Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-94-01148/USCOURTS-ca10-94-01148-0/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 

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PUBLISH 

FILED UNITED STATES COURT OF APPEAI.f}mted States Court or Appca!l 

Tenth Circuit 

TENTH CIRCUIT 

MULTISTATE LEGAL STUDIES, INC., a 

Delaware corporation, 

v. 

Plaintiff/Counter-Defendant/ 

Appellant, 

HARCOURT BRACE JOVANOVICH LEGAL AND 

PROFESSIONAL PUBLICATIONS, INC.; 

COLORADO PROFESSIONAL EDUCATION, INC., 

doing business as Colorado Bar 

Refresher, Inc., 

Defendants/Counter-Claimants/ 

Appellees. 

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AUG 2 9 1995·· 

PATRICK FISHER 

Clerk 

No. 94-1148 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF COLORADO 

(D.C. NO. 92-Z-2330) 

James M. Harris of Sidley & Austin, Los Angeles, California 

(Robert Fabrikant of Sidley & Austin, Los Angeles, California; 

Julia E. Sullivan of Sidley & Austin, Washington, D.C.; and 

Richard A. Feinstein of McKenna & Cuneo, Washington, D.C., with 

him on the briefs), for Appellant. 

Tucker K. Trautman of Ireland, Stapleton, Pryor & Pascoe, Denver, 

Colorado (Hardin Holmes of Ireland, Stapleton, Pryor & Pascoe, 

Denver, Colorado; Stephen M. Axinn and John D. Harkrider of 

Skadden, Arps, Slate, Meagher & Floro, New York, New York; and 

Edward P. Timmins of Otten, Johnson, Robinson, Neff & Ragonetti, 

Denver, Colorado, with him on the briefs), for Appellees. 

Appellate Case: 94-1148 Document: 01019279644 Date Filed: 08/29/1995 Page: 1 
Before ANDERSON and McWILLIAMS, Circuit Judges, and BROWN,* 

District Judge. 

ANDERSON, Circuit Judge. 

I. INTRODUCTION 

The plaintiff in this antitrust action is Multistate Legal 

Studies, Inc. ("PMBR"), a commercial provider of bar examination 

preparation to would-be lawyers in Colorado and elsewhere. PMBR 

claims that anticompetitive actions by two other providers of bar 

review courses, defendants Harcourt Brace Jovanovich Legal and 

Professional Publications, Inc. ("HBJL") and its Colorado 

licensee, Colorado Professional Education, Inc. d/b/a/ Colorado 

Bar Refresher, Inc. ("CBR"), were the reason PMBR's Colorado 

market share dropped from 84 percent in 1991 to 23 percent in 

1993. 

PMBR accuses HBJL and CBR of the following antitrust law 

violations: engaging in an illegal tying arrangement and 

conspiring to fix predatory prices, in violation of section 1 of 

the Sherman Act; attempting and conspiring to monopolize the 

supplemental bar workshop market and monopolizing and conspiring 

to monopolize the full-service bar review course market, in 

violation of section 2 of the Sherman Act. PMBR appeals the 

* The Honorable Wesley E. Brown, Senior District Judge, United 

States District Court for the District of Kansas, sitting by 

designation. 

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district court's grant of summary judgment against it on all 

claims.l 

We hold that PMBR has shown a genuine issue of material fact 

with respect to the Sherman Act section 1 tying and predatory 

pricing claims, and the Sherman Act section 2 claims of attempt 

and conspiracy to monopolize the supplemental course market, but 

not with respect to the claims of monopolization of and conspiracy 

to monopolize the full-service course market. 

PMBR also appeals the district court's order overruling 

PMBR's objections to a magistrate judge's order concerning 

confidential record information. Because we are remanding the 

case for trial of other issues, the court's order on this issue 

becomes interlocutory, and we decline to review it at this time. 

II. BACKGROUND 

A. BAR EXAM PREPARATION 

The Colorado bar exam consists of four components: the 

Multistate Bar Exam ("MBE"), the Multistate Professional 

Responsibility Exam ("MPRE"), essay questions, and a law practice 

simulation problem known as a "performance test." 

Two types of bar review courses are relevant to this 

litigation: "full-service" courses, designed to prepare students 

for all components of a jurisdiction's bar examination, and 

1 The complaint also contained a tying claim under section 3 of 

the Clayton Act, which was dismissed as well; because PMBR does 

not pursue it in its opening brief, we deem it waived. State Farm 

Fire & Casualty Co. v. Mhoon, 31 F.3d 979, 984 n.7 (lOth Cir. 

1994) (citing Headrick v. Rockwell Int'l Corp., 24 F.3d 1272, 

1277-78 (lOth Cir. 1994)). 

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11 supplemental multistate workshops, 11 which prepare students for 

only the MBE portion of a jurisdiction's bar exam. 

At the heart of this case is the 1992 decision by HBJL and 

CBR, who previously had offered their full-service course and 

their supplemental MBE course separately, to offer the fullservice course only in a package with the supplemental workshop. 

HBJL is the country's largest provider of full-service bar review 

courses. Its exclusive Colorado licensee, CBR, is entitled to use 

HBJL's 11 BAR/BRI 11 course trade name, course materials and national 

lecturers. HBJL and CBR have stipulated for summary judgment 

purposes that they exercise monopoly power over the Colorado fullservice course market; PMBR's evidence puts their market share at 

more than 80 percent. See Plaintiff-Appellant's App. at 191 

(Summ. of Attach. to Pl.'s Mem. in Opp'n to Defs.' Mot. Summ. J. 

[hereinafter 11 Summary11 ]). Their only full-service competitor in 

Colorado is a company called SMH Bar Review. 

The evidence indicates both sides have viewed PMBR as a 

potential competitor in the Colorado full-service course market. 

It invested three years and $1 million in an effort to enter the 

California full-service market, but ultimately abandoned that 

effort. In conjunction with a company called BRG, PMBR offers a 

full-service course in Georgia, Alabama, and Tennessee, and has 

expressed its plans to expand throughout the Southeast. PMBR 

claims that its plan to expand its full-service course from 

California to other states, including Colorado, has been stymied 

by the losses caused by the Defendants' alleged predatory acts. 

Id. at 360-61 (Feinberg Aff. ,r 30). 

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PMBR is the largest provider of supplemental MBE workshops 

nationally, and in Colorado it currently offers only supplemental 

MBE workshops. PMBR controlled 84 percent of the Colorado 

supplemental MBE market in 1991 but claims to have dropped to 23 

percent by 1993. As discussed infra, HBJL and CBR contest these 

figures, but we accept them as true for summary judgment purposes. 

See Eastman Kodak Co. v. Image Technical Servs .. Inc., 504 U.S. 

451, 456 (1992). 

In addition to the full-service BAR/BRI course, HBJL and CBR 

also offer a supplemental MBE workshop that competes with PMBR's 

workshop. The Defendants' course was previously called the HBJ 

Multistate Workshop; now it is called "Gilbert." In 1991, the 

Defendants had 11 percent of the Colorado workshop market, but by 

1993 their share had risen to 76 percent. Other actual or 

potential competitors in that market include a company called 

APTS, with 1 percent of the market in 1993; Reed Law Group, which 

planned a 1993 workshop but cancelled it; and SMH Bar Review, 

which historically has bundled its MBE training into its fullservice course but also offered a separate workshop in 1991. 

