# U ni te d S ta te s Co ur t of A pp ea ls

For the Eig hth Circu it

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No. 1 4- 25 61

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In su la te SB, In c.

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff - App el la nt

v.

Adv an ced Fin is hi ng Sy st em s, In c.; Ai rte ch Sp ray Sy st em s; Barn ha rd t
Man uf act ur in g C om

pa ny; C.H. Reed , Inc .; C.J . Spr ay ; Co as t In du st ria l Syste m s, In c.; C oa ti ng s Ho ld in gs , Ltd .; Dem il ec (USA), LLC; Dov e Equ ip m en t Co ., Inc .; End is y s Fl ui d Del iv ery Sy st em s; Gol de n S ta te Pai nt Co rp or at io n; Graco Inc .; Graco Mi nn es ot a In c.; J ack DeMi ta , in hi s i nd iv id ua l ca pa ci ty; Int ech Equ ip m en t
& Su pp ly, LLC; M arco Grou p In te rn at io na l, In c.; M CC Eq ui pm en t & Serv ic e Cen te r; S pe ci al ty Prod uc ts , Inc .; Sp ray Fo am Nati on , (reg is te red un de r Ene rg y In de pe nd en ce In c.); Sp ray Fo am Sy st em s, LLC; Sp ray-Quip , Inc .; Ul ti m at e Lin in gs , Ltd

.

ll ll ll ll ll ll ll ll ll ll l Defe nd

an ts - App el le es

__ __ __ __ __ __
App eal fro m

Uni te d S ta te s Di st ric t Co ur t fo r th e Dis tri ct of M in ne so ta - Mi nn eap ol is

__ __ __ __ __ __

Su bm it te d: May 12, 2 01 5
Fil ed : Au gu st 13 , 20 15

__ __ __ __ __ __

Befo re RI LEY, Chi ef J ud ge , MURPHY an d M ELLOY, Cir cu it Ju dg es

.

__ __ __ __ __ __RILEY, Chi ef J ud ge

.

In su la te SB, In c., a pu rch as er of fas t-s et sp ray fo am eq ui pm en t (FSE), fil ed th is

an ti tru st cl as s act io n al le gi ng FSE m an uf act ur er Graco In c. an d it s su bs id ia ry Graco

Mi nn es ot a In c. (Grac o) an d a nu m be r of FSE di st rib ut or s (Dis tri bu to rs ) (co ll ect iv el y ,
ap pe ll ees ) co ns pi r e d to res tra in tra de in vi ol at io n of fed eral an ti tru st la w, se e 15

U.S

. C

. § 1, et se q., an d nu m ero us st at e an ti tru st an d co ns um er pr ot ect io n la ws.

In su la te cl ai m s th es e co ns pi raci es ke pt Graco ’s c o mp et it or s ou t of th e m ark et

, al lo win g Graco an d th e Dis tri bu to rs to ch arg e art ifi ci al ly hi gh pr ic es

. The di s t r i c t

co ur t di sm is se d th e act io n on th e pl ead in gs , an d wit h ap pe ll at e juri sd ic ti on un de r 1

28 U.S.C. § 1 29 1, we af

fir m

.

I. BACKGRO UND 2

Graco m an uf

act ur es FSE an d se ll s it to di st rib ut or s, who th en res el l on th e op en

mar k e t t o co ns um ers li ke In su la te

. Bec au se th ere is no di rect m ark et fo r FSE

, di st rib ut or s are ke y to it s sa le

. In su la te pu rch a s e d F SE fro m de fen da nt di st rib ut or

In te ch Equ ip m en t & Su pp ly, L.L

. C

. an d cl ai m s Graco ’s an ti co m pe ti ti ve pr act ic es

fo rced it to pa y an art ifi ci al ly hi gh pr ic e. In 20 05

, Graco pu rch as ed a co m pe ti ng FSE

m an uf act ur er, Gus m er Co rp ., th us ach ie vi ng a 65 % sh are of th e Nor th Am eri can FSE

m ark et

, an d in 20 08

, Graco pu rch as ed co m pe ti to r Glas Craf

t, In c., rai si ng it s m ark et

sh are “ to ab ov e 9 0%.”

In su la te al le ge s at so m e po in t “ Graco ag reed wit h it s Dis tri bu to rs in di vi du al ly

an d co ll ect iv el y to en te r in to ex cl us iv e de al in g arra ng em en ts fo r th e pu rp os e of

The Hon or ab le Ann D. Mo nt go m ery, Uni te d St at es Dis tri c t Ju dg e fo r th e 1

Dis tri ct of M in ne so ta

.

Bec au se th is cas e was di sp os ed on a m ot io n to di sm is s, we st at e th e well -p le d 2

fact s as al le ge d in th e co m pl ai nt

. See Zay ed v. Ass oc

. Ban k, N.A., 77 9 F.3 d 72 7, 73 0 (8 th Cir . 20 15 ).

-2

-ke ep in g ne w an d po te nt ia l ent ran ts ou t of the FSE m ark et .” In su la te fu rth er al le ge s

“ ke y Dis tri bu to rs ” as si st ed Graco in a d v a n c in g it s an ti co m pe ti ti ve sc he m e. In

Octo be r 20 07

, Graco se nt a le tt er to it s di st rib ut or s ci ti ng th e “ be st effo rts ” cl au se in

it s di st rib ut or ag reem en ts an d ex pr es si ng it s pr efer en ce th at di st rib ut or s refr ai n fro m
ad di ng no n- Graco pro du ct s. Th e le tt er s ta te d:

It is ou r op in io n th at ta ki ng on an ad di ti on al co m pe ti ti ve pr od uc t li ne m ay si gn ifi can tl y red uc e th e “ be st effo rts ” of a Graco di st rib ut or to

se ll ou r Graco an d Gus m er pr od uc t li ne s. Graco real iz es th at a bu si ne ss

own er m us t m ak e in de pe nd en t de ci si o n s reg ard in g pr od uc t li ne s

co m pe ti ti ve to Graco an d Gu sm er p ro du ct off eri ng s. . . .

