84, 150

[Causal Connection]

This brings us to the second ground of dismissal. Was there a sufficient allegation, in light of the other averments in the complaint, of a direct injury, or of a causal connection between the claimed antitrust violations and the injury? Judge Bryan recently couched this question in terms of whether the plaintiff is in the target area of the illegal practices, and if so, whether he was proximately injured thereby. See South Carolina Council of Milk Producers, Inc. v. Newton [1966 TRADE CASES 71,742], 4 Cir., 1966, 360 F. 2d 414, where the court said:

"If a plaintiff can show himself within the sector of the economy in which the violation threatened a breakdown of competitive conditions and that he was proximately injured thereby, then he has standing to sue under section 4....

That case involved an alleged Sherman Act violation, and we adopt what was said with respect to the proximate cause question for our decision here:

"The pivot of decision presently is whether the defendants' asserted conduct was the proximate cause of the plaintiffs' asserted injury. If the damage was merely incidental or consequential, or if the defendants' antitrust acts are so removed from the injury as to be only remotely causative, the plaintiffs have not been injured by reason of anything forbidden in the antitrust laws' as contemplated by the Clayton Act. This is a critical

determination which must be made by the court on the evidence offered by the plaintiff. At this point, the court is in a position to foreclose claims by those only distantly or tenuously hurt. Thus the apprehension of 'wind-fall' recoveries is dispelled. In this process the court would rule upon the substantiality of the claim as it would in other damage actions." [pp. 419, 420]

We treat the contentions of a failure to allege a direct injury and a failure to allege a causal connection as simply a question of alleging proximate cause. As such, we hold the complaint sufficient.

III.

[Antimerger Law as "Antitrust Law"]

In addition, Cowles urges that no cause of action lies for damages on the basis of a violation of §7 of the Clayton Act. 15 USCA § 18. This is a question concerning which some uncertainty has crept into the law through the decisions. The better view

4 15 USCA § 15

"Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor . . .

¶ 72,153

Number 316-180 7-17-67

to us is that §7 is included in the term "antitrust laws" as that term is used in §4 of the Act. The Third Circuit has so stated although this particular argument was apparenty not made. New Jersey Wood Finishing Company v. Minnesota Mining and Manufacturing Company [1964 Trade Cases 71,110], 3 Cir., 1964, 332 F. 2d 346, aff'd sub nom Minnesota Mining and Manufacturing Company v. New Jersey Wood Finishing Company [1965 TRADE Cases [71,449], 1965, 381 U. S. 311, 85 S. Ct. 1473, 14 L. Ed. 2d 405. See also Julius M. Ames Co. v. Bostitch, Inc. (1965 TRADE CASES 71,397], S. D. N. Y., 1965, 240 F. Supp. 521 where the argument was rejected; and Note, 64 Col. Law Review, 597 (1964). There are authorities to the contrary. Gottesman v. General Motors Corporation, [1963 TRADE CASES 70,900], S. D. N. Y., 1963, 221 F. Supp. 488, cert. den., 379 U. S. 882, 85 S. Ct. 144, 13 L. Ed. 2d 88; Bailey's Bakery, Ltd. v. Continental Packaging Company, D. Hawaii, 1964, 235 F. Supp. 705; Highland Supply Corporation v. Reynolds Metal Co. [1964 TRADE CASES

71,023], 8 Cir., 1964. 327 F. 2d 725, in footnote 3, and on remand see Highland Supply Corporation v. Reynolds Metal Company [1965 Trade Cases ¶ 71,380), E. D. Mo., 1965, 245 F. Supp. 510. We see no escape from the logic that § 7 of the Clayton Act is an antitrust statute within the scope and meaning of § 4. of the Act and so hold.

[Liability of Seller]

This leaves one question. Cowles contends that the complaint should be dismissed as to it insofar as the cause of action against it rests on §7 of the Clayton Act. The argument is that § 7 is directed against the acquiring corporation only and not against the seller. This position is well taken. §7 by its terms proscribes only the acquiring corporation. There seems to be no decision to this effect but the language of the statute is clear. We thus affirm the dismissal as to Cowles on the §7 charge.

In sum, we hold Dailey is entitled to prove his claim as we have found it to have been stated. Whether the proof is sufficient as to violation of the antitrust laws, or on proximate cause or injury are matters left to the determination of the trial court after the facts have been considered.

Affirmed in part; Reversed and Remanded in part for further proceedings not inconsistent herewith.

and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee."

