JAMES CLAYWORTH v. PFIZER, INC

Filed 7/25/08

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION TWO

Story Continued From Part I ..

D. Post-1978 California Cases

Few California authorities have even mentioned the pass-on issue or Hanover Shoe in the almost 40 years since its publication. And the only three Court of Appeal cases with any meaningful mention of the issue have explicitly recognized that whether or not the pass-on defense is available in California is an open question.[1]

The first case was B.W.I. Custom Kitchen, supra, 191 Cal.App.3d 1341, which involved a class of indirect purchasers of glass containers who alleged that the corporate manufacturers of glass containers had engaged in a conspiracy to set noncompetitive prices for the containers in violation of the Cartwright Act and the UCL. (Id. at p. 1345.) The trial court denied class certification. Our colleagues in Division Five reversed.

Arguing against class certification, which largely hinged on whether the class would be able to prove that defendants overcharges were passed-on to them, defendants contended that the considerations which persuaded the court in Hanover Shoe[, supra,] 392 U.S. 481 to reject a pass-on defense should convince this court that the class proposed herein cannot demonstrate on a generalized basis that illegal overcharges were passed on to its members. (B.W.I. Custom Kitchen, supra, 191 Cal.App.3d at pp. 1351-1352.) The court first responded that, It is important to point out that the facts of Hanover Shoe presented a particularly complicated problem with respect to the pass-on issue. The product involved, shoe manufacturing machinery, was not itself resold by plaintiff. In effect, the court was being asked to determine whether plaintiffs pricing decision for shoes reflected the illegal overcharge for the machinery which was used in their manufacture. Where the product in question is ultimately sold to the consumer, and is largely unchanged in form from the price-fixing manufacturer to the indirect purchaser, assessing whether the manufacturers overcharges were passed on is less difficult. . . . The insurmountable difficulties found to exist in Hanover Shoe in proving injury are not apparent in the record before us. (Id. at p. 1352.)

Then, after concluding that the issue of injury can be proven on a class-wide basis, the court said that It should also be pointed out that both plaintiff and defendants have invoked the pass-on theory in this case. As we have seen, in order to demonstrate that plaintiff and the proposed class were injured by the alleged conspiracy, plaintiffs must demonstrate that defendants illegal overcharges were passed on to them in the form of higher prices for glass containers. Defendants have also invoked the pass-on theory, but have used it defensively instead of offensively. Defendants argue that the indirect purchasers in this case sustained no injury because they passed on any overcharges to their customers further down the chain of distribution. The trial court was apparently of the view that because California has rejected Illinois Brick Co. v. Illinois, supra, 431 U.S. 720, and has allowed indirect purchasers to maintain a cause of action under the Cartwright Act, the defendant should be able to assert this pass-on defense. Whether defendants can bar class certification or negate injury by showing plaintiff and the class passed on the overcharge is a question that has not been addressed by any California court, and it would be premature to resolve it at this juncture because we do not have an adequate factual record. However, even if a plaintiff has passed on the entire overcharge, he or she is not per se precluded from otherwise proving injury. (Id. at p. 1353.)

Sixteen years later came two companion cases also involving the issue of class certification in Cartwright Act cases, both of which stated that this issue of the availability of a pass-on defense in antitrust law still remains an open question in California . . . .: J. P. Morgan & Co. Inc. v. Superior Court (2003) 113 Cal.App.4th 195, 213, fn. 10; and Global Minerals & Metals Corp. v. Superior Court (2003) 113 Cal.App.4th 836, 852, fn. 10.[2]

We now answer that open question.

3. The Cartwright Act Requires That Plaintiffs Suffer a Compensable Injury

As quoted above, section 16750, subdivision (a) provides that [a]ny person who is injured in his or her business or property by reason of anything forbidden or declared unlawful by this chapter, may sue therefor . . . and . . . recover three times the damages sustained by him or her . . . . Recovery for the antitrust plaintiff is three times the damages sustained. What does that phrase mean?