Sh ou ld a di st rib ut or ad d a co m pe ti ti ve pr od uc t li ne , it wil l res ul t in a n i mm ed ia te rev ie w of ou r bu si ne ss rel at io ns hi p an d m ay im pa ct

acce ss to sp eci fi c p r o d uc ts

, ch an ge s in ad de nd um st at us or po ss ib le
el im in at io n o f ou r di st rib ut or ag reem en t. . . .

Thi s p os it io n h as be en ad op te d b y us un il at eral ly.

In su la te co nt en ds th es e di st rib ut or ag reem en ts ke pt po te nt ia l co m pe ti to r Gam a

Mac hi ne ry USA, In c. fro m en t e r i n g th e FSE m ark et

. In Ja nu ary 20 09

, Fo am pa k,

In c.—a Graco di s t r i b u t o r no t na m ed as a de fen da nt —co ns id ered carr y in g Gam a

pr od uc ts bu t ch os e no t to aft er Graco exe cu ti ve s m et wit h Fo am pa k’s pr es id en t an d

th reat en ed to en d it s di st rib ut or sh ip

. “ Co ns id eri ng it a be tt er de ci si on fo r it s bu si ne ss , Fo am pa k acq ui es ced .” In Feb ru ary 20 12

, Graco se nt a le tt er to it s d i s t r ib ut or s

“ rem in di ng ” th em to no t carr y Gam a pr od uc ts

. In su la te al le ge s ex cl us iv e de al in g

ag reem en ts al lo wed Dis tri bu to rs to “ ch a r g e C o nt ract or s an ti co m pe ti ti ve pr ic es fo r [FSE] an d co nt ro l ge og rap hi c di st rib ut io n area s a n d ex cl ud e ne w di st rib ut or s fro m

su ch area s.”

In Mar ch 20 08

, Graco su ed Gam a al le gi ng , am on g ot he r th in gs , th eft of tra de

se cret s, an d Gam a co un te rcl ai m ed al le gi ng , am on g o t h e r th in gs , Graco ha d

-3

-un il at eral ly m on op ol i z e d t h e FSE m ark et in vi ol at io n of Sh erm an Act Sect io n 2,

15 U.S.C. § 2

.

In 20 13

, th e Uni te d St at es Fed eral Trad e Co m m is si on (FTC) al s o dr aft ed a

co m pl a i n t ag ai ns t Graco accu si ng Graco of un la wfu ll y acq ui rin g it s co m pe ti to rs in

vi ol at io n of Cl ay to n Act Sect io n 7, id

. § 18

. Graco an d th e FTC en te r e d a co ns en t

ag reem en t whi ch co nf

irmed Graco w ou ld no t en ga ge in an y pr act ic e “ th at ha s th e

pu rp os e or effe ct of ach ie vi ng Exc lu si vi ty wit h a n y Dis tri bu to r.” The co ns en t

ag reem en t di d “ no t c on st it ut e an ad m is si on by [Grac o] th at th e la w ha [d ] be en
vio la te d,” an d Graco em

ph as iz es “ th e FTC di d no t al le ge ” th at Graco ’s act iv it ie s w er e

un la wfu l.

On Ju ne 14

, 20 13

, aft er le arn in g of th e FTC co m pl ai nt

, In su la te fil ed th e in st an t

su it

. In su la te cl ai m ed Graco an d a co ll ect io n of FSE di st rib ut or s, th ro ug h

“ ag reem en ts in res tra in t of tra de ,” co ns pi red to red uc e co m pe ti ti on in vi ol at io n of th e
Sh erm an Act, th e Cl ay to n Act, an d nu m ero us st at es ’ an ti tru st an d co ns um er

pr ot ect io n la ws. The di st ric t co ur t gr an te d th e ap pe ll ees ’ m ot io ns to di sm is s, fin di ng (1 ) In su la te ’s fed eral cl ai m s were ba rred by th e st at ut e of li m it at io ns ; (2 ) In su la te ha d

fai le d to st at e a cl ai m on it s fed eral c a u s e s o f act io n; (3 ) In su la te

, as a Cal ifo rn ia

res id en t, co ul d no t br in g st at e la w c l a i ms f o r st at es ot he r th an Cal ifo rn ia ; an d
(4 ) In su la te ha d no t m et th e Cal ifo rn i a a n ti tru st st at ut e of li m it at io ns an d fai le d to

st at e a cl ai m

un de r Cal ifo rn ia ’s Unfa ir C om pe ti ti on Law. Ins ul at e ap pe al s.

3

The di st ric t co u r t a l s o de ni ed In su la te ’s req ue st fo r in jun ct iv e rel ie f on it s 3

fed eral an ti tru st cl ai m s. W e do no t reac h t h e d i s tri ct co ur t’s st at ut e of li m it at io ns de ci si on s.

-4

-II

. DISCUSS IO N

A. Feder al Antit rus t Cla ims

1. Feder al Antit rus t Sta ndi ng

“ [T]he fo cu s of th e do ct rin e of ‘ant it ru st st an di ng ’ is so m ewh at di ffer en t fro m

th at of st an di ng as a co ns ti tu ti on al do ct rin e.” Ass oc ia te d Gen . C on tra ct or s of Cal

., In c. v. Cal

. St at e Co un ci l of Carp en te rs , 45 9 U.S. 51 9, 53 5 n.3 1 (1 98 3) ; cf. NicS an d,

In c. v. 3M Co

., 50 7 F.3 d 44 2, 44 9 (6 th Ci r. 20 07 ) (en ba nc ) (d es cri bi ng th e do ct rin e

of an ti tru st st an di ng as m or e rig or ou s th an Arti cl e III st an di ng an d ex pl ai ni ng co ur ts

“ m us t[] reject cl ai m s un de r [Fed eral Ru le of Ci vi l Pro ced ur e] 12 (b )(6 ) whe n an ti tru st

st an di ng is m is si ng ”). To br in g a fed eral an ti tru st cl ai m , “ a pr iv at e pl ai nt iff m us t

de m on st rat e th at he ha s su ffer ed an ‘ant it ru st in jury’ as a res ul t of th e al le ge d co nd uc t

of th e de fen da nt s.” In re Can ad ia n Im po rt Ant it ru st Lit ig

., 47 0 F.3 d 78 5, 79 1 (8 th

Ci r. 20 06 ). An “ an ti tru st in jury” is an “ in

jur y of th e type th e an ti tru st la ws were

in te nd ed to pr ev en t

. . . th at flo ws fro m th at whi ch m ak es de fen da nt s’ act s un la wfu l.”

