Lachance v. U.S. Smokeless Tobacco Co., 2006-564.

CourtSupreme Court of New Hampshire
Citation931 A.2d 571
Docket NumberNo. 2006-564.,2006-564.
PartiesJames J. LaCHANCE and another v. UNITED STATES SMOKELESS TOBACCO CO. and another.
Decision Date24 August 2007
931 A.2d 571
James J. LaCHANCE and another
No. 2006-564.
Supreme Court of New Hampshire.
Argued: March 21, 2007.
Opinion Issued: August 24, 2007.

[931 A.2d 573]

Shaheen & Gordon, of Dover (Christine M. Craig and D. Michael Noonan, on the brief, and Ms. Craig orally), for the plaintiffs.

McLane, Graf, Raulerson & Middleton, P.A., of Manchester (Bruce W. Felmly and Jennifer L. Parent, on the brief), and Latham & Watkins, LLP, of Washington, DC and Los Angeles, CA (Margaret M. Zwisler and Charles H. Samel, on the brief, and Mr. Samel orally), for the defendants.


The plaintiffs, James J. LaChance and Chad Crossan, appeal an order of the Superior Court (Fauver, J.), denying their motion for class certification and granting judgment on the pleadings to the defendants, United States Smokeless Tobacco Company, United States Tobacco Sales and Marketing Company, United States Tobacco Manufacturing Company, and UST, Inc. We reverse and remand.

I. Background

The following facts appear in the record. The defendants sell smokeless tobacco products using in-store display racks and advertising mechanisms. The plaintiffs are purchasers of smokeless tobacco products from retailers across New Hampshire. Following a verdict unfavorable to the defendants in antitrust litigation in another jurisdiction, see Conwood Co. L.P. v. United States Tobacco Co., 290 F.3d 768, 777 (6th Cir.2002), cert. denied, 537 U.S. 1148, 123 S.Ct. 876, 154 L.Ed.2d 850 (2003), the plaintiffs filed a civil action in the superior court, alleging that the defendants also violated the New Hampshire Consumer Protection Act (CPA), see generally RSA chapter 358-A (1995 & Supp. 2006). More specifically, they contended that the defendants engaged in conduct that excluded competitors, limited customers' product choices, and negatively affected the advertising and display of competing brands. According to the plaintiffs, the defendants "intentionally and routinely" removed competitors' racks from retail stores and entered into agreements with store retailers to restrict the sale, advertising and display of competing brands, as well as gave retailers incentives to exclude competing brands from stores. The defendants also are alleged to have "increase[ed] . . . the price and limit[ed] and reduc[ed] the supply of moist snuff tobacco products[,] [acts which] constitute[d] and w[ere] intended to constitute unfair and deceptive competition and unfair and deceptive business acts and practices within the meaning of RSA 358-A." The plaintiffs argued that, as a result of the defendants' conduct, they sustained actual damages and non-economic harm because their "product choice ha[d] been limited and each plaintiff ha[d] been wrongfully denied the free choice to purchase a lower-priced consumer product."

Over the course of litigating their case in superior court, the plaintiffs moved to certify "a class of similarly situated New Hampshire purchasers of moist snuff smokeless tobacco." For their part, the defendants moved for judgment on the pleadings, arguing, among other things, that the plaintiffs' claims were barred by our decision in Minuteman, LLC v. Microsoft Corp., 147 N.H. 634, 795 A.2d 833 (2002). The superior court denied the plaintiffs' motion and granted the defendants' motion, ruling that the plaintiffs, as

931 A.2d 574

indirect purchasers, could not pursue their claims. The plaintiffs appeal both rulings.

II. Procedural Posture

Before reaching the parties' substantive arguments, we must resolve a preliminary procedural issue. In their objection to the defendants' motion for judgment on the pleadings, the plaintiffs argued, among other things, that RSA 358-A:2, XIV (Supp.2006) provided the authority needed to bring their claims under the CPA. RSA 358-A:2, XIV makes unlawful the "[p]ricing of goods or services in a manner that tends to create or maintain a monopoly, or otherwise harm competition." The superior court "acknowledge[d] the legislature expressly authorize[d] a plaintiff to bring an action for anticompetitive practices under the CPA by the specific language of [RSA 358-A:2, XIV]" but nevertheless concluded that "the plaintiffs' claims are barred by Minuteman."

In their opening brief, the plaintiffs did not address the applicability or effects of RSA 358-A:2, XIV. The defendants cited it as part of their argument against class certification, but did not discuss whether it has any effect on whether indirect purchasers may pursue claims. Recognizing the potential importance of RSA 358-A:2, XIV, we ordered the parties to submit supplemental memoranda addressing the following two issues:

(1) Whether this court should consider RSA 358-A:2, XIV in assessing whether the plaintiffs may bring their claims under the CPA; and

(2) Assuming this court should consider RSA 358-A:2, XIV, what effect, if any, RSA 358-A:2, XIV should have in determining whether the plaintiffs may bring their claims under the CPA.

