Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_04-cv-03514/USCOURTS-cand-3_04-cv-03514-22/pdf.json

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

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

IN RE TABLEWARE ANTITRUST

LITIGATION

 /

THIS DOCUMENT RELATES TO

ALL ACTIONS

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No C-04-3514 VRW

ORDER

Plaintiffs in these consolidated cases allege that May

Department Stores Co and Federated Department Stores, Inc, which

operate department stores across the United States, and Lenox, Inc

and Waterford Wedgwood, USA, both of which produce fine tableware

sold in the United States, conspired with one another to boycott

Bed, Bath and Beyond, a competitor of May and Federated. 

Plaintiffs claim to have purchased fine tableware from May and

Federated during the period of the alleged boycott and were thus

injured because the boycott impaired competition in that product

market. Plaintiffs bring suit under § 1 of the Sherman Act,

alleging that defendants’ conduct is condemned per se.

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Case 3:04-cv-03514-VRW Document 308 Filed 04/24/07 Page 1 of 8
United States District Court

For the Northern District of California

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On March 13, 2007, the court granted summary judgment to

Waterford but denied summary judgment to Federated and May. Doc

#287. In response, Federated and May (collectively “Federated”)

moved for administrative relief to file a second motion for summary

judgment. Doc #290. The court heard oral argument on this motion

on April 12, 2007. Doc #307. 

Civ L R 7-9(b)(1) requires that reconsideration of any

motion be accompanied by a specific showing of a “material

difference in fact or law * * * from that which was presented to

the Court” before entry of the order at issue and that, “in the

exercise of reasonable diligence, the party applying for

reconsideration did not know such fact or law at the time” of the

order. Civ L R 7-9(b)(1). Federated asserts that it “could not

have anticipated the basis” of its current motion because

plaintiffs never argued that their claim against the retailers

would survive “even if plaintiffs could not link Lenox or Waterford

to any claimed conspiracy.” Doc #290 at 2. The court disagrees.

To the extent that these issues were not raised in Federated’s

first motion for summary judgment, plaintiffs are not to blame. 

Federated and Waterford moved for summary judgment in separate

motions asserting distinct grounds; the fact that one party

succeeded and the other failed is not unforeseeable. Accordingly,

Federated’s motion runs afoul of Civ L R 7-9(b). Acknowledging

that it is better to recognize an error later than not at all, the

court nevertheless proceeds to address the merits of Federated’s

motion. 

Federated’s motion relies on the following inference: by

granting summary judgment for Waterford, the court necessarily

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United States District Court

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concluded that the manufacturers did not agree with Federated and

May to cancel the Bed, Bath & Beyond rollout. Doc #290 at 1:19-20. 

Without an agreement, Federated reasons, the manufacturers acted

unilaterally and no antitrust injury exists between plaintiffs and

the retailers. Id at 5:10-16.

To support this rigid dichotomy between conspiratorial 

and unilateral conduct, Federated relies on Copperweld Corp v

Interdependence Tube Corp, 467 US 752 (1984), in which the Court

observed that “[t]he Sherman Act contains a basic distinction

between concerted and independent action.” Id at 767 (citing

Monsanto Co v Spray-Rite Service Corp, 465 US 752 (1984)). But see

id at 768 (noting that § 1 “does not reach conduct that is ‘wholly

unilateral,’” suggesting the distinction is not so sharp) (emphasis

added). Yet this passage from Copperweld does not support the

dichotomy Federated urges. As a threshold matter, the cited

language addresses a wholly inapposite situation: it refers to the

Sherman Act’s distinction between § 1 and § 2 of the Act. In

Copperweld, the Court declined to follow the “intra-enterprise”

conspiracy doctrine. That theory of antitrust liability applied

between a parent and subsidiary “when there is enough separation

between the two entities to make treating them as two independent

actors sensible.” 467 US at 759. The Court emphasized the

difference between § 1 and § 2 in rejecting intra-enterprise

liability because the parent-subsidiary relationship made any such

agreement unilateral. Id at 767-769 (“The conduct of a single firm

is governed by § 2 alone and is unlawful only when it threatens

actual monopolization. It is not enough that a single firm appears

to ‘restrain trade’ unreasonably.”). Copperweld’s sweeping

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distinction between § 1 or § 2 does not shed light on the present

litigation, in which the allegations indisputably concern multiple

firms.

Moreover, Federated’s position misconstrues plaintiffs’

legal theory, which, as Federated insisted in earlier briefing,

relies on a horizontal agreement between the retailers. See Doc

#185 at 2 (emphasizing that plaintiffs “abandoned” their vertical

claims). Hence, granting summary judgment for Waterford did not

require the absence of any agreement, only insufficient evidence to

establish an agreement to take part in the horizontal conspiracy

between the retailers. In its order, the court noted that the

manufacturers appeared to cancel the Bed, Bath & Beyond rollout at

the behest of the retailers, but nonetheless granted summary

judgment for Waterford because there was insufficient evidence that

the manufacturers conspired to join the retailers’ boycott. 

