In Re American Express Anti-Steering Rules Antitrust Litigation

20–1766

In re American Express Anti-Steering Rules Antitrust Litigation

In the

United States Court of Appeals

FOR THE SECOND CIRCUIT

AUGUST TERM 2020

No. 20-1766

IN RE AMERICAN EXPRESS ANTI-STEERING RULES ANTITRUST

LITIGATION,

LAJOLLA AUTO TECH, INC., QWIK LUBE LLC,

Plaintiffs-Appellants,

RITE AID CORPORATION, WALGREEN CO., FIREFLY AIR SOLUTIONS,

LLC, PLYMOUTH OIL CORPORATION, RITE AID HEADQUARTERS

CORP., JASA, INC., ON BEHALF OF THEMSELVES AND ALL SIMILARLY

SITUATED PERSONS, ANIMAL LAND, INC., ROOKIES, INC., ITALIAN

COLORS RESTAURANT, COHEN RESE GALLERY, INC., LOPEZ-DEJONGE,

INC., BAR HAMA LLC, MEIJER, INC., PUBLIX SUPER MARKET, INC.,

RALEY’S, SUPERVALU INC., CVS PHARMACY, INC., BI-LO, LLC, H.E.B.

GROCERY COMPANY, THE KROGER CO., SAFEWAY INC., AHOLD

U.S.A. INC., ALBERTSON’S LLC, HY-VEE, INC., THE GREAT ATLANTIC

& PACIFIC TEA COMPANY INC., TREEHOUSE, INC., IL FORNO, INC.,

NATIONAL SUPERMARKETS ASSOCIATION, INC., ON BEHALF OF ITS

MEMBERSHIP, AND ALL OTHER SIMILARLY SITUATED PERSONS,

PLAINTIFFS, ALL CLASS PLAINTIFFS, THE MARCUS CORPORATION,

BILL MCCAULEY, READ MCCAFFREY, HILLARY JAYNES, ANTHONY

OLIVER, BERNADETTE MARTIN, BRYAN HUEY, JAMES EATON, PAUL

KASHISHIAN, GIANNA VALDES, CHAD TINTROW, MATTHEW

MORIARTY, ANDREW AMEND, IGOR GELMAN, ZACHARY DRAPER,

SHAWN O’KEEFE, FRANCISCO ROBLETO, JR., MICHAEL THOMAS REID,

PLYMOUTH OIL CORP., CLAM LAKE PARTNERS LLC,

Plaintiffs,

v.

AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.,

AMERICAN EXPRESS COMPANY,

Defendants-Appellees,

SUSAN BURDETTE,

Defendant,

CIRCUIT CITY LIQUIDATING TRUST, THE RSH LIQUIDATING TRUST,

HOLIDAY COMPANIES, GANDER MOUNTAIN COMPANY,

COMMONWEALTH HOTELS, INC., KEILA RAVELO,

Intervenors. *

On Appeal from the United States District Court

for the Eastern District of New York

ARGUED: DECEMBER 16, 2020

DECIDED: NOVEMBER 22, 2021

Before: CHIN, BIANCO, and MENASHI, Circuit Judges.

The plaintiffs-appellants are commercial merchants that sought

monetary and injunctive relief under both federal and California

antitrust laws against the defendants-appellees—American Express

* The Clerk of Court is directed to amend the caption as set forth above.

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Travel Related Services Co., Inc., and American Express Co.—alleging

that the appellees’ anti-steering rules caused merchant fees to rise

across the market. The appellants do not accept American Express

cards and therefore proceeded under an “umbrella” theory of

liability. The district court considered the four “efficient enforcer”

factors, concluded that the appellants lacked antitrust standing, and

dismissed the claims. The appellants challenge that holding, arguing

that the four efficient-enforcer factors support antitrust standing for

the “umbrella” plaintiffs in this case.

We disagree. The efficient-enforcer factors structure a

proximate cause analysis according to which there must be a

sufficiently close relationship between the alleged injury and the

alleged antitrust violation to establish antitrust standing. Here, that

relationship is lacking. After considering the efficient-enforcer factors

and the relevant state laws, we AFFIRM.

SCOTT MARTIN, Hausfeld LLP, New York, NY (Michael

D. Hausfeld, Hausfeld LLP, Washington, DC, and Irving

Scher, Jeanette Bayoumi, and Kimberly Fetsick, Hausfeld

LLP, New York, NY, on the brief), for Plaintiffs-Appellants.

EVAN R. CHESLER (Peter T. Barbur, Kevin J. Orsini, and

Rory A. Leraris, on the brief), Cravath, Swaine & Moore

LLP, New York, NY, for Defendants-Appellees.

Eric F. Citron, Goldstein & Russell, P.C., Bethesda, MD,

for Amici Curiae Eighteen Professors of Antitrust Law.

3

20–1766

In re American Express Anti-Steering Rules Antitrust Litigation

MENASHI, Circuit Judge:

The appellants, on behalf of a class of commercial merchants,

allege that the Anti-Steering Rules promulgated by the appellees, the

American Express Company and American Express Travel Related

Services Company, Inc. (together, “Amex”), violate the antitrust laws.

