9

unidentified, exception to Illinois Brick.

Plaintiffs

are in error in alleging that Illinois Brick "recognized" that such new exceptions could exist if plaintiffs make a "'convincing demonstration'" that the rules of Hanover

Shoe and Illinois Brick would undermine effective antitrust 1/

enforcement. (Pls. Memo. in Opp., pp. 10-11) On the
contrary, the Supreme Court ruled that antitrust policy
supports its decision that only those who deal directly
with antitrust defendants may sue. 97 S.Ct. at 2075.
The Court in Illinois Brick also noted that:

"Hanover Shoe itself implicitly discouraged the
creation of exceptions to its rule barring pass-
on defenses, and we adhere to the narrow scope
of exemption indicated by our decision there."
97 S.Ct. at 2074. 2/

1/

In support of this contention, plaintiffs cite a portion of a sentence (Pls. Memo. in Opp., p. 11), the full text of which is:

-

-

"Second, we decline to abandon the construction
given S 4 in Hanover Shoe 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 the section in the absence of a
convincing demonstration that the Court was
wrong in Hanover Shoe to think that the effec-
tiveness of the antitrust treble-damage action
would be substantially reduced by adopting a
rule that any party in the chain may sue to re-
cover the fraction of the overcharge allegedly
absorbed by it." 97 S.Ct. at 2066.

The Court emphatically reaffirmed that the decision in
Hanover Shoe was not wrong. Thus, this sentence hardly
supports the argument that the Court "recognized" that
"new exceptions" to Illinois Brick could exist.

2/ In the Supreme Court's judgment, this policy favoring limitation of suits to direct purchasers or sellers is so strong that the limitation should be enforced even if some direct purchasers or sellers will "refrain from bringing a treble damage suit for fear of disrupting relations with their suppliers." 97 S.Ct. at 2075.

we alllige thing
Conspiva to
Repriss to
Wholesale price

1.

Plaintiffs' Other Efforts to Escape
Illinois Brick Should Be Rejected.

The Argument that Meat Packers
"Participated" in the Alleged
Conspiracy.

Plaintiffs argue that Illinois Brick is not ap-
plicable to these cases because some of the plaintiffs
sell cattle directly to meat packers, who "may be" the
"unnamed co-conspirators" in these lawsuits. (See Pls.
Memo. in Opp., p. 6; Boccardo Memo., pp. 4-5) Yet
plaintiffs' pleadings, including the new complaints in
Becker and MPIA, allege that supermarkets have conspired
against packers to depress beef prices; and plaintiffs
concede that "the facts underlying the Plaintiffs' Com-
plaints have not changed." (Pls. Memo. in Opp. p. 3)

The argument that packers "may be" the "unnamed co-conspirators" is refuted by any fair reading of the charges in the complaints, including the Amended and Substituted Complaints in MPIA and Becker. The complaints charge a conspiracy by supermarkets against) packers, and one of the principal "terms" and "purposes" of the alleged violation was to "fix, stabilize and maintain at uniform non-competitive and artifically low levels, the price paid to slaughterhouses and beef packers for fresh and processed beef

1/

Specifically, the

MPIA Amended and Substituted Complaint ¶¶ 37 and 37(a) (emphasis added). The allegations in the other complaints are substantially similar. See Petersen Original Complaint, ¶ 12(a); Petersen Amended Complaint, § IV, 1 2(a); Pony Creek, 12(a); Lowe, ¶ 27 (d); Agee, S IV, 1 2(a); Black, 142(a); Chaparral, § V, ¶ 2(a); Boccardo, ¶ 57(a); and Varian, SV, ¶ 2(a).

- 11

amended MPIA complaint

-

said by plaintiffs in this re

spect to be "typical of the allegations of all Complaints

11

alleges

at issue here" (Pls. Memo. in Opp., p. 6 n.2)
that the defendants and "unnamed co-conspirators" have
done the following:

"a. Many retail food chains, including the defendant food chains named herein and other coconspirators, have engaged in centralized buying whereby beef purchases can be made for the entire chain or a substantial part thereof, from one or more central locations.

There is no role for packers as "unnamed co-conspirators"

in allegations such as these, which describe activities

of retailers in the purchase and retail sale of beef.

2/

1/ MPIA Amended and Substituted Complaint, 34. The full text of paragraph 34 ("overt manifestations") and paragraph 37 ("substantial terms, purposes and intent") of the MPIA pleading is set forth in Appendix B to this reply.

2/ Plaintiffs have attempted to suggest that support for the idea that packers "may be" the "unnamed co-conspirators" [Footnote continued on following page]

12

Furthermore, even if it were assumed that packers participated somehow in the supermarkets' alleged violations, plaintiffs would still have to show that the supposedly depressed beef prices were passed on to cattlemen in the form of lower prices for cattle. Since proof of a pass-on such as this is precisely what the Supreme Court intended to bar in Illinois Brick, plaintiffs' speculative references to unlawful activities by packers cannot establish an entitlement to sue super

market chains.

Plaintiff Boccardo cites Albrecht v. Herald Co., 390 U.S. 145 (1968), for the proposition that packers and supermarket chains are jointly liable for prices "'dictated'" by supermarkets even though the packers may have done nothing more than "unwilling[ly]" accept the allegedly depressed prices. (Boccardo Memo., pp. 4-5) Plaintiff has totally misread the Albrecht decision. In that case, plaintiff was a direct purchaser of a product

How

[Footnote continued from preceding page] in the super-
market cases can be found in the fact that the MPIA
plaintiffs have sued packers in a separate lawsuit known
as MPIA, et al. v. Iowa Beef Processors, Inc., et al.
ever, plaintiffs' belated suggestion is completely at
odds with the representations these same plaintiffs made
to the Multidistrict Panel in opposing transfer of the
packer cases to Dallas. There, plaintiffs argued that the
packers had nothing to do with the alleged retail con-
spiracy:

from defendant.

The Supreme Court concluded that the purchaser could sue the person with whom he dealt directly, even though the purchaser may have "participated" in the violation by unwillingly adhering to a retail pricing structure dictated by defendant. In other words, the Court simply ruled that a direct purchaser can sue his immediate supplier if he is coerced into selling at fixed retail prices.

If plaintiffs' argument were successful here, the
Virtually any in-

result would be easily foreseeable.

direct purchaser or seller could allege that his supplier

or customer "participated" in a violation by willingly

or unwillingly passing on the alleged losses to him.

As plaintiffs have demonstrated in their briefs, it is an easy matter to make such a claim. If this were per

The Supreme Court in Illinois Brick was concerned about the danger of duplicative recoveries, and the Court

therefore held that pass-on rules must be mutually ap

plicable to plaintiffs, as well as to defendants. If
meat packers were to sue supermarket chains for allegedly
depressing beef prices, the defendants obviously could
not avoid liability by arguing that the packers "par-
ticipated" in the conspiracy by passing on the depressed
prices to others. The Supreme Court in Hanover Shoe ex-
pressly excluded such a defense.

Therefore, unless

defendants are to be subjected to multiple liability

-

27-396 O- 78 - 13

prero hate ot

Prema Life
Mufflers