1967, Commerce Clearing House, Inc.

69, 120

Brick Company', the eleven defendants are manufacturers of concrete block. In Count 1 of the complaint Illinois charged that the defendants violated Section 1 of the Sherman Act (15 U. S. C. § 1) by conspiring to fix the price of concrete block, allegedly resulting in overcharges of "an amount in excess of $3 million." Because of the treble damage provision contained in Section 4 of the Clayton Act (15 U. S. C. § 15), plaintiffs apparently sought in excess of $9 million in damages.'

The present lawsuit was filed after the United States had filed similar criminal and civil cases against eleven manufacturers of concrete block used in building construction in the Greater Chicago area. Pleas of nolo contendere were accepted in the criminal case and a consent decree was entered in the civil action. Comparable private treble damage actions brought by masonry contractors, general contractors and private builders were settled with the payment of agreed-upon sums of money. The settlements were without prejudice to this suit.

[Public Projects]

Plaintiffs assert that the defendants sold large quantities of concrete block to masonry and general contractors for incorporation in public buildings and structures. Most of the building project contracts were awarded pursuant to competitive bidding based on plans and specifications setting forth the amount and type of concrete block required. The bids submitted included the cost of the concrete block purchased from the manufacturer or masonry contractor. Thus the plaintiffs were not the first purchasers of the concrete block although they alleged that the cost of the product was passed on to them.

[Ultimate Consumers]

Defendants moved for summary judgment against all plaintiffs that were not direct purchasers of concrete block from defendants. In its memorandum opinion (67 F. R. D. 461), the district court first noted that the plaintiffs did not purchase concrete

1 American Brick Company was sued on the theory that it was a purchaser of concrete block for resale primarily from its production affiliate, Carey Brick Company.

In Count II, plaintiffs were two named hospitals suing also on behalf of all Chicago area private hospitals (in part supported by private funds) that were damaged by purchases of concrete block. No set damages were claimed in Count II. Summary judgment was also ren- . dered for defendants with respect to that Count.

¶ 60,939

236 7-6-76

block indirectly pursuant to cost-plus contracts but instead purchased buildings of which concrete block was a component part. As Judge Kirkland put it, the critical issue before him was "whether parties more remote than the direct purchaser from an alleged anti-trust violator have standing to sue under Section 4 of the Clayton Act ***" 67 Fɔ R. D. 464.

Citing Hanover Shoe, Inc. v. United Shoe Machinery [1968 TRADE CASES ¶72,490], 392 U. S. 481, the district court held that an immediate consumer or direct purchaser unquestionably has standing to sue the antitrust violator, 67 F. R. D. 466. However, relying upon our decision in Commonwealth Edison v. Allis-Chalmers Mfg. Co. [1963 TRADE CASES ¶ 70,725], 315 F. 2d 564, 567 (7th Cir., 1963), certiorari denied, sub nom Illinois v Commonwealth Edison Co., 375 U. S. 834, the court held that "as to ultimate consumers [such as plaintiffs], their injuries are too remote and [in] consequential to provide legal standing to sue against the alleged antitrust violator." 67 F. R. D. 468. Therefore, summary judgment was granted as to this phase of defendants' motion.*

[Zone of Interests]

บ.

In private actions seeking to vindicate rights conferred by Congressional enactment, to establish standing the plaintiffs must show an injury in fact that is "arguably within the zone of interests to be regulated by the statute." Association of Data Processing Service Organizations, Inc. Camp, 397 U. S. 150, 153; Malamud v. Sinclair Oil Co. [1975-2 Trade Cases ¶ 60,442]. 521 F. 2d 1142, 1151-1152 (6th Cir. 1975). The district court held that plaintiffs' interests as ultimate consumers were not protected by he antitrust laws. We disagree and therefore reverse.

[Statutory Language]

Our holding that ultimate consumers may recover for violations of the Sherman Act is motivated by the broad language of the treble damage provision in Section 4 of the Clayton Act. It provides in pertinent part:

'Defendant also moved for summary judgment as to direct purchasers from non-defendants. The denial of this motion is not involved in this appeal. As a result of the partial summary Judgment, the claims of only four governmental entities remained in the suit.

Final judgment was subsequently entered thereon pursuant to Rule 54(b) of the Federal Rules of Civil Procedure.

1976, Commerce Clearing House, Inc.

236 7-6-76

Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor * * * and shall recover threefold damages by him sustained (15 U. S. C. § 15; emphasis supplied.)

