Court Opinion

ID: 3191234
Source: CourtListenerOpinion
Date Created: 2016-04-04 21:00:26.785026+00
Date Added: 2024-06-11T12:24:10.525856
License: Public Domain

United States Court of Appeals
                     For the First Circuit

No. 15-1571

                          FLOVAC, INC.,

                      Plaintiff, Appellant,

                               v.

                  AIRVAC, INC. and MARK JONES,

                     Defendants, Appellees.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                 FOR THE DISTRICT OF PUERTO RICO

        [Hon. Salvador E. Casellas, U.S. District Judge]

                             Before

                     Lynch, Selya and Lipez,
                         Circuit Judges.

     Roberto Ruiz Comas, with whom RC Legal & Litigation Services,
P.S.C. was on brief, for appellant.
     Zachary A. Madonia, with whom David M. Schiffman, Courtney A.
Hoffmann, Sidley Austin LLP, Rafael Escalera Rodriguez, and
Reichard & Escalera were on brief, for appellees.

                          April 4, 2016
                 SELYA, Circuit Judge.          That an antitrust case may turn

on    the    definition     of    the    relevant    market    is   a    common-sense

proposition.          In   this    instance,      the   summary     judgment     record

disclosed a relevant market much broader than the plaintiff claimed

— a market in which the defendant lacked any semblance of market

dominance.         Finding the plaintiff's antitrust claims wanting and

its    companion       claims     equally      impuissant,    the   district      court

entered summary judgment in favor of the defendant.                     After careful

consideration, we affirm.

I.    BACKGROUND

                 Plaintiff-appellant Flovac, Inc. (Flovac) and defendant-

appellee         Airvac,   Inc.    (Airvac)      both   fabricate       vacuum    sewer

systems.         Such systems are among the options available to transfer

sewage from various sources to wastewater treatment facilities.

There       is    money    to     be    made    in   providing      this    essential

infrastructure to governmental units (especially municipalities)

and to developers.

                 In May of 2012, Flovac filed suit against Airvac and

Airvac's president, Mark Jones, in the United States District Court

for the District of Puerto Rico.                Flovac sought relief under both

federal and Puerto Rico antitrust laws, see 15 U.S.C. §§ 1-2; P.R.

Laws Ann. tit. 10, §§ 258, 260, alleging that Airvac's conduct in

marketing its vacuum sewer systems was anticompetitive.                            The

specifics of the challenged behavior are irrelevant here; for

                                          - 2 -
present    purposes,       it   suffices    to   say    that     the    alleged

anticompetitive     conduct     occurred    in   the   course    of    Airvac's

solicitation of municipalities interested in installing new sewer

systems.    According to Flovac, Airvac lobbied those prospective

customers both to choose vacuum systems and to impose project

specifications favorable to its proprietary wares.

            Flovac's complaint also contained claims of tortious

interference with advantageous economic relations, brought against

Airvac and Jones under Puerto Rico law.           See P.R. Laws Ann. tit.

31, § 5141. These claims focused on a specific vacuum sewer system

installation in Toa Baja, Puerto Rico (the Ingenio Project).              Both

Flovac and Airvac competed for that project; and though the Puerto

Rico Aqueduct and Sewer Authority (PRASA) solicited bids for a

vacuum    sewer   system    with   specifications      modeled   on    Airvac's

system, the general contractor who won the bid chose Flovac to

provide the vacuum system components.

            Airvac did not go quietly into this bleak night.                The

Ingenio Project was funded in part through the American Recovery

and Reinvestment Act of 2009 (ARRA), Pub. L. No. 111-5, 123 Stat.

115, which contained certain "Buy American" provisions, mandating

that funded projects use only materials produced in the United

States, see id. § 1605.         Jones — noting both the ARRA's mandate

and the stipulation in the project requirements that the component

parts for the system had to be purchased from a single manufacturer

                                    - 3 -
— wrote to PRASA in May of 2010 questioning the manufacturing

process    for    Flovac's   system.        PRASA   halted    Flovac's     work

temporarily, but replied in June that it was satisfied that

Flovac's system complied with both the ARRA and the applicable

project requirements.

             Airvac then raised the ARRA compliance issue in a letter

to the Environmental Protection Agency (EPA) — the agency tasked

with overseeing the "Buy American" requirements for the Ingenio

Project.      EPA investigated the complaint and recommended that

Flovac implement some modifications to its manufacturing process.

