797 F.3d 1248 (11th Cir. 2015), 14-11853, Duty Free Americas, Inc. v. Estee Lauder Cos., Inc.

Docket Nº:14-11853
Citation:797 F.3d 1248
Opinion Judge:MARCUS, Circuit Judge:
Party Name:DUTY FREE AMERICAS, INC., Plaintiff - Appellant, v. THE ESTEE LAUDER COMPANIES, INC., Defendant - Appellee
Attorney:For Duty Free Americas, Inc., Plaintiff - Appellant: Paul Joseph Schwiep, Coffey Burlington, PL, Miami, FL; Emily E. Chow, Craig S. Coleman, Richard Alan Duncan, Faegre Baker Daniels, LLP, Minneapolis, MN. For Estee Lauder Companies, Inc., Defendant - Appellee: Cristina Alonso, Aaron Stenzler Wei...
Judge Panel:Before MARCUS and WILSON, Circuit Judges, and THAPAR,[*] District Judge.
Case Date:August 07, 2015
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit

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797 F.3d 1248 (11th Cir. 2015)

25 Fla.L.Weekly Fed. C 1465

DUTY FREE AMERICAS, INC., Plaintiff - Appellant,



No. 14-11853

United States Court of Appeals, Eleventh Circuit

August 7, 2015

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Appeal from the United States District Court for the Southern District of Florida. D.C. Docket No. 0:12-cv-60741-RNS.

For Duty Free Americas, Inc., Plaintiff - Appellant: Paul Joseph Schwiep, Coffey Burlington, PL, Miami, FL; Emily E. Chow, Craig S. Coleman, Richard Alan Duncan, Faegre Baker Daniels, LLP, Minneapolis, MN.

For Estee Lauder Companies, Inc., Defendant - Appellee: Cristina Alonso, Aaron Stenzler Weiss, Carlton Fields Jorden Burt, PA, Miami, FL; Thomas G. Hungar, Thomas M. Johnson Jr., Joseph Kattan, Robert C. Walters, Gibson Dunn & Crutcher, LLP, Washington, DC.

Before MARCUS and WILSON, Circuit Judges, and THAPAR,[*] District Judge.


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MARCUS, Circuit Judge:

Duty Free Americas, Inc. (" DFA" ), which operates duty free stores in many international airports nationwide, appeals the district court's dismissal of its multicount suit against The Estée Lauder Companies, Inc. (" Estée Lauder" ), the largest manufacturer of beauty products sold in duty free retail outlets in the United States. DFA claims that Estée Lauder's refusal to do business with DFA, and its communication of that fact to airport authorities evaluating whether to offer rental space to DFA, violates several federal and state laws. DFA also says that Esté e Lauder places anticompetitive restrictions on duty free operators' display space and ability to select their own inventory; it seeks injunctive relief from these requirements. Finally, DFA claims that its competitors disparaged its business methods and financial projections to airport authorities and seeks to hold Estée Lauder accountable for all of those statements. DFA filed suit in the United States District Court for the Southern District of Florida, asserting three claims in its amended complaint: (1) attempted monopolization, in violation of § 2 of the Sherman Act; (2) contributory false advertising, in violation of § 43(a) of the Lanham Act; and (3) tortious interference with a prospective business relationship, in violation of Florida law. The district court dismissed the lawsuit in its entirety for failure to state a claim.

After thorough review, we affirm. On each claim, DFA failed to allege basic facts sufficient to state a claim to relief that is plausible on its face. Thus, in pleading its antitrust claim, DFA did not adequately allege that Estée Lauder engaged in predatory or anticompetitive conduct. Nor has DFA come close to establishing standing to seek injunctive relief from the requirements that Estée Lauder places on its competitors, inasmuch as DFA no longer does any business with Esté

e Lauder. As for its false advertising claim, DFA failed to plead sufficient facts from which a court could find that Estée Lauder made false statements, or, for that matter, was responsible for any such statements made by DFA's competitors. Finally, the complaint failed to allege any improper conduct sufficient to constitute tortious interference with a business relationship in violation of Florida law.



The essential facts contained in DFA's complaint and its attached exhibits are

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these. DFA operates many duty free stores in American airports with international terminals. DFA is one of approximately ten major operators of duty free stores in the United States. DFA currently holds leases in thirteen international airports located in eleven cities: New York (JFK and LaGuardia), Washington, D.C. (Dulles and Reagan National), Detroit, Miami, Atlanta, Baltimore, San Antonio, Phoenix, San Diego, Salt Lake City, and Charlotte. It competes with other duty free operators for the limited rental space available in U.S. airports servicing international flights.

