STATE OF CALIFORNIA, ET AL., APPELLANTS V. ARC AMERICA CORPORATION, ET AL. No. 87-1862 In the Supreme Court of the United States October Term, 1987 On Appeal from the United States Court of Appeals for the Ninth Circuit Brief for the United States as Amicus Curiae TABLE OF CONTENTS Question Presented Interest of the United States Statement Discussion Conclusion QUESTION PRESENTED Whether Section 4 of the Clayton Act, 15 U.S.C. 15, construed by this Court in Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), to bar treble damage actions by indirect purchasers under the federal antitrust laws, preempts state indirect-purchaser statutes. INTEREST OF THE UNITED STATES The United States has primary responsibility for enforcing the federal antitrust laws. Many States also have antitrust laws, which, like the federal statutes, seek to deter anticompetitive conduct. The question presented in this case is whether the Clayton Act, which has been construed to provide no remedy to "indirect purchasers" in most cases, should be construed to preclude the States from giving a remedy to indirect purchasers. Because that question is ultimately one of congressional intent underlying a statute that the United States enforces, and because the answer may affect federal antitrust enforcement, the United States has a particular interest in its correct resolution. STATEMENT 1. In 1976 and 1977, 35 actions were filed in 12 federal district courts against numerous cement manufacturers alleging a nationwide conspiracy to fix prices of cement (J.S. App. A3). Appellants -- California, Minnesota, Alabama, and Arizona -- filed four of those actions; each State sought to represent a class that included all the governmental entities within the State that had purchased cement or products containing cement (see id. at A63-A137). The States' complaints alleged violations of Section 1 of the Sherman Act, 15 U.S.C. 1, and state statutes. California, Minnesota, and Alabama sought recovery for indirect purchases of cement; they based those claims on state statutes that indisputably permit indirect-purchaser suits. /1/ Arizona made a similar claim, but the question whether its statute permits indirect-purchaser suits is disputed (J.S. 9). /2/ In September 1977, all pending actions were transferred to the United States District Court for the District of Arizona for coordinated pretrial proceedings (J.S. App. A3). Earlier that year, this Court had issued its decision in Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), holding that indirect purchasers have no claim under the federal antitrust laws for damages resulting from overcharges passed on to them by suppliers who purchased from members of an illegal conspiracy. On March 9, 1979, the district court certified the actions as class actions and established three classes of cement purchasers. /3/ The broadest of those three classes, the National Cement Class, consisted of all those who purchased cement during the relevant time period, other than the defendants and the members of the other two classes. J.S. App. A3. All three cement-purchaser classes entered into settlements with several defendants between July 1979 and October 1981, creating a settlement fund in excess of $32 million (J.S. App. A4). The settlement agreements provided that the plaintiffs release all claims "of any nature whatsoever * * * pertaining to any direct or indirect purchase of cement or cement-containing products from any cement manufacturer or producer * * * which claims * * * are asserted under any federal or state antiturst or unfair competition or business law" (Calif. C.A. Br. 4; see J.S. App. A141, A153, A154-A155). The agreements also provided that the "allocation and distribution of the Settlement Fund shall be in accordance with the provisions of any agreements or plans approved by the (District) Court" (J.S. App. A11). In subsequent proceedings involving distribution of the fund, direct purchasers challenged the States' rights to be compensated for their indirect purchasers of cement, relying on Illinois Brick. In January 1985, the district court disallowed the claims of indirect purchasers. It held that the state statutes on which the indirect purchasers' claims were based were preempted by the Clayton Act, as interpreted by Illinois Brick. J.S. App. A30-A31. 