Northern Arizona Gas Service, Inc. v. Petrolane Transport, Inc
In Northern Arizona Gas Service, Inc. v. Petrolane Transport, Inc., 145 Ariz. 467, 702 P.2d 696 (App. 1984), the trial court granted summary judgment for the plaintiff on its breach of contract claim, but the defendant argued that the plaintiff passed any overcharge on to its customers and thus suffered no damage.
In discussing the "pass-through" defense, the court first noted that the defense had only been applied in the antitrust context and therefore determined that the defendant's argument was inapposite because the controversy centered on a breach of contract, not a violation of the regulatory scheme. Id. at 475, 702 P.2d at 704.
Notwithstanding, the Northern Arizona Gas Service court went on to state that, even if the defendant were properly relying on antitrust cases, its circumstances did not fall within the limited exception that allowed the pass-through defense. Id.
The court agreed with the reasoning of Hanover Shoe, Inc. v. United Shoe Machinery Corp that the complexity of proving the amount of overcharges passed on to consumers and separating them from the damage to the direct purchaser operated in favor of rejecting the pass-through defense. Id.
Finally, the court noted that if the defendant were allowed to assert the pass-through defense, it would be able to retain a portion of its overcharges because the plaintiff's customers, who absorbed at least some of the damages, were not in privity with the defendant and thus could not sue it on the contract. Id. at 476, 702 P.2d at 705.