Elkins v. Microsoft Corp.
Annotate this Case
Elkins v. Microsoft Corp. (2001-431); 174 Vt. 328; 817 A.2d 9
[Filed 01-Nov-2002]
NOTICE: This opinion is subject to motions for reargument under
V.R.A.P. 40 as well as formal revision before publication in the Vermont
Reports. Readers are requested to notify the Reporter of Decisions,
Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
any errors in order that corrections may be made before this opinion goes
to press.
No. 2001-431
Richard L. Elkins Supreme Court
On Appeal from
v. Windham Superior Court
Microsoft Corporation September Term, 2002
John P. Wesley, J.
Kirsten A. Beske, David N. Dunn, and Potter Stewart, Jr. of Potter
Stewart, Jr. Law Offices, P.C., Brattleboro, for Plaintiff-Appellant.
Robert Luce of Downs Rachlin Martin, PLLC, Burlington, and David
Tulchin of Sullivan & Cromwell (Of Counsel), New York, New York,
for Defendant-Appellee.
William H. Sorrell, Attorney General, and Julie Brill and David B.
Borsykowsky, Assistant Attorneys General, Montpelier, for Amicus
Curiae State of Vermont.
PRESENT: Amestoy, C.J., Dooley, Morse, Johnson and Skoglund, JJ.
DOOLEY, J. This is an appeal from the trial court's dismissal of a
class action suit brought under the Vermont Consumer Fraud Act (VCFA or the
Act), 9 V.S.A. § 2451-80g. Plaintiff, Richard Elkins, alleged that
defendant Microsoft Corporation (Microsoft) used its monopoly power to
overprice the Windows 98 operating system which plaintiff purchased
pre-installed in a personal computer from a computer manufacturer (called
original equipment manufacturer or OEM). Based on the United States
Supreme Court decision in Illinois Brick Co. v. Illinois, 431 U.S. 720
(1977),
the superior court dismissed the case because plaintiff was only an
indirect purchaser of Windows 98, that is, he purchased it from the OEM
rather than Microsoft. Plaintiff appeals arguing that he does not have to
be a direct purchaser to sue under the VCFA. We agree and reverse and
remand.
The facts of this case are not in dispute. Microsoft is the leading
supplier of operating system software for personal computers. Microsoft
distributed its Windows 98 operating system through OEM's, who
pre-installed the software on personal computers they sold to consumers,
and through retailers of CD-ROMs containing the software. In February
1999, plaintiff purchased a computer with a pre-installed Microsoft Windows
98 operating system. He subsequently brought suit under the VCFA, alleging
that he and other similarly situated Vermont licensees of Windows 98 were
injured by Microsoft's abuse of its monopoly power in charging consumers a
price in excess of the price it would have been able to charge in a
competitive market.
Microsoft moved to dismiss the complaint on the grounds that an
"indirect purchaser" such as plaintiff does not suffer cognizable damages
in an unfair competition case and thus is barred from bringing a claim
under the VCFA. The trial court agreed and granted the motion.
The issue on appeal is the same as before the trial court: whether,
given the Illinois Brick decision and the statutory language of the VCFA,
an indirect purchaser is barred from bringing an action for antitrust
violations under the VCFA. Plaintiff and amicus curiae State of Vermont
argue that a suit by an indirect purchaser under the VCFA is not barred
because (1) the VCFA provides a cause of action for indirect purchasers,
and (2) the Illinois Brick indirect purchaser rule is not applicable
because it construes the Clayton Antitrust Act, and not the VCFA, and our
construction of the VCFA is not guided by federal Clayton Act decisions.
In response, Microsoft argues that (1) an indirect purchaser cause of
action did not exist under the VCFA until the 2000 amendment, which
became effective after plaintiff acquired his copy of Windows 98, and (2)
the indirect purchaser rule of Illinois Brick controls here because there
is no express statutory provision in the VCFA providing indirect purchasers
a cause of action and because the VCFA directs that construction of its
terms be guided by federal law.
