Antitrust Remedy Wars Episode I: Illinois Brick from Inside the Supreme Court

Article excerpt


Few questions in antitrust law have proven to be as challenging as whether "indirect purchasers" should be authorized to seek damages for antitrust violations. Despite the seemingly unqualified language of section 4 of the Clayton Act,1 which creates a treble damage private right of action for "any person" injured in her business or property by virtue of an antitrust violation, indirect purchasers have been barred from seeking damages in federal court since the Supreme Court's 1977 decision in Illinois Brick Co. v. Illinois.2 At the same time, many such indirect purchasers, often consumers, have been authorized to seek the very relief barred in federal court under analogous but more expansive state antitrust laws. The Supreme Court specifically endorsed this dual-remedial scheme when, in California v. ARC America Corp.,3 it rejected arguments that Illinois Brick effectively preempted broader state antitrust remedies.4

Illinois Brick was animated by the Court's belief that permitting indirect purchasers to sue would be inconsistent with its earlier decision in Hanover Shoe, Inc. v. United Shoe Machinery Corp.,5 would diminish the incentives for private parties to file suit in federal court, would subject defendants to multiple damages, and would mire the court in complex battles over the apportionment of damages among various classes of plaintiffs at different levels of the product distribution chain. In short, the Court believed it would make for bad antitrust remedial policy.

In its larger context, Illinois Brick also reflected a developing and significant shift in the antitrust priorities of the Court; one that found profound expression in the Court's 1976-77 term. Whereas contemporaneous decisions like Continental T.V., Inc. v. GTE Sylvania Inc.6 sought to rein in the substantive prohibitions of the antitrust laws, which had come to depend in large part on the invocation of per se rules of illegality, Illinois Brick and Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc.7 focused on restricting access to the Clayton Act's private treble damage right of action. Collectively, this trilogy of cases trumpeted a more sweeping message from the Court that today seems clear: antitrust laws had been interpreted too harshly and the private treble damage action had perhaps been used too expansively. Ironically however, Illinois Brick and ARC America together created a more vexing set of problems than those Illinois Brick sought to avert.

In this Article, I will examine the available papers of the Supreme Court justices from this critical period in the evolution of modern antitrust law and policy.8 To set the stage, Part I contrasts the state of antitrust in 1975 with that of 1990, emphasizing the fundamental shift that commenced at the Court in the late 1970s; a shift that was not at all limited to the new members of the Court-the four Nixon appointees, Chief Justice Warren Burger, Associate Justices Blackmun, Powell and Rehnquist, and Justice Stevens, appointed by President Ford. Indeed, Justice White, who had been on the Court since being appointed by President Kennedy in 1962, proved to be a key player with respect to indirect purchaser issues, authoring the majority opinions in Hanover Shoe, Illinois Brick, and ARC America.9 Justice Marshall, a Johnson appointee, authored the majority opinion in Brunswick.10

After a brief overview of what I call the "Illinois Brick quartet" in Part II,11 Part III will consider the available papers of the Justices who sat on the Court at the time of Illinois Brick: Justices Blackmun, Brennan, Marshall, and Powell. These papers illuminate all phases of consideration of the case, from the treatment of the petition for a writ of certiorari, to the evaluation of the merits of the case by the clerks and the Justices, and the evolution of the Court's majority and dissenting opinions. Perhaps the most striking discovery is that the initial conference vote in Illinois Brick was to affirm, upholding the right of indirect purchasers to sue. …