Opinion ID: 2330622
Heading Depth: 1
Heading Rank: 16

Heading: Necessity of Explicit Written Agreement

Text: Brighton argues on its cross-appeal that it was entitled to partial summary judgment against O'Brien on any purchases made at Kansas retailers that were not Heart Stores in 2001 or 2002 and/or luggage stores in 2003, that is, for any purchases made at all but nine Kansas stores during the specified years. Brighton asserts that the KRTA, like federal law, demands that a plaintiff alleging vertical price-fixing come forward with proof of agreement and concerted action between each specific retailer and Brighton. In its view, the evidence O'Brien has gathered cannot possibly demonstrate that there was the necessary meeting of the minds between Brighton and the overwhelming majority of Kansas retailers subject only to Brighton's pricing policy and not designated a Heart Store nor authorized to sell luggage. O'Brien responds that the written agreements between Brighton and nine of its Kansas retailers were merely the clearest evidence of a larger, unwritten price-fixing arrangement between Brighton and all of its Kansas retailers. She urges us to consider all of her evidence and the reasonable inferences a jury may be permitted to draw from it in context, arguing there is plenty in the record to enable her to escape summary judgment on the issue of whether Brighton acted unilaterally or in unlawful conjunction with its Kansas retailers. Judge Goering denied partial summary judgment to Brighton on this issue. He determined that [t]he KRTA requires concerted action by two or more persons or entities to fix prices, without citation to a specific KRTA provision. The district judge reasoned that O'Brien established the existence of a genuine issue of material fact on the scope of any arrangement or agreement. He noted, in particular, evidence of Brighton's enforcement practices and the dispute between the parties over the purpose of Brighton's RPM policy. As we observed above, K.S.A. 50-101 and K.S.A. 50-112 prohibit more than agreements to fix prices. But even a combination under K.S.A. 50-101 must be by two or more persons and an arrangement under K.S.A. 50-112 must be between persons. Both requirements demand something more than merely a unilateral pricing policy adopted by a wholesale supplier in the position of Brighton. Because K.S.A. 50-112 and § 1 of the Sherman Act share the between persons language, and the language of K.S.A. 50-101 is equivalent, we look to interpreting United States Supreme Court precedent for assistance in understanding what, short of an express agreement, qualifies as more than merely unilateral behavior. Has O'Brien mustered enough evidence to avoid summary judgment on those purchases made at Brighton retailers who were not parties to Heart Store or luggage store applications or agreements? In Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 763, 768, 104 S.Ct. 1464, 79 L.Ed.2d 775 (1984), the Court ruled that, under § 1 of the Sherman Act, a price-fixing case must include evidence that tends to exclude the possibility of independent action by the manufacturer and distributor. [T]here must be direct or circumstantial evidence that reasonably tends to prove that the manufacturer and others had a conscious commitment to a common scheme designed to achieve an unlawful objective, and neither communication between a manufacturer and its retailers nor the existence of complaints about discounting would be enough alone for a plaintiff in a price-fixing action to sustain its burden of proof. 465 U.S. at 768, 104 S.Ct. 1464. The Court acknowledged that evidence of complaints about discounting can be probative; however, there must be additional evidence of unlawful conduct. 465 U.S. at 764, 104 S.Ct. 1464. In this case, Brighton emphasizes evidence from several retailers who said that they independently decided to charge the suggested price for Brighton products. It reminds us that Brighton's officers testified that Brighton had not actually terminated any Kansas retailer for a pricing policy violation and that Brighton had not made explicit promises to Heart Stores or luggage stores that it would enforce its pricing policy against other retailers. But the record contains ample conflicting evidence in support of O'Brien's claim that an unlawful pricing arrangement existed between Brighton and Kansas retailers beyond the nine Heart Stores and/or luggage sellers. Brighton's pricing policy was distributed to all retailers. And for at least 1 year, Brighton required all of them to initial an acknowledgment stating that violation of the policy was grounds for dismissal. Brighton's owner testified that the company require[d] everybody to charge the same price. Unauthorized promotions were not allowed because they would spread like cancer. Brighton maintained a Pending Pricing Issues file, and it conducted investigations into at least two Kansas retailers suspected of discounting. One of those investigations was launched when one retailer who was not a Heart Store or luggage seller reported another in the same category. All of this evidence provides relevant context for the written agreements Brighton entered into with Heart Stores and luggage sellers and at least circumstantially supports a reasonable inference of more than a unilateral policy or action by Brighton. This evidence also is reminiscent of that before the United States Supreme Court in Monsanto Co. In that case, a manager testified that the company advised distributors who were discounting that they were in danger of receiving less than their desired amount of company product. A company representative contacted a distributor's parent company, which then told the subsidiary distributor to comply with the pricing plan. The Court recognized such evidence as relevant and persuasive as to a meeting of minds. 465 U.S. at 765, 104 S.Ct. 1464. In addition, one distributor sent a newsletter to his customers, in which he discussed the company's efforts to `get [t]he marketplace in order' and emphasized the company's efforts to maintain minimum prices. 465 U.S. at 765-66, 104 S.Ct. 1464. The Court ultimately stated in Monsanto Co. that it was reasonable to conclude that the termination of a noncomplying distributor was pursuant to a pricing agreement rather than unilateral pricing policy because it was necessary for competing distributors contemplating compliance with suggested prices to know that those who do not comply will be terminated. 465 U.S. at 767, 104 S.Ct. 1464. The Court decided that the plaintiff had marshaled enough evidence to raise a jury issue. 465 U.S. at 768, 104 S.Ct. 1464. We reach a similar conclusion here. There is more than enough evidence in the record before us to hold that the district judge was correct in denying Brighton partial summary judgment on the issue of whether there was an unlawful combination by two or more persons under K.S.A. 50-101 or an arrangement between persons under K.S.A. 50-112 with an effect on the prices paid for purchases at retailers other than Heart Stores and luggage sellers. This is not a case in which the plaintiff can show only a unilateral pricing policy or action. A genuine issue of material fact remains for trial, and weighing of evidence by this court or by the district judge reviewing a summary judgment motion would be improper. See Underhill v. Thompson, 37 Kan.App.2d 870, 878, 158 P.3d 987, rev. denied 285 Kan. 1177 (2007).