FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

U.S. WHOLESALE OUTLET & 

DISTRIBUTION, INC.; TREPCO 

IMPORTS AND DISTRIBUTION, 

LTD.; L.A. INTERNATIONAL 

CORPORATION; CALIFORNIA 

WHOLESALE; YNY 

INTERNATIONAL, INC.; EASHOU, 

INC., DBA San Diego Cash and 

Carry; SANOOR, INC., DBA L.A. 

Top Distributor, 

Plaintiffs-Appellants, 

 v. 

INNOVATION VENTURES, LLC; 

LIVING ESSENTIALS, LLC, 

Defendants-Appellees.

No. 21-55397 

D.C. No. 

2:18-cv-01077-

CBM-E 

ORDER AND 

AMENDED

OPINION

Appeal from the United States District Court

for the Central District of California

Consuelo B. Marshall, District Judge, Presiding
2 U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC

Argued and Submitted June 7, 2022

Seattle, Washington

Filed July 20, 2023

Amended December 22, 2023

Before: Ronald Lee Gilman,* Sandra S. Ikuta, and Eric D. 

Miller, Circuit Judges.

Order;

Opinion by Judges Miller and Ikuta**

Partial Concurrence and Partial Dissent by Judge Gilman;

Partial Dissent by Judge Miller

SUMMARY***

Robinson-Patman Price Discrimination Act

The panel filed (1) an order amending its opinion, 

denying a petition for panel rehearing, and denying a petition 

for rehearing en banc; and (2) an amended opinion affirming 

in part and reversing in part the district court’s judgment 

after a jury trial and a bench trial in favor of the defendants 

in an action brought under the Robinson-Patman Price 

* The Honorable Ronald Lee Gilman, United States Circuit Judge for the 

U.S. Court of Appeals for the Sixth Circuit, sitting by designation.

** Judge Ikuta authored Part III.

*** This summary constitutes no part of the opinion of the court. It has 

been prepared by court staff for the convenience of the reader.
U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC 3

Discrimination Act by U.S. Wholesale Outlet & 

Distribution, Inc., and other California wholesale 

businesses.

Parts I and II, authored by Judge Miller

Defendant Living Essentials, LLC, sold its 5-hour 

Energy drink to the Costco Wholesale Corporation and also 

to the plaintiff wholesalers, who alleged that Living 

Essentials offered them less favorable pricing, discounts, 

and reimbursements in violation of the Robinson-Patman 

Act. On summary judgment, the district court found that the 

wholesalers had proved the first three elements of their 

section 2(a) claim for secondary-line price 

discrimination. At a jury trial on the fourth element of 

section 2(a), whether there was a competitive injury, the jury 

found in favor of defendants. At a bench trial on the 

wholesalers’ section 2(d) claim for injunctive relief, the 

court ruled in favor of defendants.

Affirming in part, the panel held that the district court 

did not abuse its discretion in finding that there was some 

factual foundation for instructing the jury that section 2(a) 

required the wholesalers to show, as part of their prima facie 

case, that Living Essentials made “reasonably 

contemporaneous” sales to them and to Costco at different 

prices.

The panel further held that the district court did not abuse 

its discretion in instructing the jury that the wholesalers had 

to prove that any difference in prices could not be justified 

as “functional discounts” to compensate Costco for 

marketing or promotional functions. The panel concluded 

that the functional discount doctrine was legally available to 

defendants regardless of whether the wholesalers and Living 

Essentials were at the same level in the distribution chain, 
4 U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC

and that there was some foundation in the evidence to 

support the jury instruction.

Part III, authored by Judge Ikuta

Section 2(d) of the Robinson-Patman Act provides that 

it is unlawful for a seller to pay anything of value to or for 

the benefit of a customer in connection with the sale of a 

product unless the payment is available on proportionally 

equal terms to all other customers competing in the 

distribution of this product. As to whether Costco and the 

wholesalers were in competition, it was undisputed that they 

both were customers of Living Essentials and purchased 

goods of the same grade and quality. The panel held that the 

district court did not clearly err in finding that the 

wholesalers’ businesses were in geographic proximity to the 

Costco outlets that sold 5-hour Energy. The district court, 

however, committed both legal and factual errors in finding 

that Costco and the wholesalers operated at different 

functional levels and therefore competed for different 

customers of 5-hour Energy. The district court erred as a 

matter of law in concluding that when the jury found in favor 

of Living Essentials on the section 2(a) claim, it made an 

implicit factual finding that there was no competition 

between Costco and the wholesalers. And the record did not 

support the district court’s finding that Costco and the 

wholesalers operated at different functional levels.

The panel vacated the district court’s holding as to 

section 2(d) and reversed and remanded for the district court 

to consider whether Costco and the wholesalers purchased 

5-hour Energy from Living Essentials within approximately 

the same period of time in light of the record, or whether the 

wholesalers otherwise proved competition.
U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC 5

Concurring in part and dissenting part, Judge Gilman 

wrote that he agreed with the majority that the district court 

did not abuse its discretion in giving the “functional 

discount” jury instruction, but he would reverse and remand 

for a new trial on the section 2(a) claim because the district 

court abused its discretion in giving the “reasonably 

contemporaneous” instruction. As to the section 2(d) claim, 

Judge Gilman agreed with the majority that the district court 

abused its discretion in finding that Costco and the 

wholesalers operated at different functional levels.

Dissenting in part, Judge Miller wrote that he would 

affirm the judgment in its entirety because he agreed that the 

district court did not abuse its discretion in instructing the 

jury on the section 2(a) claims, but he did not agree that the 

district court erred in rejecting the section 2(d) claims.

COUNSEL

Mark Poe (argued), Randolph Gaw, and Victor Meng, Gaw 

Poe LLP, San Francisco, California; Thomas C. Goldstein 

and Erica O. Evans, Goldstein & Russell PC, Bethesda, 

Maryland; Eric F. Citron, Gupta Wessler PLLC, 

Washington, D.C.; for Plaintiffs-Appellants.

David C. Frederick (argued), Daniel G. Bird, and Collin R. 

White, Kellogg Hansen Todd Figel & Frederick PLLC, 

Washington, D.C.; E. Powell Miller and Martha J. Olijnyk, 

The Miller Law Firm PC, Rochester, Michigan; Gerald E. 

Hawxhurst, Hawxhurst Harris LLP, Los Angeles, 

California; for Defendants-Appellees.
6 U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC

ORDER

The Opinion filed on July 20, 2023, and published at 74 

F.4th 960 (9th Cir. 2023), is amended by the opinion filed 

concurrently with this order. Further petitions for rehearing 

or rehearing en banc will not be allowed. 

The panel has unanimously voted to deny appellants’ 

petition for rehearing. Judge Ikuta and Judge Miller have 

voted to deny the petition for rehearing en banc, and Judge 

Gilman so recommends. The full court has been advised of 

the petition for rehearing en banc, and no judge has 

requested a vote on whether to rehear the matter en banc. 

Fed. R. App. P. 35. 

Appellants’ petition for rehearing or rehearing en banc is 

DENIED.

The majority of the panel has voted to deny appellees’ 

petition for rehearing. Judge Miller would grant the petition 

for rehearing. Judge Ikuta and Judge Miller have voted to 

deny the petition for rehearing en banc, and Judge Gilman 

so recommends. The full court has been advised of the 

petition for rehearing en banc, and no judge has requested a 

vote on whether to rehear the matter en banc. Fed. R. App. 

P. 35.

Appellees’ petition for rehearing and rehearing en banc 

is DENIED.
U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC 7

OPINION

MILLER, Circuit Judge, as to Parts I and II:

This appeal arises out of an action under the RobinsonPatman Price Discrimination Act, 15 U.S.C. §§ 13–13b, 21a.

The jury returned a verdict for the defendants, and the 

district court denied the plaintiffs’ requested injunctive 

relief. The plaintiffs challenge various jury instructions as 

well as the denial of injunctive relief. We affirm in part and 

vacate, reverse, and remand in part.

I

Living Essentials, LLC, produces 5-hour Energy, a 

caffeinated drink sold in 1.93-ounce bottles. Living 

Essentials sells 5-hour Energy to various purchasers,

including wholesalers, retailers, and individual consumers.

This case concerns Living Essentials’ sales of 5-hour 

Energy to two sets of purchasers. One purchaser is the 

Costco Wholesale Corporation, which purchases 5-hour 

Energy for resale at its Costco Business Centers—stores 

geared toward “Costco business members,” such as 

restaurants, small businesses, and other retailers, but open to 

any person with a Costco membership. The other purchasers, 

whom we will refer to as “the Wholesalers,” are seven 

California wholesale businesses that buy 5-hour Energy for 

resale to convenience stores and grocery stores, among other 

retailers. The Wholesalers allege that Living Essentials has 

offered them less favorable pricing, discounts, and 

reimbursements than it has offered Costco.

During the time period at issue here, Living Essentials 

charged the Wholesalers a list price of $1.45 per bottle of 

“regular” and $1.60 per bottle of “extra-strength” 5-hour 
8 U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC

Energy, while Costco paid a list price of ten cents per bottle

less: $1.35 and $1.50, respectively. Living Essentials also 

provided the Wholesalers and Costco with varying rebates, 

allowances, and discounts affecting the net price of each 

bottle. For example, the Wholesalers received a 7-cent per 

bottle “everyday discount,” a 2 percent discount for prompt 

payment, and discounts for bottles sold from 5-hour Energy 

display racks. Meanwhile, Costco received a 1 percent 

prompt-pay discount; a spoilage discount to cover returned, 

damaged, and stolen goods; a 2 percent rebate on total sales 

for each year from 2015 to 2018; payments for displaying 5-

hour Energy at the highly visible endcaps of aisles and 

fences of the store; and various advertising payments.

