NO. 93-097

IN THE SUPREME COURT OF THE STATE OF MONTANA

1993

RICHARD W. SMITH, d/b/a HIGH PLAINS

GAMING-SMITH BROTHERS AMUSEMENTS;

DENNIS H. DANIELS, d/b/a FLEETWOOD

AMUSEMENT OF MISSOULA; DAVID G. KELMAN,

d/b/a AMERICAN MUSIC COMPANY: EVELYN

KELMAN, d/b/a ARCHER'S CASINO; THOMAS

HEISLER, d/b/a BINGO BONANZA: CHARLES

P. WIECK, d/b/a BEDROCK GAMING; JON

L. DEHLER, d/b/a FLEETWOOD AMUSEMENTS:

and GLEN ALEXANDER, d/b/a ACE AMUSEMENT,

Plaintiffs and Appellants,

--vs.-

VIDEO LOTTERY CONSULTANTS, INC., a

Montana corporation,

Defendant and Respondent.

APPEAL FROM: District Court of the Eighteenth Judicial District,

In and for the County of Gallatin,

The Honorable Larry A. Moran, Judge presiding.

COUNSEL OF RECORD:

For Appellants:

George T. Radovich, Billings, Montana

For Respondent:

Tom Stonecipher and Peter M. Kirwan, Kirwan &

Barrett, P.C., Bozeman, Montana

Submitted on Briefs: July 15, 1993

Decided: August 17, 1993

Clerk
Justice James C. Nelson delivered the Opinion of the Court.

This is an appeal from an Order of the Eighteenth Judicial

District Court granting Defendant's (Video Lottery's) motion to

dismiss the Plaintiffs' amended complaint for failure to state a

claim upon which relief may be granted. We affirm in part and

reverse in part.

We restate the issues on appeal as follows:

1 . Did the District Court err in dismissing the Plaintiffs'

restraint of trade claim against Video Lottery?

2 . Did the District Court err in dismissing the Plaintiffs'

monopoly and rebates claims against Video Lottery?

In their amended complaint, the Plaintiffs allege the

following facts. The Plaintiffs are engaged in the retail gambling

business. Video Lottery is engaged in selling wholesale gambling

machines and in operating retail gambling machines. Video Lottery

is a competitor of the Plaintiffs and has refused to provide its

machines to the Plaintiffs on a wholesale level. Plaintiffs filed

an amended complaint against Video Lottery, alleging that its

failure to sell the machines to the Plaintiffs violated three

sections of the Montana Unfair Trade Practices Act, 55 30-14-201,

et seq., MCA. The Plaintiffs also requested an injunction of the

alleged violative conduct.

Video Lottery moved to dismiss the amended complaint pursuant

to Rule 12(b)(6), M.R.Civ.P., for failure to state a claim upon

which relief could be granted. The district judge granted this

motion, and the Plaintiffs appealed.

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In reviewing a Rule 12 motion to dismiss, we will construe the

complaint in the light most favorable to the plaintiffs and take

the allegations of the complaint as true. Willson v. Taylor

(1981), 194 Mont. 123, 126, 634 P.2d 1180, 1182. The dismissal

will be affirmed only if this Court finds that the plaintiffs are

not entitled to relief under any set of facts which could be proven

in support of the claim. Proto v. Missoula County (1988), 230

Mont. 351, 352-53, 749 P.2d 1094, 1095-96.

I - RESTRAINT OF TRADE CLAIM

The Plaintiffs allege that Video Lottery has violated !j 30-14-

205(2) cc), MCA, which provides:

It is unlawful for a person or group of persons, directly

or indirectly: . . .

(2) for the purpose of creating or carrying

out any restriction in trade, to: . . d

(c) prevent competition in the

distribution or sale of

merchandise or commodities.

Although this section is modeled after § 1 of the Sherman Act, it

differs in one critical respect. The Sherman Act requires two or

more persons to be involved in the unlawful trade restraint: in

effect, a conspiracy must exist. 15 U.S.C. 5 1; Copperweld Corp.

v. Independence Tube Corp. (1984), 467 U.S. 752, 767-6,8, 104 S.Ct.

2731, 2739-40, 81 L.Ed.2d 628, 641. However, the Montana

counterpart states that a "person" may violate this section. Thus,

the Montana statute on restraint of trade facially appears to be

broader than the Sherman Act, as one person acting alone may

violate the Montana statute.