As we explained in MacIsaac v. Waste Management Collection & Recycling, Inc. (2005) 134 Cal.App.4th 1076 (MacIsaac), the rules governing statutory construction in California are well-established. [O]ur primary task is to determine the lawmakers intent, which we are to do using a three-step process. (Id. at p. 1082.) We first look to the words of the statute themselves. . . . The Legislatures chosen language is the most reliable indicator of its intent because  it is the language of the statute itself that has successfully braved the legislative gauntlet.  [Citation.] We give the words of the statute a plain and commonsense meaning unless the statute specifically defines the words to give them a special meaning. [Citations.] If the statutory language is clear and unambiguous, our task is at an end . . . . (Id. at pp. 1082-1083.)

When the plain meaning of the statutes text does not resolve the interpretive question, we must proceed to the second step of the inquiry. (MacIsaac, supra, 134 Cal.App.4th at p. 1083.) In this step, we  may turn to rules or maxims of construction,  and [w]e may also look to a number of extrinsic aids, including the statutes legislative history, to assist us in our interpretation. (Ibid., footnote omitted.)

We then described the third step: If ambiguity remains after resort to secondary rules of construction and to the statutes legislative history, then we must cautiously take the third and final step of the interpretive process. [Citation.] In this phase of the process, we apply reason, practicality, and common sense to the language at hand. [Citation.] Where an uncertainty exists, we must consider the consequences that will flow from a particular interpretation. [Citation.] Thus, [i]n determining what the Legislature intended we are bound to consider not only the words used, but also other matters, such as context, the object in view, the evils to be remedied, the history of the times and of legislation upon the same subject, public policy and contemporaneous construction. [Citation.] (MacIsaac, supra, 134 Cal.App.4th at p. 1084. Accord, Day v. City of Fontana (2001) 25 Cal.4th 268, 272; Pacific Gas & Electric, supra, 16 Cal.4th 1143, 1152.)

Consistent with these guidelines, we must first examine the language of section 16750 to ascertain whether it evidences an intent to allow plaintiffs to maintain a Cartwright Act case even though they themselves have sustained no injury. We conclude that the answer is no. Put conversely, we hold that the pass-on defense is available to defendants and, as applied here, defeats plaintiffs who have passed on all the claimed overcharges. In the language of the Cartwright Act, plaintiffs have no damages sustained.

The term damages sustained is not defined in the Cartwright Act. However, it is in other places and cases and, as will be seen, those authorities hold that the phrase refers to actual financial loss suffered. But two early California cases addressing the issue of damages in the context of the Cartwright Act also bear on the question, and we begin with discussion of those cases.

The first case is Krigbaum v. Sbarbaro (1913) 23 Cal.App. 427 (Krigbaum). Krigbaum, a real estate broker, filed an antitrust action against the stockholders of a bank, claiming that defendants colluded to prevent him from acquiring certain property suitable for grape-growing, doing so, he alleged, so they could purchase the property themselves and secure a monopoly on the wine industry. (Id. at pp. 429‑431.) Defendants demurred for failure to state a claim, which the trial court sustained. (Id. at p. 429.) The Court of Appeal affirmed, holding that the complaint did not state a cause of action under the Cartwright Act. (Id. at p. 432.)

The court reasoned that plaintiff did not allege he suffered an injury as a result of a restraint in trade. At most, he alleged that he suffered an injury as a result of the wrongful acts of the defendants, which does not constitute a cause of action under the Cartwright Act. Rather, the court explained, To be injured in business or property, within the contemplation of [the Cartwright Act] . . . . is where the injury has directly resulted from the fact of the existence of the trustthat is to say, where the business or property has directly sustained injury solely by reason of the restrictions in trade or commerce which are fostered by such trust or combination. In other words, while one whose business or property has been injured solely because of the restrictions in trade carried out by a trust organized and maintained for that purpose may maintain an action under the provisions of the anti-trust law for double the damages he has actually suffered from the injury so inflicted, yet he could not maintain an action based upon said law if the injury, although directly the result of the wrongful acts of the trust or the constituent members thereof, did not arise by reason of the restrictions in trade or commerce carried out by such trust or combination. (Krigbaum, supra, 23 Cal.App. at p. 433.) Importantly for our purposes, the court recognized that recovery was only available for the damages the plaintiff actually suffered as a result of the antitrust violation.

