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Supreme Auto Transport LLC v. Mittal

United States District Court, N.D. Illinois, Eastern Division

March 3, 2017

Supreme Auto Transport LLC, et al., Plaintiffs,
Arcelor Mittal, et al., Defendants.


          Manish S. Shah United States District Judge

          Plaintiffs allege that domestic steel manufacturers reduced steel production in a concerted effort to drive up the price of steel. Direct purchasers of steel then passed on the higher prices to downstream customers like the plaintiffs, who bought consumer products made with steel as well as other materials. Plaintiffs filed suit against the defendants, the steel manufacturers, for the indirect harm allegedly caused by the illegal reduction in supply. Defendants move to dismiss the amended class action complaint. [175].[1] For the following reasons, defendants' motion is granted.

         I. Legal Standard

         A motion to dismiss under Fed.R.Civ.P. 12(b)(6) does not test the merits of a claim, but rather the sufficiency of the complaint. Fed.R.Civ.P. 12(b)(6); Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). In deciding a 12(b)(6) motion, a court accepts all well-pleaded facts as true and draws all reasonable inferences in favor of the plaintiff. Id. at 1521. To survive a 12(b)(6) motion, “a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In addition to the complaint, a court may also consider documents attached to or referenced in the complaint. Levenstein v. Salafsky, 164 F.3d 345, 347 (7th Cir. 1998) (quoting Wright v. Associated Ins. Cos., Inc., 29 F.3d 1244, 1249 (7th Cir.1994)). “A complaint should not be dismissed for failure to state [a] claim unless it appears beyond doubt that the plaintiff is unable to prove any set of facts which would entitle the plaintiff to relief.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 546 (2007).

         II. Facts

         Plaintiff Supreme Auto Transport LLC, based in Michigan, and fifteen individual plaintiffs from ten states represent a purported class of indirect purchasers of steel products. In 2008, Supreme Auto filed suit as the sole plaintiff representing a purported class. The original complaint alleged that defendants orchestrated a scheme to artificially increase the price of steel through coordinated production cuts between January 2005 and September 2008. Plaintiffs filed an amended complaint adding the fifteen individual plaintiffs in April 2016.

         Plaintiffs allege that defendants, who are among the largest producers of steel in the U.S. market, instituted a plan to improve “industry discipline” and increase both prices and profit in the United States steel market. At the forefront of this plan was Mittal Steel USA, the predecessor of defendant ArcelorMittal USA, who allegedly orchestrated a concerted cutback in steel production with the other defendants. As a result of this illegal market restraint, the price of steel was substantially higher than defendants' cost of production, the domestic demand for steel was well in excess of defendants' production, and there was a shortage of steel on the U.S. market. Consequently, plaintiffs allege that the price of steel was artificially inflated and this additional cost was passed along from the direct purchasers of steel to the purchasers of a panoply of consumer products containing steel, including refrigerators, dishwashers, ovens, automobiles, air conditioner units, lawn mowers, and farm and construction equipment.

         The first amended complaint contains three counts: (1) violation of state antitrust laws, (2) violation of state consumer protection and unfair competition laws, and (3) unjust enrichment claims under the common law of “each of the fifty states, excluding Ohio and Indiana, and including the District of Columbia.” Defendants now move to dismiss each of the counts.

         III. Analysis

         A. Article III Standing

         To bring a claim in federal court, a plaintiff must suffer an injury in fact that is fairly traceable to the alleged conduct of the defendant and likely to be redressed by a favorable judicial decision. See Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016), as revised (May 24, 2016). The burden is on the plaintiff to establish all of these elements of Article III standing. Id. Defendants argue that plaintiffs have not established Article III standing in any states except those in which they reside, and they urge this court to address plaintiffs' standing before addressing issues of class certification. Plaintiffs argue that the standing inquiry should be postponed until after matters of class certification have been decided.

         Plaintiffs have met their individual Article III standing requirements. They properly alleged an injury in fact (payment of “supracompetitive” prices) that could be fairly traced to defendants' alleged scheme and that would be redressed by a favorable judicial decision. Whether Article III poses an obstacle to adjudicating this case as a class action should be evaluated later.[2] In Payton v. County of Kane, 308 F.3d 673 (7th Cir. 2002), the Seventh Circuit said that “once a class is properly certified, statutory and Article III standing requirements must be assessed with reference to the class as a whole, not simply with reference to the individual named plaintiffs.” Payton, 308 F.3d at 680 (emphasis added). In Arreola v. Godinez, the court addressed the question of standing before it addressed class certification; however, in that case it was the standing of the individual named plaintiff that was being addressed-no inquiry was being made into the named plaintiff's ability to serve as a class representative at that time. Arreola v. Godinez, 546 F.3d 788, 794- 95 (7th Cir. 2008). For now, whether named plaintiffs can bring claims under the laws of other states and whether plaintiffs are adequate class representatives do not pose Article III barriers to subject-matter jurisdiction. See Morrison v. YTB Int'l, Inc., 649 F.3d 533, 536 (7th Cir. 2011).