Flovac complied.      It thereafter completed the project, but not

without protracted delays (allegedly attributable to Airvac's

meddling).

             After a series of discovery squabbles (not relevant

here), Airvac moved for summary judgment.              See Fed. R. Civ. P.

56(a).    Flovac opposed the motion.        In a thoughtful rescript, the

district court granted summary judgment in Airvac's favor on all

claims.    See Flovac, Inc. v. Airvac, Inc., 84 F. Supp. 3d 95, 107

(D.P.R. 2015).     This timely appeal followed.

II.    ANALYSIS

             Our standard of review is de novo, which requires us to

take the facts in the light most agreeable to the summary judgment

loser and to draw all reasonable inferences from those facts in

that   party's    favor.     See   Tropigas   de    P.R.,   Inc.   v.   Certain

                                    - 4 -
Underwriters at Lloyd's of London, 637 F.3d 53, 56 (1st Cir. 2011).

Summary judgment is permissible only when examination of the record

in that light reveals "no genuine dispute as to any material fact

and the movant is entitled to judgment as a matter of law."   Fed.

R. Civ. P. 56(a).

          A party moving for summary judgment must identify for

the district court the portions of the record that show the absence

of any genuine issue of material fact.      See Celotex Corp. v.

Catrett, 477 U.S. 317, 323 (1986).    Once such a showing is made,

"the burden shifts to the nonmoving party, who must, with respect

to each issue on which [it] would bear the burden of proof at

trial, demonstrate that a trier of fact could reasonably resolve

that issue in [its] favor."   Borges ex rel. S.M.B.W. v. Serrano-

Isern, 605 F.3d 1, 5 (1st Cir. 2010).   This demonstration must be

accomplished by reference to materials of evidentiary quality, see

Garside v. Osco Drug, Inc., 895 F.2d 46, 49 (1st Cir. 1990), and

that evidence must be more than "merely colorable," Anderson v.

Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).   At a bare minimum,

the evidence must be "significantly probative."     Id. at 249-50.

The nonmovant's failure to adduce such a quantum of evidence

entitles the moving party to summary judgment.   See Tobin v. Fed.

Express Corp., 775 F.3d 448, 450-51 (1st Cir. 2014).

                              - 5 -
                      A.   Antitrust Claims.

          Flovac has asserted claims under two separate provisions

of the Sherman Act: Section 1, which forbids conspiracies in

restraint of trade, and Section 2, which bars monopolization or

attempted monopolization of a particular area of commerce.    See 15

U.S.C. §§ 1-2.    Since Flovac's Section 1 claim is explicitly

limited to the rule of reason, see, e.g., Leegin Creative Leather

Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 885-87 (2007), all of

its antitrust claims require proof that Airvac exercises or could

exercise a threshold degree of market power, see Spectrum Sports,

Inc. v. McQuillan, 506 U.S. 447, 456 (1993); E. Food Servs., Inc.

v. Pontifical Catholic Univ. Servs. Ass'n, Inc., 357 F.3d 1, 5

(1st Cir. 2004); Coastal Fuels of P.R., Inc. v. Caribbean Petroleum

Corp., 79 F.3d 182, 195 (1st Cir. 1996).1      This analysis demands

consideration of the defendant's market power, that is, its power

to lessen or eliminate competition in the relevant market.       See

Spectrum Sports, 506 U.S. at 456; E. Food Servs., 357 F.3d at 5;

Coastal Fuels, 79 F.3d at 196.

    1 With respect to matters relevant to this appeal, Puerto
Rico's antitrust statute is coterminous with the Sherman Act. See
Podiatrist Ass'n, Inc. v. La Cruz Azul de P.R., Inc., 332 F.3d 6,
16 (1st Cir. 2003); Coastal Fuels, 79 F.3d at 195; Pressure Vessels
of P.R., Inc. v. Empire Gas de P.R., 137 P.R. Dec. 497, 508-13
(1994) (official translation, slip op. at 8-14).         Thus, the
antitrust claims separately brought under Puerto Rico law rise or
fall with Flovac's Sherman Act claims and do not warrant
independent analysis.