Bru ns wick Co rp

. v. Pu eb lo Bo wl-O-M at

, In c., 42 9 U.S. 4 7 7

, 4 8 9 (1 97 7)

. “ [T]he

Su pr em e Co ur t [h as ] he ld th at a rem ot e or ‘ind ire c t ’ pu rch as er was no t a pe rs on

in jure d” un de r fed eral an ti tru st la w. In re Mi dwe st Mi lk Mo no po li zat io n Lit ig

., 73 0

F.2 d 52 8, 52 9 (8 th Ci r. 19 84 ) ( c it in g Ill

. Bri ck Co

. v. Ill in oi s, 43 1 U.S. 72 0, 73 5
(1 97 7) ).

The ap pe ll ees cla im In su la te , a s an in di rect pu rch as er o f FSE, la ck s s ta nd in g

to br in g it s an ti tru st cl ai m s. Our co ur t ha s su gg es te d th at in di rect pu rch as ers m ay
br in g an an ti tru st cl ai m if th ey al le ge th e di rect pu rch as ers are “ pa rty to th e an ti tru st

vi ol at io n” an d joi n th e di rect pu rch as ers as de fen da nt s. Cam po s v. Tick et m as te r

C o rp ., 14 0 F.3 d 11 66

, 11 70 -7 1 & nn .3-4 (8 th Ci r. 19 98 ). W e no w ho ld as mu c h

. Bec au se In sul at e’ s co m

pla int al le ge s co nsp ira ci es be twee n Graco an d th e Dis tri bu to rs

an d nam es th e Dis tri bu to rs as de fen da nt s, In su la te ha s ad eq ua te ly es ta bl is he d it ha s

an ti tru st st an di ng

.

-5

-2. Fai lu re to Sta te a Cla im

The pr es en ce of an ti tru st st an di ng do es no t an swe r th e di st in ct qu es ti on
whe th er In su la te ha s su ffi ci en tl y st at ed a cl ai m un de r Fed eral Ru le of Ci vi l Pro ced ur e

12 (b )(6 ). Cf. H u tt erv il le Hut te ria n Bret hr en , I nc . v . S ve en , 7 76 F.3 d 54 7, 55 4 (8 th

Ci r. 20 15 ).

“ W e rev ie w de no vo th e di st ric t co ur t’s gr an t of a m ot io n to di sm is s un de r Ru le

12 (b )(6 ).” Ret ro Tele vi si on Netwo rk

, In c. v. Luk en Co m m c’ns

, LLC, 69 6 F.3 d 76 6,

7 6 8 ( 8 t h C i r. 20 12 ). “ [A] pl ai nt iff ’s ob li ga ti on to pr ov id e th e gr ou nd s of hi s 4

en ti tl em en t t o r e l i ef req ui res m or e th an la be ls an d co nc lu si on s, an d a fo rm ul ai c
reci ta ti on of th e el em en ts of a cau se of act io n wil l no t do .” Bel l A tl

. Co rp

. v.

Twom bl y , 55 0 U.S. 5 44 , 55 5 (2 00 7) (in te rn al m ark s o m it te d)

.

Giv en “ th e un us ua ll y hi gh co st of di sc ov ery in an ti tru st cas es ,” id

. at 55 8, “ th e

li m it ed ‘suc ces s of

jud ic ia l su pe rv is io n in ch eck ing dis co ve ry ab us e[,]’ an d ‘the th reat [th at ] di sc ov ery ex pe ns e wil l pu sh co st -co ns ci ou s de fen da nt s to se tt le ev en an em ic

cas es

. . . , ’ th e fed eral co ur ts ha ve be en reas on ab ly ag gr es si ve in weed in g ou t

On ap pe al

, In su la te as ks th is co ur t to t a k e jud ic ia l no ti ce of a nu m be r of 4

do cu m en ts co nc ern in g th e FTC an d Gam a act io ns —i nc lu di ng th e FTC co m pl ai nt an d
rel at ed do cu m en ts

, th e di st ric t co ur t’s or de r de nyin g su m m ary jud gm en t to Graco in
th e Gam a su it

, an d a tra ns cri pt of a de po si ti on ta ke n in th e Gam a su it —t ha t In su la te be li ev es are “ su pp or ti ve of th e pl au si bi li ty of [it s] cl ai m s.” Fed eral Ru le of Evi de nc e 20 1( b) all ows th is co ur t to ta ke jud ic ia l n ot ic e o f pu bl ic do cu m en ts for th e p ur po se of no ti ng un di sp ut ed ad

jud ic at iv e fact s, bu t jud ic ia l no ti ce is in ap pr op ria te t o th e

ex te nt Ins ul at e o ffer s th es e do cu m en ts fo r th e “ tru th of th e m at te rs wit hi n t he m

an d
in fere nc es to be d r a wn fro m th em –m at te rs whi ch [Grac o] di sp ut es .” Kus hn er v. Bev erl y Ent ers ., 31 7 F.3 d 82 0, 83 2 (8 th Ci r. 20 03 ). W e th us gr an t In su la te ’s m ot io n fo r jud ic ia l no ti ce of th es e do cu m en ts to th e ex te nt we no te th e ex is te nc e of an d ba si c fact s su rro un di ng th es e act io ns , bu t we de cl in e to co ns id er th e do cu m en ts as ev id en ce Graco act ua ll y

en ga ge d i n a ny ant ic om

pe ti ti ve co nd uc t al le ge d t he rei n.

In su la te ’s m ot io n t o s up pl em en t t he reco rd is de ni ed

.

-6

-m eri tl es s an ti tru st cla im s at th e p le ad in g s ta ge ,” NicS an d, 5 07 F.3d at 4 50 (se co nd

al te rat io n in or ig in al ) (q uo ta ti on om it te d) (q uo ti ng Twom bl y , 55 0 U.S. at 55 9)

. Cf.