A motion to dismiss for failure to state a claim should not be granted
unless there exists no facts or circumstances that would entitle plaintiff
to relief. Richards v. Town of Norwich, 169 Vt. 44 , 48, 726 A.2d 81, 85
(1999). On review of the trial court's disposition of the motion to
dismiss, this Court will assume the truth of all factual allegations
pleaded in the complaint as well as all reasonable inferences that may be
derived from the pleadings. Id. at 48-49, 726 A.2d at 85. To the extent
that our review of the trial court's decision involves questions of
statutory construction, and thus questions of law, it is nondeferential and
plenary. State v. Koch, 169 Vt. 109, 112, 730 A.2d 577, 580 (1999).
We begin with the applicable provisions of the VCFA and then consider
the impact of Illinois Brick.
As with any attempt at statutory construction, we begin with the plain
meaning of the statutory language, because we presume that it reflects the
Legislature's intent. Dover Town Sch. Dist. v. Simon, 162 Vt. 630, 631,
650 A.2d 514, 516 (1994) (mem.).
The central provision of the VCFA is 9 V.S.A. § 2453(a) which
provides:
(a) Unfair methods of competition in commerce, and unfair or
deceptive acts or practices in commerce, are hereby declared
unlawful.
The Act goes on to provide a private remedy for violations:
Any consumer who . . . sustains damage or injury as a result of
any false or fraudulent representations or practices prohibited by
section 2453 of this title . . . may sue for appropriate equitable
relief and may sue and recover from the seller, solicitor or other
violator the amount of his damages . . . .
Id. § 2461(b) (emphasis added). "Consumer" is defined by the act as:
[A]ny person who purchases, leases, contracts for, or otherwise
agrees to pay consideration for goods or services not for resale
in the ordinary course of his trade or business but for his use or
benefit or the use or benefit of a member of his household or in
connection with the operation of his household . . . .
Id. § 2451a(a) (emphasis added).
The statutory language contains no privity requirement, that is, no
provision that the consumer can sue only the retailer and no one further up
the supply chain. In general, we will not read provisions into the statute
that are not present unless it is necessary in order to make the statute
effective. State v. O'Neill, 165 Vt. 270, 275, 682 A.2d 943, 946 (1996).
The Act expressly states that any consumer, reinforced by the definition of
consumer as "any person", who suffers injury may bring an action under the
statute against a "seller, solicitor or other violator." The language does
not support the imposition of a privity requirement.
The plain meaning of the language is supported by the express
legislative intent behind the statute to "protect the public" against
"unfair or deceptive acts or practices" and to "encourage fair and honest
competition." 9 V.S.A. § 2451; see State v. Int'l Collection Serv., Inc.,
156 Vt. 540, 543, 594 A.2d 426, 429 (1991); Gramatan Home Investors Corp.
v. Starling, 143 Vt. 527, 536, 470 A.2d 1157, 1162 (1983) (purpose of VCFA
includes "to encourage a commercial environment highlighted by integrity
and fairness"). In light of this purpose, this Court has repeatedly held
that the VCFA is "remedial in nature" and therefore must be construed
"liberally so as to furnish all the remedy and
all the purposes intended." State v. Custom Pools, 150 Vt. 533, 536, 556 A.2d 72, 74 (1988); see also Carter v. Gugliuzzi, 168 Vt. 48, 52, 716 A.2d 17, 21 (1998) (VCFA should be applied "liberally to accomplish its
purposes"); State v. Therrien, 161 Vt. 26, 31, 633 A.2d 272, 275 (1993).
Of course, liberal construction does not allow us to stretch the language
beyond legislative intent. See Wilder v. Aetna Life & Casualty Ins. Co.,
140 Vt. 16, 19, 433 A.2d 309, 310 (1981).
The Legislature clearly intended the VCFA to have as broad a reach as
possible in order to best protect consumers against unfair trade practices.
