Ciardi v. F. HOFFMANN-LA ROCHE, LTD

• Decision Date: 04 October 2001
• Citation: 436 Mass. 53,762 NE 2d 303
• Parties: VALERIE CIARDI v. F. HOFFMANN-LA ROCHE, LTD., & others.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

436 Mass. 53

762 NE 2d 303

VALERIE CIARDI¹ v. F. HOFFMANN-LA ROCHE, LTD., & others.²

Supreme Judicial Court of Massachusetts, Middlesex.

October 4, 2001.

February 8, 2002.

Present: MARSHALL, C.J., GREANEY, IRELAND, SPINA, COWIN, SOSMAN, & CORDY, JJ.

Charles Fried (Michelle D. Miller with him) for F. Hoffman-La Roche, Ltd., & others.

Edward D. Rapacki (Fredric L. Ellis & Joseph M. Makalusky with him) for the plaintiff.

Joseph F. Ryan, for Lonza A.G. & another, was present but did not argue.

Neil P. Motenko, for Chinook Group, Inc., & another, was present but did not argue.

The following submitted briefs for amici curiae Paul E. Nemser, James C. Rehnquist, & Jaren D. Wilcoxson for Microsoft Corporation.

Loretta M. Smith for New England Legal Foundation.

Thomas F. Reilly, Attorney General, & Judith Whiting, Assistant Attorney General, for the Commonwealth.

Stuart T. Rossman for National Consumer Law Center.

SPINA, J.

The plaintiff, an indirect purchaser³ of vitamin products manufactured and distributed by the defendants,⁴ brought this action for injunctive relief and damages arising from a price-fixing conspiracy among the defendants.⁵ Her complaint alleged coercive civil conspiracy (count I) and unfair or deceptive acts or practices in violation of G. L. c. 93A (count II). Each defendant filed a motion to dismiss the plaintiff's complaint pursuant to Mass. R. Civ. P. 12 (b) (6), 365 Mass. 754 (1974). A Superior Court judge granted the defendants' motions to dismiss count I of the complaint but denied their motions to dismiss count II of the complaint.⁶ The judge then reported the correctness of her order denying the defendants' motions to dismiss count II of the plaintiff's complaint to the Appeals Court pursuant to Mass. R. Civ. P. 64 (a), as amended, 423 Mass. 1403 (1996), and stayed all proceedings below. We granted the parties' applications for direct appellate review. The only issue before us is whether indirect purchasers can assert claims for price-fixing or other anticompetitive conduct under G. L. c. 93A, § 9, where they have no standing to bring such claims under the Massachusetts Antitrust Act (Antitrust Act), G. L. c. 93, §§ 1-14A. Because we conclude that indirect purchasers can assert such claims, we affirm the order of the Superior Court judge.⁷

The sufficiency of the claims raised in the plaintiff's complaint is examined by accepting the allegations, and such reasonable inferences as may be drawn therefrom, as true. See Eyal v. Helen Broadcasting Corp., 411 Mass. 426, 429 (1991). A complaint is sufficient "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of [her] claim which would entitle [her] to relief." Nader v. Citron, 372 Mass. 96, 98 (1977), quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957).

The defendants, who dominate international markets for vitamin products,⁸ are foreign corporations doing business in the Commonwealth of Massachusetts. The plaintiff alleges that, beginning in January, 1990, the defendants conspired among themselves to restrain free trade of vitamin products by suppressing and eliminating competition. The conspiracy consisted of formal and informal collusion by the defendants to (1) fix, increase, and maintain prices for vitamin products; (2) coordinate price increases among themselves for the sale of vitamin products; (3) allocate among themselves the volume of sales and market shares of vitamin products; (4) allocate among themselves all or part of certain contracts to supply vitamin products to various customers; and (5) refrain from submitting bids, or submit collusive, noncompetitive, and rigged bids. The effect of the defendants' alleged conduct was to restrict competition in the sale of vitamin products in Massachusetts and to force consumers to pay prices for such products that were artificially inflated.

In considering the claims set forth in the plaintiff's complaint, alleging violations of G. L. c. 93A, the judge examined the relationship between that statutory scheme and the Antitrust Act. She concluded that, based on their respective language and history, G. L. c. 93A should not be interpreted to bar the plaintiff, as an indirect purchaser, from bringing an action for price-fixing or other forms of unfair competition against the defendants. Because the plaintiff had stated a claim on which relief could be granted, the defendants' motions to dismiss count II of her complaint were denied.

