Kansas v. UtiliCorp United Inc.

497 U.S. 199, 110 S. Ct. 2807, 111 L. Ed. 2d 169, 1990 U.S. LEXIS 3293, 58 U.S.L.W. 4898
Supreme Court of the United States·Decided June 21, 1990·No. 88-2109·Published·Cited by 220 cases

Opinions

[203]*203Justice Kennedy

delivered the opinion of the Court.

Section 4 of the Clayton Act, 38 Stat. 731, as amended, 15 U. S. C. § 15, authorizes any person injured by a violation of [204]*204the antitrust laws to sue for treble damages, costs, and an attorney’s fee. We must decide who may sue under § 4 when, in violation of the antitrust laws, suppliers overcharge a public utility for natural gas and the utility passes on the overcharge to its customers. Consistent with Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U. S. 481 (1968), and Illinois Brick Co. v. Illinois, 431 U. S. 720 (1977), we hold that only the utility has the cause of action because it alone has suffered injury within the meaning of § 4.

I

The respondent, UtiliCorp United Inc., an investor-owned public utility operating in Kansas and western Missouri, purchased natural gas from a pipeline company for its own use and for resale to its commercial and residential customers. Together with a second utility and several other gas purchasers, the respondent sued the pipeline company and five gas production companies in the United States District Court for the District of Kansas. The utilities alleged that the defendants had conspired to inflate the price of their gas in violation of the antitrust laws. They sought treble damages, pursuant to §4 of the Clayton Act, for both the amount overcharged by the pipeline company and the decrease in sales to their customers caused by the overcharge.

The petitioners, the States of Kansas and Missouri, initiated separate §4 actions in the District Court against the same defendants for the alleged antitrust violation. Acting as parens patriae, the petitioners asserted the claims of all natural persons residing within Kansas and Missouri who had purchased gas from any utility at inflated prices. They also [205]*205asserted claims as representatives of state agencies, municipalities, and other political subdivisions that had purchased gas from the defendants. The District Court consolidated all of the actions.

The defendants, in their answer, asserted that the utilities lacked standing under §4. They alleged that, pursuant to state and municipal regulations and tariffs filed with state regulatory agencies, the utilities had passed through the entire wholesale cost of the natural gas to their customers. As a result, the defendants contended, the utility customers had paid 100 percent of the alleged overcharge, and the utilities had suffered no antitrust injury as required by § 4.

The utilities moved for partial summary judgment with respect to this defense, and the District Court granted their motion. The court ruled that our decisions in Hanover Shoe and Illinois Brick controlled its interpretation of § 4. It read these cases to hold that a direct purchaser from an antitrust violator suffers injury to the full extent of an illegal overcharge even if it passes on some or all of the overcharge to its customers. The District Court concluded that utilities, as direct purchasers, had suffered antitrust injury, but that their customers, as indirect purchasers, had not.

In light of its ruling, the District Court chose to treat the partial summary judgment motion as a motion to dismiss the petitioners’ parens patriae claims. It then granted this motion but allowed the petitioners to take an interlocutory appeal under 28 U. S. C. § 1292(b). It certified the following question to the Court of Appeals:

“In a private antitrust action under 15 U. S. C. § 15 involving claims of price fixing against the producers of natural gas, is a State a proper plaintiff as parens pa-triae for its citizens who paid inflated prices for natural gas, when the lawsuit already includes as plaintiffs those public utilities who paid the inflated prices upon direct purchase from the producers and who subsequently passed on most or all of the price increase to the citizens [206]*206of the State?” In re Wyoming Tight Sands Antitrust Cases, 695 F. Supp. 1109, 1120 (Kan. 1988).

The Court of Appeals answered the question in the negative. It agreed with the District Court that Hanover Shoe and Illinois Brick required dismissal of the parens patriae claims. See In re Wyoming Tight Sands Antitrust Cases, 866 F. 2d 1286, 1294 (CA10 1989). We granted certiorari to resolve a conflict between this decision and Illinois ex rel. Hartigan v. Panhandle Eastern Pipe Line Co., 852 F. 2d 891 (CA7 1988) (en banc). 493 U. S. 1041 (1990). We now affirm.

II

Section 4 of the Clayton Act provides in full:

“[A]ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney’s fee.” 15 U. S. C. § 15(a).

As noted by the District Court and the Court of Appeals, we have applied this section in two cases involving allegations that a direct purchaser had passed on an overcharge to its customers.

In Hanover Shoe, Inc. v. United Shoe Machinery Corp., supra, Hanover alleged that United had monopolized the shoe manufacturing machinery industry in violation of § 2 of the Sherman Act, 26 Stat. 209, as amended, 15 U. S. C. § 2. It sought treble damages under §4 of the Clayton Act for overcharges paid in leasing certain machinery from United. United defended, in part, on the ground that Hanover had passed on the overcharge to its customers and, as a result, had suffered no injury. We rejected the defense for two reasons. First, noting that a wide range of considerations may influence a company’s pricing decisions, we concluded that [207]*207establishing the amount of an overcharge shifted to indirect purchasers “would normally prove insurmountable.” 392 U. S., at 493. Second, we reasoned that a pass-on defense would reduce the effectiveness of § 4 actions by diminishing the recovery available to any potential plaintiff. See id., at 494.

In Illinois Brick Co. v. Illinois, 431 U. S. 720 (1977), we applied these considerations to reach a similar result. The State of Illinois sued Illinois Brick and other concrete block manufacturers for conspiring to raise the cost of concrete blocks in violation of § 1 of the Sherman Act, 26 Stat. 209, as amended, 15 U. S.

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Kansas v. UtiliCorp United Inc., 497 U.S. 199, 110 S. Ct. 2807, 111 L. Ed. 2d 169, 1990 U.S. LEXIS 3293, 58 U.S.L.W. 4898 (1990).

497 U.S. 199 (Kansas v. UtiliCorp United Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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