                                 - 6 -
               The definition of the relevant market is ordinarily a

question of fact, and the plaintiff bears the burden of adducing

enough evidence to permit a reasonable factfinder to define the

relevant market.       See Coastal Fuels, 79 F.3d at 197.       The relevant

market has two components: the relevant geographic market and the

relevant product market.       See Spectrum Sports, 506 U.S. at 459; E.

Food Servs., 357 F.3d at 5-6.

               The first part of the relevant market inquiry is not

controversial here. The parties agree that the relevant geographic

market    is     the   continental     United   States   and   Puerto   Rico.

Consequently, the inquiry in this case reduces to what the evidence

shows — or fails to show — about the scope of the relevant product

market.

               Determining the scope of a product market begins with

examining the universe of products that are considered "reasonably

interchangeable by consumers for the same purposes." United States

v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 395 (1956).              The

market is established by examining both the substitutes that a

consumer might employ and "the extent to which consumers will

change their consumption of one product in response to a price

change    in    another,   i.e.,     the   'cross-elasticity   of   demand.'"

Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 469

(1992) (quoting du Pont, 351 U.S. at 400).

                                      - 7 -
             These abecedarian principles are sufficient to resolve

the case at hand.    In the court below, Flovac offered only a single

definition    of   the   relevant   product    market:   a   product   market

restricted to vacuum sewer systems.          Airvac argued, however, that

the relevant product market is composed of all sewer systems

(including both vacuum and non-vacuum varieties).            This disparity

is significant because Airvac's market share within the narrower

market envisioned by Flovac is around 87%, while its share of the

broader market is closer to 2%.       An 87% market share would almost

certainly be a clear indication of market dominance, but a 2%

market share would be too puny to provide any semblance of market

power.   See, e.g., Grappone, Inc. v. Subaru of New England, Inc.,

858 F.2d 792, 797 (1st Cir. 1988) (concluding that market share of

5.6% does not demonstrate market power).

             To establish the lack of any material fact dispute about

the relevant product market, Airvac cites to uncontested evidence

that there is a variety of sewer system options that all serve the

same basic purpose; that prospective customers routinely consider

those other systems (along with vacuum systems) when deciding what

system to purchase; and that, in virtually every instance in which

Airvac bid for a project, it competed against these alternatives.

See Flovac, 84 F. Supp. 3d at 101.          This evidence suffices, at the

very least, to shift the burden of adducing contrary facts about

                                    - 8 -
product interchangeability and cross-elasticity of demand.             See

Borges, 605 F.3d at 5.

           In an attempt to carry this burden and generate a

contested issue of material fact, Flovac points mainly to two

pieces of evidence.      First, it relies on a statement from its

president, Héctor Rivera, to the effect that "[v]acuum sewer

systems   as   a   particular   technology   [are]   more   suitable   for

particular geographical and topographical areas than gravity or

other technologies."     Second, Flovac submits that a review of the

record will reveal a list indicating that Flovac has completed

more projects in certain states than in others. The district court

found these offerings insufficient to stave off summary judgment,

and so do we.2

           The proffered evidence is probative only as to Flovac's

view of the relevant product market; it does not speak at all to

the perspective of consumers.       Seen in this light, the evidence

has no bearing on the key questions of product interchangeability

and cross-elasticity of demand from the perspective of consumers.

    2 Although our holding does not depend on these shortcomings,
we note that both of these proffers are intrinsically deficient.
Rivera's statement is an undated declaration that does not comport
with statutory requirements. See 28 U.S.C. § 1746; see also Bonds
v. Cox, 20 F.3d 697, 702 (6th Cir. 1994). Similarly, the list of
projects was not mentioned in Flovac's statement of disputed
material facts and, thus, was properly excluded from the summary
judgment record by the district court. See D.P.R. Civ. R. 56(c),
(e); see also Cabán Hernández v. Philip Morris USA, Inc., 486 F.3d
1, 7-8 (1st Cir. 2007).

                                  - 9 -
Without such evidence, a jury could not find as a fact that the

product market should be defined along the lines that Flovac

proposes.   It is the consumer's options and the consumer's choices

among them on which relevant market analysis ultimately depends.

See George R. Whitten, Jr., Inc. v. Paddock Pool Builders, Inc.,

508 F.2d 547, 551 (1st Cir. 1974) ("A market definition which is

confined to the seller's perspective is not meaningful.          By

necessity, definition of [a] 'market' must also focus on [the]

attitudes and reactions of consumers."   (citations omitted)).

