281 F.3d 629 (7th Cir. 2002), 01-2925, Paper Systems Inc. v. Nippon Products Inc.

Docket Nº01-2925
Citation281 F.3d 629
Party NamePaper Systems Incorporated, Graphic Controls Corp., and Victor Paper Roll Products, Inc., Plaintiffs-Appellants, v. Nippon Paper Industries Co., Ltd., Defendant-Appellee.
Case DateFebruary 06, 2002
CourtUnited States Courts of Appeals, United States Court of Appeals (7th Circuit)

Page 629

281 F.3d 629 (7th Cir. 2002)

Paper Systems Incorporated, Graphic Controls Corp., and Victor Paper Roll Products, Inc., Plaintiffs-Appellants,

v.

Nippon Paper Industries Co., Ltd., Defendant-Appellee.

No. 01-2925

In the United States Court of Appeals, For the Seventh Circuit

February 6, 2002

Argued January 17, 2002

Appeal from the United States District Court for the Eastern District of Wisconsin. Nos. 96-C-959 et al.--Lynn Adelman, Judge.

Page 630

[Copyrighted Material Omitted]

Page 631

Before Flaum, Chief Judge, and Bauer and Easterbrook, Circuit Judges.

Easterbrook, Circuit Judge.

Five manufacturers of thermal facsimile paper--a product now obsolete--are accused in this class action of conspiring to reduce output and raise price in this business from 1990 to 1992. The paper business has a long history of cartelization; criminal prosecutions and civil antitrust actions are depressingly common. In 1995 the Department of Justice brought a criminal prosecution against the major producers of thermal fax paper. Nippon Paper Industries (known until recently as Jujo Paper) was among the defendants. See United States v. Nippon Paper Industries Co., 109 F.3d 1 (1st Cir. 1997). Although it was acquitted, see 62 F.Supp.2d 173 (D. Mass. 1999), this does not foreclose civil litigation, which employs a lower burden of persuasion. Nippon Paper prevailed in this action, too, and without a trial, because the district judge concluded that the direct-purchaser rule of Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), and Kansas v. Utilicorp United Inc., 497 U.S. 199 (1990), precludes recovery. 2000 U.S. Dist. Lexis 4535 (E.D. Wis. Mar. 30, 2000). After the remaining defendants settled, the plaintiffs appealed the dismissal of their claim against Nippon Paper.

The five manufacturers use different distribution systems. Kanzaki Specialty Papers, Inc., and Appleton Papers, Inc., sell directly to firms such as plaintiffs. (Our plaintiffs resold fax paper to their own customers, but under Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481 (1968), they are entitled to collect damages without reduction to account for the possibility that they passed the overcharge on to their own customers. The first buyer from a conspirator is the right party to sue. In other words, Hanover Shoe holds that there is no passing-on defense, while Illinois Brick and Utilicorp establish that indirect purchasers cannot use a passing-on theory offensively.) Two other manufacturers, Oji Paper Co. and Mitsubishi Paper Mills Ltd., sell exclusively to trading houses, which resell to firms such as plaintiffs. Oji sold only to Elof Hansson Paper & Board, Inc., while Mitsubishi Paper sold exclusively to Mitsubishi Corp. in Japan, which resold exclusively to Mitsubishi International Corp. in the United States. The complaint alleges that Elof and the two Mitsubishi trading firms are members of the conspiracy, which makes plaintiffs the first purchasers from outside the conspiracy. The right to sue middlemen that joined the conspiracy is sometimes referred to as a co-conspirator "exception" to Illinois Brick, but it would be Page 632

better to recognize that Hanover Shoe and Illinois Brick allocate to the first non-conspirator in the distribution chain the right to collect 100% of the damages. Perhaps if a conspirator defects and sues its former comrade, that snitch would come to own the right to damages, but Elof and the Mitsubishi trading houses did not change sides and align themselves as plaintiffs. Thus our plaintiffs are entitled to collect damages from both the manufacturers and their intermediaries if conspiracy and overcharges can be established. See Fontana Aviation, Inc. v. Cessna Aircraft Co., 617 F.2d 478, 481 (7th Cir. 1980); In re Brand Name Prescription Drugs Antitrust Litigation, 123 F.3d 599, 604 (7th Cir. 1997); Phillip E. Areeda & Herbert Hovenkamp, II Antitrust Law para.para. 346f, 346h (rev. ed. 2000).

