Court Opinion

ID: 3020120
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:22:16.482668+00
Date Added: 2024-06-11T08:12:07.227518
License: Public Domain

United States Court of Appeals
                             FOR THE EIGHTH CIRCUIT
                                 ___________

                                No. 97-1456
                                 ___________
Double D Spotting Service, Inc.,       *
                                       *
           Plaintiff-Appellant,        *   Appeal from the United States
                                       *   District Court for the
     v.                                *   Southern District of Iowa.
                                       *
Supervalu, Inc.; World Super           *
Services, Inc.,                        *
                                       *
           Defendants-Appellees.       *

                                 ___________

                         Submitted: October 23, 1997
                                                   Filed: February 11, 1998
                                 ___________

Before RICHARD S. ARNOLD, Chief Judge, LOKEN and HANSEN, Circuit Judges.
                               ___________

HANSEN, Circuit Judge.

      Double D Spotting Service, Inc. (Double D) brought this suit against
Supervalu, Inc. (Supervalu) and World Super Services, Inc. (World Super
Services), alleging that the defendants violated federal antitrust laws,
state competition laws, and a federal motor carrier law. The district
court dismissed Double D’s complaint for failure to state a claim. See
Fed. R. Civ. P. 12(b)(6). We affirm in part and reverse in part.
                                    I.

      When reviewing a Rule 12(b)(6) dismissal for failure to state a claim,
we look only to the facts alleged in the complaint and construe them in the
light most favorable to the plaintiff. See Doe v. Norwest Bank Minnesota,
N.A., 107 F.3d 1297, 1303-04 (8th Cir. 1997).           In its amended and
substituted complaint, Double D pleaded that until 1996, it had been in the
business of competing with other companies to provide semitrailer unloading
services for over the road trucking companies that deliver goods to the
Supervalu warehouse in Urbandale, Iowa.        The semitrailers travel in
interstate commerce, carrying goods that are unloaded at the Supervalu
warehouse and subsequently shipped to grocery stores in several states. In
addition to unloading trucks driven to the warehouse by the trucking company
drivers, Double D offered trucking companies a more involved unloading
service. By agreement with Double D, the trucking company could drop its
loaded, unhooked semitrailer at a nearby interstate truck stop. A Double
D driver driving a Double D tractor would then hook on to the trailer and
transport it to the Supervalu warehouse. The Double D driver would then
unload the semitrailer and return it empty to the same truck stop location
for the over the road trucking company to retrieve at its convenience. This
service allowed the over the road trucking company to save the time and
expense of paying its own driver both to deliver the semitrailer to the
warehouse and to wait for it to be unloaded. It also freed up the trucking
company’s tractor for other work.

      In 1996, Supervalu entered into an agreement granting World Super
Services the exclusive right to provide unloading services at the Urbandale
warehouse. The agreement provided fixed prices to be charged by World Super
Services and barred all other unloading companies from performing any
unloading services at the Urbandale warehouse.        Thereafter, trucking
companies could choose either to unload their own trucks at the warehouse
or to hire World Super Services to unload them. Double D complains that the
agreement between Supervalu and World Super Services wrongfully

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eliminated competition and imposed an unreasonable restraint        on   the
unloading services trade at Supervalu’s Urbandale warehouse.

      Double D originally brought suit against Supervalu and World Super
Services in state court, seeking an injunction and damages for the
defendants’ alleged restraint of trade and competition in violation of state
and federal antitrust law and for alleged tortious interference with Double
D’s business relationships. The defendants removed the case to federal
district court and moved to dismiss the complaint pursuant to Rule 12(b)(6)
for failure to state a claim upon which relief may be granted. Double D
filed an amended and substituted complaint in federal district court,
alleging in counts I through IV that the defendants contracted to restrain
trade in violation of Iowa Code § 553.4 (1997) and Section 1 of the Sherman
Antitrust Act, 15 U.S.C. § 1 (1994); and that they attempted to establish
a monopoly in violation of Iowa Code § 553.5 and Section 2 of the Sherman
Antitrust Act, 15 U.S.C. § 2. Count V alleges a violation of 49 U.S.C.A.
§ 14103(b) (West 1997), which prohibits the act of coercing any motor
carrier operator to pay someone to load or unload the property being
transported in interstate commerce.

