                            In the
 United States Court of Appeals
              For the Seventh Circuit
                         ____________

No. 03-1905
UNITED STATES GYPSUM COMPANY,
                                            Plaintiff-Appellant,
                               v.

INDIANA GAS COMPANY, INCORPORATED, and
PROLIANCE ENERGY LLC,
                                Defendants-Appellees.
                   ____________
       Appeal from the United States District Court for the
       Southern District of Indiana, Indianapolis Division.
        No. IP 00-1675C-Y/K—Richard L. Young, Judge.
                         ____________
ARGUED NOVEMBER 4, 2003—DECIDED NOVEMBER 24, 2003
                   ____________


 Before EASTERBROOK, ROVNER, and EVANS, Circuit
Judges.
   EASTERBROOK, Circuit Judge. Indiana Gas Co. and
Citizens Gas & Coke, two utilities that supply natural gas
to customers in Indiana, formed a joint venture (called
ProLiance Energy) to manage the contracts by which they
purchase gas and transportation services from the inter-
state pipelines that pass through that state. United States
Gypsum (USG) purchases substantial quantities of gas for
use in manufacturing; it buys gas at the wellhead and deals
directly with the pipelines for transportation. In this
litigation under sections 1 and 2 of the Sherman Act, 15
U.S.C. §§ 1, 2, USG contends that ProLiance is an unlawful
2                                               No. 03-1905

combination that by contract controls a substantial fraction
of the transport capacity between the gas fields and Indi-
ana, and that it has used this market power to monopolize.
Even though USG buys transportation directly from the
pipelines, it alleges, the price the pipelines can charge for
their services depends on what ProLiance has done with its
portion of the capacity. According to USG, pipelines have
been able to charge more for their residual capacity because
of ProLiance’s existence (and practices) than the pipelines
would have been able to charge in its absence.
   Indiana Gas and Citizens Gas have many customers with
firm entitlements to gas. In order to assure delivery,
Indiana Gas and Citizens Gas purchase more pipeline
capacity than needed for daily deliveries; they hold the
excess as reserve for the benefit of the uninterruptible cus-
tomers during periods of peak demand, such as cold snaps
or a business’s high season. During times of average de-
mand, Indiana Gas and Citizens Gas sold their excess
transport entitlement on the spot market, where USG
bought it at attractive prices and used it to secure gas that
it stored for times when spot market prices were high. After
ProLiance came into existence, however, it ended (or at
least greatly curtailed) these spot-market sales, forcing
USG to pay more for firm capacity from the pipelines (firm
commitments always sell for more than interruptible or
spot purchases).
  There are several ways to characterize what happened.
ProLiance contends that, by managing purchases on behalf
of both Indiana Gas and Citizens Gas, it has achieved
efficiencies: when one utility’s demand peaks, the other’s
may be closer to normal, which means that less aggregate
reserve capacity is needed. This is the way in which an
insurer, by pooling many imperfectly correlated risks, cre-
ates a portfolio that is less risky than any insured standing
alone. Thus ProLiance needs less standby capacity for peak
periods and can provide more firm, uninterruptible commit-
ments per unit of pipeline capacity than either Indiana Gas
No. 03-1905                                                3

or Citizens Gas could do on its own. An increase in demand
from the utilities’ customer base then can be met without
an increase in price. The upshot, however, is that third
parties such as USG find fewer bargains in the spot market.
As USG sees matters, however, the higher spot-market
prices stem not from risk pooling but from ProLiance either
holding reserve capacity off the market (a reduction in
output that drives up prices) or bundling the release of
reserve transport capacity with gas (which USG describes
as a monopolistic tie-in sale).
   Because all we have to go on is USG’s complaint, it is too
soon to determine whose understanding of these events is
superior. The district judge concluded that it would never be
necessary to examine these issues and dismissed the
complaint, citing Fed. R. Civ. P. 12(b)(6), on three grounds:
first, USG has not suffered antitrust injury because it does
not buy from ProLiance; second, the suit is barred by the
four-year period of limitations in 15 U.S.C. §15b; third,
USG could not prove its claims in light of adverse findings
by the Indiana Utility Regulatory Commission in a proceed-
ing to which USG was a party. None of these is a good
ground on which to dismiss USG’s complaint—and the lat-
ter two are not permissible even in principle, because the
statute of limitations and issue preclusion are affirmative
defenses. See Fed. R. Civ. P. 8(c). Complaints need not
anticipate or attempt to defuse potential defenses. See
Gomez v. Toledo, 446 U.S. 635 (1980). A complaint states a
claim on which relief may be granted when it narrates an
intelligible grievance that, if proved, shows a legal enti-
tlement to relief. See Swierkiewicz v. Sorema N.A., 534 U.S.
506 (2002); Bennett v. Schmidt, 153 F.3d 516 (7th Cir.
1998). A litigant may plead itself out of court by alleging
(and thus admitting) the ingredients of a defense, see
Walker v. Thompson, 288 F.3d 1005 (7th Cir. 2002) (apply-
ing this principle to the period of limitations), but this
4                                                 No. 03-1905

