Com. of Pa. v. Mid-Atlantic Toyota Distributors, Inc.

• Court: U.S. Court of Appeals — Fourth Circuit
• Writing for the Court: Before PHILLIPS and CHAPMAN; JAMES DICKSON PHILLIPS
• Citation: Com. of Pa. v. Mid-Atlantic Toyota Distributors, Inc., 704 F.2d 125 (4th Cir. 1983)
• Decision Date: 24 March 1983
• Docket Number: MID-ATLANTIC,Nos. 82-1131,s. 82-1131
• Parties: 1983-1 Trade Cases 65,291 COMMONWEALTH OF PENNSYLVANIA on its own behalf and as Parens Patriae, Appellee, v.TOYOTA DISTRIBUTORS, INC., Carecraft Industries, Ltd., Frederick R. Weisman, and Al Sweet Motor Sales, Inc., Allegheny Toyota, Inc., Bel Air Motors, Inc., Bergman Toyota, Inc., Bob Mayberry Chevrolet-Toyota, Inc., Bud Haas Toyota Motors, Inc., Falconi Toyota Motors, Inc., Joel Confer AMC, Inc., Knobloch Toyota Park, Inc., McCracklin-Sturman Toyota, Inc., Meadville Toyota, Inc., Montgomery Toyota, Inc., Rohrich Cadillac, Inc., Suburban Toyota, Inc., Trostle Oldsmobile, Inc., University Toyota, Inc., Belvin J. Kishbaugh, Inc., Bobart, Inc., Continental Motor Sales Co., Inc., Hartman Motorcars Co., J.H. Bennett, Inc., James W. Halterman, Inc., Lancaster Toyota, Inc., Performance Motors, Inc., R.D. Ertley Toyota, Inc., Richard Auto Sales, Inc., Valley Toyota, Inc., A.S. Berman, Inc., Airport Toyota, Inc., Central City Toyota, Inc., Charles A. Bott, Inc., Chester Mack Toyota, Inc., Foster Toyota, Inc., Henry Kehl Enterprises, Inc., Peter Alan Toyota, Inc., Sloane Toyota, Inc., Speedcraft Enterprises, Inc., Thompson Toyota, Inc., Tony Biscotte, Inc., Appellants. DISTRICT OF COLUMBIA ex rel. ROGERS, Appellee, v.TOYOTA DISTRIBUTORS, INC., Carecraft Industries, Ltd., Frederick R. Weisman, and Rosenthal Toyota, Inc., Silver Spring Toyota, Inc., Appellants. MARYLAND ex rel. SACHS, Delaware ex rel. Gebelein, Appellees, v.TOYOTA DISTRIBUTORS, INC., Carecraft Industries, Ltd., Frederick R. Weisman, Anton Motors, Inc., Schaefer/May Motors Sales, Ltd., Torrey, Inc., Castle Toyota, Inc., Croyste Toyota, Inc., Waldorf Toyota, Inc., Younger Toyota, Inc., Annapolis-Toyota, Inc., Rosenthal Toyota, Inc., Silver Spring Toyota, Inc., Fulker Toyota, Inc., Jones Plymouth, Inc., Fredericktown Toyota, Inc., Toyota Village, Inc., R & H Motor Cars, Ltd., Russell Motor Cars, Inc., Schaefer & Strohminger, Inc., Best Toyota, Inc., Laurel Toyota, Inc., Premier Motor Co., Inc., Timonium Toyota,

Page 125

704 F.2d 125

1983-1 Trade Cases 65,291

COMMONWEALTH OF PENNSYLVANIA on its own behalf and as Parens

Patriae, Appellee, v. MID-ATLANTIC TOYOTA DISTRIBUTORS, INC., Carecraft

Industries, Ltd., Frederick R. Weisman, and Al Sweet Motor

Sales, Inc., Allegheny Toyota, Inc., Bel Air Motors, Inc.,

Bergman Toyota, Inc., Bob Mayberry Chevrolet-Toyota, Inc.,

Bud Haas Toyota Motors, Inc., Falconi Toyota Motors, Inc.,

Joel Confer AMC, Inc., Knobloch Toyota Park, Inc.,

McCracklin-Sturman Toyota, Inc., Meadville Toyota, Inc.,

Montgomery Toyota, Inc., Rohrich Cadillac, Inc., Suburban

Toyota, Inc., Trostle Oldsmobile, Inc., University Toyota,

Inc., Belvin J. Kishbaugh, Inc., Bobart, Inc., Continental

Motor Sales Co., Inc., Hartman Motorcars Co., J.H. Bennett,

Inc., James W. Halterman, Inc., Lancaster Toyota, Inc.,

Performance Motors, Inc., R.D. Ertley Toyota, Inc., Richard

Auto Sales, Inc., Valley Toyota, Inc., A.S. Berman, Inc.,

Airport Toyota, Inc., Central City Toyota, Inc., Charles A.