            At any rate, Rivera's statement is nothing more than a

generalized suggestion that, from his coign of vantage, vacuum

systems are better suited to some geographic areas than to others.

The statement provides no specifics about what factors drive that

suitability calculation or how the calculation affects the choices

consumers make when considering what kind of sewer system to

purchase.

            Flovac's reference to the list of completed projects is

singularly unhelpful.    The mere fact that Airvac has completed

more projects in some states than in others, without elaboration,

tells us nothing of value about the relevant product market.

            In an eleventh-hour effort to undermine the granting of

summary judgment, Flovac makes three further arguments.     All of

them are fruitless.

                               - 10 -
             To begin, Flovac attempts to rely on statements made by

Airvac employees, in the course of pretrial depositions, which it

claims substantiate its theory that vacuum systems are uniquely

suited to certain topographical settings.          Any such reliance is

doubly mislaid.     For one thing, Flovac did not bring any of these

statements    to   the   district   court's   attention   in    its   summary

judgment papers.     Given that omission, Flovac cannot now attempt

to resurrect those statements on appeal.           See Cochran v. Quest

Software, Inc., 328 F.3d 1, 11 (1st Cir. 2003) ("[A] party may not

advance for the first time on appeal either a new argument or an

old argument that depends on a new factual predicate.").

             If more were needed — and we doubt that it is — the

belatedly    identified     statements   suffer   from    the   same    basic

infirmity as the Rivera statement and the list of projects.             None

of those statements is probative of either the interchangeability

of different types of sewer systems or the cross-elasticity of

demand.

             We need not tarry over Flovac's contention that the

district court blundered in failing to consider whether vacuum

sewer systems make up a submarket of the broader product market

for sewer systems.       Even assuming, for argument's sake, that this

contention is properly before us,3 characterizing Flovac's claims

    3 Flovac did not brief this contention at all in the district
court but, rather, voiced it for the first time at oral argument

                                    - 11 -
as involving a submarket is smoke and mirrors.                     The requirements

for establishing a relevant submarket are no different than those

for establishing a relevant market.                  See, e.g., PSKS, Inc. v.

Leegin Creative Leather Prods., Inc., 615 F.3d 412, 418 (5th Cir.

2010); Geneva Pharm. Tech. Corp. v. Barr Labs. Inc., 386 F.3d 485,

496 (2d Cir. 2004).           Therefore, the evidentiary flaws identified

above would operate to defeat the proffered submarket claim as

well.

            Finally,         Flovac     insists     that    the     district     court

erroneously       imposed     an    ironclad   requirement        that   a   plaintiff

provide expert testimony in order to establish the relevant market.

But this case does not require us to take a position on the need

for expert testimony in a Sherman Act case, and we express no

opinion on that matter.             Instead, we reject Flovac's argument as

sheer persiflage.

            The district court observed that other circuits have

imposed such a rule, see, e.g., Bailey v. Allgas, Inc., 284 F.3d
1237, 1246 (11th Cir. 2002), and that expert testimony is a common

and useful device for establishing a product market, see Flovac,

84   F.   Supp.    3d   at    102;     see   also   U.S.    Healthcare,       Inc.   v.

Healthsource,       Inc.,     986 F.2d 589,   599    (1st   Cir.   1993)    ("In

on Airvac's motion for summary judgment.      The district court
concluded that the contention was not timely raised, but
nonetheless proceeded to spotlight its deficiencies. See Flovac,
84 F. Supp. 3d at 104 n.1.

                                         - 12 -
practice, the frustrating but routine question how to define the

product market is answered in antitrust cases by asking expert

economists    to    testify.").    But    the    court   stopped   there:   it

explicitly acknowledged that this circuit has yet to adopt such a

rigid rule and prudently eschewed the application of any such

requirement.       Rather, the court's analysis relied on the wholly

anodyne notion that Flovac had a responsibility to "introduce some

type of economic evidence, even if not done through an economic

expert."    Flovac, 84 F. Supp. 3d at 102.        Because Flovac failed to

fulfill that responsibility, its opposition to summary judgment

failed.