2. On appeal to the Ninth Circuit, the States argued that this Court's decision in Illinois Brick to disallow indirect purchaser suits under the federal statutes did not represent a congressional policy to foreclose the States from providing antitrust remedies to indirect purchasers. /4/ The court of appeals affirmed the denial of the indirect-purchaser claims on the basis of Illinois Brick. The court reasoned that such claims would "complicate antitrust enforcement" (J.S. App. A21); "could also limit the recoveries of direct purchasers and thus reduce their incentives to bring antitrust actions" (id. at A22); and would "conflict most directly with federal policy because they create the risk of multiple liability for defendants" (id. at A22-A23). The court of appeals reasoned that it was "bound by the Supreme Court's pronouncements" concerning the policy against multiple liability (id. at A23). DISCUSSION Appellants have properly invoked this court's appellate jurisdiction under 28 U.S.C. 1254(2). /5/ In our view, the question presented is substantial, and the decision below is wrong. In Illinois Brick, the Court construed the Clayton Act as not permitting indirect purchasers to recover damages under that statute in most circumstances. We agree that this construction best serves the public interest in effective antitrust enforcement. But the States, many of which have their own antitrust laws, may have different views about effective enforcement and may adopt different enforcement policies and remedies unless Congress has required uniformity. In a decision that conflicts with the one other appellate decision squarely in point /6/ and with the views of most commentators, /7/ the court of appeals here held state law invalid even though there is no evidence of a congressional intent to preempt. This decision, which invalidates the laws of at least three (possibly all four) appellant States and casts doubt on the validty of laws adopted by at least 12 other jurisdictions, /8/ erroneously turns policy considerations that led this Court to a particular construction of a federal statute into federal barriers to contrasting state approaches. 1. "The critical question in any pre-emption analysis is always whether Congress intended that federal regulation supersede state law." Louisiana Public Service Comm'n v. FCC, 476 U.S. 355, 369 (1986); see also California Federal Savings & Loan Ass'n v. Guerra, No. 85-494 (Jan. 13, 1987), slip op. 7. "(I)n any pre-emption analysis, '"(t)he purpose of Congress is the ultimate touchstone."'" Metropolitan Life Insurance Co. v. Massachusetts, 471 U.S. 724, 747 (1985) (citations omitted); see Fort Halifax Packing Co. v. Coyne, No. 86-341 (June 1, 1987), slip op. 6. Thus, federal law will preempt state law only when Congress has expressly chosen to occupy a given field; when a scheme of federal regulation is sufficiently comprehensive to make reasonable the inference that Congress left no room for state regulation; or when state law is in actual conflict with federal law (Guerra, slip op. 7). The Sherman and Clayton Acts contain no statement of congressional intent to preempt state antitrust remedies. Nor have they ever been understood to occupy the field of antitrust law. The regulation of business practices stems from the common law and has traditionally been undertaken by the States. /9/ The Sherman Act was intended to supplement, not to displace, the States' efforts to control "dangerous combinations." 21 Cong. Rec. 2456 (1890) (remarks of Sen. Sherman). As this Court noted in Southern Motor Carriers Rate Conf., Inc. v. United States, 471 U.S. 48, 56 n.19 (1985), statements in the legislative history affirmatively express a desire not "to invade the legislative authority of the several States." See H.R. Rep. 1707, 51st Cong., 1st Sess. 1 (1890). See generally Cantor v. Detroit Edison Co., 428 U.S. 579, 632-634 (1976) (Stewart, J., dissenting). Thus, the States retain extensive authority to legislate in the antitrust field. Watson v. Buck, 313 U.S. 387, 403 & n.6 (1941); 1 P. Areeda & D. Turner, Antitrust Law paragraph 208, at 58 (1978); see Exxon Corp. v. Governor of Maryland, 437 U.S. 117, 133 (1978); see also Puerto Rico v. Shell Co., 302 U.S. 253 (1937) (Section 3 of the Sherman Act (15 U.S.C. 3) does not preempt similar Puerto Rican antitrust law). /10/ As the Court said in Parker v. Brown, 317 U.S. 341, 351 (1943), "(i)n a dual system of government in which, under the Constitution, the states are sovereign, save only as congress may constitutionally subtract from their authority, and unexpressed purpose to nullify a state's (regulatory scheme) is not lightly to be attibuted to Congress." In the absence of an express intent to preempt or an occupation of the field by a federal regulatory scheme, an inference of preemption is only justified when there is clear inconsistency or conflict between federal and state law. Cloverleaf Co. v. Patterson, 315 U.S. 148, 156 (1942). There is no suggestion here, however, that the state statutes mandate or authorize conduct that violates federal law or that they place "'irresistible pressure on a private party to violate the antitrust laws.'" See Fisher v. City of