This intent underlies a private remedy section that allows suits by "any
consumer" with no suggestion of a distinction between direct and indirect
purchasers. It also underlies a description of proper defendants including
not only a seller or solicitor, but also an "other violator," a broad term
that covers defendant in this case. We think in this context that any
restriction to impose a privity requirement, that is to allow only direct
purchasers to sue, must be stated in clear terms. See Int'l Collection
Serv., Inc., 156 Vt. at 549-50, 594 A.2d at 429 (in the absence of express
language limiting Attorney General's enforcement power to personal consumer
victims, plain meaning supports actions against defendants who engage in
unfair and deceptive practices with respect to business consumers); Custom
Pools, 150 Vt. at 536, 556 A.2d at 74 (if Legislature intended that
Attorney General cannot sue a finance company that benefitted from the
consumer fraud of a seller, "it could have done so with clear language to
that effect").
Although we have never addressed the precise question before us, two
of our decisions are instructive. In Carter v. Gugliuzzi, we held that a
home purchaser could sue a real estate broker under § 2461(b) as a "seller"
even though the broker did not own the home when it was sold to the
plaintiff. Relying on the broad remedial purpose of the VCFA, the plain
meaning of the term
"seller," and the lack of any explicit limitation on that term, we held
that the broker could be sued under § 2461(b) for deceptive representations
that induced the sale. 168 Vt. at 53, 716 A.2d at 22. Also relevant is
Poulin v. Ford Motor Co., 147 Vt. 120, 513 A.2d 1168 (1986), where a
purchaser of an automobile sued both the dealer and the manufacturer
because a representative of the manufacturer misrepresented that the
specific model purchased was produced in very limited numbers so that its
value would increase. We affirmed a jury verdict against both the dealer
and manufacturer in response to various claims that plaintiff had failed to
present the proof required by the statute, id. at 125-27, 513 A.2d at
1172-73, although we did not confront the precise claim made here. Poulin
is exactly the kind of case that demonstrates that a privity requirement
would seriously undermine the utility of the Act. Virtually all of the
representations about the quality and features of a modern automobile are
made by manufacturers, most through national and regional media
advertisements. If we enforced a privity requirement, the consumer could
not reach the perpetrator of consumer fraud.
Microsoft suggests that another decision, Wilder v. Aetna Life &
Casualty Ins. Co., supports a privity requirement. In Wilder, plaintiff
had been in an automobile accident with defendant's insured and sued the
insurer under VCFA claiming it had failed to pay plaintiff pursuant to a
settlement agreement. The main holding of Wilder is that the sale of an
insurance policy is not a contract of "goods or services" under §§ 2461(b)
and 2451a(a) (definition of "consumer"). 140 Vt. at 18, 433 A.2d at 310.
This Court added, however, that we were "not dealing with a contractual
situation between buyer and seller" but instead being asked "to read into
the Act a transaction one step removed." Id. at 19, 433 A.2d at 310.
Microsoft argues that this language precludes a suit by an indirect
purchaser, who is "one step removed."
Microsoft misreads the Wilder alternative holding. The problem in
Wilder was that the plaintiff was not a purchaser of the alleged good or
service at all and, in that sense, was removed from the transaction that
was needed to bring the transaction under § 2461(b). Here, plaintiff
indisputably contracted for goods that included the Windows 98 operating
system.
Microsoft also argues that the Legislature clearly intended that §
2461(b) did not provide a remedy to indirect purchasers in antitrust
actions as shown by Act 65, a 2000 amendment to the VCFA. We consider this
argument in the next section because it arises from Microsoft's central
position that we should treat VCFA antitrust actions differently from VCFA
consumer protection actions and require privity for the former even if we
do not require it for the latter. We turn now to the effect of federal
law.
