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    UNITED STATES COURT OF APPEALS

    FOR THE FIFTH CIRCUIT


    No. 97-31341


    ROBIN FREE AND RENEE FREE,


    Plaintiffs-Appellants,



    versus



    ABBOTT LABORATORIES, BRISTOL-MYERS SQUIBB COMPANY,

    AND MEAD JOHNSON & COMPANY,



    Defendants-Appellees.


    Appeal from the United States District Court

    for the Middle District of Louisiana


    June 3, 1999


    Before REYNALDO G. GARZA, JONES, and DeMOSS, Circuit Judges.



    EDITH H. JONES, Circuit Judge:

    The appellants, consumers of infant formula, sued theabove-named manufacturers of infant formula under Louisiana'santitrust laws alleging a price-fixing conspiracy. Because thiscase is before us for a third time, it is unnecessary torecapitulate the procedural and factual history. See Free v.Abbott Lab., Inc. , 164 F.3d 270 (5th Cir. 1999); Free v. AbbottLab. , 51 F.3d 524 (5th Cir.), reh'g denied , 65 F.3d 33 (1995).

    This panel certified two state law questions to theLouisiana Supreme Court: 1) whether Louisiana antitrust law grantsstanding to indirect purchasers (1) of consumer products; and, 2)whether Louisiana antitrust law provides a cause of action forinterstate conspiracies in restraint of trade, or whether suchsuits are limited to wholly intrastate conspiracies. See AbbottLab. , 164 F.3d at 277. The Louisiana Supreme Court deniedcertification, leaving us to fathom Louisiana's unsettled antitrustlaw as Louisiana courts would do it. See Federal Deposit Ins.Corp. v. Abraham , 137 F.3d 264, 268 (5th Cir. 1998). In our bestjudgment, the Louisiana courts would follow the federal indirectpurchaser rule and deny standing to the appellants. See IllinoisBrick Co. v. Illinois , 431 U.S. 720, 97 S. Ct. 2061 (1977). Inreaching this conclusion, we assume arguendo that Louisianaantitrust laws apply to a conspiracy carried on interstate that haseffects within the state. But see HMC Management Corp. v. NewOrleans Basketball Club , 375 So. 2d 700, 706-07 (La. Ct. App.1979).

    DISCUSSION

    Louisiana law permits any person "who is injured in hisbusiness or property by any person by reason of any act or thingforbidden by this Part, [to] sue . . . and . . . recover threefoldthe damages sustained by him, the cost of suit, and a reasonableattorney's fee." La. Rev. St. Ann. § 51:137 (West 1987). Thissection is virtually identical to the federal antitrust enforcementprovision, § 4 of the Clayton Act. (2) Although the Clayton Act issilent with respect to the standing afforded indirect purchasers,the United States Supreme Court long ago interpreted it to denystanding to indirect purchasers. See Illinois Brick , 431 U.S. at745-48, 97 S. Ct. at 2074-75.

    No Louisiana case directly addresses the issue ofstanding. The Louisiana Supreme Court afforded relevant insight tointerpreting state antitrust statutes that are "virtuallyidentical" to their federal counterpart when it noted that "theUnited States Supreme Court's interpretation . . . should be apersuasive influence on the interpretation of our own stateenactment." Louisiana Power and Light Co. v. United Gas Pipe LineCo. , 493 So. 2d 1149, 1158 (La. 1986). Lower Louisiana courts havelikewise considered federal antitrust standards a starting pointfor interpreting counterpart state statutes. See, e.g. , Louisianaex rel. Ieyoub v. Bordens, Inc. , 684 So. 2d 1024, 1027 (La. Ct.App. 1996), writ denied , 690 So. 2d 42 (La. 1997); Reppond v. Cityof Denham Springs , 572 So. 2d 224, 228 (La. Ct. App. 1990). Thecourts are not, however, required to abide by the federal standardif compelling justifications exist for not doing so. See LouisianaPower , 493 So. 2d at 1158 (cautioning that "federal analysis is notcontrolling"); Reppond , 572 So. 2d at 228 n.2 (same).

