By: Andrew I. Gavil
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, 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, 431 U.S. 720
(1977). 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., 490 U.S. 93 (1989), it rejected arguments that
Illinois Brick effectively preempted broader state
antitrust remedies.
Illinois Brick was animated by the Court's beliefs that
permitting indirect purchasers to sue would be inconsistent with
its earlier decision in Hanover Shoe, Inc. v. United Shoe
Machinery Corp., 392 U.S. 481 (1968), 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 this Article, I examine the available papers of four of the
Supreme Court justices from this critical period in the evolution
of modern antitrust law and policy. 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, especially its
increased reliance on a particular kind of economic
analysis. After a brief overview of what I call the
“Illinois Brick quartet” in Part II, Part III turns to 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.
Within a week’s time however, five Justices changed their
votes. Seemingly influenced by the leadership and arguments of
Justice Byron White and others, the Court’s initial 6-3 vote to
affirm was transformed into a 6-3 vote to reverse.
Although the papers of the Justices vary greatly in detail, they
do suggest that several factors were of particular importance in
reaching the Court’s result. Clearly, a major change in the
make-up of the Court and a change of judicial attitude toward
antitrust and business was a significant factor. The import of
that change was obscured to some degree owing to the common
leadership of Justice White in drafting the majority decisions in
both Hanover Shoe and Illinois Brick.
Nevertheless, philosophically the two cases are difficult to
reconcile and it seems highly unlikely that the full Hanover Shoe
Court would have decided Illinois Brick the same
way. Leadership within and without the Court also influenced
the outcome in Illinois Brick, with Justice White and a noted
commentator playing important roles in shaping the arguments that
ultimately prevailed. Other factors were also in evidence,
such as the role of the clerks, of the Solicitor General, who
appeared as an amicus, and of the broader readiness of the Court to
strike out in a new direction in antitrust.
Part IV concludes with some observations about what the
Justices’ papers on Illinois Brick reveal about the
process of change at the Supreme Court relative to other decisions
of the time. It also looks at judicial developments subsequent to
Illinois Brick, which suggest that the Court’s continuing
support for the economic reasoning of the case eroded over
time. Finally, I pose a question that bears upon our
understanding of Illinois Brick, but more broadly on the
institutional role that the Supreme Court plays in establishing
national competition policy: what are the sources of the Court’s
economic ideas, and what institutional filters exist to ensure that
the Court embraces sound economic reasoning when it formulates that
policy?