B. ANTICOMPETITIVE ACTS 

PMBR claims that HBJL and CBR engaged in various 

anticompetitive acts directly targeted at PMBR in the supplemental 

MBE market. PMBR also claims that HBJL and CBR illegally acquired 

their monopoly power in the full-service market through a secret 

market allocation agreement, and their monopoly power made it 

possible for their acts in the MBE workshop market to harm PMBR. 

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1. Acts Allegedly Directed at PMBR 

PMBR claims that starting in 1992, HBJL and CBR began 

bundling together their supplemental MBE workshop, Gilbert, with 

their full-service BAR/BRI course and pricing the bundled Gilbert 

workshop below cost. PMBR also presents evidence of a substantial 

increase nationwide in the number of scheduling conflicts between 

the BAR/BRI course and the PMBR workshop starting in 1991. PMBR 

identifies three specific conflicts in Colorado, in the summer 

1991, winter 1991, and summer 1992 courses. And PMBR complains 

that HBJL and CBR advertised falsely that the BAR/BRI course would 

include the Gilbert workshop "for free" when actually, in 1993, 

Defendants raised the BAR/BRI course price by $50. 

PMBR contends that these acts had a twofold purpose: to 

achieve a monopoly in the supplemental MBE workshop market, and 

thereby to so weaken PMBR that it would be forced to abandon its 

efforts as a full-service competitor. PMBR alleges that the 

Defendants adopted this strategy after a prior attempt to avoid 

competition had failed. PMBR's president, Robert Feinberg, stated 

that in 1989, HBJL's chief executive officer, Richard Conviser, 

proposed an illegal market allocation agreement whereby HBJL would 

abandon the supplemental MBE workshop market nationwide if PMBR 

would refrain from pursuing future entry into the full-service 

market outside California. See Plaintiff-Appellant's App. at 

193-94 (Summary) ; id. at 359 (Feinberg Aff. ,! 23) . Mr. Feinberg 

said that when he refused, Mr. Conviser threatened to make him 

"sorry," and the bundling, predatory pricing, increase in 

scheduling conflicts, and false advertising then ensued. 

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2. Defendants' Acquisition of Monopoly Power 

PMBR also argues that when HBJL and CBR, or their 

predecessors, signed their first licensing agreement, they 

secretly entered into an illegal agreement dividing up the 

Colorado, Wyoming, and other markets between them, and they have 

secretly renewed their noncompetition pact ever since. The 

companies were competitors in the Colorado full-service market 

before signing their first license agreement in 1974. Since then, 

although their original written agreement and subsequent written 

extensions have not prohibited competition, the two companies have 

not competed against each other. HBJL and CBR deny any secret 

agreement and say it simply would make no sense to compete and 

undermine the BAR/BRI trademark. The companies' latest written 

agreement, signed in 1989, was to expire in 1991 but remains in 

effect by oral extension. 

To support its allegation that a secret agreement existed, 

PMBR offers evidence that HBJL officials previously proposed 

market allocation agreements to two other competitors, id. at 

195-96 (Summary), as well as to PMBR itself, and that in one state 

HBJL entered an explicit market allocation agreement that was 

declared illegal per se by the Supreme Court. See Palmer v. BRG 

of Georgia, Inc., 498 U.S. 46, 49-50 (1990) (per curiam). PMBR 

also points to evidence that CBR's founder, Jerry Kopel, once 

threatened to offer competing bar review courses outside Colorado 

if HBJL did not give him more favorable license terms, but he 

ultimately did not carry out his threat. 

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III. DISCUSSION 

We review the grant of summary judgment de novo, applying the 

same legal standard used by the district court under Fed. R. Civ. 

P. 56(c). Applied Genetics Int'l. Inc. v. First Affiliated Sec., 

Inc., 912 F.2d 1238, 1241 (lOth Cir. 1990). Because PMBR is the 

nonmoving party, its evidence is to be believed; all justifiable 

inferences are to be drawn in its favor; its nonconclusory version 

of any disputed issue of fact is assumed to be correct. See 

Kodak, 504 u.s. at 456. 

A. ANTITRUST CLAIMS 

PMBR claims violations of both section 1 and section 2 of the 

Sherman Act. Section 1 of the Act focuses on the anticompetitive 

behavior of joint actors, prohibiting "[e]very contract, 

combination or conspiracy, in restraint of trade or 

commerce." 15 U.S.C. § 1. Section 2 applies to unilateral as 

well as joint action, making it illegal for a person to 

"monopolize, or attempt to monopolize, or combine or conspire with 

any other person or persons, to monopolize any part of ... trade 

or commerce." 15 U.S.C. § 2. 

1. Section 1 Tying Arrangement Claim 

PMBR claims that HBJL and CBR created an unlawful tying 

arrangement in violation of Sherman Act section 1, by bundling the 

Gilbert workshop together with the BAR/BRI course and requiring 

customers to purchase Gilbert if they wanted BAR/BRI. The 

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Defendants reply that all they did was to improve the curriculum 

of their full-service BAR/BRI course, a procompetitive act. 

Since Colorado began requiring the MBE as part of its bar 

exam, the Defendants' full-service BAR/BRI course has included 

some level of MBE preparation. Since the 1970s, BAR/BRI's MBE 

component has included an in-class practice MBE exam with written 

answers that could be reviewed at home. In 1989, the label 

"HarBrace" was attached to this test and associated lectures and 

practice drills. The separately sold MBE workshop, now known as 

Gilbert, has consisted of another exam with written answers, plus 

two days of in-class answer review. 

Starting in the 1980s, PMBR and the Defendants' full-service 

competitor, SMH, began pointing to the Defendants' dual course 

offerings in their advertising and saying that by selling a 

separate MBE workshop, the Defendants were admitting that BAR/ 

BRI's internal MBE component was inadequate. At the same time 

that the ads denigrating the full-service course were appearing, 

enrollment in Gilbert (or the Defendants' supplemental MBE 

workshop under a previous name) was dropping precipitously, from 

78 people in the winter 1986 course and 238 in the summer 1986 

course to a single student in the winter of 1992. 

The Defendants added one day of in-class review of the 

practice MBE exam to their BAR/BRI course in their winter 1992 

session, then added a second day of review in the summer 1992 

course, so that the full-service course contained the same threeday workshop format as the separate Gilbert course. They then 

advertised that students signing up for BAR/BRI would receive 

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Gilbert "for free" or "at no extra charge."2 The first time they 

offered the package, in summer 1992, they did not raise the $795 

BAR/BRI course tuition. The next winter, however, they raised it 

by $50, partly to cover some of the Gilbert costs. Customers 

could still buy Gilbert separately for $325, but they could not 

get any discount from the package price if they wanted BAR/BRI 

without Gilbert. This change was made in Colorado and in some, 

but not all, other states where HBJL operated. 

PMBR offers evidence that the bundling of Gilbert was 

intended as a temporary move only. In a September 11, 1992, 

letter written by CBR's president, Stephen P. Davis, to an HBJL 

official, Mike Connors, Mr. Davis referred to a future time when 

the Gilbert course would again be offered only for added tuition, 

as it was before the summer of 1992. Plaintiff-Appellant's App. 

at 199 (Summary); id. at 346 (Baseman Aff. Ex. 6). PMBR also 

offers evidence that the administration of the BAR/BRI course and 

the administration of the Gilbert course have never been combined; 

the courses have separate national administrators, campus 

representatives, registration forms and addresses, suggesting that 

administrative streamlining was not the reason for the bundling. 