The other case is Overland P. Co. v. Union L. Co. (1922) 57 Cal.App. 366 (Overland). The claim there was by a publishing company which alleged that a cartel of publishing companies known as the Printers Board of Trade had violated the Cartwright Act by engaging in price-fixing and bid-rigging in the publishing market, thereby eliminating competition among the cartels members. (Id. at pp. 373-374.) Again, the trial court sustained a demurrer on the ground that plaintiff did not allege it had been damaged within the meaning of the Cartwright Act. (Id.at pp. 374‑375.) We affirmed, holding that If plaintiff could secure union labor and continue to operate its business, the activities of the Printers Board of Trade in restricting competition among its own members would not injure plaintiff in the least. It is alleged that these practices have continued for three years. Apparently they have not injured plaintiff, but have probably meant to it a business opportunity. . . . [] Plaintiff cannot maintain an action against the Printers Board of Trade because of these alleged practices without pleading and proving special damage to his business or property by reason thereof. There are no facts alleged in the complaint showing damage to plaintiff because of said defendants methods of doing business. (Id. at p. 375.)

Overlandholds that an antitrust plaintiff must have special damage. It also teaches that a plaintiff who benefits from the alleged collusion lacks a Cartwright Act cause of action. This is the situation here, where the result of the passing on of the claimed overcharges is that plaintiffs gross profits are higher. In sum, the only two Cartwright Act cases remotely addressing the issue demonstrate the plaintiffs action has no merit.

CACI No. 3440, the Judicial Council of California Civil Jury Instruction on damages under the Cartwright Act, is instructive. It provides: If you decide that [name of plaintiff] has proved [his/her/its] claim against [name of defendant], you also must decide how much money will reasonably compensate [name of plaintiff ] for the harm. This compensation is called damages. [] The amount of damages must include an award for all harm that was caused by [name of defendant], even if the particular harm could not have been anticipated. [] [Name of plaintiff ] must prove the amount of [his/her/its] damages. . . . [] The following are the specific items of damages claimed by [name of plaintiff]: [] 1. [Loss of reasonably anticipated sales and profits]; [] 2. [An increase in [name of plaintiff]s expenses]; [] 3. [Insert other applicable item of damage]. This instruction clearly contemplates that the damages recoverable under the Cartwright Act are intended to compensate the injured plaintiff for actual monetary loss suffered.

Our conclusion finds further support in the cases applying the term damages sustained in contexts other than the Cartwright Act. Thus, for example, Carter v. Agricultural Ins. Co. (1968) 266 Cal.App.2d 805, 807, where, construing damages sustained in suits brought under former Code of Civil Procedure section 539, the court interpreted the term to mean those [damages] suffered by [the plaintiff], his actual damages, to compensate him for the losses he has endured. Likewise Scally v. W. T. Garratt & Co.(1909) 11 Cal.App. 138, 151, where, construing damages sustained in a jury instruction, the court stated that a plaintiff could, manifestly, sustain such damages only as amounted to an actual loss to him. Two old Supreme Court cases are to the same effect: Utter v. Chapman (1869) 38 Cal. 659, 663 [absent fraud, it is always the aim of the Court to give damages, and such damages only as will compensate the plaintiff for his loss]; and De Costa v. Massachusetts Mining Company (1861) 17 Cal. 613, 617 [plaintiff could not recover beyond the injury sustained].) While these cases do not involve antitrust claims or the Cartwright Act, nothing there, or elsewhere, suggests that the Legislature intended the phrase damages sustained to mean something different in the antitrust context.