Airports generally rent their dedicated duty free space for lease terms of between five and ten years. An airport seeking to rent to a duty free operator proceeds by initiating competitive bidding. Typically, the airport issues a request for proposal (" RFP" ), and interested duty free operators respond with proposals explaining what products they would carry at the airport and the amount of rent they are willing to pay. Proposed rent in the duty free market is comprised of both a minimum annual guarantee and a percentage of sales revenue. Normally, all of the space that an airport allocates for duty free retail space is leased by the same operator.

At duty free stores, customers -- who must be outbound international travelers -- can purchase luxury products at discounted prices. Beauty products -- which include makeup, skin care products, and fragrances -- are a substantial component of duty free stores' product offerings. And Esté e Lauder is the " largest manufacturer of beauty products sold in duty-free stores in U.S. airports." DFA notes that in 2010 Esté e Lauder's market share of cosmetics, a subgroup consisting of makeup and skin care, sold in duty free stores was approximately 45.71%, while its market share for skin care products exceeded 50%. DFA further estimates that Esté e Lauder's market share has increased in the intervening years. Newcomers to the duty free beauty products market are apparently rare, due to the " extremely limited shelf space available in airport duty free shops," and DFA alleges that " [t]here has been no change in the composition of the top five beauty product manufacturers in the past five years, other than [Esté e Lauder's] continuous increase in market share each year."

DFA purchased Esté e Lauder beauty products to sell in its duty free stores until June 2008. During that time, Esté e Lauder set two different prices for each product -- a suggested domestic retail price and a lower suggested travel retail price. Retailers that sold Esté e Lauder products in traditional outlets, such as department stores, could purchase goods at wholesale prices, which were set by discounting the suggested domestic retail prices of items. By contrast, duty free operators like DFA could purchase at lower travel wholesale rates that were set by discounting the suggested travel retail prices for particular products. For most of DFA's relationship with Esté e Lauder, the suggested travel retail price for beauty products offered customers a 10% discount off of the suggested domestic retail price.

Duty free operators that contracted with Esté e Lauder had to comply with several inventory and display requirements. In particular, Esté e Lauder required operators to carry the full line of products within a particular brand (" full line forcing" ) and carry the company's less-popular fragrances if they wanted to sell cosmetics (" tying" ). Esté e Lauder also mandated that operators reserve display space of a certain size and quality for its products and that they keep excess inventory in stock, and routinely threatened to cut off

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all product supply when duty free operators resisted these conditions. According to the complaint and its attached exhibits, DFA was last subject to Esté e Lauder's various contractual requirements several years ago: (1) " display space and inventory demands" in March 2008; (2) " full line forcing" in March 2008; and (3) " tying" fragrances to other products in April 2006.

In January 2007, Esté e Lauder announced plans to eliminate the differences between its suggested domestic retail prices and suggested travel retail prices. In other words, it would promulgate only one suggested retail price for each product that would be used in both traditional retail outlets and duty free stores. This planned change, which would both increase the prices DFA paid for Esté e Lauder products and eliminate the discount that DFA's customers gained by shopping at duty free stores, was supposed to take effect on April 1, 2008. As a result of the changing price structure, DFA terminated its business dealings with Esté e Lauder by June 2008.

DFA adapted to the loss of Esté e Lauder's product lines by devoting the display space that it formerly reserved for Esté e Lauder products to other beauty brands. But at some undisclosed point, DFA sought to renew its prior relationship with Esté e Lauder. The manufacturer refused to have any further dealings with DFA. The decision not to resume relations with DFA costs Esté e Lauder an estimated $14.5 million each year.

Since 2008, DFA has participated in competitive bidding for duty free retail space at four international airports: Newark Liberty International Airport, Boston Logan International Airport, Orlando International Airport, and Hartsfield-Jackson Atlanta International Airport. Because DFA's allegations of unlawful conduct stem from Esté e Lauder's involvement, directly and indirectly, in these bidding processes, we relay the events that occurred in some detail.

In December 2008, Newark Liberty International Airport issued a request for proposal, seeking a tenant to lease its duty free retail space for a seven-year term. DFA submitted a proposal in response to the RFP, as did three competitors: International Shoppes, Dufry, and EJE Travel Retail. Each of the other operators sold Esté e Lauder products. During the RFP process, Esté e Lauder's President of Travel Retailing Worldwide, Olivier Bottrie, sent a letter to the leasing agent responsible for administering Newark's bidding...

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