United States District Court, Southern District of New York
July 12, 2000
INFORMATION RESOURCES, INC., PLAINTIFF,
THE DUN & BRADSTREET CORP., A.C. NIELSEN CO., AND IMS INTERNATIONAL, INC., DEFENDANTS.
The opinion of the court was delivered by: Stanton, District Judge.
Opinion and Order
Plaintiff Information Resources, Inc. ("IRI") is a Delaware
corporation headquartered in Chicago. It provides retail tracking
services to manufacturers who sell consumer goods in the United
States. Retail tracking services:
. . involve the continuous collection of data on
the sale of consumer packaged goods. From this data,
retail tracking services suppliers produce estimates
of trends in sales of product categories and brands,
by relevant geographic region for each product
category being tracked.
In short, a retail tracking service is the
provision of information to manufacturers and
retailers of consumer goods concerning turnover,
market share, pricing and other aspects of the sale
of fast moving consumer goods and analysis of that
information to reveal market trends, business
conditions, and the like.
Def.'s 56.1 Statement ¶¶ 2-3.
Additionally, IRI participates in offering retail tracking
services through its subsidiaries and joint ventures in France
(where it owns an 89% interest in a corporation formed pursuant
to a joint venture agreement), Germany (where it owns a 51%
interest in a corporation formed pursuant to a joint venture
agreement), Great Britain (where it owns an 87% interest in a
corporation formed pursuant to a joint venture agreement), Italy
(where two holding companies wholly owned by IRI operate a
subsidiary), the Netherlands (where it owns a 51% interest in a
company formed pursuant to a joint venture agreement), and Sweden
(where it owns an 8% interest in a corporation formed pursuant to
a joint venture agreement).
IRI either has "strategic partnerships" or "relationships" with
companies offering retail tracking services in a variety of other
nations in which it claims antitrust injury, but has no ownership
interest in the foreign concerns, despite some attempts to
purchase a company already doing business in the foreign market
in order to provide retail tracking services in that market. IRI
has made plans to enter additional markets.
In those six nations in which IRI participates through a joint
venture or a subsidiary, it is the subsidiary or joint venture
which enters into agreements with the clients for provision of
services (Pl.'s Rule 56.1 Statement ¶ 27) and negotiates for the
acquisition of local data (id. ¶ 28). The subsidiary or joint
venture obtains the scanning data directly from the clients.
Id. ¶ 29. Raw data is then loaded onto computers in the offices
of the subsidiaries or joint ventures. Id. at ¶ 31. That data
is then transmitted to IRI in the United States, where it is
"normalized" (id. ¶ 33), put onto IRI's computers (id. ¶ 33),
and processed (id. ¶ 40). The processed data is generally then
sent directly back to the subsidiary or joint venture. Id. ¶
45. The subsidiary or joint venture then delivers the customer
report directly to the client. Id. ¶ 50.
Defendant A.C. Nielsen Company ("Nielsen") is an operating unit
of defendant Dun & Bradstreet, offering retail tracking services
in the United States, and in at least 80 foreign countries.
IRI contends in this lawsuit that Nielsen engaged in
anticompetitive activity by applying "favorable pricing
conditions if Nielsen's services were purchased in a considerable
number of countries, including, at least, one country where IRI
was present." Pl.'s Mem. at 5. For purposes of this motion,
Nielsen does not contest this allegation.
In this motion for partial summary judgment, defendants argue
that (1) IRI lacks standing to sue for injuries suffered in
foreign markets, because the injury was actually suffered by its
subsidiaries and joint ventures; and (2) this court lacks
jurisdiction under the Foreign Trade Antitrust Improvements Act
of 1982, 15 U.S.C. § 6a (1997) ("FTAIA"), to hear such claims in
any event, because the foreign activities of which IRI complains
are beyond the reach of United States antitrust laws.
"`Merely derivative injuries sustained by employees, officers,
stockholders, and creditors of an injured company do not
constitute "antitrust injury" sufficient to confer antitrust
standing.'" G.K.A. Beverage Corp. v. Honickman, 55 F.3d 762,
766 (2d Cir. 1995), quoting Southwest Suburban Bd. of Realtors,
Inc. v. Beverly Area Planning Ass'n, 830 F.2d 1374, 1378 (7th
IRI argues that although nominally in dependent, its
subsidiaries and joint ventures operate with IRI to provide a
unitary service which could not be performed without IRI's role.
Further, IRI contends that the injury it suffers in the form of
diminished demand for its services is cognizable under United
States antitrust laws because it is directly and intentionally
caused by defendants' anticompetitive activities.