In re Tex t Mes sa gi ng Ant it ru st Lit ig

., 63 0 F.3 d 62 2, 62 5- 26 (7 th Ci r. 20 10 ) (“ W he n

a di st ric t c o u r t b y misa pp lying th e Twom bl y st an da rd al lo ws a co m pl ex cas e of

ex t r e mel y du bi ou s m eri t to pr oc eed

, it bi ds fai r to im m ers e th e pa rti es in th e
di sc ov ery swa m

p

. . . an d by do in g so crea te irr ev oc ab le as well as un jus ti fia bl e ha rm

to th e d efen da nt .”).

On ap pe al

, In su la te ch al le ng es th e di sm is sa l of th ree fed eral an ti tru st cl ai m s: (1 ) co ns pi racy to res tra in tra de th ro ug h th e us e of ex cl us io na ry ag reem en ts in

vi ol at io n of Sh erm an Act Sect io n 1; (2 ) “ at te m pt an d c o n s p i r acy to ” “ acq ui re,

m ai nta in, an d en ha nc e Graco ’s m on op ol y po wer” in vi ol at io n of Sh erm an A ct Se ct ion

2 ; a nd (3 ) “ us e of ex cl us io na ry co nt ract s to su bs ta nt ia ll y le ss en co m pe ti ti on ” i n
vi ol at io n of Clayton Act Sect io n 3. As relev an t to th is cas e, th e cri ti cal ele m en t of 5

each cl ai m is co nc ert ed act io n— i.e., th e ex is t e n c e o f a co nt ract or co ns pi racy. See

15 U

. S

. C

. §§ 1, 2, 14

. “ [T]o sa ti sf y th e co nc ert ed act io n req ui rem en t, th e pl ai nt iff

m us t de m on st rat e th at th e de fen da nt s sh ared a ‘uni ty of pu rp os e or a co m m on de si gn

an d un de rs ta nd in g, or a m eet in g of th e m in ds .’ ” Im pr o Pro ds

., In c. v. He rri ck

, 71 5

F.2 d 12 67

, 12 73 (8 th Ci r. 19 83 ) (q uo ti ng Am

. Tob acco Co

. v. Uni te d St at es , 32 8 U.S.

78 1, 81 0 (1 94 6) ). Pl ead in g on ly “ pa r a l l e l co nd uc t” or ot he r co nd uc t “ m erel y

co ns is te nt wi th [an ] ag reem en t” is no t su ffi ci en t to sh ow a co ns pi racy. Twom bl y , 55 0

U.S. at 5 57 (em

ph as is ad de d)

.

In su la te can sa ti sf

y th e co nc ert ed act io n req ui rem en t by sh owi ng “ two or m or e

pe rs on s en te red in to ei th e r a n e x p r e ss or im pl ie d ag reem en t.” Im

pr o, 71 5 F.2 d at

12 7 3 ( d i s cu ss in g Sh erm an Act cl ai m s) ; se e al so In re W ho le sa le Gro cery Pro ds

. Ant it ru st Lit ig

., 75 2 F.3 d 72 8, 73 4 ( 8t h Ci r. 20 14 ); Ro la nd Mac h. Co

. v. Dres se r

In su la te al so br ou gh t a pr ic e-fi xi ng cl ai m ag ai ns t al l de f e n d a n ts an d 5

m on op ol iz at io n an d un la wfu l acq ui si ti on cl ai m s so le ly ag ai ns t G raco bu t ha s

ex pr es sl y ab an do ne d t he se cla im s o n a pp eal

. -7

-In du s., In c., 74 9 F.2 d 38 0, 39 2 (7 th Ci r. 19 84 ) (“ In or de r to pr ev ai l on i t s [ C l a yt on

Act] se ct io n 3 cl ai m , [th e pl ai nt iff ] wil l ha ve to sh ow

. . . th at th ere was an ag reem en t,

th ou gh no t ne ces sa ril y an ex pl ic it ag reem en t.”)

. I n su la te cl ai m s to ha ve pl ed th e

ex is te nc e of bo th ex pr es s an ti co m pe ti ti ve co nt ract s an d im pl ie d ex cl us iv it y

ag reem en ts

. Afte r a th or ou gh rev ie w of th e co m pl ai nt

, we co nc lu de In su la te ha s no t pl ed “ en ou gh fact ua l m at te r (ta ke n as tru e) to su gg es t th at an ag reem en t was m ad e,”

Twom bl y , 55 0 U.S. at 55 6.

a. Wri tten Ex cl us iv ity Agre ements

In su la te

, qu ot in g In si gn ia Sy st em s, In c. v. News Am eri ca Mar ke ti ng In -St or e,

In c., 66 1 F. Su pp

. 2d 10 39

, 10 62 (D. Mi nn

. 20 09 ), arg ue s th e “ App el le es en te red in to

w r i tt en ex cl us iv e de al in g co nt ract s” th at are “ ‘suf fic ie nt to es ta bl is h a co nt ract or

co ns pi racy fo r th e pu rp os es of

. . . ex cl us iv e de al in g cl ai m s.’” (Alt erat io n in or ig in al ).

The co m pl ai nt do es no t su pp or t th is arg um en t. I ns ul at e ap pe ars to rel y on Graco ’s

20 07 let te r as ev id en ce o f th es e “ writ te n e xc lu si ve de al in g c on tra ct s.” Bec au se th e

co m pl ai nt do es no t al le ge t h e Dis tri bu to rs si gn ed an y ag reem en t co ns en ti ng to th e
le tt er’s te rm s or ot he rwis e ex pr es sl y ag reed to it s te rm s, th ere was no “ ‘m eet in g of th e
mind s,’” Im

pr o, 71 5 F.2 d at 12 73 (q uo ti ng Am

. Tob acco , 32 8 U.S. at 81 0 )

, s o t h e
le tt er al on e can no t co ns ti tu te a writ te n e xc lu si ve -d eal in g c on tra ct

.

