Opinion
M 19-93A and the following actions: 70 Civ. 3157, 69 Civ. 5632, 69 Civ. 3220, 69 Civ. 1629, 69 Civ. 5154, 70 Civ. 3738, 70 Civ. 3737, 69 Civ. 4746, 69 Civ. 3294, 71 Civ. 570, 70 Civ. 3158, 69 Civ. 3195, 70 Civ. 1074 and 69 Civ. 2838.
May 29, 1971.
MISCELLANEOUS ORDER NO. 71-12
MEMORANDUM AND ORDER DENYING DEFENDANTS' MOTION TO DISMISS CLAIMS OF INSURERS AND OTHERS SIMILARLY SITUATED
Following discussions in New York and Minneapolis on January 14-15, 1971 and February 9-10, 1971, regarding "standing," "remoteness" and "passing-on," the court established a schedule for filing and briefing motions to dismiss, and motions for summary judgment, or partial summary judgment, in several categories of cases. (See Miscellaneous Order 71-6). It was the court's belief that the issues of "standing" and "remoteness" were legal ones involving essentially undisputable facts and therefore ripe for decision. However, all agreed that the so called "passing-on" defense required further discovery and was not appropriate for disposition at that time.
Comprehensive briefs were filed by all interested parties and the motions were argued in San Francisco on March 16, 1971. With one exception the court concluded that a ruling on the merits of defendants' motions cannot be made at this time.
The motion to dismiss claims of purchasers of finished animal feed was granted, Misc. Order No. 71-11, 333 F. Supp. 310 (1971).
The main thrust of defendants' argument seems to be that since the Hanover Shoe doctrine precludes the use of a "pass-on" defense against a seller in a chain of distribution unless the sale was pursuant to a "cost plus" or other fixed mark-up arrangement, a subsequent purchaser in the chain of distribution is too remote or lacks standing unless he purchased under a "cost plus" type contract.
Hanover Shoe v. United Shoe Machinery Corp., 392 U.S. 481, 88 S.Ct. 2224, 20 L.Ed.2d 1231 (1968).
However, as the Court of Appeals pointed out in the settling cases:
[T]here are then several obvious distinctions between the principles laid down in Hanover Shoe and the present case. First, the passing-on doctrine is not here being used as a defense to permit the defendants to escape liability, but rather as an attempt to award damages, insofar as is possible, to those who ultimately paid higher prices as a result of the collusive pricing, and to avoid giving a windfall gain to those who rather clearly were not injured. Secondly, to permit the use of a doctrine in the present circumstances will not act to limit or frustrate private treble-damage claims, but will, if anything, do the opposite.
State of West Virginia v. Chas. Pfizer Co., Inc., 440 F.2d 1079 (2nd Cir. 1971).
Courts and commentators have both confessed an inability to reconcile the standing and remoteness cases. The Eighth Circuit, recognizing the interrelationship between "remoteness" and "pass-on" recently concluded that one should not be decided without the other and that "judicial resolution of these complex issues must await the ripe adjudication of the factual context in which they arise."
Wilson v. Ringsby Truck Lines, Inc., 320 F. Supp. 699 (D.Colo. 1970).
M. Handler, The Shift From Substantive to Procedural Innovations in Antitrust Suits — The Twenty-Third Annual Antitrust Review, 71 Col.L.Rev. 1, 24-31 (1971).
State of Minnesota v. U.S. Steel Corp., 438 F.2d 1380 (8th Cir. 1971).
This court believes that the resolution of the standing/remoteness/pass-on issues as they relate to this litigation must also await further development of the factual context in which they arise.
It is therefore ordered that defendants' motions for summary judgment or dismiss as to the following actions are hereby denied without prejudice to the right of the defendants to refile similar motions at a later time:
Valley Clerks Trust Fund v. Chas. Civil Action Pfizer Co., Inc., et al. (N.D. Cal., No. 70 Civ. 3157 Civil No. C-70-1294LHB)
Retail Clerks Local 770 Food Employers Civil Action Benefit Fund, et al. v. Chas. No. 70 Civ. 3738 Pfizer Co., Inc., et al. (N.D. Cal., Civil No. C-70-1681ACW)
San Francisco Culinary, Bartenders Civil Action and Service Employees Welfare Fund No. 70 Civ. 3158 v. Chas. Pfizer Co., Inc., et al. (N.D. Cal., Civil No. C-70-1295ACW)
Hoffa Medical Center v. American Civil Action Cyanamid No. 69 Civ. 5632
Bakers Health Welfare Fund, et al. Civil Action v. Chas. Pfizer Co., Inc., et al. No. 70 Civ. 3737 (N.D. Cal., Civil No. C-70-1680ACW)
Group Health Cooperative of Puget Civil Action Sound v. Chas. Pfizer Co., Inc., No. 69 Civ. 3195 et al. (W.D. Wash., Civil No. 8222)
Building Service Union Health Civil Action Welfare Trust Fund v. Chas. Pfizer No. 69 Civ. 3220 Co., Inc., et al. (N.D. Cal., Civil No. 51523)
California Physicians' Service v. Chas. Civil Action Pfizer Co., Inc., et al. No. 69 Civ. 4746
Associated Life Insurance Co., etc. Civil Action v. Chas. Pfizer Co., Inc., et al. No. 70 Civ. 1074 (N.D. Ill., Civil No. 70 C 368)
Teamsters Security Fund of Northern Civil Action California, Inc. v. Chas. Pfizer No. 69 Civ. 1629 Co., Inc., et al. (N.D. Cal., Civil No. 51010)
Aetna Life Insurance Co. v. Chas. Civil Action Pfizer Co., Inc., et al. No. 69 Civ. 3294
Union Health Center of New York, Civil Action et al. v. Chas. Pfizer Co., Inc., No. 69 Civ. 2838 et al.
Edward Swayduck, et al. v. Chas. Civil Action Pfizer Co., Inc., et al. No. 69 Civ. 5154
Mutual of Omaha Insurance Co., Civil Action et al. v. American Cyanamid Co., et No. 71 Civ. 570 al. (D. Minn., Civil No. 4-71-Civil-6)
So ordered.