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Court Says Price-Fixing Victims Can Sue on Anti-Trust Grounds

April 18, 1989

WASHINGTON (AP) _ The Supreme Court on Tuesday gave consumers a chance to recover, through antitrust lawsuits, the extra money they spend because of illegally inflated prices.

By a 7-0 vote, the justices said state laws may allow those indirectly affected by illegal price-fixing to sue for monetary damages.

Lower courts had struck down such state laws, ruling that they are precluded by the federal antitrust law’s bar on suits by ″indirect purchasers.″

″This is an extremely important victory for the American consumer,″ said Ramon Klitzke, a Marquette University law professor who had studied the case decided Tuesday.

″I foresee many cases in which lawyers representing consumers will pursue antitrust remedies in state courts, and consumer associations will file ‘class action’ lawsuits in behalf of numerous consumers,″ Klitzke said.

In other matters, the court:

-Ruled that international airline passengers do not have to be told beforehand that they cannot collect more than $75,000 in the event of an accident.

The court, in a unanimous decision stemming from the 1983 shooting down of a Korean Air Lines jet in Soviet airspace, freed KAL from having to pay more than the $75,000 per-passenger limit because the airline failed to give adequate warnings on tickets.

-Ruled unanimously in a Massachusetts case that states may prosecute employers for withholding accrued vacation pay owed fired workers.

-Was urged during a courtroom argument session to strike down as unconstitutional some of the huge punitive-damages awards won in personal- injury cases and other lawsuits.

The price-fixing decision reinstated efforts by four states - California, Minnesota, Alabama and Arizona - to participate in a $32 million settlement of an alleged nationwide conspiracy to fix cement prices.

At least 11 other states and the District of Columbia have enacted antitrust laws giving indirect purchasers the right to sue.

The states are Colorado, Hawaii, Illinois, Kansas, Maryland, Michigan, Mississippi, New Mexico, Rhode Island, South Dakota and Wisconsin.

Klitzke predicted that ″attorneys general in other states now will recommend to their legislatures that similar laws be enacted.″

The court’s ruling restores a right the nation’s consumers enjoyed until a 1977 decision by the justices.

In that decision, the court had interpreted federal antitrust law as barring most lawsuits by ultimate consumers even if they suffer the most harm from the illegal conduct.

Under the 1977 ruling, if a manufacturer illegally conspires to fix a product’s price and sells it to a retailer, the retailer may use federal antitrust law to sue for triple damages.

But if the retailer passes on the illegally inflated price when selling the product, federal law bars the consumer from suing.

Tuesday’s decision, however, allows such customers to sue under state antitrust laws.

A spate of lawsuits was filed against cement manufacturers in 1976 and 1977, alleging a nationwide conspiracy to fix prices. Each of the four states involved in today’s court action filed a suit, based in part on state laws protecting indirect purchasers.

Four states sought to sue on behalf of county and municipal governments that had purchased cement or products containing cement.

The litigation was consolidated in federal court in Arizona, and by 1981 cement manufacturers had agreed to pay $32 million to settle the case.

Direct purchasers then challenged the states’ right to be compensated for indirect purchases.

A federal trial judge, later upheld by the 9th U.S. Circuit Court of Appeals, threw out the states’ suits.

Writing for the high court, Justice Byron R. White said that allowing enforcement of state antitrust laws protecting indirect purchasers does not impair the effectiveness of federal antitrust law.

Justices John Paul Stevens and Sandra Day O’Connor did not participate in the case for unannounced reasons.

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