      The district court granted the defendants’ motion to dismiss. The
court held that Double D failed to state a claim of restraint of trade or
monopoly as alleged in counts I through IV, concluding that the facts as
alleged do not constitute a legally cognizable relevant market or
demonstrate an actual adverse impact on competition within that market.
Additionally, the district court concluded that count V, asserting coercion
of a ?person providing transportation of property by motor vehicle for
compensation in interstate commerce,” fails to state a claim because there
is no allegation that any trucking companies were forced or coerced to pay
World Super Services to unload their semitrailers. Double D appeals the
dismissal of its complaint.

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                                       II.

      We review de novo the district court’s grant of a motion to dismiss
pursuant to    Federal Rule of Civil Procedure 12(b)(6).     Association of
Commonwealth Claimants v. Moylan, 71 F.3d 1398, 1402 (8th Cir. 1995). Using
the same standard as the district court, we must accept the factual
allegations of the complaint as true and construe the complaint in the light
most favorable to the plaintiff. Doe, 107 F.3d at 1303-04. We affirm a
Rule 12(b)(6) dismissal if ?it appears beyond doubt that the plaintiff can
prove no set of facts in support of his claim which would entitle him to
relief.”   Hafley v. Lohman, 90 F.3d 264, 266 (8th Cir. 1996) (internal
quotations omitted), cert. denied, 117 S. Ct. 1081 (1997).

                              A.   Antitrust Claims

      The first four counts of Double D’s complaint allege violations of
state and federal antitrust law.      Two counts are based on the Sherman
Antitrust Act, which declares it unlawful to contract or form a conspiracy
?in restraint of trade or commerce among the several States,” 15 U.S.C. §
1, and which makes it a felony to ?monopolize, or attempt to monopolize .
. . any part of the trade or commerce among the several States,” 15 U.S.C.
§ 2.   Two counts are based on Iowa statutes that mirror these federal
prohibitions, absent the interstate commerce element. See Iowa Code §§
553.4, 553.5.1 ?The essential elements of a private antitrust claim must be
alleged in more than vague and conclusory terms to prevent dismissal of the
complaint on a defendant’s [Rule]

      Section 553.4 provides, ?A contract, combination , or conspiracy between two
      1

or more persons shall not restrain or monopolize trade or commerce in a relevant
market.” Section 553.5 provides, ?A person shall not attempt to establish . . . a
monopoly of trade or commerce in a relevant market for the purpose of excluding
competition or of controlling, fixing, or maintaining prices.”

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12(b)(6) motion.” Crane & Shovel Sales Corp. v. Bucyrus-Erie Co., 854 F.2d
802, 805 (6th Cir. 1988).

      The district court concluded that Double D’s antitrust claims failed
to state a claim because Double D failed to plead a valid relevant market.
Double D contends that it was not required to plead a relevant market
because it pleaded per se antitrust violations. Alternatively, Double D
asserts that even if it was necessary for it to plead a relevant market, the
Supervalu warehouse in Urbandale itself is the relevant market for trailer
unloading services.

      To demonstrate a violation of section 1 of the Sherman Act, a
plaintiff must provide proof of an illegal contract, combination, or
conspiracy which results in an unreasonable restraint of trade. State Oil
Co. v. Khan, 118 S. Ct. 275, 279 (1997). ?[M]ost antitrust claims are
analyzed under a Id. This ?rule of reason” analysis involves an
inquiry into the market structure and the defendant’s market power in order
to assess the actual effect of the restraint.          Copperweld Corp. v.
Independence Tube Corp., 467 U.S. 752, 768 (1984); see also Flegel v.
Christian Hosp., Northeast-Northwest, 4 F.3d 682, 688 (8th Cir. 1993).

      Certain types of restraint are so inherently anticompetitive that they
are illegal per se, without inquiry into the reasonableness of the restraint
or the harm caused. Copperweld Corp., 467 U.S. at 768; see also Khan, 118
S. Ct. at 279.     ?It is only after considerable experience with certain
business relationships that courts classify them as per se violations of the
Sherman Act.” United States v. Topco Assocs., 405 U.S. 596, 607-08 (1972).
?Per se treatment is appropriate once experience with a particular kind of
restraint enables the Court to predict with confidence that the rule of
reason will condemn it.” Khan, 118 S. Ct. at 279 (internal quotations and
alterations omitted).