The appellants do not accept American Express cards but claim

to be harmed by Amex’s policies nevertheless. These merchants “seek

monetary and injunctive relief for overcharges paid to Visa,

MasterCard, and Discover,” not to Amex, “caused by Amex’s

imposition of ‘Anti-Steering Rules’ in its agreements with merchants

who accept Amex cards.” Appellants’ Br. 1-2. The appellants claim

that “Amex’s Anti-Steering Rules have stifled interbrand competition

throughout the relevant market, causing the credit card transaction

fees charged to Appellants by Visa, MasterCard, and Discover to

prevail at supracompetitive levels under Amex’s pricing umbrella.”

Id. at 2.

The U.S. District Court for the Eastern District of New York

(Garaufis, J.) dismissed the appellants’ claims under Federal Rule of

Civil Procedure 12(b)(6) and ruled that the class lacked antitrust

standing because it did not include “efficient enforcers” of the

antitrust laws relative to Amex’s challenged anticompetitive conduct.

In re Am. Express Anti-Steering Rules Antitrust Litig., 433 F. Supp. 3d

395, 407-13 (E.D.N.Y. 2020). The appellants “seek reversal of the

district court’s dismissal of their claims because Amex’s

anticompetitive conduct has directly injured them, and recognizing

their standing would ensure efficient enforcement of the antitrust

laws.” Appellants’ Br. 2. Amex contends that the district court was

correct that the appellants “lack antitrust standing because they are

not efficient enforcers” of the antitrust laws and the alleged damages

are “too indirect” and “speculative.” Appellees’ Br. 3-4.

We affirm the district court’s judgment. To determine whether

a party can sue under the antitrust laws—whether the party has

“antitrust standing”—we apply the “efficient enforcer” test. The

efficient-enforcer test is an elaboration on the proximate cause

requirement of Associated General Contractors of California, Inc. v.

California State Council of Carpenters (AGC), 459 U.S. 519, 535-36 (1983).

In cases of economic harm, proximate cause is demarcated by the

“first step” rule, which limits liability to parties injured at the first step

of the causal chain of the defendants’ actions. See id. at 534. Here, at

the first step, Amex restrained trade to raise its own prices; only later

did its competitors follow suit. Because the appellants were harmed

at that later step, the claims here fail the first-step test. After

considering the four AGC factors, we conclude that—taking the

allegations of the complaint as true—the appellants are not efficient

enforcers of the antitrust laws and therefore lack antitrust standing.

BACKGROUND 1

The appellants challenge Amex’s Anti-Steering Rules, or what

Amex calls its non-discrimination provisions, contained in its Card

Acceptance Agreement with merchants. The appellants allege that

“Amex’s Anti-Steering Rules unreasonably restrain interbrand price

competition with the other major [credit card] networks because the

Rules: (1) stifle interbrand competition among the networks;

(2) impose supracompetitive merchant fees, without corresponding

1For purposes of this appeal, we accept as true all facts alleged in the second

amended complaint (“SAC”). Henry v. County of Nassau, 6 F.4th 324, 328 (2d

Cir. 2021).

5

offsetting credit card user economic benefits; (3) cause the overall

price of credit card transactions to rise above competitive levels

marketwide, because the other credit card networks would not

benefit competitively by reducing their merchant fees; and (4) raise

consumer retail prices throughout the economy, thereby reducing

output.” Appellants’ Br. 4; see also Am. Express Anti-Steering, 433

F. Supp. 3d at 401.

I

The credit card industry is divided among four competing

networks: Amex, Visa, MasterCard, and Discover. Ohio v. Am. Express

Co., 138 S. Ct. 2274, 2282 (2018). The market is characterized by high

barriers to entry. New entrants face a “chicken-and-egg” problem

because “merchants value a payment system only if a sufficient

number of cardholders use it and cardholders value a payment card

only if a sufficient number of merchants accept it.” 2

Credit card networks such as Amex “operate what economists

call a ‘two-sided platform,’” which “offers different products or

services to two different groups who both depend on the platform to

intermediate between them.” Ohio, 138 S. Ct. at 2280. 3 Amex provides

credit-card services to both “merchants,” who accept Amex as

payment, “and cardholders,” who use Amex to make payments. Ohio,

138 S. Ct. at 2279-80. Both parties are necessary; “no credit-card

2Benjamin Klein, Andres V. Lerner, Kevin M. Murphy & Lacey L. Plache,

Competition in Two-Sided Markets: The Antitrust Economics of Payment Card

Interchange Fees, 73 ANTITRUST L.J. 571, 584 (2006).

3See also D. Daniel Sokol, Rethinking the Efficiency of the Common Law, 95

NOTRE DAME L. REV. 795, 803 (2019) (“The value of the two-sided market (or

platform) is the ability to make matches across both sides of the market.”).

6

transaction can occur unless both the merchant and the cardholder

simultaneously agree to use the same credit-card network.” Id. at

2280.

While credit card companies often charge cardholders an

annual fee, all credit card companies charge merchants a fee for every

transaction processed. 4 According to the appellants, Amex charges

higher merchant fees than its competitors. To avoid the higher fees,

merchants—in the absence of any restraint prohibiting the practice—

might “steer” their customers toward using another form of payment.