Living Essentials also participated in Costco’s Instant

Rebate Coupon (IRC) program. Under that program, Costco

sent monthly mailers to its members with redeemable

coupons for various products. About every other month,

Costco would offer its members an IRC worth $3.60 to $7.20

per 24-pack of 5-hour Energy—a price reduction of 15 to 30

cents per bottle. The customer would redeem the IRC from

Costco at the register when buying the 24-pack, and Living

Essentials would reimburse Costco for the face value of the

5-hour Energy IRCs redeemed that month. Over the course

of the seven-year period at issue here, Living Essentials

reimbursed Costco for about $3 million in redeemed IRCs.

In February 2018, the Wholesalers brought this action 

against Living Essentials and its parent company, Innovation 

Ventures, LLC, in the Central District of California, alleging 

that by offering more favorable prices, discounts, and 

reimbursements to Costco, Living Essentials had violated

the Robinson-Patman Act, which prohibits sellers of goods 

from discriminating among competing buyers in certain 
U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC 9

circumstances. The Wholesalers sought damages under 

section 2(a) of the Act and an injunction under section 2(d).

Section 2(a)—referred to as such because of its original

place in the Clayton Act, see Volvo Trucks N. Am., Inc. v. 

Reeder-Simco GMC, Inc., 546 U.S. 164, 175 (2006)—bars a 

seller from discriminating in price between competing 

purchasers of commodities of like grade and quality. 15 

U.S.C. § 13(a). One form of prohibited discrimination under 

section 2(a) is secondary-line price discrimination, “which 

means a seller gives one purchaser a more favorable price

than another.” Aerotec Int’l, Inc. v. Honeywell Int’l, Inc., 836 

F.3d 1171, 1187 (9th Cir. 2016). To establish secondary-line 

discrimination, a plaintiff must show that (1) the challenged 

sales were made in interstate commerce; (2) the items sold 

were of like grade and quality; (3) the seller discriminated in 

price between the disfavored and the favored buyer; and 

(4) “‘the effect of such discrimination may be . . . to injure, 

destroy, or prevent competition’ to the advantage of a 

favored purchaser.” Volvo, 546 U.S. at 176–77 (quoting 15 

U.S.C. § 13(a)). The fourth component of that test, the 

element at issue in this case, ensures that section 2(a) “does 

not ban all price differences,” but rather “proscribes ‘price 

discrimination only to the extent that it threatens to injure 

competition.’” Id. at 176 (quoting Brooke Group Ltd. v. 

Brown & Williamson Tobacco Corp., 509 U.S. 209, 220 

(1993)).

Section 2(d) makes it unlawful for a manufacturer to 

discriminate in favor of one purchaser by making 

“payment[s]” to that purchaser “in connection with 

the . . . sale, or offering for sale of any products . . . unless 

such payment or consideration is available on proportionally 

equal terms to all other customers competing in the 

distribution of such products.” 15 U.S.C. § 13(d). To prevail 
10 U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC

on a claim for injunctive relief under section 2(d), the 

plaintiff must establish that it is in competition with the 

favored buyer, and “must show a threat of antitrust injury,” 

Cargill, Inc. v. Monfort of Colo., Inc., 479 U.S. 104, 122 

(1986), but it need not make “a showing that the illicit 

practice has had an injurious or destructive effect on

competition.” FTC v. Simplicity Pattern Co., 360 U.S. 55, 65 

(1959).

On summary judgment, the district court found that the 

Wholesalers had proved the first three elements of their 

section 2(a) claim—that the products were distributed in 

interstate commerce, of like grade and quality, and sold at 

different prices to Costco and to the Wholesalers. The parties 

proceeded to try to a jury the fourth element of section 2(a),

whether there was a competitive injury, and to try to the 

court the section 2(d) claim for injunctive relief.

At trial, the parties focused on whether the Wholesalers 

and Costco were in competition. The Wholesalers 

introduced numerous emails from Living Essentials 

employees discussing the impact of Costco’s pricing on the 

Wholesalers’ sales. Additionally, they presented the 

testimony of a marketing expert who opined that the 

Wholesalers and the Costco Business Centers were in 

competition. The expert based that opinion on the 

companies’ geographic proximity and on interviews he 

conducted in which the Wholesalers’ proprietors stated that 

they lost sales due to Costco’s lower prices. Living 

Essentials primarily relied on the testimony of an expert who 

reviewed sales data and opined that buyers of 5-hour Energy 

are not price sensitive and do not treat the Wholesalers and 

Costco Business Centers as substitutes; for that reason, he 

concluded that the Wholesalers and Costco Business Centers

were not competitors.
U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC 11

The district court instructed the jury that section 2(a) 

required the Wholesalers to show that Living Essentials 

made “reasonably contemporaneous” sales to them and to 

Costco at different prices. The Wholesalers objected. They 

agreed that the instruction correctly stated the law but argued 

that “[t]here is literally no evidence to suggest that Living 

Essentials’ sales of 5-Hour Energy to Costco and Plaintiffs 

occurred at anything other than the same time over the entire 

7-year period.” The court nevertheless gave the proposed 

instruction, telling the jury that “[e]ach Plaintiff must prove 

that the sales being compared were reasonably 

contemporaneous.” The instruction directed the jury to find 

for Living Essentials if it determined “that the sales 

compared are sufficiently isolated in time or circumstances 

that they cannot be said to have occurred at approximately 

the same time for a Plaintiff.” The instruction also listed a 

number of factors for the jury to consider in its evaluation, 

such as “[w]hether market conditions changed during the 

time between the sales.”

The district court further instructed the jury that the 

Wholesalers had to prove that any difference in prices could 

not be justified as “functional discounts” to compensate 

Costco for marketing or promotional functions that it 

performed. The Wholesalers again objected. As with the 

instruction on reasonably contemporaneous sales, the 

Wholesalers agreed that the instruction was a correct 

statement of the law, but they argued that there was “a 

complete absence of evidence” of any savings for Living 

Essentials or costs for Costco in performing the alleged 

functions justifying the discount. Rejecting that argument, 

the court instructed the jury that Living Essentials claimed

that “its lower prices to Costco are justified as functional 

discounts,” which the court defined as discounts “given by a 
12 U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC

seller to a buyer based on the buyer’s performance of certain 

functions for the seller’s product.” The instructions 

explained that while the Wholesalers had “the ultimate 

burden to prove that defendant’s lower prices were not 

justified as a functional discount,” Living Essentials had the 

burden of production and so “must present proof” that 

“(1) Costco actually performed the promotional, marketing, 

and advertising services” it claimed to perform and “(2) the 

amount of the discount was a reasonable reimbursement for 

the actual functions performed by Costco.” The instructions 

told the jury to find for Living Essentials if it found that the 

price discrimination was “justified as a functional discount.”

The jury returned a verdict for Living Essentials on the 

section 2(a) claim. The court then denied the Wholesalers’ 

request for injunctive relief under section 2(d). The court 

reasoned that “the jury implicitly found no competition 

existed between [the Wholesalers] and Costco, and the Court 

is bound by that finding.” In addition, the court concluded,

based on its own independent review of the evidence, that 

the Wholesalers had “failed to prove by a preponderance of 

the evidence that they competed with Costco for resale” of 

5-hour Energy.

II

We begin by considering the jury instructions on 

reasonably contemporaneous sales and functional discounts.

Our standard of review of a district court’s decision to give 

a jury instruction depends on the error that is alleged. Yan 

Fang Du v. Allstate Ins. Co., 697 F.3d 753, 757 (9th Cir. 

2012). We review legal issues de novo, including “[w]hether 

a district court’s jury instructions accurately state the law.”

Coston v. Nangalama, 13 F.4th 729, 732 (9th Cir. 2021)

(quoting Hung Lam v. City of San Jose, 869 F.3d 1077, 1085 
U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC 13

(9th Cir. 2017)). Here, however, the Wholesalers do not 

argue that the challenged instructions misstated the law. 

Instead, they argue that the evidence did not support giving 

them. “Whether there is sufficient evidence to support an 

instruction is reviewed for abuse of discretion.” Yan Fang 

Du, 697 F.3d at 757. In conducting that review, we give

“considerable deference” to the district court because we 

recognize the “district judge’s proximity to the trial and 

intimate knowledge of the record.” United States v. Heredia, 

483 F.3d 913, 921 (9th Cir. 2007) (en banc).

Sufficient evidence necessarily requires some evidence,

and it has long been “settled law that it is error in the court 

to give an instruction when there is no evidence in the case 

to support the theory of fact which it assumes.” Tweed’s 

Case, 16 Wall. (83 U.S.) 504, 518 (1872); see Avila v. Los 

Angeles Police Dep’t, 758 F.3d 1096, 1101 (9th Cir. 2014). 

But sufficient evidence does not require convincing 

evidence, or even strong evidence; rather, “a party is entitled 

to have his theory of the case presented to the jury by proper 

instructions, if there be any evidence to support it.” 

Blassingill v. Waterman S.S. Corp., 336 F.2d 367, 368 (9th 

Cir. 1964) (emphasis added) (internal quotation marks and 

footnote omitted). “The district court could not have abused 

its discretion unless there was no factual foundation to 

support . . . an instruction.” Desrosiers v. Flight Int’l of Fla. 

Inc., 156 F.3d 952, 959 (9th Cir. 1998).

The question before us is whether the district court 

abused its wide discretion in finding that there was any 

foundation for giving the instructions. We conclude that it 

did not. 
14 U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC

A

The Wholesalers argue that the district court abused its 

discretion in instructing the jury on reasonably

contemporaneous sales because “there was no legitimate 

dispute” that the Wholesalers carried their burden on that

requirement.

To establish a prima facie case under section 2(a), a 

plaintiff must show that the discriminating seller made one 

sale to the disfavored purchaser and one sale to the favored 

purchaser “within approximately the same period of time.” 

Texas Gulf Sulphur Co. v. J.R. Simplot Co., 418 F.2d 793, 

807 (9th Cir. 1969) (quoting Tri-Valley Packing Ass’n v. 