We note that there is minimal Montana law interpreting the

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Unfair Trade Practices Act, and no cases interpreting 5 30-14-

205(2) (c), MCA. We also recognize that cutting litigation short at

the initial pleading stage is not favored. Willson, 634 P.2d at

1183. This is especially true when the cause of action is based

upon a statute that has not been previously interpreted and where

no underlying factual record has been developed.

Therefore, because Montana's restraint of trade statute

differs in some respects from the Sherman Act, and because we have

not heretofore interpreted 5 30-14-205(2)(c), MCA, on appeal and in

the context of a factual record developed on the basis of the

granting of a mot:ion for summary judgment or on the basis of a

trial, we hold that dismissing the complaint on Count One was

premature and thus error. While not ruling on the merits of their

claim, we cannot say that the Plaintiffs are not entitled to relief

under any set of facts which could be proven in support of their

claim. We believe that the Plaintiffs' allegations should be more

fully developed through discovery. & Willson, 634 P.2d at 1183.

If the Plaintiffs cannot develop a sustainable action through

discovery, their claim under § 30-14-205(2)(c), MCA, may be

properly disposed of through summary judgment.

As to the Plaintiffs' request for an injunction under 5 30-14-

222, MCA, we hold that, if the Plaintiffs are able to develop and

maintain an action under § 30-14-205(2)(c), MCA, they may then be

entitled to injunctive relief. However, if the Plaintiffs cannot

factually develop and maintain an action under this section, then

an injunction wil:L not properly issue.

Accordingly, we reverse the District Court's dismissal of

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Counts One and Four, and remand for proceedings consistent with

this opinion.

II - MONOPOLY AND REBATES CLAIMS

The Plaintiffs also allege that Video Lottery has refused to

provide its machines to the Plaintiffs in order to create a

monopoly in the sale and use of Video Lottery machines. This claim

is based on § 30-14-205(2)(g), MCA, which provides:

It is unlawful for a person or group of persons, directly

or indirectly: . . .

(2) For the purpose of creating or carrying

out any restriction in trade, to: . . .

(4) create a monopoly in the

manufacture, sale, or

transportation of an article of

commerce.

This section of the Unfair Trade Practices Act is very similar to

§ 2 of the Sherman Act, which prohibits the creation of a monopoly.

Because the statutes are similar, we will give due weight to the

federal courts' interpretation of this type of alleged antitrust

violation.

In this case, the Plaintiffs allege that Video Lottery has

refused to sell its gambling machines to them. However, it is

clear that "[a] manufacturer has a natural monopoly over its own

products, especially when the products are sold under a trademark."

Sadler v. Rexair, Inc. (D.C.Mont. 1985), 612 F.Supp. 491, 494.

In Sadler, a supplier of Rainbow vacuum cleaners terminated a

distribution agreement with the plaintiff. The plaintiff filed an

action against the supplier, alleging antitrust violations. The

court held that "[a] 'brand' monopoly over the manufacturer's own

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product . . . is not a violation of 15 U.S.C. § 2" and dismissed

the action. Sadler, 612 F.Supp. at 494.

Following the reasoning of Sadler, we hold that a brand

monopoly over the manufacturer's own product does not violate 5 30-

14-205(2)(g), MCA. Here, Plaintiffs allege Video Lottery has

refused to sell Video Lottery gambling machines to them. This

allegation cannot sustain a cause of action under this section of

the Unfair Trade Practices Act.

The Plaintiffs also claim that Video Lottery's refusal to sell

its machines violates § 30-14-215(l), MCA, which prohibits secret

rebates, as follows:

(1) The secret payment or allowance of rebates, refunds,

commissions, or unearned discounts, whether in the form

of money or otherwise, or secretly extending to certain

purchasers special services or privileges not extended to

all purchasers purchasing upon like terms and conditions,

to the injury of a competitor and when such payment or

allowance tends to destroy competition, is an unfair

trade practice. . . . (emphasis added)

This section applies when a seller discriminates between

purchasers. The Plaintiffs have alleged that Video Lottery has

refused to sell to them. Therefore, the Plaintiffs are not

"purchasers" as contemplated by this statute. Because this section

of the Unfair Trade Practices Act applies only to discrimination

between purchasers, the Plaintiffs have failed to state a claim

under this section upon which relief may be granted.

We hold that the District Court properly dismissed Counts Two

and Three of the Plaintiffs' amended complaint.

Affirmed in part, reversed in part, and remanded for

proceedings consistent with this opinion.

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We concur:

A?‘

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