complaint does not do so; the district judge thought, rather,
that the complaint had failed to overcome the defenses. As
complaints need not do this, the omissions do not justify
dismissal. What is more, all three grounds are unsound in
application as well as in principle.
  A private plaintiff must show antitrust injury—which is
to say, injury by reason of those things that make the prac-
tice unlawful, such as reduced output and higher prices.
The antitrust-injury doctrine was created to filter out
complaints by competitors and others who may be hurt by
productive efficiencies, higher output, and lower prices, all
of which the antitrust laws are designed to encourage. See,
e.g., Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S.
328 (1990); Cargill, Inc. v. Monfort of Colorado, Inc., 479
U.S. 104 (1986); Brunswick Corp. v. Pueblo Bowl-O-Mat,
Inc., 429 U.S. 477 (1977). A plaintiff who wants something,
such as less competition or higher prices, that would injure
consumers, does not suffer antitrust injury. In Midwest Gas
Services, Inc. v. Indiana Gas Co., 317 F.3d 703 (7th Cir.
2003), we held that the antitrust-injury doctrine prevents
a suit by one of ProLiance’s business rivals. USG, by
contrast, is a consumer of gas; it is in the class of persons
protected from reductions in output and higher prices. And
USG contends that it has been required to pay higher
prices. Its injury (if any) is antitrust injury. That at least
one of ProLiance’s rivals has sued, and that none of its
indirect purchasers (the customers of Indiana Gas and
Citizens Gas) has done so, may be informative, but it does
not prevent USG from attempting to show that ProLiance
has anticompetitive consequences.
  Portions of the district court’s opinion equate the anti-
trust-injury doctrine of Brunswick and its successors with
the direct-purchaser doctrine of Illinois Brick Co. v. Illinois,
431 U.S. 720 (1977), and Hanover Shoe, Inc. v. United Shoe
Machinery Corp., 392 U.S. 481 (1968). USG may suffer from
No. 03-1905                                                  5

higher prices but does not buy from defendants, which the
district judge thought dispositive. If USG were seeking
damages, and ProLiance’s direct or derivative customers
also wanted (or could seek) monetary relief, then defen-
dants would have a point. See Kansas v. UtiliCorp United
Inc., 497 U.S. 199 (1990) (reserving the possibility of suit by
an indirect customer if the direct customer is a participant
in the cartel); cf. Paper Systems Inc. v. Nippon Paper
Industries Co., 281 F.3d 629 (7th Cir. 2002). But the
direct-purchaser doctrine does not foreclose equitable relief,
nor does it apply when no purchaser could obtain damages,
for then there is no risk of double recovery (and no need to
calculate elasticities in order to apportion damages among
multiple tiers).
  A cartel cuts output, which elevates price throughout the
market; 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.
We noted and reserved in Loeb Industries, Inc. v. Sumitomo
Corp. of America, 306 F.3d 469 (7th Cir. 2002), a number of
potentially difficult issues about the design of relief when
the customer of a fringe firm sues the (supposed) cartel
members and the injury is derivative. See also Associated
General Contractors of California, Inc. v. California State
Council of Carpenters, 459 U.S. 519 (1983); Blue Shield of
Virginia v. McCready, 457 U.S. 465 (1982). Courts some-
times label this “antitrust standing,” despite the potential
for confusion with Article III standing (which requires only
injury in fact plus redressability.) We did not resolve these
issues in Loeb and need not do so here either. It is enough
to reiterate, as Loeb holds, that the buyers from fringe firms
suffer antitrust injury, that their complaints cannot be
dismissed at the outset under the Illinois Brick doctrine,
and that the potential to establish injury through elevation
of price in the affected market satisfies any distinct “anti-
6                                                No. 03-1905