FTC, 329 F.2d 694, 709 (9th Cir. 1964)). In other words, it 

must establish “[t]wo or more contemporaneous sales by the 

same seller.” Rutledge v. Electric Hose & Rubber Co., 511 

F.2d 668, 677 (9th Cir. 1975). That requirement ensures that 

the challenged price discrimination is not the result of a 

seller’s lawful response to a change in economic conditions 

between the sales to the favored and disfavored purchasers.

Texas Gulf Sulphur Co., 418 F.2d at 806.

As we have explained, the Wholesalers do not argue that 

the district court’s instructions on reasonably 

contemporaneous sales misstated the law. Instead, they 

contend that they so clearly carried their burden on this 

element that the district court should have found the element 

satisfied rather than asking the jury to decide it. In the 

Wholesalers’ view, “there was no dispute . . . that [Living 

Essentials] had made thousands of contemporaneous sales to 

Costco and to all seven Plaintiffs.”

The Wholesalers’ position appears to be that when the 

plaintiff has the burden of proving an element of its case, a 

district court should decline to instruct the jury on that 
U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC 15

element if the court determines the plaintiff has proved it too 

convincingly. We are unaware of any authority for that 

proposition. To the contrary, our cases that have rejected

proposed jury instructions have done so because the party 

bearing the burden presented too little evidence to justify the 

instruction, not too much. See, e.g., Avila, 758 F.3d at 1101 

(affirming the denial of an instruction on a defense for which 

the defendant lacked evidence); Yan Fang Du, 697 F.3d at 

758 (affirming the denial of an instruction on a theory of 

liability for which the plaintiff lacked evidence). If the 

Wholesalers believed that their evidence conclusively 

established liability, the appropriate course of action would 

have been to move for judgment as a matter of law. See 

Unitherm Food Sys., Inc. v. Swift-Eckrich, Inc., 546 U.S. 

394, 396 (2006). But although the Wholesalers did move for 

judgment as a matter of law, they have not challenged the

denial of that motion on appeal. The Wholesalers may not

bypass that procedure by challenging a jury instruction on an 

element of their prima facie case.

Even if it could be error to instruct the jury on an element 

that a plaintiff obviously proved, the proof here was far from 

obvious. The Wholesalers might be right that the evidence 

established reasonably contemporaneous sales, but during 

the trial, they did not explain how it did so. In their written 

objection to the instructions, the Wholesalers stated that 

“[t]here is literally no evidence to suggest” that the 

compared sales were not contemporaneous, and in their oral 

objection, they similarly declared that there was “no dispute” 

on the issue. The first and last time the Wholesalers 

mentioned the requirement to the jury was during closing 

argument, when they said that the “[t]he sales were made 

continuously to Costco and to plaintiffs over the entire seven 

years.” Despite those confident assertions, the Wholesalers 
16 U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC

did not direct the district court to any evidence to 

substantiate their claim.

The Wholesalers did not point to any evidence of 

reasonably contemporaneous sales until their post-trial

motion for judgment as a matter of law. Because that motion 

was not available to the district court when the court 

instructed the jury, it cannot be a basis for concluding that 

the court abused its discretion. In any event, the motion did 

not clearly identify any reasonably contemporaneous sales. 

Instead, the Wholesalers merely referred to Exhibit 847, a 

series of spreadsheets introduced by Living Essentials that 

spans more than 100,000 cells cataloguing seven years’ 

worth of Living Essentials’ sales to all purchasers, including 

Costco and the Wholesalers. The motion presented a 

modified version of that exhibit that included only Living 

Essentials’ sales to Costco and the Wholesalers, omitting 

sales to other purchasers. But that (relatively) pared-down 

version—itself more than 200 pages long—was never 

presented to the jury. Even that version is hardly selfexplanatory, and the Wholesalers made little effort to 

explain it: They did not point to any specific pair of sales that 

were reasonably contemporaneous.

Indeed, even on appeal, the Wholesalers have not 

identified any pair of sales that would satisfy their burden.

The most they have argued is that the column entitled 

“Document Date” reflects the date of the invoice, so in their 

view the spreadsheets speak for themselves in showing 

“thousands of spot sales to Costco and Plaintiffs.” At no time 

have the Wholesalers shown that there were two or more 

sales between Living Essentials and both Costco and each

plaintiff that were reasonably contemporaneous such that 

changing market conditions or other factors did not affect the 
U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC 17

pricing. See Rutledge, 511 F.2d at 677; Texas Gulf Sulphur

Co., 418 F.2d at 806.

The Wholesalers complain that they are being unfairly 

faulted for not more thoroughly arguing “the incorrectly 

instructed point to the jury.” That complaint reflects a 

misunderstanding of their burden. To take the issue away 

from the jury, it was the Wholesalers’ burden to make—and 

support—the argument that the sales were reasonably 

contemporaneous. Perhaps, when it developed the jury 

instructions, the district court could have reviewed all of the 

evidence, located Exhibit 847 (the full version, not the more 

focused one the Wholesalers submitted later), and then

identified paired transactions for each Wholesaler from the 

thousands upon thousands of cells it contained. But “a

district court is not required to comb the record” to make a 

party’s argument for it. Carmen v. San Francisco Unified 

Sch. Dist., 237 F.3d 1026, 1029 (9th Cir. 2001) (quoting 

Forsberg v. Pacific Nw. Bell Tel. Co., 840 F.2d 1409, 1418 

(9th Cir. 1988)). There may have been a needle—or even 

many needles—in the haystack of sales data. It was not the 

district court’s job to hunt for them.

Significantly, the district court identified factors that 

might have influenced the pricing between sales, including 

that “the overall sales of 5-hour Energy in California were 

declining.” That trend could potentially explain why two 

differently priced sales resulted from “diverse market 

conditions rather than from an intent to discriminate.” Texas 

Gulf Sulphur Co., 418 F.2d at 806. The timing of the 

disputed sales is unclear, so it could be that the Wholesalers 

bought the product during periods of higher market pricing 

that Costco avoided. The possibility that sales were not 

reasonably contemporaneous has “some foundation in the 

evidence,” and that is enough. Jenkins v. Union Pac. R.R. 
18 U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC

Co., 22 F.3d 206, 210 (9th Cir. 1994). With only the 

Wholesalers’ conclusory assertions, an unexplained mass of 

spreadsheets, and Living Essentials’ evidence of changing 

market conditions before it, the district court did not abuse 

its discretion in instructing the jury on this disputed element 

of the Wholesalers’ prima facie case. 

B

The Wholesalers next argue that the district court abused 

its discretion in giving the functional-discount instruction.

The Supreme Court has held that when a purchaser 

performs a service for a supplier, the supplier may lawfully 

provide that purchaser with a “reasonable” reimbursement, 

or a “functional discount,” to compensate the purchaser for 

“its role in the supplier’s distributive system, reflecting, at 

least in a generalized sense, the services performed by the 

purchaser for the supplier.” Texaco Inc. v. Hasbrouck, 496 

U.S. 543, 562, 571 n.11 (1990). For example, the Court has 

held that a “discount that constitutes a reasonable 

reimbursement for the purchasers’ actual marketing 

functions will not violate the Act.” Id. at 571.

Separately, the Robinson-Patman Act contains a 

statutory affirmative defense for cost-justified price 

differences, or “differentials which make only due allowance 

for differences in the cost of manufacture, sale, or delivery.” 

15 U.S.C. § 13(a). The functional-discount doctrine is 

different because it requires only a “reasonable,” not an 

exact, relationship between the services performed and the 

discounts given. Hasbrouck, 496 U.S. at 561 & n.18. Also,

in contrast to the cost-justification defense, it is the 

plaintiff’s burden to prove that the price discrimination was 

not the result of a lawful functional discount. Id. at 561 n.18.

But the doctrine applies “[o]nly to the extent that a buyer 
U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC 19

actually performs certain functions, assuming all the risk, 

investment, and costs involved.” Id. at 560–61. And it does 

not “countenance a functional discount completely 

untethered to either the supplier’s savings or the 

wholesaler’s costs” Id. at 563. 

The Wholesalers do not dispute that the jury instructions 

accurately stated the law governing functional discounts. 

Instead, they argue that the district court should not have 

given a functional-discount instruction because the doctrine 

does not apply “as between favored and disfavored 

wholesalers” and because the discounts given to Costco bore 

no relationship to Living Essentials’ savings or Costco’s 

costs in performing the alleged functions. We find neither 

argument persuasive.

The Wholesalers are correct that selective 

reimbursements may create liability for the supplier under 

section 2(d) if the supplier fails to offer them “on 

proportionally equal terms to all other” competing 

purchasers. 15 U.S.C. § 13(d). Nevertheless, purchasers at 

the same level of trade may receive different functional 

discounts if they perform different functions. A functional 

discount may compensate a purchaser for “assuming all the 

risk, investment, and costs involved” with “perform[ing] 

certain functions,” Hasbrouck, 496 U.S. at 560–61, and 

“[e]ither because of this additional cost or because 

competing buyers do not function at the same level,” James 

F. Rill, Availability and Functional Discounts Justifying 

Discriminatory Pricing, 53 Antitrust L.J. 929, 934 (1985) 

(emphasis added), a functional discount “negates the 

probability of competitive injury, an element of a prima facie 

case of violation,” Hasbrouck, 496 U.S. at 561 n.18 (quoting 

Rill, supra, at 935). Conversely, even where customers do 

operate at different levels of trade, a discount may violate the 
20 U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC

Robinson-Patman Act if it does not reflect the cost of 

performing an actual function. See Hasbrouck v. Texaco, 

Inc., 842 F.2d 1034, 1040 (9th Cir. 1987) (“Where . . . the 

discount given to a customer higher in the distributive chain 

is sufficiently substantial and is unrelated to the costs of the 

customer’s function, . . . . a plaintiff may assert a cause of 

action against the seller even though he and the favored 

customer operate at different market levels.”), aff’d, 496 

U.S. 543 (1990).

In all section 2(a) cases, a plaintiff “ha[s] the burden of 

proving . . . that the discrimination had a prohibited effect on 

competition.” Hasbrouck, 496 U.S. at 556. To the extent that 

a “legitimate functional discount,” id. at 561 n.18,

compensates a buyer for “actually perform[ing] certain 

functions, assuming all the risk, investment, and costs 

involved,” id. at 560 (citation omitted), no such effect can be 

shown.

Here, the competitive-injury element was the subject of 

dispute at trial. Because Living Essentials offered evidence 

that it compensated Costco for performing certain functions 

and assuming certain risks (which would eliminate a 

competitive injury), the Wholesalers had the burden of 

showing that those functions and risks did not justify the 

discounted price that Costco received—whether or not

Costco and the Wholesalers were at the same level of trade.

The Wholesalers also argue that even if the functionaldiscount instruction was legally available to Living 

Essentials, the district court still abused its discretion in 

giving the instruction because there was no foundation in the 

evidence to support it. In fact, Living Essentials presented 

evidence that Costco performed several marketing and other 

functions that could have been compensated for by a 
U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC 21

functional discount. For example, Costco promoted 5-hour 

Energy by giving the product prime placement in aisle 

endcaps and along the fence by the stores’ entrances; it

created and circulated advertisements and mailers; it 

provided delivery and online sales for 5-hour Energy; and it

contracted for a flat “spoilage allowance” rather than 

requiring Living Essentials to deal with spoilage issues as 

they arose. In addition to providing those services, Costco

allowed Living Essentials to participate in its IRC program, 

in which Costco sent out bi-monthly mailers with coupons 

for 5-hour Energy, among other products, to its members.

The member would redeem the coupon at the register, and

Costco would advance the discount to the buyer on behalf of 

Living Essentials, record the transaction, and then collect the 

total discount from Living Essentials at the end of each 

period.

Living Essentials testified that Costco received 

“allowance[s]” in relation to its placement services because 

Costco was “performing a service for us.” As to Costco’s 

advertising and IRC services, Living Essentials testified that 

they allowed it to reach some 40 million Costco members, 

whom it could not otherwise reach “with one payment.” 

Finally, in the case of the spoilage discount, Living 

Essentials explained that by providing a flat, upfront 

discount in exchange for Costco’s assumption of the risk of 

loss and spoilage, Living Essentials avoided having to 

negotiate case-by-case with Costco over product loss.

The Wholesalers argue that the functional discount 

defense is unavailable because Living Essentials separately 

compensated Costco for promotional, marketing, and 

advertising services, so “the entirety of the price-gap cannot 

be chalked up to a unitary ‘functional discount.’” They cite 

spreadsheets showing that Costco was paid for endcap 
22 U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC

promotions, advertising, and IRCs. But those spreadsheets 

do not show that Living Essentials’ separate payments to 

Costco fully compensated it for those services. They 

therefore do not foreclose the possibility that some 

additional discount might have reflected reasonable 

compensation for the services.

More generally, the Wholesalers argue that even if 

Costco’s services were valuable, “Living Essentials 

introduced zero evidence that its lower prices to Costco bore 

any relationship to either” Living Essentials’ savings or 

Costco’s costs. In fact, there is evidence in the record from 

which it is possible to infer such a relationship. For instance, 

Living Essentials presented testimony that Costco’s 

performance of advertising functions—especially the 40-

million-member mailers as well as endcap and fence 

placement programs—gave it “a tremendous amount of 

reach and awareness,” which Living Essentials would 

otherwise have had to purchase separately. The record thus 

supported the conclusion that Living Essentials provided 

Costco “a functional discount that constitutes a reasonable 

reimbursement for [its] actual marketing functions.” 

Hasbrouck, 496 U.S. at 571. 

To be sure, the evidence did not establish a particularly 

precise relationship between the discounts and Costco’s 

services, and it was open to the Wholesalers to argue that the 

discounts were so “untethered to either the supplier’s savings 

or the wholesaler’s costs” as not to qualify as functional 

discounts. Hasbrouck, 496 U.S. at 563. But it was the jury’s 

role, not ours, to decide which party had the better 

interpretation of the evidence. The only question before us is 

whether the district court abused its discretion in 

determining that there was enough evidence to justify giving 

an instruction on functional discounts. Because at least some 
U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC 23

evidence supported the instruction, we conclude that there 

was no abuse of discretion.

The Wholesalers separately argue that the district court 

erred in denying their pre-verdict motion for judgment as a 

matter of law to exclude the functional-discount defense. 

Because the Wholesalers did not renew that argument in 

their post-verdict motion under Federal Rule of Civil 

Procedure 50(b), they failed to preserve the issue for appeal. 

See Crowley v. Epicept Corp., 883 F.3d 739, 751 (9th Cir. 

2018) (per curiam).

III

Finally, the Wholesalers challenge the district court’s 

denial of injunctive relief under section 2(d). We review the 

district court’s legal conclusions de novo and its factual 

findings under the clear-error standard. FTC v. Consumer 

Def., LLC, 926 F.3d 1208, 1212 (9th Cir. 2019). We review 

the denial of a permanent injunction under the abuse-ofdiscretion standard. Or. Coast Scenic R.R., LLC v. Or. Dep’t 

of State Lands, 841 F.3d 1069, 1072 (9th Cir. 2016).

A

Under section 2(d), it is unlawful for a seller to pay 

“anything of value to or for the benefit of a customer” for 

“any services or facilities furnished by or through such 

customer in connection with the . . . sale” of the products 

unless the payment “is available on proportionally equal 

terms to all other customers competing in the distribution of 

such products.” 15 U.S.C. § 13(d); Tri-Valley Packing 

Ass’n, 329 F.2d at 707–08. In enacting the RobinsonPatman Act, “Congress sought to target the perceived harm 

to competition occasioned by powerful buyers, rather than 

sellers; specifically, Congress responded to the advent of 
24 U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC

large chainstores, enterprises with the clout to obtain lower 

prices for goods than smaller buyers could demand.” Volvo, 

546 U.S. at 175 (citing 14 HERBERT HOVENKAMP, Antitrust 

Law ¶ 2302 (2d ed. 2006)). In other words, Congress meant 

to prevent an economically powerful customer like a chain 

store from extracting a better deal from a seller at the 

expense of smaller businesses.1

The key issue in this case is whether Costco and the 

Wholesalers (both customers of Living Essentials) are 

“customers competing” with each other as to resales of 5-

hour Energy for purposes of section 2(d). The FTC has 

interpreted the statutory language in section 2(d) to mean 

that customers are in competition with each other when they 

“compete in the resale of the seller’s products of like grade 

and quality at the same functional level of distribution.” 16 

C.F.R. § 240.5.2

Our interpretation of “customers competing,” as used in 

15 U.S.C. § 13(d), is consistent with the FTC’s. We have 

held that, to establish that “two customers are in general 

competition,” it is “sufficient” to prove that: (1) one 

customer has outlets in “geographical proximity” to those of 

the other; (2) the two customers “purchased goods of the 

same grade and quality from the seller within approximately 

the same period of time”; and (3) the two customers are 

1 To avoid confusion, we refer to the seller or supplier of a product as the 

“seller,” the seller’s customers as “customers,” and those who buy from 

the seller’s customers as “buyers.”

2 Although the FTC Guides that “provide assistance to businesses 

seeking to comply with sections 2(d) and 2(e),” 16 C.F.R. § 240.1, do 

not have the force of law, “we approach the [Guides] with the deference 

due the agency charged with day-to-day administration of the Act,” FTC 

v. Fred Meyer, Inc., 390 U.S. 341, 355 (1968).
U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC 25

operating “on a particular functional level such as 

wholesaling or retailing.” Tri-Valley Packing Ass’n, 329 

F.2d at 708. Under these circumstances, “[a]ctual 

competition in the sale of the seller’s goods may then be 

inferred.” Id.; see also Infusion Res., Inc. v. Minimed, Inc., 

351 F.3d 688, 692–93 (5th Cir. 2003) (holding that “[t]he 

competitive nexus is established if the disfavored purchaser 

and favored purchaser compete at the same functional level 

and within the same geographic market at the time of the 

price discrimination,” which indicates that each customer is 

“directly after the same dollar”) (citing M.C. Mfg. Co. v. 

Texas Foundries, Inc., 517 F.2d 1059, 1065 (5th Cir. 1975) 

(internal quotation marks omitted)). We reasoned that this 

interpretation was consistent with “the underlying purpose 

of section 2(d),” which is to “require sellers to deal fairly 

with their customers who are in competition with each other, 

by refraining from making allowances to one such customer 

unless making it available on proportionally equal terms to 

the others.” Tri-Valley Packing Ass’n, 329 F.2d at 708. 

Because sellers, in order to avoid violating section 2(d), must 

“assume that all of their direct customers who are in 

functional competition in the same geographical area, and 

who buy the seller’s products of like grade and quality within 

approximately the same period of time, are in actual 

competition with each other in the distribution of these 

products,” courts must make the same assumption of 

competition “in determining whether there has been a 

violation.” Id. at 709.3 Applying this rule, Tri-Valley held 

3 The “direct customer” requirement in Tri-Valley no longer remains 

good law after Fred Meyer, in which the Supreme Court held that a 

seller’s duty to provide proportionately equal promotional services or 

facilities, or payment thereof, extends downstream to buyers competing 
26 U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC

that two wholesalers that received canned goods from the 

same supplier and sold them in the same geographical area 

would be in “actual competition” if the wholesalers had 

purchased the canned goods at approximately the same time. 

If this final criterion were met, then “a section 2(d) violation 

would be established” because the canned-good supplier 

gave one wholesaler a promotional allowance, but did not 

offer the same allowance to the other wholesaler. Id.

In considering the third prong of the Tri-Valley test—

whether the two customers are operating “on a particular 

functional level such as wholesaling or retailing,” id. at 

708—we ask whether customers are actually functioning as 

wholesalers or retailers with respect to resales of a particular 

product to buyers, regardless of how they describe 

themselves or their activities. See Alterman Foods, Inc. v. 

FTC, 497 F.2d 993, 999 (5th Cir. 1974) (upholding the 

FTC’s determination that two customers were “functional 

competitor[s]” on the wholesale level based on market 

realities); see also Feesers, Inc. v. Michael Foods, Inc., 498 

F.3d 206, 214 (3d Cir. 2007) (“[T]he relevant question is 

whether two companies are in ‘economic reality acting on 

the same distribution level,’ rather than whether they are 

both labeled as ‘wholesalers’ or ‘retailers.’”) (citation 

omitted).

In listing the factors to consider in determining whether 

customers are competing, Tri-Valley did not include the 

manner in which customers operate. It makes sense that 

operational differences are not significant in making this 

with each other at the same functional level, even if one set of buyers 

purchases directly from the defendant while another set purchases 

through intermediaries. See 390 U.S. at 352–53; see also Tri Valley 

Growers v. FTC, 411 F.2d 985, 986 (9th Cir. 1969) (per curiam).
U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC 27

determination, given that the Robinson-Patman Act was 

enacted to protect small businesses from the harm to 

competition caused by the large chain stores, 

notwithstanding the well-understood operational differences 

between the two. See, e.g., Innomed Labs, LLC v. ALZA 

Corp., 368 F.3d 148, 160 (2d Cir. 2004) (explaining that 

chain stores have a more integrated distribution apparatus 

than smaller businesses and are able to “undersell their more 

traditional competitors”). Thus, courts have indicated that 

potential operational differences are not relevant to 

determining whether two customers compete for resales to 

the same group of buyers. In Simplicity Pattern Co., the 

Supreme Court held that competition in the sale of dress 

patterns existed between variety stores that “handle and sell 

a multitude of relatively low-priced articles,” and the more 

specialized fabric stores, which “are primarily interested in 

selling yard goods” and handled “patterns at no profit or 

even at a loss as an accommodation to their fabric customers 

and for the purpose of stimulating fabric sales.” 360 U.S. at 

59–60. The Court noted that the manner in which these 

businesses offered the merchandise to buyers was different, 

because the variety stores “devote the minimum amount of 

display space consistent with adequate merchandising—

consisting usually of nothing more than a place on the 

counter for the catalogues, with the patterns themselves 

stored underneath the counter,” while “the fabric stores 

usually provide tables and chairs where the customers may 

peruse the catalogues in comfort and at their leisure.” Id. at 

60. Nevertheless, the Court held there was no question that 

there was “actual competition between the variety stores and 

fabric stores,” given that they were selling an “identical 

product [patterns] to substantially the same segment of the 

public.” Id. at 62.
28 U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC

Similarly, in Feesers, the “different character” of two 

businesses that bought egg and potato products from a food 

supplier did not affect the analysis of whether they were in 

actual competition. 498 F.3d at 214 n.9. Although the 

businesses operated and interacted with their clients in 

different ways—one was a “full line distributor of food and 

food related products” while the other was a “food service 

management company”—the court held that “[t]he threshold 

question is whether a reasonable factfinder could conclude 

[the two customers] directly compete for resales [of the food 

supplier’s] products among the same group of [buyers].” Id.; 

see also Lewis v. Philip Morris Inc., 355 F.3d 515, 531–32 

(6th Cir. 2004) (noting that there was a genuine dispute of 

material fact as to whether companies that use vending 

machines to resell cigarettes were in actual competition with 

convenience stores for the resale of cigarettes to smokers 

under the Robinson-Patman Act).

An assumption underlying the Tri-Valley framework is 

that two customers in the same geographic area are 

competing for resales to the same buyer or group of buyers. 

However, the Supreme Court has identified an unusual 

circumstance when that assumption does not hold true and 

customers who resell the same product at the same 

functional level in the same geographic area are not in 

competition because they are not reselling to the same buyer. 

See Volvo, 546 U.S. at 175; see also 14 PHILLIP E. 

AREEDA & HERBERT HOVENKAMP, Antitrust Law 

¶ 2333 (4th ed. 2019) (noting that the holding in Volvo

regarding the same buyer is “quite narrow,” and would 

“appear not to apply in the typical ‘chain store’ situation 

where dealers [] actually purchase and carry substantial 

inventories” for sale to all comers).
U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC 29

In Volvo, Volvo dealers (customers of Volvo, the car 

manufacturer and seller) resold trucks through a competitive 

bidding process, where retail buyers described their specific 

product requirements and invited bids from selected dealers 

of different manufacturers. 546 U.S. at 170. Only after a 

Volvo dealer was invited to bid did it request discounts or 

concessions from Volvo as part of preparing the bid. Id. 

Volvo dealers typically did not compete with each other in 

this situation.4 Because the plaintiff in Volvo (a Volvo 

dealer) could not show that it and another Volvo dealer were 

invited by the same buyer to submit bids, there was no 

competition between Volvo dealers, and therefore no section 

2(a) violation (which requires competition and potential 

competitive injury). Id. Moreover, because the plaintiff did 

not ask for price concessions from Volvo until after the 

buyer invited it to bid, id., (and no other Volvo dealer had 

been invited to bid, id. at 172) there could be no section 2(a) 

violation, id. at 177. Recognizing that the fact pattern in 

Volvo was different from a traditional Robinson-Patman Act 

“chainstore paradigm” case, where large chain stores were 

competing with small businesses for buyers, id. at 178, the 

Court “declin[ed] to extend Robinson-Patman’s 

governance” to cases with facts like those in Volvo, id. at 

181; see also Feesers, 498 F.3d at 214 (suggesting that there 

may be no actual competition where customers are selling to 

“two separate and discrete groups” of buyers).

4 In the rare occasions when the same buyer solicited a bid from more 

than one Volvo dealer, Volvo’s policy was “to provide the same price 

concession to each dealer competing head-to-head for the same sale.” 

Id. at 171.
30 U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC

B

We now turn to the question whether Costco and the 

Wholesalers were in actual competition. 

It is undisputed that Costco and the Wholesalers were 

customers of Living Essentials and purchased goods of the 

same grade and quality. Further, the district court found that 

the Wholesalers’ businesses were in geographic proximity to 

the Costco Business Centers, the only outlets that sold 5-

hour Energy. It held that there “was at least one Costco 

Business Center in close proximity to each of the 

[Wholesalers] or their customers.” Living Essentials and 

Judge Miller’s dissent seemingly argue that this finding is 

clearly erroneous, because the maps in the record are 

ambiguous and the Wholesalers’ expert, Dr. Frazier, is 

unreliable, because he “did not calculate the distance or drive 

time[s] between the stores” and did not conduct customer 

surveys. We disagree. “Where there are two permissible 

views of the evidence, the factfinder’s choice between them 

cannot be clearly erroneous.” Anderson v. City of Bessemer 

City, N.C., 470 U.S. 564, 574 (1985). Therefore, we defer 

to the district court’s fact-finding notwithstanding the 

alleged ambiguity in the evidence. Further, the district court 

could reasonably reject Living Essentials’ critique of Dr. 

Frazier’s methodology.

We next consider whether Costco and the Wholesalers 

operated at different functional levels with respect to resales 

of 5-hour Energy. The district court found that they did 

operate at different functional levels, and therefore competed 

for different customers of 5-hour Energy. In so holding, the 
U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC 31

district court abused its discretion because its ruling was 

based on both legal and factual errors.5

First, the district court erred as a matter of law in 

concluding that, because the jury found in favor of Living 

Essentials on the section 2(a) claim, the jury made an 

implicit factual finding that there was no competition 

between Costco and the Wholesalers. As we have explained, 

to prevail on a section 2(a) claim, the Wholesalers had to 

show that the Wholesalers and Costco were in competition 

with each other, and that discriminatory price concessions or 

discounts caused a potential injury to competition. 

Therefore, in rejecting the Wholesalers’ claim, the jury could 

have determined that the Wholesalers and Costco were 

competing, but there was no potential harm to competition. 

Because the jury did not necessarily find that the 

Wholesalers and Costco were not competing, the district 

court erred by holding that the jury had made an implicit 

finding of no competition.6

5 The Wholesalers do not challenge the district court’s holding that they 

are judicially estopped from seeking an injunction on the ground that the 

IRCs are promotional services in connection with resale under section 

2(d). Therefore, any challenge to this finding is waived, and potential 

injunctive relief under section 2(d) excludes relief related to IRCs. See 

Officers for Just. v. Civ. Serv. Comm’n of City & Cnty. of San Francisco, 

979 F.2d 721, 726 (9th Cir. 1992).

6 Contrary to Living Essentials’ assertion, the Wholesalers did not waive 

this argument. Although a party that agrees to the use of a general verdict 

form waives a future challenge to the verdict as insufficiently specific, 

see, e.g., McCord v. Maguire, 873 F.2d 1271, 1274 (9th Cir.), opinion 

amended on other grounds on denial of reh’g, 885 F.2d 650 (9th Cir. 

1989), the Wholesalers do not raise such a challenge. Rather, the 

Wholesalers argue that the district court made a legal error in interpreting 

the verdict, and that argument is not waived.
32 U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC

Second, the district court erred in holding that Costco 

and the Wholesalers did not operate at the same functional 

level. The district court stated that Costco was a retailer and 

made the vast majority of its sales to the ultimate consumer. 

This finding is unsupported by the record, which contains no 

evidence that Costco sold 5-hour Energy to consumers. 

Rather, the evidence supports the conclusion that Costco 

sold 5-hour Energy to retailers. First, Living Essentials’ 

Vice President of Sales, Scott Allen, testified that from 2013 

to 2016, only Costco Business Centers, which target 

retailers, and not regular Costco stores, which target 

consumers, carried 5-hour Energy. Another Living 

Essentials employee, Larry Fell, testified that 90 percent of 

all Costco Business Center clients were businesses, and that 

Costco Business Centers targeted mom-and-pop 

convenience stores and small grocery stores. Allen also 

testified that Costco Business Centers sold 5-hour Energy in 

24-packs, which Living Essentials packages for sale to 

businesses rather than to consumers. This evidence supports 

the conclusion that Costco sold 24-packs of 5-hour Energy 

to retailers, and there is no evidence supporting the district 

court’s conclusion that Costco sold 5-hour Energy to 

consumers. Therefore, as a matter of “economic reality,” 

both Costco and the Wholesalers were wholesalers of 5-hour 

Energy. The district court clearly erred by holding 

otherwise.

Because the evidence shows that Costco and the 

Wholesalers operated at the same functional level in the 

same geographic area, if the Wholesalers and Costco 

purchased 5-hour Energy within approximately the same 

period of time, this confluence of facts is sufficient to 

establish that Costco and the Wholesalers are in actual 
U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC 33

competition with each other in the distribution of 5-hour 

Energy. See Tri-Valley Packing Ass’n, 329 F.2d at 708. 

C

Judge Miller’s dissent argues that Costco and the 

Wholesalers are not in actual competition because they did 

not compete in the resales of 5-hour Energy to the same 

buyers. The dissent bases this argument on evidence in the 

record that Costco and the Wholesalers had “substantial 

differences in operations” and that buyers did not treat 

Costco and the Wholesalers as substitute supply sources of 

5-hour Energy. We disagree with both arguments.

First, the differences in operations that Judge Miller’s 

dissent cites, such as differences in the availability of instore credit, negotiated prices, or different retail-oriented 

accessories such as 5-hour Energy display racks, are not 

relevant to determining whether Costco and the Wholesalers 

are “customers competing” under 15 U.S.C. § 13(d). As 

explained above, customers may compete for purposes of 

section 2(d) even if they operate in different manners. Cf.

Simplicity Pattern Co., 360 U.S. at 59–62 (holding that a 

variety store and a specialized fabric store were in 

competition for the sale of clothing patterns even though 

they carried different inventories and presented the 

merchandise in different manners). Our sister circuits have 

taken a similar approach. See Feesers, 498 F.3d at 214 n.9 

(holding that, for purposes of determining whether two 

businesses were in competition, it was irrelevant that one 

was “a full line distributor of food and food related products” 

and the other was a “food service management company,” 

with very different operations); see also Lewis, 355 F.3d at 

531–32 (holding that companies using vending machines to 

resell cigarettes can be in competition with convenience 
34 U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC

stores that resell cigarettes); Innomed Labs, 368 F.3d at 160 

(holding that chain stores in competition with smaller 

businesses often offer lower prices than smaller businesses). 

In addition to precedent, FTC guidance indicates that 

customers are in competition with each other when they 

“compete in the resale of the seller’s products of like grade 

and quality at the same functional level of distribution,” 

regardless of the manner of operation. 16 C.F.R. § 240.5. 

For example, a discount department store may be competing 

with a grocery store for distribution of laundry detergent. 

See id. (Example 3). 

Second, Judge Miller’s dissent argues that Costco and 

the Wholesalers may not be in actual competition because it 

is not clear they sold to the same buyers. In making this 

argument, the dissent and Living Essentials primarily rely on 

Living Essentials’ economic expert, Dr. Darrel Williams, 

who testified that Costco and the Wholesalers were not in 

competition because their buyers did not treat Costco and the 

Wholesalers as substitute supply sources. Dr. Williams 

based this conclusion on evidence that the Wholesalers’ 

buyers continued to purchase 5-hour Energy from the 

Wholesalers regardless of changes in relative prices between 

the Wholesalers and Costco. This argument fails, however, 

because the question whether one business lost buyers to 

another does not shed light on whether the businesses are in 

competition, but only on whether there has been an injury to 

competition. See Lewis, 355 F.3d at 531–32 (holding that to 

establish that two businesses are in competition, the plaintiff 

is not required to show that the seller’s discrimination 

between the businesses caused buyers to switch to the 

favored business, because evidence of customer switching 

“goes to injury, and the element at issue on this appeal is the 

existence, not the amount of damage to, competition”); see 
U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC 35

also Volvo, 546 U.S. at 177 (determining that the “hallmark” 

of competitive injury is the diversion of sales). Therefore, 

Dr. Williams’s testimony about a lack of switching between 

Costco and the Wholesalers does not undermine the 

Wholesalers’ claim that they are in competition with Costco 

for resales of 5-hour Energy. 

Finally, Judge Miller’s dissent relies on Volvo for the 

argument that even when the criteria in Tri-Valley are met 

for actual competition, a seller can show that the two 

customers are not in actual competition because “markets 

can be segmented by more than simply functional level, 

geography, and grade and quality of goods.” But Volvo is 

inapposite. In Volvo, the customers (Volvo dealers) did not 

offer the same product to buyers in the same geographical 

area (i.e., the Tri-Valley scenario). Rather, it was the buyer 

who chose the customers from whom it solicited bids for a 

possible purchase. Since the buyer at issue in Volvo did not 

solicit bids from competing Volvo dealers, they were not in 

competition, and so a section 2(a) violation was not possible. 

In short, Volvo tells us that there may be circumstances 

where the evidence shows that each customer is selling to a 

“separate and discrete” buyer, as in Volvo, or to a separate 

and discrete group of buyers, eliminating the possibility of 

competition between customers. But there is no evidence 

supporting such a conclusion here. Instead, this case is a 

typical chainstore-paradigm case where the Wholesalers and 

Costco carried and resold an inventory of 5-hour Energy to 

all comers. 

Because the district court erred by finding that Costco 

and the Wholesalers operated at different functional levels 

and competed for different customers with respect to 5-hour 

Energy, it abused its discretion in denying injunctive relief 
36 U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC

to the Wholesalers on that basis.7 See Or. Coast Scenic R.R., 

841 F.3d at 1072. We therefore vacate the district court’s 

holding as to section 2(d) and reverse and remand for the 

district court to consider whether Costco and the 

Wholesalers purchased 5-hour Energy from Living 

Essentials “within approximately the same period of time” 

in light of the record (the only remaining Tri-Valley

requirement), Tri-Valley Packing Ass’n, 329 F.2d at 709, or 

whether the Wholesalers have otherwise proved their section 

2(d) claim.

AFFIRMED IN PART; VACATED, REVERSED, 

AND REMANDED IN PART.

8

7 In order to obtain injunctive relief, the Wholesalers must prove 

“threatened loss or damage by a violation of the antitrust laws.” 15 

U.S.C. § 26. Because the district court concluded that the Wholesalers 

could not prove they were in competition with Costco, it held that they 

could not prove an antitrust injury. On remand, the district court should 

consider whether there is any violation of the antitrust laws that threatens 

loss or damage to the Wholesalers in light of our ruling here.

8 Each party to bear its own costs on appeal.
U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC 37

GILMAN, Circuit Judge, concurring in part and dissenting 

in part:

Contrary to the majority’s decision, I am of the opinion 

that the district court abused its discretion in giving the 

“reasonably contemporaneous” instruction to the jury. I 

would therefore reverse the judgment of the court and 

remand for a new trial on the Wholesalers’ Section 2(a) 

claim with a properly instructed jury. On the other hand, I 

agree with the majority that the court did not abuse its 

discretion in giving the “functional discount” jury 

instruction. Finally, I agree with the majority that the court 

abused its discretion in finding that Costco and the 

Wholesalers operated at different functional levels. In sum, 

I concur in vacating the court’s denial of the Wholesalers’ 

Section 2(d) claim for injunctive relief and would go further 

in granting a new trial on the Wholesalers’ Section 2(a) 

claim. 

The Wholesalers’ secondary-line price-discrimination 

claim under Section 2(a) requires them to show that: (1) the 

challenged sales were made in interstate commerce; (2) the 

items sold were of like grade and quality; (3) the defendantseller discriminated in price between favored and disfavored 

purchasers; and (4) “‘the effect of such discrimination may 

be . . . to injure, destroy, or prevent competition’ to the 

advantage of a favored purchaser.” Volvo Trucks N. Am, 

Inc. v. Reeder-Simco GMC, Inc., 546 U.S. 164, 176–77 

(2006) (quoting 15 U.S.C. § 13(a)). 

Secondary-line price discrimination is unlawful “only to 

the extent that the differentially priced product or 

commodity is sold in a ‘reasonably comparable’ 

transaction.” Aerotec Int’l, Inc. v. Honeywell Int’l, Inc., 836 

F.3d 1171, 1188 (9th Cir. 2016) (citing Tex. Gulf Sulphur 
38 U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC

Co. v. J.R. Simplot Co., 418 F.2d 793, 807 (9th Cir. 1969)). 

To be reasonably comparable, the transactions in question 

must, among other things, occur “within approximately the 

same period of time,” such that the challenged price 

discrimination is not a lawful response to changing 

economic conditions. Tex. Gulf Sulphur, 418 F.2d at 807 

(quoting Tri-Valley Packing Ass’n v. FTC, 329 F.2d 694, 

709 (9th Cir. 1964)); see also England v. Chrysler Corp., 

493 F.2d 269, 272 (9th Cir. 1974) (observing that the 

“reasonably contemporaneous” requirement “serves the 

purposes of the [Robinson-Patman] Act” by helping to 

ensure that price differentials “have some potential for 

injuring competition”). A plaintiff must show at least two 

contemporaneous sales by the same seller to a favored 

purchaser and a disfavored purchaser to make a Section 2(a) 

claim. Airweld, Inc. v. Airco, Inc., 742 F.2d 1184, 1191 

(9th Cir. 1984) (citing, inter alia, Foremost Pro Color, Inc. 

v. Eastman Kodak Co., 703 F.2d 534, 547 (9th Cir. 1983), 

overruled on other grounds as recognized in Chrona 

Lighting v. GTE Prods. Corp., 111 F.3d 653, 657 (9th Cir. 

1997)).

The Wholesalers challenge as discriminatory thousands 

of sales of 5-Hour Energy that Living Essentials made to 

Costco over the course of seven years. Living Essentials 

also made thousands of sales to the Wholesalers over the 

same time period, many of which occurred on the very same 

day as sales to Costco. Trial Exhibit 847, a spreadsheet of 

all of Living Essentials’ sales during the relevant time 

period, documents each of these transactions (approximately 

95,000 transactions in total).

Although the spreadsheet is extensive, it is fairly selfexplanatory, not an “unexplained mass” as it is characterized 

by the majority. Each transaction appears on a separate line, 
U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC 39

with the date, the name of the buyer, the type of buyer 

(“wholesaler” or “Costco,” for example), the number of 

bottles purchased, and the price all clearly indicated. This 

evidence establishes that thousands of sales to Costco and to 

the Wholesalers occurred in close proximity over the course 

of the entire seven-year period, which more than satisfies the 

Robinson-Patman Act’s requirement that the challenged 

sales be reasonably contemporaneous. Cf. Airweld, 742 

F.2d at 1192 (“Airweld never proved when the sales actually 

occurred and therefore that they were contemporaneous to 

its purchases.”). 

Yet the majority concludes that the Wholesalers failed to 

meet their burden to establish contemporaneous sales 

because they “did not direct the district court to any evidence 

to substantiate their claim” until their post-trial motion for 

judgment as a matter of law, and even then the Wholesalers 

failed to “clearly identify any reasonably contemporaneous 

sales.” The majority concedes that “[t]here may have been 

a needle—or even many needles—in the haystack of sales 

data.” But the majority concludes that “[i]t was not the 

district court’s job to hunt for them.” In fact, however, there 

were many thousands of needles (contemporaneous sales 

data) in the evidentiary haystack of Trial Exhibit 847, so the 

court did not have to “hunt for them”—the data was staring

the court in the face for all to see. 

Moreover, by focusing only on whether the Wholesalers 

“identified any pair of sales that would satisfy their burden,” 

the majority fails to account for the full record in the trial 

court. The comprehensive sales data was referenced 

frequently at trial—indeed it was the centerpiece of much of 

the proceedings. To offer just one example, Living 

Essentials’ expert witness, Dr. Williams, engaged in an 
40 U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC

extensive analysis of the “sales data” by “look[ing] at every 

single day between 2012 and 2018.”

In light of this evidence, I see no justification to 

characterize the transactions in this case as anything other 

than reasonably contemporaneous. And I am not aware of 

any authority supporting the proposition that the sufficiency 

of the evidence for a jury instruction turns on how 

thoroughly counsel discussed certain evidence at trial, so 

long as it is properly admitted (which is the case here). Nor 

did Living Essentials offer any contrary evidence to place 

the issue back in dispute. In other words, giving the 

contemporaneous-sales instruction was unwarranted 

because the Wholesalers introduced unrefuted evidence that 

the sales were in fact contemporaneous. Cf. Desrosiers v. 

Flight Int’l of Fla. Inc., 156 F.3d 952, 959 (9th Cir. 1998) 

(“The district court could not have abused its discretion 

unless there was no factual foundation to support . . . an 

instruction.”). As the Wholesalers rightly pointed out,

“[t]here is literally no evidence to suggest that Living 

Essentials’ sales of 5-Hour Energy to Costco and Plaintiffs 

occurred at anything other than the same time.” 

The majority disagrees, holding that the district court 

properly ruled that the price differential could be explained 

(and therefore rendered lawful) by the fact that sales of 5-

Hour Energy were declining overall. They further speculate 

that the Wholesalers might have “bought the product during 

periods of higher market pricing that Costco avoided.” But 

declining overall sales is a market condition that would have 

affected all purchasers for resale and, more importantly, the 

price differential remained consistent throughout the sevenyear period over which the Wholesalers and Costco bought 

5-Hour Energy from Living Essentials. The record provides 

no basis to support the proposition that fluctuations in 
U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC 41

demand could account for price differentials between 

transactions that occurred on the same day. 

Parties are “entitled to an instruction about [their] theory 

of the case if it is supported by law and has foundation in the 

evidence.” Clem v. Lomeli, 566 F.3d 1177, 1181 (9th Cir. 

2009) (quoting Dang v. Cross, 422 F.3d 800, 804–05 

(9th Cir. 2005)); see also Mayflower Ins. Exch. v. Gilmont, 

280 F.2d 13, 16 (9th Cir. 1960) (holding that when “no 

evidence warrant[s] the giving of the instruction in 

question[,] the giving of that instruction must be held to be 

error”). Faced with the evidence outlined above, no 

reasonable juror could conclude that the transactions in this 

case were other than contemporaneous. No separation in 

time between transactions can account for the difference 

between the higher price offered to the Wholesalers and the 

lower price offered to Costco. That is what matters for the 

purposes of the Robinson-Patman Act, which targets price 

discrimination between “competing customers,” 

England v. Chrysler Corp., 493 F.2d 269, 272 (9th Cir. 

1974), in “comparable transactions,” Tex. Gulf Sulphur Co. 

v. J.R. Simplot Co., 418 F.2d 793, 806 (9th Cir. 1969)

(emphasis in original) (quoting FTC v. Borden Co., 383 U.S. 

637, 643 (1966)), in order to combat “the perceived harm to 

competition occasioned by powerful buyers,” Volvo Trucks 

N. Am., Inc. v. Reeder-Simco GMC, Inc., 546 U.S. 164, 175 

(2006).

The Wholesalers clearly objected to the “reasonably 

contemporaneous” instruction, and I find no evidence to 

support giving that instruction. I am therefore of the opinion 

that so instructing the jury was an abuse of the district court’s 

discretion. See Clem, 566 F.3d at 1181. And the 

Wholesalers need not have challenged the district court’s 

denial of their entire post-trial renewed motion for judgment 
42 U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC

as a matter of law in order for us to remand for a new trial 

on the basis of this instructional error; the very fact that they 

“objected at the time of trial on grounds that were 

sufficiently precise to alert the district court to the specific 

nature of the defect” is sufficient. See Merrick v. Paul 

Revere Life Ins. Co., 500 F.3d 1007, 1015 (9th Cir. 2007) 

(internal quotation marks omitted); see also Fed. R. Civ. P. 

51.

Nor was the district court’s error harmless. In the event 

of instructional error, prejudice is presumed, and “the burden 

shifts to [the prevailing party] to demonstrate that it is more 

probable than not that the jury would have reached the same 

verdict had it been properly instructed.” BladeRoom Grp. 

Ltd. v. Emerson Elec. Co., 20 F.4th 1231, 1243 (9th Cir. 

2021) (quoting Clem, 566 F.3d at 1182). In this case, the 

jury was told to “find for the Defendants” if it determined 

that Living Essentials’ sales to the Wholesalers and to 

Costco were not reasonably contemporaneous. And Living 

Essentials highlighted these instructions in their closing 

argument, calling the Wholesalers’ failure to present 

evidence of contemporaneous sales “fatal to their claim.” 

There is “no way to know whether the jury would [have] 

return[ed] the same [verdict] if the district court” had not 

given the “reasonably contemporaneous” instruction. See id. 

at 1244–45. I would therefore reverse the judgment of the 

court and remand for a new trial on the Wholesalers’ Section 

2(a) claim with a properly instructed jury. 
U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC 43

MILLER, Circuit Judge, dissenting in part:

I agree that the district court did not abuse its discretion 

in instructing the jury on the section 2(a) claims, but I do not 

agree that the district court erred in rejecting the section 2(d) 

claims. I would affirm the judgment in its entirety.

Under section 2(d), if two or more customers of a seller 

compete with each other to distribute that seller’s products, 

the seller may not pay either customer “for any services or 

facilities furnished by or through such customer in 

connection with the . . . sale” of the products unless the 

payment “is available on proportionally equal terms to all 

other customers competing in the distribution of such 

products.” 15 U.S.C. § 13(d); see Tri-Valley Packing Ass’n 

v. FTC, 329 F.2d 694, 707–08 (9th Cir. 1964). Unlike section 

2(a), section 2(d) does not require “a showing that the illicit 

practice has had an injurious or destructive effect on 

competition.” FTC v. Simplicity Pattern Co., 360 U.S. 55, 65

(1959). But it does demand that the favored and the 

disfavored customer be “competing” with each other. 15 

U.S.C. § 13(d).

The district court did not clearly err in finding that the 

Wholesalers failed to establish by a preponderance of the 

evidence that they were competing with Costco. (The district 

court was wrong to suggest that the jury’s verdict compelled 

this conclusion, but the court expressly stated that its finding 

also rested on an “independent review of the evidence,” and 

we may uphold it on that basis.) We have previously held 

that “customers who are in functional competition in the 

same geographical area, and who buy the seller’s products 
44 U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC

of like grade and quality within approximately the same 

period of time, are in actual competition with each other in 

the distribution of these products.” Texas Gulf Sulphur Co. 

v. J.R. Simplot Co., 418 F.2d 793, 807 (9th Cir. 1969) 

(quoting Tri-Valley Packing Ass’n, 329 F.2d at 709). We 

have not set out a definitive definition of “functional 

competition,” and the Wholesalers argue that they need only 

show a “‘competitive nexus,’ whereby ‘as of the time the 

price differential was imposed, the favored and disfavored 

purchasers competed at the same functional level, i.e., all 

wholesalers or all retailers, and within the same geographic 

market.’” (quoting Best Brands Beverage, Inc. v. Falstaff 

Brewing Corp., 842 F.2d 578, 585 (2d Cir. 1987)).

Such a capacious understanding of competition is 

foreclosed by the Supreme Court’s decision in Volvo Trucks 

North America, Inc. v. Reeder-Simco GMC, Inc., 546 U.S. 