“Steering” could be done in different ways, such as simply by asking,

offering benefits for using other payment methods, or imposing a

surcharge on the use of Amex cards. 5

Steering allows for price signals between merchant and

customer. Without steering, “consumers do not internalize the full

costs of their choice of payment system.” 6 Steering also may prevent

Amex from charging higher fees because merchants will steer

customers toward cards with lower fees. In sum, “American Express

dislikes steering; the merchants like it; and the shoppers may benefit

from it, whether because merchants will offer them incentives to use

4See Timothy J. Muris, Payment Card Regulation and the (Mis)application of the

Economics of Two-Sided Markets, 2005 COLUM. BUS. L. REV. 515, 522 (2005).

5 See Klein et al., supra note 2, at 586-87.

6 Adam J. Levitin, Priceless? The Social Costs of Credit Card Merchant

Restraints, 45 HARV. J. ON LEGIS. 1, 11 (2008); see also id. at 3 (“[S]ome

consumers end up paying higher or lower prices for the transaction than

they would have if the merchant charged prices that varied with the cost of

accepting payment.”).

7

less expensive cards or in the form of lower retail prices overall.” Ohio,

138 S. Ct. at 2292 (Breyer, J., dissenting).

Amex has discouraged steering by inserting anti-steering

provisions into its contracts with merchants. Pursuant to Amex’s

Anti-Steering Rules, merchants may not:

• indicate or imply that they prefer, directly or

indirectly, any Other Payment Products over Amex

Cards;

• try to dissuade cardholders from using their Amex

Card;

• criticize or mischaracterize the Amex Card or any of

Amex’s services or programs;

• try to persuade or prompt cardholders to use any

Other Payment Products or any other method of

payment (e.g., payment by check);

• impose any restriction, conditions, or disadvantages

when the Card is accepted that are not imposed

equally on all Other Payment Products, except for

ACH funds transfer, cash, and checks;

• engage in activities that harm Amex’s business or the

American Express Brand (or both);

• or promote any Other Payment Products (except the

Merchant’s own private label card that they issue for

use solely at their Establishments) more actively than

the Merchant promotes Amex.

Am. Express Anti-Steering, 433 F. Supp. 3d at 404 (alterations omitted).

8

The appellants allege that these Anti-Steering Rules, when

combined with Amex’s higher merchant fees, have raised fees

throughout the industry. Competing networks “have no economic

incentive to compete in the market by offering lower merchant fees

[because] merchants cannot educate cardholders and [steer]

transactions to the cards with lower fees.” Appellants’ Br. 7. Because

“lower-fee competitor[s] cannot gain market share” by competing on

price, all competing networks raise prices. Id. This effect is

widespread because “most large merchants, according to Plaintiffs,

do accept Amex, meaning that the credit card companies would have

little incentive to tailor contracts for relatively insignificant individual

merchants who do not.” Am. Express Anti-Steering, 433 F. Supp. 3d at

415.

II

The Anti-Steering Rules have been litigated for over a decade.

Merchants have been filing suits since the 2000s. See generally Rite-Aid

Corp. v. Am. Express Travel Related Servs. Co., 708 F. Supp. 2d 257, 260

(E.D.N.Y. 2010). “In October 2010, the Department of Justice and the

attorneys general of eighteen states filed the Government Action

against Amex, MasterCard, and Visa” challenging each company’s

version of the Anti-Steering Rules. In re Am. Express Anti-Steering

Rules Antitrust Litig., No. 08-CV-2315, 2016 WL 748089, at *2 (E.D.N.Y.

Jan. 7, 2016). “Visa and MasterCard entered into consent decrees with

the Government on the same day that the Government Action was

initiated. Only Amex remained as a defendant.” Id. at *2 n.5. After a

bench trial, the district court ruled for the government, concluding

that it had shown by a preponderance of the evidence that the Anti-

Steering Rules violated § 1 of the Sherman Act. United States v. Am.

Express Co., 88 F. Supp. 3d 143, 238 (E.D.N.Y. 2015). Our court

9

reversed that judgment, holding that the district court erred in not

requiring the government to show harm to consumers “accounting

for consumers on both sides of the platform.” United States v. Am.

Express Co., 838 F.3d 179, 206-07 (2d Cir. 2016). The Supreme Court

then affirmed. Ohio, 138 S. Ct. at 2290.

“Following the Supreme Court’s affirmance of the dismissal of

the Government Action, matters resumed in the [Merchant Plaintiff]

Actions.” Am. Express Anti-Steering, 433 F. Supp. 3d at 405. The

merchant plaintiffs—including the appellants here—filed the SAC on

December 17, 2018. The SAC sought monetary and equitable relief

“on behalf of two putative classes: (1) a class of merchants who accept

Amex cards … (the ‘Amex Class’); and (2) a class of merchants who

do not accept Amex cards and who have no contract with Amex (the

‘Non-Amex Class’).” Id. at 401. Within both classes, subclasses of

plaintiffs sought relief under California law. Id. at 402, 405.

On January 15, 2020, the district court ruled in Amex’s favor.

