The Illinois Brick Damages Edifice: Demolition or Destruction?

The Illinois Brick Damages Edifice: Demolition or Destruction?

 

 

Gregory K. Leonard

Charles River Associates

 

Abstract

As typically calculated in U.S. “overcharge” cases under existing law, a plaintiff’s damages can diverge substantially from its economic losses. There are two primary reasons for this. First, only direct purchasers may seek damages under Illinois Brick and related federal case law and only those indirect purchasers located in states with Illinois Brick “repealer” laws may seek damages under state law. Thus, some entities that sustained economic losses may not have an avenue for recovery. Second, damages in overcharge cases are typically calculated as the amount of overcharges the plaintiff paid, but this measure may diverge substantially from the plaintiff’s true economic losses and the divergence can go in either direction. The implication is that damages as typically calculated in overcharge cases are not necessarily compensatory. This article discusses these issues and explores the implications of changing the existing legal framework, e.g., overruling Illinois Brick, so that damages would align more closely with economic losses.