Stotter & Co. v. Amstar Corp.

579 F.2d 13
CourtCourt of Appeals for the Third Circuit
DecidedMarch 6, 1978
DocketNos. 77-1555 and 77-2606
StatusPublished
Cited by6 cases

This text of 579 F.2d 13 (Stotter & Co. v. Amstar Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Stotter & Co. v. Amstar Corp., 579 F.2d 13 (3d Cir. 1978).

Opinions

OPINION OF THE COURT

WEIS, Circuit Judge.

In this antitrust action it is alleged that defendant refiners of sugar have engaged in a conspiracy to fix the price of that product. At least two of the defendants use the sugar to manufacture candy which they sell to the plaintiff wholesaler. The question raised in this appeal is whether the plaintiff has run into an [Illinois] brick wall in his efforts to secure treble damages arising out of his candy purchases. We conclude that plaintiffs action is not barred, and accordingly vacate a summary judgment entered in favor of the defendants.

The Sugar Industry Antitrust Litigation is complex and extensive, literally extending from coast to coast. It rests basically on allegations that major sugar refiners and others in the United States conspired to fix the prices of refined sugar in violation of § 1 of the Sherman Act, 15 U.S.C. § l.1

In its complaint plaintiff Stotter & Co., Inc. asserted that it is entitled to recover treble damages under § 4 of the Clayton Act, 15 U.S.C. § 15, because of overcharges it paid in purchasing food products containing sugar refined or sold by defendants. Stotter is a Philadelphia area wholesaler of candy, beverage syrup, and other products. The 12 defendants refine and sell sugar in the eastern half of the United States, and several of them also manufacture food products containing sugar they refine. Stotter did not purchase sugar from any of the defendants but did buy candy from defendant Borden and from a subsidiary of defendant SuCrest. Stotter purchased other products such as soft drink beverage syrup from nondefendant manufacturers, who secured sugar from defendants.

Stotter’s complaint was similar to many others in the Sugar Litigation alleging a combination and conspiracy to fix and raise prices.2 However, unlike the others which [16]*16asserted injury because of excessive prices paid for refined sugar, Stotter claimed damages because it had been charged substantially more for various food products which contained sugar. The district court entered summary judgment against Stotter, holding that since it purchased only sugar-containing products, it was too “remote in the chain of distribution of refined sugar to make a claim for alleged overcharging tl

Although judgment was entered on all claims, the court did discuss the difference between the situation in which Stotter purchased such products as candy directly from the defendants and that in which it bought sugar-containing products from nondefen-dants who did not refine sugar. As to the latter category, which might be termed indirect purchases, the court observed that plaintiff would be obliged to embark upon discovery with respect to each sugar-containing product sold by 70 separate suppliers — some who did not even manufacture the product.

In discussing purchases made directly from the defendants, the court said:

“The problem with the plaintiff’s claim related to direct purchases of candy from defendants is it simply has not pleaded or proved (to the extent necessary to survive a Rule 56 motion) that a conspiracy to fix sugar prices by the major refiners extends to their own sugar-containing products.”

On appeal, Stotter has limited the issue to the summary judgment only insofar as it affects the direct purchases of candy from defendants. Indeed, in the face of Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977), plaintiff has no hope of success on the purchases from non-defendants.

Preliminarily, we observe that the plaintiff did plead, although not artfully or clearly, that it had purchased food products containing sugar refined or sold by the defendants.3 The complaint itself could readily be amended to state unambiguously that purchases were made directly from some of the defendants. In their briefs in the district court on the motion for summary judgment, both parties commented on the plaintiff’s direct purchases of candy from Borden. Accordingly, we believe that the district judge’s comments as to pleading and proof were intended to reflect his view that the issue was lack of standing as a matter of law, rather than simply a pleading or evidentiary deficiency. Had it been the latter, opportunity for discovery would have been granted.

We come then to the question in this case. The Supreme Court’s decision in Illinois Brick Co. v. Illinois, supra, bans Clayton Act suits by persons who are not direct purchasers from the defendant antitrust violator. Does the decision also bar a suit by a plaintiff who purchases directly from the alleged offender but buys a product which incorporates the price-fixed product as one of its ingredients? Stated another way, does the proscription against recovery for indirect purchases extend to the product as well as the buyer?

Illinois Brick held that the “passing on”4 defense which was prohibited by Hanover [17]*17Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481, 88 S.Ct. 2224, 20 L.Ed.2d 1231 (1968), should also be applied in a correlative fashion to a plaintiff’s case — that the pass-on rule should apply equally to plaintiffs and defendants, 431 U.S. at 730-31, 97 S.Ct. 2061. The Court grounded its conclusion on several bases, including the possibility of exposing the defendant to multiple liability and the evidentiary complexities that would arise in apportioning the overcharge among those in the chain who had suffered injury. The Court also expressed concern that if the direct purchaser could not make a full recovery of the overcharge, the wrongdoer would be able to keep some of the fruits of its illegality. Based on this reasoning, the Court held that the plaintiff, which purchased a completed building, was not permitted to sue the manufacturer of concrete block which had been incorporated into the structure. In reaching this determination, the Supreme Court noted that the concrete block had passed through two separate levels in the chain of distribution before reaching the plaintiff:

“[T]he evidentiary complexities and uncertainties involved in the defensive use of pass-on against a direct purchaser are multiplied in the offensive use of pass-on by a plaintiff several steps removed from the defendant in the chain of distribution. The demonstration of how much of the overcharge was passed on by the first purchaser must be repeated at each point at which the price-fixed goods changed hands before they reached the plaintiff.” 431 U.S. at 732-33, 97 S.Ct. at 2068.
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“Permitting the use of pass-on theories under § 4 essentially would transform treble-damages actions into massive efforts to apportion the recovery among all potential plaintiffs that could have absorbed part of the overcharge — from direct purchasers to middlemen to ultimate consumers.” Id. at 737, 97 S.Ct. at 2070.

Defendants here argue that the primary reason for the result in Illinois Brick was the Court’s desire to avoid further complexity being introduced into antitrust litigation.

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579 F.2d 13, Counsel Stack Legal Research, https://law.counselstack.com/opinion/stotter-co-v-amstar-corp-ca3-1978.