Bott, Inc., Chester Mack Toyota, Inc., Foster Toyota, Inc.,

Henry Kehl Enterprises, Inc., Peter Alan Toyota, Inc.,

Sloane Toyota, Inc., Speedcraft Enterprises, Inc., Thompson

Toyota, Inc., Tony Biscotte, Inc., Appellants.

DISTRICT OF COLUMBIA ex rel. ROGERS, Appellee, v. MID-ATLANTIC TOYOTA DISTRIBUTORS, INC., Carecraft

Industries, Ltd., Frederick R. Weisman, and

Rosenthal Toyota, Inc., Silver Spring

Toyota, Inc., Appellants.

MARYLAND ex rel. SACHS, Delaware ex rel. Gebelein, Appellees, v. MID-ATLANTIC TOYOTA DISTRIBUTORS, INC., Carecraft

Industries, Ltd., Frederick R. Weisman, Anton Motors, Inc.,

Schaefer/May Motors Sales, Ltd., Torrey, Inc., Castle

Toyota, Inc., Croyste Toyota, Inc., Waldorf Toyota, Inc.,

Younger Toyota, Inc., Annapolis-Toyota, Inc., Rosenthal

Toyota, Inc., Silver Spring Toyota, Inc., Fulker Toyota,

Inc., Jones Plymouth, Inc., Fredericktown Toyota, Inc.,

Toyota Village, Inc., R & H Motor Cars, Ltd., Russell Motor

Cars, Inc., Schaefer & Strohminger, Inc., Best Toyota, Inc.,

Laurel Toyota, Inc., Premier Motor Co., Inc., Timonium

Toyota, Inc., Royal Imports of Delaware, Inc., Airport

Toyota, Inc., C.F. Schwartz Motor Company, Inc., Appellants.

Nos. 82-1131 to 82-1133.

United States Court of Appeals Fourth Circuit.

Argued Oct. 7, 1982.

Decided March 24, 1983.

William J. Murphy, Washington, D.C. (Raymond W. Bergan, Scott Blake Harris, Williams & Connolly, Washington, D.C., on brief), Michael G. Charapp, Washington, D.C. (Basil J. Mezines, Jacob A. Stein, Stein, Mitchell & Mezines, Washington, D.C., on brief), Francis P. Newell, Philadelphia, Pa. (Craig E. Zeigler, Montgomery, McCracken, Walker & Rhoades, Philadelphia, Pa., on brief), for appellants.

Robert W. Hesselbacher, Jr., Asst. Atty. Gen., Baltimore, Md. (Stephen H. Sachs, Atty. Gen., Charles O. Monk, II, Asst. Atty. Gen. and Chief, Antitrust Div., Michael F. Brockmeyer, Francis John Gorman, Asst. Attys. Gen., Baltimore, Md., on brief), for appellees.

Before PHILLIPS and CHAPMAN, Circuit Judges, and WALTER E. BLACK, Jr., United States District Judge, sitting by designation.

JAMES DICKSON PHILLIPS, Circuit Judge:

This interlocutory appeal has been certified, pursuant to 28 U.S.C. Sec. 1292(b), on the question whether the state attorneys general of Maryland, Delaware, and Pennsylvania, and the Corporation Counsel of the District of Columbia, may maintain statutory parens patriae damage actions under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, 15 U.S.C. Secs. 15c-15h (1976) (the Act), in the names of their respective jurisdictions on behalf of their natural-person residents injured by an alleged price-fixing conspiracy in violation of the Sherman Act, 15 U.S.C. Sec. 1. While departing somewhat from the reasoning of the district court, we affirm its ruling that the state attorneys general ¹ involved here may prosecute these statutory parens patriae actions under the antitrust laws.

I

Between December 1980 and August 1981, the states of Maryland, Delaware, Pennsylvania, Virginia, and West Virginia, and the District of Columbia, instituted civil antitrust actions in federal district courts in their respective jurisdictions against Toyota automobile dealers and distributors in the middle-Atlantic region. These actions, brought pursuant to the Antitrust Improvements Act of 1976, 15 U.S.C. Secs. 15c-15h, have been consolidated along with two private actions in the District of Maryland by the Judicial Panel on Multidistrict Litigation. The state attorneys general, acting in their statutory parens patriae capacity, seek damages on behalf of their natural-person residents injured by an alleged conspiracy to fix the prices of Toyotas. ²

Defendants moved to dismiss the states' actions, alleging inter alia that the attorneys general lack authority to bring parens patriae damage actions under the federal antitrust laws. ³ The district court denied the motion to dismiss, ruling (1) that the state attorneys general were authorized by federal law, irrespective of local law, to maintain these actions, or alternatively (2) that state law provided the attorneys general with authority independent of federal law to bring these actions. Following certification by the district court under 28 U.S.C. Sec. 1292(b), we granted defendants' petition to appeal from this interlocutory order.