    In Louisiana Power , the Louisiana Supreme Court held thata parent company and its subsidiary are capable of conspiring inrestraint of trade under the Louisiana antitrust law--contrary tothe United States Supreme Court's interpretation and in spite ofvirtually identical state and federal statutes. See 493 So. 2d at1158-60; cf. Copperweld Corp. v. Independence Tube Corp. , 467 U.S.752, 104 S. Ct. 2731 (1984). The court articulated a number ofreasons for deviating from the Copperweld decision. First, as a1931 state court decision had held intraenterprise conspiraciesviolative of Louisiana antitrust law, the state's precedent wasfirmly established. Second, before the United States Supreme Courtmodified its interpretation of the Sherman Antitrust Act in Copperweld , it, too, had proscribed intraenterprise conspiraciesunder the federal law. (3) Moreover, Copperweld does not expresslyexclude federal antitrust liability where the conspirator ispartially-owned, as in Louisiana Power , rather than a wholly-ownedsubsidiary. Third, a per se rule exempting parent/subsidiaryconspiracies from Louisiana antitrust law would divest the courtsof authority reposed in them by the legislature--a resultparticularly worrisome because intraenterprise activity can havethe same adverse economic effects as traditional conspiracies inrestraint of trade. Fourth, the Louisiana antitrust laws aspire toa political as well as strictly economic purpose: their politicalgoal is to "provid[e] an environment conducive to the preservationof our democratic political and social institutions." (4) Fifth, theLouisiana court was commanded by the "unqualified" statutoryprohibition of "every" contract, combination or conspiracy inrestraint of trade in Louisiana. La. Rev. Stat. Ann. § 51:122; Louisiana Power , 493 So. 2d at 1160.

    A careful comparison demonstrates that Louisiana Power isdistinguishable from this case. Consider first the superficiallyformidable issue of the "plain meaning" of the remedy statute. Although the language of § 137, the statute here at issue, is alsobroad, whether it is "unqualified" like § 122 is the issue beforeus. No Louisiana court has squarely so held, (5) and the SupremeCourt decision in Illinois Brick rested not on the breadth of "anyperson," but on the extent of injury to "business or property"comprehended by the antitrust laws. See 431 U.S. at 729, 97 S. Ct.at 2066. Antitrust injury has always been a policy laden-conceptdesigned, inter alia , to distinguish damages caused byanticompetitive conduct from those not so caused. See, e.g. , Spectrum Sports, Inc. v. McQuillan , 506 U.S. 447, 458-59, 113 S.Ct. 884, 891-92 (1993). Louisiana courts have not eschewed theimportance of defining antitrust injury in this manner but, infact, have deferred to federal precedent. See , e.g. , J.B.N. Morrisv. Rental Tools, Inc. , 435 So. 2d 528, 534 n.1 (La. Ct. App. 1983). The nature of antitrust injury encompassed by § 137 thus bestcharacterizes the question before us.

    Viewed from this perspective, the purposes of § 137 and§ 122 differ significantly and further distinguish Louisiana Power . Section 122 was interpreted as "unqualified" in order to proscribeconduct promoted by one enterprise that may be economically asharmful as classic conspiratorial conduct between unrelatedentities. Section § 137, however, runs the risk of functionaldeconstruction if interpreted to provide an "unqualified" right ofrecovery. In addition, the courts' role in policing conductviolative of Louisiana antitrust policy would not be diminished bya rule restricting recovery to direct purchasers; on the contrary,the remedy would become more effective. The Louisiana Power decision, on the other hand, concluded that a narrower constructionof § 122 would divest courts of authority under the antitrust laws. See 493 So. 2d at 1159. Finally, the political goal of theantitrust laws and the goal of furthering the economicallyefficient allocation of resources are both well served byrationalizing the antitrust remedy as the Supreme Court did in Illinois Brick .

    The Illinois Brick rule permitting only direct purchasersto sue for antitrust injury reduces the "dimensions of complexity"that would otherwise curtail the effectiveness of antitrust suits, see 431 U.S. at 737, 97 S. Ct. at 2070, and encourages "vigorousprivate enforcement" by enhancing direct purchasers' incentive tobring antitrust suits. See id. at 745-46, 97 S. Ct. at 2074-75. In contrast, the rule advocated by the Frees for antitrust recoverysuits resembles chaos theory (a butterfly flapping its wings in theAmazon will affect global climate). See James Gleick, Chaos:Making a New Science (1987). The focus of suits would shift fromthe amount of increased prices caused by defendants'anticompetitive conduct (a relatively straightforward inquiry) tothe allocation of damages among parties in the line of distributionto ultimate consumers. Litigation would be prolonged, would becomefar more complex factually and strategically, and would benefitlawyers and determined defendants while reducing recoveries forplaintiffs. (6)  