Id. at 417. It first granted Amex’s motion to compel arbitration of the

Amex Class’s claims. See id. at 405-07. It then granted Amex’s motion

to dismiss the Non-Amex Class’s claims. See id. at 407-16. Specifically,

the district court held that “the Non-Amex Class has not established

federal antitrust standing.” Id. at 413. Applying the “efficient

enforcer” test, id. at 408; see Balaklaw v. Lovell, 14 F.3d 793, 797 n.9 (2d

Cir. 1994) (endorsing the efficient-enforcer test), the district court

concluded that all four efficient-enforcer factors indicated that the

appellants lacked antitrust standing. Am. Express Anti-Steering, 433

F. Supp. 3d at 407-13. For similar reasons, the district court concluded

that the appellants lacked antitrust standing under California’s

Cartwright Act and Unfair Competition Law as well. Id. at 413-16. On

May 14, 2020, the district court entered an order of partial final

10

judgment pursuant to Federal Rule of Civil Procedure 54(b). On June

8, 2020, the appellants timely appealed.

DISCUSSION

“We review a district court’s grant of a motion to dismiss de

novo, accepting as true all factual claims in the complaint and drawing

all reasonable inferences in the plaintiff’s favor.” Henry, 6 F.4th at 328

(internal quotation marks omitted). The appellants argue that the

district court erred when it dismissed their claims under the Clayton

Act and under California antitrust law. We address each claim in turn.

I

The appellants contend that the district court erred in

dismissing their federal antitrust claim. The appellants brought that

claim under the Clayton Act, which provides a private right of action

for injuries “by reason of anything forbidden in the antitrust laws.”

15 U.S.C. § 15(a). The district court dismissed the claim on the ground

that the appellants lacked antitrust standing. See Am. Express Anti-

Steering, 433 F. Supp. 3d at 407-08. We agree with the district court’s

conclusion.

“It is a well-established principle that, while the United States

is authorized to sue anyone violating the federal antitrust laws, a

private plaintiff must demonstrate ‘standing.’” Daniel v. Am. Bd. of

Emergency Med., 428 F.3d 408, 436 (2d Cir. 2005). We have explained

that “[a]ntitrust standing is a threshold, pleading-stage inquiry” and

that “when a complaint by its terms fails to establish this requirement

we must dismiss it as a matter of law.” Gatt Commc’ns, Inc. v. PMC

Assocs., L.L.C., 711 F.3d 68, 75 (2d Cir. 2013) (quoting NicSand, Inc. v.

3M Co., 507 F.3d 442, 450 (6th Cir. 2007) (en banc)). This requirement

11

“prevents private plaintiffs from recovering damages under” the

Clayton Act “merely by showing injury causally linked to an illegal

presence in the market.” Id. at 76 (internal quotation marks and

alteration omitted).

To demonstrate antitrust standing, a private plaintiff must

show both that (1) “it suffered a special kind of antitrust injury” and

that (2) “it is a suitable plaintiff to pursue the alleged antitrust

violations and thus is an efficient enforcer of the antitrust laws.” Id.

(internal quotation marks omitted). Whether a plaintiff is an “efficient

enforcer” depends on the four factors the Supreme Court identified

in AGC. 459 U.S. at 540-45. Those factors are (1) “the directness or

indirectness of the asserted injury”; (2) “the existence of more direct

victims” or the “existence of an identifiable class of persons whose

self-interest would normally motivate them to vindicate the public

interest in antitrust enforcement”; (3) the extent to which the claim is

“highly speculative”; and (4) “the importance of avoiding either the

risk of duplicate recoveries on the one hand, or the danger of complex

apportionment of damages on the other.” Id.; see also Gelboim v. Bank

of Am. Corp., 823 F.3d 759, 772 (2d Cir. 2016). “[T]he weight to be given

the various factors will necessarily vary with the circumstances of

particular cases.” Daniel, 428 F.3d at 443.

In this case, the appellants claim to have antitrust standing

under a so-called “umbrella” theory. The classic “umbrella” scenario

occurs when “[a] cartel cuts output, which elevates price throughout

the market.” U.S. Gypsum Co. v. Ind. Gas Co., 350 F.3d 623, 627 (7th Cir.

2003). Because of that price umbrella, “customers of fringe firms

(sellers that have not joined the cartel) pay this higher price, and thus

suffer antitrust injury, just like customers of the cartel’s members.” Id.

In other words, the umbrella theory “seeks to hold price-fixers liable

12

for harm allegedly flowing from the illegal conduct even though the

price-fixing defendants received none of the illegal gains and were

uninvolved in their competitors’ pricing decisions.” In re Coordinated

Pretrial Proceedings in Petroleum Prods. Antitrust Litig., 691 F.2d 1335,

1339 (9th Cir. 1982). The appellant merchants in this case do not have

a contractual relationship with Amex such that the Anti-Steering

Rules apply to the appellants directly. Rather, the appellants argue

that—as in a classic umbrella scenario—Amex’s practices provide an

umbrella under which the other credit card companies that do have a

relationship with the appellants also raise prices.

