Big Bear Lodging Assoc. v. Snow Summit
| Decision Date | 01 February 1999 |
| Docket Number | No. 97-56042,97-56042 |
| Citation | 182 F.3d 1096 |
| Parties | (9th Cir. 1999) BIG BEAR LODGING ASSOCIATION; SLEEPY FOREST RESORTS, a California corporation; ROBERT POOL, dba Cathy's Country Cottages; MARK TWAIN HANNAH, dba Front Desk Vacation Rentals, Plaintiffs-Appellants, v. SNOW SUMMIT, INC., a California corporation; RICHARD KUN, an individual; FRITZ UPPENLATZ, dba Forest Shores Estates (Inn); JOYCE REED, dba Grey Squirrel Resort; GERRY TAYLOR, dba Bear Mountain Trading Co.; BRUCE VOIGHT, dba Alpine Slide at Magic Mountain; LOREN HAFFEN, dba Boulder Creek Resort, dba Holloway's Marina & RV Park, dba North Shore Landing; ROBERT MCDONALD, dba Shores Acres Lodge & Vacation Rentals; BIG BEAR LAKE RESORT ASSOCIATION; BEAR MOUNTAIN, INC., dba Bear Mountain Ski Resort, a business entity, form unknown, and DOES 1-500, Defendants-Appellees |
| Court | U.S. Court of Appeals — Ninth Circuit |
COUNSEL: James G. Allen, Allen & Pappas, Thousand Oaks, California, for the plaintiffs-appellants.
Patrick M. Kelly, Wilson, Elser, Moskowitz, Edelman & Dicker, Los Angeles, California, for the defendants-appellees.
Douglas L. Day, Crowe & Day, Santa Monica, California, for the defendants-appellees.
Evan Eickmeyer and Timothy M. Smith, McKinley & Smith, Sacramento, California, for the defendants-appellees.
Appeal from the United States District Court for the Central District of California Manuel L. Real, District Judge, Presiding. D.C. No. CV-97-00451-R.
Before: Procter Hug, Jr., Chief Judge, James R. Browning and John T. Noonan, Circuit Judges.
Plaintiffs are lodge operators and lodging referral services in a ski resort area in Southern California. They allege antitrust violations by other lodge operators and two ski resorts in the area, allegedly injuring Plaintiffs. The district court dismissed the complaint without leave to amend. We affirm in part and reverse in part.
Plaintiffs base their claims on the following allegations, which we accept as true for purposes of reviewing dismissal of a complaint for failure to state a valid claim. See Fed. R. Civ. P. 12(b)(6); Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996).
Plaintiffs provide lodging accommodations and lodging referral services in the Big Bear Valley recreational area in the San Bernardino mountains of Southern California. For years, the two ski resorts in the area, Snow Summit, Inc., and Bear Mountain, Inc., offered bulk discounts on ski lift tickets to lodges and tourist businesses, including several Plaintiffs. By virtue of these discounts, Plaintiffs were able to offer "ski packages," combinations of lodging and lift tickets, at attractive prices. Sales of such "ski packages" constituted a substantial portion of the business done by some Plaintiffs.
In about January 1994, Richard Kun, president of Snow Summit, helped form the Defendant Big Bear Lake Resort Association. Kun asked the City of Big Bear Lake to refrain from enacting a tax on Snow Summit or Bear Mountain in exchange for the Resort Association's commitment to collect funds from the lodges and ski resorts in Big Bear Valley and to use said funds to promote Big Bear Valley. He also asked the city to reduce its transient occupancy tax on local lodges from eight to six percent. The Resort Association eventually entered into an agreement with the Big Bear Chamber of Commerce, providing that the organizations would grant reciprocal memberships to each other at no cost, and that inquiries for lodging received by the Chamber of Commerce would be referred to the Resort Association.
Kun advised Plaintiff Robert Pool that Snow Summit would continue to sell discount lift tickets to Pool and Plaintiff Sleepy Forest Resorts only if Pool joined the Resort Association. Plaintiffs Pool, Sleepy Forest, Mark Twain Hannah, and members of the Big Bear Lodging Association joined the Resort Association. Because their businesses were located within the city of Big Bear Lake, Plaintiff lodges paid 2.5% of their lodging accommodation income as dues to the Association. Lodges located outside the city were charged only 0.5% of their income as dues.
