Consumers who buy goods for their personal use are free to file lawsuits for damages from suppliers alleged to have violated the antitrust laws, the Supreme Court ruled 8 to 0 yesterday.
The outcome was sought by the federal government and all of the states but Georgia to restore a long tradition of allowing consumers to seek triple damages for price-fixing or other anti-competitive injuries inflicted directly upon them.
The tradition had been threatened by a January 1978 ruling by the 8th U.S. Circuit Court of Appeals that, had it been upheld, would have resulted in an anomaly: the right to sue for treble damages would be lost to American citizens while being preserved for foreign governments.
Yesterday's decision involved a class-action complaint that five manufacturers and retailers had conspired to fix the prices of hearing aids. The suit was brought by Kathleen R. Reiter of Minneapolis against the manufacturers: Sonotone Corp., Beltone Electronics Corp., Dahlberg Electronics Inc., Textron Inc. and Radioear Corp.
Reiter's right to sue was upheld by a trial judge but overturned by the 8th Circuit. The Clayton Act of 1914 allows treble-damage suits only by persons injured in their "business or property," the appeals court pointed out. Reiter, not being engaged in a commercial ventrue, but being merely a retail purchaser, did not have a right to sue, the court said.
In the opinion for the Supreme Court, Chief Justice Warren E. Burger turned at the start to the language of the law's Section 4. It says that "any person" injured in his business "or property" by reason of "anything" forbidden in the antitrust laws is entitled to sue.
"On its face, Section 4 contains little in the way of restrictive language," Burger observed. In addition, he said, "the word 'property' has a naturally broad and inclusive meaning," being defined in the dictionary and in common usage as being anything of material value that is owned or possessed.
The Manufacturers' contention that "business or property" means "business activity or property related to one's business" is a "strained construction," Burger said.
That Reiter "was deprived of only money, albeit a modest amount, is no reason to conclude that she did not sustain a 'property' injury," the chief justice said.
The manufacturers and the 8th Circuit expressed concern that with consumers spending at retail more than $1.2 trillion annually, class-actions such as the one now unleashed will add a significant burden to already-crowded court dockets. They also claimed that there will be a potentially ruinous effect on small businesses in particular.
"These are not unimportant policy considerations, but they are policy considerations more properly addressed to Congress," Burger said. Terming the contentions "not without substance," he said that lower courts "must be especially alert to identify frivolous claims brought to extort nuisance settlements." He added:
"Recognition of the plain meaning of the statutory language 'business or property' need not result in administrative chaos, class action harassment, or 'windfall' settlements if the district courts exercise sound discretion and use the tools available."
Among other Supreme Court actions:
The court ruled 6 to 3 that the Ku Klux Klan Act of 1871, enacted to deter violence against blacks in the Reconstruction era, can't be used to redress violations of Title VII of the Civil Rights Act of 1964, enacted to prevent employment discrimination on the basis of race, color, religion, sex, or national origin.
The ruling rejected arguments by the federal government and the American Civil Liberties Union in a case involving John R. Novotny, former secretary and a director of the Great American Federal Savings and Loan Association of Pittsburgh.