In their memoranda, the plaintiffs, not unexpectedly, argue that RSA 358-A:2, XIV buttresses the argument that they may pursue their claims under the CPA. The defendants make two rejoinders. First, citing Derosia v. Warden, N.H. State Prison, 149 N.H. 579, 580, 826 A.2d 575 (2003), among other cases, they contend that the plaintiffs waived consideration of RSA 358-A:2, XIV by failing to raise it in their opening brief. Second, they contend that, even if we consider RSA 358-A:2, XIV, it supports affirming the superior court's judgment.

The defendants' first argument is well-taken. Generally, we do not consider arguments that have not been briefed. See Derosia, 149 N.H. at 580, 826 A.2d 575. However, the instant case is somewhat unusual in that we ordered the parties to address the effects of the statutory provision at issue, and they have done so. Moreover, the issue was presented to the superior court, and thus should not come as a surprise to either side.

Faced with this procedural posture, we could decide the case without reference to RSA 358-A:2, XIV. That approach, however, is an empty one because we would be ignoring a critical statutory provision in order to render an opinion that would be essentially meaningless outside the context of this case. This would be a waste of judicial resources, a result we typically attempt to avoid. See Rochester School Bd. v. N.H. PELRB, 119 N.H. 45, 50, 398 A.2d 823 (1979).

We could also remand to the superior court for it to consider, in the first instance, how RSA 358-A:2, XIV affects the application of Minuteman with respect to whether the plaintiffs may bring claims under the CPA. This, too, would be a waste of judicial resources and unnecessarily burden the parties because no matter what conclusion the superior court might reach, the parties likely would appeal, and

931 A.2d 575

we would once again be called upon to decide the issue.

Finally, we could decide the matter in the first instance. This approach is the most sensible, so we opt for it. The issue is now thoroughly briefed and ready for our consideration. Deciding it now will avoid unnecessarily burdening the parties with additional steps in the litigation process. Moreover, since the issue of who may bring claims under the CPA is one of statutory interpretation, we would review the matter de novo in any event. Lower Bartlett Water Precinct v. Murnik, 150 N.H. 690, 692, 845 A.2d 1245 (2004).

III. Discussion

A. Whether Indirect Purchasers May Bring Claims under the CPA

The question presented by this case — whether consumers, as indirect purchasers, may bring a cause of action under the CPA — arises from a controversy that began gathering steam in 1977. At that time, in Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977), the United States Supreme Court held that indirect purchasers may not bring claims under the federal antitrust laws. For purposes of the Illinois Brick rule, indirect purchasers are those who acquire a product not directly from a manufacturer, but from some intermediary in the chain of distribution. Id. at 724-27, 97 S.Ct. 2061. In support of its holding, the Court cited the unique nature of antitrust litigation, issues of multiple recovery, and the problem of allocating damages if indirect purchasers were allowed to bring suit. Id. at 737-38, 97 S.Ct. 2061. Later, the Court held that federal antitrust laws do not, however, preempt states from enacting statutes that allow indirect purchasers to recover damages for their injuries. See California v. ARC America Corp., 490 U.S. 93, 101-02, 109 S.Ct. 1661, 104 L.Ed.2d 86 (1989) (rejecting argument that California's antitrust law, which specifically allows indirect purchaser actions, was preempted by federal law).

In the wake of Illinois Brick and ARC America, states have been grappling with issues involving whether, and in what context, indirect purchasers may pursue their claims. For example, at least thirty-three states and the District of Columbia have passed so-called Illinois Brick repealer statutes, permitting plaintiffs to bring their claims under state antitrust statutes. Elkins v. Microsoft Corp., 174 Vt. 328, 817 A.2d 9, 18 (2002). Our legislature has not. Other jurisdictions have ruled that Illinois Brick applies in both the antitrust and the consumer protection realms. See, e.g., Sickles v. Cabot Corp., 379 N.J.Super. 100, 877 A.2d 267, 274 (App.Div.), cert. denied, 185 N.J. 297, 884 A.2d 1267 (2005). These courts reason that antitrust-type claims are unique and should be resolved under antitrust — as opposed to consumer protection — laws and principles. Id. They note that reaching a contrary conclusion would undermine state antitrust acts and the jurisprudence construing such acts. Id. By contrast, Vermont, Massachusetts and Florida follow a different approach. Courts in all three states have allowed antitrust-type claims to be brought under the state's...

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