Microsoft's argument is based on the United States Supreme Court
decision in Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977). In
Illinois Brick, the State of Illinois, on its own behalf and on behalf of a
number of local government entities, brought an action under § 4 of the
Clayton Act alleging that defendants, manufacturers and distributors of
concrete block, had conspired to fix the price of concrete block in
violation of § 1 of the Sherman Act. The State and the local governments
were all indirect purchasers of concrete block because the block was sold
by the manufacturers directly to contractors to construct buildings, which
were later sold to state and governmental entities. The United States
Supreme Court, relying on the earlier case of Hanover Shoe, Inc. v. United
Shoe Mach. Corp., 392 U.S. 481 (1968), held that "the overcharged direct
purchaser, and not others in the chain of manufacture or distribution, is
the party 'injured in his business or property' within the meaning of [§ 4
of the Clayton Act]." Illinois Brick, 431 U.S. at 729. Plaintiffs,
therefore, were not entitled to recover the illegal overcharges that were
passed on to them via the
contractors. Id. at 735. Illinois Brick announced what has become to be
known as the "indirect-purchaser" rule: a party who does not purchase a
product directly from an antitrust violator is barred from bringing a cause
of action for overcharge against that violator under federal law. See
California v. ARC America Corp., 490 U.S. 93, 96-97 (1989); In re Microsoft
Corp. Antitrust Litig., 127 F. Supp. 2d 702, 708 (D. Md. 2001).
The critical decision in understanding the effect of Illinois Brick on
this action is California v. ARC America Corp., in which defendants in
state antitrust actions argued that allowing indirect purchasers to sue
under state antitrust acts frustrated federal law so that such claims were
preempted by federal law. The Court rejected this claim:
It is one thing to consider the congressional policies
identified in Illinois Brick and Hanover Shoe in defining what
sort of recovery federal antitrust law authorizes; it is something
altogether different, and in our view inappropriate, to consider
them as defining what federal law allows States to do under their
own antitrust law. As construed in Illinois Brick, § 4 of the
Clayton Act authorizes only direct purchasers to recover monopoly
overcharges under federal law. We construed § 4 as not
authorizing indirect purchasers to recover under federal law
because that would be contrary to the purposes of Congress. But
nothing in Illinois Brick suggests that it would be contrary to
congressional purposes for States to allow indirect purchasers to
recover under their own antitrust laws.
490 U.S. at 103. The Court later reiterated this theme: "When viewed
properly, Illinois Brick was a decision construing the federal antitrust
laws, not a decision defining the interrelationship between the federal and
state antitrust laws." Id. at 105. Thus, under ARC America, states are
free to determine how best to protect consumers against antitrust
violations; in crafting or amending state antitrust law, states can decide
whether to adopt the indirect purchaser rule of Illinois Brick.
Microsoft contends that ARC America stands for the rule that express
statutory language is required in order to permit indirect purchasers to
recover under state antitrust law. Microsoft bases its contention on the
Court's statement of the issue before it: "whether this rule limiting
recoveries under the Sherman Act also prevents indirect purchasers from
recovering damages flowing from violations of state law, despite express
state statutory provisions giving such purchasers a damages cause of
action." Id. at 100. We read this language, which comes early in the
opinion, as a description of the issue rather than a limitation on the
holding. That reading is reinforced by the fact that one of the state
plaintiffs, Arizona, did not have an express provision in its statute
allowing indirect purchaser suits, see Bunker's Glass Co. v. Pilkington,
2002 WL 1461739, at 23 n.7 (Ariz. Ct. App. 2002), but the Court
acknowledged that the statute "might be interpreted as a matter of state
law as authorizing indirect purchasers to recover." ARC America Corp., 490 U.S. at 98 n.3. More importantly, there is nothing in the rationale of ARC
America to suggest that a state is not free to express its own policy in
any way it desires. We reject Microsoft's narrow reading of ARC America.
The issue before us is not whether the Vermont Legislature can allow
indirect purchasers to sue; it is instead whether it has.
