United States District Court, Southern District of New York
July 24, 1990
STATE OF NEW YORK, PLAINTIFF,
CEDAR PARK CONCRETE CORP., ET AL., DEFENDANTS. STATE OF NEW YORK, PLAINTIFF, V. CENTURY MAXIM CONSTRUCTION CORP., ET AL., DEFENDANTS.
The opinion of the court was delivered by: Sand, District Judge.
These cases arise out of an alleged bid rigging/market
allocation scheme in the New York City market for
reinforced-concrete superstructure construction work. The State
of New York seeks to amend its complaint to include claims for
damages under New York's antitrust statute on behalf of
government entities which were apparently indirect purchasers
of the concrete work.
In Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct.
2061, 52 L.Ed.2d 707 (1977), the United States Supreme Court
held that "indirect purchasers," downstream buyers who allege
that they absorbed at least part of the "cost" of an antitrust
violation, could not recover from the alleged violator under §
4 of the Clayton Act, 15 U.S.C. § 15. The Court described its
decision as one of "statutory construction," id. at 736, 97
S.Ct. at 2070, and found that:
the legislative purpose in creating a group of "`private
attorneys general'" to enforce the antitrust laws under § 4
. . . is better served by holding direct purchasers to be
injured to the full extent of the overcharge paid by them than
by attempting to apportion the overcharge among all that may
have absorbed a part of it.
Id. at 746, 97 S.Ct. at 2075 (citation omitted).
Plaintiff, the State of New York, commenced these actions on
March 20, 1985 and October 22, 1986 respectively, against more
than thirty named defendants, all alleged participants in a
continuing collusive bid rigging and market allocation scheme
directed at the New York City market for "major
reinforced-concrete superstructure construction work." Cedar
Park Amended Complaint, Preliminary Statement. Although
plaintiff sought treble damages under section 4 of the Clayton
Act, 15 U.S.C. § 15, and sections 340 and 342-b of the New York
General Business Law (the "Donnelly Act") for injuries
allegedly sustained by the State and its political
subdivisions, the only state subdivision actually named by
plaintiff in its initial complaint was the New York Convention
Center Development Corporation, a subsidiary of the New York
State Urban Development Corporation ("UDC"). Plaintiff also
sought an injunction against further violations and the
imposition of civil penalties under the Donnelly Act.
In 1987, various of the defendants moved to dismiss all or
portions of the complaints. In State of N.Y. v. Cedar Park
Concrete Corp., 665 F. Supp. 238 (S.D.N.Y. 1987), this Court
In view of the need early in the litigation to identify
State-affiliated purchasers, we believe the complaints should
be dismissed insofar as they purport to state treble damages
claims on behalf of unidentified state subdivisions.
Accordingly, we hold that insofar as the complaints allege
federal and state antitrust damages claims on behalf of State
subdivisions other than the UDC, they are dismissed
without prejudice to repleading within 60 days.
Id. at 242. Having dismissed plaintiff's claims to the extent
they asserted damages claims on behalf of State entities other
than the State itself and the UDC, we turned our attention to
the implications of Illinois Brick, which we described as
stating a "principle of federal antitrust law." Id. We found
that the treble damages claims asserted by the State and the
UDC could withstand the motions to dismiss because the
complaints contained "the required allegations of direct injury
to both the State of New York and the UDC." Id. Pursuant to
our opinion, the State later notified the Court and all parties
that it would not assert any additional damage claims. See
Letters of September 15 and September 22, 1987 from Alice
McInerney, Assistant Attorney General.*fn1
In California v. ARC America Corp., ___ U.S. ___, 109 S.Ct.
1661, 104 L.Ed.2d 86 (1989), the Supreme Court held in a
unanimous opinion joined in by seven justices that claims by
indirect purchasers under state antitrust provisions providing
such purchasers with a cause of action for damages were not
pre-empted by § 4 of the Clayton Act. The Court stressed that
it had "made clear" in Illinois Brick that the issue in that
case was "strictly a question of statutory interpretation" and
observed that nothing in that case "suggest[ed] that it would
be contrary to congressional purposes for States to allow
indirect purchasers to recover under their own antitrust laws."
Id. 109 S.Ct. at 1666.
On October 3, 1989, plaintiff moved for "[a]n order
reconsidering the Court's earlier decision . . . and granting
plaintiff the right to pursue its indirect purchaser damage
claims under state antitrust law against defendants." Notice of
Motion dated October 2, 1989. Plaintiff described this Court's
earlier decision as "holding that it was a settled principle of
antitrust law that `only one who directly purchases products
from an alleged antitrust violator may sue for treble damages'"
and "effectively barr[ing] repleading state affiliated
downstream purchasers" on the basis of Illinois Brick.
Plaintiff's Memorandum in Support of Motion to Reconsider at 3.
At oral argument, we denied plaintiff's motion without
prejudice to the filing of a motion for leave to file an
Amended Complaint. Transcript of Oral Argument dated November
16, 1989 at 29.
On December 19, 1989, plaintiff moved for an order granting it
leave to file an amended complaint seeking damages on behalf of
five government entities which were apparently indirect
purchasers of major reinforced concrete superstructure work for
eight construction projects. Plaintiff continued to argue that
this Court had, "relying on Illinois Brick, effectively
dismissed plaintiff's indirect damage claims, including claims
based on state antitrust law." Plaintiff's Memorandum in
Support of Motion to Amend Complaints at 2. At oral argument,
we noted that we were having "difficulty recognizing [our
earlier] opinion from the plaintiff's characterization of it."
Transcript of Oral Argument dated January 18, 1990 at 5-6.
