Opinion ID: 1190367
Heading Depth: 4
Heading Rank: 2

Heading: analysis

Text: The record in this case clearly demonstrates that B & H's antitrust claims lack any conceivable merit. As the analysis in the district court's thorough opinion demonstrated, B & H's claims suffer from numerous fatal defects: the lack of evidence defining a relevant market; the lack of evidence suggesting that the SUPPORT contract has allowed W & F to foreclose a substantial portion of the DME/P & O market in Michigan through its exclusive [6] arrangement for providing DME/P & O services to certain employees and retirees of Chrysler, Ford, and the MPSERS; and the lack of evidence demonstrating an injury to competition establishing B & H's antitrust standing. In its opening brief on appeal, B & H failed to challenge the district court's finding that B & H had not shown any antitrust injury and therefore had no antitrust standing, and we may affirm the district court's judgment on this ground alone. [7] See Priddy v. Edelman, 883 F.2d 438, 446 (6th Cir.1989) (We normally decline to consider issues not raised in the appellant's opening brief.). Although B & H's failure to challenge one of the grounds on which the district court ruled against it dooms its appeal, after discussing antitrust standing we will briefly address B & H's other arguments because their resolution is relevant to B & H's appeal of the Rule 11 sanctions and W & F's motion pursuant to FRAP 38 for appellate sanctions.
Antitrust [p]laintiffs must prove antitrust injury, which is to say injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants' acts unlawful. Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977); see also NicSand, Inc. v. 3M Co., 507 F.3d 442, 450 (6th Cir.2007) (en banc) (Antitrust injury . . . is a `necessary, but not always sufficient,' condition of antitrust standing.) (quoting Cargill, Inc. v. Monfort of Colo., Inc., 479 U.S. 104, 110 n. 5, 107 S.Ct. 484, 93 L.Ed.2d 427 (1986)). The antitrust laws . . . were enacted for `the protection of competition not competitors,' Brunswick, 429 U.S. at 488, 97 S.Ct. 690 (quoting Brown Shoe Co. v. United States, 370 U.S. 294, 320, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962)), and we have held that a district court appropriately dismissed a lawsuit for failing to state a claim when the only harm allegedly suffered by [the plaintiff] was in the company's capacity as a competitor in the marketplace, not as a defender of marketplace competition and the record present[ed] no indication that competition itself was harmed by any act of the defendants. Indeck, 250 F.3d at 977. As stated above, B & H failed to discuss antitrust standing in its opening brief even though the district court explicitly stated that the absence of antitrust injury was an additional ground[ ] for granting summary judgment in [W & F's] favor. J.A. at 113 (Op. & Order at 40). Even after W & F included a section in its appellate brief arguing that the district court properly found that B&H suffered no antitrust injury, Appellee Br. at 44-46, B & H devoted only a total of three sentences in its Reply Brief to the issue of its antitrust standing and then misstated the record, Reply Br. at 26-27. In its Reply Brief, B & H charged that [o]nce again, W & F distorts the record below by claiming that B&H demonstrated no harm to competition but only damages to B & H. Reply Br. at 26. But B & H is the party who distorts the record: the district court explicitly stated that although B&H has produced an expert opinion as to B & H's loss of anticipated income, the record is devoid of evidence that competition as a whole has suffered as a result of the exclusive SUPPORT program. J.A. at 116 (Op. & Order at 43). B & H's Reply Brief ignored the district court's explicit finding on this point, and B & H merely referred to a section of the affidavit submitted by its expert witness without quoting from it or explaining how it demonstrated injury to competition and why the district court was wrong on this point. Reply Br. at 26-27 (citing J.A. at 1658-67 (Pisarkiewicz Aff. at 20-29). Furthermore, in the cited pages B & H's expert merely referred to a strong consumer backlash against the restrictive policies of HMO's and even conceded that it does appear that Chrysler obtained sharp discounts from W & F. J.A. at 1660, 1666 (Pisarkiewicz Aff. at 20, 28)). The district court observed that B&H presented no evidence, for example, that DME/P & O providers have been driven out of business or that consumers have been saddled with poor quality goods or services, and the court further noted that the limited duration of the SUPPORT contract affords BCB SM and its customers . . . the periodic opportunity to make different arrangements if the SUPPORT program or [W & F's] performance is not achieving the desired objectives. J.A. at 116-17 (Op. & Order at 43-44). We hold that the district court properly granted summary judgment in favor of W & F on the ground that B&H failed to demonstrate any antitrust injury.