The broad reach of a treble damage action under the Sherman Act was stressed in Mandeville Island Farms, Inc. v. American Crystal Sugar Co. [1948-1949 TRADE CASES ¶ 62,251], 334 U. S. 219, 236, where the Supreme Court noted that the Sherman Act "does not confine its protection to consumers, or to purchasers, or to competitors, or to sellers ***. The Act is comprehensive in its terms and coverage, protecting all who are made victims of the forbidden practices by whomever they may be perpetrated." No subsequent decision of that Court has confined the treble damage remedy to direct consumers. The sweeping language of the statute and the policy encouraging private enforcement of the antitrust laws persuade us that if plaintiffs can prove a violation which resulted in an injury to them, they ought to recover. See Hawaii v. Standard Oil Co., supra, 405 U. S. at 262; Zenith Radio Corp. v. Hazeltine Research, Inc. [1969 TRADE CASES ¶ 72,800], 395 U. S. 100, 130-131.

[Precedent]

Although the Supreme Court has not decided the issue presented here, the two courts of appeals that have squarely considered the problem have held that ultimate consumers are within the reach of the treble damage statute. In In re Western Liquid Asphalt Cases (1974-1 TRADE CASES ¶ 75,081], 487 F. 2d 191 (9th Cir. 1973), certiorari denied sub nom. Standard Oil Co. v. Alaska, 415 U. S. 919, the Ninth Circuit noted that Congressional policy favors the allowance of recovery to plaintiffs who can prove both the occurrence of an antitrust violation and that they thereby incurred substantial damage. The Court refused to confine standing under Section 4 of the Clayton Act to first

See also Hawaii v. Standard Oil Co. [1972 TRADE CASES ¶ 73,8621, 485 U. S. 251, 262; Minnesota Mining & Mfg. Co. v. New Jersey Wood Finishing Co. (1965 TRADE CASES 71,449), 381 U. S. 311, 318: Radovich v. National Football League [1957 TRADE CASES 168.628). 352 U. S. 445, 454.

• See State of Illinois v. Bristol-Myers Co. [1973-1 TRADE CASES ↑ 74,262], 470 F. 2d 1276, 1278, n. 4 (D. C. Cir. 1972); In re Master Key Antitrust Litigation (1975-2 TRADE CASES 160,6481, 528 F. 2d 5, 12, n. 11 (2d Cir. 1975); South Carolina Council of Milk Producers, Inc. v. Newton [1966 TRADE CASES 71,742). 360 F. 2d 414, 417-418 (4th Cir. 1966), certiorari denied, 385 U. S. 934; Lehigh Portland Cement Co. v. City of North Bay Village (Misc. No. Trade Regulation Reports

69, 121

line purchasers or more remote consumers who bought goods subject to a cost-plus contract. Similarly, in Armco Steel Corpora tion v. State of North Dakota [1967 TRADE CASES 72,058], 376 F. 2d 206 (8th Cir. 1967), the court held that because unlawfully fixed prices could injure the ultimate consumers, North Dakota should be permitted to recover $258,255 on its indirect purchases of metal products eventually used in state highways.

The District of Columbia, Second, Fourth, Fifth and possibly the Sixth Circuits also seem hospitably inclined to the rule that ultimate purchasers may sue under Section 4 of the Clayton Act to recover damages incurred as a result of a price-fixing conspiracy."

Analysis of defendants' cases does not lead to a different conclusion. Defendants rely primarily on Hanover Shoe, Inc. v. United Shoe Machinery Corp. [1968 TRADE. CASES ¶ 72,490], 392 U. S. 481. In that case, the Court held that first-line purchasers could recover for antitrust violations even if the purchaser passed on the cost of the product attributable to the anti-competitive practice. 392 U. S. at 488. However, the Court did not enshrine privity as a requirement of recovery under the antitrust laws. See In re Western Liquid Asphalt Cases, supra, 487 F. 2d at 196-198; Boshes v. General Motors Corporation, supra, 59 F. R. D. at 592-596. Although the Court noted that more remote purchasers might have difficulty in establishing the relationship between the antitrust violation and the injury suffered, we do not believe Hanover Shoe precludes those purchasers from ever recovering.

