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STATE OF N.Y. v. CEDAR PARK CONCRETE CORP.

July 24, 1990

STATE OF NEW YORK, PLAINTIFF,
v.
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.

OPINION

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.

Background

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 held that:

  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 ...


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