Thursday, July 03, 2008

Auto Lessees Lack Standing to Recover Damages from Allegedly Conspiring Manufacturers

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

Lessees of new cars lacked standing to seek damages from Canadian and U.S. auto makers for conspiring to restrict the flow of cheaper Canadian cars into the U.S. market between 2001 and 2003, when the U.S. dollar was much stronger than the Canadian dollar, the U.S. Court of Appeals in Boston has ruled.

Indirect Purchaser Rule

The lessees contended that, as a result of the conspiracy, they were forced to pay inflated payments under their automobile lease agreements in the United States. Because the lessees were indirect purchasers, they lacked standing to sue for damages under Sec. 4 of the Clayton Act, and their suit was correctly dismissed under the rule of Illinois Brick Co. v. Illinois (1977-1 Trade Cases ¶61,460). In March, the appellate court rejected the certification of a class seeking injunctive relief under federal antitrust laws (2008-1 Trade Cases ¶76,100).

The court rejected the lessees’ attempt to recast the claim as one of vertical conspiracy involving auto dealers, in an effort to avoid their indirect purchaser status. If the dealers were co-conspirators, then the lessees would arguably be direct victims of the conspiracy. However, the lessees did not did not join the dealers as defendants, nor did they plead sufficiently or argue consistently that dealers were part of the conspiracy.

Dealers as Participants in Conspiracy

While the lessees referred at times to dealers as members of the conspiracy, these references were primarily to Canadian dealers, not to the U.S. dealers who actually negotiated the leases. Moreover, those passing and general allusions were contradicted and outweighed by allegations in the complaints that dealers also paid higher prices due to the conspiracy, the court explained.

The June 30 decision is In re New Motor Vehicles Canadian Exp. Antitrust Litigation. The opinion will appear at 2008-1 Trade Cases ¶76,195.

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