Berkeley, 475 U.S. 260, 265 (1986) (quoting Rice v. Norman Williams Co., 458 U.S. 654, 661 (1982)); see also California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S. 97 (1980); Schwegmann Bros. v. Calvert Distillers Corp., 341 U.S. 384 (1951). Indeed, the regulation of conduct is not what is at issue: the question before the Court pertains only to the remedies that a State may provide for conduct that is made unlawful by both state and federal law. The court of appeals held that the state statutes, insofar as they permit indirect-purchaser suits, are preempted by federal antitrust law because they "stand() as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." See Hines v. Davidowitz, 312 U.S. 52, 67 (1941) (footnote omitted); CTS Corp. v. Dynamics Corp. of America, No. 86-71 (Apr. 21, 1987), slip op. 8. We think the court of appeals overexteded that principle. There are circumstances in which state law, while not imposing directly conflicting requirements, so clearly frustrates the intended operation of a federal statute that preemption must be inferred. See, e.g., Michigan Canners & Freezers Ass'n v. Agricultural Marketing & Bargaining Bd., 467 U.S. (1984). But the Davidowtiz principle only bars state frustration of federal regulation; it does not require the States to conform their "purposes" and "objectives" to those of Congress. Nor does the principle justify preemption simply to eliminate some inconvenience to the courts in administering the state and federal regulations. A determination that the purposes of a federal statute give that statute a certain reach does not, without substantially more, demonstrate that Congress wanted to preclude the States from enacting laws that reach further. When Congress legislates in a field in which the States have traditionally regulated, there is a presumption that the historic police powers of the States are not to be superseded unless that purpose is clearly manifested. Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 146-147 (1963); Jones v. Rath Packing Co., 430 U.S. 519, 525 (1977); Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947); Hillsborough County v. Automated Medical Laboratories, Inc., 471 U.S. 707, 715 (1985); CTS Corp. v. Dynamics Corp. of America slip op. 15-16; Puerto Rico Dep't of Consumer Affairs v. Isla Petroleum Corp., No. 86-1406 (Apr. 19, 1988), slip op. 4, 7. In particular, state law is not preempted merely because it provides additional or different remedies from those chosen by Congress. See, e.g., Silkwood v. Kerr-McGee Corp., 464 U.S. 238 (1984) (state-law tort remedies for nuclear incidents are available, despite congressional determination that safety regulation is the exclusive concern of federal law, because Congress was aware of state remedies and apparently intended to tolerate the tension between the two); California v. Zook, 336 U.S. 725, 736 (1949) (California might impose more serious penalties than Congress "if the California legislature deemed it wise"). /11/ 2. It would be particularly difficult to conclude that States may not adopt antitrust remedies differing from federal remedies. The state and federal antitrust statutes at issue here have similar objectives, a factor that generally counsels against preemption. See Exxon Corp. v. Governor of Maryland, 437 U.S. at 132; Guerra, slip op. 15. Like the state laws at issue, the Sherman Act prohibits the price fixing alleged in this case. The purposes of the state and federal private damage remedies correspond as well: Congress and the States intended to compensate victims of antitrust violations and to enhance the effectiveness of enforcement through deterrence. Union Carbide Corp. v. Superior Court, 36 Cal. 3d at 20-22, 679 P.2d at 17-18, 201 Ca. Rptr. at 583-584; Illinois Brick, 431 U.S. at 746; Crown Oil Corp. v. Superior Court, 177 Cal. App. 3d at 607, 223 Cal. Rptr. at 165. Although the Clayton Act has been construed to create means of achieving compensation and deterrence that differ from the means chosen by the appellant States, it does not for that reason preclude the States from making their different choice. /12/ Congress has repeatedly shown its awareness of state antitrust remedies and its understanding that, in the absence of specific congressional action to preempt them, they will coexist with federal remedies. For example, the legislative history of the exemption for agricultural cooperatives under the federal antitrust laws (Capper-Volstead Act, 7 U.S.C. 291, 292) indicates that "(i)n States where it is illegal to operate an association such as the ones permitted under this bill, it will * * * be practically impossible to operate under this legislation, as the bill only grants the right to operate in interstate and foreign commerce. That