Numerous other statutes employ the phrase damages sustained. (See, e.g., 7160, 10167.10, subd. (e), 16804, & 18413, subd. (a); Civ. Code,  798.29.5, 883.140, subd. (c), 1710.1, 1786.50, subd. (a)(1), 1798.48, & 1812.31, subd. (a).) We are unaware of any authorityand plaintiffs have not identified anyinterpreting any of those statutes in a manner that allowed for the recovery of monetary compensation beyond the actual financial loss suffered by a plaintiff. And we can discern nothing suggesting that the term means something different in the antitrust context. As Judge Sabraw put it: If the Legislature had intended to depart in section 16750 from the usual meaning of damages sustained, then it probably would have used different words. The Legislature did not, for example, state that a plaintiff can recover three times any excess price paid . . . . 

Plaintiffs attempt to distinguish the above authorities on a variety of grounds. They argue Krigbaum, supra, 23 Cal.App. 427, and Overland, supra, 57 Cal.App. 366,are unpersuasive because neither case interpreted the phrase damages sustained. They object to reliance on non-Cartwright Act cases, complaining that as contract or tort actions they do not take into account the Acts three-pronged policy objective. They take exception to consideration of the phrase damages sustained in other statutes, claiming that it violates principles of statutory construction. And they criticize any reliance on cases that post-date the enactment of the Cartwright Act, deeming it implausible that such cases influenced the drafters of the Cartwright Act. None of these arguments is convincing.

It is true that Krigbaum, supra, 23 Cal.App. 427, and Overland, supra, 57 Cal.App. 366, did not expressly construe damages sustained. But neither did Hanover Shoe. As to the three-pronged policy objective argument, the primary purpose of private antitrust actions is compensation. (Bruno v. Superior Court, supra, 127 Cal.App.3d at p. 132.) Plaintiffs who have passed on all overcharges and suffered no financial loss themselves have nothing that merits compensation. And as to the consideration of the phrase in other settings, the language in Torres v. Parkhouse Tire Service, Inc. (2001) 26 Cal.4th 995, 1005 is particularly apt:   [W]hen words used in a statute have acquired a settled meaning through judicial interpretation, the words should be given the same meaning when used in another statute dealing with an analogous subject matter . . . .   (Accord, Mercer v. Department of Motor Vehicles (1991) 53 Cal.3d 753, 763.)

Plaintiffs raise one final argument to attempt to dissuade us from holding that the language of section 16750 means what it says. Relying on Hughes v. Board of Architectural Examiners (1998) 17 Cal.4th 763, 776 for the proposition that [a] statute is regarded as ambiguous if it is capable of two constructions, both of which are reasonable, plaintiffs argue that the United States Supreme Court in Hanover Shoe and Judge Sabraw here construed virtually identical language yet arrived at contradictory conclusions. As plaintiffs frame it: The former read the language as excluding the pass-on defense; whereas the latter interpreted the statute as permitting it. For the language to be considered ambiguous, both readings must be reasonable. The United States Supreme Courts reading must be considered at least reasonable, given it has affirmed the reasoning on three separate occasions over the past four decades. Plaintiffs argument is unsound for several reasons.

First, the Supreme Court did not decide Hanover Shoe based on the language of section 4 of the Clayton Act. Nowhere does Justice White analyze the phrase damages sustained. Nowhere does he even note, much less determine, that the language was intended to include any amount plaintiff was overcharged even if the full amount was passed on to a subsequent purchaser. Instead, the Supreme Court based its holding on concerns over nearly insuperable problems of proof as well as concerns that indirect purchasers would lack incentive to sue if the pass-on defense were recognized. (Hanover Shoe, supra, 392 U.S. at pp. 492-494.) In re Western Liquid Asphalt Cases (9th Cir. 1973)487 F.2d 191, 199 (Liquid Asphalt), a case cited numerous times by plaintiffs, confirms this point, observing as follows: We do not believe that the Supreme Court [in Hanover Shoe, supra, 392 U.S. 481] intended a per se rule with respect to passing on . . . . The Court was applying policy to a specific case.