In Associated General Contractors of California v. California
State Council of Carpenters, 459 U.S. 519, 103 S.Ct. 897,
908-10, 74 L.Ed.2d 723 (1983), the Supreme Court weighed "factors
that circumscribe and guide the exercise of judgment in deciding
whether the law affords a remedy in specific circumstances."
Id. 103 S.Ct. at 908. It considered the nature of the
plaintiff's alleged injury and its relationship to the antitrust
violation, whether the injury is of a type which Congress sought
to redress in the antitrust laws, whether the injury is direct or
indirect, whether there is ". . . an identifiable class of
persons whose self-interest would normally motivate them to
vindicate the public interest in antitrust enforcement . . ."
thereby diminishing the justification of suit by a more remote
plaintiff, the degree of speculation or complex apportionment
involved in the claim for damages, and the potential for multiple
liability of the defendant should another plaintiff bring suit.
The Court concluded (103 S.Ct. at 912):
We conclude, therefore, that the Union's
allegations of consequential harm resulting from a
violation of the antitrust
laws, although buttressed by an allegation of intent
to harm the Union, are insufficient as a matter of
law. Other relevant factors — the nature of the
Union's injury, the tenuous and speculative character
of the relationship between the alleged antitrust
violation and the Union's alleged injury, the
potential for duplicative recovery or complex
apportionment of damages, and the existence of more
direct victims of the alleged conspiracy — weigh
heavily against judicial enforcement of the Union's
A similar analysis of this case follows.
1. Consequential Harm and Intent to Injure
For purposes of this motion, defendants concede a causal
connection between the alleged antitrust violation and the harm
to the plaintiff, as well as their intent to injure IRI. Def.'s
Mem. at 12.
2. Directness of Injury
IRI contends that it is a competitor of defendants in the
foreign markets, while defendants argue that the foreign
subsidiaries and joint ventures of IRI, not IRI itself, are the
Defendants have the better of the argument. IRI is the supplier
of data services to its joint ventures and subsidiaries, who are
the direct participants in the foreign markets. They find the
foreign clients, obtain the data from these clients, and deliver
the completed reports to them. Unlike the plaintiff farmers in
Amarel v. Connell, 102 F.3d 1494 (9th Cir. 1996) who
participated directly in the injured mills' profits, IRI does not
participate directly in the profits of the foreign companies.
Those companies pay IRI for its data processing services pursuant
to contracts, and IRI is one of the joint venturers by whom the
companies are owned, but neither of those facts makes IRI a
direct participant in the market of foreign retail tracking
In G.K.A. Beverage, the court held that terminated soft-drink
distributors did not have standing to sue those who conspired to
monopolize the bottling industry and bankrupted their bottler
(55 F.3d 762, 766-67):
We believe that the distributors do not have
standing to bring an antitrust claim against
defendants because the distributors have not alleged
an antitrust injury . . . It follows naturally that a
party in a business relationship with an entity that
failed as a result of an antitrust violation has not
suffered the antitrust injury necessary for antitrust
standing . . .
Although the distributors undoubtedly suffered
injury as a result of the alleged antitrust
violation, the injury suffered by the distributors is
derivative of the injury suffered by Seven Up
Brooklyn [the bottler].
Here, too, IRI's injury, while real, is derivative of the
injury suffered by its foreign joint ventures and subsidiaries.
IRI's supplies of processing services and finished data reports
to its foreign affiliates do not give it antitrust standing. 2
AREEDA & HOVENKAMP, ANTITRUST LAW § 375(d) at 302 (1995); see
also, Crimpers Promotions, Inc. v. Home Box Office,
724 F.2d 290, 294 (2d Cir. 1983) (distinguishing "a `supplier' of a
competitor, to whom standing is generally denied.").
Blue Shield of Virginia v. McCready, 457 U.S. 465, 102 S.Ct.
2540, 73 L.Ed.2d 149 (1982) is of no help to IRI. McCready's
injury was direct, for she was the person to whom reimbursement
of her psychologist's bills was refused, by the antitrust
conspirator, as part of its boycott of psychologists.
3. Identifiable Class of Self-Interested Parties
The subsidiaries and joint ventures are an "identifiable class
of persons whose self-interest would normally motivate them
to vindicate the public interest in antitrust enforcement . . ."
This diminishes the justification for suit by IRI, a more remote
party. Injuries sustained by the subsidiaries and joint ventures
are direct and, as stated in Associated General, 103 S.Ct. at
. . they would have a right to maintain their
own treble-damages actions against the defendants. An
action on their behalf would encounter none of the
conceptual difficulties that encumber the Union's
claim. The existence of an identifiable class of
persons whose self-interest would normally motivate
them to vindicate the public interest in antitrust
enforcement diminishes the justification for allowing
a more remote party such as the Union to perform the
office of a private attorney general. Denying the
Union a remedy on the basis of its allegations in
this case is not likely to leave a significant
antitrust violation undetected or unremedied.