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      Practices which have been held to be illegal per se include price-
fixing, division of markets, group boycotts, and tying arrangements. See
Arizona v. Maricopa County Med. Soc., 457 U.S. 332, 344 n.15 (1982);
Northern Pac. Ry. v. United States, 356 U.S. 1, 5 (1958). The district
court concluded that under a liberal construction of the factual
circumstances pleaded, Double D failed to plead circumstances under which
it could prove a per se antitrust violation. We agree.

      In support of its contention that it has pleaded per se violations,
Double D contends that the agreement between Supervalu and World Super
Services amounts to a horizontal restraint of trade, which the Supreme Court
has described as a ?naked restraint[] of trade with no purpose except
stifling of competition.”    Topco, 405 U.S. at 608 (internal quotations
omitted).   Horizontal restraints of trade result when combinations of
traders at one level of the market structure agree to exclude direct
competitors from the same level of the market. See id. Thus, a plaintiff
alleging a horizontal restraint must at least define the market and its
participants, which, for reasons discussed below, Double D has failed to do.
Supervalu is not a participant in the unloading services market at the same
level as Double D or World Super Services.        Furthermore, for reasons
discussed more fully below, we conclude that Supervalu’s agreement with
World Super Services has no improper effect of restraining trade in the
relevant unloading services market, because Double D has failed to plead a
valid relevant market. Thus, Double D has not stated a claim of a per se
horizontal restraint of trade.

      Double D asserts that it has also alleged vertical price-fixing as
a per se violation. Vertical restraints of trade result from agreements
among ?combinations of persons at different levels of the market structure,
e.g., manufacturers and distributors.” Id. Vertical nonprice restrictions
are governed by the rule of reason and are not per se violations, because
they ?promote interbrand competition by allowing the manufacturer to achieve
certain efficiencies in the distribution of his products.”       Continental
T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 54 (1977). We have noted that
vertical

                                    -6-
refusals to deal are subject to the rule of reason unless they are price-
related ?or are designed to enforce underlying restrictions that would
otherwise be subject to per se analysis,” such as an illegal tying
arrangement. Lomar Wholesale Grocery, Inc. v. Dieter’s Gourmet Foods, Inc.,
824 F.2d 582, 590 (8th Cir. 1987), cert. denied, 484 U.S. 1010 (1988).
Generally, vertical price restrictions are per se antitrust violations.
Business Elec. Corp. v. Sharp Elec. Corp., 485 U.S. 717, 735-36 (1988) (?A
vertical restraint is not illegal per se unless it includes some agreement
on price or price levels.”).     Recently, however, the Supreme Court has
clarified that vertical maximum price-fixing is not a per se violation but
is subject to the rule of reason. See Kahn, 118 S. Ct. at 283. Double D
asserts that the agreement between Supervalu and World Super Services is one
fixing prices between market participants at different levels of the market
structure and therefore amounts to a vertical per se price-fixing violation.
We disagree. The agreement at issue does not fix prices between different
levels of the market structure. Instead, the agreement fixes the price that
one unloading service provider can charge at Supervalu’s one warehouse in
Urbandale, Iowa.    Such an arrangement does not amount to an unlawful
restraint between different levels of the market structure. Rather, it
demonstrates an isolated agreement concerning Supervalu’s operation of its
warehouse. Double D has not stated a claim of a per se vertical price-
fixing violation.

      Double D also asserts that it has stated an unlawful tying
arrangement. ?A tying arrangement is 77
F.3d 1109, 1112 (8th Cir. 1996) (quoting Amerinet, Inc. v. Xerox Corp., 972
F.2d 1483, 1498 (8th Cir. 1992)), cert. denied, 506 U.S. 1080 (1993)). ?[A]
per se illegal tying arrangement does not exist unless the defendant has
coerced buyers into purchasing a product [or service] which such buyers
otherwise would not have purchased or would have purchased from a different
source than the defendant.” Amerinet, 972 F.2d at 1499. In this case,
Double D asserts that a tying arrangement arose because trucking companies
who deliver trailers to Supervalu’s

                                    -7-
Urbandale warehouse (the alleged tying service) and who want to use an
unloading service have no choice but to use World Super Service’s unloading
service (the alleged tied service).     Double D’s attempt to define this
situation as a tying arrangement is unsuccessful. The trucking companies
always remain free to unload their own trucks, and they are not coerced into
hiring World Super Service’s third-party unloading service. Furthermore,
to demonstrate a per se tying violation the plaintiff must show that the
defendant has sufficient market power in the tying product or service market
to restrain competition. Marts, 77 F.3d at 1112. As we will discuss below,
Double D’s complaint fails to plead a valid relevant market, and thus Double
D could not demonstrate sufficient market power necessary to state or
sustain a tying violation.