is the only power that Congress can confer upon such associations." H.R. Rep. 24, 67th Cong., 1st Sess. 2 (1921). In more recent legislation granting limited exemptions from the federal antitrust laws, Congress chose expressly to preempt state antitrust remedies. See National Cooperative Research Act of 1984, 15 U.S.C. (Supp. IV) 4303(c); /13/ Export Trading Company Act of 1982, 15 U.S.C. 4016, 4002(a)(7). /14/ These express preemption provisions reflect Congress's understanding that, in the absence of express preemption, the States would be free to authorize independant and potentially conflicting private remedies. See S. Rep. 98-427, 98th Cong., 2d Sess. 14 (1984) ("(t)he protections afforded by title II to joint R&D programs from treble damages under Federal law would be largely vitiated by continuing treble damage exposure under State law"). 3. This Court's decisions construing Section 4 of the Clayton Act (15 U.S.C. 15) as not permitting damage suits by indirect purchasers in most circumstances do not suggest that Congress intended to require state conformity on this point, as the court of appeals believed. See Illinois Brick Co. v. Illinois, supra; Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481 (1968). Neither Illinois Brick nor Hanover Shoe contains any reference to state law or a congressional intent to preempt. Indeed, although the Court was engaged in a task of statutory interpretation, its decisions rested on a weighing of competing policy concerns rather than an analysis of statutory text and legislative history. In Hanover Shoe, the Court held that a defendant in an antitrust action may not invoke a "pass-on" defense. Recognizing that "(a) wide range of factors influence a company's pricing policies," the Court was loath to inject into treble-damage actions "additional long and complicated proceedings involving massive evidence and complicated theories" (392 U.S. at 492-493). As a corollary, the Court said that the effectiveness of treble-damage actions as a deterrent would be substantially reduced if indirect purchasers were allowed to sue. The Court reasoned that if effective measures for allocating overcharges in the chain of distribution could be fashioned, recoveries by indirect purchasers would diminish the damages recoverable by direct purchasers, but since the ultimate victims of the illegal charge, consumers, would have only a tiny stake in a lawsuit and little incentive to sue, the overall deterrent would be reduced (id. at 494; see also Illinois Brick, 431 U.S. at 725-726). Subsequently, in Illinois Brick, indirect purchasers sought to use the "pass-on" theory offensively. The Court acknowledged that indirect purchasers may come within the language of Section 4 of the Clayton Act, but it nevertheless denied recovery (431 U.S. at 746-747). Citing its prior rule should govern offensive and defensive pass-on theories rather than overrule it, citing state decisis (431 U.S. at 736-737) and the "absence of a convincing demonstration that the Court was wrong in Hanover Shoe" with respect to deterrence (id. at 729). The Court indicated, however, that passing-on theories might be permitted in cases in which market forces had been superseded, such as those involving preexisting cost-plus contracts or a direct purchaser owned or controlled by its customer (id. at 732 n.12, 736 n.16). 4. The court of appeals in this case discerned from this Court's decisions three policies served by its construction of the Clayton Act "in this context": "(1) avoiding unnecessarily complicated litigation; (2) providing incentives to direct purchasers to bring private damages actions; and (3) avoiding multiple liability for defendants" (J.S. App. A20-A21). The court concluded that these policies are impermissibly infringed by the state statutes. A policy -- invoked in construing a federal statute -- against complicating litigation is not a basis for finding preemption of a state statute in the absence of an affirmative indication that Congress intended to force such a policy on the States. This Court was justifiably reluctant in Illinois Brick and Hanover Shoe to accept a construction of the Clayton Act that would result in complication of federal proceedings, but the reluctance stemmed from general concerns about complexity and judicial economy, not from any identifiable anti-complexity policy of the Clayton Act. State legislatures cannot lose their power to enact antitrust remedies merely because those remedies may make proceedings more complex than the judiciary would prefer. /15/ The policy against undercutting the incentives of potential plaintiffs to bring Sherman Act suits raises much more legitimate preemption concerns. /16/ A state statute that squarely undermined those incentives