In fact, there is some evidence in the briefs that the foreign
affiliates are considering such a suit. Def.'s Mem. at 13, fn. 8.
4. Uncertain or Speculative Damages
Although neither party addresses this point in detail in its
briefs, the defendants claim "[a]ny damages flowing to IRI are
speculative because they require measurement first of the impact
on its foreign affiliates and second the derivative impact on
IRI." Def.'s Mem. at 13. It would probably be feasible, however,
to calculate IRI's damages with the relaxed degree of precision
required for computations of lost revenues in antitrust cases,
and this factor is of little weight.
5. Multiple Recoveries
IRI's subsidiaries and joint ventures abroad suffer the primary
injury from defendants' activities. If they sue on their own
behalf, allowing IRI to recover on its derivative claims could
result in double recoveries (each to be trebled) against the
From the submissions, there seems little doubt that inflicting
competitive injury on IRI was a goal and purpose of defendants'
alleged activities, and that the economic connection between the
alleged violations and the effect on IRI is linear and short;
nevertheless the fact that the primary injury fell on the foreign
companies (who have rights to sue for whatever remedies the law
applicable to them provides), together with the factors discussed
above, leaves IRI without standing to sue for its derivative
The foregoing discussion disposes of the issues raised by the
motion, and renders it unnecessary to address defendants'
alternative ground for dismissal: that this court lacks
jurisdiction under the FTAIA. If the foreign subsidiary and joint
venture corporations sue, the question of United States
jurisdiction may arise; until then, its determination would be
Defendants' motion for partial summary judgment is granted.
IRI's claims of injury suffered from defendants' activities in
foreign markets where IRI operates through subsidiaries or
companies owned by joint ventures, or "relationships" with local
companies, are dismissed.
Memorandum and Opinion
With respect to the points raised in the parties' submissions
in connection with plaintiff's Motion to Clarify the Court's July
12, 2000 Order and for Leave to Amend its Complaint:
A. Motion to Clarify
1. The July 12, 2000 Order adjudicated only that (as stated in
IRI's claims of injury suffered from defendant's
activities in foreign markets where IRI operates
or companies owned by joint ventures, or
"relationships" with local companies, are dismissed.
(Order, p. 9).
That ruling accepted the chief ground of defendants' motion for
partial summary judgment: as defendants expressed it, that IRI
lacks standing to sue
because it was not the person directly affected by
the alleged conduct. Rather, the conduct allegedly
harmed IRI's affiliates in Europe — separate
corporate entities that are not parties to this suit.
IRI was affected only in its capacity as a
shareholder of, and supplier to, the European
entities. It is hornbook law that the shareholder and
supplier relationships are insufficient to confer
(Defendants' December 22, 1999 Brief in Support of Their Motion,
IRI so understood the thrust of defendants' motion. IRI
articulated defendant's claim as being
that in these markets, "[t]he competition is between
A.C. Nielson and IRI's Affiliates," because these
affiliates, not IRI, "provide" and sell the retail
tracking services. According to Defendants, IRI is a
"mere supplier" to and "investor" in such entities
and, as a consequence, lacks standing.
(Plaintiff's February 17, 2000 Response, p. 11) (citations
The court's adoption of defendants' view of the applicable law
led to the conclusion that IRI cannot recover for losses it
sustained indirectly from antitrust injuries inflicted directly
on intermediary entities abroad.
2. Not only where IRI shared in the subsidiary's losses as a
partner, joint venture or shareholder, but also where its volume
of sales to the subsidiary was diminished because of the
subsidiary's loss of business, IRI has no standing to sue,
because (together with the other factors stated in the Order)
IRI's injury is derivative of the antitrust injury inflicted on
the subsidiary. Nor can IRI recover damages for weakening of its
competitive position in the United States because of reduced
revenue from its foreign subsidiaries. The deprivation of
revenue, and the consequent inability to use the lost money to
competitive advantage, amount to the same thing. The only value
of money lies in the uses to which it can be put.
3. But where IRI proves that a foreign or domestic direct
customer shunned IRI's retail tracking services (e.g. by
refusing access to raw sales data, or refusing to use IRI's
services) because of an agreement it had made with defendants in
violation of the Sherman Act, and there is no intermediary
affiliated company, IRI has standing to sue for its lost profits.
On principles familiar at least since U.S. v. Aluminum Co. of
America, 148 F.2d 416 (2nd Cir. 1945), in light of the
allegations that the anticompetitive agreements reflected a
course of dealing conceived in the United States which was
intended to and did affect domestic commerce, the court has
jurisdiction to hear that claim.
