The Supreme Court of California ruled last week that the Golden State's antitrust statute, the Cartwright Act, allows an award of overcharge damages to people who don't buy directly from a price-fixer.  Clayworth v. Pfizer, Inc., No. S166435 (Cal. July 12, 2010).

The case involved pharmacies that alleged price-fixing by drug manufacturers.  The drug companies defended on the ground that the Cartwright Act barred claims by people who resold the product and thus passed on some or all of the overcharge to more remote purchasers.  The trial court granted summary judgment against the pharmacies, and the court of appeals affirmed.

The Supreme Court reversed.  It concluded that the Cartwright Act entitles any victim of price-fixing, whether direct or indirect, to recover the entire overcharge it paid.

The Court also held that, in some cases, the plaintiffs must share damages among themselves.  That could happen if both direct and indirect purchasers timely sue and would otherwise recover "duplicative" damages.  The Court noted that the specter of the manufacturers' having to pay more than their full overcharge didn't arise in the case before it.  Neither drug wholesalers, which do buy directly, nor the California Attorney General, who can sue on behalf of all Golden State purchasers, the Court pointed out, had brought suit.

If you'd like to know more about the development of the law on the direct-indirect purchaser dichotomy — including Hanover Shoe, Illinois Brick, and the "Illinois Brick repealers" that many states enacted in reaction – Clayworth will give you a good introduction.