might frustrate the federal scheme and be preempted. But that is not the case here. Direct purchasers' entitlement under federal law to recover overcharges that they paid, without a deduction for passed-- on overcharges, cannot be affected by state indirect-purchaser statutes. /17/ Those statutes merely give additional plaintiffs the right to sue the defendants for additional sums, thus enhancing the deterrence of antitrust violations. Finally, this Court in Hanover Shoe and Illinois Brick invoked a policy against duplicative recoveries. We assume for the purpose of analysis that some or all of the indirect purchasers' claims in this case are duplicative of direct purchasers' claims. /18/ We submit, however, that there is nothing in the Clayton Act that deprives the States of the power to permit such recoveries. Congress has established no policy against requiring an antitrust defendant to pay state and federal penalties cumulating to more than three times the total overcharge. Indeed, under federal law alone a defendant may be required to pay criminal fines in addition to treble damages. E.g., New York v. Hendrickson Bros., 840 F.2d 1065, 1086 (2d Cir. 1988). /19/ And under ordinary principles of preemption, state penalties that are more onerous than federal penalties are not precluded in the absence of evidence of a congressional intention to preclude them. California v. Zook, 336 U.S. 725, 736 (1949); Agency Rent-A-Car, Inc. v. Connolly, 686 F.2d 1029, 1037, 1039 (1st Cir. (1982). Although a single plaintiff usually will not be able to claim damages under federal and state law for the same injury, /20/ nothing in federal law protects defendants from having to pay damages equal to more than (or more than three times) their total overcharges in order to compensate a plaintiff a State chooses to protect as well as the plaintiffs who may recover under federal law. The state indirect-purchaser statutes therefore do not create such an "irreconcilable conflict" (Rice v. Norman Williams Co., 458 U.S. at 659) with the policies enunciated in Illinois Brick that the state remedies can be said to frustrate the intended operation of the remedial scheme of the Clayton Act. /21/ To be sure, allowing such duplicative recoveries will be a harsh result for the defendants in cases in which such duplicative recoveries are actually obtained. Our own view is that the Court was wise in Illinois Brick, 431 U.S. at 731 n.11, to deem "not * * * acceptable" within the federal shceme itself the risk of multiple recoveries in a case in which no legislature had clearly provided for such recoveries. But the legislatures of the States are entitled to find acceptable that which this Court, in construing a federal statute, finds unacceptable, so long as they do not flout the will of Congress. And it appears that the legislatures of California, Minnesota, Alabama, and perhaps Arizona think it better that there might be multiple recovery in some cases than that they and their citizens go uncompensated for economic injuries. /22/ Congress has done nothing to prevent those legislatures from supplementing the remedial scheme of the federal antitrust laws. In these circumstances, there is no basis for a conclusion that the Clayton Act preempts state indirect-purchaser statutes. The lower courts cited no direct evidence -- and we are aware of none -- to indicate that Congress in enacting Section 4 of the Clayton Act had any intention of limiting the freedom of the States to adopt additional damage remedies for conduct prohibited by state as well as federal law. Nor is there any reason to conclude that damage claims by indirect purchasers would so frustrate the intended operation of the federal antitrust laws that they must be prohibited. facts of the case." R. Stern, E. Gressman & S. Shapiro, Supreme Court CONCLUSION Probable jurisdiction should be noted. Respectfully submitted. CHARLES FRIED Solicitor General CHARLES F. RULE Assistant Attorney General LOUIS R. COHEN Deputy Solicitor General KENNETH G. STARLING Deputy Assistant Attorney General ROY T. ENGLERT, JR. Assistant to the Solicitor General CATHERINE G. O'SULLIVAN ANDREA LIMMER Attorneys JUNE 1988 /1/ See Cal. Bus. & Prof. Code Section 16750(a) (West 1987 & Supp. 1988) (action to recover "three times the damages sustained * * * may be brought by any person who is injured in his business or property * * * regardless of whether such injured person dealt directly or indirectly with the defendant"); Minn. Stat. Ann. Section 325D.57 (Supp. 1988) ("(a)ny person * * * injured directly or indirectly * * * shall recover three times the actual damages sustained"); Ala. Code Section 6-5-60(a) (1975) ("(a)ny person * * * injured or damaged by an unlawful trust, combine or monopoly, or its