Nippon Paper, the fifth manufacturer, sold its output in Japan to Japan Pulp & Paper Co. and Mitsui & Co., which resold through subsidiaries around the world. Neither Japan Pulp & Paper nor Mitsui is alleged to have participated in the conspiracy. As a result, Hanover Shoe and Illinois Brick allocate to them any right to collect overcharges attributable to Nippon Paper's sales. Neither of these firms joined the suit or expressed any interest in suing, so no damages may be awarded to the three plaintiffs (or any class member) on account of Nippon Paper's sales. The district court understood this to mean that Nippon Paper cannot be liable. Yet all that Hanover Shoe and Illinois Brick establish is that the direct purchasers (here, Japan Pulp & Paper and Mitsui) own the right to damages on account of particular sales. Nothing in Illinois Brick displaces the rule of joint and several liability, under which each member of a conspiracy...

To continue reading

Request your trial
43 practice notes
  • 282 F.R.D. 92 (D.N.J. 2012), MDL 1663, In re Ins. Brokerage Antitrust Litigation
    • United States
    • Federal Cases United States District Courts 3th Circuit United States District Courts. 3th Circuit. District of New Jersey
    • March 30, 2012
    ...Radcliff Materials, Inc., 451 U.S. 630, 646, 101 S.Ct. 2061, 68 L.Ed.2d 500 (1981); see also Paper Sys., Inc. v. Nippon Paper Indus., Co., 281 F.3d 629, 632 (7th Cir.2002). Plaintiffs thus have standing to pursue claims against ARS Carolinas, even though this defendant was not specifically ......
  • Chipping away at the Illinois Brick wall: expanding exceptions to the indirect purchaser rule.
    • United States
    • Notre Dame Law Review Vol. 87 Nbr. 4, April 2012
    • April 1, 2012
    ...and to calculate pass-on damages under Illinois Brick repealer statutes ...."); see also Paper Sys. Inc. v. Nippon Paper Indus. Co., 281 F.3d 629, 633-34 (7th Cir. 2002) (holding, per Judge Easterbrook, that courts are capable of apportioning damages if need be); AMC REPORT, supra note......
  • Harris County v. Eli Lilly and Co., 092920 TXSDC, C. A. H-19-4994
    • United States
    • Federal Cases United States District Courts 5th Circuit United States District Courts. 5th Circuit. Southern District of Texas
    • September 29, 2020
    ...purchased directly from a co-conspirator in a price-fixing conspiracy. See, e.g., Paper Sys. Inc. v. Nippon Paper Indus. Co., 281 F.3d 629, 631-32 (7th Cir. 2002) (holding that the first purchaser from outside the conspiracy is the "right party to sue"); State&......
  • 306 F.R.D. 585 (N.D.Ill. 2015), 10 C 5711, Kleen Products LLC v. Int'l Paper
    • United States
    • Federal Cases United States District Courts 7th Circuit United States District Court (Northern District of Illinois)
    • March 26, 2015
    ...are joint and severally liable " for all damages caused by the [entire] conspiracy." Paper Sys. Inc. v. Nippon Paper Indus. Co., 281 F.3d 629, 632 (7th Cir. 2002) (emphasis added). No problem so far. But, the conspiracy for which Plaintiffs seek to hold RockTenn's co-conspirators ......
  • Request a trial to view additional results
40 cases
  • 282 F.R.D. 92 (D.N.J. 2012), MDL 1663, In re Ins. Brokerage Antitrust Litigation
    • United States
    • Federal Cases United States District Courts 3th Circuit United States District Courts. 3th Circuit. District of New Jersey
    • March 30, 2012