A tying arrangement is an agreement by a party to sell one 

product--the "tying product"--only on condition that the buyer 

also purchase a second product--the "tied product"--or at least 

agree not to buy that product from another supplier. Kodak, 504 

U.S. at 461-62 (citing Northern Pac. Ry. Co. v. United States, 356 

2 The practice exam within the BAR/BRI course and the practice 

exam in the separate Gilbert workshop had previously covered the 

same ground but with different exam questions. 

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U.S. 1, 5-6 (1958)). A tie-in constitutes a per se section 1 

violation if the seller has appreciable economic power in the 

tying product market and if the arrangement affects a substantial 

volume of commerce in the tied product market. Id. at 462. 

The elements, then, of a per se violation, are (1) two 

separate products, (2) a tie--or conditioning of the sale of one 

product on the purchase of another, (3) sufficient economic power 

in the tying product market, and (4) a substantial volume of 

commerce affected in the tied product market. Here, the parties 

stipulate to the third requirement, that HBJL and CBR have 

monopoly power in the full-service course market, and the 

Defendants have not raised the issue of the fourth requirement, 

the volume of commerce affected. We examine, therefore, only the 

two-product and conditioning requirements. 

a. The Two-Product Requirement 

HBJL and CBR have stipulated that full-service courses and 

supplemental MBE workshops are in separate product markets for 

antitrust law purposes. They do not concede, however, that the 

existence of separate markets means separate products were 

involved here. They argue that their actions involved nothing 

more than the improvement of a single product--their full-service 

course. 

PMBR argues on appeal that the district court failed to apply 

the proper test to determine whether two products exist. We 

agree. The court focused on PMBR's stipulation that the purpose 

of a full-service course includes preparing bar applicants for the 

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MBE as well as for the other parts of the bar exam. From this, 

the court appears to have concluded that any effort to improve the 

full-service course by adding elements to it could not possibly 

constitute the bundling of a second product, at least where those 

added elements related to the MBE. In this the court erred.3 

The Supreme Court has made clear that the test for determining whether two components are separate products turns not on 

their function, but on the nature of any consumer demand for 

them.4 For two items at issue to be considered distinct products, 

"there must be sufficient consumer demand so that it is efficient 

for a firm to provide [one] separate from [the other]." Kodak, 

504 U.S. 462; Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 

2, 21-22 (1984). See also Service & Training, Inc. v. Data Gen. 

Corp., 963 F.2d 680, 684-85 (4th Cir. 1992) (district court erred 

in reasoning that since customers' only legitimate purpose for 

using defendant's diagnostic software was to repair computers, 

defendant was providing only a single integrated product of 

computer servicing, rather than a package of service and 

diagnostic software) . 

The Defendants argue that a different analysis is required in 

this case because it involves "overlap markets." They define 

"overlap markets" as a multicomponent package being sold in one 

3 The district court also erred by relying, for its analysis of 

this section 1 issue, on Telex Corp. v. IBM Corp., 510 F.2d 894 

(lOth Cir.), cert. dismissed, 423 U.S. 802 (1975), a section 2 

monopolization case. 

4 Product improvements may be the cause and/or effect of 

changes in consumer demand, but the nature of that demand is what 

counts. 

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market and one of those components being sold in a second market, 

and they contend that in such situations, courts have universally 

held that the package was a single product. We disagree that 

courts universally have so held. See. e.g., Parts & Elec. Motors. 

Inc. v. Sterling Elec., Inc., 826 F.2d 712, 720 (7th Cir. 1987); 

Mozart Co. v. Mercedes-Benz of N. Am .. Inc., 593 F. Supp. 1506, 

1515 (N.D. Cal. 1984), aff'd, 833 F.2d 1342 (9th Cir. 1987), cert. 

denied, 488 U.S. 870 (1988); Metrix Warehouse. Inc. v. DaimlerBenz Aktiengesellschaft, No. N-79-2066, 1982 WL 1870, at *6-9 (D. 

Md. June 4, 1982), reinstated, No. Civ. A.N. 79-2066, 1984 WL 1105 

(D. Md. June 11, 1984). Moreover, we are not persuaded either 

that the "overlap markets" characterization does anything more 

than restate the problem, or that, if it does, the Supreme Court's 

Kodak/Jefferson Parish test is somehow less controlling in such 

cases than in any others. 

PMBR maintains that by incorporating BAR/BRI and Gilbert into 

a package, the Defendants have "link[ed] two distinct markets for 

products that were distinguishable in the eyes of buyers." 

Jefferson Parish, 466 U.S. at 19. 

PMBR's evidence includes the following: 

1) Defendants stipulated that full-service courses and 

supplemental MBE workshops are in separate product markets. 

2) Defendants have marketed their full-service course and 

their supplemental workshop as separate products, for separate 

fees, for over a decade and still offer Gilbert separately. 

3) In Kansas, Ohio and Hawaii, HBJL and/or its licensees 

still offer the full-service course unbundled from Gilbert. 

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4) Prior to Defendants' bundling, not every full-service 

course customer chose to purchase a supplemental workshop; in 

Colorado, only one-third to one-half did so. 

5) In the past, HBJL officials worked to keep their external 

Gilbert workshop separate and distinct in customers' minds from 

the HarBrace workshop within the full-service course, because many 

customers preferred to buy from two different companies to get 

multiple providers' perspectives on the MBE. 

6) Defendants have not consolidated the operation of the 

full-service and supplemental courses; Gilbert continues to be 

administered and marketed separately. 

7) One or more of Defendants' officers contemplated that the 

inclusion of the Gilbert workshop in the full-service course at no 

added charge would be only temporary. 

8) Other bar review industry participants view full-service 

and supplemental MBE courses as separate products. 

This evidence is sufficient to create a material factual 

dispute over whether there is enough consumer demand in Colorado 

for full-service courses without supplemental MBE workshops to 

make it efficient to sell the two separately. If there is, then 

the BAR/BRI-Gilbert package should be viewed as two products. 

b. The Conditioning Requirement 

The final element of an illegal tying arrangement is 

conditioning. For an illegal tie-in to exist, "'purchases of the 

tying product must be conditioned upon purchases of a distinct 

tied product.'" Continental Trend Resources. Inc. v. Oxy USA, 

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Inc., 44 F.3d 1465, 1481 (lOth Cir. 1995) (quoting Fox Motors, 

Inc. v. Mazda Distribs. (Gulf), Inc., 806 F.2d 953, 957 (lOth Cir. 

1986)), petition for cert. filed, 63 USLW 3819 (U.S. May 8, 1995) 

(No. 94-1838). HBJL and CBR argue that this element requires a 

showing of coercion, and that by adding Gilbert to BAR/BRI in the 

summer of 1992 they did not force or coerce any BAR/BRI students 

to forgo PMBR's supplemental workshop; since they did not raise 

BAR/BRI tuition, the economic incentives remained the same as 

before. 

The Defendants are correct with respect to the summer 1992 

course, when the bundled BAR/BRI-Gilbert course cost the same as 

the separate BAR/BRI course had cost previously. It appears that 

Gilbert truly was free to BAR/BRI customers during that summer's 

session, so that no separate, tied purchase was involved. 

HBJL and CBR do not address, however, the evidence that in 

the winter 1993 course they raised the tuition of the bundled 

course by $50, in part to cover some of the costs of providing 

Gilbert. Where the price of a bundled product reflects any of the 

cost of the tied product, customers are purchasing the tied 

product, even if it is touted as being free. See Directory Sales 

Management Corp. v. Ohio Bell Tel. Co., 833 F.2d 606, 610 (6th 

Cir. 1987); 3 Phillip E. Areeda & Donald F. Turner, Antitrust Law 

,, 733a ( 1978) (" [T] he tie may be obvious as in the classic form, 

or somewhat more subtle, as when a machine is sold or leased at a 

price that covers 'free' servicing."). 

