Opinion ID: 526974
Heading Depth: 2
Heading Rank: 2

Heading: Impact on Interstate Commerce

Text: 13 In order to state a tying claim, therefore, appellants need only allege the five specific elements enunciated previously. See Yentsch, 630 F.2d at 56-57. Whether or not appellants have satisfied all of the first four elements of the Yentsch test, we agree with the district court that there is a serious question whether appellants can establish the fifth element, which requires them to show that the alleged tie forecloses a not insubstantial amount of potential sales for the tied product. See Grappone, Inc. v. Subaru of New England, Inc., 858 F.2d 792, 794 (1st Cir.1988) (citing International Salt Co. v. United States, 332 U.S. 392, 396, 68 S.Ct. 12, 15, 92 L.Ed. 20 (1947)). 14 The Supreme Court has stated that as a threshold matter there must be a substantial potential for impact on competition in the tied market in order to justify per se condemnation of an alleged tying arrangement. Jefferson Parish, 466 U.S. at 16, 104 S.Ct. at 1560. If only a single purchaser were 'forced' with respect to the purchase of a tied item, the resultant impact on competition would not be sufficient to warrant the concern of antitrust law. Id. The Supreme Court has defined substantial in this context as substantial enough in terms of dollar-volume so as not to be merely de minimis. Fortner Enterprises, Inc. v. United States Steel Corp., 394 U.S. 495, 501, 89 S.Ct. 1252, 1257, 22 L.Ed.2d 495 (1969) (Fortner I ). For purposes of determining substantiality, a court measures the total volume of sales tied by the policy under challenge, not merely the portion of this total accounted for by the particular plaintiff who brings suit. Id. at 502, 89 S.Ct. at 1258. 15 There is no magic number that definitively establishes whether a plaintiff has foreclosed a not insubstantial amount of potential sales for the tied product. In Fortner I, the Supreme Court held that a sum of almost $200,000 is not paltry or 'insubstantial.'  Id. at 502, 89 S.Ct. at 1258. See also United States v. Loew's Inc., 371 U.S. 38, 49, 83 S.Ct. 97, 104, 9 L.Ed.2d 11 (1962) (payments ranging from $60,800 to over $2,500,000 were substantial). We have said that $600,000 of commerce clearly meets any test of substantiality, Yentsch, 630 F.2d at 58, and in the same case, we stated that we were not convinced that $15,000 would be  'substantial enough ... so as not to be merely de minimis.'  Id. (quoting Fortner I, 394 U.S. at 501, 89 S.Ct. at 1257). Other courts have come to varying conclusions. See Tic-X-Press, Inc. v. Omni Promotions Co. of Ga., 815 F.2d 1407, 1419-20 (11th Cir.1987) ($10,091.07 is not de minimis); Amey, Inc. v. Gulf Abstract & Title, Inc., 758 F.2d 1486, 1503 (11th Cir.1985) ($325 is de minimis), cert. denied, 475 U.S. 1107, 106 S.Ct. 1513, 89 L.Ed.2d 912 (1986); Aamco Automatic Transmissions, Inc. v. Tayloe, 407 F.Supp. 430, 436 (E.D.Pa.1976) ($50,000 over four years with respect to one plaintiff in class action is not de minimis). In their complaint, appellants suggest that the amount of purchases that are foreclosed by the mandatory meal program is approximately $330,000, the total annual meal charges collected from approximately 250 residents. We agree with the district court that this sum overstates the amount of commerce foreclosed because the record already indicates that many residents would continue to use the meal plan by choice. The district court noted that the annual mandatory meal fees for the 22 original plaintiffs, albeit at the slightly lower monthly rate then in effect, came to approximately $30,000. Moreover, this figure may also overstate the amount of commerce foreclosed by the mandatory meal policy because some plaintiffs would choose not to buy the product (the single, prepared meal) at all, see Jefferson Parish, 466 U.S. at 16, 104 S.Ct. at 1560, for a variety of reasons; e.g., they might cook in their rooms at lower cost. (Each apartment has a full kitchen.) In Jefferson Parish, the majority specifically stated that when a purchaser is 'forced' to buy a product he would not have otherwise bought even from another seller in the tied-product market, there can be no adverse impact on competition. Id. In any event, the district court's prediction that it is highly unlikely that plaintiffs would prevail on this issue seems correct. Yet, we cannot decide this issue definitively on the limited record before us. 16 Under the circumstances, we think it best to remand this case to the district court for a very limited inquiry to determine whether the impact of the alleged tying arrangement is substantial enough to warrant the protection of the antitrust laws. Although the relevant benchmark for determining substantiality is not absolutely clear, see Tic-X-Press, 815 F.2d at 1419, we believe that the district court, in making this determination, should take into consideration the actual number of people affected by the disputed policy. See Johnson v. Soundview Apartments Housing Dev. Fund Co., 588 F.Supp. 1381, 1383 (S.D.N.Y.1984); cf. Jefferson Parish, 466 U.S. at 16, 104 S.Ct. at 1560. Although one might read Fortner I, 394 U.S. at 502, 89 S.Ct. at 1258, to require the district court to consider the total annual meal service charges collected from all the residents, we believe that the Supreme Court in Fortner I was primarily concerned with ascertaining the total sales lost to potential competitors due to the tying policy. See Johnson v. Soundview Apartments Housing Dev. Fund Co., 588 F.Supp. at 1383; cf. Jefferson Parish, 466 U.S. at 16, 104 S.Ct. at 1560. If the district court can ascertain such lost sales, it may use that as the relevant figure. 1 The district court should also determine how many appellants actually remain in this case. As indicated above, the number is in dispute. If the district court determines that the total amount of commerce foreclosed is de minimis, the complaint should be dismissed. 17 In his opinion below, Judge Leval indicated his concern that discovery on the antitrust claim might cause undue hardship to St. Margaret's. The district court has substantial discretion in controlling the scope and nature of discovery. On remand, the court should exercise this authority aggressively to make sure that discovery is strictly limited to the information necessary to determine the alleged tie's impact on interstate commerce. An immense amount of time and effort has already been expended by both sides in this litigation. The services of appellants' attorneys in this stubbornly fought litigation 2 are obviously being furnished on a pro bono basis. The target of the litigation is a non-profit institution offering low-cost residence to those in need of housing in New York City. Plaintiffs seek to apply antitrust doctrine to parties and activities that not only are not the sort that ordinarily implicate the Sherman Act but also are already substantially regulated by HUD. Under the circumstances, those engaged in the litigation have special responsibilities to exercise restraint in any further proceedings. 18 We believe that the facts of this case reveal the possible weaknesses in the per se tying analysis. The furnishing of such a unique congregate care facility should not be subjected so easily to the antitrust laws, and under a rule of reason analysis, we are virtually certain that this arrangement would survive scrutiny. Nevertheless, we must, of course, adhere to the views of a majority of the Supreme Court, which has not abandoned the per se test. Compare Jefferson Parish, 466 U.S. at 9, 104 S.Ct. at 1556 (It is far too late in the history of our antitrust jurisprudence to question the proposition that certain tying arrangements ... are unreasonable 'per se.' ) with Jefferson Parish, 466 U.S. at 35, 104 S.Ct. at 1570 (O'Connor, J., concurring in judgment) (The time has therefore come to abandon the 'per se' label....). 19 As to St. Margaret's cross-appeal, we believe that if appellants' federal claim is again dismissed, the district court has discretion to decline to exercise jurisdiction over appellants' Donnelly Act claim. 20 Vacated and remanded for further proceedings consistent with this opinion.