effect, direct or indirect, may, in each instance of such injury or damage, rocover the sum of $500.00 and all actual damages"). The California and Minnesota statutes were enacted in response to this Court's decision in Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977). See Union Carbide Corp. v. Superior Court, 36 Cal. 3d 15, 19, 679 P.2d 14, 16, 201 Cal. Rptr. 580, 582 (1984). /2/ Ariz. Rev. Stat. Ann. Section 44-1408 (1987) provides that the State or any other person "threatened with injury or injured in his business or property by a violation of this article may bring an action for * * * amages sustained." /3/ The district court also certified a class of entities that purchased ready-mix concrete for delivery within the State of Arizona (J.S. App. A3). /4/ The States also asserted that, since the release of state indirect-purchaser claims had formed part of the inducement of the defendants to settle, indirect purchasers should not, as a matter of contract law, be precluded from sharing in the settlement fund. The court of appeals rejected that claim (J.S. App. A25-A26), and it is not at issue on this appeal. /5/ The decision of the court of appeals invalidates, under the Supremacy Clause, the state indirect-purchaser statutes at least as applied to this case. "(I)t is sufficient for Section 1254(2) appeal purposes that the state law was held unconstitutional as applied to the Practice 52 (6th ed. 1986) (citing Dutton v. Evans, 400 U.S. 74, 76 n.6(1970); Malone v. White Motor Corp. 435 U.S. 497, 499 (1978)). This case is not like Silkwood v. Kerr-McGee Corp., 464 U.S. 238 (1984), and California Coastal Comm'n v. Granite Rock Co., No. 85-1200 (Mar. 24, 1987), in which the Court held that it lacked appellate jurisdiction, where lower courts had invalidated state actions taken pursuant to state statutes but, in each case, "the statute * * * (had been) left untouched" (Silkwood, 464 U.S. at 247). /6/ Crown Oil Co. v. Superior Court, 177 Cal. App. 3d 604, 223 Cal. Rptr. 164 (1986), appeal dismissed, No. 86-287 (Oct. 14, 1986). State indirect-purchaser statutes also were assumed to be valid, without any mention of preemption, in In re Chicken Antitrust Litigation, 669 F.2d 228, 238-239 (5th Cir. 1982), and were stated in dicta not to be preempted in In re Sugar Antitrust Litigation, 588 F.2d 1270, 1273 (9th Cir. 1978), cert. denied, 441 U.S. 932 (1979). The preemption question was discussed but not resolved in Union Carbide Corp. v. Superior Court, 36 Cal. 3d at 24 & n.3, 679 P.2d at 20 & n.3, 201 Cal. Rptr. at 586 & n.3. /7/ See Note, Indirect Purchaser Suits Under State Antitrust Laws: A Detour Around the Illinois Brick Wall, 34 Stan. L. Rev. 203 (1981); Note, State Indirect Purchaser Statutes: The Preemptive Power of Illinois Brick, 62 B.U.L. Rev. 1241 (1982); Floyd, Control of Break-Away State Antitrust Litigation: An Issue of Federalism, 35 Hastings L.J. 1, 16 & n.107, 45 (1983); Comment, The California Legislature Steers the Antitrust Cart Right off the Illinois Brick Road, 11 Pac. L.J. 121, 126-127 (1979). /8/ At least 12 other jurisdictions have indirect-purchaser statutes like those of California, Minnesota, and Alabama, that expressly give indirect purchasers standing to sue. Colo. Rev. Stat. Section 6-4-106 (1974 & Supp. 1987); D.C. Code Ann. Section 28-4509(a) (1981); Hawaii Rev. Stat. Section 480-14 (1984); Ill. Ann. Stat. ch. 38 Paragraph 60-7 (Smith-Hurd Supp. 1988); Kan. Stat. Ann. Section 50-801(b) (Supp. 1987); Md. Com. Law Code Ann. Section 11-209 (1983 & Supp. 1987); Mich. Comp. Laws Ann. Section 445-778 (West Supp. 1987); Miss. Code Ann. Section 75-21-9 (1973); N.M. Stat. Ann. Section 57-1-3(A) (Supp. 1987); R.I. Gen. Laws Section 6-36-12(g) (1985); S.D. Codified Laws Ann. Section 37-1-33 (1986); Wis. Stat. Ann. Section 133.18 (West Supp. 1987). Other jurisdictions have statutes, like that of Arizona, that could be interpreted to permit indirect purchaser suits, but they generally appear to be interpreted to preclude recovery by indirect purchasers, following this Court's reasoning in Illinois Brick. See In re Wiring Device Antitrust Litigation, 498 F. Supp. 79, 87 (E.D.N.Y. 1980) (construing South Carolina law); Russo & Dubin v. Allied Maintenance Corp., 95 Misc. 2d 344, 407 N.Y.S.2d 617 (Sup. Ct. 1978); Commonwealth of Massachusetts v. Massachusetts CRINC, 1984-1 Trade Cas. (CCH) Paragraph 66,057, at 68,684 n.7 (Mass. 1984); Keating v. Philip Morris, Inc., 417 N.W.2d 132, 136 (Minn. Ct. App. 1987) (following Illinois Brick in suits based on pre-1984 statute that did not contain express indirect-purchaser provision); see also Tip Top Farms, Inc. v. Park Lane Dairies, Inc., 114 A.D.2d 12, 16, 497 N.Y.S.2d 99, 101 (1985) (dismissing indirect purchasers' suits based on "breach