Under governing Supreme Court precedent, the legality of the SUPPORT network is not a close question. In Tampa Electric, the Supreme Court provided the standard for analyzing exclusive-dealing arrangements, stating that the competition foreclosed by the contract must be found to constitute a substantial share of the relevant market. 365 U.S. at 328 81 S.Ct. 623 (emphasis added). Courts routinely observe that foreclosure levels are unlikely to be of concern where they are less than 30 or 40 percent. See, e.g., Stop & Shop Supermarket Co. v. Blue Cross & Blue Shield of R.I., 373 F.3d 57, 68 (1st Cir.2004). B&H lacked any reasonable theory by which its evidence satisfied the basic substantial foreclosure threshold necessary to prevail on an exclusive-dealing claim. B & H asserted that the evidence in this case satisfied the substantial foreclosure threshold purely on the basis of observing that forty-six percent of DME/P & O retail outlets in Michigan were members of the SUPPORT network, without regard to any sales or revenue data. J.A. at 1616 (B & H's Supplemental Summ. J. Br. at 10) (stating expert's conclu[sion] that B&H and other DME competitors are being excluded from networks which account for 46 percent of the DME provider outlets across the state of Michigan for the large insurance provider networks). Revenue data for the SUPPORT network, as well as estimates for the total size of the market for DME/P & O in Michigan, did exist, and W & F's expert determined that the SUPPORT network accounted for only six and one-half percent of the DME/P & O sales revenue for the entire state of Michigan and just twelve and one-half percent of the DME/P & O sales revenue in the metropolitan Detroit area. On appeal, B & H essentially repeats its argument that a provider-based percentage of participating DME/P & O outlets is meaningful, without responding to the district court's criticism of that measure as pointless and perverse. J.A. at 99 (Op. & Order at 26); Appellant Br. at 17-20, 33. Further, B&H grossly distorts the district court's reasoning on this point. B & H claims that the district court incorrectly rejected the analysis of B & H's economic expert because the analysis was based on a pointless and perverse method of estimating market shares, and B&H then falsely claims that the Court cited approvingly the use by W & F's economic expert, Dr. Lynk, of the precise same numerical fraction except that Dr. Lynk excluded from his numerator any [SUPPORT] providers other than W & F['s outlets]. Appellant Br. at 18 (citing J.A. at 98). In fact, in the passage of the district court opinion that B&H quotes in its brief, the district court was clearly referring to the economic evidence regarding the sales revenue generated by outlets in the SUPPORT network, not simply a crude percentage of W & F outlets or SUPPORT outlets of the total in the state. J.A. at 98 (Opinion & Order at 25). We hold that the alleged exclusive-dealing arrangement in this case does not violate the antitrust laws because the evidence shows that the SUPPORT program foreclosed access to less than thirteen percent of the relevant market.
By devoting a mere seven sentences to its claims of monopolization and attempted monopolization under § 2, see Appellant Br. at 40-41, B&H effectively waived its § 2 claims. See United States v. Corrado, 304 F.3d 593, 611 n. 12 (6th Cir.2002) (Arguments not developed in briefs on appeal are deemed waived by this court. . . .).
B & H devoted large portions of its Opening Brief and its Reply Brief to arguing, for the first time in this case, that the principal problem with the SUPPORT network is that it amounts to a price-fixing conspiracy. See Appellant Br. at 21 (All of these providers in the Support Network have come together and agreed to accept a fee schedule, so there is a horizontal price fixing agreement . . .); Appellant Br. at 27-28 (stating that `[n]aked' agreements among competitors to fix prices are per se illegal and that [t]he Support [Network] is per se illegal); Reply Br. at 7 (stating the SUPPORT contracts are primarily price fixing agreements); id. at 10 (stating the SUPPORT contracts just happen to be primarily price fixing agreements). Nowhere below did B & H describe the SUPPORT network as a conspiracy to fix prices. The phrase price fixing does not appear anywhere in B & H's Amended Complaint. [8] J.A. at 33-37 (Am.Compl.). Rather, the entire case focused on whether the SUPPORT network was an exclusive-dealing arrangement that potentially foreclosed a substantial portion of the market. B&H claims that its price-fixing arguments are not new because courts analyze both price fixing and exclusive dealing under § 1 of the Sherman Act, which prohibits unreasonable restraints of trade, Reply Br. at 7-8, but this argument manifestly lacks merit and borders on bad faith. Price fixing and exclusive dealing are two entirely separate theories of antitrust liability, with vastly different applicable standards and analyses relying on very different kinds of evidence. We generally `cannot consider an issue not passed on below,' and [w]e exercise our discretion to rule on an issue not decided below only in `exceptional cases.' St. Marys Foundry, Inc. v. Employers Ins. of Wausau, 332 F.3d 989, 995-96 (6th Cir.2003) (quotations omitted). This is not such an exceptional case. Similarly, on appeal, B&H also relies heavily, for the first time, on Statements 8 and 9 from the U.S. Department of Justice and Federal Trade Commission's Statements of Antitrust Enforcement Policy in Health Care (Aug.1996), available at http://www.usdoj.gov/atr/public/guidelines/0000.pdf (Health Care Enforcement Guidelines). Although it is not improper for a party to cite a case or an authority to an appellate court for the first time, see Costantino v. TRW, Inc., 13 F.3d 969, 981 n. 13 (6th Cir.1994), Statements 8 and 9, and particularly B & H's use of them, [9] primarily concern a price-fixing theory of liability, which B&H did not assert below. We therefore decline to address B & H's arguments that, under Statements 8 and 9, the SUPPORT network is an illegal agreement to fix prices because B&H did not present this theory of antitrust liability to the district court. See St. Marys Foundry, 332 F.3d at 995-96.