trust standing” requirement. See also Metallgesellschaft AG
v. Sumitomo Corp. of America, 325 F.3d 836 (7th Cir. 2003).
  Now we turn to the statute of limitations. ProLiance was
formed in March 1996, and USG did not file this suit until
October 2000. The statute of limitations is four years—but,
as the district judge recognized, this time runs from the
most recent injury caused by the defendants’ activities
rather than from the cartel’s inception. See, e.g., Zenith
Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321
(1971); United States v. E.I. du Pont de Nemours & Co., 353
U.S. 586 (1957). Cf. Klehr v. A.O. Smith Corp., 521 U.S.
179, 188-91 (1997) (describing how this approach works).
The district court wrote that the complaint was deficient
because USG failed to “show some injurious overt act within
the limitations period”—but, as we have observed already,
complaints need not allege facts that tend to defeat affirma-
tive defenses. The right question is whether it is possible to
imagine proof of the critical facts consistent with the
allegations actually in the complaint. See Hishon v. King &
Spalding, 467 U.S. 69 (1984); Conley v. Gibson, 355 U.S. 41
(1957). Proof that ProLiance had committed an
anticompetitive act after October 1996 would not contradict
any of the complaint’s allegations. Obviously USG hopes to
show that ProLiance regularly keeps some capacity off the
market, ties gas and transport together, or performs other
acts that could be thought to violate the antitrust laws.
Otherwise what’s the point of USG’s suit?
  To the extent that defendants believe that even new
anticompetitive acts and fresh injury within the four years
before suit are insufficient, if the joint activity began
earlier, that position cannot be reconciled with du Pont,
which held that old activity (in du Pont, a stock acquisition
preceding the suit by 30 years) is not immunized, if the po-
tential for a reduction in output is created or realized more
recently as market conditions change. Cooperative ventures
No. 03-1905                                                   7

may begin innocently but acquire market power (or begin to
exercise it) afterward; if this occurs, a suit within four years
of any anticompetitive activity is timely. This is clear
enough if we apply the label “cartel” to what Indiana Gas
and Citizens Gas call a “joint venture.” Choice of terminol-
ogy does not shorten the time for suit. A merger may be
complete at closing, see Concord Boat Corp. v. Brunswick
Corp., 207 F.3d 1039, 1050-53 (8th Cir. 2000), but a joint
venture or cartel is a continuing cooperative activity that
may be discontinued, or amended, from time to time.
(According to the state agency, ProLiance’s basic agree-
ments had to be renegotiated in 2000. Opinion at 57.) The
parties’ decision to keep a joint venture in operation or
manage the operations in ways that may violate antitrust
rules is one that may be challenged when adverse effects
are felt.
   As for issue preclusion (collateral estoppel): USG’s
principal argument is that the state commission did not
have “jurisdiction” to resolve a federal antitrust claim, so as
a matter of federal law its findings must be disregarded.
That’s wrong, for two reasons. First, the preclusive effect of
a state judicial decision depends on state rather than
federal law. See 28 U.S.C. §1738. (A state agency acting in
a judicial capacity is a court for this purpose. See University
of Tennessee v. Elliott, 478 U.S 788, 799 (1986). USG does
not contest the district judge’s conclusion that the Indiana
Utility Regulatory Commission, whose decision was af-
firmed by the state’s highest court, United States Gypsum,
Inc. v. Indiana Gas Co., 735 N.E.2d 790 (Ind. 2000), was
acting in such a capacity.) State law controls with respect
to preclusion even when a federal court has exclusive
jurisdiction of a federal claim that may be affected by the
state’s decision. Marrese v. American Academy of Orthopae-
dic Surgeons, 470 U.S. 373 (1985). Second, USG confuses
issue preclusion with claim preclusion. An agency or court
8                                                No. 03-1905

that lacks authority to decide whether ProLiance has
violated the antitrust laws nonetheless may resolve a
disputed issue—such as whether ProLiance has market
power—that has significance beyond the particular adjudi-
cation in which the issue is addressed. Indiana gives
preclusive effect to issues actually and necessarily decided
in a contested adjudication. See McClanahan v. Remington
Freight Lines, Inc., 517 N.E.2d 390, 394 (Ind. 1988). All
doubts about the proper use of Rule 12(b)(6) to one side, the
right question to ask is what, in particular, the state agency
actually decided.
  When Indiana Gas and Citizens Gas formed ProLiance,
USG and several other customers asked the Indiana Utility
Regulatory Commission to block the plan. They offered two
lines of argument: first, that ProLiance would itself be a
utility that could not come into existence without the
Commission’s permission; second, that Indiana Gas and
Citizens Gas (which are utilities subject to the Commis-
sion’s jurisdiction) did not satisfy the “public interest”
standard when forming ProLiance. The Commission re-
jected the first on grounds that do not matter to this anti-
trust litigation. It rejected the second after finding that
ProLiance serves the public interest by enabling Indiana
Gas and Citizens Gas to make better use of their joint
reserve capacity. Petition by Ratepayers of Indiana Gas Co.,
No. 40437 (Sept. 12, 1997), affirmed under the name United
States Gypsum, Inc. v. Indiana Gas Co., 735 N.E.2d 790
(Ind. 2000).
   One month after the state Supreme Court’s decision, USG
filed this antitrust action, only to be met by the argument
that the Commission’s decision knocks out essential
elements of the federal claim. The district court wrote that
USG loses because “the issue sought to be precluded—the
improper creation and operation of ProLiance—is the same
as that involved in [the] prior action that was before the”
No. 03-1905                                                 9

