Industrial Gas Antitrust Litigation, In re

• Decision Date: 25 June 1982
• Docket Number: No. 81-2567,81-2567
• Citation: 681 F.2d 514
• Parties: 1982-2 Trade Cases 64,807 In re INDUSTRIAL GAS ANTITRUST LITIGATION Robert C. BICHAN, Plaintiff-Appellant, v. CHEMETRON CORPORATION, a corporation; Allegheny Ludlum Industries, Inc., a corporation; Airco Industrial Gas, a division of Airco, Inc., a corporation; Air Products & Chemicals, Inc., a corporation; Liquid Air Corporation of North America, a corporation; Liquid Air, Inc., a corporation; and Linde Division, a division of Union Carbide Corporation, a corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 514

681 F.2d 514

1982-2 Trade Cases 64,807

In re INDUSTRIAL GAS ANTITRUST LITIGATION Robert C. BICHAN, Plaintiff-Appellant, v. CHEMETRON CORPORATION, a corporation; Allegheny Ludlum Industries, Inc., a corporation; Airco Industrial Gas, a division of Airco, Inc., a corporation; Air Products &amp Chemicals, Inc., a corporation; Liquid Air Corporation of North America, a corporation; Liquid Air, Inc., a corporation; and Linde Division, a division of Union Carbide Corporation, a corporation, Defendants-Appellees.

No. 81-2567.

United States Court of Appeals Seventh Circuit.

Argued Feb. 26, 1982.

Decided June 25, 1982. ^*

Michael W. Rathsack, Chicago, Ill., for plaintiff-appellant.

Henry P. Sailer, Covington & Burling, Washington, D. C., for defendants-appellees.

Before BAUER and POSNER, Circuit Judges, and BARTELS, Senior District Judge. ^**

BAUER, Circuit Judge.

The issue on appeal is whether Robert C. Bichan, a salaried executive who was terminated from his position as president of Chemetron's Industrial Gas Division and blacklisted by the industrial gas industry, has standing to bring a private treble damage action against his employer under § 4 of the Clayton Act. 15 U.S.C. § 15. The district court held that Bichan could not maintain the action because he was not within the target area of the alleged anticompetitive conduct and had not suffered an "antitrust injury." We affirm.

Bichan was hired to manage Chemetron's Industrial Gas Division. Contrary to established marketing practices, Bichan began competing for customers of other producers and was successful in obtaining an account from a customer who traditionally purchased gas from another producer. In July 1976, shortly after obtaining this account, Bichan was dismissed and, since that time, has been unable to secure similar work in the industry.

Bichan alleges that a conspiracy existed to fix prices, to impose conditions of sales on customers and to allocate customers. He maintains that he was fired and blacklisted because he refused to adhere to these illegal practices. He argues that having lost salary and bonuses as a direct result of his refusal to participate in the conspiracy, he has suffered an "injury in his business or property" within the meaning of § 4 of the Clayton Act. 15 U.S.C. § 15.

Analysis of whether Bichan may maintain a treble damages action under § 4 is a two step process. First, we must determine whether Bichan's injury is an "antitrust injury" which is inextricably related to, and caused by, the alleged anticompetitive conduct. Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977); Weit v. Continental Illinois National Bank & Trust Co., 641 F.2d 457 (7th Cir. 1981). If we determine that Bichan has suffered an "injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants' act unlawful," Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S.Ct. 690, 697, 50 L.Ed.2d 701 (1977), we must then decide if Bichan is the proper party to bring this suit. Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 rehearing denied, 434 U.S. 881, 98 S.Ct. 243, 54 L.Ed.2d 164 (1977).

As the district court judge noted, the question of who may bring a private treble damages action under § 4 is characterized by doctrinal confusion. In re Uranium Antitrust Litigation, 473 F.Supp. 393, 401 (N.D.Ill.1979). This confusion has been caused by the exceedingly broad terms in which the treble damages provision is framed. Section 4 of the Clayton Act provides that "(a) ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue ... and shall recover threefold the damages by him sustained." 15 U.S.C. § 15. Courts have recognized, however, that the antitrust laws were not intended as a "panacea for all wrongs." Parmelee Transportation Co. v. Keeshin, 292 F.2d 794, 804 (7th Cir.), cert. denied, 368 U.S. 944, 82 S.Ct. 376, 7 L.Ed.2d 340 (1961), rehearing denied, 368 U.S. 972, 82 S.Ct. 437, 7 L.Ed.2d 401 (1962), and that to read § 4's language literally would inevitably lead to excessively complex or numerous suits as well as damage awards unrelated to the social cost of the antitrust violation. ¹ See Havoco of America, Ltd. v. Shell Oil Co., 626 F.2d 549 (7th Cir. 1980). Thus, this language has been construed to imply restrictions limiting the injured parties who may seek redress under § 4 to those persons whose injury is of a kind the antitrust laws are designed to prevent. Lupia v. Stella D'Oro Biscuit Co., Inc., 586 F.2d 1163, 1168 (7th Cir. 1978), cert. denied, 440 U.S. 982, 99 S.Ct. 1791, 60 L.Ed.2d 242 (1979).