of contract or for money had and received" by indirect purchasers against direct purchasers who had recovered antitrust damages, reasoning that "recovery would undermine overriding Federal antitrust policies"), aff'd, 69 N.Y.2d 625, 503 N.E. 2d 692, 511 N.Y.S.2d 227 (1986), cert. denied, No. 86-1484 (Apr. 27, 1987). /9/ In 1890, 21 States had their own antitrust laws. Mosk, State Antitrust Enforcement and Coordination with Federal Enforcement, A.B.A. Sec. Antitrust L. Proc., Aug. 6-10, 1962, at 358, 363. /10/ Indeed, as appellants observe (J.S. 14-116), Congress apparently has approved an indirect-purchaser statute enacted by the District of Columbia. /11/ Indeed, the States generally may adopt standards of conduct that are more or less exacting than those mandated by federal law, unless the result is a frustration of the federal scheme. See Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. at 141-142 (State may impose more stringent standards for gauging the maturity of avocados for shipment within its borders); Exxon Corp. v. Governor of Maryland, 437 U.S. 117 (1978) (potential conflict between State-imposed gasoline marketing requirements and Robinson-Patman Act, in that State might ban what federal law permits, is insufficient to nullify state regulation); CTS Corp. v. Dynamics Corp. of America, slip op. 11 & n.7 (more onerous state regulations of tender offers that do not "alter the balance * * * in any significant way" are not preempted). /12/ Even when the regulation of conduct is at issue, the line of "state action" cases beginning with Parker v. Brown, supra, holds that the Sherman Act does not deprive States of their power to enact statutes that displace competition altogether, even though the core policy of the Sherman Act is to promote competition. See, e.g., Hoover v. Ronwin, 466 U.S. 558, 567-568 (1984) ("under the Court's rationale in Parker, when a state legislature adopts legislation, its actions constitute those of the State * * * and ipso facto are exempt from the operation of the (federal) antitrust laws"). Given this latitude to depart from even the core procompetitive policy of the Sherman Act, it is anomalous to suggest that States must invariably conform to particular policies that this Court has invoked in determining the scope of federal remedies for antitrust violations. /13/ 15 U.S.C. (Supp. IV) 4303(c) provides: Notwithstanding any provision of any State law providing damages for conduct similar to that forbidden by the antitrust laws, any person who is entitled to recovery on a claim under such provision shall not recover in excess of the actual damages sustained * * * . /14/ 15 U.S.C. 4016(a) provides: Except as provided in subsection (b) of this section, no criminal or civil action may be brought under the antitrust laws against a person to whom a certificate of review is issued * * * . 15 U.S.C 4002(a)(7) defines "antitrust laws" to include "any State antitrust or unfair competiton law." /15/ In any event, as the court of appeals acknowledged (J.S. App. A21-A22), indirect-purchaser claims based on state law would not complicate federal damage claims if they were brought in state court. And even if they were joined with federal claims, the federal courts could decline to excericse pendent jurisdiction if the state claims posed significant additional burdens. United Mine Workers v. Gibbs, 383 U.S. 715, 725-726 (1966). /16/ The court of appeals misdescribed this Court's objective as "providing incentives to direct purchasers to bring private damages actions" (J.S. App. A20-A21 (emphasis added)). This Court's objective was to minimize the number of antitrust violations that would go unpunished because no one had a sufficient incentive to sue, and the Court determined that allowing direct purchasers to recover for all overcharges, including those they had passed on to indirect purchasers, would serve that goal better than would allowing the use of both offensive and defensive passing-on theories. See generally Hanover Shoe, 392 U.S. at 494; Illinois Brick, 431 U.S. at 746-747. If the Court had thought otherwise -- i.e., had concluded that the deterrent objectives of the antitrust laws would be best served by allowing the use of passing-on theories -- it presumably would not have cared that "incentives to direct purchasers" to sue were thereby lessened. /17/ No one has suggested that the state statutes at issue in this case would be construed to allow a passing-on defense in an action in which a direct purchaser asserts its federal-law right to recover treble damages, or to take away from the direct purchaser and give to the indirect purchaser a portion of the recovered damages that is attributable to passed-on overcharges. If any statute were so construed, it would