The district court declined to determine whether the appellants

had established an antitrust injury because it concluded that the

appellants were not efficient enforcers of the antitrust laws and for

that reason lacked antitrust standing. We likewise need not address

antitrust injury. Because the four efficient-enforcer factors do not

establish antitrust standing, we affirm the district court’s judgment.

A

The first efficient-enforcer factor asks whether “the violation

was a direct or remote cause of the injury.” Gelboim, 823 F.3d at 772.

This factor turns on “familiar principles of proximate causation.”

Lotes Co. v. Hon Hai Precision Indus. Co., 753 F.3d 395, 412 (2d Cir. 2014).

Proximate cause stands for the proposition that “the judicial

remedy cannot encompass every conceivable harm that can be traced

to alleged wrongdoing.” AGC, 459 U.S. at 536. It encompasses “the

judicial tools used to limit a person’s responsibility for the

consequences of that person’s own acts” and “reflects ideas of what

justice demands, or of what is administratively possible and

convenient.” Holmes v. Sec. Inv. Prot. Corp., 503 U.S. 258, 268 (1992)

13

(internal quotation marks omitted). This principle limits antitrust

liability beyond a certain point. Given the “ripples of harm” that

antitrust violations may have in the economy, the Supreme Court has

said that “[i]t is reasonable to assume that Congress did not intend to

allow every person tangentially affected by an antitrust violation to

maintain an action to recover threefold damages for the injury to his

business or property.” Blue Shield of Va. v. McCready, 457 U.S. 465, 476-

77 (1982). Therefore, “despite the broad wording of § 4 [of the Clayton

Act] there is a point beyond which the wrongdoer should not be held

liable.” Id. at 477 (quoting Ill. Brick Co. v. Illinois, 431 U.S. 720, 760

(1977) (Brennan, J., dissenting)).

In the context of antitrust standing, proximate cause generally

follows the first-step rule. When the Clayton Act was enacted, the

Supreme Court has explained, Congress understood “the judicial

gloss” expressed by Justice Holmes: “The general tendency of the law,

in regard to damages at least, is not to go beyond the first step.” AGC,

459 U.S. at 534 (quoting S. Pac. Co. v. Darnell-Taenzer Lumber Co., 245

U.S. 531, 533 (1918) (Holmes, J.)). 7 The first-step rule requires “some

7 In other words, the law “does not attribute remote consequences to a

defendant,” even if those consequences are foreseeable. Darnell-Taenzer, 245

U.S. at 533. Barring liability for foreseeable harms is not unusual. Such

limits on liability can be found, for example, in the economic loss rule, see

Akron Corp. v. M/T Cantigny, 706 F.2d 151, 153 (5th Cir. 1983) (noting that “a

party may not recover for economic losses not associated with physical

damages” so as “to prevent limitless liability for negligence and the filing

of law suits of a highly speculative nature”); see also RESTATEMENT (THIRD)

OF TORTS: LIAB. FOR ECON. HARM § 1 cmt. c(1) (Am. L. Inst. 2020) (noting that

one of the rationales for limiting tort liability for economic loss is that

“[e]conomic losses proliferate more easily than losses of other kinds” even

though such losses “may be at least generally foreseeable to the person who

commits the negligent act”), and other limitations on liability for

14

direct relation between the injury asserted and the injurious conduct

alleged.” Bank of Am. Corp. v. City of Miami, 137 S. Ct. 1296, 1306 (2017)

(quoting Holmes, 503 U.S. at 268). Under the rule, injuries that happen

at the first step following the harmful behavior are considered

proximately caused by that behavior. Accordingly, “[d]irectness in

the antitrust context means close in the chain of causation.” Gatt

Commc’ns, 711 F.3d at 78 (quoting IBM Corp. v. Platform Sols., Inc., 658

F. Supp. 2d 603, 611 (S.D.N.Y. 2009)). As Justice Stevens, the author of

AGC, observed, the Supreme Court’s “interpretation of § 4 has …

adhered to Justice Holmes’ observation that the ‘general tendency of

the law, in regard to damages at least, is not to go beyond the first

step.’” Verizon Commc’ns Inc. v. Law Offs. of Curtis V. Trinko, LLP, 540

U.S. 398, 417 (2004) (Stevens, J., concurring in the judgment) (quoting

S. Pac. Co., 245 U.S. at 533).

Our court has repeatedly followed the first-step rule in the

antitrust context. In Paycom Billing Services. v. MasterCard International,

Inc., we held that a merchant, Paycom, did not suffer a direct injury

negligence, see 532 Madison Ave. Gourmet Foods, Inc. v. Finlandia Ctr., Inc., 96

N.Y.2d 280, 289 (2001) (“Absent a duty running directly to the injured

person there can be no liability in damages, however careless the conduct

or foreseeable the harm.”), and for negligent misrepresentation, see

RESTATEMENT (THIRD) OF TORTS: LIAB. FOR ECON. HARM § 5 cmt. b

(“Liabilities that expand as easily as words travel would … become

indeterminate and unduly widespread in many cases.”). Even when the law

extends a right to recover for derivative injury—such as emotional distress

from witnessing another’s accident—that right is often confined to close

relations and excludes others in ways unrelated to foreseeability. Robert L.

