Court Opinion

ID: 3033037
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:48:55.337918+00
Date Added: 2024-06-11T11:48:21.650310
License: Public Domain

FILED
                           NOT FOR PUBLICATION                              FEB 11 2010

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U .S. C O U R T OF APPE ALS

                            FOR THE NINTH CIRCUIT

THE SUB CORPORATION, LTD., a                     No. 08-56499
California Corporation,
                                                 D.C. No. 2:07-cv-05822-R-CT
             Plaintiff - Appellant,

  v.                                             MEMORANDUM *

BEST BUY CO. INC., a Minnesota
Corporation doing business in California
Erroneously Sued As Best Buy Stores
L.P.,

             Defendant - Appellee.

                    Appeal from the United States District Court
                       for the Central District of California
                     Manuel L. Real, District Judge, Presiding

                           Submitted February 8, 2010 **
                              Pasadena, California

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
        **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
Before: THOMAS and SILVERMAN, Circuit Judges, and FOGEL, *** District
Judge.

      The Sub Corporation, Ltd. appeals the district court’s summary judgment in

favor of Best Buy Co., Inc. We affirm. Because the parties are familiar with the

factual and procedural history of this case, we will not recount it here.

                                           I

      The district court properly granted summary judgment on Sub Corp’s claim

that Best Buy violated California Business and Professions Code §§ 17043 and

17044, a part of California's Unfair Practices Act (“UPA”). To violate California

Business and Professions Code §§ 17043 and 17044, “a company must act with the

purpose, i.e., the desire, of injuring competitors or destroying competition.” Cel-

Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal.4th 163,

174-75, 178 (1999) (emphasis added). Mere knowledge that a retailer’s below cost

or loss leader sales will injure competitors or destroy competition is not sufficient.

See id. at 173-75, 178. Under certain circumstances, an intent to injure competitors

or destroy competition (an “injurious intent”) will be presumed. Sub Corp relies

on two statutory presumptions created by the Unfair Practices Act.

        ***
            The Honorable Jeremy D. Fogel, United States District Judge for the
Northern District of California, sitting by designation.

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      California Business and Professions Code § 17071 provides that “proof of

one or more acts of selling . . . any article or product below cost or at

discriminatory prices, together with proof of the injurious effect of such acts, is

presumptive evidence of the purpose or intent to injure competitors or destroy

competition.” The UPA does not define “injurious effect,” but courts have

interpreted it to mean “injury to a competitor or destruction of competition.”

William Inglis & Sons Baking Co. v. ITT Continental Baking Co., Inc., 668 F.2d

1014, 1049 n. 61 (9th Cir. 1981). Thus, to be entitled to a presumption of injurious

intent under § 17071, Sub Corp must show that Best Buy's unlawful pricing

practices diverted customers from or otherwise injured Best Buy's competitors

generally or Sub Corp in particular. See Dooley's Hardware Mart v. Food Giant

Markets, Inc., 21 Cal.App.3d 513, 517 (1971).

      California Business and Professions Code § 17071.5 contains a second

statutory presumption of injurious intent:

      [P]roof of limitation of the quantity of any article or product sold or offered
      for sale to any one customer to a quantity less than the entire supply thereof
      owned or possessed by the seller or which he is otherwise authorized to sell
      at the place of such sale or offering for sale, together with proof that the
      price at which the article or product is sold or offered for sale is in fact
      below its invoice or replacement cost, whichever is lower, raises a
      presumption of the purpose or intent to injure competitors or destroy
      competition.

                                             3
In other words, proof that Best Buy limited the quantity of items available for

purchase to any one seller, together with proof that such item was sold below cost,

will raise a presumption of injurious intent.

      Here, neither presumption is applicable. First, Sub Corp has submitted no

admissible evidence supporting its contention that Best Buy sells CDs or DVDs at

below cost prices. All of the evidence upon which Sub Corp relies was excluded

by the district court. Because Sub Corp does not dispute the district court’s

evidentiary rulings on appeal, it has waived any challenge to the court’s exclusion

of its evidence. See Indep. Towers of Wash. v. Washington, 350 F.3d 925, 929 (9th

Cir. 2003) (holding that the failure to properly raise and brief an issue waives the

argument).

      Second, Sub Corp has failed to make a sufficient showing of the injurious

effect of Best Buy’s allegedly unlawful pricing practices to create a statutory

presumption under § 17071. Injurious effect cannot be established from the mere

fact that the plaintiff claims to have lost business, without a showing that plaintiff’s

lost sales are attributable to the defendant’s actions. Here, Best Buy submitted

evidence showing that, due to increased internet sales of downloaded music and

movies, among other factors, CD and DVD sales have dropped substantially across

the industry. Because Sub Corp offers no concrete evidence to show that its

                                           4
alleged loss in sales volume is attributable to Best Buy’s pricing practices as

opposed to other factors affecting the CD and DVD markets, it is not entitled to the

§ 17071 presumption.

      In addition, Best Buy tendered significant evidence showing that its pricing

practices were undertaken with an intent to maintain its market share and expand

its customer base.

      Absent a presumption, or if a presumption is rebutted, “the burden shifts

back to the moving party to offer actual proof of injurious intent.” Western Union

Financial Servs., Inc. v. First Data Corp., 20 Cal.App.4th 1530, 1540 (1993). To

make this showing, Sub Corp relies upon statements in its complaint and affidavits

which state in a conclusory fashion that Best Buy has acted with the intent to injure

Sub Corp and competition generally. The district court disallowed the affidavits,

and Sub Corp does not challenge that ruling on appeal. Thus, the plaintiff is left

with the general, conclusory allegations of the complaint, which are not sufficient

to satisfy the pleading requirements under §§ 17043-44.

      Because Sub Corp cannot show that the statutory presumptions are

applicable to the present case and has failed to rebut Best Buy’s evidence that its

pricing practices are not undertaken with an injurious intent, we affirm the district

court’s grant of summary judgment as to Sub Corp’s claims under the UPA.

                                           5
                                          II

      The district court properly granted summary judgment on California

Business and Professions Code § 17200 et seq, California's Unfair Competition

Law (“UCL”). The UCL prohibits “unfair competition,” which it broadly defines

as including “any unlawful, unfair or fraudulent business act or practice and unfair,

deceptive, untrue or misleading advertising.” Cal. Bus. & Prof. Code § 17200.

Sub Corp’s complaint does not specify whether Sub Corp is asserting a claim for

unlawful, fraudulent, or unfair business practices. The district court correctly

concluded that summary judgment is appropriate given the absence of evidence

supporting a claim under any one of these theories.

                                          III

      Sub Corp contends that the district judge erred in refusing to allow Sub Corp

more time to complete discovery prior to a hearing on Best Buy’s summary

judgment motion. Sub Corp’s request for additional discovery did not comply with

the requirements of Fed. R. Civ. P. 56(f). Specifically, Sub Corp did not submit

affidavits setting forth the particular facts expected from further discovery, and

made no showing that its sought-after facts exist and are “essential” to resist the

summary judgment motion. California ex rel. California Dep’t of Toxic

                                           6
Substances Control v. Campbell, 138 F.3d 772, 779 (9th Cir. 1998). Thus, the

district court properly dismissed Sub Corp’s request.

      AFFIRMED.

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