Mr. GOLDBERG. I think it would be "killed," not "harmed." It is a bill that is designed, in its present form, to kill off any attempt at serious antitrust enforcement in the private sphere in the guise of being a bill to improve such enforcement. That, I believe, is the almost unanimous view of private practitioners who have represented plaintiffs over the last 20 years.

I believe Mr. Harold Kohn spoke before this body earlier in these sessions and said: "Go slow." I say: "Go very, very slow." We have only had a year of Illinois Brick. So far in that last year I think there is more effective antitrust enforcement than the preceding 5 years.

If we are successful in the current litigation which all of us on the plaintiff's side are undertaking, we will have more in the next 2 years than we have had in the past 100 years of antitrust enforcement.

Senator ALLEN. I will say that I am very much impressed with your testimony and the testimony of the other two witnesses.

Mr. GOLDBERG. Mr. Chairman, if I might indicate, my colleague from Chicago, Mr. James Sloan is here. We would like the opportunity to supplement these remarks if you would like, through our ad hoc committee, of plaintiff lawyers throughout the United States with further remarks into the record at a future date. I believe we are now forming an organization which, in Chicago already, has 25 plaintiff antitrust lawyers as members. We have various members throughout the rest of the United States in opposition to this bill. We would like an opportunity in the near future to supplement our remarks with a little bit of support from this group.

Senator ALLEN. That is fine.

From a practical standpoint, I am wondering if we would be allowed by the committee to have any more testimony of witnesses. You would certainly have a right to put in such written testimony if you so desire, but we are being pressed. We have a definite time limitation during which we have the opportunity to have this testimony. I seriously doubt if we could arrange for more testimony down the line.

When could the testimony be available?

Mr. GOLDBERG. Mr. Chairman, let me defer to my colleague from Chicago, Mr. Sloan.

Senator ALLEN. We are here today, and if the testimony would be made available today, then we would certainly be glad to hear it. Mr. GOLDBERG. Perhaps Mr. Sloan could respond to that question. He is sitting to my left here.

Senator ALLEN. Mr. Sloan, please identify yourself, for the record. We will be glad to hear from you.

Mr. SLOAN. My name is James Sloan from Sloan & Connelly in Chicago. I am a plaintiff's antitrust attorney and have been for many years. I am involved in some of the major antitrust litigation in the country with Mr. Goldberg, and in some suits without Mr. Goldberg.

We realize that this is an 11th-hour matter for the committee. We do not request additional hearings or an oportunity to present testimony.

In order to expedite the committee's consideration of this important legislation, we are simply asking to supplement Mr. Gold

berg's testimony with a written statement to the committee by some of the members of the National Ad Hoc Committee of Plaintiffs Counsel to do two things.

First, it would identify the variety of lawyers and the types of practice they are in, to identify those lawyers, and perhaps supplement with some succinct nonredundant remarks.

I think the views which have been expressed here have been expressed fairly well. Certainly Mr. Goldberg's testimony states what this legislation may mean as a practical matter. So, I think we can do that promptly and in writing and with copies to each member of this subcommittee.

Senator ALLEN. Within the next week?

Mr. SLOAN. Yes, Senator, we certainly can.

Senator ALLEN. I am advised that we will probably vote on May 5 in the committee on the final reporting of the bill in some form. Mr. SLOAN. We will get it in next week.

Senator ALLEN. Without objection, so ordered.

Mr. SLOAN. I would like to make this statement also: The plaintiffs' bar has been at repose on this legislation because we never dreamed that this type of remedial legislation would be so promptly enacted.

Senator ALLEN. I think Mr. Gillam made a point there that it may well be pride of authorship in the legislation in the 94th Congress which prompted this followup legislation. I believe Mr. Gillman said that, or words to that effect. I certainly agree on that point. But we are going to need, for the record, these statements. I feel that it would be very helpful if some grassroots work was done to explain the position of the plaintiffs' attorneys. That is not realized by members of the committee, and, I feel, by many of the Senators. That would be most helpful to help with a proper decision in this matter.

Mr. SLOAN. Thank you.

Senator ALLEN. Let me inquire as to what the practical effect has been of the parens patriae provision as to what litigation it has brought forth at the State level. What has been the effect of that provision authorizing the attorneys general in this suit?

Mr. GOLDBERG. Are you asking me?

Senator ALLEN. I am asking any of you.

Mr. GILLAM. The only case I am familiar with is the case in the State of Arizona file which is Consolidated in the Petroleum Products litigation in Los Angeles, where the parens patriae claim is made.

The State of Illinois has also asserted a parens patriae claim in the Paper litigations in Philadelphia. Those claims have been asserted. The first wave of discovery is about to take place. It is much too early to tell what effect, if any, the legislation is really going to have.

Senator ALLEN. Were those individual claims for an individual direct purchaser? Or, was there a class action?