Language in Kansas v. UtiliCorp. United Inc. (1990) 497 U.S. 199 (UtiliCorp.), another case heavily relied on by plaintiffs, albeit only in reply, also bears on this issueand not favorably to plaintiffs. In UtiliCorp. the Court of Appeals considered the following certified question:  In a private antitrust action under 15 U.S.C.  15 involving claims of price fixing against the producers of natural gas, is a State a proper plaintiff as parens patriae for its citizens who paid inflated prices for natural gas, when the lawsuit already includes as plaintiffs those public utilities who paid the inflated prices upon direct purchase from the producers and who subsequently passed on most or all of the price increase to the citizens of the State?  (Id. at pp. 205-206.) In other words, could the state bring a parens patriae action on behalf of indirect purchasers? The Court of Appeals answered this question in the negative. The Supreme Court affirmed. (Id. at p. 206.)

One of the arguments asserted by plaintiffs was that the Court should apply an exception . . . for actions based upon cost-plus contracts. (UtiliCorp., supra, 497 U.S. at pp. 207-208.) While the Court ultimately declined to do so under the particular facts before it, it did acknowledge that Illinois Brick and Hanover Shoe allowed for a departure from the rule forbidding the assertion of the pass-on theory in certain circumstances. As the Court hypothesized, it might allow indirect purchasers to sue only when . . . the direct purchaser will bear no portion of the overcharge and otherwise suffer no injury. (Id. at pp. 217-218.)

But most significant, and most worthy of comment here, are three comments in the dissent of Justice White, the author of Hanover Shoe and the Illinois Brick majority opinion. Urging that the indirect purchaser states should be allowed to sue, Justice White noted as follows:

(1) [A]lthough the utility could sue to recover lost profits resulting from lost sales due to the illegally high price, its injury is not measured by the amount of the illegal overcharge that it has passed on, and hence the utility would have no incentive to seek such a recovery. . . . (497 U.S. at p. 224.)

(2) Given a passthrough, the customer, not the utility, suffers the antitrust injury, and it is the customer or the State on his behalf that is entitled to recover treble damages. (497 U.S. at p. 224.)

(3) Again however, where there is a perfect and provable pass through, there is no danger that both the utilities and the indirect purchasers will recover damages for the same anticompetitive conduct because the utilities have not suffered any overcharge damage: The petitioners will sue for the amount of the overcharge, while the utilities will sue for damages resulting from their lost sales. (497 U.S. at pp. 224-225.)

We read these comments to suggest that Justice White himself would rule against plaintiffs. It was the indirect purchaser which suffers the antitrust injury. By contrast, the utility could only sue for damages resulting from their lost sales; its injury is not measured by the amount of the illegal overcharge that it has passed on. (UtiliCorp., supra, 497 U.S. at p. 224.) Substitute pharmacies for utilities and the author of Hanover Shoe devastates plaintiffs here: their injury is not measured by the amount of the illegal overcharge [they have] passed on.

Second, the United States Supreme Court has confirmed that Hanover Shoe and Illinois Brick were interpreting federal, not state, law. In California v. ARC America Corp. (1989) 490 U.S. 93, 102-103 (ARC America), again a unanimous opinion by Justice White, the Court explained: As we made clear in Illinois Brick, the issue before the Court in both that case and in Hanover Shoe was strictly a question of statutory interpretationwhat was the proper construction of 4 of the Clayton Act. . . . [] It is one thing to consider the congressional policies identified in Illinois Brick and Hanover Shoe in defining what sort of recovery federal antitrust law authorizes; it is something altogether different, and in our view inappropriate, to consider them as defining what federal law allows States to do under their own antitrust law.

