July 11, 2011 Articles

Tag-Along Litigation: When an Indirect Purchaser Wants a Free Ride

Illinois Brick gives a bright-line rule barring damage claims by indirect purchasers. But it does not preclude them from pursuing injunctive relief.

By Amanda P. Reeves and Eric J. McCarthy

In 1977, the United States Supreme Court held in Illinois Brick Co. v. Illinois, 431 U.S. 720, 735 (1977), that direct purchasers are the only parties “injured” in a manner that permits them to recover damages under Section 4 of the Clayton Act. Since that time, courts have repeatedly affirmed that Illinois Brick delineates a bright-line rule that poses an absolute bar to damage claims by indirect purchasers. Illinois Brick, however, does not preclude indirect purchasers from pursuing injunctive relief under Section 16 of the Clayton Act. As a result, when the government successfully litigates an antitrust claim against a manufacturer, the government’s win can tempt indirect purchasers to bring the same or similar claims against the same manufacturer and to leverage factual findings from the government litigation into a victory of their own and seek attorneys’ fees as a prevailing party. But as the nearly nine-year old litigation in Howard Hess Dental Labs. v. Dentsply Internat’l Inc. and Jersey Dental Labs. v. Dentsply Internat’l Inc. illustrates, manufacturer defendants are not without recourse in these circumstances: bedrock substantive antitrust principles provide at least three defenses that are useful to obtaining dismissal of an indirect purchaser plaintiff’s claims on the pleadings.

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