Court Opinion

ID: 9568818
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:07:48.702105+00
Date Added: 2024-06-11T11:09:01.175911
License: Public Domain

Wright, J.,
dissenting.
I respectfully dissent. Heath Consultants, Inc., which manufactures leak detection equipment and. underground locating equipment, has a policy of selling replacement parts only to end users of its products. Precision Instruments, Inc., has just one employee, a former Heath employee, who repairs leak detection units. Precision is not an end user of Heath products, but on two occasions Precision was permitted to purchase Heath replacement parts. Subsequent orders placed by Precision were refused. It is not disputed that Heath has competitors in the manufacturing and repairing of leak detection equipment or that Precision is one of those competitors.
*285As the majority points out, to succeed in its claim, Precision must prove that Heath had sufficient economic power over parts and repairs to appreciably restrain competition in the market and that Heath exercised such power to coerce purchasers to obtain both parts and service from Heath. Appreciable economic power in the tying market concerns market power, which is the power to force a purchaser to do something that he would not do in a competitive market. Jefferson Parish Hospital Dist. No. 2 v. Hyde, 466 U.S. 2, 104 S. Ct. 1551, 80 L. Ed. 2d 2 (1984). The existence of such power ordinarily is inferred from the seller’s possession of a predominant share of the market. Id. The majority defines the relevant market for purposes of this case as being composed of only those companies that can service Heath equipment.
As I review the record, I cannot find any evidence of actions by Heath that would constitute an unlawful tying arrangement. Although Heath has refused to sell replacement parts directly to Precision, there is absolutely no evidence that Heath has refused to sell parts to end users who did not promise to use Heath’s repair service or repair services designated by Heath.
Although Katherine Waldmann, Precision’s president, testified that she knew of one instance in which Heath had “refused” to sell parts to Midwest Gas, an end user which wanted to use Precision’s repair service, she admitted that she was speculating about the end user’s dealings with Heath. No evidence was presented as to why the order was not filled. Waldmann testified that she had spoken to a Michigan company, Midwest Instrument Services Corporation, to see if it could repair an item that Precision could not repair. When Waldmann inquired about purchasing parts from Midwest Instrument, she was told that Midwest Instrument did not want to bother with selling parts. Waldmann did not know where Midwest Instrument got its Heath parts, but assumed Midwest Instrument ordered them from Heath. Waldmann did not know whether Midwest Instrument was an authorized Heath distributor. Waldmann had no knowledge of Heath’s entering into any kind of agreement with a parts manufacturer not to distribute parts to Precision.
The majority finds it significant that Heath did not ship a part *286to Midwest Gas after Midwest Gas sent a letter to Heath stating that Midwest Gas would.use Precision’s repair services. I fail to see the significance of this occurrence. The letter from Midwest Gas to Heath was dated February 9, 1990. Waldmann stated that the nonshipment occurred during November 1991, 21 months after the letter was sent. Waldmann admitted that she did not know if Midwest Gas contacted Heath regarding the nonshipment, and she did not know why the part was not shipped. There is no evidence that Heath refused other orders from Midwest Gas, nor- did anyone positively state that Heath had ever refused to sell a part to Midwest Gas. I cannot conclude that there is a reasonable inference that the letter caused the nonshipment or that the nonshipment creates an inference of an illegal tying arrangement. Therefore, I conclude that there is no reasonable inference that Heath has refused to sell parts to any end user.
The record does not create an inference that Heath conditioned the sale of its parts on an end user’s agreement to make such parts unavailable to Precision or any other repair service. Waldmann testified that Precision continued to make repairs on Heath products by having the end users order parts from Heath. Precision was able to obtain many parts through independent manufacturers. Waldmann had encountered no restrictions on the independent manufacturers of Heath parts. Furthermore, Precision has been able to replicate certain Heath schematics.
The majority relies upon Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451, 112 S. Ct. 2072, 119 L. Ed. 2d 265 (1992), but I do not think that Eastman Kodak Co. is applicable to the facts in the case at bar. In Eastman Kodak Co., there was ample evidence that Kodak was carrying on a broad-based campaign to eliminate independent service organizations from the market for repair of.Kodak photocopiers. In the case at bar, there is a unilateral refusal to sell parts to one independent service organization. There are neither allegations nor evidence of agreements between Heath and independent parts manufacturers. There is no evidence that Heath pressured its end users to use only Heath repair services. There is no evidence that Heath was discriminating against end *287users that used independent service organizations or that Heath was engaging in a broad-based attempt at a tying arrangement or an exclusion of all independent service organizations. Here, the evidence establishes that Heath has several competitors who manufacture leak detection equipment. Precision is able to do some repairs with generic electronic parts, and Precision concedes that it has been able to obtain parts for Heath products from independent parts manufacturers, as well as obtaining Heath parts through end users.
Under the Sherman Antitrust Act, monopolization consists of two elements: (1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident. See Eastman Kodak Co., supra. Although Heath is the exclusive manufacturer of some Heath parts that cannot be replicated, and therefore Heath would have 100 percent of that parts market, the refusal to sell such parts to Precision does not create a monopolistic practice on the part of Heath. The fact that only a Heath part can repair Heath equipment, with no further evidence, does not establish that Heath has engaged in monopolistic practices by refusing to sell parts to Precision.
The question becomes: Does Heath’s refusal to sell parts to one competitor constitute the existence of monopoly power and the willful acquisition or maintenance of that power? I cannot conclude that one isolated instance supports any such inference of monopolistic behavior on the part of Heath. Therefore, I cannot say that the refusal to sell parts to Precision constitutes a monopolistic practice or an unlawful restraint of trade or commerce within the State of Nebraska.
In my opinion, the facts of this case do not square with the facts in Eastman Kodak Co. The facts recited in the majority opinion do not set forth a reasonable inference that Heath’s behavior has risen to the level of unlawful anticompetitive and monopolistic restraint of trade. Summary judgment was properly entered in favor of Heath, and I would affirm the decision of the district court.
Howard, D.J., Retired, joins in this dissent.