be preempted as so applied. See Note, supra, 34 Stan. L. Rev. at 208 n.24. #FN18 /18/ The computation is complicated in this case because it was not litigated to conclusion but was settled. Appellants argue that any multiple-liability issue dropped out of the case once the defendant's liability became fixed (J.S. 19) and that the failure of certain direct purchasers to come forward to claim their shares of the settlement fund means at the least that honoring claims based on the corresponding indirect purchases would present no issue of duplicative recovery (J.S. 18). In our view, however, the sounder analysis requires the Court to meet head on the question whether the state statutes are valid even if applied to permit different plaintiffs to recover for the same over-charges. This was a class action. Every direct purchaser was a member of one of the plaintiff classes certified and had a right to share in the settlement fund, and every claim based on an indirect purchase necessarily overlapped with a valid claim that could have been made against the fund. Nor did the fact of settlement, by fixing the defendants' total liability, render the existence of overlapping claims irrelevant. The settlement, as construed by the court of appeals (see J.S. App. A26), left open the question whether the indirect purchasers' claims were valid. If those claims were invalid ab initio because they overlapped with direct purchasers' claims, the settlement cannot have made them valid. /19/ See Clayton Act Section 5, 15 U.S.C. 16(a) (criminal conviction can be used as prima facie evidence of antitrust violation in subsequent civil suit); see also 18 U.S.C. (Supp. IV) 3623(c)(1) (repealed effective Nov. 1, 1987) (authorizing criminal penalties amounting to twice the defendant's pecuniary gain or twice the victim's pecuniary loss). /20/ A single plaintiff can recover from a defendant on multiple damage theories, although he cannot obtain a "double recovery" for any one injury. See McDonald v. Johnson & Johnson, 722 F.2d 1370, 1381 (8th Cir. 1983) (en banc) (conpensatory damages for antitrust, fraud, and breach of contract claims were not impermissibly duplicative but punitive damages on fraud count were disallowed because deemed duplicative of statutory trebled damages), cert. denied, 469 U.S. 870 (1984); Woods Exploration & Producing Co. v. Aluminum Co. of America, 438 F.2d 1286, 1314-1315 (5th Cir. 1971) (recovery in federal antitrust suit bars recovery in state antitrust suit since former compensated plaintiff for total harm suffered), cert. denied, 404 U.S. 1047 (1972); 1047 (1972); Colorado v. Asphalt Paving Co., 1987-1 Trade Cas. (CCH) Paragraph 67,473 (D. Colo. 1987) (State cannot recover damage for bid rigging under both federal and state antitrust laws); Wynn Oil Co. v. Purolator Chemical Corp., 403 F. Supp. 226, 231 (M.D. Fla. 1974) (affirming award for treble damages under Sherman Act as well as compensatory and punitive damages under state contract and tort laws); California v. National Ass'n or Realtors, 1981-1 Trade Cas. (CCH) Paragraph 64,102, at 76-647-76,648 & n.7 (Cal. Ct. App. 1981) (multiple claims under separate state statutes permitted as long as duplicative damages were not recovered on both claims). /21/ We agree with the student commentator who wrote (Note, supra, 34 Stan. L. Rev. at 212 (footnotes omitted)): In declining to allow duplicative recovery, the Court (in Illinois Brick) was simply unwilling to go beyond section 4 of the Clayton Act, which authorizes only the award of treble damages. This decision does not prevent duplicative recovery; rather, it states the more limited policy of permitting only one treble damage recovery under the federal law. The decision not to permit duplicative recovery, therefore, was simply a matter of interpretation of a federal antitrust statute. The majority opinion in Illinois Brick properly identified itself as a decision "in the area of statutory construction" involving "this Court's interpretation of (Congress's) legislation." The decision to avoid duplicative recovery and the complementary decision to deny indirect purchasers a cause of action were based on federal policy considerations and are limited in their effect to the federal law. Noting in the Illinois Brick decision established a federal policy of preventing indirect purchaser suits under state law. 4##FN22 /22/ Of course, it is possible that the States' indirect-purchaser statutes might be construed, as a matter of state-law statutory interpretation rather than federal preemption, to deny indirect purchasers any recovery that would duplicate a direct purchaser's recovery. The court of appeals, however, did not address any such questions of state statutory construction (J.S. App. A24), nor do we.