Opinion ID: 479003
Heading Depth: 1
Heading Rank: 2

Heading: The Grant of Summary Judgment on the Refusal to Deal Claims

Text: 18 The district court concluded that the Clayton Act's four-year statute of limitations, 15 U.S.C. Sec. 15b (1982), barred both the unilateral and concerted refusal to deal claims. Plaintiffs filed the complaint on March 31, 1980. The court found that UDA did not unilaterally refuse to deal with plaintiffs within the four preceding years. It also found that the concerted refusal to deal claim stemmed from contracts entered into between UDA and other Arizona handlers as early as 1960, and that plaintiffs were aware of these contracts before the end of 1975. 19 We review grants of summary judgment de novo, and like the district court apply Federal Rule of Civil Procedure 56. British Airways Board v. Boeing Co., 585 F.2d 946, 951 (9th Cir.1978), cert. denied, 440 U.S. 981, 99 S.Ct. 1790, 60 L.Ed.2d 241 (1979). We reverse as to both claims. 6 A. The Unilateral Refusal to Deal Claim. 20 The district court relied upon David Orgell, Inc. v. Geary's Stores, Inc., 640 F.2d 936 (9th Cir.), cert. denied, 454 U.S. 816, 102 S.Ct. 92, 70 L.Ed.2d 84 (1981), in granting summary judgment for defendants on the LaSalvias' unilateral refusal to deal claim. The court's treatment of Orgell is ambiguous. Defendants understand the district court's view to be that any refusal to deal subsequent to an initial refusal is a mere reaffirmation, and thus the Clayton Act's statute of limitations runs from the initial refusal. Orgell, however, merely applies AMF, Inc. v. General Motors Corp. (In re Multidistrict Vehicle Air Pollution), 591 F.2d 68 (9th Cir.) (Air Pollution ), cert. denied, 444 U.S. 900, 100 S.Ct. 210, 62 L.Ed.2d 136 (1979). See Hennegan v. Pacifico Creative Service, Inc., 787 F.2d 1299, 1301 (9th Cir.1986). In Air Pollution, we held that because the defendants' initial refusal to deal was irrevocable, immutable, permanent and final, any harm necessarily resulted from the initial refusal and not from subsequent reaffirmations. 591 F.2d at 72. Because the plaintiff in that case was not injured by the defendants' subsequent conduct, the statute of limitations ran from the initial refusal. Rather than stating a per se rule governing repeated refusals to deal, Air Pollution and Orgell merely apply the usual rule that antitrust claims accrue when the plaintiff incurs the injury. Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 338, 91 S.Ct. 795, 806, 28 L.Ed.2d 77 (1971). See Western Shoe Gallery, Inc. v. Duty Free Shoppers, Ltd., 593 F.Supp. 348, 352 n. 4 (N.D.Cal.1984). 21 At issue therefore is the finality of UDA's refusal to handle the LaSalvias' excess production, and the source of the harm allegedly inflicted by defendants upon them. 22 Plaintiffs argue that a material question of fact exists as to whether UDA's refusal to accept its milk for handling in 1975 was final, and that summary disposition of the unilateral refusal claim was thus error. They cite the deposition testimony of defendant Girard, UDA's general manager, regarding his 1975 refusal to accept plaintiffs' milk. They also rely upon their allegation, supported by affidavit and denied by UDA's counsel, that in 1977 and 1978 their attorney again requested access to UDA's manufacturing facility. Lastly, they argue that UDA's acceptance in 1981 of their milk for processing cuts against any finding that the 1975 refusal was final. In response, defendants argue that if plaintiffs' characterization of Girard's statement is true, then no illegal refusal to deal occurred and they should prevail on the merits. They also cite deposition testimony by plaintiffs suggesting that UDA's initial refusal was unequivocal. 23 The evidence on the finality of UDA's refusal to deal with the LaSalvias is ambiguous. On the one hand, Girard's testimony can be read to give plaintiffs some hope that UDA would relent, and thus accept their milk for processing. He expressly denied telling Jerome LaSalvia in 1975 that LaSalvia was not to call again to request that UDA handle his excess production. Gerard stated that during this conversation he informed LaSalvia that if UDA later had the capacity to handle plaintiffs' milk, it would so inform him. On the other hand, the LaSalvias' testimony suggests that the 1975 refusal was in fact unequivocal. 24 The district court, in concluding that UDA's 1975 refusal was final and subsequent denials were mere reaffirmations, thus resolved a material factual question that would ordinarily go to the jury. Because summary disposition is allowed only if there is no genuine issue as to any material fact and ... the moving party is entitled to judgment as a matter of law, Fed.R.Civ.P. 56(c), the court should not have granted summary judgment on the unilateral refusal to deal claim. 25 The initial refusal to deal in Air Pollution was necessarily final because the product, if it was to be used at all, had to be integrated into the design of new automobiles. 591 F.2d at 72. Therefore, finality was easily assessed because it turned upon a peculiarity of the product market at issue and not upon the subjective intent of the defendants. By contrast, the brief opinion in Orgell does not disclose the basis for its conclusion that the initial refusal was both final and the source of the plaintiff's injury. Orgell may encourage ambiguous responses to requests to deal coupled with later allegations that those denials were final. We therefore place on defendants the burden of showing that their initial refusal to deal was in fact final, and that the finality of the refusal was conveyed to the plaintiff. A self-serving allegation of finality made in the course of litigation is insufficient to meet this burden. 