Opinion
No. 99-3491, MDL 00-1311
August 24, 2001
CLASS ACTION MEMORANDUM AND ORDER
This antitrust class action is brought under Wisconsin law. Plaintiff, on behalf of a class of indirect purchasers. alleges that defendants engaged in a 15-year conspiracy to fix the price of methionine. Domestic defendants have moved for summary judgment on the ground that plaintiff West Bend Elevator, Inc. lacks standing. In particular, they contend that because West Bend "passed along" the entire overcharge to its customers it was not injured by the alleged price-fixing conspiracy. They also argue that the indirect purchaser plaintiff class does not have standing to recover "full consideration" damages, that is, the amount they paid for the methionine-containing product. Finally, they move for summary judgment of West Bend's claim for injunctive relief. After carefully considering the papers submitted by the parties, and having had the benefit of oral argument, defendants' motion for summary judgment is GRANTED in part and DENIED in part.
BACKGROUND
West Bend is a Wisconsin grain elevator and feed mill. It buys and resells synthetic methionine and synthetic methionine-containing products. Nearly all the methionine that West Bend resells is purchased from Vita Plus Corporation. During the relevant class period Vita Plus purchased synthetic methionine from other resellers. Vita Plus also purchased Mepron (encapsulated methionine) directly from defendant Degussa Corporation and resold it to West Bend. West Bend resold the methionine to its customers who raise livestock and tend dairy in Wisconsin. West Bend also operates a hog farm. It alleges that during a year and half period, from January 1985 through June 1986, West Bend's hog farm purchased methionine-containing feed from Vita Plus.
DISCUSSION
A. Antitrust Injury
Under the Wisconsin antitrust statute plaintiffs must prove, among other things, that plaintiffs were injured by the alleged price-fixing conspiracy. See Jauquet Lumber Co., Inc. v. Kolbe Kolbe Millwork Co., Inc., 476 N.W.2d 305, 310 (Wis.App., 1991) ("Wisconsin's law requires the plaintiff to demonstrate actual injury); Wisc. Stats. § 133.18 ("any person injured, directly or indirectly, by reason of anything prohibited by this chapter may sue therefore and shall recover threefold the damages sustained by the person.").
Defendants contend that "[t]o demonstrate an injury in fact, an indirect purchaser plaintiff must show that it absorbed the overcharges that were passed on to it by wholesalers, retailers and others above him in the chain of distribution." Defendants argue that West Bend has admitted that it "passed along" the entire price of methionine, including any overcharge, to its customers. and as result it has not suffered any antitrust injury.
Defendants' interpretation of what is required to show "actual injury" is not supported by the Wisconsin statute or the caselaw. The statute only requires that a plaintiff, including an indirect purchaser, prove "injury;" it does not require a plaintiff to prove injury by proving that it somehow "absorbed" the overcharge. The Court is not persuaded otherwise by the cases cited by defendants. McCarter v. Abbott Laboratories, Inc., No. CV-91-050 (Alabama Cir. Ct. April 14, 1993) is an unpublished decision applying Alabama law. "The plaintiffs sought to certify a class of purchasers of baby formula, including those who purchased the formula from a vendor other than the defendants. for example. parents who purchased the formula from a supermarket or similar retail outlet. In its order denying class certification the court focused on individual questions related to the ultimate consumer class members, and in particular, the individual inquiry required to determine whether the increased price in baby formula was passed on from the direct purchasers to the ultimate consumers.
The McCarter court s emphasis on whether the overcharge was passed along to the ultimate consumer plaintiffs is unsurprising. With respect to such a class — ultimate users — there is no other way for the plaintiffs to suffer injury. West Bend, in contrast to the McCarter plaintiffs, is not an ultimate consumer — it is a reseller. The anti-competitive conspiracy could still injure West Bend even if it ultimately passed along the entire overcharge. For example. West Bend's higher prices could reduce sales or profit margins, or cause West Bend to lose customers to competitors. See B.W.I. Custom Kitchen v. Owens-Illinois, 191 Cal.App.3d 1341, 1353 (1987) (stating that "even if a plaintiff has passed on the entire overcharge, he or she is not per se precluded from otherwise proving injury. For example. even though the entire overcharge has been passed on. the plaintiff may have lost a percentage share of the market or otherwise suffered reduced sales."). The other case cited by defendants, In Re Brand Name Prescription Drugs, 1994 WL 663590 (N.D. Ill. 1994), does not support defendants' argument for the same reason. Thus, the mere fact that West Bend did not absorb the overcharge does not mean that it did not suffer any antitrust injury.
