In County of San Mateo v. CSL, Limited, Case No. 3:10-cv-05686-JSC (N.D. Cal. Aug. 20, 2014) (Corley, M.J.), the Northern District of California held that California’s antitrust law, the Cartwright Act, allows the recovery of umbrella damages. If the decision stands or is upheld, it could stimulate a new wave of antitrust litigation.
Umbrella damages are damages due to overcharges paid to non-conspirators who raise their prices because they are protected by the cartel’s price “umbrella.” Federal courts, including the Ninth Circuit, have predominantly held that such damages are too speculative to be recovered.
In CSL, Magistrate Judge Corley held that the federal courts’ reasoning — which derives from the Illinois Brick doctrine which bars indirect purchaser claims under the Sherman Act — is not applicable to the Cartwright Act, which does allow for indirect purchaser suits. The case reaches a conclusion opposite to that of the court in In re TFT-LCD (Flat Panel) Antitrust Litigation, 2012 WL 6708866 (N.D. Cal. Dec. 26, 2012).
It will be very interesting to see how this decision holds up. It is a boon to antitrust plaintiffs, and a problem for antitrust defendants.
A copy of the decision is attached.