4. The materials submitted on the partial summary judgment
motion gave no sufficient basis for ruling on the extent to which
IRI can recover for lost revenues in particular foreign or
domestic markets it prepared to or attempted to enter itself, but
from which it claims it was excluded. Defendants concede that the
"standing" argument does not apply to markets IRI "sought to
enter . . . directly, rather than through an affiliated company."
(Defendant's December 22, 1999 Brief In Support of Their Motion,
p. 17, n. 11). Such claims were not excluded by the Order. It is
unclear whether they are too speculative.
B. Motion for Leave to Amend the Complaint
1. To Join and Substitute IRI's Subsidiaries as Plaintiffs on
its Sherman Act Claims
The analysis starts with the fact that each of the foreign
markets is a separate
market. As stated in the proposed Second Amended Complaint ¶ 26:
Because of differences in consumer demand, language,
currency, custom, brand names, product bar codes and
advertising, among others, retail tracking services
are national in coverage. For example, a manufacturer
could not use a retail tracking service based on
German sales data to track French sales or a service
based on Italian sales data to track sales in the
Thus, by definition each subsidiary competed only in its own
national market where it sustained its own claimed injury. That
injury also had an effect in the United States: IRI, as a
shareholder and supplier of the subsidiary, lost revenues from
the subsidiary. IRI is defendants' only competitor in the United
States, and there is no claim of any other material effect upon
domestic trade or commerce from the subsidiary's injury than the
effect upon IRI.
Under the Foreign Trade Antitrust Improvements Act ("FTAIA"),
15 U.S.C. § 6a, for the Sherman Act to apply to the defendants'
alleged foreign conduct against the subsidiaries, the effect of
that conduct on domestic trade or commerce must be "direct,
substantial and reasonably foreseeable", id. at § 6a(1), and
must give rise to a claim under the Sherman Act. Id. at §
But, as already adjudicated in the Order, the effect of the
foreign conduct on IRI was not direct. It was indirect and
derivative, and did not give rise to a claim under the Sherman
Act. In short, although the defendants' conduct which caused the
subsidiaries' claims had an effect in the United States, that
effect was indirect, derivative and did not give rise to a
Sherman Act claim.
Thus, under the FTAIA, the subsidiaries have no Sherman Act
claims, and leave to join them to this action to assert such
claims is denied. Cf. In re Copper Antitrust Litigation,
117 F. Supp.2d 875, 887 (W.D.Wis. 2000) ("It is not reasonable to
think that Congress wanted to provide a forum for mostly foreign
plaintiffs who were injured abroad by effects felt abroad and not
in American markets, even if the wrongdoer's conduct produced
other anticompetitive effects in the United States.")
2. To Assert Claims Under Article 82 of the Treaty of Rome
A district court may decline to exercise supplemental
jurisdiction over otherwise cognizable claims which raise novel
or complex issues of State law, even if they are so related to
claims in the action that they form part of the same case or
controversy. See 28 U.S.C. § 1367(c)(1). Passing the point that
the "State" involved is the European Economic Community, the
United Kingdom, France, Germany, Italy, the Netherlands or Spain
(or all of them), the novel and complex issues presented by
Article 82 of the Treaty of Rome (to which the United States is
not a party) counsel against exercising supplemental jurisdiction
over its application to the subsidiaries' claims.
Normally the subsidiary's claims under Article 82 of the Treaty
of Rome would be brought in its national court, which would apply
its own substantive and procedural rules and remedies in giving
effect to the Treaty, and would have the option of seeking an
opinion from the European Court of Justice on questions of
European Community law. This court does not have that option; it
would have to decide what European Community law would be, de
novo. European countries' laws are neither uniform nor
individually fully developed with respect to issues arising under
the Treaty (e.g. statutes of limitation, degree of injunctive
relief, awards of attorney's fees and expenses), and expert
testimony might be required concerning the law of each
jurisdiction. (November 10, 2000 Declaration of Dr. John Temple
Lang, Esq., pp. 6-7).
Although Article 82 of Treaty of Rome is "roughly analogous" to
the Sherman Act, Capital Currency Exch. v. Nat'l Westminster
ster Bank, 155 F.3d 603, 610 (2nd Cir. 1998), its application
to the subsidiaries' claims in six separate European markets
would present sufficiently novel and complex issues of foreign
law to persuade this court to decline to exercise supplemental
jurisdiction, even if the Article 82 claims are otherwise
The July 12, 2000 Order is clarified and explicated as set
forth above. The application for leave to amend the complaint to
add the subsidiaries as parties is denied.
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