Rabin, Tort Recovery for Negligently Inflicted Economic Loss: A Reassessment,

37 STAN. L. REV. 1513, 1522 (1985). The “specter of collateral claims, virtually

unlimited in number, as a result of any given accident”—not

foreseeability—informs these limitations. Id. at 1525.

15

from MasterCard’s practice of forbidding its member banks from

dealing with other card companies. 467 F.3d 283, 293 (2d Cir. 2006).

Paycom’s theory was that, absent that practice, MasterCard would

have faced more competition from Discover and American Express,

and it would have then adopted more favorable policies toward

Paycom. Id. That was not enough to establish antitrust standing; we

concluded that “any injury suffered by Paycom was indirect and

flowed from the injuries suffered by Discover and American

Express.” Id. We similarly held that the injury suffered in Gatt

Communications was indirect. 711 F.3d at 78-79. In that case, Gatt

Communications alleged that PMC Associates had formed a price-

fixing conspiracy for the sale of Vertex radio equipment to

government agencies, and when Gatt sought to defect, its “Dealer

Agreement”—through which it was able to sell that brand of radio

equipment in the first place—was terminated. Id. at 71-73. Gatt argued

that it was entitled to damages for the commissions it would have

received absent the anticompetitive conduct. Id. at 74. We held that

Gatt was harmed “only incidentally” and that “[i]f there are direct

victims of the alleged conspiracy, they are the state agencies, not

Gatt.” Id. at 78-79. Most recently, in IQ Dental Supply, Inc. v. Henry

Schein, Inc., we determined that IQ Dental Supply, though injured by

a boycott of the third-party online portal through which IQ sold its

goods, lacked antitrust standing to challenge that boycott. 924 F.3d 57,

65 (2d Cir. 2019). Because the harm to IQ “resulted from injury” to the

third-party portal, the antitrust claims were “derivative and indirect.”

Id.

In this case, the appellants did not suffer a direct injury from

the alleged antitrust violation. At the first step, Amex raised the price

for Amex-accepting merchants through the Anti-Steering Rules.

16

Amex did not raise the appellants’ fees. Nor could it have: the

appellants do not accept American Express cards. Similar to the

holdings in Gatt Communications and IQ Dental Supply, if there are

“direct victims,” those victims are the merchants to which Amex’s

Anti-Steering Rules applied. Gatt Commc’ns, 711 F.3d at 78-79; IQ

Dental Supply, 924 F.3d at 65. The appellants were allegedly injured

when Amex’s competitors, covered by Amex’s price umbrella, raised

their own prices. In the appellants’ words, Amex’s imposition of

increased merchant fees “enabled” the competitor companies “to

increase their own merchant fees.” Appellants’ Br. 10. Yet Amex

“enabl[ing]” other credit card companies to raise the appellants’ fees

does not establish the “direct relation” between injury and antitrust

violation that the first-step rule requires. Bank of Am. Corp., 137 S. Ct.

at 1306.

Given the allegations in the SAC, we hold that the appellants’

injuries did not occur at the first step following Amex’s conduct. The

injuries, therefore, were not proximately caused by Amex; the alleged

antitrust violation was instead a “remote” cause of the injuries.

B

The second efficient-enforcer factor considers the “existence of

an identifiable class of persons whose self-interest would normally

motivate them to vindicate the public interest in antitrust

enforcement.” IQ Dental Supply, 924 F.3d at 65 (quoting Daniel, 428

F.3d at 443). For this factor, we ask whether “[d]enying the [plaintiff]

a remedy on the basis of its allegations” is “likely to leave a significant

antitrust violation undetected or unremedied.” AGC, 459 U.S. at 542;

see also Paycom, 467 F.3d at 294. “[T]he presence of plaintiffs who are

better situated to vindicate the antitrust laws,” though not

17

dispositive, “is relevant to this second factor.” IQ Dental Supply, 924

F.3d at 66. The existence of such plaintiffs “diminishes the justification

for allowing a more remote party … to perform the office of a private

attorney general.” AGC, 459 U.S. at 542.

This factor also counsels against antitrust standing here. In IQ

Dental Supply, we concluded that antitrust standing based on the

second factor was unlikely because “IQ [was] further removed from

the harm caused by the Defendants than the parties directly affected

by the boycott that have already sued the Defendants.” IQ Dental

Supply, 924 F.3d at 66. The same argument applies here. As noted, the

merchants who have a relationship with Amex were harmed at the

first step by Amex’s Anti-Steering Rules. And those merchants have

already sued Amex. Am. Express Anti-Steering, 433 F. Supp. 3d at 401-

02. We follow our precedent in holding that “the second efficient-

enforcer factor weighs against … antitrust standing” in this case. IQ

Dental Supply, 924 F.3d at 66.

C

The third efficient-enforcer factor concerns the extent to which

the claim is “highly speculative.” AGC, 459 U.S. at 542. “[H]ighly

speculative damages is a sign that a given plaintiff is an inefficient

engine of enforcement.” Gelboim, 823 F.3d at 779. Under this factor,

we ask whether there would be “a high degree of speculation in a

damages calculation.” IQ Dental Supply, 924 F.3d at 66-67. When an

injury is “derivative” rather than direct, the potential recovery is often

“highly speculative.” Id. at 67. We also consider whether the “alleged

effects on the [plaintiff] may have been produced by independent

factors.” AGC, 459 U.S. at 542.