Mr. GILLAM. Both. Both the Arizona and the Illinois complaints are class action and parens patriae complaints. They have all counts in them.

Following Mr. Goldberg's advice, they allege everything. [Laughter.]

Mr. GOLDBERG. They are not following my advice.

Mr. GILLAM. Mr. Specks' advice.

Mr. GOLDBERG. Certainly Arizona is not following my advice. Mr. GILLAM. Only Illinois, Mr. Chairman. [Laughter.]

Mr. LACOVARA. I am caught here. I can serve as a buffer since I am not involved in those lawsuits. I think at last count there were four or five suits that have been brought under the 1976 parens patriae litigation. There were two of them which involve Arizona. There is one other than the one mentioned in Arizona, which is against local gas stations in a small section in the State of Arizona. Another case was brought by the State of Maryland against real estate brokers. I think there was a second case involving real estate brokers somewhere in the Far West. The fourth case does not readily come to mind, I confess but I believe in each instance it was a suit brought by the State on behalf of the consumers who were directly purchasing from the defendants in the case. So, in the cases that the States have been bringing under the parens patriae statute, the applicability of Illinois Brick to the parens patriae statute, or its inapplicability, has not been tested. It is irrelevant to the cases the States have been bringing.

Mr. GILLAM. Let me clarify one thing.

The Petroleum Products case that I was referring to was not the Gasoline Station case. It is the case against 18 oil companies. It and the Fire Paper case illustrate one thing that I do not think anyone has pointed out. Illinois Brick has absolutely minimal effect in a vertically integrated industry. This is one of Mr. Berger's 17 ways to get around Illinois Brick.

Senator ALLEN. I see.

I appreciate very much this very illuminating testimony that we have heard today. I would like to ask you, Mr. Sloan, to bring in the statements within a week.

Mr. SLOAN. Certainly.

Senator ALLEN. I encourage you to make known the views of the plaintiffs lawyers with regard to this legislation. As I say, I do not believe that is generally known in the Senate. I know it is not realized in the committee itself. I think it might have a profound effect on the decision, either in the committee or on the floor of the Senate. I do feel very grateful to you for coming before the committee and giving us the benefit of your views and your opinions with regard to this legislation.

Thank you very much.

[The prepared statement of Mr. Goldberg follows:]

PREPARED STATEMENT OF PERRY GOLDBERG

Mr. Chairman, my name is Perry Goldberg. I am a member of the firm of Specks & Goldberg, Ltd., in Chicago, a firm which with its predecessors has been heavily involved as attorneys for plaintiffs in scores of antitrust litigation for the past 10 years. I am appearing here today on behalf of a committee of plaintiffs' antitrust attorneys throughout the nation who are assembling to consider the merits and pitfalls of the various legislative proposals which you are considering with respect to Illinois Brick and Hanover Shoe. I hope I can bring to this subcommittee my experience not only as a practicing plaintiffs antitrust attorney, but also some special experience in the problems of judicial administration to which I believe Hanover Shoe and Illinois Brick are primarily addressed.

Much of my early career was spent in the massive Electric Equipment Antitrust Litigation. In the early 1960's, I served in an administrative legal capacity to the

Coordinating Committee for Multiple Litigation. This was a special subcommittee organized by the Judicial Conference of the United States and appointed by Chief Justice Warren to function as a kind of executive committee for the judges assigned to the Electric Equipment Antitrust Litigation and thereafter, to make recommendations regarding proposals for dealing with future complex multidistrict litigation. In a sense, this Judicial Conference subcommittee was the predecessor for the current Judicial Panel on Multidistrict Litigation. Accordingly, I participated in the drafting of Title 28, U.S.C. 1407, the pretrial coordination or consolidation provisions that are applicable to multidistrict litigation and which have been mentioned in the course of these hearings. I, thus, have had experience both as a judicial advisor and as a practicing plaintiffs attorney with the problems of complex litigation and judicial administration.

The committee of plaintiffs attorneys for whom I am speaking has as its major objective improvements in the efficient and effective enforcement of the antitrust laws. Most of us are unhappy with the decision in Illinois Brick. We believe it could possibly be a step backwards in the antitrust laws, and our sense of justice is, of course, offended by the thought that the courts are unable to remedy violations of the laws by providing redress to the persons actually injured. However, just as strongly, we believe that Hanover Shoe was correctly decided, and that the proposed legislation could do irreparable harm in the effective enforcement of the antitrust laws and to the efficient administration of justice.

I am aware of the concern voiced at these hearings that the combination of Hanover Shoe and Illinois Brick may operate to deny court access to persons who are not in privity with the defendants, but who may nevertheless have suffered economic injury. I want to return to this point in a minute. But I want first to voice the concern that many of us in the plaintiffs' bar have that you do not fully appreciate difficulties of antitrust litigation.

