Opinion ID: 2826960
Heading Depth: 4
Heading Rank: 2

Heading: Implied Agreements

Text: Insulate, pointing to Graco’s 2007 and 2012 letters and some distributors’ resulting compliance, proposes the “Appellees’ conduct provides . . . circumstantial evidence of anticompetitive agreements.”6 However, in both the 2007 and 2012 letters, Graco simply stated its policy of not selling to distributors who also sold competitors’ products. The federal antitrust laws “do[] not restrict the long recognized right of [a] manufacturer engaged in an entirely private business, freely to exercise his own independent discretion as to parties with whom he will deal; and, of course, he may announce in advance the circumstances under which he will refuse to sell.” Colgate, 250 U.S. at 307. Under the “Colgate doctrine,” “[a] manufacturer . . . generally has a right to deal, or refuse to deal, with whomever it likes, as long as it does so 6 Insulate’s complaint states the appellees entered into both an overarching huband-spoke conspiracy and multiple small conspiracies between Graco and each of its distributors. The parties dispute whether Insulate adequately alleged a hub-and-spoke conspiracy. Because we conclude Insulate’s complaint does not sufficiently allege any conspiracy—whether widespread or on an individual basis—we do not reach this issue. -9- independently.” Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 761-63 (1984) (citing Colgate, 250 U.S. at 307); accord Corner Pocket of Sioux Falls, Inc. v. Video Lottery Techs., Inc., 123 F.3d 1107, 1111-12 (8th Cir. 1997). Indeed, a “manufacturer can announce its [policy] in advance and refuse to deal with those who fail to comply. And a distributor is free to acquiesce in the manufacturer’s demand in order to avoid termination.” Monsanto, 465 U.S. at 761. To allege the existence of a conspiracy adequately, Insulate must present something beyond the mere fact that Graco stated its policy and the Distributors complied. In United States v. Parke, Davis & Co., 362 U.S. 29 (1960), the Supreme Court explained that plaintiffs can prove concerted action by showing a manufacturer took some action “beyond mere announcement of his policy and the simple refusal to deal[ and] employ[ed] other means which effect adherence to his” policies. Id. at 44; see, e.g., Monsanto, 465 U.S. at 765 (holding defendant’s attempts to force its distributors to comply with its resale price policy went beyond the Colgate doctrine’s limits); Parke, Davis, 362 U.S. at 33-36, 45 (deciding a company that policed the implementation of its resale price policy and individually met with each of its wholesalers and retailers to ensure compliance exceeded Colgate). Yet Colgate protects a manufacturer who communicates a policy and then terminates distribution agreements with those who violate that policy. See Colgate, 250 U.S. at 307; Roland, 749 F.2d at 393 (“The mere announcement of [an exclusive-dealing] policy, and the carrying out of it by canceling [a] noncomplying dealer, would not establish an agreement.”); see also, e.g., Lovett v. Gen. Motors Corp., 998 F.2d 575, 577, 579 (8th Cir. 1993) (explaining the plaintiff’s evidence that a manufacturer decreased its supply to a noncompliant distributor and told the distributor to “reconsider” its noncompliant activities was not sufficient to support the jury’s finding of a conspiracy and reversing the district court’s denial of judgment as a matter of law to the manufacturer). -10- Attempting to distinguish Colgate, Insulate maintains the appellees took actions to enforce their agreements that went “‘beyond [the] mere announcement of [a] policy and the simple refusal to deal,’” quoting Parke, Davis, 362 U.S. at 44. But the complaint does not describe any conduct suggesting an agreement between Graco and the Distributors. While the complaint makes some vague references to concerted action among “key Distributors,” Insulate does not provide any factual allegations beyond the bare conclusion that there was a conspiracy. The complaint does not allege when the agreements occurred or even identify which of the distributors named as defendants—if any—are among the “key Distributors” who were party to the agreements. Without some supporting factual allegations, these conclusions are insufficient. See Twombly, 550 U.S. at 557 (“[A] conclusory allegation of agreement at some unidentified point does not supply facts adequate to show illegality.”); In re Elevator Antitrust Litig., 502 F.3d 47, 50-51 (2d Cir. 2007) (per curiam) (dismissing plaintiff’s complaint because the complaint generally recounted antitrust violations “without any specification of any particular activities by any particular defendant; it is nothing more than a list of theoretical possibilities, which one could postulate without knowing any facts whatever” (quotation and marks omitted)); accord Twombly, 550 U.S. at 565 n.10 (doubting whether a complaint “mention[ing] no specific time, place, or person involved in the alleged conspiracies” would adequately state a claim). The only allegations in the complaint that come close to suggesting a conspiracy are those concerning Foampak. The complaint avers Graco, after learning Foampak was considering taking on a competitive product line, flew two “top executives” to Foampak’s headquarters to meet with Foampak executives. At this meeting, Graco threatened to end Foampak’s distributorship, so Foampak chose not to carry a competitive product. Insulate compares Graco’s actions here to similar behavior in Monsanto, which the Supreme Court found exceeded the Colgate doctrine’s limits. See Monsanto, 465 U.S. at 765 (explaining Monsanto’s multiple attempts to force distributor compliance with its resale price policy by threatening -11- termination and “complain[ing] to [a] distributor’s parent company” were sufficient to support the jury’s finding of an agreement). Assuming Insulate’s complaint sufficiently alleges an agreement between Foampak and Graco, Insulate cannot challenge this conspiracy because it has not named Foampak as a defendant. See Campos, 140 F.3d at 1170-71 & nn.3-4. The complaint does allege Foampak had “communications with fellow Distributors,” broadly implying these other distributors may have been part of the alleged GracoFoampak conspiracy. But again Insulate does not identify any other distributor by name, suggest when these communications occurred, or provide any other specific factual allegation that would create an inference that an agreement was made.7 Ultimately, Insulate’s complaint fails sufficiently to allege concerted action. The complaint repeatedly asserts Graco and an unnamed set of distributors generally conspired to restrain trade, but these assertions are not enough. “[A] naked assertion of conspiracy . . . gets the complaint close to stating a claim, but without some further factual enhancement it stops short of the line between possibility and plausibility of entitlement to relief.” Twombly, 550 U.S. at 557 (internal marks omitted). Insulate has not provided the “factual enhancement” necessary to move its complaint forward. 7 Insulate additionally references Graco’s dealings with the FTC, suggesting we should infer Graco’s wrongdoing from the FTC’s investigation and consent agreement. The FTC’s complaint, however, alleged Graco unlawfully acquired competitors under Clayton Act Section 7, conduct not relevant to the conspiracy claims alleged here. Further, the FTC consent agreement explicitly stated Graco had made no admission of guilt. We thus decline to presume Graco violated federal antitrust laws based on the mere existence of this settlement of a different antitrust dispute. -12-