In Re Antibiotic Antitrust Actions, 333 F. Supp. 313 (S.D.N.Y. 1971)

US District Court for the Southern District of New York - 333 F. Supp. 313 (S.D.N.Y. 1971)
May 29, 1971

333 F. Supp. 313 (1971)

In re Coordinated Pretrial Proceedings in ANTIBIOTIC ANTITRUST ACTIONS.

M 19-93A and the following actions: 70 Civ. 3157, 69 Civ. 5632, 69 Civ. 3220, 69 Civ. 1629, 69 Civ. 5154, 70 Civ. 3738, 70 Civ. 3737, 69 Civ. 4746, 69 Civ. 3294, 71 Civ. 570, 70 Civ. 3158, 69 Civ. 3195, 70 Civ. 1074 and 69 Civ. 2838.

United States District Court, S. D. New York.

May 29, 1971.

 
MISCELLANEOUS ORDER NO. 71-12 
MEMORANDUM AND ORDER DENYING DEFENDANTS' MOTION TO DISMISS CLAIMS OF INSURERS AND OTHERS SIMILARLY SITUATED

MILES W. LORD, District Judge (By Assignment).

Following discussions in New York and Minneapolis on January 14-15, 1971 and February 9-10, 1971, regarding "standing," "remoteness" and "passing-on," the court established a schedule for filing and briefing motions to dismiss, and motions for summary judgment, or partial summary judgment, in several categories of cases. (See Miscellaneous Order 71-6). It was the court's belief that the issues of "standing" and "remoteness" were legal ones involving essentially undisputable facts and therefore ripe for decision. However, all agreed that the so called "passing-on" defense required further discovery and was not appropriate for disposition at that time.

*314 Comprehensive briefs were filed by all interested parties and the motions were argued in San Francisco on March 16, 1971. With one exception[1] the court concluded that a ruling on the merits of defendants' motions cannot be made at this time.

The main thrust of defendants' argument seems to be that since the Hanover Shoe[2]doctrine precludes the use of a "pass-on" defense against a seller in a chain of distribution unless the sale was pursuant to a "cost plus" or other fixed mark-up arrangement, a subsequent purchaser in the chain of distribution is too remote or lacks standing unless he purchased under a "cost plus" type contract.

However, as the Court of Appeals pointed out in the settling cases:

 
[T]here are then several obvious distinctions between the principles laid down in Hanover Shoe and the present case. First, the passing-on doctrine is not here being used as a defense to permit the defendants to escape liability, but rather as an attempt to award damages, insofar as is possible, to those who ultimately paid higher prices as a result of the collusive pricing, and to avoid giving a windfall gain to those who rather clearly were not injured. Secondly, to permit the use of a doctrine in the present circumstances will not act to limit or frustrate private treble-damage claims, but will, if anything, do the opposite.[3]

Courts[4] and commentators[5] have both confessed an inability to reconcile the standing and remoteness cases. The Eighth Circuit, recognizing the interrelationship between "remoteness" and "pass-on" recently concluded that one should not be decided without the other and that "judicial resolution of these complex issues must await the ripe adjudication of the factual context in which they arise."[6]

This court believes that the resolution of the standing/remoteness/pass-on issues as they relate to this litigation must also await further development of the factual context in which they arise.

It is therefore ordered that defendants' motions for summary judgment or dismiss as to the following actions are hereby denied without prejudice to the right of the defendants to refile similar motions at a later time:

 
Valley Clerks Trust Fund v. Chas.               Civil Action
Pfizer & Co., Inc., et al. (N.D. Cal.,          No. 70 Civ. 3157
Civil No. C-70-1294LHB)
Retail Clerks Local 770 & Food Employers        Civil Action
Benefit Fund, et al. v. Chas.                   No. 70 Civ. 3738
Pfizer & Co., Inc., et al. (N.D. Cal.,
Civil No. C-70-1681ACW)
San Francisco Culinary, Bartenders              Civil Action
and Service Employees Welfare Fund              No. 70 Civ. 3158
v. Chas. Pfizer & Co., Inc., et al.
(N.D. Cal., Civil No. C-70-1295ACW)
Hoffa Medical Center v. American                Civil Action
Cyanamid                                        No. 69 Civ. 5632
Bakers Health & Welfare Fund, et al.            Civil Action
v. Chas. Pfizer & Co., Inc., et al.             No. 70 Civ. 3737
(N.D. Cal., Civil No. C-70-1680ACW)
Group Health Cooperative of Puget               Civil Action
Sound v. Chas. Pfizer & Co., Inc.,              No. 69 Civ. 3195
et al. (W.D. Wash., Civil No. 8222)
Building Service Union Health &                 Civil Action
Welfare Trust Fund v. Chas. Pfizer &            No. 69 Civ. 3220
Co., Inc., et al. (N.D. Cal., Civil
No. 51523)
California Physicians' Service v. Chas.         Civil Action
Pfizer & Co., Inc., et al.                      No. 69 Civ. 4746
Associated Life Insurance Co., etc.             Civil Action
v. Chas. Pfizer & Co., Inc., et al.             No. 70 Civ. 1074
(N.D. Ill., Civil No. 70 C 368)
 
*315
Teamsters Security Fund of Northern        Civil Action
California, Inc. v. Chas. Pfizer &         No. 69 Civ. 1629
Co., Inc., et al. (N.D. Cal., Civil
No. 51010)
Aetna Life Insurance Co. v. Chas.          Civil Action
Pfizer & Co., Inc., et al.                 No. 69 Civ. 3294
Union Health Center of New York,           Civil Action
et al. v. Chas. Pfizer & Co., Inc.,        No. 69 Civ. 2838
et al.
Edward Swayduck, et al. v. Chas.           Civil Action
Pfizer & Co., Inc., et al.                 No. 69 Civ. 5154
Mutual of Omaha Insurance Co.,             Civil Action
et al. v. American Cyanamid Co., et        No. 71 Civ. 570
al. (D. Minn., Civil No. 4-71-Civil-6)

So ordered.

NOTES

[1] The motion to dismiss claims of purchasers of finished animal feed was granted, Misc. Order No. 71-11, 333 F. Supp. 310 (1971).

[2] Hanover Shoe v. United Shoe Machinery Corp., 392 U.S. 481, 88 S. Ct. 2224, 20 L. Ed. 2d 1231 (1968).

[3] State of West Virginia v. Chas. Pfizer & Co., Inc., 440 F.2d 1079 (2nd Cir. 1971).

[4] Wilson v. Ringsby Truck Lines, Inc., 320 F. Supp. 699 (D.Colo. 1970).

[5] M. Handler, The Shift From Substantive to Procedural Innovations in Antitrust Suits The Twenty-Third Annual Antitrust Review, 71 Col.L.Rev. 1, 24-31 (1971).

[6] State of Minnesota v. U. S. Steel Corp., 438 F.2d 1380 (8th Cir. 1971).