Federal antitrust laws seek to protect those entities that purchase goods directly from parties engaged in unlawful trade restraints, monopolies and other acts that violate antitrust laws. However, in a situation involving an antitrust violation, it is evident that certain other entities or individuals may also be indirectly injured as a result of these improper acts. For instance, take the situation where a manufacturer and its distributors agree that a certain product will only be sold at an inflated price. Suppliers who purchase products from those distributors must now pay excessive amounts for the product. The supplier will then sell the product at an inflated priced to its customers in order to recoup the inflated price charged by the distributor.
In such a situation, the supplier may have a claim pursuant to federal antitrust laws since it directly purchased products from an entity that may have engaged in unlawful restraints on trade. However, under federal law, the end users of the product would be precluded from bringing a claim, despite the fact that they may have been harmed by having to pay such high prices for the product. Could the end user circumvent the standing requirement of federal antitrust laws by bringing a claim under state law?
This question was recently examined in Stepan Co. v. Callahan Co., a decision issued by the District Court for the State of New Jersey. In that case, the Court determined that federal antitrust laws preempted a plaintiff customer’s state claim for unjust enrichment. There, the defendant supplier had received settlement proceeds in a separate action from a distributor who had charged inflated prices for a chemical product in violation of federal antitrust laws. The plaintiff had purchased the chemical product from the defendant supplier for an amount that was based on the distributor’s inflated price. Accordingly, it argued that by retaining the settlement proceeds, the defendant supplier had been unjustly enriched as it passed on the inflated price to the plaintiff customer.
Nonetheless, the Court dismissed the plaintiff’s state claim, finding that allowing such a claim would run afoul of the standing requirements imposed by federal antitrust laws. As mentioned above, only direct purchasers of a product (and not indirect end users) may pursue claims against sellers that engage in federal antitrust violations. The Stepan Co. Court reasoned that if it permitted the plaintiff customer to bring a claim under state law, it could open the door for a vast array of indirect purchasers to bring suits where a direct purchaser recovered monies in connection with an antitrust violation.
© 2008 Nissenbaum Law Group, LLC