In su la te ad di ti on al ly su gg es ts Graco an d th e Dis tri bu to rs ’ pr eex is ti ng
di st rib ut or sh ip co nt ract s are ex pr es s co nt ract s no t to co m pe te be cau se , in it s 20 07

le tt er, Graco refe ren ced th e c on tra ct s’ “ be st effo rts cl au se .” Graco ’s un il at eral

an no un cem en t of it s de ci si on no t to su pp ly di st rib ut or s who al so se l l c o mpet in g

pr od uc ts di d no t tra ns fo rm a pr io r in no cu ou s di st rib ut or ag reem en t in to a co nt ract fo r

ex cl us iv e de al in g. See, e.g ., Uni te d St at es v. Co lg at e & Co

., 25 0 U.S. 30 0, 30 7
(1 91 9) (d et erm in in g a m an uf act ur er’s la te r req ue st th at it s pr od uc ts no t be so ld be lo w

cert ai n pr ic es di d no t tra ns fo rm pr eex is ti ng sa le s ag reem en ts be twee n th e

m an uf act ur er an d it s di st rib ut or s in to ag reem en ts no t to co m pe te ); Co nc or d Bo at

-8

-Co rp

. v. Bru ns wick Co rp ., 20 7 F.3 d 10 39

, 10 58 (8 th Ci r. 20 00 ) (ex pl ai ni ng , al th ou gh

de fen da nt ’s di sc ou nt pr og ram m ay ha ve crea te d “ de fact o ex c l u s i ve de al in g

arra ng em en ts ,” th e di sc ou nt ag reem en ts th em se lv es “ were no t ex cl us iv e co nt ract s” ).

E ve n tho ug h th e co m

pl ai nt co nt ai ns se ve ral co nc lu so ry ref er en ce s to a co ntr ac t,

th e al le ge d fact s do no t su gg es t Graco en te red in to ex pl ic it ex cl us iv it y ag reem en ts

wit h an y of th e Dis tri bu to rs

. See Twom bl y , 55 0 U.S. at 55 5 (“ [ A ] pl ai nt iff ’s

ob li ga ti on to pr ov id e th e gr ou nd s of hi s en ti tl em en t to rel ie f req ui res m or e th an la be ls

an d c on cl us io ns .” (i nt ern al m ark s o m it te d) ).

b. Impli ed Ag reements

In su la te

, po in ti ng to Graco ’s 20 07 an d 20 12 le tt ers an d so m e di st rib ut or s’

res ul ti ng co m

pl ia nc e, pr op os es th e “ App el le es ’ co nd uc t pr ov id es

. . . ci rcu m st an ti al

ev id en ce of an ti co m

pe ti ti ve ag r e e men t s.” Howev er, in bo th th e 20 07 an d 20 12 6

le tt ers , Graco si m

pl y st at ed it s po li cy of no t s e l l i n g t o di st rib ut or s who al so so ld

co m pe ti to rs ’ pr od uc ts

.

The fed eral an ti tru st la ws “ do [] no t res tri ct t he lo ng reco gn iz ed rig ht of [a]

m an uf act ur er en ga ge d in an e n t i r el y pr iv at e bu si ne ss , free ly to ex erci se hi s own

in de pe nd en t di sc ret io n as to par ti es wit h who m he wil l deal ; and

, of co ur se , he m ay

an no un ce in ad va nc e th e ci rcu m st an ces un de r whi ch he wil l refu se to se ll .” Co lg at e,

25 0 U.S. at 30 7. Und er the “ Co lg at e d oc tri ne ,” “ [a] m an uf act ur er .

. . ge ne ral ly ha s

a rig ht to de a l

, o r r e f

us e to de al

, wit h who m ev er it li ke s, as lo ng as it do es so

In sul at e’s co m

pl ai nt st at es th e ap pe ll ees en te red in to bo th an ov erar ch in g hu b- 6

an d- sp ok e co ns pi racy an d m ul ti pl e sm al l co ns pi raci es be twee n Graco an d each of it s di st rib ut or s. The pa rti es dis put e w he the r In sul at e ad equa te ly al le ge d a hu b- an d- sp ok e

co ns pi racy. Bec au se we co n cl ud e In su la te ’s c om pl ai nt do es no t su ffi ci en tl y al le ge

an y co ns pi racy—whe th er wid es pr ead or on an in di vi du al ba si s— we do no t reac h th is
is su e.

-9

-i n d e p e n d e nt ly.” Mo ns an to Co

. v. Sp ray-Rit e Serv

. Co rp ., 46 5 U.S. 75 2, 76 1- 63

(1 98 4) (ci ti ng Co lg at e, 25 0 U.S. a t 30 7) ; acco rd Co rn er Po ck et of Si ou x F a l ls , I nc

.

v. Vid eo Lot te ry Tech s., In c., 1 2 3 F

. 3 d 1 10 7, 11 11 -1 2 (8 th Ci r. 19 97 ). In de ed

, a

“ m an uf act ur er can an no un ce it s [p ol ic y ] in ad va nc e an d refu se to de al wit h th os e who

fai l t o c om

pl y . And a di st rib ut or is free to acq ui es ce i n t he m an uf act ur er’s d em an d

in ord er t o a vo id ter m in at io n.” Mo ns an to , 46 5 U.S. at 76 1.

To al le ge th e ex is te nc e o f a co ns pi racy ad eq ua te ly, In su la te m us t pr es en t

so m et hi ng be y on d th e m ere fact th at Gr a co st at ed it s po li cy an d th e Dis tri bu to rs

co m pl ie d. In Uni te d St at es v. Park e, Dav is & Co

., 36 2 U.S. 29 (1 96 0)

, th e Su pr em e

Co ur t ex pl ai ne d th at pl ai nt iff s can pr ov e co nc ert ed act io n by sh owi ng a m an uf act ur er

to ok so m e act io n “ be y on d m ere a n n o u n c e men t of hi s po li cy an d th e si m pl e refu sa l

to de al [ an d] em

pl oy[ed] ot he r m ean s whi ch effe ct ad he ren ce to hi s” po li ci es

. Id

. at

44 ; se e, e.g ., Mo ns an to

, 46 5 U.S. at 76 5 (h ol di n g d e f en da nt ’s at te m

pt s to fo rce it s
di st rib ut or s to co m

pl y wit h it s res al e pr ic e po li cy wen t be y on d th e Co lg at e do ct rin e’s

li m it s) ; Park e, Dav is

, 36 2 U.S. at 33 -3 6, 45 (d eci di ng a co m pa ny th a t p o l i c e d th e

im pl em en ta ti on of i t s res al e pr ic e po li cy an d in di vi du al ly m et wit h each of it s
who le sa le rs an d ret ai le rs to en su re co m pl ia nc e ex ceed ed Co lg at e). Yet Co lg at e