PMBR has presented enough evidence to create a triable issue 

as to whether the tuition for the bundled BAR/BRI course covered 

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some portion of the Gilbert costs in 1993, and therefore whether 

the conditioning element was satisfied. See Plaintiff-Appellant's 

App. at 207-08 (Summary}. Summary judgment on the tie-in claim 

therefore was premature. 

2. Section 1 Predatory Pricing Claim 

PMBR has alleged that by packaging Gilbert with BAR/BRI for a 

nominal or no charge, HBJL and CBR engaged in predatory pricing, 

in violation of both section 1 and section 2 of the Sherman Act. 

To establish a section 1 violation, PMBR must show a 

conspiracy to engage in short-term price cutting to secure longterm monopoly profits. Instructional Sys. Dev. Corp. v. Aetna 

Casualty & Sur. Co., 817 F.2d 639, 649 (lOth Cir. 1987}. To be 

predatory, prices must be set below "an appropriate measure" of 

costs. Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 113 

S. Ct. 2578, 2587 (1993} .5 Because of the time value of the money 

lost through price cuts and the uncertainty involved in predatory 

pricing schemes, the Supreme Court has said such a conspiracy is 

rational only if the conspirators "have a reasonable expectation 

of recovering, in the form of later monopoly profits, more than 

the losses suffered." Matsushita Elec. Indus. Co. v. Zenith Radio 

Corp., 475 U.S. 574, 588-89 (1986}; cf. Brooke Group, 113 S. Ct. 

5 Unfortunately for litigants, neither the Supreme Court nor we 

have taken a position on which of various cost measures is the 

definitive one, although we have spoken of marginal and average 

variable costs as being relevant. See Brooke Group, 113 s. Ct. at 

2588 n.l; Instructional Sys., 817 F.2d at 648; Pacific Eng'g & 

Prod. Co. of Nevada v. Kerr-McGee Corp., 551 F.2d 790, 797 (lOth 

Cir.}, cert. denied, 434 U.S. 879 (1977}. 

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at 2587-89 (discussing the elements of predatory pricing under 

Sherman Act section 2 and the Robinson-Patman Act) .6 

The district court dismissed PMBR's predatory pricing claim 

because it found that the bundled BAR/BRI-Gilbert course was a 

single product, and PMBR had not alleged that the package was 

priced below cost. As noted above, however, we find that a 

factual dispute remains as to the existence of two products. 

The parties do not appear to dispute for summary judgment 

purposes the joint action element of the conspiracy claim. Nor do 

Defendants disagree that in the summer 1992 course, they included 

Gilbert for free, a level below any measure of Gilbert's costs.? 

We see no evidence in the appellate record, however, of any belowcost pricing in the winter 1993 course, when tuition was raised by 

6 Separate f.rom but closely related to the question of whether 

a defendant's acts are likely to succeed is the question of 

whether a defendant with a monopoly in one market would have any 

plausible reason to use its monopoly profits in that market to 

subsidize predation in a second market. See Matsushita, 475 u.s. 

at 596 (requiring a showing of plausible motive for predatory 

pricing and observing that "a conspiracy to increase profits in 

one market does not tend to show a conspiracy to sustain losses in 

another"). 

Here, where PMBR has presented evidence that it was probably 

the most likely challenger to the Defendants' monopoly in the 

Colorado full-service market, we cannot say as a matter of law 

that Defendants would find it economically irrational to price 

below cost in the MBE market for the summer 1992 course as part of 

a larger scheme, employing tie-ins and schedule conflicts, to 

monopolize the supplemental market, in order to discipline PMBR 

for refusing to allocate markets and to deprive PMBR of the 

resources necessary to continue its full-service market 

incursions. 

7 Although the record below is somewhat ambiguous, HBJL and CBR 

do not appear to seriously dispute on appeal that if the BAR/BRIGilbert package does comprise two separate products, then the 

relevant product for predatory pricing's cost-price analysis is 

the supplemental workshop, rather than the package. 

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$50. See Plaintiff-Appellant's App. at 344 (Baseman Aff. Ex. 4.) 

The only Gilbert cost evidence we have located in the record shows 

that the cost of Gilbert materials was approximately $15 per 

person. See id. at 452, 458 (Davis Dep.). 

HBJL and CBR argue that PMBR has failed to show any evidence 

that they are likely to be able to recoup, with interest, their 

losses from any alleged predatory pricing. As discussed infra in 

our review of the section 2 claims, we find that PMBR has adduced 

enough evidence of high entry barriers and other structural 

factors in the supplemental market to create a triable issue as to 

this element. We therefore conclude that summary judgment on the 

section 1 predatory pricing claim was premature. 

3. Section 2 Attempted Monopolization of Supplemental MBE Course 

Market 

PMBR alleges that HBJL and CBR attempted to monopolize the 

supplemental MBE workshop market by means of tying, predatory 

pricing, false advertising, and the creation of schedule 

conflicts. The district court dismissed the attempt claim after 

deciding that tying and predatory pricing could not have occurred 

because only a single product was involved, that any reasonable 

juror would find the inclusion of Gilbert in the BAR/BRI course to 

be a procompetitive product improvement, and that PMBR had failed 

to show a triable issue as to the existence of schedule conflicts 

and false advertising. 

PMBR argues on appeal that summary judgment was inappropriate 

as to each type of anticompetitive act alleged. HBJL and CBR 

argue that the district court's reasoning was sound, and that, in 

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addition, PMBR has failed to show the requisite dangerous 

probability that the Defendants will succeed in monopolizing the 

supplemental MBE workshop market. 

To succeed on an attempted monopolization claim, PMBR must 

show: (1) relevant geographic and product markets; (2) specific 

intent to monopolize; (3) anticompetitive conduct in furtherance 

of an attempt to monopolize; and (4) a dangerous probability of 

success. See TV Communications Network. Inc. v. Turner Network 

Tel .. Inc., 964 F.2d 1022, 1025 (lOth Cir.), cert. denied, 113 

S. Ct. 601 (1992). The parties do not appear to contest the first 

and second elements for summary judgment purposes. We proceed, 

therefore, to examine the evidence with respect to conduct and 

probability of success. 

a. Anticompetitive Conduct 

Anticompetitive or exclusionary conduct under section 2 is 

"conduct constituting an abnormal response to market 

opportunities. Predatory practices are illegal if they impair 

opportunities of rivals and are not competition on the merits or 

are more restrictive than reasonably necessary for such 

competition," if the conduct appears "reasonably capable of 

contributing significantly to creating or maintaining monopoly 

power." Instructional Sys., 817 F.2d at 649 (citations omitted). 

A defendant may avoid liability by showing a legitimate business 

justification for the conduct. See Kodak, 504 U.S. at 483. 

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(1) Tying and Predatory Pricing 

As discussed above, PMBR has shown enough evidence to create 

triable issues as to the existence of a predatory pricing 

conspiracy in 1992 and a tying arrangement in 1993 in violation of 

section 1. Illegal tie-ins and predatory pricing under section 1 

may also qualify as anticompetitive conduct for section 2 

purposes. See, e.g., Directory Sales, 833 F.2d at 613; Great 

Escape, Inc. v. Union City Body Co., 791 F.2d 532, 541 (7th Cir. 