While courts have been in agreement that the right to bring treble damages actions should be limited, they have devised differing tests to identify which parties should be permitted to sue under § 4. To date, at least three tests have been adopted: (1) the target area test; (2) the direct injury test; and (3) the "zone-of-interest" test. All three tests attempt to identify those persons who have suffered an injury which flows from antitrust violations. The target area test focuses on the area affected by the anticompetitive conduct, requiring that the plaintiff be within the area of the economy which was endangered by a breakdown of competition and that plaintiff's injury be a direct result of the lessening of that competition. In re Multidistrict Vehicle Air Pollution M. D. L. No. 31, 481 F.2d 122, 128 (9th Cir.), cert. denied sub nom. Morgan v. Automobile Manufacturing Assoc., 414 U.S. 1045, 94 S.Ct. 551, 38 L.Ed.2d 336 (1973), rehearing denied, 414 U.S. 1148, 94 S.Ct. 905, 39 L.Ed.2d 104 (1974). The "zone-of-interest" test, although borrowing language from standing cases decided in the context of administrative law, appears to be similar to the target area test. This test requires that the plaintiff prove a direct and causal relationship between his business or property and the antitrust violations. Malamud v. Sinclair Oil Corp., 521 F.2d 1142, 1145 (6th Cir. 1975). In contrast, the direct injury test, incorporating notions of privity, focuses on the relationship between the injured party and the antitrust violator. In re Multidistrict Vehicle Air Pollution M. D. L. No. 31, 481 F.2d 122, 127 (9th Cir.), cert. denied sub nom. Morgan v. Automobile Manufacturing Assoc., 414 U.S. 1045, 94 S.Ct. 551, 38 L.Ed.2d 336 (1973), rehearing denied, 414 U.S. 1148, 94 S.Ct. 905, 39 L.Ed.2d 104 (1974). ²

However, not all persons who have suffered an injury flowing from the antitrust violation have standing to sue under § 4. From the class of injured persons suffering an "antitrust injury" only those parties who can most efficiently vindicate the purposes of the antitrust laws have antitrust standing to maintain a private action under § 4. Jeffrey v. Southwestern Bell, 518 F.2d 1129 (5th Cir. 1975). Accord, In re Multidistrict Vehicle Air Pollution M. D. L. No. 31, 481 F.2d 122 (9th Cir.), cert. denied sub nom. Morgan v. Automobile Manufacturing Assoc., 414 U.S. 1045, 94 S.Ct. 551, 38 L.Ed.2d 336 (1973), rehearing denied, 414 U.S. 1148, 94 S.Ct. 905, 39 L.Ed.2d 104 (1974). In re Uranium Antitrust Litigation, 473 F.Supp. 393 (N.D.Ill.1979).

I

We first consider whether Bichan has sustained an "antitrust injury". We conclude he has not.

The parties agree that there is no Seventh Circuit precedent dealing specifically with Bichan's situation, but they differ as to the significance of this fact. Bichan argues that despite the lack of controlling precedent, the cause of his injury, the anticompetitive marketing scheme, is precisely the type of restraint of commerce proscribed by the Sherman Act, 15 U.S.C. § 1, and remediable by § 4 of the Clayton Act, 15 U.S.C. § 15. He argues that since the purpose of the antitrust laws is to provide compensation for injury as well as to preserve a competitive market structure, these laws should be interpreted not only to punish conspirators but also to protect persons who induce and encourage competition.

In contrast, appellees (collectively Chemetron), relying on Hawaii v. Standard Oil Co., 405 U.S. 251, 92 S.Ct. 885, 31 L.Ed.2d 184 (1972), insist that Congress did not intend the antitrust laws to remedy all injuries which might conceivably be traced to anticompetitive conduct. Chemetron argues that the courts have restricted the treble damages remedy to injured parties who are within the target area of the anticompetitive conduct. Defendants assert that the effect of the conspiracy alleged here would be to raise the price of industrial gas, thereby depriving buyers of the lower prices and more advantageous conditions of sale which result from free competition. Thus, Chemetron contends that the only parties within the target area of the alleged conspiracy would be the purchasers of industrial gas and the non-conspiring gas producers. It concludes that Bichan is not within this target area and, thus, he has not suffered the requisite "antitrust injury."

The parties agree that this circuit has adopted the target area test and that if Bichan is to prevail, he must show that he has been a target of the alleged conspiracy. Bichan concedes that in the past, producers, wholesalers, retailers, or consumers have been the parties traditionally found to be targets of anticompetitive conduct. Nevertheless, he argues that § 4 protection should also be extended to executive employees who attempt to encourage competition for two reasons. First, he asserts that extending protection to those who encourage competition is consistent with the goals of the antitrust laws. Second, he contends that protecting those who encourage competition is the most effective method of eliminating antitrust violations.

In support of his contention that his termination and blacklisting is an "antitrust injury," Bichan relies on Radovich v. National Football League, ...