Seventh Circuit reminds practitioners: Article III standing and antitrust standing are distinct
The Seventh Circuit’s recent opinion in Marion Diagnostic Center, LLC v. Becton Dickinson & Co., breaks no new legal ground, but reminds attorneys that antitrust standing and Article III Standing are distinct. The concepts are often confused—including by the district court in this matter. In the opinion written by Chief Judge Diane Wood, the Seventh Circuit panel took pains to clarify and reaffirm the distinctions. Ultimately, the panel agreed that dismissal was appropriate under both doctrines of standing.
In Sum: Article III standing is a constitutional doctrine. The Constitution limits the jurisdiction of federal courts to “cases” and “controversies,” and a plaintiff must establish three prongs of the standing doctrine to bring a claim in federal court. Article III standing applies to all federal cases, not only antitrust. Antitrust standing, in contrast, is a prudential doctrine developed by the courts; it outlines who is a proper party to bring an antitrust case. As the panel described antitrust standing, plaintiffs must “show that they have suffered an antitrust injury and that they are the proper parties to bring suit.” In Marion, antitrust standing turned on whether plaintiffs were proper parties to bring suit. Under longstanding precedent, the Supreme Court in Illinois Brick limited purchaser antitrust claims to “direct purchasers”—giving the first buyer from a conspirator the right to sue, and barring suits by purchasers further down the chain. In Marion, the panel clarified how Illinois Brick applies to multi-layer conspiracies and multi-defendant conspiracies.
Marion I & II
Plaintiffs in Marion brought a class-action alleging that a manufacturer of medical supplies as well as its distributors engaged in an antitrust conspiracy in the market for conventional syringes, safety syringes, and safety IV catheters. Plaintiffs were small health care providers who joined group purchasing organizations (“GPOs”) that negotiated contracts for medical products on behalf of their members. They alleged that the defendants engaged in a conspiracy that caused plaintiffs and class members to pay supracompetitive prices for the products. The nature of the purchasing agreements is somewhat complex: The GPOs entered into contracts with the manufacturer, and plaintiffs purchased the medical supplies according to the contracts directly from the distributors. The distributors also entered contracts with the manufacturer, obliging the manufacturer to abide by the terms negotiated by the GPOs. The three applicable medical supplies were manufactured by defendant Becton Dickinson & CO (“BD”), and plaintiffs alleged that BD had monopoly power in the relevant market for the products. The named plaintiffs did not purchase from BD directly, but instead purchased BD products from McKesson, one of the two allegedly conspiring distributor defendants. A second distributor, Cardinal, was also named as a defendant, but none of the named plaintiffs had purchased from Cardinal.
This was the second time the plaintiffs had challenged an unfavorable motion to dismiss opinion at the Seventh Circuit. In the first instance, Marion I,plaintiffs alleged a hub-and-spoke conspiracy, asserting that BD had conspired with the distributors and GPOs, as evidenced by three types of conduct: (1) distributors agreed to purchase BD products at anticompetitive contractual terms; (2) distributors enforced BD’s penalty pricing system which penalized providers who switched suppliers; and (3) the distributors paid the GPOs based on the volume of sales pursuant to the contracts. The District Court dismissed the claims, holding that under Illinois Brick, plaintiffs were not direct purchasers. In particular, because the plaintiffs had not purchased from all defendants and did not allege a price fixing conspiracy, they could not benefit from the co-conspirator exception to Illinois Brick.
The Seventh Circuit reversed the district court on Illinois Brick grounds. The panel reaffirmed that Illinois Brick does not bar a plaintiff from bringing claims against any member of a conspiracy, even a manufacturer from whom they did not purchase. The panel cautioned against speaking of the rule as a “conspiracy ‘exception,’” but emphasized instead that the general rule under Illinois Brick is that the proper plaintiff is the first purchaser outside the conspiracy. Restating the Seventh Circuit’s earlier holding in Paper Systems,the panel noted it was “better to think of the right to sue co-conspirators not as an exception to Illinois Brick, but instead as a rule inherent in Illinois Brick that allocates the right to collect 100% of the damages to the first non-conspirator in the supply Chain.” The district court had held that the exception did not apply because the plaintiffs did not allege a price fixing conspiracy, but rather had alleged unlawful price inflation derived from different types of anticompetitive conduct. But the Seventh Circuit determined that this limitation was too narrow: the “exception” applies to purchasers from members of any anticompetitive conspiracy, not just a price-fixing conspiracy. That plaintiffs had purchased from distributors, and not manufacturers, did not violate Illinois Brick because the distributors were alleged to have conspired with the manufacturers.
