Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_06-cv-00247/USCOURTS-cand-3_06-cv-00247-10/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 15:1 Antitrust Litigation

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States District C

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For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

JENSEN ENTERPRISES INC.,

Plaintiff,

 v.

OLDCASTLE PRECAST, INC., et al.,

Defendants.

 /

No. C 06-247 SI

ORDER GRANTING IN PART AND

DENYING IN PART PLAINTIFF’S

MOTION FOR LEAVE TO FILE

FOURTH AMENDED COMPLAINT

Plaintiff has filed a motion for leave to file a fourth amended complaint. Plaintiff seeks to add

a single claim under Section 3 of the Clayton Act against defendants Oldcastle Precast Inc. (“Oldcastle”)

and SBC Services Inc. (“SBC”). Oldcastle does not oppose the motion. Both plaintiff and SBC, which

does oppose the motion, state that oral argument is not necessary. Accordingly, pursuant to Civil Local

Rule 7-1(b), the Court VACATES the February 9, 2007 hearing. For the reasons set forth below, the

Court GRANTS the motion as to Oldcastle and DENIES the motion as to SBC.

As background, plaintiff generally alleges that defendants have colluded so that property

developers who wish to connect properties to AT&T’s wireline network in California or Nevada must

use Oldcastle’s pre-cast concrete telephone utility vaults when making the connection. See generally

Third Amended Complaint ¶¶ 20-22, 27. Plaintiff alleges that defendants have excluded other telephone

vault sellers (such as plaintiff) from the market, forcing property developers to pay unreasonably high

prices to Oldcastle when purchasing the vaults. Id. Plaintiff further alleges that defendants force

developers to accept low “reimbursement prices” from the AT&T defendants when making compulsory

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 The AT&T defendants include SBC, Pacific Bell Telephone Company, and Nevada Bell

Telephone Company. The complaint alleges that after a property developer has purchased a telephone

vault and installed it in order to connect a property to the AT&T infrastructure, the developer must resell the vault to the local AT&T affiliate in order to activate telephone service. 

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re-sales of the vaults to the AT&T defendants.1 Id. ¶ 29.

In November 2006, Oldcastle produced the Oldcastle-SBC contract to plaintiff. According to

plaintiff, this contract establishes Oldcastle as the sole authorized seller of telephone vaults to property

developers and contractors for installation in the AT&T defendants’ wireline network in California and

Nevada. Plaintiff seeks to add a single cause of action alleging that the Oldcastle-SBC contract and

SBC’s “Oldcastle-only” policy violate Section 3 of the Clayton Act. Section 3 provides in relevant part:

It shall be unlawful for any person . . . to lease or make a sale or contract for sale of

goods . . . or other commodities . . . for use, consumption, or resale within the United

States . . . on the condition, agreement, or understanding that the lessee or purchaser

thereof shall not use or deal in the goods . . . or other commodities of a competitor or

competitor of the lessor or seller, where the effect of such lease, sale, or contract for sale

or such condition, agreement, or understanding may be to substantially lessen

competition or tend to create a monopoly in any line of commerce.

15 U.S.C. § 14. Plaintiff’s amended complaint alleges, inter alia, that “the Contract and the Oldcastleonly policy, as implemented, have constituted an exclusive supplier contract/arrangement that has

substantially lessened competition in the affected line of commerce.” Proposed Fourth Amended

Complaint ¶ 136. Plaintiff did not submit a copy of the contract to the Court, and does not explain how,

specifically, the contract gives rise to a Section 3 claim. 

Relying on McGuire v. Columbia Broadcasting System, 399 F.2d 902 (9th Cir. 1968), SBC

opposes the amendment as futile, contending that a Section 3 claim does not lie against a buyer in an

alleged exclusive dealing arrangement. In McGuire, the Ninth Circuit held that Section 3 precluded such

a claim. “The language of the statute defines liability in terms of a person who makes a sale or contracts

for sale and nowhere provides for liability of the buyer.” Id. at 906; see also Genetic Systems Corp. v.

Abbott Laboratories, 691 F. Supp. 407, 414-15 (D.D.C. 1988) (agreeing with McGuire and noting that

few courts have addressed this issue). 

Plaintiff contends that McGuire is inapposite because here the buyers are the property developers

and contractors. However, plaintiff ignores the fact that SBC is also a buyer, and that nowhere in the

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transaction is SBC a seller. Plaintiff does not cite any authority for the proposition that SBC can be held

liable under Section 3 for its role as a party to the Oldcastle-SBC contract. The Court finds that in the

absence of any authority to the contrary, McGuire bars plaintiff’s proposed claim against SBC.

For the foregoing reasons, the Court DENIES plaintiff’s motion to amend the complaint as to

SBC, and GRANTS plaintiff’s unopposed motion to amend the complaint as to Oldcastle. (Docket Nos.

99 and 104). No later than February 12, 2007, plaintiff shall file a fourth amended complaint consistent

with this order. Oldcastle’s answer on file is hereby deemed to be its answer to plaintiff’s fourth

amended complaint, and Oldcastle is deemed to deny the allegations in the Twelfth Cause of Action

(paragraphs 134-146).

IT IS SO ORDERED.

Dated: February 5, 2007 

SUSAN ILLSTON

United States District Judge

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