Also enlightening on this point are the briefs submitted on behalf of the State of California in ARC America,where Attorney General Van de Kamp expressed the view that the pass-on defense is recognized in California. For example, in appellants opening brief, he is quoted as stating, [R]ecovery under states laws is determined by actual injury. (Brief of Appellant States, ARC America [No. 87-1862], 1988 U.S. S.Ct. Briefs LEXIS 736, at *59.) And in reply, that a state plaintiff is not authorized to recover for the injuries sustained by another . . . . (Reply Brief of Appellant States, ARC America [No. 87-1862], 1989 U.S. S.Ct. Briefs LEXIS 1452, at *21.) So, too, is the conclusion of the author of the law review article cited by our Supreme Court in Union Carbide, supra, 36 Cal.3d 15, 20, that the pass-on defense is available in California. (See Smith, Comment, The California Legislature Steers the Antitrust Cart Right Off the Illinois Brick Road (1979) 11 Pac. L.J. 121, 137-138.)

Finally, Hanover Shoe relied on cases applying a privity rule that precluded indirect purchasers suits. (See 392 U.S. at pp. 489-490, citing Southern Pac. Co. v. Darnell-Taenzer Co. (1918) 245 U.S. 531, 533-534.) In enacting the Illinois Shoe repealer statute, the California Legislature confirmed in no uncertain terms that indirect purchaser suits are permissible in California.

We conclude this discussion with the observation that to allow plaintiffs to recover here would violate a fundamental precept of California damage lawthat plaintiffs not receive a windfall. As one Court of Appeal put it long ago, the fundamental principle of the law of damages is that a plaintiff cannot hold a defendant liable . . . for more than the actual loss which he has inflicted by his wrong. (Avery v. Frederickson and Westbrook (1944) 67 Cal.App.2d 334, 336; see generally Privette v. Superior Court (1993) 5 Cal.4th 689, 699-700 [allowing employee plaintiffs to recover from multiple sources for the same injury would result in unwarranted windfall].)[3]

In sum, the language of the Cartwright Act, all relevant case law, and all relevant statutes lead us to conclude that three times the damages sustained as used in section 16750 refers to actual monetary loss suffered by plaintiffs. Plaintiffs suffered no such loss, as the claimed overcharges were passed on, a pass‑on that defeats plaintiffs here. In the language of the issue as framed by the parties, the pass-on defense is available in California.

In light of the result we reach, we perhaps need not engage in any further level of statutory interpretation. (MacIsaac, supra, 134 Cal.App.4th at p. 1083.) But because the parties devote substantial portions of their briefs to the subject, we choose to address it and conclude that neither plaintiffs extensive citation to legislative history nor their reliance on public policy supports any different conclusion.

4. Neither Legislative History Nor Public Policy Demonstrates That Hanover Shoe Is the Law in California

a. Legislative History

Plaintiffs primary argument, to which they devote some 13 pages in their opening brief and 12 in their reply, is that Judge Sabraw erred by failing to interpret the intent of the Legislature. Their positionthat Hanover Shoe is the law in Californiarelies on the fundamental premise that the legislative history demonstrates a recognition by the Legislature of the risk of multiple liability. In plaintiffs words, this risk necessarily presumes the recognition of Hanover Shoe. If Hanover Shoe were not the law, the danger [of multiple liability] would simply not exist.

In arguing that the legislative history supports their construction of section 16750, plaintiffs focus primarily on three distinct aspects of such history: the 1976 Hart-Scott‑Rodino Act and the 1977 California equivalent, the 1978 Illinois Brick repealer amendment, and the California Attorney Generals amicusbriefin Illinois Brick.