         B. Antitrust Standing

         In addition to Article III standing, an antitrust plaintiff must demonstrate antitrust standing at the pleading stage. Although general “harm” to the plaintiff is sufficient to satisfy the constitutional standing requirement, “the court must make a further determination whether the plaintiff is a proper party to bring a private antitrust action.” In re Aluminum Warehousing Antitrust Litig., 833 F.3d 151, 157 (2d Cir. 2016) (citing Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 535 n.31 (1983)). A range of doctrines attempt to spell out “the circumstances under which a particular party may recover from an antitrust violator.” Loeb Indus., Inc. v. Sumitomo Corp., 306 F.3d 469, 480 (7th Cir. 2002). These “antitrust standing” doctrines have arisen primarily under federal law. In Illinois Brick Co. v. Illinois, 431 U.S. 720, 735 (1977), for example, the Supreme Court created a “direct purchaser” doctrine limiting treble damage actions under § 4 of the Clayton Act to direct purchasers, and in Associated Gen. Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519, 536-45 (1983) (“AGC”), the Court created a multi-factor “direct injury” doctrine to measure the link between the defendants' conduct and the plaintiffs' injury in a federal antitrust action. Those factors include “(1) the causal connection between the violation and the harm; (2) the presence of improper motive; (3) the type of injury and whether it was one Congress sought to redress; (4) the directness of the injury; (5) the speculative nature of the damages; and (6) the risk of duplicate recovery or complex damage apportionment.” Loeb, 306 F.3d at 484 (citing AGC, 459 U.S. at 537-45). The Illinois Brick direct-purchaser doctrine and the AGC direct-injury doctrine “are analytically distinct.” Int'l Bhd. of Teamsters, Local 734 Health & Welfare Trust Fund v. Philip Morris Inc., 196 F.3d 818, 828 (7th Cir. 1999) (citing Blue Shield of Virginia v. McCready, 457 U.S. 465, 476, 102 S.Ct. 2540, 73 L.Ed.2d 149 (1982)).

         The parties here focus their debate on (1) whether AGC is the governing test for each of the state-law antitrust claims and (2) if so, whether the first amended complaint in this case meets the multi-factor test laid out in AGC. I agree with defendants that AGC is the appropriate test in each of the states for which resident plaintiffs assert antitrust claims and that the complaint does not meet the AGC test.

         1. State Applications of the AGC Test

          Plaintiffs point out that the Supreme Court did not address whether the AGC factors should govern questions of antitrust standing when plaintiffs bring state antitrust claims to federal court. Plaintiffs cite a different Supreme Court case, California v. ARC America Corp., 490 U.S. 93 (1989), for the proposition that “standing to sue under state antitrust law is determined solely with reference to state law.” Plaintiffs' Response, [188] at 13 (emphasis in original). This is an overstatement. Federal antitrust laws do not “expressly pre-empt state laws permitting indirect purchaser recovery” and federal antitrust laws serve “to supplement, not displace, state antitrust remedies.” ARC America, 490 U.S. at 101- 02. But the Supreme Court left open the possibility that states could choose to follow AGC specifically or federal law generally, and defendants argue that the states at issue in this case have done so. I agree.

         Plaintiffs assert state antitrust violations in twenty-one states.[3] Named plaintiffs reside in nine of the twenty-one states. In eight[4] of the nine named-plaintiff states, the state courts have adopted the AGC test or a modified version of it to determine antitrust standing. See Defendants' Appendix 4, [176-1] at 54-56. The remaining named-plaintiff state, Tennessee, has not said outright that it would apply AGC or something similar, but at least one Tennessee appellate court has suggested that it might do so. See Tenn. Med. Ass'n v. BlueCross BlueShield of Tenn., Inc., 229 S.W.3d 304, 311 (Tenn. Ct. App. 2007).

         Likewise, courts in ten[5] of the twelve states where no named plaintiffs reside apply the AGC test in antitrust standing cases. See Defendants' Appendix 4, [176-1] at 57-58. Without mentioning the AGC standard by name, Utah and West Virginia have also established that their courts shall look to federal law when interpreting antitrust statutes. Utah Code Ann. § 76-10-3118 (when construing the state's antitrust laws, Utah state courts “will be guided by interpretations given by the federal courts to comparable federal antitrust statutes and by other state courts to comparable state antitrust statutes”); W.Va. Code § 47-18-16 (state antitrust laws “shall be construed liberally and in harmony with ruling judicial interpretations of comparable federal antitrust statutes”); Princeton Ins. Agency, Inc. ...

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