In their reply and at oral argument defendants urged the Court to grant summary judgment on the ground that West Bend has not produced evidence sufficient to permit a reasonable trier of fact to find that West Bend had been injured as a result of lost profits or otherwise. Defendants' motion for summary judgment, however, is premised on its argument that West Bend had not suffered any injury because it passed along the overcharges; they did not move for summary judgment on the ground that West Bend could not produce any evidence of an injury. Accordingly. defendants' motion for summary judgment on the ground that West Bend's passing along the overcharge precludes it from proving injury must be denied.
B. Full Consideration Damages
West Bend seeks "full consideration" damages. that is, it seeks to recover the full purchase price the plaintiff class paid for methionine and recover that amount directly from defendants, even though they did not purchase the methionine from defendants. Defendants contend that the plaintiff class, as indirect purchasers, may not recover such damages.
The relevant Wisconsin statute provides as follows:
133.14. Illegal contracts void: recovery
All contracts or agreements made by any person while a member of any combination or conspiracy prohibited by s. 133.03, and which contract or agreement is founded upon, is the result of, grows out of or is connected with any violation of such section, either directly or indirectly, shall be void and no recovery thereon or benefit therefrom may be had by or for such person. Any payment made upon, under or pursuant to such contract or agreement to or for the benefit of any person may be recovered from any person who received or benefitted from such payment in an action by the party making any such payment or the heirs, personal representative or assigns of the party.
Defendants contend that the plain language of the statute only voids contracts made by a person "while a member of any [antitrust conspiracy];" thus, in order to recover under this statute a plaintiff must have a contract with a defendant member of the conspiracy.
West Bend responds that under section 133.14 "all contracts for the sale of goods whose price is affected by anti-competitive conduct are void" and therefore the indirect purchasers' contracts with direct purchasers (or other indirect purchasers) are void. They also contend that under the statute the indirect purchasers may recover the full price they paid for the methionine from defendants even though they did not buy the methionine from defendants.
West Bend's theory is contradicted by the plain and unambiguous language of the statute. The statute refers to all contracts "made by any person while a member of any combination or conspiracy," thus, the statute only speaks to contracts made by a member of the conspiracy, that is, a contract to which a defendant is a party. It then clarifies that not to contracts conspirator, but only those contracts made by the conspirator which are "the result of, grows out of or [are] connected with any violation" of the statute. It nowhere provides that it voids any contract somehow infected by the conspiracy, including contracts to which a member of the conspiracy is not a party. West Bend's theory simply ignores the first phrase of the statute. Accordingly, defendants' motion to strike West Bend's claim for full consideration damages under section 133.14 must be granted.
C. Claim for Injunctive Relief
Defendants also move to strike the claim for injunctive relief on the ground that the complaint itself alleges that the price-fixing conspiracy ended in 1998; thus, there is no conduct to enjoin or restrain. West Bend responds that given the longevity of the conspiracy. and the timing of its demise (upon investigation by the government), there is a need for injunctive relief. As there is no compelling reason for the Court to rule on this issue at this time in the proceedings, the Court will deny defendants' motion for summary judgment of the injunctive relief claim without prejudice.
CONCLUSION
For the foregoing reasons the Court rules as follows:
1. Defendants' motion for summary judgment that West Bend lacks standing because it passed along the overcharge is DENIED;
2. Defendants' motion for summary judgment that West Bend lacks standing to pursue full consideration damages is GRANTED. The demand for full consideration damages is hereby stricken from the complaint.
3. defendants' motion for summary judgment of plaintiff's claim for injunctive relief is DENIED without prejudice.