The defendants contend that the plaintiff's allegations of price-fixing fall within the limits of the Antitrust Act and that, in light of the precedent established in Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), the plaintiff is precluded from bringing a claim under that Act because she is an indirect purchaser of vitamin products. The defendants argue that principles of statutory construction, as well as public policy concerns, mandate that G. L. c. 93A be construed harmoniously with related statutes, including the Antitrust Act. As such, indirect purchasers should be barred from bringing price-fixing claims under G. L. c. 93A. To conclude otherwise would be to allow indirect purchasers to circumvent the limitations on plaintiffs' remedies in the Antitrust Act by bringing their causes of action under G. L. c. 93A.

The purpose of the Antitrust Act, enacted in 1978, is "to encourage free and open competition in the interests of the general welfare and economy by prohibiting unreasonable restraints of trade and monopolistic practices in the commonwealth." G. L. c. 93, § 1. To that end, "[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce in the commonwealth shall be unlawful." G. L. c. 93, § 4. "Any person who shall be injured in his business or property by reason of a violation of the provisions of [G. L. c. 93] may sue therefor and recover the actual damages sustained, together with the costs of suit, including reasonable attorney fees." G. L. c. 93, § 12. The Antitrust Act is to be "construed in harmony with judicial interpretations of comparable federal antitrust statutes insofar as practicable."⁹ G. L. c. 93, § 1.

"Federal courts consistently have held that an agreement among competitors to raise, depress, stabilize, or fix the price of goods in commerce is illegal per se." Commonwealth v. Mass. CRINC, 392 Mass. 79, 92 (1984). See Catalano, Inc. v. Target Sales, Inc., 446 U.S. 643, 647 (1980); United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 223 (1940). In analyzing § 4 of the Clayton Act, 15 U.S.C. § 15 (2000), the Supreme Court concluded that only the overcharged direct purchaser, and not others in the chain of manufacture or distribution (such as an indirect purchaser), was "injured in his business or property" for purposes of recovering damages for the violation of federal antitrust laws.¹⁰ See Illinois Brick Co. v. Illinois, supra at 729-736. See also Kansas v. Utilicorp United Inc., 497 U.S. 199, 206-208 (1990). Because the Antitrust Act is to be construed in harmony with judicial interpretations of comparable Federal antitrust statutes, the rule of law established in Illinois Brick Co. v. Illinois, supra, would apply with equal force to preclude claims brought under G. L. c. 93 by indirect purchasers in Massachusetts. See Boos v. Abbott Labs., 925 F. Supp. 49, 51 (D. Mass. 1996). See also Commonwealth v. Mass. CRINC, supra at 89 n.9, 95 n.14 (recognizing economic harm suffered by indirect purchasers as result of defendants' price-fixing would not be capable of remediation in light of Supreme Court's Illinois Brick decision, but declining to consider whether defendants' activities would constitute a violation of G. L. c. 93A).

The plaintiff does not dispute that she is an indirect purchaser of the defendants' vitamin products within the meaning of Illinois Brick Co. v. Illinois, supra, and that she is therefore foreclosed from pursuing her cause of action under the Antitrust Act. Undoubtedly for that reason, the plaintiff has asserted her claim for relief under G. L. c. 93A. Federal antitrust laws do not expressly preempt States from enacting statutes allowing indirect purchasers to recover damages for their injuries. See California v. ARC Am. Corp., 490 U.S. 93, 101-102, 105 (1989) (rejecting claim that California's antitrust law, which specifically allowed indirect purchaser actions, was inconsistent with, and thus preempted by, Federal law). That is exactly what happened in Massachusetts with the enactment of G. L. c. 93A, "a statute of broad impact which creates new substantive rights and provides new procedural devices for the enforcement of those rights." Linthicum v. Archambault, 379 Mass. 381, 383 (1979), quoting Slaney v. Westwood Auto, Inc., 366 Mass. 688, 693 (1975).

General Laws c. 93A regulates trade and commerce "directly or indirectly affecting the people of this commonwealth" (emphasis added).¹¹ G. L. c. 93A, § 1. The broad language of G. L. c. 93A, § 9 (1), provides that a cause of action may be brought by "[a]ny person, [other than a businessperson entitled to bring an action under § 11], who has been injured by another person's use or employment of any method, act or practice declared to be unlawful by section two" (emphasis added). General Laws c. 93A, § 2, states that "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful."

In analyzing what constitutes unfair methods of competition and unfair or deceptive acts or practices, which are not defined in G. L. c. 93A, this court looks to interpretations by the Federal Trade Commission and Federal courts of § 5(a)(1) of the Federal Trade Commission Act (FTC Act), 15 U.S.C. § 45(a)(1) (2000).¹² See G. L. c. 93A, § 2 (b). See also PMP Assocs., Inc. v. Globe Newspaper Co., 366 Mass. 593, 595-596 (1975). The Federal Trade Commission may, under § 5(a)(1) of the FTC Act,...