      Because no per se violation is established, it is necessary for Double
D to allege a valid relevant market in order to apply the rule of reason
analysis to determine whether the arrangement amounts to an unreasonable
restraint of trade within the meaning of section 1 of the Sherman Act. As
we noted above, the ?rule of reason” analysis involves ?an inquiry into
market power and market structure” to assess the actual effect of the
restraint. Copperweld Corp., 467 U.S. at 768. Double D must also allege
a valid relevant market in order to prevail on its monopoly claim. Section
2 of the Sherman Act requires a plaintiff to plead and prove that the
defendant ?(1) possessed monopoly power in the relevant market and (2)
willfully acquired or maintained that power as opposed to gaining it as a
result Amerinet, 972 F.2d at 1490 (quoting United States v. Grinnell Corp., 384
U.S. 563, 570-71 (1966)). Thus, in order to state a Sherman Act claim under
either section 1 or section 2, the plaintiff must identify a valid relevant
market.    See Brader v. Allegheny Gen. Hosp., 64 F.3d 869, 877 (3d Cir.
1995); Tunis Bros. Co. v. Ford Motor Co., 952 F.2d 715, 726 (3d Cir. 1991),
cert. denied, 505 U.S. 1221 (1992).

      We note that courts are hesitant to dismiss antitrust actions before
the parties have had an opportunity for discovery, because the proof of
illegal conduct lies largely

                                    -8-
in the hands of the alleged antitrust conspirators. Huelsman v. Civic Ctr.
Corp., 873 F.2d 1171, 1174 (8th Cir. 1989). A dismissal on the pleadings
should be ?Id. (quoting 5 Charles
Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1349
(1969)). Most often, ?proper market definition can be determined only after
a factual inquiry into the commercial realities faced by consumers.” Queen
City Pizza, Inc. v. Domino’s Pizza, Inc., 124 F.3d 430, 436 (3d Cir. 1997),
petition for cert. filed (Jan. 5, 1998). This general rule, however, does
not amount to ?a per se prohibition against dismissal of antitrust claims
for failure to plead a relevant market under Fed. R. Civ. P. 12(b)(6).” Id.

      It is the plaintiff’s burden to define the relevant market.       Id.
?Antitrust claims often rise or fall on the definition of the relevant
market.” Bathke v. Casey’s Gen. Stores, Inc., 64 F.3d 340, 345 (8th Cir.
1995).   ?The definition of the relevant market has two components - a
product market and a geographic market.” Id. The relevant product market
includes all reasonably interchangeable products. See Queen City Pizza, 124
F.3d at 436. The geographic market is defined by considering the commercial
realities faced by consumers. Bathke, 64 F.3d at 345. It includes the
geographic area in which consumers can practically seek alternative sources
of the product, and it can be defined as ?the market area in which the
seller operates.” Tampa Elec. Co. v. Nashville Coal Co., 365 U.S. 320, 327
(1961); see Bathke, 64 F.3d at 345.

      In each of the four antitrust counts of its complaint, Double D states
that Supervalu and World Super Services engaged in anticompetitive activity
within the relevant market ?for unloading services at the Supervalu, Inc.
warehouse in Urbandale, Iowa.” (Appellant’s App. at 26, 31, 34, and 36.)
Thus, the product market is defined as unloading services and the geographic
market is alleged to be the Supervalu warehouse in Urbandale, Iowa, which
is a suburb of Des Moines. We agree with the district court that, as a
matter of law, this stated geographic market is too narrow to support a
claim of an antitrust violation. At issue is one contract between the owner
of one particular warehouse within the Des Moines metropolitan area and one

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unloading service provider. The contract provides that this one unloading
service provider has the right, subject to an agreed upon price schedule,
to provide all of the unloading services at this particular warehouse.
Supervalu’s one warehouse in Urbandale does not amount to a relevant market
for unloading services of this type.      Rather, the market for unloading
services would seem to be more properly defined as including all warehouses
within, at least, the entire Des Moines, Iowa, metropolitan area, if not an
even larger area.