Antitrust litigation is today enormously complex even without the pass-on defense. I have taken the liberty of enclosing an article I co-authored on the Electrical Equipment conspiracy cases to demonstate how difficult that litigation became just in the context of what were essentially direct purchaser actions. I do not believe those cases could have been handled had the pass-on defense been available. Nor do I believe that it would be possible to handle most of the treble damage actions that are pending today. In short, we believe it is correct to observe that much current private enforcement would be torpedoed if the proposed legislation were enacted. I sincerely believe that an already complex enforcement system would simply collapse of its own weight if you complicate it any more. And I should add here in this connection that obviously direct purchasers do sue, and I find the argument that they do not sue is simply not borne out by the experience in scores of cases. I would challenge you in a different way than Professor Handler. I would ask you before you enact any legislation to spend just a few weeks in the field, so to speak, monitoring some of the current antitrust actions. I do not refer here to review of scholarly papers. I mean traveling with me or anyone you choose through a few steps of the discovery process. I would be willing to let such an experience speak for itself. Accordingly, I will only make three brief additional points.

First, on the question of the compensatory aspects of the question, to which I said I would return, let me just make one comment. Perfect compensation is impossible, and the costs of trying to achieve even approximate compensation would undermine the entire enforcement effort. Indirect purchasers, including consumers, are simply not the only ones who may be injured in some economic way by violations that today can be pursued only by direct purchasers. Stockholders, employees and suppliers of both the direct and the indirect purchasers may suffer even more injury than the ultimate consumer. The pending legislation at least recognizes that it would be impossibly burdensome to allow these persons into the lawsuit by expressing an intent not to change the law of standing.

Presumably, the proponents hope by this limitation on complexity to make the legislation more appealing. To my way of thinking, this limitation only underscores the futility and discriminatory nature of the bill. While Congress can obviously decide to prefer compensation over efficient deterrence, I do not see how it can decide to compensate some injured persons but exclude others perhaps more worthy. Hanover Shoe and Illinois Brick are, I will admit, somewhat arbitrary in the interests of enforcement and judicial administration. But the pending legislation is no less arbitrary and infinitely more complex. In short, it combines the worst of both worlds and cannot work.

It is possible to try to have it both ways, by leaving Hanover Shoe intact and overruling Illinois Brick and revising the law of standing. This would eliminate the difficulties with the pass-on defense while permitting all potentially injured persons

to press their claims. I am not convinced that double recovery is as much of a problem on the practical level in the Federal courts as it is on the theoretical level. But it should be pointed out that no matter what the Congress does to amend the Clayton Act, the State courts are likely to continue to follow Hanover Shoe and Illinois Brick in interpreting state antitrust laws, which are patterned after the current Federal law. There is nothing the Congress can do to change State law short of total preemption. Accordingly, if the pending bill passes, you will have interactable problems of double damages arising out of direct purchasers' rights to the entire overcharge in State courts, and indirect purchasers' rights to additional recovery in the Federal courts.

Second, in the interest of full disclosure, I should point out that my firm's clients have an interest in this legislation. My clients are currently pursuing direct purchaser claims in numerous active litigations, including the Folding Carton, Fine Paper, Corrugated Container, Western Sugar, Chicken, Wiring Devices, Toilet Seats and Armored Car Antitrust Litigations. These clients are primarily small businesses which may have their potential recovery both reduced and delayed if the defendants raise a Hanover Shoe defense, as they most certainly will have to, in the event the pending legislation is enacted. But the fact that our clients may be affected cannot eliminate the questions of constitutionality and basic fairness raised by retroactive legislation.

Perhaps there is concern on the other side about the pending actions that will fail if the legislation is not retroactive. But I would like to suggest that the equities are not equally balanced. Hanover Shoe has been solid law for a decade, and there was never any hint that I was aware of that the Congress even considered overruling that case in the parens patriae legislation. Illinois Brick, though in our view of questionable correctness, can hardly be considered a surprise. It is a logical extension of Hanover Shoe, and there have been many indications in the courts and in the parens patriae legislation that such a case could be decided in the way it was. In other words, I am trying to say that while I recognize that nothing you do will be considered equally fair by all interested groups, I think that apart from being unwise, it is more unfair to reverse the reasoning of recent and long-standing Supreme Court precedent retroactively than to accept the teaching of the High Court.

Finally, a possible result of the proposed legislation would be to increase the importance of State governments in the overall scheme of antitrust enforcement. We question the soundness of this result at this early date. Many of the States are just beginning their development of any expertise in the antitrust field, and the direct cost of the Justice Department's grants to these States is yet to show any result for the many millions of taxpayers' money which have already been expended. Surely in these days of already overburdened taxpayers, some considerations should be afforded the possibility of self-help through the free enterprise system which, after all, is what the antitrust laws are all about.

In conclusion, I should like to state that the Office of the Attorney General of Illinois has reviewed my presentation here today and finds itself substantially in accord with these views.