Supreme Court Allows Less Stringent Federal Rules to Be Superseded : States May Use Own Laws to Fight Price-Fixing

States won an important victory Tuesday in their efforts to use their own laws to combat price-fixing as the Supreme Court ruled that California may go beyond federal law in seeking damages from manufacturers that fix prices.

The immediate impact of the ruling is to give California as much as $20 million in damages from cement makers who were accused of conspiring to fix the price of road-building materials sold to the state.

But the more far-reaching result is to allow state attorneys general--often acting in response to complaints from consumers--to sue manufacturers that are out of reach of federal antitrust officials, who are bound by more limited federal price-fixing laws.

“Given the long history of state common-law and statutory remedies against monopolies and unfair business practices, it is plain that this is an area traditionally regulated by the states,” Justice Byron R. White wrote for a unanimous court.

A previous appeals court ruling that state efforts were preempted by the narrower federal guidelines was in error, he wrote.

Tuesday’s decision was hailed by California Atty. Gen. John Van De Kamp, who has championed the rigorous use of state price-fixing laws. “It’s my hope that this decision will be a strong warning to those who seek to inflate their profits through unlawful price-fixing schemes,” he said.

“Before this decision, taxpayers who paid conspiracy-inflated prices for cement for roads and buildings couldn’t recover a penny unless they happened to purchase directly from a conspirator.”

The settlement in the case against the cement manufacturers (California vs. ARC America Corp., 87-1862) has grown with interest during the appeals process, and officials estimated that California will get $15 million to $20 million. In 1981, the companies agreed to pay $32 million to the plaintiffs in the case--California, Alabama, Arizona and Minnesota--before the claim was rejected by the appeals court.

Officials in California and other states began expanding state efforts to combat price-fixing in recent years as President Ronald Reagan’s Administration and the courts began scaling back federal action in the antitrust field.

The Justice Department’s antitrust division during the Reagan years embraced a view of economics that stressed a free-market approach toward business, with some antitrust sanctions considered as excessive government regulation.

That approach underscored a ruling issued by the high court in 1977 that sharply limited the reach of some federal antitrust laws. In price-fixing cases, the justices ruled, purchasers of a product whose price had been rigged through a conspiracy could seek federal court damages only from the firm with which they had done business.

If they had bought the product from distributors rather than from the manufacturers directly, the plaintiffs could not sue the manufacturers. And if the distributors had not conspired in the price rigging, the buyers might be left with no recourse.

California, which filed price-fixing suits against manufacturers in 1976 with the three other states, had bought its cement from distributors. But it contended that it could still seek remedies from the makers under its own state laws because they were not under the same federal constraints.

Two years ago, the U.S. 9th Circuit Court of Appeals in California ruled otherwise. The court said to allow states to use broader laws would intrude on federal jurisdiction and frustrate Congress’ purpose in passing the federal statute.

Appealing to the Supreme Court, Van De Kamp said this view, if upheld, would largely strip states of their authority to attack price-fixing conspiracies by manufacturers.

The high court ruled Tuesday that California did have the legal right to use its own statutes.

In a second victory for the states, the high court also ruled unanimously Tuesday that states may prosecute employers who refuse to pay fired workers for their accrued vacation time.

Forty-seven states, including California, have laws requiring employers to pay discharged employees full wages, including pay for accrued vacation time.

Last year, however, the Massachusetts Supreme Judicial Court threw out such a state suit against a Boston bank president on grounds that the federal Employee Retirement Income Security Act of 1974 does not require payment for vacation time.

Joined by labor groups, the state lawyers appealed to the Supreme Court.

Justice John Paul Stevens, writing for the court, said the “states have traditionally regulated payment of wages, including vacation pay,” and nothing in the federal law prohibits them from continuing to do so.