We now reach Microsoft's central argument that the holding of Illinois
Brick should be followed in Vermont because § 2453(b) directs that
construction of the VCFA should be guided by federal law. Section 2453(b)
provides:
It is the intent of the legislature that in construing subsection
(a) of this section, the courts of this state will be guided by
the construction of similar terms contained in section 5(a)(1) of
the Federal Trade Commission Act as from time to time amended by
the Federal Trade Commission and the courts of the United States.
The text of subsection (a) is set out earlier in this opinion and is taken
from § 5(a)(1) of the Federal Trade Commission Act, 15 U.S.C. § 5(a)(1).
Microsoft construes the phrase "and the courts of the United States" in §
2453(b) as encompassing federal court decisions interpreting all federal
antitrust statutes, including the Clayton Act and the Sherman Act. See
also 9 V.S.A. § 2451 (the purpose of the VCFA is "to complement the
enforcement of federal statutes and decisions governing unfair methods of
competition . . . "). It argues, therefore, that § 2453(b) requires this
Court to follow the indirect purchaser rule of Illinois Brick and affirm
the dismissal of Elkins's claim. For a number of reasons, we cannot agree
with this construction of the "harmonization" provision.
First, Microsoft plainly misreads the language of § 2453(b). The
phrase "and the courts of the United States" is part of the larger phrase
"by the construction of similar terms contained in section 5(a)(1) of the
Federal Trade Commission Act as from time to time amended by the Federal
Trade Commission and the courts of the United States," and must be so
limited as to include only those federal decisions construing the Federal
Trade Commission Act. Microsoft's reading would have us divorce the phrase
"in the courts of the United States" from its context and thus construe §
2453(b) as stating in effect "the courts of this state will be guided by .
. . the courts of the United States." Not only is this reading
implausible, it also produces a direction so broad as to be practically
meaningless. See State v. Yorkey, 163 Vt. 355, 358, 657 A.2d 1079, 1080
(1995) ("[T]here is a presumption that the Legislature does not intend to
enact meaningless legislation . . . [and], thus, when we construe a
statute, we must do so in a manner that will not render it ineffective or
meaningless").
Second, our interpretation of § 2453(b) is supported by other sections
of the VCFA as well as by our previous decisions construing the Act.
Section 2453(c) specifically references the Federal
Trade Commission Act in instructing the Attorney General to ensure that
rules and regulations enacted for the purposes of the Act "shall not be
inconsistent with the rules, regulations and decisions of the Federal Trade
Commission and the federal courts interpreting the Federal Trade Commission
Act." 9 V.S.A. § 2453(c). That subsection makes sense only if subsection
(b) also means that we are guided by federal court decisions construing the
Federal Trade Commission Act and not other federal antitrust laws.
This Court has expressly interpreted § 2453(b) to mean that "[i]n
construing the Act, we look to the interpretations accorded similar terms
and provisions of the Federal Trade Commission Act . . . ." Carter, 168
Vt. at 52, 716 A.2d at 21 (citing 9 V.S.A. § 2453(b)); see also Russell v.
Atkins, 165 Vt. 176, 182, 679 A.2d 333, 336 (1996); Int'l Collection Serv.,
Inc., 156 Vt. at 544-45, 594 A.2d at 429; Poulin, 147 Vt. at 124-25, 513
A.2d at 1171-72; Christie v. Dalmig, Inc., 136 Vt. 597, 600-01, 396 A.2d 1385, 1387-88 (1979). Russell is particularly significant because it is an
antitrust case.