Fed.R.Civ.P. 15(a) provides that:
A party may amend the party's pleading once as a matter of
course at any time before a responsive pleading is served . . .
Otherwise a party may amend the party's pleading only by leave
of court or by written consent of the adverse party; and leave
shall be freely given when justice so requires.
At the same time, leave may be denied where there has been
undue delay, the movant has acted in bad faith or with a
dilatory motive, the opposing party would be unduly prejudiced,
or the amendment would be futile. Foman v. Davis,
371 U.S. 178
, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962). Similarly,
where plaintiff has already had a sufficient opportunity to
plead, leave may be denied. Kaster v. Modification
Sys., Inc., 731 F.2d 1014
, 1018 (2d Cir. 1984) (citing Denny
v. Barber, 576 F.2d 465
, 471 (2d Cir. 1978)). While a change
in the governing law can justify granting leave to amend
despite the passage of a significant amount of time, Ellis v.
Blum, 643 F.2d 68
, 85 (2d Cir. 1981); Boileau v. Bethlehem
Steel Corp., 730 F.2d 929
, 937-38 (3d Cir.), cert. denied,
469 U.S. 871
, 105 S.Ct. 221
, 83 L.Ed.2d 150 (1984), mere
ignorance of the law cannot. Goss v. Revlon Inc.,
548 F.2d 405
, 407 (2d Cir. 1976).
In this case, plaintiff again seeks to assert damage claims on
behalf of state subdivisions a full two years after this Court
dismissed the damages claims asserted by plaintiff on behalf of
all unidentified state subdivisions without prejudice to
repleading within 60 days. Though plaintiff discusses ARC
America at great length, it is not arguing that the law
changed during this two year period, that the law was unsettled
or uncertain, that it misunderstood the law, or even that it
misconstrued this Court's earlier decision. Instead, plaintiff
argues that this Court "effectively" barred it from asserting
claims under the Donnelly Act on behalf of indirect purchasers.
In no sense can this Court's earlier decision be construed as
plaintiff suggests. In State of N.Y. v. Cedar Park Concrete
Corp., we dismissed the claims asserted on behalf of
unidentified state subdivisions because they were not
identified. Under a separate section heading, we then
considered the claims asserted by the State on behalf of itself
and the UDC. In this section of the opinion, we first observed
that Illinois Brick stated a "settled principle of federal
antitrust law." 665 F. Supp. at 242 (emphasis added). We then
found that the complaint asserted claims on behalf of the State
and the UDC as direct purchasers and thus did not dismiss the
claims. We neither reached nor were asked to reach the question
whether plaintiff could assert damage claims under the Donnelly
Act on behalf of state subdivisions which were indirect
The most plaintiff could argue is that it was not certain until
ARC America that claims could be asserted on behalf of
indirect purchasers under state antitrust statutes.*fn2 As
plaintiff itself concedes, however, whether indirect purchasers
could recover under state antitrust laws was not resolved by
Illinois Brick and remained an open question until ARC
America. See Transcript of Oral Argument dated November 16,
1990 at 10. At the time of our first decision, it had already
been the subject of ongoing litigation, legislative activity,
and academic discussion. In 1985, a New York State judge had
Clearly, Congress has not preempted the field of antitrust law
by passage of the Federal antitrust statutes . . . A State
remains free to regulate in the area of antitrust despite the
existence of the Federal antitrust provisions, so long as the
State statutes do not conflict with the Federal law. Several
states have antitrust laws that provide a remedy for indirect
purchasers (see, e.g., Ala.Code § 6-5-60[a]; Cal.Business and
Professions Code § 16750; Hawaii Rev.Stat. § 480-14[c];
Illinois Ann.Stat. ch. 38, § 60-7; Miss.Code Ann. § 75-21-9;
Wis.State.Ann. § 133.18), but the validity of these statutes
remains a matter of debate (compare State of California v.
California & Hawaiian Sugar Co., 9th Cir., 588 F.2d 1270,
1273, cert. denied 441 U.S. 932, 99 S.Ct. 2052, 60 L.Ed.2d
660 with Russo & Dubin v. Allied Maintenance Corp., 95
Misc.2d 344, 347, 407 N.Y.S.2d 617 and Matter of Wiring Device
Antitrust Litigation, 498 F. Supp. 79;
see, Note, State Indirect Purchaser Statutes: The
Preemptive Power of Illinois Brick, 62 BUL Rev 1241; Note,
Indirect Purchaser Suits Under State Laws: A Detour Around the
Illinois Brick Wall, 34 Stan L Rev 203 ; Cavanagh, The
Illinois Brick Dilemma: Is There a Legislative Solution?, 48
Alb L Rev 273, 309-310 ).
Tip Top Farms, Inc. v. Dairylea Co-op, Inc., 114 A.D.2d 12,
497 N.Y.S.2d 99, 109 (2d Dep't 1985) (Lazer, J., concurring in
part and dissenting in part). Thus, plaintiff must still
explain why it chose not to raise the issue earlier.
At oral argument on the Reconsideration Motion, counsel for
plaintiff appeared to concede that they only became aware of
the issue after ARC America and that it was only then that
they "looked extremely closely at the [Donnelly Act's]
legislative history and . . . the legislative intent."
Transcript of Oral Argument dated November 16, 1990 at 10. This
explanation suggests that plaintiff was simply unaware of the
law and does not offer a legally sufficient excuse for the
For the reasons stated above, plaintiff's motion to amend its
complaint is denied. The parties are to inform the Court by
letter of the status of these cases by August 31, 1990.