Reiter v. Sonotone
442 U.S. 330 (1979)
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Rule of Law:
A consumer who is forced to pay a higher price for goods purchased for personal use as a result of an antitrust violation suffers an injury to their 'property' within the meaning of § 4 of the Clayton Act and therefore has standing to sue for treble damages.
Facts:
- Kathleen R. Reiter purchased a hearing aid for her personal use.
- The hearing aid was manufactured by one of five corporations, including Sonotone Corp. (respondents).
- Reiter alleged that these five manufacturers engaged in anticompetitive practices, such as vertical and horizontal price fixing.
- As a result of these alleged antitrust violations, Reiter claimed that she and other consumers were forced to pay an artificially inflated, higher price for the hearing aids they purchased.
Procedural Posture:
- Kathleen R. Reiter filed a class action lawsuit against Sonotone Corp. and other hearing aid manufacturers in the U.S. District Court for the District of Minnesota.
- Respondents moved to dismiss the complaint, arguing Reiter lacked standing because she was not injured in her 'business or property' as required by § 4 of the Clayton Act.
- The District Court denied the motion to dismiss, holding that a retail purchaser's payment of an unlawfully high price constitutes an injury to 'property.'
- The District Court certified the question for an interlocutory appeal to the U.S. Court of Appeals for the Eighth Circuit.
- The Court of Appeals (appellant: Sonotone, appellee: Reiter) reversed, holding that the phrase 'business or property' limits standing to persons engaged in commercial ventures.
- The U.S. Supreme Court granted certiorari to review the decision of the Court of Appeals.
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Issue:
Does a consumer who pays a higher price for goods for personal use due to an antitrust violation sustain an injury to their 'business or property' within the meaning of § 4 of the Clayton Act, thus granting them standing to sue for treble damages?
Opinions:
Majority - Chief Justice Burger
Yes. A consumer who is forced to pay a higher price due to an antitrust violation has been injured in their 'property' under § 4 of the Clayton Act. The Court's reasoning begins with the plain language of the statute, which grants a cause of action to 'any person' injured in their 'business or property.' The word 'property' has a broad and inclusive meaning that encompasses money. A consumer whose money has been diminished by an antitrust violation is injured in their property. The disjunctive 'or' separating 'business' and 'property' indicates they should be given separate meanings; interpreting 'property' to mean only 'business property' would render the word 'business' superfluous. This interpretation is supported by precedent, specifically Chattanooga Foundry & Pipe Works v. Atlanta, which held that a city paying more for water pipes was 'injured in its property.' The legislative history, while not extensive, indicates Congress intended the Sherman and Clayton Acts to be a 'consumer welfare prescription,' further supporting the conclusion that consumers have a right to sue. Policy arguments about increasing litigation are matters for Congress, not the Court, to address.
Concurring - Justice Rehnquist
Yes. While agreeing with the Court's statutory construction, this opinion expresses concern over the practical consequences of the decision. The Court of Appeals' fears that this holding will substantially increase litigation and be used to extort nuisance settlements are not unfounded. There is considerable doubt whether consumer class actions of this type primarily benefit the consumers themselves, who may recover very little, as opposed to the class attorneys who receive large fees. However, despite these policy concerns, the Court must interpret the statute as written by Congress, and any potential problems are for Congress, not the courts, to resolve.
Analysis:
This decision definitively established consumer standing to bring treble-damages suits under federal antitrust law. By clarifying that a monetary loss from an overcharge constitutes an injury to 'property,' the Court opened the federal courts to consumer class actions for price-fixing and other anticompetitive behavior. This significantly expanded the role of private litigation in antitrust enforcement, creating a powerful deterrent for conspiracies aimed at retail consumers and empowering individuals to seek redress for such violations. The case solidifies the idea that antitrust laws are intended as a 'consumer welfare prescription' and not just a tool for resolving disputes between commercial entities.
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