The Seventh Circuit instructed the lower court to dismiss, however, ruling that the plaintiffs’ conspiracy allegations failed to allege a “conscious commitment to a common scheme.” The plaintiffs had alleged that BD was the “hub,” and the distributors and GPO were the “spokes” of a hub and spoke conspiracy. But plaintiffs did not allege any agreement or coordination among the spokes—a rimless wheel. In other words, in the absence of an allegation that a distributor had been reassured that the other distributors were abiding by the same agreement with BD, horizontal coordination within the rim had not been alleged. All the Plaintiffs had alleged, the Seventh Circuit concluded, was perhaps a series of individual vertical agreements between BD and each manufacturer. Plaintiffs amended their complaint, but the district court again dismissed their claims.
On their second turn, plaintiffs modified the alleged conspiracy—instead of a hub-and-spoke, plaintiffs adopted the Panel’s suggestion and alleged two separate vertical conspiracies between McKesson and BD and between Cardinal and BD. In moving to dismiss, Cardinal argued that the Plaintiffs lacked Article III standing, but the district court dismissed on the basis of antitrust standing. The district court’s focus on antitrust injury in explaining its reasoning was described by the Seventh Circuit panel as “admittedly imprecise.” It was here that the panel saw the opportunity to clarify the two doctrines of standing.
Two types of standing
Divorced from antitrust standing, the three basic elements of Article III standing are simple to recite (although much more difficult to apply in practice). As the Seventh Circuit repeated:
Article III limits federal courts’ jurisdiction to “cases” and “controversies.” U.S. Const. art. III, § 2. The “irreducible constitutional minimum” of standing requires that the plaintiff has “(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 578 U.S. 330 (2016).
In antitrust cases, the first and third prongs (injury and redressability) of Article III standing are rarely issues: paying an inflated price is a quintessential injury which is redressed by the damages a plaintiff can recoup under the Clayton Act. The second prong, whether the conduct is “fairly traceable,” was at issue in Marion II.
Antitrust standing, in contrast, requires plaintiffs to show they “suffered an antitrust injury and that they are the proper parties to bring suit.” The first prong, antitrust injury, was not in dispute in Marion II, because a victim of an overcharge clearly has suffered an antitrust injury. In this instance, antitrust injury and the first element of Article III injury are identical—but that it not always the case. Antitrust injury ensures “that a plaintiff can recover only if the loss stems from a competition-reducing aspect or effect of the defendants’ behavior.” Put another way, the plaintiff must have suffered “an injury of the type the antitrust laws were intended to prevent.” One could have suffered an economic loss sufficient for Article III “injury in fact” but inadequate for an antitrust injury. Indirect purchasers are but one example of a plaintiff that would have experienced injury in fact but not an antitrust injury.
The question in Marion II related both to the second prong of antitrust standing and the second factor in Article III standing: were plaintiffs the “proper party” to bring suit, and were their injuries “fairly traceable” to the defendants’ conduct? According to the Seventh Circuit, the answer to both questions was no. Under Illinois Brick, Chief Judge Wood explained, only a direct purchaser from price fixers may sue, even if “purchasers further down the supply chain” paid higher prices as a result of the defendants’ anticompetitive conduct. Because the plaintiffs dropped their allegations of a conspiracy that included both McKesson and Cardinal conspiring with one another (under the hub-and-spoke theory), and because plaintiffs never purchased from Cardinal, they could not sue Cardinal under Illinois Brick. Simply, plaintiffs did “not allege that all distributors [were] in the same conspiracy.” But this same fate doomed plaintiffs’ Article III standing as well: the Seventh Circuit held that plaintiffs lacked Article III standing because their injuries were not “fairly traceable” to defendant Cardinal’s conduct. Thus, while the panel took pains to distinguish the two doctrines, ultimately the same facts led to the same conclusion under each.
The panel also upheld the District Court’s dismissal of plaintiffs’ conspiracy claims against McKesson and BD—again ruling that the complaint did not sufficiently allege the “conscious commitment to a common scheme” required to find a conspiracy. In particular, in limiting their claims to individual conspiracies between BD and two distributors, the plaintiffs needed to allege that the distributors and BD could have inflated prices, even though there were at least four major distributors. The panel found that without market power, the distributors lacked the ability to cause supracompetitive prices. The panel also noted that much of the conduct plaintiffs alleged to be anticompetitive simply reflected the distributors’ “rational, lawful self-interest in encouraging sales with a leading manufacturer.”
Marion II provides two main takeaways for antitrust claimants and practitioners.
First, antitrust standing and Article III standing are distinct but related concepts. A party who can establish Article III standing may not necessarily meet the more exacting standard to prove antitrust standing. And claimants should be cautious in opposing a motion to dismiss that they defend on the basis of the correct doctrine—antitrust or constitutional standing. A busy or incautious court may easily confuse the concepts, and raise a plaintiffs’ burden if claimants fail to clarify which doctrine of standing is at issue. This may be particularly important in suits involving multiple claims: a plaintiffs’ lack of antitrust standing may doom its antitrust claims, but related claims based on state unfair competition laws or other common law doctrines survive as long as Article III standing is intact. For this reason, courts also should be precise in explaining which standing doctrine has been imposed when dismissing a claim.