pr ot ect s a m an uf

act ur er who co m

m un ic at es a po li cy an d th en te rm in at es di st rib ut io n

ag reem en ts wit h th os e who vi ol at e th at po li cy

. See Co lg at e, 25 0 U.S. at 30 7; Ro la nd

, 74 9 F.2 d at 39 3 (“ The m ere an no un cem en t of [an ex cl us iv e-d eal in g] po li cy , an d th e

car r yi n g o u t of it by can cel in g [a] no nc om pl y in g de al er, wou ld no t es ta bl is h an

ag reem en t.”) ; se e al so , e.g ., Lov et t v. Gen

. Mo to rs Co rp ., 99 8 F.2 d 57 5, 57 7, 57 9 (8 th

Ci r. 19 93 ) (ex pl ai ni ng th e pl ai nt iff ’s ev id en ce th at a m an u f a c t ur er de crea se d it s

su pp ly to a no nc om

pl ia nt di st rib ut or an d to ld th e di st rib ut or to “ re c on si de r” it s

no nc om pl ia nt act iv it ie s was no t su ffi ci en t t o su pp or t th e jury’ s fin di ng of a

co ns pi racy an d rev ers in g th e di st ric t co ur t’s de ni al of jud gm en t as a m at te r of la w to

th e m an uf

act ur er).

-1 0-Att em pt in g to d i s t i n gu is h Co lg at e, In su la te m ai nt ai ns th e ap pe ll ees to ok

act io ns to en fo rce th ei r ag reem en ts th at wen t “ ‘bey on d [th e] m ere an no un cem en t of
[a] po li cy an d th e si m

pl e refu sa l to de al ,’ ” qu ot in g Park e, Dav is

, 36 2 U.S. at 44

. Bu t

th e co m pl ai nt do es no t de sc rib e an y co nd uc t su gg es ti ng an ag reem en t be twee n Graco

an d th e Dis tri bu to rs

. W hi le th e co m pl ai nt m ak es so m e va gu e refe ren ces to co nc ert ed

act io n am on g “ ke y Dis tri bu to rs ,” I n su la te do es no t pr ov id e an y fact ua l al le ga ti on s
be y on d th e ba re co nc lu si on th at th ere was a c o n sp ira cy

. The co m pl ai nt do es no t

al le ge whe n th e ag reem en ts oc cu rred or ev en id en ti fy whi ch of th e di st rib ut or s na m ed

as de fen da nt s— if an y

—ar e am on g th e “ ke y Dis tri bu to rs ” who were pa rty to th e

ag ree men ts

. W it ho ut so m e su pp or ti ng fact ua l al le ga ti on s, th es e co nc lu si on s are

in su ffi ci en t. See Twom

bl y , 55 0 U.S. at 55 7 (“ [A] co nc lu so ry al le ga ti on of ag reem en t

at so m e un id en ti fie d po in t do es no t su pp ly fact s ad eq ua te to sh ow il le ga li ty.”); In re
Elev at or Ant it ru st Lit ig

., 50 2 F.3 d 47

, 50 -5 1 (2 d Ci r. 20 07 ) (p er cu ria m ) (d is m is si ng pl ai nt iff ’s com

pl ai nt be cau se th e co m

pl ai nt ge ne ral ly reco un te d ant it ru st vi ol at io ns

“ wit ho ut an y sp eci fic at io n of an y pa rti cu la r act iv it ie s by an y pa rti cu la r de fen da nt ; it

is no th in g m or e th an a li st of th eo ret ic al po ss ib il it ie s, w h i c h on e co ul d po st ul at e
wit ho ut kn owi ng an y fact s wha te ve r” (q uo ta ti on an d marks om it te d) ); acco rd

Twom bl y , 55 0 U.S. at 56 5 n.1 0 (d ou bt in g whe th er a co m pl ai nt “ m en ti on [in g] no

spec ifi c ti m e, pl ace, or pe rs on in vo lv ed in th e al le ge d co ns pi raci es ” wou ld ad eq ua te ly

st at e a cl ai m ).

Th e on ly al le ga ti on s in th e co m pl ai nt th at co m e cl os e to su gg es ti ng a

co ns pi racy are th os e co nc ern in g Fo am pa k. The co m

pl ai nt av ers Graco

, aft er le arn in g

Fo am pa k was co ns id eri ng ta ki ng on a co m pe ti ti ve pr od uc t li ne , fle w t w o “ to p

ex ecu ti ve s” to Fo am

pa k’s he ad qu art ers to m eet wit h Fo am pa k ex ecu ti ve s. At th is

m eet in g, Graco th reat en ed to en d Fo am pa k’s di st rib ut or sh ip

, so Fo am pa k ch os e no t

to carr y a co m

pe t i t i v e p r od uc t. In su la te co m pa res Graco ’s act io ns he re to si m il ar
be ha vi or in Mo ns an to

, whi ch th e Su pr em e Co ur t fo un d ex ceed ed th e Co lg at e
do ct rin e’s li m it s. See M o n s an to , 4 65 U.S. a t 76 5 (ex pl ai ni ng Mo ns an to ’s m ul ti pl e

at te m pt s to fo rce di st rib ut or co m pl ia nc e wit h it s res a l e p ric e po li cy by th reat en in g

-1 1-te rm in at io n an d “ co m pl ai n[ in g] to [a] di st rib ut or ’s pa ren t co m pa ny” were su ffi ci en t

to su pp or t t he jury’ s fi nd in g o f an ag reem en t).