Commission. But “the improper creation and operation of
ProLiance” is not an “issue”; that is far too lofty a level of
generality. Putting the matter this way suggests that the
district court has equated issue preclusion with claim
preclusion. Indiana did not require USG to present its fed-
eral antitrust claims to the Commission, so the rules of
merger and bar do not block this litigation. Unless the
agency decided some concrete issue that also bears on the
antitrust claim, USG does not encounter a problem with
preclusion.
  A finding that “X is in the public interest” is compatible
with subsequent antitrust litigation. See California v. FPC,
369 U.S. 482, 489 (1962); United States v. Radio Corp. of
America, 358 U.S. 334, 351-52 (1959). It might mean simply
that Indiana has decided that cartels serve the public
interest, a conclusion that under the Supremacy Clause
must yield to contrary federal policy. (Antitrust law makes
an exception for state policies that compel monopolistic
organization of regulated industries, see Cantor v. Detroit
Edison Co., 428 U.S. 579 (1976); Parker v. Brown, 317 U.S.
341 (1943), but no one argues that Indiana required the
utilities to form ProLiance.)
   Defendants do not rely on the district court’s understand-
ing. Instead they contend that the agency made a favorable,
concrete finding: that ProLiance lacks market power. If that
is so, then USG’s antitrust claim fails at the threshold. See,
e.g., Jefferson Parish Hospital District No. 2 v. Hyde, 466
U.S. 2 (1984); Elliott v. United Center, 126 F.3d 1003 (7th
Cir. 1997); Digital Equipment Corp. v. Uniq Digital Tech-
nologies, Inc., 73 F.3d 756 (7th Cir. 1996); Chicago Profes-
sional Sports Limited Partnership v. National Basketball
Ass’n, 95 F.3d 593 (7th Cir. 1996); Polk Bros., Inc. v. Forest
City Enterprises, Inc., 776 F.2d 185 (7th Cir. 1985). We have
searched the agency’s decision in vain for such a finding,
however. Although the agency mentioned market power as
10                                               No. 03-1905

a factor worth consideration, it did not find that ProLiance
has none. What it did say is that (a) the pipelines’ transpor-
tation capacity to Indiana is unaffected by ProLiance, so
that no matter how much of the capacity has been commit-
ted to ProLiance by contract, total deliverable supplies
cannot fall; and (b) ProLiance had to date acted to make
better use of the existing capacity by pooling amounts held
in reserve.
   “To date” is a vital qualifier. The Commission issued its
opinion in September 1997. More than six years have
passed since then. What is ProLiance doing today? It does
not take a leap of fancy to envisage a joint venture behaving
itself long enough to win regulatory approbation, and only
then applying the squeeze in the market. The agency found
that in 1997 ProLiance was beneficial to consumers and
that a “thriving robust . . . secondary market” (opinion at
40) protected third parties such as USG. It wrote: “[m]ost
important to our decision is witness Feingold’s uncontra-
dicted evidence that, post-ProLiance, the market place
continues to function with no ill effects.” Id. at 41. “[T]he
affected markets are as robust after the formation of
ProLiance as they were prior to its formation.” Id. at 55.
That was 1997. What of 2003? The agency recognized that
its record had been compiled quickly and reflected only the
initial months of ProLiance’s operations. “There simply is
little experience with the actual operation of the alli-
ance. . . . [E]xperience under the current agreements may
indicate that their actual operation does not comport with
the public interest even though we find that they do so
now.” Id. at 57. Reviewing this decision, the Supreme Court
of Indiana made a similar point, observing that, if circum-
stances change, the agency may revisit the subject. 735
N.E.2d at 804. These reservations foreclose any argument
that Indiana would deem the agency’s decision preclusive
with respect to the economic effects of ProLiance in the
period after September 1997. If the findings made in 1997
No. 03-1905                                               11

would not block Indiana itself from revisiting the subject in
2003—and they don’t—then under §1738 they do not block
adjudication in federal court either. It may be that a fresh
look will lead to the same conclusions reached six years ago,
but nothing in the agency’s decision prevents a federal court
from taking that fresh look in antitrust litigation.
                                  VACATED    AND   REMANDED

A true Copy:
      Teste:

                        ________________________________
                        Clerk of the United States Court of
                          Appeals for the Seventh Circuit




                   USCA-02-C-0072—11-24-03