In this regard, ES Development, Inc v RWM Enterprises,

Inc, 939 F2d 547 (8th Cir 1991), is instructive. The plaintiff in

ES Development purchased land to build an auto mall at which many

dealerships would operate. Existing dealers in the area formed a

“dealer alliance” in order to oppose plaintiff’s auto mall. To do

so, the alliance created a form letter complaining about the

proposed auto mall, which each member sent to its respective car

manufacturer. Plaintiff sought to enjoin these efforts. The

Eighth Circuit rejected the dealers’ contention that they merely

exercised their legal rights independently. Id at 554. “The

evidence * * * compels the inference that the dealers chose to

exercise their individual legal rights in a concerted manner

designed to impair plaintiff’s ability to procure franchise

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commitments from various manufacturers.” Id at 554-555 (emphasis

added). The court continued:

The present case provides a further example of the

antitrust maxim that “even an otherwise lawful

device may be used as a weapon in restraint of

trade.” * * * 

* * *

In sum, the antitrust laws do not countenance such a

concerted individual exercise of the otherwise legal

rights of the members of a conspiracy to achieve a

combined effect in restraint of trade in excess of

that possible were the conspirators to act alone.

Id at 555-556. Hence, otherwise “lawful” activity is not shielded

from the antitrust laws when the activity is “part and parcel” of

an effort to restrain trade. 

The ES Development court further rejected the dealers’

portrayal of the arrangement as a vertical restraint. Although the

complaints were vertical, “the individually filed dealer complaints

arose from an agreement among the complaining dealers to * * * take

simultaneous, parallel action in opposition to the practices of

their more aggressive competitors.” Id at 556-557. The vertical

components “emanat[ed] from a horizontal agreement among the

dealers to constrain competitive activity at the same dealer level

* * * * and thus constitute a per se violation of the Sherman Act.” 

Id. 

One aspect of ES Development squarely undermines 

Federated’s legal theory: the car manufacturers were not

defendants. The ES Development plaintiff could not have been

injured, as a causal matter, unless the car manufacturers complied

with the dealers’ demands, yet the court found that the dealers

conspired horizontally and injured the plaintiff with nary a

mention of the absent manufacturers’ role. This outcome cannot be

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squared with Federated’s theory that non-conspiratorial conduct

must be unilateral; if that were so, plaintiff could not have

suffered an antitrust injury in ES Development without a finding

that the manufacturers joined the conspiracy. 

Apparently aware of this inconsistency, Federated retorts

that “nowhere” in the ES Development opinion “does the Eighth

Circuit hold that the suppliers did not participate in the

challenged conspiracy.” Doc #305 at 3 (citing ES Development, 939

F2d at 556). The court doubts whether anything may be inferred

from what the Eighth Circuit did not say about car manufacturers,

as they were not parties in the litigation. But more

significantly, this omission does not rescue Federated’s theory. 

To Federated, a party either conspires or acts unilaterally, with

no shades of gray in between. Yet plaintiff in ES Development

suffered an antitrust injury without the court finding that the car

manufacturers joined the conspiracy. The fact that the car

manufacturers were not defendants in the suit is besides the point;

a plaintiff cannot bypass the requirement of antitrust injury by

declining to sue some of the conspirators. ES Development thus

demonstrates that conspiracy on the part of the manufacturers is

not a prerequisite for antitrust injury.

Federated also attempts to distinguish ES Development on

the ground that “the dealers conceded that they had entered into

agreements with their [car manufacturers], which they described as

vertical (not horizontal) restraints emanating from the provisions

in the individual dealer agreements allowing them to protest the

award of new franchises.” Doc #305 at 3; see also id at 4

(defendants-dealers in ESD “conceded the existence of vertical

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restraints and the issue was whether the restraints should be

viewed as horizontal”). But acknowledging the existence of

independent vertical franchise agreements is not tantamount to

admitting involvement in the dealers’ conspiracy. Again, the

Eighth Circuit did not hold that the car manufacturers were part of

the conspiracy; if anything, the court assumed that the individual

protest letters were lawful. Id at 555 (stating “we do not

question the legality of appellants’ separately filed protests”).

Apart from running against the case law, Federated’s

formalism also errs as a matter of policy. Consider the logical

endpoint of Federated’s artificial dichotomy between conspiratorial

and unilateral conduct. To avoid antitrust scrutiny, horizontal

conspirators could simply implement their conspiracy through an

unknowing third party — for example, by delivering the terms of

conspiracy through a courier. Because this courier cannot be

considered a “conspirator,” as he is unaware of the horizontal

conspiracy, he must be acting unilaterally, at least in Federated’s

view. And any injury flowing from the courier’s unilateral conduct

is not antitrust injury. Hence, Federated’s reasoning would enable

conspirators to immunize themselves via third party nonconspirators. That is not what the antitrust laws countenance. 

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In sum, the court rejects the theory advanced in

Federated’s second motion for summary judgment. In the first

summary judgment order, the court concluded, based on the evidence

and market conditions, that the manufacturers may have agreed to

comply with the demands of Federated and May, but did not join the

alleged horizontal conspiracy to boycott Bed, Bath & Beyond. 

Hence, in granting summary judgment for Waterford, the court did

not conclude that the manufacturers acted unilaterally. As ES

Development makes plain, Waterford is not a necessary conspirator

to plaintiffs’ theory of the case. Accordingly, the court DENIES

Federated’s second motion for summary judgment.

IT IS SO ORDERED.

 

VAUGHN R WALKER

United States District Chief Judge

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