Rickards v. Canine Eye Registration Foundation

• Decision Date: 27 February 1986
• Docket Number: No. 84-2185,84-2185
• Citation: 783 F.2d 1329
• Parties: , 1986-1 Trade Cases 66,969 D.A. RICKARDS, M.A. Custer, Paul V. Belkin and John S. Sleasman, Plaintiffs- Counterdefendants-Appellants, v. CANINE EYE REGISTRATION FOUNDATION, INC., Lawrence M. Trauner and Dolly B. Trauner, Defendants-Counterclaimants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1329

783 F.2d 1329

54 USLW 2517, 1986-1 Trade Cases 66,969

D.A. RICKARDS, M.A. Custer, Paul V. Belkin and John S.

Sleasman, Plaintiffs- Counterdefendants-Appellants, v. CANINE EYE REGISTRATION FOUNDATION, INC., Lawrence M.

Trauner and Dolly B. Trauner,

Defendants-Counterclaimants-Appellees.

No. 84-2185.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 12, 1985.

Decided Feb. 27, 1986.

Joseph M. Alioto, Lawrence G. Papale, Alioto & Alioto, San Francisco, Cal., for plaintiffs-counterdefendants-appellants.

Forrest A. Hainline, III, Timothy A. Ngau, Swidler & Berlin, Washington, D.C., for defendants-counterclaimants-appellees.

Appeal from the United States District Court for the Northern District of California.

Before MERRILL and GOODWIN, Circuit Judges and WILLIAMS, District Judge. ^**

GOODWIN, Circuit Judge.

D.A. Rickards, M.A. Custer, Paul V. Belkin and John S. Sleasman ("Rickards group") appeal from the grant of summary judgment in favor of Canine Eye Registration Foundation, Inc., Lawrence M. Trauner and Dolly B. Trauner, ("CERF") defendants and counterclaimants in this antitrust action. The district court granted summary judgment on the CERF counterclaim, which challenged the Rickards group's original action as a violation of the antitrust laws. We affirm.

I. BACKGROUND

The dispute between these parties is before us for the second time. In Rickards v. Canine Eye Registration Foundation, Inc., 704 F.2d 1449 (9th Cir.), cert. denied, 464 U.S. 994, 104 S.Ct. 488, 78 L.Ed.2d 683 (1983) ("Rickards I "), the district court granted CERF's motion for summary judgment, and entered a directed verdict denying the Rickards group recovery in their antitrust action, and we affirmed. The district court stayed the CERF counterclaim pending the disposition of this first appeal.

The underlying facts of this dispute were discussed in Rickards I and need not be discussed at length here. See id. at 1451-52. CERF was established as a non-profit organization to collect and disseminate information concerning hereditary eye disease in dogs. It operated a registry listing certain breeds of purebred dogs. Only dogs examined by veterinarians certified by the American College of Veterinary Ophthalmologists ("ACVO") were permitted to be listed in the registry. The Rickards group were non-ACVO certified veterinarians, and thus were not permitted to perform the examinations required for CERF registration. This dispute centers on the efforts of the Rickards group either to be allowed to perform such examinations, or to drive CERF from the veterinary ophthalmology market. We turn briefly to the CERF counterclaim.

The counterclaim alleged that the Rickards group had violated sections 1 and 2 of the Sherman Act (15 U.S.C. Secs. 1, 2 (1982)), filed a vexatious complaint for an improper purpose, wrongfully interfered with CERF's present and prospective business relationships and had violated the California Cartwright Act and Unfair Trade Practices Act (Cal.Bus. & Prof.Code Secs. 16,600, et seq., 16,720 et seq., and 17,000 et seq. (West 1964)).

Both the Rickards group and CERF filed cross-motions for summary judgment, and after the motions were fully briefed and argued, the magistrate, sitting as trial judge by stipulation of the parties, granted CERF's motion for summary judgment.

On March 1, 1984, the magistrate signed an order for partial final judgment and held that the Rickards group had (1) violated section 1 of the Sherman Act under both the rule of reason and per se standards; (2) violated Section 2 of the Sherman Act by engaging in a conspiracy to monopolize and an attempt to monopolize trade or commerce; and (3) brought a lawsuit which was baseless and a sham, and in furtherance of their overall scheme to violate the antitrust laws. The court awarded CERF $416,893.99 in damages, and trebled that amount pursuant to 15 U.S.C. Sec. 15 (1982).

After the retirement of the magistrate who originally heard the case, it was assigned to another magistrate. The Rickards group's motion to alter or amend the March 1, 1984 judgment was denied on May 30, 1984 after further briefing and a hearing, and this timely appeal followed.

II. DISCUSSION

We review the grant of summary judgment de novo, and apply the same test as did the district court. British Airways Board v. Boeing Co., 585 F.2d 946, 951 (9th Cir.1978), cert. denied, 440 U.S. 981, 99 S.Ct. 1790, 60 L.Ed.2d 241 (1979). Thus, "[a]ll 'evidence and factual inferences' must be viewed in the light most favorable to the adverse party and the summary judgment may be upheld only if 'there are no genuine issues of material fact and [the movant is] entitled to judgment as a matter of law.' " Alaska v. United States, 754 F.2d 851, 853 (9th Cir.1985) (quoting Martino v. Santa Clara Valley Water District, 703 F.2d 1141, 1145 (9th Cir.), cert. denied, 464 U.S. 847, 104 S.Ct. 151, 78 L.Ed.2d 141 (1983)).

