Campos v. Ticketmaster Corp.

Decision Date10 April 1998
Docket NumberNo. 96-2883.,96-2883.
Citation140 F.3d 1166
PartiesAlex CAMPOS; Dania Campos; Albert Alfonso, Individually and on behalf of all others similarly situated; Plaintiffs/Appellants, v. TICKETMASTER CORPORATION; Defendant/Appellee. Stephen HINES; Dirk Schnable; Todd Vicsik; Jamie Saltzman; Mike Ellis; Brad Cheskes; Suzanne Crawford, on behalf of themselves and on behalf of a class of persons similarly situated; Plaintiffs/Appellants, v. TICKETMASTER CORPORATION; Defendant/Appellee. Joseph CROWLEY, Individually and on behalf of all others similarly situated; Plaintiff/Appellant, v. TICKETMASTER CORPORATION; Defendant/Appellee. Tony STEPHENS, Individually and on behalf of all others similarly situated; Plaintiff/Appellant, v. TICKETMASTER CORPORATION; Defendant/Appellee. Ebon PETTY; Arlean Azzo; John Azzo; Scott Henry Buettner; Scott J. Freedland; Brian Homer; Roger Hutton; Garrett Pfetzing; Christopher W. Quinn; Thomas Rockov; James Stewart; Hilary Tompkins, on behalf of themselves and others, in a class to be certified; Plaintiffs/Appellants, v. TICKETMASTER CORPORATION; Defendant/Appellee.
CourtU.S. Court of Appeals — Eighth Circuit

George W.Sampson, Seattle, WA, argued (Steve W. Berman, Seattle, WA, on the brief), for Plaintiffs/Appellants.

Phil C. Neal, Chicago, IL, argued (James K. Gardner, Charles Evans Gerber, Chicago, IL, Francis P. Barron, New York City, David W. Harlan, Michael A. Kahn, St. Louis, MO, on the brief), for Defendant/Appellee.

Before HANSEN and MORRIS SHEPPARD ARNOLD, Circuit Judges, and MELLOY,1 Chief District Judge.

MELLOY, Chief District Judge.

The plaintiffs, individually and as a proposed class of popular music fans, sued Ticketmaster Corporation ("Ticketmaster") for damages and injunctive relief. Sixteen cases, originally filed in various districts, were consolidated for pretrial proceedings in the Eastern District of Missouri. Eleven of the cases were dismissed. The plaintiffs in the remaining five cases then filed a consolidated complaint superseding the individual complaints. The consolidated complaint alleged that Ticketmaster violated § 1 of the Sherman Act by engaging in price fixing with various concert venues and promoters and by boycotting the band Pearl Jam; that Ticketmaster violated § 2 of the Sherman Act by monopolizing, or attempting to monopolize, the market for ticket distribution services; and that Ticketmaster violated § 7 of the Clayton Act by acquiring its competitors. See 15 U.S.C. § 1 et seq. The plaintiffs claimed standing to sue based on their payment of monopoly overcharges, in the form of service and handling fees, for Ticketmaster's ticket distribution services.

The district court dismissed the suit, holding that the plaintiffs lacked standing to sue because they were indirect purchasers within the meaning of Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977) and its progeny. The district court also held that, even if the plaintiffs were not indirect purchasers, they were nevertheless inappropriate plaintiffs under the standards set forth by the Supreme Court in Associated General Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983). Finally, the district court held that three of the consolidated cases had been improperly venued, and dismissed the cases originally filed in Georgia, Washington, and Michigan.

The plaintiffs contend that the court erred in all of these holdings. We affirm in part, reverse in part, and remand for further proceedings.

I.

Since the case was dismissed on the pleadings, we treat all factual allegations of the complaint as true. See Haberthur v. City of Raymore, 119 F.3d 720 (8th Cir.1997). We may affirm a dismissal on the pleadings "only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232, 81 L.Ed.2d 59 (1984); see also Associated General Contractors, 459 U.S. at 526, 103 S.Ct. at 902 ("[W]e must assume that the [plaintiff] can prove the facts alleged in its amended complaint.").

According to the complaint, Ticketmaster is a monopoly supplier of ticket distribution or ticket delivery services to large-scale popular music shows. The complaint alleges that Ticketmaster has long-term exclusive contracts with almost every promoter of concerts in the United States. These exclusive contracts ensure that Ticketmaster will have the right to handle the vast majority of ticket sales for almost every large-scale popular music concert in the United States, regardless of whether or not Ticketmaster has exclusive contracts with the particular venues where those concerts are held.

Ticketmaster's exclusive contracts with almost every promoter of concerts in the United States give it the right to distribute tickets over the telephone, at outlets such as retail stores, and at the venue where the promoter is presenting an event. According to plaintiffs, Ticketmaster therefore has ironclad control over ticketing for any large-scale popular music concert at major venues in the United States.

