Opinion
96 Civ. 5716 (LLS).
July 12, 2000
Opinion and Order
I. Background
Plaintiff Information Resources, Inc. ("IRI") is a Delaware corporation headquartered in Chicago. It provides retail tracking services to manufacturers who sell consumer goods in the United States. Retail tracking services:
. . . involve the continuous collection of data on the sale of consumer packaged goods. From this data, retail tracking services suppliers produce estimates of trends in sales of product categories and brands, by relevant geographic region for each product category being tracked.
In short, a retail tracking service is the provision of information to manufacturers and retailers of consumer goods concerning turnover, market share, pricing and other aspects of the sale of fast moving consumer goods and analysis of that information to reveal market trends, business conditions, and the like.
Def.'s 56.1 Statement ¶¶ 2-3.
Additionally, IRI participates in offering retail tracking services through its subsidiaries and joint ventures in France (where it owns an 89% interest in a corporation formed pursuant to a joint venture agreement), Germany (where it owns a 51% interest in a corporation formed pursuant to a joint venture agreement), Great Britain (where it owns an 87% interest in a corporation formed pursuant to a joint venture agreement), Italy (where two holding companies wholly owned by IRI operate a subsidiary), the Netherlands (where it owns a 51% interest in a company formed pursuant to a joint venture agreement), and Sweden (where it owns an 8% interest in a corporation formed pursuant to a joint venture agreement).
IRI either has "strategic partnerships" or "relationships" with companies offering retail tracking services in a variety of other nations in which it claims antitrust injury, but has no ownership interest in the foreign concerns, despite some attempts to purchase a company already doing business in the foreign market in order to provide retail tracking services in that market. IRI has made plans to enter additional markets.
In those six nations in which IRI participates through a joint venture or a subsidiary, it is the subsidiary or joint venture which enters into agreements with the clients for provision of services (Pl.'s Rule 56.1 Statement ¶ 27) and negotiates for the acquisition of local data (id. ¶ 28). The subsidiary or joint venture obtains the scanning data directly from the clients. Id. ¶ 29. Raw data is then loaded onto computers in the offices of the subsidiaries or joint ventures. Id. at ¶ 31. That data is then transmitted to IRI in the United States, where it is "normalized" (id. ¶ 33), put onto IRI's computers (id. ¶ 33), and processed (id. ¶ 40). The processed data is generally then sent directly back to the subsidiary or joint venture. Id. ¶ 45. The subsidiary or joint venture then delivers the customer report directly to the client. Id. ¶ 50.
Defendant A.C. Nielsen Company ("Nielsen") is an operating unit of defendant Dun Bradstreet, offering retail tracking services in the United States, and in at least 80 foreign countries.
IRI contends in this lawsuit that Nielsen engaged in anticompetitive activity by applying "favorable pricing conditions if Nielsen's services were purchased in a considerable number of countries, including, at least, one country where IRI was present." Pl.'s Mem. at 5. For purposes of this motion, Nielsen does not contest this allegation.
In this motion for partial summary judgment, defendants argue that (1) IRI lacks standing to sue for injuries suffered in foreign markets, because the injury was actually suffered by its subsidiaries and joint ventures; and (2) this court lacks jurisdiction under the Foreign Trade Antitrust Improvements Act of 1982, 15 U.S.C. § 6 (a) (1997) ("FTAIA"), to hear such claims in any event, because the foreign activities of which IRI complains are beyond the reach of United States antitrust laws.
II. Standing
"`Merely derivative injuries sustained by employees, officers, stockholders, and creditors of an injured company do not constitute "antitrust injury" sufficient to confer antitrust standing.'" G.K.A. Beverage Corp. v. Honickman, 55 F.3d 762, 766 (2d Cir. 1995), quotingSouthwest Suburban Bd. of Realtors, Inc. v. Beverly Area Planning Ass'n, 830 F.2d 1374, 1378 (7th Cir. 1987).
IRI argues that although nominally independent, its subsidiaries and joint ventures operate with IRI to provide a unitary service which could not be performed without IRI's role. Further, IRI contends that the injury it suffers in the form of diminished demand for its services is cognizable under United States antitrust laws because it is directly and intentionally caused by defendants' anticompetitive activities.
In Associated General Contractors of California v. California State Council of Carpenters, et. al., 103 S.Ct. 897, 908-10 (1983), the Supreme Court weighed "factors that circumscribe and guide the exercise of judgment in deciding whether the law affords a remedy in specific circumstances." Id. at 908. It considered the nature of the plaintiff's alleged injury and its relationship to the antitrust violation, whether the injury is of a type which Congress sought to redress in the antitrust laws, whether the injury is direct or indirect, whether there is ". . . an identifiable class of persons whose self-interest would normally motivate them to vindicate the public interest in antitrust enforcement . . ." thereby diminishing the justification of suit by a more remote plaintiff, the degree of speculation or complex apportionment involved in the claim for damages, and the potential for multiple liability of the defendant should another plaintiff bring suit. The Court concluded ( 103 S.Ct. at 912):
We conclude, therefore, that the Union's allegations of consequential harm resulting from a violation of the antitrust laws, although buttressed by an allegation of intent to harm the Union, are insufficient as a matter of law. Other relevant factors — the nature of the Union's injury, the tenuous and speculative character of the relationship between the alleged antitrust violation and the Union's alleged injury, the potential for duplicative recovery or complex apportionment of damages, and the existence of more direct victims of the alleged conspiracy — weigh heavily against judicial enforcement of the Union's antitrust claim.
A similar analysis of this case follows.
1. Consequential Harm and Intent to Injure
For purposes of this motion, defendants concede a causal connection between the alleged antitrust violation and the harm to the plaintiff, as well as their intent to injure IRI. Def.'s Mem. at 12.
2. Directness of Injury
IRI contends that it is a competitor of defendants in the foreign markets, while defendants argue that the foreign subsidiaries and joint ventures of IRI, not IRI itself, are the competitors.
Defendants have the better of the argument. IRI is the supplier of data services to its joint ventures and subsidiaries, who are the direct participants in the foreign markets. They find the foreign clients, obtain the data from these clients, and deliver the completed reports to them. Unlike the plaintiff farmers in Amarel v. Connell, 102 F.3d 1494 (9th Cir. 1996) who participated directly in the injured mills' profits, IRI does not participate directly in the profits of the foreign companies. Those companies pay IRI for its data processing services pursuant to contracts, and IRI is one of the joint venturers by whom the companies are owned, but neither of those facts makes IRI a direct participant in the market of foreign retail tracking services.
In G.K.A. Beverage, the court held that terminated softdrink distributors did not have standing to sue those who conspired to monopolize the bottling industry and bankrupted their bottler ( 55 F.3d 762, 766-67):
We believe that the distributors do not have standing to bring an antitrust claim against defendants because the distributors have not alleged an antitrust injury . . . It follows naturally that a party in a business relationship with an entity that failed as a result of an antitrust violation has not suffered the antitrust injury necessary for antitrust standing . . .
Although the distributors undoubtedly suffered injury as a result of the alleged antitrust violation, the injury suffered by the distributors is derivative of the injury suffered by Seven Up Brooklyn [the bottler].
Here, too, IRI's injury, while real, is derivative of the injury suffered by its foreign joint ventures and subsidiaries.
IRI's supplies of processing services and finished data reports to its foreign affiliates do not give it antitrust standing. 2 AREEDA HOVENKAMP, ANTITRUST LAW § 375(d) at 302 (1995); see also, Crimpers Promotions, Inc. v. Home Box Office, et. al., 724 F.2d 290, 294 (2d Cir. 1983) (distinguishing "a `supplier' of a competitor, to whom standing is generally denied.")
Blue Shield of Virginia v. McCready, 102 S.Ct. 2540 (1982) is of no help to IRI. McCready's injury was direct, for she was the person to whom reimbursement of her psychologist's bills was refused, by the antitrust conspirator, as part of its boycott of psychologists.
3. Identifiable Class of Self-Interested Parties
The subsidiaries and joint ventures are an "identifiable class of persons whose self-interest would normally motivate them to vindicate the public interest in antitrust enforcement . . ." This diminishes the justification for suit by IRI, a more remote party. Injuries sustained by the subsidiaries and joint ventures are direct and, as stated inAssociated General, 103 S.Ct. at 910-11:
. . . they would have a right to maintain their own treble-damages actions against the defendants. An action on their behalf would encounter none of the conceptual difficulties that encumber the Union's claim. The existence of an identifiable class of persons whose self-interest would normally motivate them to vindicate the public interest in antitrust enforcement diminishes the justification for allowing a more remote party such as the Union to perform the office of a private attorney general. Denying the Union a remedy on the basis of its allegations in this case is not likely to leave a significant antitrust violation undetected or unremedied.
In fact, there is some evidence in the briefs that the foreign affiliates are considering such a suit. Def.'s Mem. at 13, fn. 8.
4. Uncertain or Speculative Damages
Although neither party addresses this point in detail in its briefs, the defendants claim "[a]ny damages flowing to IRI are speculative because they require measurement first of the impact on its foreign affiliates and second the derivative impact on IRI." Def.'s Mem. at 13. It would probably be feasible, however, to calculate IRI's damages with the relaxed degree of precision required for computations of lost revenues in antitrust cases, and this factor is of little weight.
5. Multiple Recoveries
IRI's subsidiaries and joint ventures abroad suffer the primary injury from defendants' activities. If they sue on their own behalf, allowing IRI to recover on its derivative claims could result in double recoveries (each to be trebled) against the defendants. * * * * *
From the submissions, there seems little doubt that inflicting competitive injury on IRI was a goal and purpose of defendants' alleged activities, and that the economic connection between the alleged violations and the effect on IRI is linear and short; nevertheless the fact that the primary injury fell on the foreign companies (who have rights to sue for whatever remedies the law applicable to them provides), together with the factors discussed above, leaves IRI without standing to sue for its derivative injuries.
The foregoing discussion disposes of the issues raised by the motion, and renders it unnecessary to address defendants' alternative ground for dismissal: that this court lacks jurisdiction under the FTAIA. If the foreign subsidiary and joint venture corporations sue, the question of United States jurisdiction may arise; until then, its determination would be advisory.
Conclusion
Defendants' motion for partial summary judgment is granted. IRI's claims of injury suffered from defendants' activities in foreign markets where IRI operates through subsidiaries or companies owned by joint ventures, or "relationships" with local companies, are dismissed.
So ordered.