Third, the harmonization provision in § 2453(b) does not apply to the
VCFA as a whole but only to § 2453(a), which sets out the practices
prohibited under the Act. Thus, § 2453(b) is not aimed at defining who can
sue under the VCFA, but rather what conduct constitutes a violation of the
Act. Nowhere in the Act is there any requirement that the definition of
who may sue under the Act must be consistent with the definition of who may
sue under federal antitrust law, including under the FTCA. This is logical
because the Federal Trade Commission Act does not provide for a private
cause of action, see Holloway v. Bristol-Myers Corp., 485 F.2d 986, 991
(D.C. Cir. 1973), and thus has no bearing on our determination on who can
sue under the VCFA. As the Supreme Court of Iowa recently stated:
The purpose behind both state and federal antitrust law is to
apply a uniform standard of conduct so that businesses will know
what is acceptable conduct and what is not acceptable conduct. To
achieve this uniformity or predictability, we are not required to
define who may sue in our state courts in the same way federal
courts have defined who may maintain an action in federal court.
Comes v. Microsoft Corp., 646 N.W.2d 440, 446 (Iowa 2002).
We are not persuaded by Microsoft's additional argument that the
Legislature's 2000 creation of a specific remedy for indirect purchasers
supports its position. By Act 65 of 2000, the Legislature enacted a
specific antitrust remedy provision, 9 V.S.A. § 2465, which allowed "any
person" to sue for a violation of an antitrust act including VCFA, limited
the damages available in a private action under the VCFA or other state
antitrust act and explicitly authorized indirect purchaser antitrust
actions based on a violation of § 2453. According to Microsoft, prior to
the passage of Act 65, an indirect purchaser such as Elkins must have been
barred from bringing suit under the VCFA; otherwise the legislative
authorization of such a suit was unnecessary. It argues that allowing
plaintiff's suit here would be an impermissible retroactive application of
the amendment.
The express legislative purpose behind the amendment instructs
otherwise. The amendment language states in relevant part:
In any action for damages or injury sustained as a result of
any violation of state antitrust laws, pursuant to section 2453 of
this title, the fact that the state, any public agency, political
subdivision or any other person has not dealt directly with a
defendant shall not bar or otherwise limit recovery. . . .
9 V. S.A. § 2465(b). In its Statement of Intent, the Legislature expressed
the purpose behind this amendment: "This act clarifies the right of a
direct or indirect purchaser to obtain recovery for a violation of the
state antitrust law as set forth in chapter 63 of Title 9." 1999, No. 65
(Adj. Sess.),
§ 1 (emphasis added). Where the Legislature has amended a prior law and
the circumstances clearly indicate clarification to be intended, this
Court's construction of a statute must be governed by the disclosed intent
of the Legislature. See Town of Cambridge v. Town of Underhill, 124 Vt.
237, 241, 204 A.2d 155, 158 (1964); see also In re Shantee Point, Inc., No.
2000-474, slip. op. at 11 (Oct. 4, 2002) (where authorization issue is in
litigation, amendment to provide the authorization "can be interpreted as
clarifications adopted in light of . . . litigation, rather than
substantive changes"). There is nothing to indicate that the Legislature's
intended purpose behind the enactment of § 2465(b) was contrary to the
statement that it was a clarification and not necessarily a substantive
change in the preexisting law. Therefore, based on the plain meaning of
the statute, the expressly stated legislative intent, the remedial purposes
of the Act, our previous decisions construing the VCFA, and the express
legislative purpose behind the 2000 amendment, we find that Act 65 did not
effectuate a change in Vermont law and that an indirect purchaser was
entitled to bring a cause of action under the VCFA prior to the 2000
amendment.
We have saved until last the consideration of the myriad of decisions
from federal and state courts considering the question before us under the
law of the state involved. By way of context, approximately 33 states and
the District of Columbia have allowed indirect purchasers to sue for at
least some damages, many by statutes equivalent to 9 V.S.A. § 2465 and
others by decision. See Note, Good "Brick" Walls Make Good Neighbors:
Should a State Court Certify a Multistate or Nationwide Class of Indirect
Purchasers?, 70 Fordham L. Rev. 2019, 2025-26 (2002); see generally Davis,
Indirect Purchaser Litigation: ARC America's Chickens Come Home to Roost on
the Illinois Brick Wall, 65 Antitrust L.J. 375 (1997). In virtually every
state in which there is no explicit statute
there has been litigation to resolve the issue. Further, state antitrust
claims are often raised in federal antitrust suits so there are some
federal decisions.
