On Appeal from the United States District Court for the District of New Jersey (Newark) C.A. No. 84-4554-A
Before ADAMS, Acting Chief Judge, GIBBONS and STAPLETON, Circuit Judges.
ADAMS, Acting Chief Judge.
Under the Robinson-Patman Act, a seller ordinarily may not charge different buyers unequal prices for the same product. The issue in this appeal is whether a law suit challenging alleged price discrimination may be maintained under § 4 of the Clayton Act by a broker whose services were terminated for refusing to carry out a manufacturer's allegedly unlawful discount for a preferred buyer. The district court dismissed the claim, ruling that the broker was not a proper party to bring suit under the antitrust laws. We agree, and therefore will affirm.
Since 1954, appellant Gregory Marketing Corporation (Gregory) has served as a broker in New Jersey for Red Check, Inc. (Red Cheek), a manufacturer of apple juice. As broker, Gregory sold Red Cheek's products to commercial distributors and retailers, including Wakefern Food Corporation (Wakefern), a large buying cooperative engaged in bulk purchasing and redistribution on behalf of numerous supermarket chains. Under an agreement with he manufacturer, Gregory was compensated by receiving a percentage of its gross sales of Red Cheek products.
In 1984, Red Cheek began providing Wakefern with special price discounts not available to other purchasers. For example, according to Gregory's complaint, which is assumed to be true for purposes of a motion to dismiss under Fed. R. Civ. P. 12(b)(6), while all other customers paid $11.85 for each case of 40-ounce containers of apple juice, Wakefern began receiving one case free for each case purchased.
When he learned of these practices in February 1984, Daniel Scher, Gregory's majority shareholder and a corporate officer, objected, and informed Red Cheek that the discounts to Wakefern were unlawful.*fn1 Red Cheek, however, declined to stop the discounts. Instead, according to the complaint, it directed Gregory to fabricate explanations justifying the discounts for any of Wakefern's competitors who inquired. When Gregory refused to comply, Red Cheek terminated its brokerage agreement.
On October 31, 1984, Gregory filed suit against Red Cheek and Wakefern, alleging that they violated Section 2(a) of the Robinson-Patman Act, 15 U.S.C. § 13(a) (1982).*fn2 The Act prohibits sellers from discriminating in price between different purchasers of a product in order to give one a competitive advantage. The complaint was brought under Section 4 of the Clayton Act, which affords treble damages to plaintiffs injured by "anything forbidden in the antitrust laws."*fn3 15 U.S.C. § 15(a) (West Supp. 1985). Gregory alleged that it had suffered two distinct injuries as a consequence of the defendants' pricing practices: Red Cheek's retaliatory termination of the brokerage agreement resulted in the loss of the future brokerage commissions plaintiff otherwise would have received, and the discounted prices on sales to Wakefern reduced the broker's commission on the gross sales it actually made to the buying cooperative before being terminated. In addition to the federal claim, Gregory also asserted pendent state claims, including breach of a brokerage agreement, violation of state antitrust statutes, and tortious interference with plaintiff's contract rights and prospective business advantage.
The district court granted the defendant's motion to dismiss on February 25, 1985. Drawing on a series of Supreme Court cases designed to limit the broad scope of the Clayton Act's treble damage provision, the court ruled that Gregory could not maintain a suit challenging the anticompetitive Red Cheek-Wakefern pricing scheme because the broker's injury did not result from the anticompetitive nature of the arrangements Gregory's injury did not flow "from that which makes defendants' acts unlawful." Blue Shield of Virginia v. McCready, 457 U.S. 465, 482, 73 L. Ed. 2d 149, 102 S. Ct. 2540 (1982), quoting Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489, 50 L. Ed. 2d 701, 97 S. Ct. 690 (1977), and thus it "is not the type of injury that the antitrust laws were written to guard against," the district court declared. As further grounds for ruling that Gregory could not maintain the suit, the court noted that Wakefern's competitors, who were directly injured by the pricing scheme, could still sue for treble damages. Allowing the broker to sue, therefore, would subject the defendants to "overkill" by exposing them to the risk of multiple treble damage liability.