In 1976, Congress passed the Hart-Scott-Rodino Act, an amendment to the federal antitrust statutes which authorized parens patriae[4]suits by state attorneys general on behalf of citizens injured by anticompetitive conduct. A provision of the amendment read, The court shall exclude from the amount of monetary relief awarded in such action any amount of monetary relief (A) which duplicates amounts which have been awarded for the same injury, or (B) which is properly allocable to (i) natural persons who have excluded their claims pursuant to subsection (b)(2) of this section, and (ii) any business entity. (15 U.S.C.  15c(a)(i).)

The Hart-Scott-Rodino Act included a provision to protect defendants from multiple liability in antitrust overcharge cases. As summarized in the Senate Committee on Judiciary Report, the amendment contains a proviso to assure that defendants are not subjected to duplicative liability, particularly in a chain-of-distribution situation where it is claimed that middlemen absorbed all or part of the illegal overcharge. The Committee intention is to codify the holding of the 9th Circuit in [Liquid Asphalt] 487 F.2d 191 (9th Cir. 1973).[5]

Representative Rodino, the bills sponsor in the House of Representatives, expressed a similar intent: [T]he courts that have required privity between the plaintiff and the defendant as a prerequisite to standing [i.e., the Donson view], have generally done so, because they have misread the Supreme Courts Hanover Shoe opinion, 392 U.S. 481 (1968). Fearing that the first purchaser can, under Hanover Shoe, recover the entire overcharge, whether or not he absorbs all or merely part of it, these courts have clearly been motivated by the specter of double liability raised by successful actions by subsequent purchasers. However, the compromise billunlike the House billexpressly forbids duplicative recovery.

From these legislative comments, plaintiffs conclude that Congress passage of the Hart-Scott-Rodino Act included (1) the intent to preserve the Hanover Shoe rule, (2) the intent to codify Liquid Asphalts solution to the multiple recovery problem, and (3) the intent to allow standing to indirect purchasers.

The following year, the California Legislature passed Assembly Bill 1162 (AB 1162) which, according to the Bill Digest, was modeled directly on federal law. The bill codified the Hart-Scott-Rodino Act as California law, incorporating a parens patriae provision into the Cartwright Act. ( 16760.)[6] The provision included language that was substantively identical to the Hart-Scott-Rodino Acts prohibition against duplicate recovery. (Cf.,  16760, subd. (a)(1) and 15 U.S.C.  15c(a)(i).) The Assembly Bill Analysis confirmed that AB 1162 would enact into law basically the same provisions enacted into federal law last year by the [C]ongress. Plaintiffs also identify various writings suggesting AB 1162 was intended to parallel the Hart-Scott-Rodino Act, including letters from the Los Angeles and San Diego County District Attorneys.

According to plaintiffs, the foregoing establishes that (1) the Legislature intended AB 1162 to bring California law into line with the federal statute, (2) the federal statute was enacted to address the possibility of multiple liability, and (3) multiple liability can only occur if the pass-on defense is not permitted. Ergo, plaintiffs conclude, in passing AB 1162 the California Legislature implicitly recognized Hanover Shoe as the law in California. We are not persuaded.

First, and as Judge Sabraw observed, if the Legislature was in fact concerned with the threat of multiple liability, logically it would have included a safeguard against double recovery in section 16750 as well as in the parens patriae provision. Since it did not, one can reasonably conclude that it did not consider multiple liability in private actions a problem because the pass-on defense is available to defendants.

Moreover, the safeguard against multiple liability in the parens patriae provision undermines plaintiffs claim that the provision necessarily assumes the non-existence of the pass-on defense. As defendants put it, the multiple liability provision applies more logically where the Attorney General purports to bring suit on behalf of end-users (as to whom a pass-on defense would never be available), or other natural persons, who have already recovered for their injuries through different litigation or settlementas, for example, through a consumer class action. When the Attorney General subsequently sues under the parens patriae statute on behalf of all natural persons in California, the Attorney General cannot recover a second time those portions of an overcharge that were already awarded as damages.

We cannot conclude that the legislative history of AB 1162 clearly demonstrates the Legislatures intent to reject the pass-on defense in California. Nor does the legislative history of Assembly Bill 3222 (AB 3222), the 1978 Illinois Brick repealer amendment.

