Hanover Shoe bars the defense in federal direct purchaser actions, preventing defendants from arguing the purchaser recovered the overcharge from its customers. State repealer statutes frequently permit it.
Cost-plus contracts are a recognized exception.
Alternative Names:
Pass-Through Defense|Passing-On Defense
Why it Matters?
The federal bar means a direct purchaser recovers the full overcharge regardless of pass-through, which is the counterpart to Illinois Brick and prevents duplicative recovery in the federal system. In state indirect purchaser actions the defense is frequently available, creating the risk of duplicative liability across parallel proceedings. Coordinating settlement across both to obtain global peace addresses that exposure.
Frequently Confused with
Related terms
Frequently asked questions
Is the defense available federally?
What risk does the state availability create?