    The Frees seem to object that adopting the Illinois Brick rule deprives them of a state law recovery that would supplement,not conflict with federal law. See California v. ARC AmericaCorp. , 490 U.S. 93, 109 S. Ct. 1661 (1989). But this assertionmisses the mark. Neither the California case nor any citedLouisiana policy advocates increasing penalties on antitrustdefendants or maximizing Louisiana plaintiffs' recovery as comparedwith federal law remedies. Instead, the question is whetherLouisiana seeks to enforce a coherent state antitrust law thatplaces the incentive to sue on the party best situated to recover. Because the Illinois Brick scheme is preferable for this purpose,we believe Louisiana courts would follow it.

    Bolstering this conclusion is the fact that the majorityof state appellate courts faced with this same issue have decidedto follow the Illinois Brick road. (7) For these reasons, theappellants, as indirect purchasers of infant formula, lack standingto bring the present state antitrust claim.

    Accordingly, we AFFIRM the district court's dismissal ofappellants' claims.

    AFFIRMED.

    1. Indirect purchasers "are not the immediate buyers from thealleged antitrust violators," but are those who buy goods throughan intermediary such as a retailer or wholesaler. Kansas v.Utilicorp United, Inc. , 497 U.S. 199, 207, 110 S. Ct. 2807, 2812(1990).

    2. Section 4 of the Clayton Act, 15 U.S.C. § 15 (1997), statesin part:



    [A]ny person who shall be injured in his business orproperty by reason of anything forbidden in the antitrustlaws may sue therefor in any district court of the UnitedStates . . . and shall recover threefold the damages byhim sustained, and the cost of suit, including areasonable attorney's fee.

    3.   See United States v. Yellow Cab Co. , 332 U.S. 218, 67 S. Ct.1560 (1947).

    4.   Louisiana Power , 493 So. 2d at 1152 (quoting Northern Pac.Ry. Co. v. United States , 356 U.S. 1, 4, 78 S. Ct. 514, 517(1958)).

    5. In State ex rel. Ieyoub v. Borden, Inc. , 1995 WL 59548 (E.D.La. Feb. 10, 1995), the federal district court noted, whilediscussing an issue of diversity jurisdiction, the absence ofLouisiana caselaw interpreting whether § 137 provides a remedy forindirect purchasers. The decision contains no holding on the issuebefore us.

    6. As appellees correctly describe the non- Illinois Brick position: "To recover damages, every member of the [Frees']putative class would have to prove not only the magnitude of thealleged overcharge in wholesale prices at the time they boughtinfant formula, but the retail prices paid and the proportion ofthe alleged wholesale overcharge passed on to consumers throughthose retail prices." Appellees' brief at 32.

    7.   See Blewett v. Abbott Lab., Inc . , 938 P.2d 842, 845-46 (Wash.Ct. App. 1997); Mack v. Bristol-Myers Squibb Co. , 673 So. 2d 100,108, (Fla. Dist. Ct. App. 1996); Stifflear v. Bristol-Myers SquibbCo. , 931 P.2d 471, 475-76 (Colo. Ct. App. 1996). But see Hyde v.Abbott Lab., Inc. , 473 S.E.2d 680, 685-86 (N.C. Ct. App. 1996) Several states have statutorily overruled Illinois Brick 's indirectpurchaser rule, allowing any person to sue for antitrust violationswhether injured "directly or indirectly." See, e.g. , Minn. Stat.§ 325D.57 (1994) (recognized in Minnesota ex rel. Humphrey v.Philip Morris, Inc. , 551 N.W.2d 490 (Minn. 1996)); Cal. Bus. &Prof. Code § 16750(a) (West 1997) (recognized in Cellular Plus,Inc. v. Superior Court , 18 Cal. Rptr. 2d 308 (Cal. Ct. App. 1993)). Other states have taken the opposite approach and statutorilydenied standing to indirect purchasers. See, e.g. , 740 Ill. Comp.Stat. Ann. 10/7(2) (West 1994) (recognized in Gaebler v. New MexicoPotash Corp. , 676 N.E.2d 228, 230 (Ill. App. Ct. 1997) (permittingonly the state attorney general to bring indirect purchasersuits)).

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