Whether c. 93A Creates a Cause of Action for Indirect Purchasers Alleging Antitrust Violations

In this case NELF challenged the ability of indirect purchasers to sue for antitrust violations under the state Consumer Protection Act.  Indirect purchasers of a product cannot state a claim under the Massachusetts Antitrust Act.  In this case of alleged price-fixing, the Superior Court concluded that indirect purchasers may, however, pursue the identical antitrust claim under the Consumer Protection Act, Chapter 93A.  In its decision, the Superior Court reasoned that price fixing is an unfair method of competition prohibited by Chapter 93A.  Since the Legislature removed the privity requirement for consumer suits in 1979, without making any reference to the Antitrust Act, the Court concluded that the Legislature intended to permit consumers to assert antitrust claims under Chapter 93A.  

NELF’s amicus brief argued that the Massachusetts Antitrust Act requires that the Act be construed in accordance with federal antitrust law.  A Supreme Court case, Illinois Brick, prohibits indirect purchasers antitrust suits.  Illinois Brick’s prohibition of indirect purchaser suits was based on policy considerations: avoiding multiple liability, avoiding the additional complexity that would be injected into already complex antitrust litigation, and encouraging effective enforcement of the antitrust laws.  NELF argued that the Massachusetts legislature made the same policy choices in 1978 when it revised the Antitrust Act and incorporated Illinois Brick and thus is was highly unlikely that, without discussion, the legislature made diametrically opposed policy decisions a year later when it amended Chapter 93A.  In a recent decision the SJC held that Chapter 93A did permit indirect purchaser suits.

Constitutionality of the Lead Plaintiff Provisions of the Private Securities Litigation Reform Act

Judge Robert Keeton has ruled that a provision requiring that he appoint a lead plaintiff within 90 days violates the separation of powers doctrine, finding that Congress did not have constitutional authority to place a deadline on a court decision requiring the exercise of judicial discretion.  The provision in question is part of the "lead plaintiff" provisions of the Private Securities Litigation Reform Act ("PSLRA").  Seeking to reform the practice of class action lawyers recruiting and controlling class representatives with a minimal financial stake in litigation, Congress enacted the lead plaintiff provisions to encourage institutional investors with a large stake in securities litigation to represent the class and exercise effective management and supervision of class lawyers.  In the case before Judge Keeton, Kai Chan, a purchaser of common stock in PRI Automation, Inc., brought a class action suit against PRI and various directors and officers alleging that PRI violated the Securities and Exchange Act of 1934.  More than one plaintiff has sought to be named "lead plaintiff."  Judge Keeton asked "any interested member of the Bar of this Court" to comment on six questions he raised concerning the constitutionality of the PSLRA.  

Responding to this request, NELF contended that none of these provisions are constitutionally infirm. Under lead plaintiff provisions of PSLRA, a plaintiff filing a new putative class action must "cause to be published, in a widely circulated national business-oriented publication or wire service, a notice advising members of the purported plaintiff class" of the pending action.  The notice must advise the class that "any member of the purported class may move the court to serve as lead plaintiff of the purported class."  The PSLRA creates a rebuttable presumption that the "most adequate plaintiff . . . is the person or group of persons" who has sought the role, otherwise meets the requirements of rule 23 of the Federal Rules of Civil Procedure, and "in the determination of the court, has the largest financial interest in the relief sought by the class."    Within 90 days after the notice is published, the court "shall appoint as lead plaintiff the member or members of the purported class that the court determines to be most capable of adequately representing the interests of the class members."  It was this 90-day requirement that Judge Keeton found to be “an unconstitutional intrusion on the judicial functions of a United States District Court.”  NELF is awaiting a decision on the other questions raised by Judge Keeton.

Challenging Retroactive Imposition of Permanent Housing Subsidy Requirement

This case involves the duration of affordable housing restrictions on property developed under the comprehensive permit provisions of Massachusetts General Laws Chapter 40B, also known as the Anti-Snob Zoning Act. Chapter 40B permits a developer who sets aside a certain number of subsidized housing units in a new development pursuant to a government affordable housing program to override local zoning requirements. The developer of Ardemore Apartments received a comprehensive permit overriding local Wellesley zoning to build a 36-unit multi-family development by agreeing to set aside nine subsidized units. The relevant program mandated that the units remain “affordable” for fifteen years, as was common in most government-assisted housing developments build before the 1990s. The subsidizing agency explicitly provided that, after the fifteen-year subsidy period, the units could be rented at market rate. When the subsidy period was set to expire, Wellesley sued for declaratory judgment to require Ardemore to continue to rent the nine set-aside units as “affordable” housing in perpetuity or to tear down the entire development as nonconforming with Wellesley zoning. The trial court decided in favor of Wellesley and Ardemore appealed. The SJC granted direct appellate review. 