Since its formation, the Resort Association has engaged in activities discriminatory to certain members, including some Plaintiffs. The Resort Association favored friends of directors of the Association by providing them with choice lodging referrals and preferential advertising, and removed advertisements purchased by Pool and Sleepy Forest from magazines the Resort Association mailed to potential customers. In the fall of 1995, Pool and Sleepy Forest quit the Resort Association because of these discriminatory practices. In October 1995, Kun advised Pool that, unless Pool and Sleepy Forest rejoined the Resort Association, neither Snow Summit nor Bear Mountain would sell them discount lift tickets nor would they honor any tickets purchased by them. Moreover, he said Snow Summit would no longer supply discount lift tickets to Sleepy Forest. Snow Summit and Bear Mountain agreed that they would refuse to sell discount lift tickets to non-members of the Resort Association. Kun advised Resort Association members that they were prohibited from selling, trading or conveying Snow Summit discount lift tickets to Pool or Sleepy Forest.
In 1996, the Resort Association adopted rules prohibiting members from belonging to other local referral services in which non-members participated, and from referring any business to non-members. In about 1996, the Resort Association suspended Doc's Getaway, which is operated by Sleepy Forest, because Sleepy Forest allegedly referred a call received by Doc's Getaway to a non-member. The Resort Association terminated Hannah's membership in November 1996 because he refused to remove a listing for the Big Bear Lake Area Chamber of Commerce, a referral service established by Hannah, from the local phone directory. The Resort Association objected to the listing because Hannah was receiving calls that might otherwise go to the Resort Association per its agreement with the Chamber of Commerce. Some Plaintiffs were threatened or denied membership in the Resort Association because of their personal relationships with Resort Association members who violated Resort Association rules.
Resort Association members also engaged in a price-fixing conspiracy, agreeing on uniform rates and charges for lodge accommodations, ski packages and resort services; publishing and disseminating advertising materials reflecting the agreedupon rates; communicating for the purpose of implementing this conspiracy; and charging and collecting the agreed-upon rates.
Plaintiffs assert the Defendants' alleged conduct violated sections 1 and 2 of the Sherman Act and California's Cartwright Act, and breached Plaintiffs' subscription agreements with the Resort Association. The district court dismissed Plaintiffs' complaint without leave to amend, stating only: "This is not an antitrust case, period." Plaintiffs filed a timely appeal.
We review dismissal of a complaint without leave to amend de novo.1 See Cahill , 80 F.3d at 337 (); Dumas v. Kipp, 90 F.3d 386, 389 (9th Cir. 1996) (). "All allegations of material fact are taken as true and construed in the light most favorable to the nonmoving party." Cahill, 80 F.3d at 337-38. "A court may dismiss a complaint only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Hishon v. King & Spalding, 467 U.S. 69, 73 (1984); see also Cahill, 80 F.3d at 338. The allegations in the complaint, however, must "give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47 (1957). A complaint may be dismissed without leave to amend only "when it is clear that the complaint cannot be saved by further amendment." Dumas, 90 F.3d at 389.
Sherman Act S 1 prohibits agreements that unreasonably restrain trade. See 15 U.S.C. S 1; NYNEX Corp. v. Discon, Inc., 119 S. Ct. 493, 497 (1998).2 NYNEX, 119 S. Ct. at 497 (citations omitted). Horizontal price-fixing, market division, and certain types of group boycotts are unlawful per se. See id. Other alleged violations are subject to "rule of reason " analysis to determine "whether particular concerted conduct unreasonably restrains competition." Oltz v. St. Peter's Community Hosp., 861 F.2d 1440, 1445 (9th Cir. 1988).
Rule of reason analysis "is a case-by-case study in which the fact finder weighs all of the circumstances of a case." Id. (internal quotation marks omitted). "Proving injury to competition in a rule of reason case almost uniformly requires a claimant to prove the relevant market and to show the effects upon competition within that market." Id. at 1446. Elaborate market analysis and case-by-case evaluation are unnecessary in cases involving per se antitrust violations because the anticompetitive effects of the practice are presumed. See id. at 1445.
To have standing to bring an antitrust case, a plaintiff must demonstrate that the harm the plaintiff has suffered or might suffer from the practice is an "antitrust injury," that is, an "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) (internal quotation marks omitted). The injury must be "attributable...
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Table of Cases
...F.2d 1467 (9th Cir. 1985), 26 Bichan v. Chemetron Corp., 681 F.2d 514 (7th Cir. 1982), 41 Big Bear Lodging Ass’n v. Snow Summit, Inc., 182 F.3d 1096 (9th Cir. 1999), 28 Bigelow v. RKO Radio Pictures, 327 U.S. 251 (1946), 12, 14, 88, 89, 93, 120, 279, 282 Bingham v. Zolt, 66 F.3d 553 (2d Cir......