`
`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
`
`
`CHIN, BIANCO, and MENASHI, Circuit Judges.
`
`Before:
`
`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.
`
`2
`
`

`

`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.
`
`factors structure a
`We disagree. The efficient-enforcer
`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.
`
`BACKGROUND1
`
`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
`
`1 For 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
`
`
`2 Benjamin 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).
`3 See 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
`
`
`4 See 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
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`

`

`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
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`

`

`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