164 (2006). There, the Court clarified that a common 

position in the supply chain in a shared geographical market 

is not sufficient, by itself, to establish actual competition. Id.

at 179 (“That Volvo dealers may bid for sales in the same 

geographic area does not import that they in fact competed 

for the same customer-tailored sales.”). Thus, it is not 

enough to point to evidence of “sales in the same geographic 

area.” Id. Instead, the evidence must show that the 

disfavored buyer “compete[d] with beneficiaries of the 

alleged discrimination for the same customer.” Id. at 178. 

Consistent with Volvo, other circuits have held that “two 

parties are in competition only where, after a ‘careful 

analysis of each party’s customers,’ we determine that the 

parties are ‘each directly after the same dollar.’” Feesers, 

Inc. v. Michael Foods, Inc., 591 F.3d 191, 197 (3d Cir. 2010) 
U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC 45

(quoting Feesers, Inc. v. Michael Foods, Inc., 498 F.3d 206, 

214 (3d Cir. 2007)); see also M.C. Mfg. Co. v. Texas 

Foundries, Inc., 517 F.2d 1059, 1068 n.20 (5th Cir. 1975) 

(“Competition is determined by careful analysis of each 

party’s customers. Only if they are each directly after the 

same dollar are they competing.”) (quoting Ag-Chem Equip. 

Co., v. Hahn, Inc., 350 F. Supp. 1044, 1051 (D. Minn. 1972), 

aff’d in part, vacated in part, 480 F.2d 482 (8th Cir. 1973)).

In this case, Living Essentials presented evidence of 

substantial differences in operations that suggests that the 

Wholesalers and Costco were not competing “for the same 

customer.” Volvo, 546 U.S. at 178. For example, unlike 

Costco, most of the Wholesalers sold 5-hour Energy only in 

store, negotiated pricing with their customers—offering inhouse credit and different prices for 5-hour Energy—and 

sold only to retailers, not to end-consumers. Meanwhile, 

Costco Business Centers sold both in store and online at set 

prices to any consumer with a Costco membership, some of 

whom were end-consumers; in addition, they carried fewer 

than half of the 5-hour Energy flavors carried by the 

Wholesalers, and they did not sell 5-hour Energy display 

racks or other retailer-oriented accessories for Living 

Essentials. It is true that Costco Business Centers sold most 

of their 5-hour Energy to retailers. But it is far from clear 

that Costco sold to the same retailers as the Wholesalers. The 

Wholesalers’ distinct features, such as their credit and wider 

inventory, may well have appealed to different customers.

Expert testimony corroborated that evidence. The parties 

offered dueling experts on the issue of competition. For the 

Wholesalers, Dr. Gary Frazier, a marketing expert, opined 
46 U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC

that the purchasers did compete based on his review of 

emails sent by Living Essentials’ employees discussing 

sales, the testimony of six of the seven Wholesalers, and 

maps showing the locations of the Wholesalers, their 

customers, and the seven Costco Business Centers. But on 

cross-examination, Dr. Frazier acknowledged that he did not 

speak with any of the Wholesalers’ customers, and that the 

maps on which he relied included all of the Wholesalers’ 

customers in a cluster of unlabeled dots without regard to

whether the customer ever purchased 5-hour Energy or the 

actual travel time for the customer to get to a Wholesaler 

versus one of the seven Costco Business Centers. The district 

court found that the Costco Business Centers and the 

Wholesalers were in close proximity to each other, and I do 

not question that finding. But the court was not required to 

accept Dr. Frazier’s inference that their 5-hour Energy 

customers were the same.

For Living Essentials, Dr. Darrel Williams, an expert in 

industrial organization and economics, testified that a 

“necessary condition for competition is that the buyers 

consider the two sellers substitute[s],” and he opined that this 

“necessary condition” was absent. After analyzing Living 

Essentials’ sales records, the sales data provided by four of 

the Wholesalers, and the Wholesalers’ customer data, Dr. 

Williams concluded that the Wholesalers did not compete 

with Costco for sales of 5-hour Energy. His analysis showed 

that even though some Wholesalers priced 5-hour Energy 

above the prices of other Wholesalers and Costco, the 

Wholesalers’ customers did not switch to the seller with the 

cheapest product; from the lack of any economically 

significant customer loss, he inferred that the Wholesalers’ 
U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC 47

customers did not treat Costco as a substitute supplier of 5-

hour Energy. He determined that the maximum level of 

customer switching across the Wholesalers and Costco was 

ten times lower than the switching attributable to ordinary 

customer “churn,” and that even the opening of three new 

Costco Business Centers had no statistically significant

effect on the Wholesalers’ 5-hour Energy sales. Dr. Williams 

posited that operating differences between the Wholesalers 

and Costco might explain why their customers differed. He 

reasoned that the Wholesalers might draw customers 

interested in buying on credit or in the unique products the 

Wholesalers offer. In its ruling on the Wholesalers’ motion 

for judgment as a matter of law, the district court 

summarized this testimony by explaining that “[b]ecause 

customers are presumed to purchase a product at the lowest 

available price, the jury could reasonably conclude this 

evidence tended to show Costco and Plaintiffs did not 

compete for the same customers.”

The Wholesalers respond that Dr. Williams’s testimony 

goes only to whether there was competitive injury, not 

whether there was competition in the first place. But that is 

a misreading of the testimony. Based on his conclusion that 

the Wholesalers’ customers were not sensitive to the price of 

5-hour Energy, Dr. Williams opined that the Wholesalers 

and Costco did not compete “for the same customer.” Volvo, 

546 U.S. at 178; see Lewis v. Philip Morris Inc., 355 F.3d 

515, 531 (6th Cir. 2004) (explaining that studies of price 

sensitivity are helpful for assessing competition).

To be sure, the district court was not required to credit 

Living Essentials’ evidence and Dr. Williams’s economic 
48 U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC

analysis of the sales data over the Wholesalers’ evidence and 

Dr. Frazier’s examination of emails and maps. But it did not 

clearly err in doing so and in finding that the Wholesalers 

failed to carry their burden. See United States v. Frank, 956 

F.2d 872, 875 (9th Cir. 1991) (“Clear error is not 

demonstrated by pointing to conflicting evidence in the 

record.”).

In reversing the denial of an injunction, the court deems 

all of the evidence of lack of actual competition—and the 

district court’s findings based on that evidence—to be 

irrelevant. It relies on our decision in Tri-Valley Packing, in 

which we said that where two direct customers of a seller 

both “operat[e] solely on the same functional level,” if “one 

has outlets in such geographical proximity to those of the 

other as to establish that the two customers are in general 

competition, and . . . the two customers purchased goods of 

the same grade and quality from the seller within 

approximately the same period of time,” then it is not 

necessary to trace the seller’s goods “to the shelves of 

competing outlets of the two in order to establish 

competition.” 329 F.2d at 708. Instead, “[a]ctual competition 

in the sale of the seller’s goods may then be inferred.” Id.

As the court reads Tri-Valley Packing, the “confluence 

of facts” of operating on the same functional level, being in 

geographic proximity, and reselling goods of like grade and 

quality is sufficient to conclusively establish competition, 

making any other evidence irrelevant. But what we said in 

Tri-Valley Packing is that actual competition “may . . . be 

inferred,” 329 F.2d at 708, not that it “shall be irrebuttably 

presumed.”
U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC 49

Nowhere in Tri-Valley Packing did we say that a 

defendant is barred from rebutting the inference of 

competition by presenting evidence that two resellers at the 

same functional level and in the same geographic area are 

not, in fact, in actual competition with each other. If we had, 

our insistence in Tri-Valley Packing on a showing of 

“functional competition,” which I have already discussed, 

would have been superfluous. 329 F.2d at 709. Reading TriValley Packing in that way is contrary to the economic 

reality that markets can be segmented by more than simply 

functional level, geography, and grade and quality of goods. 

Some differences in operations may not matter to customers, 

but others are undoubtedly significant. (In the New York 

geographic market, you can order a Coke both at Le 

Bernardin and at McDonald’s, but no one thinks they are 

engaged in actual competition.)

The court’s approach is also contrary to Volvo, which 

says that section 2(d) requires competition “for the same 

customer.” 546 U.S. at 178. It is contrary to the decisions of 

other circuits that have recognized that finding competition 

requires “a careful analysis of each party’s customers,” not 

the application of a categorical rule. Feesers, Inc., 591 F.3d 

at 197 (internal quotation marks omitted). And it is 

unsupported by the Federal Trade Commission’s 

interpretation of section 2(d). In regulations defining 

“competing customers,” the FTC gives the following 

illustrative example: “B manufactures and sells a brand of 

laundry detergent for home use. In one metropolitan area, 

B’s detergent is sold by a grocery store and a discount 

department store.” 16 C.F.R. § 240.5. Under the court’s 

reading of Tri-Valley Packing, the grocery store and the 
50 U.S. WHOLESALE OUTLET & DISTR. V. INNO. VENTURES, LLC

discount department store would necessarily be in 

competition with each other. But that is not how the FTC 

sees it. Instead, the agency says, “If these stores compete 

with each other, any allowance, service or facility that B 

makes available to the grocery store should also be made 

available on proportionally equal terms to the discount 

department store.” Id. (emphasis added); see also FTC v. 

Simplicity Pattern Co., 360 U.S. 55, 62 (1959) (emphasizing 

the FTC’s factual finding that the putative competitors were 

indeed “retailing the identical product to substantially the 

same segment of the public” (quoting Simplicity Pattern Co. 

v. FTC, 258 F.2d 673, 677 (D.C. Cir. 1958), aff’d in part, 

rev’d in part, 360 U.S. 55 (1959)). The presence or absence 

of competition must be assessed based on the facts.

The district court appropriately reviewed all of the 

evidence in making a finding that Living Essentials had not 

established competition. Because that finding was not 

clearly erroneous, I would affirm the judgment in its entirety.