In support of its construction of § 2453(b) and its effect on the
construction of the VCFA as a whole, Microsoft relies on two federal
district court cases that involve Vermont law. See State of Vermont v.
Densmore Brick Co., Inc., 1980 WL 1846, at *1 (D.Vt. Apr. 10, 1980), and
F.T.C. v. Mylan Labs., Inc., 99 F. Supp. 2d 1 (D.D.C. 1999). In Densmore,
the State of Vermont sued a woodburning stove distributor for violations of
the Sherman Act and the VCFA. In ruling on defendant's summary judgment
motion, the court stated the general rule of Illinois Brick: that an
antitrust plaintiff who was not a direct purchaser could not recover.
Densmore, 1980 WL 1846 at *4. However, in denying the motion, the court
ultimately found no reason to apply the indirect purchaser rule, as
plaintiff had alleged a direct relationship. Id. Nowhere did the court
address whether Illinois Brick was controlling law with respect to both
federal and state law claims.
The subsequent holding in Mylan Laboratories relied upon Densmore for
the proposition that Vermont case law applied prohibited indirect purchaser
suits under the VCFA. 99 F. Supp. 2d at 10. Not only did the Mylan court
misinterpret Densmore, it failed to do its own independent analysis. We
find more accurate the later District of Maryland decision in In re
Microsoft Corp. Anitrust Litigation, 127 F.2d 702, 723, 725 (D. Md. 2001).
In this decision, the court found that it could not determine how this
court would resolve the issue of whether an indirect purchaser could sue,
labeling Microsoft's argument to the contrary as painting "with too broad a
brush." Id. at 723. We agree with the court that the issue before us was
entirely unresolved until this opinion. We decline to follow Mylan
Laboratories or hold that the Densmore is persuasive authority for
Microsoft's position.
As the experience of other states in the construction of their
antitrust and consumer fraud statutes may offer guidance, see Int'l
Collection Serv., Inc., 156 Vt. at 547-49, 594 A.2d at 430-32 (Court looks
to other state's jurisprudence for guidance in construing the VCFA), we
turn to a brief examination of the cases from other states. Because the
statutory schemes vary markedly from state to state, it is helpful to place
the decisions in three categories, as follows:
1. Those Based on State Antitrust Acts - Unlike Vermont, most states
have specific state antitrust acts. These statutes typically have federal
harmonization provisions that require the court to look to federal court
decisions interpreting any of the federal antitrust laws. Unless there is
a specific provision in the state antitrust act allowing indirect
purchasers to sue - that is, explicit rejection of the Illinois Brick rule
- most of the court decisions in these states hold that they are bound to
follow Illinois Brick. See Pomerantz v. Microsoft Corp., 50 P.3d 929, 932
(Colo. Ct. App. 2002); Berghausen v. Microsoft Corp., 765 N.E.2d 592, 596
(Ind. Ct. App. 2002); Duvall v. Silvers, 998 S.W.2d 821, 825 (Mo. Ct. App.
1999); Minuteman, LLC v. Microsoft Corp., 795 A.2d 833, 838 (N.H. 2002);
Siena v. Microsoft Corp., 796 A.2d 461, 464-65 (R.I. 2002). Those that
refuse to follow Illinois Brick note that the harmonization provision is
not absolute. See Bunker's Glass Co. v. Pilkington, 2002 WL 1461739, at
29; Comes v. Microsoft Corp., 646 N.W.2d 440, 446 (Iowa 2002); Hyde v.
Abbott Labs., 473 S.E.2d 680, 686 (N.C. Ct. App. 1996) (federal law is
considered "only as persuasive authority").