1986); Heatransfer Corp. v. Volkswagenwerk, A.G., 553 F.2d 964, 

981 (5th Cir. 1977), cert. denied, 434 U.S. 1087 (1978); see also 

Areeda & Turner, supra ,r 733c. 

HBJL and CBR offer three justifications, however, which they 

say made the inclusion of Gilbert "for free" as part of the BAR/ 

BRI course permissible competitive activity. First, they argue 

that since supplemental MBE workshops were being offered "for 

free" as part of full-service courses in Colorado by SMH and 

outside Colorado by PMBR, SMH, and other providers, they (HBJL and 

CBR) were entitled to meet their competitors' prices, even if 

those prices were predatory. Second, they contend, they were 

entitled to use legal and ordinary marketing methods such as 

bundling to respond to PMBR's and SMH's "attack" advertisements, 

which criticized Defendants for charging "extra" for their MBE 

workshop. Third, they argue, the bundling of Gilbert with BAR/BRI 

was a procompetitive improvement of their full-service course. 

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(a) Meeting competition 

Determining when the meeting-competition defense properly 

applies to a predatory pricing claim can require substantial 

analysis. See Phillip E. Areeda & Herbert Hovenkamp, Antitrust 

Law~~ 717' (Supp. 1994). But Defendants have not shown, at any 

rate, why they should be allowed to price Gilbert below cost in 

Colorado in order to meet PMBR's prices in California, Alabama, 

Tennessee, and Georgia. And PMBR has offered enough evidence to 

create a triable issue regarding whether HBJL and CBR were truly 

concerned about and responding to competition from SMH. See 

Plaintiff-Appellant's App. at 203 (Summary). 

(b) Ordinary marketing methods 

HBJL and CBR say their "free" inclusion of Gilbert in the 

BAR/BRI course was nothing more than one of the "legal and 

ordinary marketing methods already used by others in the market" 

that we have previously said even monopolists are free to use. 

See Telex, 510 F.2d at 927. We do not necessarily read Telex to 

mean that absolutely every marketing method available to any 

nonmonopolist is equally proper when used by a monopolist, since 

such a reading might eliminate the law on tying arrangements. But 

in the supplemental MBE market, where HBJL and CBR were not 

monopolists, they may have been at liberty to temporarily engage 

in promotional pricing--even giving Gilbert away free--to try to 

boost the sales of a product that consumers were rejecting. A 

problem in this case, however, is that they did not offer Gilbert 

free to every prospective Gilbert customer. Instead, they offered 

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it free only to purchasers of their monopolized BAR/BRI course. 

Although, as we noted above, this could not have constituted an 

illegal tying arrangement in 1992 because the allegedly tied 

Gilbert product was not purchased, neither can we find this 

linking of a product giveaway to monopoly power in a separate 

market to be a legal and ordinary marketing method, absent some 

showing of legitimate business reasons for distinguishing the BAR/ 

BRI customers from other purchasers of Gilbert.8 See SmithKline 

Corp. v. Eli Lilly & Co., 575 F.2d 1056, 1059-62, 1065 (3d Cir. 

1978), cert. denied, 439 U.S. 838 (1978). 

(c) Product improvement 

Product improvement can sometimes be a defense to a section 2 

claim.9 See, e.g., Telex, 510 F.2d at 906, 926-27; ILC 

Peripherals Leasing Corp. v. IBM Corp., 458 F. Supp. 423, 443-44 

(N.D. Ca. 1978), aff'd sub nom Memorex Corp. v. IBM Corp., 636 

8 We recognize the split among the circuits regarding the 

legality of so- called "monopoly leveraging, " i.e. , using a 

monopoly in one market to gain a competitive advantage in a 

second, where the purpose is not to monopolize or attempt to 

monopolize the second market. Compare, e.g., Berkey Photo, Inc. 

v. Eastman Kodak Co., 603 F.2d 263, 275-76 (2d Cir. 1979), cert. 

denied, 444 U.S. 1093 (1980), with Alaska Airlines, Inc. v. United 

Airlines. Inc., 948 F.2d 536, 546-49 (9th Cir. 1991), cert. 

denied, 112 s. Ct. 1603 (1992). Our case falls outside this 

debate, however, because PMBR has specifically alleged an attempt 

to monopolize the supplemental MBE workshop market. 

9 It may seem contradictory that a product improvement motivation--at least without something more, such as demonstrated 

efficiencies--will not save an otherwise illegal tying arrangement 

under section 1, see Jefferson Parish, 466 U.S. at 25 n.41, but it 

may still weigh in the balance in section 2 analysis. The two 

sections are distinct, however, and the section 2 balancing test 

is different from the analysis for per se offenses under section 

1. 

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F.2d 1188 (9th Cir. 1980), cert. denied, 452 U.S. 972 (1981). 

PMBR argues, however, that the Defendants' product improvement 

justification at most creates a factual dispute. PMBR contends 

that its evidence shows that the claimed improvement was neither 

intended as an improvement nor accepted by the market as one. 

Both the purpose and results of a product change, including 

customers' reception of the change, are relevant to whether a 

claimed product improvement is pro- or anticompetitive.10 See In 

re IBM Peripheral EDP Devices Antitrust Litig., 481 F. Supp. 965, 

1003-05 (N.D. Cal. 1979), aff'd sub nom. Transamerica Computer 

Co., Inc. v. IBM Corp., 698 F.2d 1377, (9th Cir.), cert. denied, 

464 U.S. 955 (1983). But see Telex Corp. v. IBM Corp., 367 F. 

Supp. 258, 347 (1973) (refusing to second-guess technological 

justifiability of integrating more internal memory into computer's 

central processing unit where integration reduced costs and 

10 Professors Areeda and Hovenkamp, who argue for a rule of 

presumptive legality for all product changes, concede the possible 

anticompetitive nature of what they term "implicit tying" through 

product integration. See Areeda & Hovenkamp, supra ,,,, 738.1 & 

738.4. But they say an inquiry into whether a defendant's intent 

was actually to harm rivals, as distinct from making a better 

product, is difficult, costly, and usually pointless, because the 

evidence is frequently mixed or ambiguous. See id. ,, 738. 4e. And 

they say an objective appraisal of whether a product change truly 

is an improvement--let alone whether a given improvement could 

have been achieved with less harm to competition--will often be 

beyond the courts' competency and may seriously chill innovation. 

See id. ,, 738. 4f. 

We are sensitive to both the difficulties and the dangers of 

these inquiries. Where, as here, however, the claimed product 

improvement takes the form of a marketing change, rather than some 

complex technological integration of previously separate 

functions, our degree of deference to product designers is 

reduced. 

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increased utility), rev'd on other grounds, 510 F.2d 894 (lOth 

Cir.), cert. dismissed, 423 U.S. 802 (1975). 

1) Purpose of product change 

PMBR has offered evidence that the bundling was a response to 

PMBR's refusal to take part in a proposed market allocation 

agreement, see Plaintiff-Appellant's App. at 193-94 (Summary); 

that Defendants' executives never have believed that bar 

applicants need Gilbert to pass the bar, id. at 201 (Summary); 

that Defendants intended the bundling to be only temporary, id. at 

199 (Summary) ; and that bundling cannot reasonably be explained as 

a response to competitive market conditions where, prior to the 

bundling of Gilbert, Defendants' course already had more MBE 

workshop hours than SMH's full-service course, and where SMH's 

then-partner, Kaplan, went bankrupt around the time the Gilbert 

bundling began in Colorado. Id. at 203 (Summary). 