Ticketmaster uses that control, according to the complaint, to extract from the plaintiffs supracompetitive fees for ticket distribution services. Those fees can be as high as twenty dollars per ticket. By paying those fees, the plaintiffs contend that they suffer injury to their property within the meaning of Section 4 of the Clayton Act, 15 U.S.C. § 15, and so have standing to sue. See Reiter v. Sonotone Corp., 442 U.S. 330, 99 S.Ct. 2326, 60 L.Ed.2d 931 (1979). The district court, while not questioning the allegation that the plaintiffs pay some increased price for concert tickets as a result of Ticketmaster's monopoly, nonetheless held that such injury did not give the plaintiffs standing under § 4.

II.

In Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977), the Supreme Court held that only the "direct purchaser" from a monopoly supplier could sue for treble damages under § 4 of the Clayton Act. See 15 U.S.C. § 15; Hovenkamp, The Indirect Purchaser Rule and Cost-Plus Sales, 103 Harv. L.Rev. 1717 (1990). "Indirect purchasers" generally lack standing under the antitrust laws and so cannot bring suits for damages. See Sports Racing Services, Inc. v. Sports Car Club of America, Inc., 131 F.3d 874, 883 (10th Cir. 1997)("The Supreme Court has consistently held that only direct purchasers suffer injury within the meaning of § 4 of the Clayton Act.").

The Supreme Court has defined an indirect purchaser as one who is not the "immediate buyer from the alleged antitrust violator[]," Kansas v. UtiliCorp United, Inc., 497 U.S. 199, 207, 110 S.Ct. 2807, 2812, 111 L.Ed.2d 169 (1990), or one who "[does] not purchase [the monopolized product] directly from the [antitrust] defendant[.]" California v. ARC America Corp., 490 U.S. 93, 97, 109 S.Ct. 1661, 1663, 104 L.Ed.2d 86 (1989). Some commentators have offered definitions of their own. See, e.g., Werden & Schwartz, Illinois Brick and the Deterrence of Antitrust Violations — An Economic Analysis, 35 Hastings L.J. 629, 668 n. 4 (1984)("The term `indirect purchaser'... means any party that purchases a product from any party in the vertical supply chain other than the party suspected of the antitrust violation, i.e., from a direct purchaser or another indirect purchaser — with the ultimate consumer being the last indirect purchaser."); Hovenkamp, The Indirect-Purchaser Rule and Cost-Plus Sales, 103 Harv.L.Rev. 1717 (1990)("`Indirect' purchaser[s][are] those who bought an illegally monopolized or cartelized product or service through the agency of a dealer, distributor, or some other independent reseller who was not a participant in the antitrust violation."). Other courts and commentators have given examples to explain the content of the indirect purchaser concept. See, e.g., McCarthy v. Recordex Service, Inc., 80 F.3d 842, 852 n. 16 (3rd Cir.)(homeowner an indirect purchaser of paint used by housepainter), cert. denied, ___ U.S. ___, 117 S.Ct. 86, 136 L.Ed.2d 42 (1996); Landes & Posner, Should Indirect Purchasers Have Standing to Sue Under the Antitrust Laws? An Economic Analysis of the Rule in Illinois Brick, 46 U.Chi.L.Rev. 602 (1979)(bread buyer an indirect purchaser of flour and oven used by bread baker).2

A common concept unites these various definitions and examples: An indirect purchaser is one who bears some portion of a monopoly overcharge only by virtue of an antecedent transaction between the monopolist and another, independent purchaser. Such indirect purchasers may not sue to recover damages for the portion of the overcharge they bear. The right to sue for damages rests with the direct purchasers, who participate in the antecedent transaction with the monopolist.

Some review of the economic assumptions underlying the direct purchaser rule is necessary to understand the justification for the direct purchaser rule. For purposes of antitrust analysis, courts assume that a firm generally wishes to "minimize its input costs[.]" Olympia Equipment Leasing Co. v. Western Union Telegraph Co., 797 F.2d 370, 374 (7th Cir.1986), cert. denied, 480 U.S. 934, 107 S.Ct. 1574, 94 L.Ed.2d 765 (1987); Stamatakis Industries, Inc. v. King, 965 F.2d 469, 472 (7th Cir.1992). Consequently, when a firm buys its inputs from a monopolist at a monopoly price, we may be fairly certain that it had little choice in the matter.3 The indirect purchaser, in turn, pays some portion of the monopoly overcharge only because the previous purchaser was unable to avoid that overcharge. The homeowner in the example given by the Third Circuit pays some part of the monopoly overcharge for paint only because the housepainter was unable to obtain his paint at a competitive price, just as the bread buyer in Landes and Posner's example pays some...

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