            That ends this aspect of the matter. The scanty evidence

that Flovac has assembled amounts to nothing more than a gesture

in the direction of a potential factual dispute; and we have made

pellucid that "[s]peculation about mere possibilities" cannot ward

off the swing of the summary judgment ax.          Tobin, 775 F.3d at 452.

On   this   record,    the   district    court   appropriately     jettisoned

Flovac's antitrust claims.4

                       B.    Tortious Interference.

            This leaves Flovac's claim of tortious interference with

advantageous economic relations.         Those claims, which are premised

      4Airvac has served up a salmagundi of other defenses to the
antitrust claims. Given Flovac's failure to establish the relevant
market that it proposed, it is unnecessary for us to consider those
other defenses.

                                   - 13 -
on Jones's interactions with PRASA and EPA concerning the Ingenio

Project, stumble at the threshold: they are stale.

             Flovac brought the tortious interference claims under

Puerto Rico's general tort statute.         See P.R. Laws Ann. tit. 31,

§ 5141.      Claims under this statute are subject to a one-year

limitations    period,   which   begins    to   run   "from    the   time   the

aggrieved person had knowledge" of the harm.           Id. § 5298(2).        In

computing that period, "knowledge" consists of "notice of the

injury, plus notice of the person who caused it."             Rodriguez-Suris

v. Montesinos, 123 F.3d 10, 13 (1st Cir. 1997) (quoting Colón

Prieto v. Géigel, 15 P.R. Offic. Trans. 313, 331 (1984)).                    The

district   court   concluded     that,    interpreting    the     facts     most

hospitably to Flovac, these prerequisites were satisfied no later

than June of 2010, once PRASA halted work on the Ingenio Project

(shortly after receiving Jones's letter).         See Flovac, 84 F. Supp.
3d at 106.    Flovac, however, did not commence this suit until May

16, 2012 (nearly two years later).

             Flovac does not dispute that it had notice of both the

injury and its source by June of 2010.          Nevertheless, it tries to

execute an end run around the effect of that notice by resort to

the "continuing damages" doctrine, asseverating that under that

doctrine the limitations clock did not begin to tick until the

damage was complete.      This asseveration amounts to nothing more

than magical thinking.

                                  - 14 -
           Continuing      damages    cases   are   still     subject      to    the

general rule that a "plaintiff may 'not wait for his [or her]

injury to reach its final degree of development and postpone the

running of the period of limitation according to his [or her]

subjective appraisal and judgment.'"          Rodriguez-Suris, 123 F.3d at

13   (alterations    in   original)    (quoting     Ortiz   v.    Municipio      de

Orocovis, 13 P.R. Offic. Trans. 619, 622 (1982)).                   It follows

inexorably   that,    even    in     continuing     damages      cases,    "[t]he

determining factor is the moment when occurrence of the damage

begins, and that should be considered the starting point for the

limitations period, assuming that the aggrieved parties were aware

of the damage as of that moment and that they could have instituted

a cause of action."       Galib Frangie v. El Vocero de P.R., Inc., 138
P.R. Dec. 560, 575 (1995) (official translation, slip op. at 8).

           Flovac    offers    no    persuasive     counterweight         to    this

luminously clear precedent.           To be sure, Flovac has cited two

Puerto Rico cases — but it has done so without submitting certified

translations of either opinion.          Thus, those cases can form no

part of our deliberations. See 1st Cir. R. 30.0(e); see also Deniz

v. Municipality of Guaynabo, 285 F.3d 142, 148 (1st Cir. 2002).

The only other Puerto Rico case that Flovac cites is far off point:

it addresses limitations and damages questions stemming from an

ongoing nuisance.     See Seda v. Miranda Hnos. & Co., 88 P.R. 344,

349-50 (1963).

                                     - 15 -
               The short of it is that, as the district court ruled,

Flovac's tortious interference claims are time-barred.

III.       CONCLUSION

               We need go no further.   We conclude that, on this sparse

record, Flovac has failed to show the existence of a genuine issue

of material fact as to the scope of the relevant product market.5

We likewise conclude that Flovac's tortious interference claims

are time-barred.        It necessarily follows that the district court's

entry of summary judgment in Airvac's favor is unimpugnable.

Affirmed.

       5
       We take no view as to whether, on a better developed record,
a narrower product market might be shown to exist.       That is a
matter for another day.

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