States are "persons" within the meaning of the Clayton Act and are entitled to bring actions on their own behalf for damages resulting to State property from violation of provisions of federal antitrust laws. For example, a state may bring a federal antitrust action for treble damages against companies that agreed on what bids would be made on a state construction project.
Under Section 4C of the Clayton Act, 15 U.S.C.S. ¤ 15c, a state may also seek treble damages on behalf of its citizens who are injured due to a violation of the Sherman Act, 15 U.S.C.S. ¤¤ 1-7. Such "parens patriae" actions by the states are restricted to recovery for damage to a natural person's property. While a state may not sue on behalf of businesses within the state or to recover for damage to a person's business, a parens patriae action can be an effective device to recover relatively small amounts of damage to individual citizens which in the aggregate can amount to substantial judgments against antitrust law offenders.
There are limits on parens patriae actions. The defendant in a parens patriae action will not be required to pay damages that have been awarded in a previous action by a consumer or on behalf of a class of consumers or damages that were suffered by a business rather than a consumer. As in a class action, notice of a parens patriae action must be provided to consumers, and consumers must be given an opportunity to withdraw from their representation by the state. A judgment in a parens patriae action bars re-litigation of the same claim by or on behalf of consumers who do not choose to withdraw from representation by the state.
States are entitled to reimbursement of their attorney fees and costs if they are successful in their parens patriae suit. However, unlike private actions, states may be ordered to pay attorney fees and costs of the defendant if the court finds that the parens patriae action was brought in bad faith, vexatiously, wantonly, or for oppressive reasons.
If the federal government brings an action for an antitrust violation which the U.S. Attorney General believes would support a parens patriae action by a state, the Attorney General is required to notify the state's attorney general and to provide states with access to investigative materials other than grand jury or other materials protected from disclosure to persons outside the U.S. Government. The states also are assisted especially in bringing parens patriae actions against violators of Section One of the Sherman Act, 15 U.S.C.S. ¤ 1, for price fixing because overall or aggregate damage amounts may be proved through statistical or sampling methods and the amount of damage to each natural person represented by the state need not be proved.
If the state recovers damages on behalf of natural persons within the state, those persons are provided the opportunity to seek their share of the recovery. Unclaimed portions may then by court order be otherwise distributed or placed in the state's general fund.
Copyright 2009 LexisNexis, a division of Reed Elsevier Inc.