The Third Circuit's per curiam opinion in Mangano v. American Radiator & Standard Sanitary Corp., [1971 TRADE Cases ¶ 73,477), 438 F. 2d 1187 (1971), is cited by defendants in favor of the summary judgment below. However, a careful reading of Mangano shows that the affirmance was based on "the district court's sound discretion to dismiss

2364, 5th Cir. 1972), denying appeal in Southern General Builders, Inc. v. Maule Industries, Inc., 1973-1 CCH TRADE CASES 74,484 (S. D. Fla. 1972); Dailey v. Quality School Plan, Inc. (1967 TRADE CASES 72,153], 380 F. 2d 484, 487-488 (5th Cir. 1967). In a different context, the Sixth Circuit seems to lean the same way in Malamul v. Sinclair Oil Corporation (1975-2 TRADE CASES ¶ 60,442), 521 F. 2d 1142 (6th Cir. 1975). The split among the district courts was noted in Boshes v. General Motors Corporation [1973-1 TRADE CASES 174,483). 59 F. R. D. 589, 592-593, n. 5 (N. D. III. 1973) and in the opinion below, 67 F. R. D. at 464, n. 1. We approve of those district court decisions permiting ultimate consumers to sue antitrust violators.

1 60,939

69,122

the actions of the present appellants solely for inexcusable failure to answer interrogatories" (438 F. 2d at 1188). More significantly, the failure to answer the interrogatories revealed plaintiffs' inability to show that the alleged antitrust violations were the proximate cause of the injury to the plaintiffs.'

Our decision in Commonwealth Edison Co. v. Allis-Chalmers Mfg. Co., supra, is distinguishable on an identical rationale. In part, that decision was based on Keogh v. Chicago & North Western Railway Co., 260 U. S. 156, which held that complaints against legally established regulated rates must first be addressed to the regulatory agency. 315 F. 2d at 567. See United States v. Radio Corporation of America, [1959 Trade Cases 69,284], 358 U. S. 334, 346-347. However, like Mangano, the decision in Commonwealth Edison also rests on the failure to prove that the violations damaged the plaintiffs. Because the rates were set by an independent regulatory agency, plaintiffs could not show that the allegedly inflated prices for the generators resulted in higher prices for the electricity produced. In the next consideration of Commonwealth Edison's antitrust claim, the author of our previous opinion approved the rule of Clark Oil Co. v. Phillips Petroleum Co., [1944-1945 TRADE CASES 57,358], 148 F. 2d 580 (8th Cir. 1945), certiorari denied, 326 U. S. 734, that the Clayton Act permits ultimate consumers to recover from antitrust violators, thereby refuting defendants' interpretation of our prior holding. Commonwealth Edison Co. v. AllisChalmers Mfg. Co., [1964 TRADE CASES

71,197], 335 F. 2d 203, 208 (7th Cir. 1964); see also Boshes v. General Motors Corporation, supra, 59 F. R. D. at 597, n. 10.

[Proof of Injury]

The error in defendants' reading of Hanover Shoe, Mangano, and Commonwealth Edison is that they view the failure to show that

236 7-6-76

antitrust violations caused plaintiffs' injury as an element of standing. It is not. Rather, the question is one of fact (Perkins v. Standard Oil Co., [1969 TRADE CASES ¶ 72,822], 395 U. S. 642, 648; In re Western Liquid Asphalt Cases, supra, 487 F. 2d at 199), and any decision thereon is an adjudication on the merits. Cf. Sierra Club v. Morton, 405 U. S. 727, 741. Although in Mangano and Commonwealth Edison the facts were sufficiently clear early in the litigation to per mit resolution of the case on a motion to dismiss or for summary judgment, in the instant case they are not.

[Double Recovery]

We do not believe that the difficulty plaintiffs might have in proving the injury requires us to dismiss the suit. Nor do we believe that dismissal is warranted because both the immediate purchasers and the plaintiffs in this case might recover damages from the defendants. As Judge Carter pointed out in In re Western Liquid Asphalt Cases, supra, 487 F. 2d at 200-201, according standing to ultimate purchasers need not result in double recovery because appropriate means can be found to apportion any damages that might be assessed.

To the extent that the district court held that these plaintiffs, as opposed to ultimate consumers in general, lack standing, we disagree. The plaintiffs here have alleged an injury in fact and are within the target area of the Sherman and Clayton Acts. They have shown that they were "within the area of the economy which [defendants] reasonably could have or did foresee would be endangered by the breakdown of competitive conditions." In re Western Liquid Asphalt Cases, supra, 487 F. 2d 199.

The judgment below is reversed insofar as it grants summary judgment on Counts I and II against indirect purchasers of concrete block, with costs to plaintiffs-appellants.