      ?Bathke, 64 F.3d at 344
(quoting Brooke Group, Ltd. v. Brown & Williamson Tobacco, 509 U.S. 209, 224
(1993)) (other internal quotations omitted). As the district court in the
present case aptly stated, ?[p]laintiff’s complaint does no more than state
plaintiff’s commercial disappointment at losing the unloading business at
the Supervalu warehouse.” (Appellant’s Adden. at 6.) Disappointment at not
receiving one unloading contract at one particular warehouse is insufficient
as a matter of law to rise to the level of an antitrust violation within a
relevant market.

      For the same reasons, the Iowa state law claims pursuant to sections
553.4 and 553.5 of the Iowa Code fail as well. The Iowa Competition Law,
Iowa Code §§ 553.1-553.18 (1997), must ?be construed to complement and be
harmonized with the applied laws of the United States which have the same
or similar purpose as this chapter.” Iowa Code § 553.2. See also State v.
Cedar Rapids Bd. of Realtors, 300 N.W.2d 127, 128 (1981). Double D asserts
that several material differences exist between the express language of
section 553.4 of the Iowa Competition Law and section 1 of the Sherman Act,
and likewise between Iowa Code section 553.5 and section 2 of the Sherman
Act, which indicate that a smaller relevant market is acceptable under the
Iowa Competition Law than the Sherman Act would tolerate. Aside from the
lack of an interstate commerce requirement, the wording of the state
provisions is very similar to that of their federal counterparts.        Our
research has produced no Iowa case law dealing with the requirement to plead
a relevant market. In an absence of state case

                                   -10-
law on point, it is necessary to examine the comparable federal statutes and
case law, see Cedar Rapids Bd. of Realtors, 300 N.W.2d at 128, which we have
done above.

      We conclude that Double D has not stated a per se violation or valid
relevant market under either federal or state law.       Accordingly, the
district court properly dismissed counts I through IV of the amended and
substituted complaint for failure to state a claim.

                     B.   Motor Carrier Operator Claim

      In count V of its complaint, Double D asserts that by precluding it
from delivering and unloading semitrailers for trucking companies, Supervalu
and World Super Services wrongfully coerced operators of motor carriers into
either unloading their semitrailers themselves or employing the only
unloading service available, World Super Services, in violation of 49
U.S.C.A. § 14103(b) (West 1997). The district court dismissed this count
for failure to state a claim, concluding that Double D lacks standing to
bring this claim and that Double D did not allege that any carrier was
forced to pay someone else to unload its truck. The court noted that each
trucker was free to unload his own truck.         Thus, the district court
concluded that the conduct alleged was not coercive within the meaning of
the statute and failed to state a claim. Double D argues on appeal that the
district court’s ruling ignores its pleaded facts that Double D itself has
been engaged in providing transportation of property by motor vehicle within
the meaning of the statute when it hooks on to the trailer left for it at
nearby truck stops and transports it to the warehouse, and that it acts not
just as an unloader.

     Section 14103(b) provides as follows:

     It shall be unlawful to coerce or attempt to coerce any person
     providing transportation of property by motor vehicle for
     compensation in interstate commerce (whether or not such
     transportation is subject to jurisdiction

                                   -11-
under subchapter I of chapter 135) to load or unload any part of such
property onto or from such vehicle or to employ or pay one or more persons
to load or unload any part of such property onto or from such vehicle . .
. .

      The wording of this statute is not limited to protecting only actual
trucking companies or registered motor carriers ?under subchapter I of
chapter 135.”    Id.    Instead, the statute says, ?any person providing
transportation of property by motor vehicle for compensation in interstate
commerce” must be allowed to unload his own truck free of coercion to pay
someone else to do the job. Id. (emphasis added). We conclude that Double
D’s complaint alleges facts at least sufficient to survive a Rule 12(b)(6)
motion to dismiss. As we noted before, Double D alleges that it often
provided a service to interstate trucking companies where a Double D driver
would transport a semitrailer from a local truck stop to the Supervalu
warehouse and would return the semitrailer to the designated location after
unloading the truck.

      Double D has alleged a set of facts which if proved come within the
provisions of the statute. Accordingly, we reverse the dismissal of count
V and remand for further proceedings.

                             III. Conclusion

      For the reasons stated above, we affirm the judgment of the district
court dismissing counts I through IV of the amended and substituted
complaint. We reverse the judgment of the district court dismissing count
V and remand to the district court for further proceedings on that count.

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A true copy.

     Attest:

           CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

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