A core principle of the American legal system is that all are equal before the law. But equality is missing in the matter of distributing more than $1 billion to dealers and consumers harmed by a supplier price-fixing scandal.
Class-action settlement funds collected from suppliers — fallout from the largest antitrust case in U.S. history — can only be paid to consumers and dealers in 29 states and the District of Columbia.
Those in 21 other states are not eligible to file a claim or receive compensation, even though they were also injured by price fixing and bid rigging. The reason? A 40-year-old U.S. Supreme Court ruling that prohibited, short of state-level intervention, the payment of damages to secondary buyers of items involved in antitrust activity.
In the 1977 case, Illinois Brick Co. v. Illinois, the court found that contractors could file claims because the price of bricks they purchased had been jacked up through anti-competitive behavior. But homeowners who hired the contractors using the bricks had no federal claim.
After that decision, 29 states and the District of Columbia passed so-called repealer statutes to allow their citizens to recover damages as secondary purchasers. Twenty-one other states took no action.
The resulting patchwork of unequal protection is unfair, as is evident by the auto parts settlement distributions. A consumer or auto dealer in Texas or Ohio or 19 other states shouldn’t be denied compensation because of where they live or transact business.
To fix this, we could wait for the court to take up another case to overturn Illinois Brick. Or voters — and dealers — in the 21 states currently locked out could petition their state legislators to pass the same repealer statutes that those in the 30 other jurisdictions already live under.