According to plaintiffs, in passing the Illinois Brick repealer amendment, thereby clarifying that indirect purchasers have standing in California, the Legislature intended to repeal the Illinois Brick majority opinion and to adopt the Illinois Brick dissent in its entirety. This argument derives in part from the bill synopsis prepared by the Senate Committee on the Judiciary, which states, The purpose of the bill is to prevent a federal case interpretation of the Sherman Act . . . from being applied to actions under the Cartwright Act; and in part from the bill digest prepared by the Assembly Committee on the Judiciary. Plaintiffs argue that this suggests the Legislatures intent to incorporate the Illinois Brick dissent in its entirety, which includes recognition of Hanover Shoe. To bolster such assertion, plaintiffs point to the majority opinion in Illinois Brick, 431 U.S. at pp. 729-730, fn. 10, which describes the dissenting view as the same view advocated by the State of California in its amicus brief in Illinois Brick. And from this plaintiffs reason that [i]f Justice Brennans dissent accurately reflects Californias position, then it must be concluded that California does not recognize the pass-on defense since the Justice expressly stated that Hanover Shoe . . . can and should be limited to cases of defensive assertion of the passing-on defense to antitrust liability, where direct and indirect purchasers are not parties to the same action. (Illinois Brick, supra, 431 U.S. at p. 753.)

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[1] One Supreme Court case, Union Carbide Corp. v. Superior Court (1984) 36 Cal.3d 15 (Union Carbide), mentions Hanover Shoe, but only in the dissenting opinion; id. at p. 26. We ourselves discussed Hanover Shoe in Crown Oil Corp. v. Superior Court (1986) 177 Cal.App.3rd 604, 608-609, where the issue was whether the 1978 amendment to the Cartwright Act was preempted by federal law.

[2] While these cases say what they say, in both cases the Court of Appeal went on to decertify classes of antitrust plaintiffs on the grounds that their injuries could not be presumed on a classwide basis because some members of the proposed class used loss mitigation techniques, such as . . . passing on any inflated prices in subsequent resales. (J.P. Morgan & Co., supra, 113 Cal.App.4that p. 218; Global Minerals & Metals, supra, 113 Cal.App.4th at p. 857.) As the court put it, such evidence may support a pass-on defense, further noting that the case was not one in which classwide proof of illegality and impact [i.e., injury] could readily be proved. . . . (Ibid.)

[3] This same point is in the general definition of damages, in Civil Code section 3281, which provides as follows: Every person who suffers detriment from the unlawful act or omission of another, may recover from the person in fault a compensation therefore in money, which is called damages. And Civil Code section 3282 in turn defines detriment to mean a loss or harm suffered in person or property. As defendants correctly explain, Overcharges that have already been fully recoveredthe only damages alleged in this caseclearly cause no detriment and cannot be recovered again through the award of damages.

[4]   Parens patriae, literally parent of the country, refers traditionally to [the] role of [the] state as sovereign and guardian of persons under legal disability [] . . . [] State attorney generals [sic] have parens patriae authority to bring actions on behalf of state residents for anti-trust offenses and to recover on their behalf.  (Pacific Gas & Electric, supra, 16 Cal.4th at p. 1148, fn. 6, quoting Blacks Law Dic. (6th ed. 1990) p. 1114, col. 1.)

[5] In Liquid Asphalt, the Ninth Circuit endorsed the use of the offensive pass-on theory, setting forth mechanisms available to deal with the problem of multiple liability should such a situation arise. (Liquid Asphalt, supra, 487 F.2d at p. 197, 201.)

[6] The California parens patriae provision permits the Attorney General or the district attorney of any county to bring a civil action in the name of the people of the State of California or the residents of the county, respectively, for treble damages arising from violations of the Cartwright Act. ( 16760, subds. (a), (g).)