Second, the panel reaffirmed that Illinois Brick permits a plaintiff to sue any co-conspirator, even if it did not purchase from that defendant. Marion I affirmed this principle, and it should not be overlooked. In Marion II, the panel opined that if the case were to proceed to the class certification stage, plaintiffs would have been inadequate class representatives because they did not purchase from Cardinal. This dicta is unremarkable in light of plaintiffs’ lack of standing to sue Cardinal in the first place. Cardinal was alleged to have engaged in a separate conspiracy with BD—plaintiffs did not purchase from either defendant. The dicta should not be taken to suggest that a class representative is inadequate if it did not purchase from a particular defendant, so long as it was purchased from a member of the conspiracy. Marion II simply reaffirms prior law to the effect that a plaintiff can sue any co-conspirator, even if it did not purchase from that party. So too, in class actions, a named plaintiff need not have purchased from all defendants. The distinction here is the separate conspiracy. New plaintiffs would need to be added to recover from Cardinal.
Marion II reaffirms basic principles of antitrust law and the law of standing, and provides a useful framework for understanding these essential, but often neglected, concepts. The opinion can serve as a helpful tool to claimants when facing a motion to dismiss on standing grounds, to help distinguish Article III and antitrust standing, and to ensure that lower courts are assessing standing under the appropriate doctrine.
*Sarah LaFreniere is a Partner in Hausfeld's Washington D.C. office.
 Marion Diagnostic Center, LLC v. Becton & Dickinson & Co., 29 F.4th 337 (7th Cir. 2022) (“Marion II”).
 See Spokeo, Inc. v. Robins, 578 U.S. 330 (2016).
 Areeda and Hovenkamp describe antitrust standing as requiring the following five elements: (1) Injury to business or property; (2) injury-in-fact “by reason of” the antitrust violation; (3) proximity; (4) antitrust injury; and (5) cognizable injury and quantifiable damages. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 355c (4th ed. 2015).
 Marion Diagnostic Center, LLC v. Becton & Dickinson & Co., 952 F.3d 832 (7th Cir. 2020) (Marion I”).
 Id. at 842-43.
 Marion Diagnostic Center, LLC v. Becton & Dickinson & Co., 3:18-cv-01059-NRJ-RJD, 2018 WL 6266751 at *4 (S.D. Ill. Nov. 30, 2018).
 Marion I at 839.
 Paper Sys., Inc. v. Nippon Paper Indus., Co., 281 F.3d 629, 631–32 (7th Cir. 2002).
 Marion II at 343 (citing Paper Sys. at 631–32, and explaining Marion I).
 Marion I at 841-42.
 Id. at 842 (citing In re Musical Instruments & Equip. Antitrust Litig., 798 F.3d 1186, 1192 (9th Cir. 2015).
 Marion II at 344.
 Id. at 345 (discussing Weit v. Continental Illinois National Bank & Trust Co., 641 F.2d 457 (7th Cir. 1981).
 See e.g. Lujan v. Defenders of Wildlife, 504 U.S. 55 (1992); Clapper v. Amnest Intern. USA, 568 U.S. 398 (2013); Spokeo, Inc. v. Robins, 578 U.S. 330 (2016).
 See Marion II at 345 (“financial injuries are prototypical of [Article III] injuries” (quotation omitted)).
 Id. at 347.
 Atl. Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 344 (1990).
 Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977).
 Areeda & Hovenkamp, Antitrust Law ¶ 335a n. 7 (4th ed. 2015) (“although price fixing among manufacturers typically elevates prices to both their immediate customers and to downstream consumers, antitrust policy generally denies standing to the consumers even though they have constitutional standing.”). Of course, thirty-four states and the District of Columbia have “Illinois Brick Repealer” laws, which allow indirect purchasers to bring claims under state antitrust statutes. Id. ¶ 396d (4th ed. 2015).
 Marion II at 347.
 Id. at 346.
 Id. at 349.
 Id. at 350.
 Id. at 347 (“This court has interpreted Illinois Brick such that a direct purchaser may sue any member of an alleged antitrust conspiracy, so long as the plaintiff is a direct purchaser from at least one member of the conspiracy.”); see also 2A Phillip E. Areeda et al., Antitrust Law ¶ 346h (“Whether one adopts a co-conspirator exception or regards this situation as outside Illinois Brick's domain, there is no tracing or apportionment to be done.” (footnote omitted))
 Id. at 347 n. 9.