Plaintiffs tax-exempt union-backed trust funds whose purpose was to provide health care coverage for union members. Plaintiffs’ primary contention against Philip Morris was that Philip Morris had been shifting the burden of medical expenses to plaintiffs since approximately 1953, that Philip Morris had planned and done so intentionally, and that plaintiffs’ expenditures due to smoking and smoking-related illnesses were exorbitant. Plaintiffs alleged numerous claims against defendant, including negligence, unjust enrichment, RICO (Racketeer Influenced Corrupt Organizations Act), and antitrust violations.

With regard to antitrust issues, plaintiff’s contended that defendant had conspired with other manufacturers to not make a safer cigarette, in terms of either direct harm resulting from smoking or less a less addictive product. Plaintiffs also asserted that defendants conspired to conceal information about the risks of smoking.

The Court first analyzed whether plaintiffs had alleged a sufficient antitrust injury. The two step inquiry to determine such an injury is whether there is a physical and economic nexus between the plaintiff and the alleged antitrust violation and whether such an injury is of the type that Congress, when passing the antitrust laws, intended to insulate parties from injury and provide a remedy to compensate for such an injury. Other factors for analysis include the type and measure of damages sought, and whether another party was better situated to bring such a claim.

On the first prong, the Court determined that plaintiffs had sufficiently alleged an injury. Since the antitrust laws had been intended to help rather than hinder competition, and development of better products is one of the many ways that competition improves, if the defendant had in fact stifled such development through non-competitive standard setting conduct, then there is a sufficient antitrust injury. The Court also examined the types of damages that may ensue, noting that the beneficiaries would not be able to recover. Instead, the damages asserted would be for business or property damages; in this fashion, the Court rejected the defendant’s arguments that the damages would go to personal injuries. The Court was not convinced, noting that the plaintiffs were concerned with their economic loss to their business rather than the personal injury aspect. The Court also held that the trust fund plaintiffs were better situated to bring an antitrust claim against the defendants than the individual union members.

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