26 A finding of finality upon remand will not, of course, conclusively resolve the Sec. 15b question. Under Air Pollution and Orgell, the district court must also determine whether the damage to plaintiff, if any, resulted solely from the initial refusal. If it did not, and damage accrued during the four years preceding the filing of the complaint, then the action is not barred despite the finality of the refusal. Plaintiffs' damage analysis claimed losses both from the failure of their business to grow as projected, and the price differential between the Order 131 price available if they could have sold their total production within the CAMMA, and the lower price they received by selling milk in other markets. Under this damage theory, plaintiffs claim harm from UDA's exploitation of its market position. The losses claimed in plaintiffs' damage analysis stem not from the initial refusal, but from the unlawful monopolization of the market at issue. 27 Because the district court resolved a material question of fact, and because the record suggests that plaintiffs allege damage incurred within the statutory period, the summary judgment on plaintiffs' unilateral refusal to deal claim must be reversed. Because the district court addressed only the finality question, we cannot determine whether the parties had an opportunity to address the source and timing of the damage question. They should be afforded that opportunity upon remand. B. The Concerted Refusal to Deal Claim 28 Because Air Pollution involved a concerted refusal to deal, its analysis arguably should also govern the LaSalvias' concerted refusal claim. We decline to apply it, however, because of the fundamental differences in the conduct underlying the concerted refusal claims in Air Pollution and in this case. The plaintiff in Air Pollution alleged a group boycott. Such conduct is analytically indistinguishable from a unilateral refusal for statute of limitations purposes. In most instances the harm incident to such refusals stems from the refusal itself. Continuing harm is not at issue, and thus the finality of the refusal will usually determine the triggering of the statute of limitations. In this case plaintiffs allege use of long-term contracts to achieve or to maintain market dominance. The harm alleged stems from the exploitation of market dominance to deprive plaintiffs of an opportunity to market their milk within the CAMMA. Thus, finality is not at issue. Rather than looking to Air Pollution, we therefore look to the Supreme Court's continuing harm analysis. 29 In Hanover Shoe Co. v. United Shoe Machinery Corp., 392 U.S. 481, 88 S.Ct. 2224, 20 L.Ed.2d 1231 (1968), the Court established a limited exception to the usual rule that an antitrust claim accrues when the plaintiff incurs the injury. The Hanover Shoe exception applies when the anticompetitive conduct complained of constitutes a continuing violation and results in continuing harm. In that case, overcharges paid by the plaintiff because of the defendant's lease-only policy for its shoe manufacturing machinery resulted from a continuing violation of the Sherman Act which inflicted continuing and accumulating harm on the plaintiff. Id. at 502 n. 15, 88 S.Ct. at 2236 n. 15. The plaintiff alleged that the defendant, by exploiting its monopoly power, inflicted a continuing loss on the plaintiff through the use of damaging contracts. The LaSalvias allege that UDA has used its market position to impose contracts on handlers within the CAMMA that prohibited them from dealing with plaintiffs. That the contract in Hanover Shoe was between the parties to the suit and those here were between UDA and third parties does not lessen the force of the continuing harm analysis. In Twin City Sportservice, Inc. v. Charles O. Finley & Co., 512 F.2d 1264, 1270 (9th Cir.1975), we relied upon Hanover Shoe in concluding that the purchaser of a sports franchise could challenge a long-term exclusive supply contract between a former owner of the franchise and a concessionaire even though the contract was formed more than four years before suit was filed. 30 The district court in this case refused to apply the continuing harm doctrine, looking instead to the time the LaSalvias learned of the full supply contracts. Because the relevant inquiry is not when they learned of the contracts but whether the harm alleged continued into the four-year period preceding the filing of the complaint, the summary judgment on the concerted refusal to deal claim is reversed. We note, however, that while plaintiffs may recover for damages they prove were caused by anticompetitive conduct begun before the four-year statutory period under the continuing harm doctrine, their recovery is limited to damage incurred within the four years preceding the filing of the complaint. See Hanover Shoe, 392 U.S. at 502, 88 S.Ct. at 2236 (plaintiff entitled to damages for the entire period permitted by the applicable statute of limitations) (footnote omitted); cf. Hanson v. Shell Oil Co., 541 F.2d 1352, 1361 (9th Cir.1976) (limiting damages to the statutory period under the speculative damages doctrine), cert. denied, 429 U.S. 1074, 97 S.Ct. 813, 50 L.Ed.2d 792 (1977). 31