Am. AD Management v. Gen. Telephone Co.

• Citation: 190 F.3d 1051
• Decision Date: 09 September 1999
• Docket Number: No. 97-55679,97-55679
• Parties: (9th Cir. 1999) AMERICAN AD MANAGEMENT, INC., a California Corporation; O'CONNOR AGENCY, Plaintiffs-Appellants, v. GENERAL TELEPHONE COMPANY OF CALIFORNIA; GTE DIRECTORIES CORPORATION; GTE DIRECTORIES PUBLISHING CORP.; GTE DIRECTORIES SERVICE CORPORATION; GTE NATIONAL MARKETING SERVICE CORP.; GTE DIRECTORIES SALES CORP., Defendants-Appellees
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 1051

190 F.3d 1051 (9th Cir. 1999)

AMERICAN AD MANAGEMENT, INC., a California Corporation; O'CONNOR AGENCY, Plaintiffs-Appellants, v. GENERAL TELEPHONE COMPANY OF CALIFORNIA; GTE DIRECTORIES CORPORATION; GTE DIRECTORIES PUBLISHING CORP.; GTE DIRECTORIES SERVICE CORPORATION; GTE NATIONAL MARKETING SERVICE CORP.; GTE DIRECTORIES SALES CORP., Defendants-Appellees.

No. 97-55679

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted December 10, 1998

Decided September 9, 1999

[Copyrighted Material Omitted] Maxwell M. Blecher, Blecher & Collins, Los Angeles, California, for the plaintiffs-appellants.

Mark L. Callister, Callister Nebeker & McCullough, Salt Lake City, Utah, for the defendants-appellees.

Appeal from the United States District Court for the Central District of California; Lourdes G. Baird, District Judge, Presiding. D.C. Nos. CV-92-2810 LGB, CV-93-3650-LGB.

Before: Alfred T. Goodwin, A. Wallace Tashima, and Kim McLane Wardlaw, Circuit Judges.

TASHIMA, Circuit Judge:

American Ad Management, Inc. and O'Connor Agency (collectively "American") appeal the district court's grant of summary judgment in favor of General Telephone Company of California and related companies (collectively "GTE"), in American's suit against GTE for asserted violations of the federal antitrust laws and related state law claims. We previously reversed the district court's award of summary judgment on the merits in favor of GTE. See American Ad Management, Inc. v. GTE Corp., 92 F.3d 781 (9th Cir. 1996) ("American Ad I"). On remand, the district court again granted summary judgment to GTE, holding that American lacks antitrust standing. American appeals, contending that it has standing under the test set forth in Associated General Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519 (1983), and theories based on American's participation in the restrained market and the fact that American's injury was inextricably intertwined with GTE's anticompetitive scheme. We have jurisdiction pursuant to 28 U.S.C. S 1291, and we reverse.

I.

GTE publishes telephone directories commonly known as Yellow Pages. Advertisers may purchase advertising space in the directories either directly from GTE or through an Authorized Selling Representative ("ASR"). American is an ASR.

Once an ASR receives an order for advertising space, the ASR purchases the space from the publisher. The publisher sells the space to the ASR at a lower price than that given to the public, thereby providing the ASR with a commission. By charging customers a price lower than the publicly available price, the ASR passes some of the commission on to the customers. This common practice is called "discounting."

GTE is a member of the Yellow Pages Publishers Association ("YPPA"). In 1992, American filed suit against GTE, raising claims under S 1 of the Sherman Act, 15 U.S.C. S 1, other federal antitrust laws, and state law.¹ American alleges that members of the YPPA agreed to eliminate commissions on local accounts and to restrict the definition of nationalaccounts on which commissions are still paid with the effect of ending the ASRs' practice of discounting with respect to local accounts.

In 1994, the district court granted GTE's motion for summary judgment on American's antitrust claims and dismissed its supplemental state law claims on the ground that American had failed to raise a genuine issue of material fact as to whether GTE's conduct unreasonably restrained trade. American appealed. This court reversed the award of summary judgment finding that there were disputed issues of fact with respect to all of the elements of American's claim under S 1 of the Sherman Act. See American Ad I, 92 F.3d at 792.² In the process of deciding whether the district court applied the correct analytical framework to the issue of whether the alleged conspiracy constituted an unreasonable restraint of trade, we found the relationship between the ASRs and the publishers to be one of agency, rather than one of retailer and wholesaler. See id. at 785. We stated, "[i]n short, ASRs do not compete with publishers in the sale of yellow pages advertising, rather the relationship is one of agency." Id. at 786 (footnote omitted). Because genuine issues of material fact existed, we remanded the case to the district court. See id. at 792.