NELF submitted an amicus brief in its own name supporting Ardemore arguing (1) that the parties’ expectation at the time of construction was that developer’s subsidy obligation ended when the subsidy expired, and (2) that the developer should not be expected to subsidize the nine units in perpetuity itself or find alternate government subsidies after the original program expired.  The SJC held that the owner must maintain the unit is as “affordable” for as long as the housing is not in compliance with local zoning requirements.  The SJC discounted the parties’ expectations and the terms of the financing agreements.  While noting that the absences of an affordability restriction expiration may operate “as an economic disincentive to developers to build affordable housing, “ the SJC concluded, “The solution to that problem, however, lies with the Legislature.”

Contesting an Employer’s Liability for Criminal Conduct of an Employee in the Workplace

In a case of first impression, the New Hampshire Supreme Court considered--and rejected--the argument that an employer has a duty to protect an employee against foreseeable criminal attacks by third parties.  The case arose when Hilliard, an off-duty ATT employee, killed Dupont, another ATT employee, in the parking lot of ATT’s facility.  Dupont’s family sued ATT, claiming that the employment relationship was a “special one, analogous to those between school and student, common carrier and passenger, and innkeeper and guest.  The Court rejected this argument, saying that adopting such a rule would impose an “onerous burden” on employers.  The Court did go on to say that under the specific facts alleged, the employer may have become aware of an imminent danger of serious harm to Dupont.  At that point, the Court said, the employer would have a duty to protect Dupont from Hilliard’s attack.

Statute of Limitation and “Discovery Rule” Applicability to Claims for Property Damage Due to Environmental Contamination
 
This case concerns statutory and common-law claims for property damage caused by the migration of contaminated groundwater onto real property, and the proper application of the statute of limitations to those claims. Taygeta brought this action against Varian, the former owner of adjacent property, alleging damage from the migration of contaminated groundwater. The parties agree that the applicable statute of limitations period is three years. The court issued an order, finding as “uncontroverted facts” that Taygeta was aware or reasonably should have been aware of the contamination on its property more than three years before the filing of the Complaint. The court issued an order dismissing the action“as barred by the statute of limitations” and Taygeta appealed, arguing that a cause of action accrues only after the plaintiff has actual knowledge of the harm and notice of the likely cause of the harm.  

Massachusetts law holds that a cause of action accrues “when the plaintiff discovers, or ... should reasonably have discovered, that she had been harmed or may have been harmed by the defendant’s conduct.” The discovery rule, an exception to the general rule that a cause of action in tort accrues at the time of injury, is based on the fact that certain wrongs are “inherently unknowable.” When the circumstances are such that the wrong is no longer “inherently unknowable,” the exception ceases to apply and the cause of action accrues.  NELF filed a brief in support of Varian, arguing that the plaintiff’s interpretation of the discovery rule would allow plaintiffs to ignore warning signs of injury. Discouraging a plaintiff from bringing a timely action is contrary to the principle underlying statutes of limitations that plaintiffs should be encouraged to bring actions when evidence is fresh and available.  The SJC ruled in March 2002 that Taygeta did not have an independent duty to investigate under Chapter 21E; that the statute began to run when Taygeta had actual knowledge of contamination; and that Taygeta thus had a surviving cause of action.

Challenging the Standing of Indirect Purchasers to Recover for Antitrust Violations under the Connecticut Unfair Trade Practices Act

In a similar Connecticut case the plaintiff Vacco, an end purchaser of a computer loaded with Microsoft software, brought claims under the Connecticut Antitrust Act and the Connecticut Unfair Trade Practices Act ("CUTPA"). The trial court ruled that Vacco was an indirect purchaser and held that the Connecticut Antitrust Act incorporated the United States Supreme Court's Illinois Brick prohibition against suits by indirect purchasers. The trial court also dismissed the CUTPA claim, ruling that to permit the CUTPA claim to proceed "would be contrary to Supreme Court authority . . . and would undermine the Supreme Court's policy choices in its interpretation of federal antitrust law, which this court is directed to follow."  

NELF, the Connecticut Business and Industry Association and the Association for Competitive Technology joined in an amicus brief supporting Microsoft's position.  The Connecticut Supreme Court upheld the lower court decision, holding that Vacco’s claimed injuries were too indirect with respect to Microsoft’s allegedly anticompetetive conduct for Vacco to recover under CUPTA.