2) Customer reception of product change 

PMBR also cites evaluations from bar applicants in California 

and elsewhere outside of Colorado, in the summer of 1992, who 

described the "free" Gilbert sessions as "horrible," "a waste of 

time," "awful" and "a joke." See id. at 201-02 (Summary) .11 PMBR 

offers evidence that immediately prior to bundling, one-half to 

two-thirds of Colorado bar applicants who took a full-service 

11 While the evaluations are not from Colorado students, neither 

side has suggested they are irrelevant because either the Gilbert 

course or the students taking it are different in Colorado than 

elsewhere. 

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course did not choose to take a supplement, see id. at 189-90 

(Summary) , and that many prefer to take their MBE workshop from a 

different provider than their full-service company. See id. at 

547 (Reed Dep.). 

3) Results of product change 

PMBR further argues that if the addition of Gilbert had 

actually improved the product, one would expect Defendants' share 

of the full-service market and the pass rate of its course 

enrollees to have increased, but in fact they declined. The 

Defendants' market share--as measured by the percentage of firsttime Colorado bar exam takers taking the BAR/BRI course--dropped 

from 76 percent in 1991 to 72 percent in 1993, see id. at 336-37 

(Baseman Aff. Ex. 2), and BAR/BRI customers' pass rate declined 

from 5 percentage points above the Colorado average in July 1990 

to 1 percentage point above the state average in July 1992. See 

id. at 413-14 (Sullivan Aff. Exs. 12, 13). 

Taken together, the preceding evidence is enough to create a 

triable issue regarding the validity of the Defendants' product 

improvement justification for the alleged tying and predatory 

pricing behavior. In sum, PMBR has sufficiently controverted for 

summary judgment purposes the arguments that the Defendants were 

only responding to competition, that they used nothing more than 

legal and ordinary marketing methods, and that the bundled course 

was a procompetitive product improvement. 

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(2) Schedule Conflicts 

PMBR also claims the Defendants deliberately created 

scheduling conflicts between the BAR/BRI course and PMBR's 

workshop in furtherance of their attempt to monopolize the 

workshop market. PMBR offers evidence of increased numbers of 

schedule conflicts nationwide, e.g., 23 conflicts in the summer of 

1990, 2 of them major, versus 37 conflicts in the summer of 1992, 

17 of them major, see Plaintiff-Appellant's App. at 206 (Summary); 

id. at 370-71 (Feinberg Aff.); and three specific conflicts in 

Colorado, in the summer 1991, winter 1991 and summer 1992 courses. 

Id. at 366-68. 

PMBR contends that the increased conflicts were intended to 

discourage people from taking PMBR's workshop. The district court 

held that where PMBR's workshop ran from 9 a.m. to 4 p.m., and the 

Defendants' classes ran from 6 p.m. to 9 p.m., no reasonable juror 

could find that any schedule conflicts existed. HBJL and CBR 

further point out that BAR/BRI students who wished to attend 

PMBR's course could check out audiotapes of the BAR/BRI lectures 

at any time or attend videotape replays at various locations. 

PMBR argues on appeal that the court erred in concluding that 

to be actionable, the schedule conflicts had to make it 

impossible, rather than merely inconvenient, for BAR/BRI students 

to take PMBR's workshop. We agree. The relevant inquiry is 

whether the Defendants' scheduling patterns were anticompetitive, 

i.e., "an abnormal response to market opportunities ... 

impair[ing] opportunities of rivals and ... not competition on the 

merits or ... more restrictive than reasonably necessary for such 

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Appellate Case: 94-1148 Document: 01019279644 Date Filed: 08/29/1995 Page: 26 
competition." Instructional Sys., 817 F.2d at 649. What matters 

is not so much whether the classes actually overlapped as whether 

the scheduling pattern was reasonably capable of contributing 

significantly to a monopolization attempt by discouraging BAR/BRI 

customers from taking PMBR's course, and, if so, whether it was 

nevertheless justified. 

PMBR presented enough evidence to create a triable issue as 

to whether this same-day scheduling could significantly discourage 

BAR/BRI students from taking its workshop. See PlaintiffAppellant's App. at 365-72 (Feinberg Aff. ,!,! 41-63) .12 The 

Defendants contend, however, that even if there were conflicts, 

they were justified, because the overwhelming likelihood "is that 

any same-day scheduling was the inevitable result of two courses 

12 Defendants argued below that they had no duty to accommodate 

PMBR's scheduling. They analyzed the situation as a monopolist's 

refusal to cooperate with a competitor and read Aspen Skiing Co. 

v. Aspen Highlands Skiing Corp., 472 u.s. 585, 603 (1985), as 

standing for the proposition that a monopolist has a duty to 

assist a competitor only where the monopolist has accommodated the 

competitor in the past and then abruptly terminates assistance. 

We do not necessarily interpret Aspen Highlands as narrowly as do 

the Defendants, but principles governing refusals to deal do not 

control here anyway. 

PMBR's complaint goes beyond merely alleging that Defendants 

refused requests to affirmatively accommodate PMBR's course. PMBR 

alleges that the Defendants deliberately created schedule 

conflicts to avoid helping PMBR, and in fact, to harm PMBR. Since 

the Defendants naturally would not create conflicts between their 

BAR/BRI full-service course and their own MBE workshop, Gilbert, 

see Plaintiff-Appellant's App. at 370 (Feinberg Aff. ,! 58), there 

is a triable issue as to whether schedule conflicts between BAR/ 

BRI and PMBR's MBE workshop would disproportionately raise PMBR's 

costs. See Premier Elec. Constr. Co. v. National Elec. 

Contractors Ass'n, Inc., 814 F.2d 358, 368 (7th Cir. 1987) (citing 

Thomas G. Krattenmaker & Steven C. Salop, Anticompetitive 

Exclusion: Raising Rivals' Costs to Achieve Power Over Price, 96 

Yale L.J. 209 (1986)). This would qualify as anticompetitive 

conduct unless HBJL and CBR could demonstrate a legitimate 

business justification for it. 

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attempting to shoe-horn their complex schedules.into the same 

narrow time frame." Defendants-Appellees' Br. at 28. 

PMBR offers circumstantial evidence that the three schedule 

conflicts it has identified in Colorado were not accidental or 

inevitable, but instead deliberate and unjustified. PMBR points 

to a substantial increase nationwide in the number of conflicts 

after HBJL's Mr. Conviser allegedly proposed the illegal market 

allocation agreement in 1989 and PMBR's Mr. Feinberg rejected it 

in the spring of 1990. Mr. Feinberg stated by affidavit that 

there have always been conflicts between PMBR's course and that of 

BAR/BRI and its licensees, including CBR, but the vast majority 

were minor or inconsequential until 1991 and thereafter. See 

Plaintiff-Appellant's App. at 366-72 (Feinberg Aff. ,r,r 47-63). 

This sequence of events is enough to create a jury question as to 

whether the disputed schedule conflicts in Colorado were 

deliberate or the "inevitable result" of crowded curricula and 

short time frames. 

(3) False Advertising 

PMBR contends that Defendants advertised falsely when they 

advertised that their BAR/BRI course included the Gilbert workshop 

"for free." In 1993, PMBR points out, Defendants raised the price 

of the BAR/BRI course by $50, and an HBJL official testified that 

the added cost of Gilbert was one of the reasons for the tuition 

increase. See id. at 207-08 (Summary). The district court found 

no triable issue, because Gilbert was being offered as part of the 

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full-service course and, "I guess that is free to that extent." 