Ass um in g In su la te ’s co m pl ai nt su ffi ci en tl y al le g e s a n ag reem en t be twee n

Fo am pa k an d Graco

, I n s u l a t e can no t ch al le ng e th is co ns pi racy be cau se it ha s no t

na m ed Fo a mp a k a s a de fen da nt

. See Cam po s, 14 0 F.3 d at 11 70 -7 1 & nn .3-4

. The

co m pl ai nt do es al le ge Fo am

pa k ha d “ co m

m un ic at io ns wit h fel lo w Dis tri bu to rs ,”

br oa dl y im

pl y in g th es e ot he r di st rib ut or s m ay h a v e b een pa rt of th e al le ge d Graco

Fo am pa k co ns pi racy. Bu t ag ai n In su la te do es no t id en t i f y a n y ot he r di st rib ut or by

na m e, su gg es t whe n th es e co m m un ic at io ns oc cu rred

, or pr ov id e an y ot he r sp eci fic

fact ua l al le ga ti on th at wou ld crea te an in fere nc e th at an ag reem en t was m ad e. 7

Ult im at el y , In su la te ’s co m pl ai nt fai ls su ffi c i e n t ly to al le ge co nc ert ed act io n.
The co m pl ai nt rep eat ed ly as se rts Graco an d an un na m ed se t of di st rib ut or s ge ne ral ly

co ns pi red to res tra in tra de

, bu t th es e as se rti on s are no t en ou gh

. “ [A] na ke d as se rti on

of co ns pi racy

. . . ge ts th e co m pl ai nt cl os e to st at in g a cl ai m , bu t wit ho ut so m e fu rth er

fact ua l en ha nc em en t it st op s sh or t of th e li ne be twee n po ss ib il it y an d pl au si bi li ty of

en ti tl em en t to rel ie f.” Twom bl y , 55 0 U.S. at 55 7 (in te rn al m ark s om it te d)

. In su la te

ha s no t pr ov id ed th e “ fact ua l en ha nc em en t” ne ces sa ry to m ov e it s co m pl ai nt fo rward

.

In su la te ad di ti on al ly re fe rences Graco ’s de al in gs wit h th e FTC, su gg es ti ng we 7

sh ou ld in fer Graco ’s wro ng do in g fro m th e FTC’s in ve st ig at io n an d c o ns en t

ag reem en t. The FTC’s co m pl ai nt

, ho wev er, al le ge d G r aco un la wfu ll y acq ui red

co m pe ti to rs un de r Cl ay to n Act Sect io n 7, co nd uc t n o t r e l e v a nt to th e co ns pi racy cl ai m s al le ge d he re. Fu rth er, th e FTC co ns en t ag reem en t ex pl ic it ly st at ed Graco ha d

m ad e n o a d mi s s i o n of gu il t. W e th us de cl in e to pr es um e Graco vi ol at ed fed eral

an ti tru st la ws ba se d on th e m ere ex is te nc e o f th is se tt le m en t of a di ffer en t an ti tru st di sp ut e.

-1 2-B. Sta te La w Cla im

1. Min nes ot a Ant itr us t Cla im

In su la te ap pe al s th e di sm is sa l of it s cl ai m un de r th e Mi nn es ot a Ant it ru st Law

of 19 71

, Mi nn

. St at

. § 32 5D.4 9 et se q., co nt e nd in g th e di st ric t co ur t erro ne ou sl y

co nc lu de d In su la te

, as a no n- ci ti zen of Mi nn es o t a , c ou ld no t br in g th is cl ai m

. Ass um in g wit ho ut de ci di ng In su la te can br in g a cl ai m un de r Mi nn es ot a an ti tru st la w,

we affi rm th e di sm is sa l be cau se In su la te fai le d to st at e it s cl ai m ad eq ua te ly. See

Ph ip ps v. FDIC, 41 7 F.3 d 10 06

, 1 01 0 (8 th Ci r. 20 05 ) (“ W e m ay affi rm th e di st ric t

co ur t’s di sm is sa l on an y ba si s s u p p o rte d by th e reco rd .”). Bec au se “ Mi nn es ot a

an ti tru st la w is ge ne ral ly in te rp ret ed co ns is te nt ly wit h fed eral an ti tru st la w,” Lori x v.

Cro m pt on Co rp ., 73 6 N.W .2d 61 9, 62 6 (Mi nn

. 20 07 ) (en ba nc ), an d In su la te ag rees

ou r an al y si s of it s fed eral cl ai m s al so ap pl ie s to it s Mi nn es ot a cl ai m , In su la t e’s

Mi nn es ot a an ti tru st cla im als o m us t b e d is m is se d fo r fai lu re t o s ta te a cl ai m

. 8

2. Cal ifo rni a Cl ai m s

In su la te ap pe al s th e di sm is sa l of it s Cal ifo rn ia an ti tru st an d un fai r co m pe ti ti on
cl ai m s.

Mi nn es ot a la w di ffer s fro m fed eral la w in on e m at eri al res pe ct : Mi nn es ot a

8

al lo ws in di rect pu rch as ers to su e m an uf act ur ers fo r an ti tr u s t vi ol at io ns

. See Lori x, 73 6 N.W .2d at 62 6- 27

. Mi nn es ot a st il l im po se s so m e “ pr ud en ti al li m it s” on an ti tru st pl ai nt iff s, in cl ud in g a sh owi ng of pr ox im at e cau se

. Id

. at 63 1. Ass um in g In su la te ha s al le ge d an an ti co m

pe ti ti ve ag reem en t be twee n Graco an d Fo am pa k, In su la te st il l
la ck s st an di ng un de r Mi nn es ot a la w to ch al le ng e th is ag reem en t be cau s e i t on ly

pu rch as ed FSE fro m In te ch an d ha s no t pl ed an y in jury tra ceab le to a Graco -Fo am pa k

c o ns pi racy. To th e ex te nt In su la te al le ge s in it s br ie f a Mi nn es ot a m on op ol iz at i o n cl ai m ag ai n st Graco in di vi du al ly, th ere is no th in g in th e pl ead in gs or reco rd

m en ti on in g th is cl ai m , an d we wil l no t co ns id er th at cl ai m fo r th e fir st ti m e on ap pe al

. See Ho rras v. Am . Cap it al Str at eg ie s, Lt d., 7 29 F.3d 79 8, 8 03 n.3 (8t h C ir. 2 01 3)

.

-1 3-As wit h it s Mi nn es ot a cl ai m , In s u l a t e ha s fai le d to st at e a cl ai m un de r

Cal ifo rn ia ’s Cart wrig ht A n ti tru st Act, Cal

. Bu s. & Pro f. Co de § 16 70 0 et se q. “ A

lo ng li ne of Cal ifo rn ia cas es ha s co nc lu de d th at th e Cart wrig ht Act is pa tt ern ed aft er

th e Sh erm an Act an d bo th st at u t e s h a v e th ei r ro ot s in th e co m m on la w.