In dismissing Gregory's claim, the court specifically declined to apply the rule of Ostrofe v. H.S. Crocker Co., Inc., 670 F.2d 1378 (9th Cir. 1982), vacated and remanded, 460 U.S. 1007, 75 L. Ed. 2d 475, 103 S. Ct. 1244 (1983), on remand, 740 F.2d 739 (9th Cir. 1984), cert. dismissed, 469 U.S. 1200, 105 S. Ct. 1155, 84 L. Ed. 2d 309 (1985), which allowed an antitrust suit by an employee forced to resign from his job for declining to carry out a price fixing arrangement. The district court suggested that an employee's injury is more closely linked to the antitrust violation than a broker's would be, and further stated that neither the Supreme Court nor the Third Circuit has yet extend standing under the antitrust laws as far as the Ostrofe court. See McNulty v. Borden, Inc., 542 F. Supp. 655 (E.D.Pa. 1982). Gregory filed a timely appeal.
On its face, Section 4 of the Clayton Act defines an extremely broad class of persons who may bring a private action for treble damages under the antitrust laws. The language allows a suit 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. Thus, "[a] literal reading of the statute is broad enough to encompass every harm that can be attributed directly or indirectly to the consequences of an antitrust violation." Associated General Contractors v. California State Council of Carpenters, 459 U.S. 519, 74 L. Ed. 2d 723, 103 S. Ct. 897 (1983). While acknowledging that the lack of restrictive terms in this provisions "reflects Congress's expansive remedial purpose.'" Blue Shield of Virginia, Inc. v. McCready, 457 U.S. 465, 472, 73 L. Ed. 2d 149, 102 S. Ct. 2540 (1982) (quoting Pfizer, Inc. v. Government of India, 434 U.S. 308, 314, 54 L. Ed. 2d 563, 98 S. Ct. 584 (1978)), the Supreme Court has declined to read the statute as broadly as its language would allow. Instead, it has imposed limitations consistent with the statutory policies behind the awarding of treble damages: deterring antitrust violators and depriving them of the fruits of their illegal actions, and providing ample compensation to the victims. Pfizer, 434 U.S. at 314: Merican, Inc. v. Caterpillar Tractor Co., 713 F.2d 958, 963 (3d Cir. 1983), cert. denied, 465 U.S. 1024, 104 S. Ct. 1278, 79 L. Ed. 2d 682 (1984).
The restrictions fall into two categories. First, the Supreme Court has refused to permit antitrust suits that raise the risk of multiple treble damage recoveries or complex damage theories that would make antitrust suits unduly difficult to try. This, in Hawaii v. Standard Oil, 405 U.S. 251, 31 L. Ed. 2d 184, 92 S. Ct. 885, (1972), it held that § 4 did not authorize a state to sue in its parens partriae capacity for damages to its "general economy" because even a lengthy trial could not cope with the problems of double recovery. And in Illinois Brick Co. v. Illinois, 431 U.S. 720, 52 L. Ed. 2d 707, 97 S. Ct. 2061 (1977), the Court ruled that an indirect purchaser in a chain of distribution may not maintain a damage action against a seller for overcharges in violation of the Sherman Act passed on by the direct purchaser. Allowing every person along a chain of distribution to claim damages for a single transaction would risk duplicative recoveries; apportioning the damages would require massive evidence and overly complex damage theories, "discouraging vigorous enforcement of the antitrust laws by private suits." Blue Shield, 457 U.S. at 474-475 n. 11. Accordingly, the Court reasoned, to allow such suits would be "inconsistent with the broader remedial purposes of the antitrust laws." Merican, 713 F.2d at 964.
A second type of limitation, more central in the Supreme Court's recent opinions, concerns the proximity of the antitrust injury alleged and the harm suffered by the plaintiff. In an inquiry analogous to the proximate cause question in tort liability, courts must determine whether the injuries claimed by a plaintiff are "too remote from the alleged violation" to justify allowing treble damages recovery. Blue Shield, 457 ...