We note that while antitrust conspiracies do not ordinarily lend themselves to summary disposition, Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962); Northrop Corp. v. McDonnell Douglas Corp., 705 F.2d 1030, 1050 (9th Cir.), cert. denied, 464 U.S. 849, 104 S.Ct. 156, 78 L.Ed.2d 144 (1983), summary judgment is sometimes appropriate in antitrust cases. Landmark Development Corp. v. Chambers Corp., 752 F.2d 369, 371-72 (9th Cir.1985); ALW, Inc. v. United Air Lines, Inc., 510 F.2d 52, 55 (9th Cir.1975). Furthermore, a judgment may be sustained on any ground supported by the record. Fruehauf Corp. v. Royal Exchange Assurance of America, 704 F.2d 1168, 1171 (9th Cir.1985).

The principal issue on appeal is whether the record supports summary judgment. The Rickards group contends that numerous fact questions required resolution by trial. They have failed, however, to identify, either in their briefs or at oral argument, any disputed material question of fact which was not answered by uncontradicted affidavits or other documentary evidence in the record.

A. Section 1 Violation

To establish a section 1 violation by the Rickard group, CERF had to prove three elements: (1) an agreement or conspiracy, (2) resulting in an unreasonable restraint of trade, and (3) causing "antitrust injury." Gough v. Rossmoor Corp., 585 F.2d 381, 386 (9th Cir.1978), cert. denied, 440 U.S. 936, 99 S.Ct. 1280, 59 L.Ed.2d 494 (1979). The record is replete with correspondence proving an agreement on the part of the Rickards group to drive CERF out of business. While the mere expression of anticompetitive intent is insufficient to establish a section 1 claim, the record establishes acts committed in furtherance of the conspiracy. The Rickard group's vexatious litigation clearly affected CERF's business or property in a negative way; and the injury was of the type cognizable under the antitrust laws.

1. The Concerted Refusal to Deal.

The record indicates that after the Rickards group had failed in its efforts to convince CERF to allow veterinarians lacking ACVO-certification to participate in the CERF program, they encouraged ACVO members to stop dealing with CERF. There is evidence that this boycott of CERF met with some success. The minutes of the July 18, 1978 Executive Board meeting of the American Society of Veterinary Ophthalmology ("ASVO"), the professional organization established by the Rickards group, state that "[t]he ACVO members present did indicate that they had cut all ties with CERF." The district court concluded that the Rickards group's concerted refusal to deal with CERF violated section 1 under both a per se and a rule of reason analysis. We hold that a per se analysis is inappropriate under these facts.

The per se rule governs only if the practice at issue "facially appears to be one that would always or almost always tend to restrict competition and decrease output." National Collegiate Athletic Association v. Board of Regents of University of Oklahoma, 468 U.S. 85, 104 S.Ct 2948, 2960, 82 L.Ed.2d 70 (1984) (quoting Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U.S. 1, 19-20, 99 S.Ct. 1551, 1562, 60 L.Ed.2d 1 (1979)). Some practices, such as horizontal price-fixing, are clearly subject to a per se analysis. E.g., United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 223, 60 S.Ct. 811, 844, 84 L.Ed. 1129 (1940). While there is some older case law suggesting that group boycotts are per se violations of section 1, see, e.g., Klor's Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207, 212-13, 79 S.Ct. 705, 709-10, 3 L.Ed.2d 741 (1959); Blanton v. Mobil Oil Corp., 721 F.2d 1207, 1211 (9th Cir.1983), cert. denied, --- U.S. ----, 105 S.Ct. 1874, 85 L.Ed.2d 166 (1985), the Supreme Court's most recent pronouncement on concerted refusals to deal requires that we look to the type of boycott at issue to determine if per se condemnation is required. Northwest Wholesale Stationers, Inc. v. Pacific Stationery and Printing Co., --- U.S. ----, 105 S.Ct. 2613, 2619, 86 L.Ed.2d 202 (1985). Unless the challenged activity "falls into a category likely to have predominantly anticompetitive effects," the per se analysis of a concerted refusal to deal claim is overbroad. Id., 105 S.Ct. at 2621. Anticompetitive effect is unlikely unless the boycotting party "possesses market power or exclusive access to an element essential to competition." Id. Nothing in the record suggests that the Rickards group possessed dominance in the veterinary ophthalmology market, or that it controlled an element essential to competition. On the contrary, it was CERF's growing position in veterinary ophthalmology that triggered the Rickards group's concerted action against it. Therefore, under Northwest Wholesale Stationers, the district court's application of a per se analysis to the Rickards group's boycott was premature.

The district court found in the alternative that the Rickards group's concerted action violated section 1 under the rule of...