Id. at 313 (Tr. Summ. J. Hr'g). 

We affirm for a different reason. Even assuming the 

advertising was false, PMBR has not shown how it could have 

contributed to an attempt to monopolize the supplemental MBE 

market, rather than just to maintenance of Defendants' fullservice course monopoly. PMBR has not adduced any evidence that 

had BAR/BRI enrollees known the alleged "truth"--that they were 

not getting Gilbert for free but were being forced to pay for it 

in order to get the desired BAR/BRI course--they would have been 

more likely to spend another $300 or so to take PMBR or another 

MBE workshop in addition to the BAR/BRI-Gilbert course. We 

therefore affirm the district court's rejection of false 

advertising as an anticompetitive act in furtherance of the 

attempted monopolization claim. 

b. Dangerous Probability of Success 

As an alternative basis for affirming the district court's 

dismissal of the attempted monopolization claim, HBJL and CBR 

argue that PMBR has failed to demonstrate a dangerous probability 

that their alleged attempt will succeed. PMBR contends that it 

has provided ample evidence. 

"To establish the dangerous probability of success element of 

an attempted monopolization claim, 'the plaintiff must show that 

there was a dangerous probability the defendant would achieve 

monopoly status as the result of the predatory conduct alleged by 

the plaintiff.'" Bacchus Indus .. Inc. v. Arvin Indus .. Inc., 939 

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Appellate Case: 94-1148 Document: 01019279644 Date Filed: 08/29/1995 Page: 29 
F.2d 887, 894 (lOth Cir. 1991) (quoting Colorado Interstate Gas 

Co. v. Natural Gas Pipeline Co. of America, 885 F.2d 683, 693 

(lOth Cir. 1989), cert. denied, 498 u.s. 972 (1990)). Factors 

relevant to determining dangerous probability include, but are not 

limited to, a defendant's market share, whether the defendant is a 

multimarket firm, the number and strength of other competitors, 

market trends, and entry barriers. See id.; Shoppin' Bag of 

Pueblo. Inc. v. Dillon Cos., 783 F.2d 159, 162 (lOth Cir. 1986). 

Where predatory pricing is alleged, the defendants' financial 

strength and ability to absorb losses are also relevant. See 

Brooke Group, 113 S. Ct. at 2589; Cargill, Inc. v. Monfort of 

Colorado, Inc., 479 U.S. 104, 119 n.l5 (1986). Because we are 

talking about probabilities, it is not necessary for a defendant 

to already possess monopoly power in the target market; indeed, if 

it did, the offense would be monopolization, not attempt. Of 

course, "[t]he higher the firm's initial market share, the greater 

the likelihood that it will eventually gain monopolistic control 

over the market." Colorado Interstate Gas, 885 F.2d at 694. 

(1) Defendants' Market Share/Multiple Markets 

"The [market] share that is relevant for determining whether 

the defendant can satisfy the 'dangerous probability of success' 

requirement of attempted monopolization should be either that 

which he possesses at the time of litigation or the largest share 

he possessed during the period of the alleged offense." Areeda & 

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Appellate Case: 94-1148 Document: 01019279644 Date Filed: 08/29/1995 Page: 30 
Hovenkamp, supra,,,, 711.2d, 835.2b.13 No specific minimum market 

share is universally accepted. But in this case, the Defendants 

stipulate that they possess monopoly power in the full-service 

course market, which is closely related to the target supplemental 

workshop market; they are accused of leveraging that power to 

increase their share of the supplemental market; their share of 

the supplemental market went from less than 2 percent in the 

winter of 1992 to more than 70 percent within a year, while the 

share of their majo~ competitor, PMBR, went from 84 percent to 23 

percent in the same period (and from 22,000 nationwide in 1990 to 

14,000 in 1992.14 Fiberglass Insulators, Inc. v. Dupuy, No. Civ. 

A. 84-1244-1, 1986 WL 13356 at **3-4 (D. S.C. Sept. 30, 1986) 

(denying summary judgment on attempted monopolization claim where 

defendant's market share increased from 5 percent to nearly 51 

percent in four years); Indiana Grocery Co. v. Super Valu Stores, 

13 Professors Areeda and Turner, in their earlier, 1978 main 

volume, said some courts have required a showing that a defendant 

possessed a significant share of the target market at the time 

when the challenged conduct was undertaken, and they cite, inter 

alia, to one of our cases as standing for that proposition. See 

E.J. Delaney Corp. v. Bonne Bell, Inc., 525 F.2d 296 (lOth Cir. 

1975), cert. denied, 425 U.S. 907 (1976) (cited in Areeda & 

Turner, supra ,,,, 831, 835a) . We do not read Delaney as clear 

support for such a rule, but even if it were, we would hold it 

distinguishable from this case, where the Defendants are accused 

of leveraging their monopoly power in a second market to gain a 

new monopoly in the target market. 

14 The Defendants complain that PMBR arrived at the high market 

share for them by counting every sale of the Defendants' fullservice course as a sale of a supplemental MBE workshop after the 

Gilbert inclusion in the summer of 1992. But they do not show why 

this is conceptually wrong, at least for 1993, when the evidence 

shows that part of the fee increase charged to enrollees was to 

cover Gilbert costs, so that we can fairly call the Gilbert 

enrollments "sales." At any rate, we accept PMBR's numbers for 

summary judgment purposes. See Kodak, 112 S. Ct. at 2076-77. 

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Inc., 647 F. Supp. 254, 258 (S.D. Ind. 1986) (refusing to dismiss 

attempted monopolization case for failure to state a claim where 

defendant, a new market entrant with extensive resources, obtained 

a 15 percent market share in 18 months) . 

(2) Defendants' Resources 

PMBR has presented evidence that Defendants have access to 

substantial money with which to sustain a predatory campaign. 

HBJL's parent company, General Cinema, had total assets of over 

$5.5 billion as of Jan. 31, 1993, compared with PMBR's assets of 

less than $1.042 million as of June 30, 1993. See PlaintiffAppellant's App. at 200 (Summary). 

(3) Number and Strength of Competitors 

PMBR's market structure evidence suggests that if PMBR is 

seriously damaged or eliminated, remaining competitors in the 

supplemental market may not be able to compete effectively against 

Gilbert. The Colorado supplemental MBE market is highly 

concentrated, dominated by PMBR and the Defendants. The other two 

competitors--APTS and Reed Law Group--have been relatively weak in 

Colorado. In 1993, Defendants had 76.2 percent of the market; 

PMBR had 22.6 percent, and APTS had 1.2 percent. Id. at 339 

(Baseman Aff. Ex. 3). Reed cancelled its 1993 workshops. Id. at 

361 (Feinberg Aff.). SMH offered a workshop in 1991, but it is 

unclear to us whether they still compete in the supplemental 

market. 

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(4) Market Trends 

The trends in the supplemental MBE market, as reflected in 

PMBR's evidence, provide additional support for PMBR's claim. 

PMBR's market share increased from 71 percent to 84 percent 

between 1989 and 1991, but dropped to 25 percent in 1992 and to 23 

percent in 1993. The Defendants' market share showed an opposite 

trend, dropping from 29 percent to 11 percent between 1989 and 

1991, then increasing to 72 percent by the end of 1992 and 76 

percent in 1993. Figures for the third competitor, APTS, 

available for 1991-93, showed a steady decline from 4 percent in 

1991 to 1 percent over that period. 