18

Whether this factor weighs in favor of antitrust standing is a

close question. The SAC presents a compelling prima facie case of

foreseeable damages, given the allegation that Amex exercises market

power and the district court’s finding in the Government Action that

the “prohibitions on merchant steering” have “enabled … higher all-

in fees.” Am. Express Co., 88 F. Supp. 3d at 216. 8 Yet the fact that the

appellants have suffered an “indirect” injury, and the accompanying

uncertainty of how eliminating Amex’s Anti-Steering Rules would

affect its competitors’ merchant fees, suggest that a damages

calculation would rely on some speculation. See AGC, 459 U.S. at 542.

In any event, the third factor does not confer antitrust standing

on the appellants. The four efficient-enforcer factors “need not be

given equal weight,” and “the relative significance of each factor will

depend on the circumstances of the particular case.” IQ Dental Supply,

924 F.3d at 65. In particular, the Supreme Court has noted that the

“potential difficulty in ascertaining and apportioning damages is not

… an independent basis for denying standing where it is adequately

8 In making this finding, the district court in the Government Action

explained that from 1997 to 2009, “prohibitions on merchant steering”

enabled Visa and MasterCard to “increase their average all-in merchant

rates … by more than 20% … without fear of other networks undercutting

their prices in order to gain [market] share.” 88 F. Supp. 3d at 216. Discover

was “forced to abandon its low-price strategy as a result of” prohibitions

on merchant steering and “was able to raise its rates with virtual impunity,

relying on the restraining effect of anti-steering rules to ensure that it would

not be undercut by a competitor offering a lower price to merchants.” Id.

“These examples provide further support for the [district] court’s finding

that without affording merchants the ability to influence their customers’

credit and charge card decisions” through steering, “there is little, if any,

downward pressure on the price charged to merchants.” Id. Ohio did not

question this finding.

19

alleged that a defendant’s conduct has proximately injured an interest

of the plaintiff’s that the statute protects” because this factor is a

touchstone for “the proximate-cause requirement.” Lexmark Int’l, Inc.

v. Static Control Components, Inc., 572 U.S. 118, 135 (2014).

Even if the injury is not speculative here, it does not establish

proximate cause. The appellants’ injury may have been foreseeable,

predictable, and even calculable, but proximate cause—especially in

the economic harm context—requires more than foreseeability. See

McCready, 457 U.S. at 476-77. In light of the other efficient-enforcer

factors, the third factor does not confer antitrust standing.

D

The fourth efficient-enforcer factor stresses the importance of

“avoiding either the risk of duplicate recoveries on the one hand, or

the danger of complex apportionment of damages on the other.”

AGC, 459 U.S. at 543-44. This factor reflects an administrative concern:

“massive and complex damages litigation not only burdens the

courts, but also undermines the effectiveness of treble-damages

suits.” Id. at 545. The concern arises when “[t]he damages to which

[the plaintiff] lays claim” are “exactly the same damages [other

parties] could have claimed.” IQ Dental Supply, 924 F.3d at 67.

There is no risk of duplicate recoveries or complex

reapportionment of damages here. The damages that the Amex and

Non-Amex Classes seek do not overlap; each class alleges that the

respective card companies charged separately. This case does not

involve pass-on theories that would require a court to divide damages

from the same violation among multiple plaintiffs. See Ill. Brick Co.,

431 U.S. at 737-38; Hanover Shoe, Inc. v. United Shoe Mach. Corp., 392

U.S. 481, 493 (1968). Apportionment of damages here would neither

20

“burden[] the courts” nor “undermine[] the effectiveness of treble-

damages suits.” AGC, 459 U.S. at 545. 9

But the appellants’ success on this factor does not establish

antitrust standing. In AGC itself, the fourth factor was non-

dispositive. AGC, 459 U.S. at 545 n.52. Even though the Court

recognized that the “policy against duplicative recoveries may not

apply” to a harm the plaintiffs allegedly suffered, “the remote and

obviously speculative character of that harm [was] plainly sufficient

to place it beyond the reach of § 4.” Id. While the fourth factor

addresses a “strong interest … in keeping the scope of complex

antitrust trials within judicially manageable limits,” id. at 543, the

efficient-enforcer inquiry remains, fundamentally, one into proximate

cause, Lotes, 753 F.3d at 412; McCready, 457 U.S. at 476-77. Here, as in

AGC, that the line between the Amex plaintiffs’ and non-Amex

plaintiffs’ damages presents no additional difficulties does not pull

back the appellants’ injury from “beyond the reach of § 4.” 459 U.S. at

545 n.52. We therefore conclude that, given the allegations of the SAC,

the four efficient-enforcer factors do not establish antitrust standing. 10

9 The district court held that this fourth factor counseled against antitrust

standing, and in its discussion of the factor expressed concern over the

“obvious risk of disproportionate damages.” Am. Express Anti-Steering, 433

F. Supp. 3d at 412 (quoting In re London Silver Fixing, Ltd., Antitrust Litig.,

332 F. Supp. 3d 885, 906 (S.D.N.Y. 2018)). Yet the fourth efficient-enforcer

factor concerns not the size of the damages awarded but the difficulty

courts might face in dividing an award. We do not see such difficulty here.