II

The Antitrust Improvements Act provides that an "attorney general of a State may bring a civil action in the name of such State, as parens patriae on behalf of natural persons residing in such State," to secure treble money damages for injury to their property flowing from violations of the antitrust laws. ⁴ 15 U.S.C. Sec. 15c(a)(1). See generally Scher, Emerging Issues Under the Antitrust Improvements Act of 1976, 77 Colum.L.Rev. 679 (1977). While the structure of this statutory scheme--whether it deals essentially with notions of cause of action, right of action, party capacity real party in interest, representative action, or other concepts--may not be the clearest, its essence is plain enough.

It creates in the states a new right of action under existing substantive federal antitrust law. See Reiter v. Sonotone Corp., 442 U.S. 330, 344 n. 7, 99 S.Ct. 2326, 2333 n. 7, 60 L.Ed.2d 931 (1979) ("the statute authorizes the states to assert [consumers' causes of action] in a parens patriae capacity"); Illinois v. Sangamo Construction Co., 657 F.2d 855, 859 (7th Cir.1981); S.Rep. No. 803, 94th Cong., 2d Sess. 42 (1976) (the Act "creates a new statutory cause of action for States"). Because it involves no change in the substantive basis for antitrust liability, it is purely procedural ⁵ in its effect. Illinois Brick Co. v. Illinois, 431 U.S. 720, 734 n. 14, 97 S.Ct. 2061, 2068 n. 14, 52 L.Ed.2d 707 (1977); In re Montgomery County Real Estate Antitrust Litigation, 452 F.Supp. 54, 60-61 (D.Md.1978); Scher, supra, at 721-25. Emphasizing its wholly procedural cast, the Act specifically recognizes the power of the states to forego any benefit of the Act by legislatively renouncing the right of action conferred. See 15 U.S.C. Sec. 15h. And, in a final procedural twist, the Act recognizes the "authority" of state attorneys general--so far as federal interests are concerned--to prosecute the actions in the name of the state. ⁶ See 15 U.S.C. Sec. 15c(a)(1).

As the legislative history makes apparent, see H.R.Rep. No. 499, 94th Cong., 2d Sess. 6-8, reprinted in 1976 U.S.Code Cong. & Ad.News 2572, 2575-78; S.Rep. No. 803, supra, at 42, the Act was aimed primarily at enlarging the potential for consumer recovery for antitrust violations by effectively bypassing the burdensome requirements of Rule 23, Fed.R.Civ.P. 23, that might tend to dissuade private litigants from pursuing conventional consumer class actions for antitrust injury, see Scher, supra, at 707-12; Comment, Parens Patriae Antitrust Actions for Treble Damages, 14 Harv.J.Legis. 328, 336-37, 341-43 (1977). Therefore, the Act is best understood as constituting the states, acting through their attorneys general, as "consumer advocates in the [antitrust] enforcement process." H.R.Rep. No. 499, supra, at 8. See In re Grand Jury Investigation of Cuisinarts, Inc., 665 F.2d 24, 35 (2d Cir.1981), petition for cert. filed, 51 U.S.L.W. 3023 (U.S. Aug. 3, 1982) (No. 81-1595).

III

Defendants do not appear seriously to challenge the essential accuracy of this analysis of the structure and purpose of the statutory scheme. They attack instead the district court's conclusions (1) that the "authority" conferred by the Act upon state attorneys general empowers them to sue on this federally created right of action irrespective of state law limitations on their power, and (2) that, in any event, the law of each state involved supplies, or does not limit, the power of these attorneys general to maintain the right of action contemplated by the Act.

As to (1), defendants contend that, because Congress obviously lacks power to override state law definitions of the duties and authority of state officers, the Act must be interpreted as not intending to confer any federal authority at odds with state limitations. This accepted, the argument runs, none of the jurisdictions involved vests its attorney general with authority to prosecute the right of action created by the Act, so that the suits must be dismissed.

We do not think it necessary to address the validity of the district court's determination that, irrespective of state law, the authority of state attorneys general to prosecute these actions is properly conferred by the federal Act. Accepting, arguendo, defendants' postulate that Congress could not have intended to redefine or expand the state-defined offices of these attorneys general, we hold that each of these state attorneys general derives power from his respective state law framework to prosecute this federal right of action.

Defendants' contention that the state laws involved here do not provide for, or proscribe, suit by these attorneys...