On remand, the district court again granted summary judgment in favor of GTE, this time on the ground that American lacks antitrust standing to bring this suit. American appeals.

II.

We review the grant of summary judgment de novo. See Tri-State Dev., Ltd. v. Johnston, 160 F.3d 528, 529 (9th Cir. 1998). Because the facts underlying the district court's conclusion that American lacked antitrust standing are not in dispute, the only question we must determine is whether the district court correctly applied the relevant law. See id. Anti-trust standing is a question of law reviewed de novo. See Amarel v. Connell, 102 F.3d 1494, 1507 (9th Cir. 1997).

III.

A. Antitrust Standing

Section 4 of the Clayton Act authorizes the award of damages under the antitrust laws: "any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefore . . . and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee." 15 U.S.C. S 15(a) (1999). This provision is quite broad, and if "[r]ead literally, could afford relief to all persons whose injuries are causally related to an antitrust violation." Amarel, 102 F.3d at 1507 (quoting Lucas v. Bechtel Corp., 800 F.2d 839, 843 (9th Cir. 1986)) (internal quotation marks omitted) (alteration in the original). The Supreme Court has determined, however, that Congress did not intend S 4 to have such an expansive scope. See Associated General, 459 U.S. at 530-35. Therefore, courts have constructed the concept of antitrust standing, under which they "evaluate the plaintiff's harm, the alleged wrongdoing by the defendants, and the relationship between them," id. at 535, to determine whether a plaintiff is a proper party to bring an antitrust claim.³

Recognizing that it is "virtually impossible to announce a black-letter rule that will dictate the result in every case," id. at 536, the Supreme Court in Associated General identified certain factors for determining whether a plaintiff who has borne an injury has antitrust standing. These factors include:

(1) the nature of the plaintiff's alleged injury; that is, whether it was the type the antitrust laws were intended to forestall;

(2) the directness of the injury;

(3) the speculative measure of the harm;

(4) the risk of duplicative recovery; and

(5) the complexity in apportioning damages.

Amarel, 102 F.3d at 1507 (citing Associated General, 459 U.S. at 535); see also Lucas Automotive Eng'g, Inc. v. Bridgestone/Firestone, Inc., 140 F.3d 1228, 1232 (9th Cir. 1998) (citing same factors).

To conclude that there is antitrust standing, a court need not find in favor of the plaintiff on each factor. See Amarel, 102 F.3d at 1507. Generally "[n]o single factor is decisive." R.C. Dick Geothermal Corp. v. Thermogenics, Inc., 890 F.2d 139, 146 (9th Cir. 1989) (en banc). Instead, we balance the factors. See id. Nevertheless, we give great weight to the nature of the plaintiff's alleged injury. See Amarel, 102 F.3d at 1507. In fact, the Supreme Court has noted that "[a] showing of antitrust injury is necessary, but not always sufficient, to establish standing under S 4." Cargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 104, 110 n.5 (1986).

The district court concluded that the factors weighed against American's having antitrust standing. The district court found that American's alleged injury was not the type that the antitrust laws were intended to forestall; American's damages were speculative; and allowing the suit to go forward could result in duplicative and complex damages. The only factor the district court found weighing in favor of finding antitrust standing was the directness of American's alleged injury. We respectfully disagree.⁴

1. The Nature of American's Alleged Injury

The antitrust laws do not provide a remedy to every party injured by unlawful economic conduct. It is well established that the antitrust laws are only intended to preserve competition for the benefit of consumers. See Associated General, 459 U.S. at 538. Thus the famous aphorism, "[i]t is competition, not competitors, which the Act protects." Brown Shoe Co. v. United States, 370 U.S. 294, 344 (1962). A plaintiff may only pursue an antitrust action if it can show " `antitrust injury, which is to say injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants' acts unlawful.' " Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 334 (1990) ("ARCO") (quoting Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977)). Parsing the Supreme Court's definition, we can identify four requirements for antitrust injury: (1) unlawful conduct, (2) causing an injury to the plaintiff, (3) that flows from that which makes the conduct unlawful, and (4) that is of the type the antitrust laws were intended to prevent.

(1) Plaintiffs sometimes forget that the antitrust injury analysis must begin with the identification of the defendant's specific unlawful conduct. In Cargill, for example, the plaintiff alleged only that if its two competitors were allowed to merge, they would lower prices to gain market share. Theplaintiff claimed the lower prices would eventually drive it out of business, reducing competition. Cargill, 479 U.S. at 114-17. The Supreme Court rejected this allegation as a basis for antitrust injury because "[t]he kind of competition that [plaintiff] alleges here, competition for increased market share, is not an activity forbidden by the antitrust laws." Id. at 116....