2. Those Based on Consumer Protection Acts, or Similar Legislation,
in States that also Have Antitrust Acts - In most of the litigated cases,
the plaintiff is precluded from suing under the state antitrust act because
of the adoption of the Illinois Brick rule and sues instead under a
consumer protection act, an unfair trade practices act or the like. The
decisions in this category go in both
directions depending upon the court's view of the need for consistency in
the result under the applicable acts. See Vacco v. Microsoft Corp., 793 A.2d 1048, 1058, 1066 (Conn. 2002) (because of broad harmonization
provision, consumer cannot sue under state antitrust act; consumer also
cannot sue under Connecticut Unfair Trade Practices Act); Mack v.
Bristol-Myers Squibb Co., 673 So. 2d 100, 109 (Fla. Ct. App. 1996)
(although indirect purchaser cannot sue under state antitrust act, she can
sue under the Florida Deceptive and Unfair Trade Practices Act); Davidson
v. Microsoft Corp., 792 A.2d 336, 344-45 (Md. Ct. Spec. App. 2002)
(indirect purchaser who cannot sue under state antitrust act also cannot
sue under Maryland Consumer Protection Act); Ciardi v. F. Hoffman-La Roche,
Ltd., 762 N.E.2d 303, 314 (Mass. 2002) (indirect purchaser who cannot sue
under state antitrust act can sue under Massachusetts consumer protection
statutes); Abbott Labs., Inc. v. Segura, 907 S.W.2d 503, 507 (Tex. 1995)
(indirect purchaser who cannot sue under state antitrust act also cannot
sue under Texas Deceptive Trade Practices-Consumer Protection Act); see
also Arnold v. Microsoft Corp., 2001 WL 1835377, at *4, *7 (Ky. Ct. App.
2001) (indirect purchaser who cannot sue under "Kentucky's version of the
Sherman Act" also cannot sue under unfair trade practices provision of the
Kentucky Consumer Protection Act); Blake v. Abbott Labs., Inc., 1996 WL
134947, at *5, *7 (Tenn. Ct. App. 1996) (indirect purchaser can sue under
both Tennessee Unfair Trade Practices Act, the state antitrust act, and
under the Tennessee Consumer Protection Act). In most of these cases, the
court does not find Illinois Brick to be a direct barrier to suit, or, put
another way, it does not find that only direct purchasers can sue under the
consumer protection act or similar legislation. Illinois Brick is relevant
to the outcome only because it may prevent a suit under the state antitrust
act.
3. Those Based on a Consumer Protection Act in a State that Does Not
Have an Antitrust Act - This category includes this case and one decision
from another state. In Blewett v. Abbott Laboratories, the Washington
Court of Appeals ruled that an indirect purchaser could not bring an
antitrust action under the Washington Consumer Protection Act because of
the broad federal harmonization provision - "the courts [shall] be guided
by final decisions of the federal courts . . . interpreting the various
federal statutes dealing with the same or similar matters." 938 P.2d 842,
845-46 (Wash. Ct. App. 1997).
While there is language in many of the decisions that we might
otherwise find helpful, in general the decisions give us little guidance
because of the critical differences in their statutory schemes. They
involve either broad harmonization provisions that require the courts to be
guided by federal court decisions interpreting any of the federal antitrust
acts, including the Clayton Act that is interpreted in Illinois Brick, or
they involve the interrelationship of a specific antitrust act, with a
broad harmonization provision, and a more general consumer protection law.
None is persuasive authority for the outcome of this case.
In summary, we find no reason to treat antitrust cases differently
from other VCFA cases and prohibit indirect purchasers from bringing suit
under § 2461(b). Since we have concluded that consumers can generally sue
under § 2461(b) even though they are indirect purchasers of a good or
service from the defendant, we also hold that they can bring an antitrust
case under § 2461(b). The recent addition to the VCFA of § 2465(b),
explicitly authorizing indirect purchaser antitrust suits, was not a change
in the preexisting law.
Reversed and remanded.
FOR THE COURT:
_______________________________________
Associate Justice
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