The Supreme Court was told last week that if it affirms a controversial antitrust ruling by another tribunal, it will deny to American citizens a right it has granted to foreign governments: to sue price-fixers for triple damages.
The court ruled 5 to 3 in January 19798 that under the Sherman Act of 1890 and the Clayton Act of 1914, India, Iran and other nations each is considered a "person" entitled to sue-in American courts-drug manufacturers who, they allege, committed antitrust violations that injured their "business or property."
Six months later, the 8th U.S. Circuit Court of Appeals, in a ruling attacked by the federal government and every state but Georgia, held that consumers who pay higher retail prices for goods or services as a result of antitrust violations lack the legal right, or standing, to sue for treble damages because they haven't suffered injury to their commercial "property."
John E. Thomas, attorney for Kathleen R. Reiter, a Minneapolic woman who claims to have been injured by price-rigging of hearing aids, said that the foreign governments are "preferred" over citizens of the United States.
Agreeing, Assistant Attorney General John H. Shenefield suggested that such a result wouldn't "really make sense."
Justice John Paul Stevens asked Elliot S. Catlin, counsel for Sonotone Corporation, if his position was that a foreign government, victimised by claimed price fixing of bandages for its army, would be able to seek triple damages, but that "if I bought bandages for my family I would not?"
That's correct, Catlin said. He acknowledged that inequities may flow from 8th Circuit ruling but said it's the job of Congress to deal with them, it it cares to.
In an exchange with Justice William H. Rehnquist, Catlin agreed that Reiter would have standing to sue if hearing aid to enable her to function as a lawyer, but not if she bought it for personal reasons.
So under Catlin's theory Rehnquist remarked those out of luck would be "really just unemployed consumers."
Justice Thurgood Marshall, saying he thought that the protection of consumers was the purpose behind all antitrust laws, said, "I have yet to find anybody who sells me anything who's protecting me.
Reiter is seeking permission to sue as representative of the entire class of persons who bought hearing aids that she alleges were over-priced by a total of four manufacturers. Her own dollar claim, said Catlin is "minuscule."
"Minuscule to whom?" Marshall asked. The sum could be large enough to determine "whether she eats the next day," he said.
Anything but minuscule consequences would flow from an affirmance of the 8th Circuit, the Justices were told by antitrust chief Shenefield; Minnesota Attorney General Warren Spannaus, counsel for the 49 states, and Thomas.
One consequence, they said, would be the removal of the treble-damage remedy from consumers, who account for nearly half of the nation's $1.3 trillion in annual commerce. Yet, they emphasized, the federal government and the state attorney general alone cant't adequately enforce the anti-trust laws.
In addition, they asserted, an affirmation would nullify the Hart-Scott-Rodino Anti-Trust Improvements Act of 1976. This law empowers state attorneys general to seek damages in behalf of all residents of their jurisdictions when it is impractical for individual consumers to litigate claims of price-fixing, involving, say, a nickel on a loaf of bread.
For the companies, Wilhelm and Kaplan argued that legislative history of the 1890 and 1914 laws shows that Congress never thought of "consumers" in the modern context of members of the rank-and-file public who buy goods and services at retail. That's why the laws use the word "propertyc entirely in a commercial sense, they said.
This apprently didn't satisfy Justice Byron R. White. He suggested that Congress, had it wanted to do so, easily could have limited lawsuits to persons injured in their "commercial property."
Shenefield told the court, "We strongly believe that a consumer who makes a purchase in the retail market has a commercial interest." And, he said, a person who is overcharged as a result of price-fixing has standing to sue becuase his property-his supply of money-has been diminished.