10The appellants also seek injunctive relief under § 16 of the Clayton Act,

15 U.S.C. § 26. The appellants must demonstrate antitrust standing for that

requested relief. Eastman Kodak Co. v. Henry Bath LLC, 936 F.3d 86, 94 (2d

Cir. 2019). The Supreme Court has said that “the difference in the remedy

each section provides means that certain considerations relevant to a

21

In short, it is not the appellants’ status as umbrella plaintiffs or

otherwise that resolves the antitrust standing question but “the

relationship between the defendant’s alleged unlawful conduct and

the resulting harm to the plaintiff.” Am. Ad Mgmt., Inc. v. Gen. Tel. Co.

of Cal., 190 F.3d 1051, 1058 (9th Cir. 1999). We employ the efficient-

enforcer test to evaluate the relevant relationship. The key principle

underlying that test is proximate cause, and here the appellants fail to

show the required direct connection between the harm and the

alleged antitrust violation. The appellants are not efficient enforcers

of the antitrust laws and therefore lack antitrust standing. 11

II

Dismissal of the appellants’ federal antitrust claims does not

necessarily require the dismissal of their claims under the California

Unfair Competition Law (“UCL”) and California antitrust law,

known as the Cartwright Act. See Aryeh v. Canon Bus. Sols., Inc., 292

determination of standing under § 4 are not relevant under § 16.” Cargill,

Inc. v. Monfort of Colo., Inc., 479 U.S. 104, 111 n.6 (1986). In particular,

“standing under § 16 raises no threat of multiple lawsuits or duplicative

recoveries.” Id. Given that no damages are awarded under § 16, the third

factor’s inquiry into whether there is a “high degree of speculation in a

damages calculation” is inapplicable. IQ Dental Supply, 924 F.3d at 66.

Because the difference in remedies does not affect the proximate clause

analysis, we hold that the appellants lack antitrust standing for the request

for injunctive relief.

11This result does not mean that Amex could never be liable for allegedly

raising prices throughout the market. As the district court noted, the Amex

Class members can still litigate the Anti-Steering Rules through the

arbitration process. Am. Express Anti-Steering, 433 F. Supp. 3d at 411. In

addition, at least one circuit court has held that an antitrust defendant may

be held liable for umbrella effects on prices. See In re Processed Egg Prods.

Antitrust Litig., 881 F.3d 262, 276 (3d Cir. 2018).

22

P.3d 871, 877 (Cal. 2013) (“Interpretations of federal antitrust law are

at most instructive, not conclusive, when construing the Cartwright

Act.”). Still, we conclude that the appellants’ California law claims fail

for similar reasons as the federal claims.

“[W]e consider the language of the state intermediate appellate

courts to be helpful indicators of how the state’s highest court would

rule.” DiBella v. Hopkins, 403 F.3d 102, 112 (2d Cir. 2005). The

California district courts of appeals have discussed antitrust standing

under the Cartwright Act at length. In Kolling v. Dow Jones & Co., the

California court noted that “[t]he plaintiff in a Cartwright Act

proceeding must show that an antitrust violation was the proximate

cause of his injuries.” 187 Cal. Rptr. 797, 807 (Cal. Ct. App. 1982). In

the same opinion, that court described the “standing to sue”

requirement as preventing suits from parties only “incidentally

injured” by an antitrust violation. Id. More recently, a California court

observed that “[o]ne of the elements of standing to seek antitrust

damages … is a sufficient showing of injury with respect to,” among

other things, “the directness of the injury,” “the speculative measure

of the harm,” and “the risk of duplicative recovery.” Wholesale

Electricity Antitrust Cases I & II, 55 Cal. Rptr. 3d 253, 265 (Cal. Ct. App.

2007).

These decisions indicate that the California legislature, like

Congress, was “familiar with the common-law rule” of proximate

cause, and California courts will not assume that the legislature

intended “to displace it sub silentio.” Lexmark, 572 U.S. at 132.

23

Accordingly, the lack of proximate cause in this case means that the

appellants cannot state a claim under the Cartwright Act. 12

***

For these reasons, we AFFIRM the judgment of the district

court.

12The district court properly concluded that “dismissal of an underlying

antitrust claim mandates dismissal of the UCL claim as well.” Am. Express

Anti-Steering, 433 F. Supp. 3d at 416. “The UCL permits any person acting

for the interests of itself, its members or the general public to initiate an

action … against a person or business entity who has engaged in any

unlawful, unfair, or fraudulent business act or practice.” Quelimane Co. v.

Stewart Title Guar. Co., 960 P.2d 513, 521-22 (Cal. 1998) (internal quotation

marks and citations omitted). Because the UCL claim is predicated on

violations of the Sherman and Cartwright Acts, we affirm the dismissal of

that claim as well.

24