 9. ↩
  24. Before the district court Appellees suggested that the danger of duplicative recovery was not present in this case because they were suing not to recover the fee imposed by Caterpillar, but to recover the separate damages of Appellees' lost business and profits resulting from application of that fee to OMCO. App. at 4381-391. Appellees admitted, however, that the issues were intertwined and that the damage calculation would concentrate on the increased amount OMCO had to pay for the sets. App. at 4401. Furthermore, by arguing that their damages are their lost profitsresultingfrom Caterpillar's imposing the service fee on OMCO, Appellees implicate the second concern ofIllinois Brick,that of overly complex and speculative damage theories.See alsoapp. at 4141-151. ↩
  25. In the affidavit relied on by Appellees, OMCO's president stated:
    In its dealings with Merican companies with respect to Caterpillar gensets and related products, Ohio Machinery negotiated with the Merican companies on an individual transaction by transaction basis. The price, delivery, and other terms varied from transaction to transaction, depending upon a myriad of considerations.


    App. at 111E. ↩