Co ns eq ue nt ly, fed eral cas es in te rp ret in g th e Sh erm an Act are ap pl ic ab le to pr ob le m s

ari si ng un de r th e Cart wrig ht Act.” Mar in Cn ty. Bd

. of Rea lt or s, In c. v. Pal ss on , 54 9

P.2 d 83 3, 83 5 (Cal

. 19 76 ) (in ba nk ); se e al so Co rwin v. Los Ang el es Newsp ap er Serv

. Bu reau , In c., 48 4 P.2 d 95 3, 95 9 ( C a l

. 1 97 1) (in ba nk ) (“ [F]ede ral de ci si on s

in te rp ret in g se ct io n 3 [o f th e Cl ay to n Act] are ap pl ic ab le to se ct io n 16 72 7 [o f th e

Cart wrig ht Act].”). Bec au se In su la te ha s no t su ffi ci en tl y pl ed a cl ai m un de r fed eral

an ti tru st la w, In su la te al so ha s no t st at ed a cl ai m un de r th e Cart wrig ht Act. See, e.g ., nS ig ht

, In c. v. Peo pl eSo ft, In c., 2 9 6 F e d

. A p p’x 55 5, 55 7 n.3 (9 th Ci r. 20 08 )
( u n p u b l i s h e d me mo r a n d u m) ( “n S i g h t ’ s m o n o p o l i z a t i o n a n d a t t e m p t e d

m on op ol iz at io n cl ai m s un de r th e Cart wrig ht Act fai l fo r t h e s a me r e as on s as it s [Sh erm an Act] Sect io n 2 cla im .”).

In su la te si m il a r ly ha s fai le d to st at e a cl ai m un de r Cal ifo rn ia ’s Unf ai r

Co m pe ti ti on Law ( U C L)

, C a l

. Bu s. & Pro f. Co de § 17 20 0 et se q. The UCL

“ pr oh ib it s un fai r co m

pe ti ti on , in cl ud in g u n l a w f ul

, un fai r, an d frau du le nt bu si ne ss

a c t s

. ” Kor ea Su pp ly Co

. v. Loc kh eed Mar ti n Co rp ., 63 P.3 d 93 7, 94 3 (Cal

. 20 03 )

. The di st ric t co ur t fo un d In su la te fai le d to st at e a cl ai m u n d e r t h e UCL’s un la wfu l

pr on g be cau se In su la te di d no t al le ge a vi ol at io n of th e an ti tru st la ws. In su la te no w
cl ai m s t he ap pe ll ees en ga ge d i n b ot h u nl awfu l an d u nf ai r bu si ne ss pra ct ic es

.

As di sc us se d ab ov e, In su l a t e h as no t su ffi ci en tl y pl ed th e ap pe ll ees vi ol at ed

an y an ti tru st la w an d th us ha s no cl ai m un de r th e UCL’s un la wfu l pr on g. See Dav is

v. HSBC Ban k Nev

., N.A., 69 1 F.3 d 11 52

, 11 68

, 11 71 (9 th Ci r. 2 0 1 2 ) ( e x p l a in in g

“ [t]o b e ‘unl awfu l’ un de r th e UCL, th e [d efen da nt ’s] ad ve rti se m en ts m us t vi ol at e

an ot he r ‘bor ro wed ’ la w” an d affi rm in g th e di sm is sa l of th e pl ai nt iff ’s UCL cl ai m

-1 4-be cau se he fai le d to pl ead ad eq ua te ly a vi ol at io n of Cal ifo rn ia ’s F a l s e Adv ert is in g

Law (q uo ti ng Cel -Tech Co m m c’ns

, In c. v. Los Ang el es Cel lu la r Tele

. Co

., 97 3 P.2 d

52 7, 5 39 -4 0 (C al . 19 99 ))).

In su la te al so fai l e d to pl ead a vi ol at io n of th e UCL’s un fai r pr on g. In th e

an ti tru st co nt ex t, “ th e wor d ‘unf ai r’

. . . means co nd uc t th at th reat en s an in ci pi en t

vi ol at io n of an an ti tru st la w, or vi ol at es th e po li cy or sp iri t of o n e o f t h o s e la ws
be cau se it s effe ct s are co m pa rab le to or th e sa m e as a vi o l a t i o n o f t h e la w, or

ot he rwis e si gn ifi can tl y th reat en s or ha rm s co m pe ti ti on .” Cel -Tech

, 97 3 P.2 d at 54 4.

Here, In su la te ha s on ly pl ed act io ns co ns is te nt wit h Graco ’s “ rig ht to de al

, or refu se

to de al

, wit h who m ev er it li ke s,” Mo ns an to

, 46 5 U.S. at 76 1, w h i c h is no t un fai r

co nd uc t. See Orch ard Su pp ly Hard ware LLC v. Hom e Dep ot USA, In c., 96 7 F. Su pp

. 2d 13 47

, 13 64 (N.D. Cal

. 20 13 ) (“ [A]cts pe rm is si bl e un de r an ti tru st la ws ‘cann ot be

de em ed un fai r un de r th e un fai r co m pe ti ti on la w,’ at le as t no t whe re a pl ai nt iff al le ge s

th at th e act s ar e u nf

ai r fo r th e sa m e rea so n i t ar gu es th at th ey vi ol at e an ti tru st law.”
(q uo ti ng Ch av ez v. W hi rlp o ol Co rp ., 11 3 Cal

. Rp tr. 2d 17 5, 18 4 (Cal

. Ct

. App

. 20 01 ))).

II I. CONCLUSI ON

W hi le “ it is on e th in g to be cau ti ou s be fo re di sm is si ng an an ti tru st co m pl ai nt

in ad va nc e of di sc ov ery, [it is ] qu it e an ot he r to fo rg et th at p r o c e e d i ng to an ti tru st

di sc ov ery can be ex pe ns iv e.” Twom bl y , 55 0 U.S. at 55 8 (in te rn al ci ta ti on om it te d)

. In su la te ha s no t pl ed su ffi ci en t fact s to al lo w it s cas e to pr oc eed to di sc ov ery. W e

affi rm th e d is m is sa l o f In su la te ’s cla im s.

__ __ __ __ __ __ __ __ __ __ __ __ __ __ __

-1 5-