(5) Entry Barriers 

PMBR has also offered evidence that if PMBR is eliminated, 

new market entrants may not be able to establish a competitive MBE 

workshop market. PMBR's economic expert testified that entry 

barriers exist in both the full-service and the supplemental MBE 

markets in Colorado, because of Defendants' high degree of name 

recognition and accumulated goodwill, HBJL's large size 

nationwide, HBJL's economies of scope and scale in the fullservice market, and the widespread discounting practices of the 

bar review industry. See id. at 323-24 (Baseman Aff.). PMBR has 

presented further evidence of entry barriers in that there have 

been only three attempted entries in the Colorado supplemental MBE 

market since 1972, two of them largely unsuccessful. Id. at 192 

(Summary), 361 (Feinberg Aff.). 

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The preceding evidence of the Defendants' market share and 

resources, the nature of the competition they face, and the 

barriers to entry in the supplemental workshop market, are 

sufficient to create a material factual dispute with regard to 

dangerous probability of success. A jury question exists as to 

whether HBJL and CBR, by predatorily pricing Gilbert sales to BAR/ 

BRI customers in the summer 1992 course and then subsequently 

tying the BAR/BRI course to purchases of Gilbert, and by creating 

scheduling conflicts with PMBR's course, could so harm PMBR and 

other MBE providers that HBJL and CBR could monopolize the MBE 

market and maintain that monopoly long enough to recoup any 

predatory pricing losses plus interest. Although many subissues 

are subject to serious factual dispute, summary judgment on the 

attempt claim was premature. 

4. Section 2 Conspiracy to Monopolize Supplemental MBE 

Market 

PMBR next contends that the district court erred in 

dismissing its section 2 claim of conspiracy to monopolize the 

supplemental MBE market, because all of its elements except one--

the existence of a conspiracy--are subsumed in the attempt claim, 

and it has provided evidence of the conspiracy element as well. 

To succeed on a claim of conspiracy to monopolize, PMBR must 

show: "(1) 'the existence of a combination or conspiracy to 

monopolize'; (2) 'overt acts done in furtherance of the 

combination or conspiracy'; (3) 'an effect upon an appreciable 

amount of interstate commerce'; and (4) 'a specific intent to 

monopolize.'" TV Communications, 964 F.2d at 1026 (quoting Olsen 

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Appellate Case: 94-1148 Document: 01019279644 Date Filed: 08/29/1995 Page: 34 
v. Progressive Music Supply. Inc., 703 F.2d 432, 438 (lOth Cir.), 

cert. denied, 464 U.S. 866 (1983)). 

As to the conspiracy element, PMBR has presented evidence 

that major decisions regarding the Colorado course, such as 

pricing and course content, required the approval of HBJL as well 

as CBR. See Plaintiff-Appellant's App. at 206-07 (Summary); id. 

at 455 (Davis Dep.). We agree that this evidence, when combined 

with the evidence supporting the attempt claim, creates a triable 

issue and precludes summary judgment on the conspiracy claim. 

5. Monopolization of and Conspiracy to Monopolize Full-Service 

Bar Review Market 

PMBR alleges that HBJL and CBR were guilty of Sherman Act 

section 2 monopolization of and conspiracy to monopolize the fullservice bar review market by means of a geographic market 

allocation agreement, which is illegal per se under section 1. 

HBJL and CBR reply that PMBR lacks standing, that a 1990 

release agreement and the statute of limitations bar this claim, 

and that PMBR has not presented evidence that an illegal market 

allocation agreement ever existed. The district court appears to 

have relied on the 1990 release agreement in dismissing this 

claim. Although the court also mentioned the statute of 

limitations, it does not appear to have made a specific finding 

based on it. We conclude that PMBR has failed to establish a 

triable issue regarding the existence of an illegal agreement. 

Defendants correctly argue that ambiguous conduct that is as 

consistent with permissible competition as with illegal conspiracy 

does not by itself support an inference of antitrust conspiracy 

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under Sherman Act section 1. Matsushita, 475 U.S. at 588. A 

plaintiff must offer evidence tending to exclude the possibility 

that the alleged conspirators either acted independently or 

colluded in a way that could not have harmed the plaintiff. Id.; 

Gibson v. Greater Park City Co., 818 F.2d 722, 724 (lOth Cir. 

19 87) . 

We agree with the Defendants that the mere fact that they 

were competitors before their licensing arrangement and stopped 

competing afterward is not enough to show that they secretly and 

illegally divided the market between them. Their written 

agreements contained no noncompete clauses, but once they entered 

their licensing arrangement, both companies had legitimate 

business reasons not to compete and undermine the BAR/BRI 

trademark's value. 

Also ambiguous is the evidence that CBR's founder, Jerry 

Kopel, once threatened to offer competing bar review courses 

outside Colorado if HBJL did not give him more favorable license 

terms, but that he ultimately did not carry out his threat. This 

can be read, as PMBR reads it, to mean that Mr. Kopel was 

threatening to violate an existing secret agreement not to 

compete, but it also can be viewed as the normal posturing that 

occurs in any contract renegotiations. 

Nor do we consider that the balance is tipped by the evidence 

that HBJL entered into an explicit market allocation agreement 

with a former competitor in Georgia in 1980, see Palmer, 498 U.S. 

at 49-50, and that it proposed market allocation agreements to 

Josephson's Bar Review in 1969, to SMH Bar Review in 1976 and 

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1980, and to PMBR in 1989-90. The timing of these various offers 

permits two opposite inferences to be drawn. Although PMBR 

insists that this evidence shows a consistent pattern of behavior, 

all of the alleged offers were made before November 1990. In that 

month, the Supreme Court ruled in Palmer that HBJL's market 

allocation agreement with BRG was "unlawful on its face." Id. at 

so. It is clearly possible to infer that in 1991, when HBJL and 

CBR orally renewed their Colorado licensing agreement, they were 

aware of the illegality of any market allocation agreement and did 

not pursue or renew any such agreement. 

Since all of PMBR's evidence relative to the existence of a 

secret market allocation agreement is ambiguous, it cannot support 

an inference of conspiracy to monopolize the full-service course 

market, and we affirm the district court's dismissal.15 

B. CONFIDENTIALITY ISSUES 

PMBR appeals the district court's refusal to set aside under 

Fed. R. Civ. P. 72(A) a magistrate judge's orders concerning 

disclosure of confidential information in the record. The basis 

15 Although the 1990 settlement agreement released any claims 

PMBR might have had against HBJL based on pre-1990 activities, 

PMBR contends that it still has a cause of action for that time 

period against CBR, which was not a party to the settlement. But 

even assuming that CBR is not protected by the 1990 release, 

PMBR's evidence that HBJL proposed or entered into market 

allocation agreements with other companies in other states in 

1969, 1976, 1980, and 1989, without more, is simply too remote to 

furnish the basis for a conspiracy claim against CBR on grounds 

that CBR and HBJL, or their predecessors, allocated the Colorado 

and Wyoming markets in 1974, 1982, 1986, and 1988. (The latter 

dates are the years when CBR made or renewed its written license 

agreements.) 

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for the court's ruling is not clear, but because we are remanding 

the case, this order becomes interlocutory and subject to 

reexamination upon renewed motion by PMBR. We therefore decline 

to address it at this juncture. 

IV. CONCLUSION 

For the reasons discussed above, the district court's 

judgment is REVERSED IN PART, AFFIRMED IN PART, and REMANDED. 

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