    ...Radcliff Materials, Inc., 451 U.S. 630, 646, 101 S.Ct. 2061, 68 L.Ed.2d 500 (1981); see also Paper Sys., Inc. v. Nippon Paper Indus., Co., 281 F.3d 629, 632 (7th Cir.2002). Plaintiffs thus have standing to pursue claims against ARS Carolinas, even though this defendant was not specifically ......
  • Harris County v. Eli Lilly and Co., 092920 TXSDC, C. A. H-19-4994
    • United States
    • Federal Cases United States District Courts 5th Circuit United States District Courts. 5th Circuit. Southern District of Texas
    • September 29, 2020
    ...purchased directly from a co-conspirator in a price-fixing conspiracy. See, e.g., Paper Sys. Inc. v. Nippon Paper Indus. Co., 281 F.3d 629, 631-32 (7th Cir. 2002) (holding that the first purchaser from outside the conspiracy is the "right party to sue"); State&......
  • 306 F.R.D. 585 (N.D.Ill. 2015), 10 C 5711, Kleen Products LLC v. Int'l Paper
    • United States
    • Federal Cases United States District Courts 7th Circuit United States District Court (Northern District of Illinois)
    • March 26, 2015
    ...are joint and severally liable " for all damages caused by the [entire] conspiracy." Paper Sys. Inc. v. Nippon Paper Indus. Co., 281 F.3d 629, 632 (7th Cir. 2002) (emphasis added). No problem so far. But, the conspiracy for which Plaintiffs seek to hold RockTenn's co-conspirators ......
  • Mr. Dee's Inc. v. Inmar, Inc., 091621 NCMDC, 1:19cv141
    • United States
    • United States District Courts. 4th Circuit. Middle District of North Carolina
    • September 16, 2021
    ...principle, i.e., “[t]he first buyer from a conspirator is the right party to sue, ” Paper Sys., Inc. v. Nippon Paper Indus. Co., 281 F.3d 629, 631 (7th Cir. 2002), contemplates such a...
  • Request a trial to view additional results
1 firm's commentaries
  • Antitrust Bulletin – Vol. 6, No. 1
    • United States
    • JD Supra United States
    • March 10, 2014
    ...Remedies Reform Proposal: Its Derivation and Implications, 55 Antitrust L.J. 103, 120 (1986); Paper Sys. Inc. v. Nippon Paper Indus. Co., 281 F.3d 629, 633 (7th Cir. 2002) (Easterbrook, J.) (emphasizing that joint and several liability is a “vital instrument for maximizing deterrence”). In ......
3 books & journal articles
  • Chipping away at the Illinois Brick wall: expanding exceptions to the indirect purchaser rule.
    • United States
    • Notre Dame Law Review Vol. 87 Nbr. 4, April 2012
    • April 1, 2012
    ...and to calculate pass-on damages under Illinois Brick repealer statutes ...."); see also Paper Sys. Inc. v. Nippon Paper Indus. Co., 281 F.3d 629, 633-34 (7th Cir. 2002) (holding, per Judge Easterbrook, that courts are capable of apportioning damages if need be); AMC REPORT, supra note......
  • Weekly Case Digests April 13, 2020 April 17, 2020.
    • United States
    • Wisconsin Law Journal Nbr. 2020, January 2020
    • April 17, 2020
    ...In such cases, "the first buyer from a conspirator is the right party to sue." Paper Sys. Inc. v. Nippon Paper Indus. Co., 281 F.3d 629, 631 (7th Cir. 2002). The plaintiffs in this case ("the Providers") are healthcare companies that purchased medical devices manufacture......
  • Anti-trust Violation.
    • United States
    • Wisconsin Law Journal Nbr. 2020, January 2020
    • April 13, 2020
    ...In such cases, "the first buyer from a conspirator is the right party to sue." Paper Sys. Inc. v. Nippon Paper Indus. Co., 281 F.3d 629, 631 (7th Cir. 2002). The plaintiffs in this case ("the Providers") are healthcare companies that purchased medical devices manufacture......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT