Full Draw Prod. v. Easton Sports Inc.

• Decision Date: 29 June 1999
• Docket Number: PLAINTIFF-APPELLANT,No. 98-1026,DEFENDANTS-APPELLEES,98-1026
• Citation: 182 F.3d 745
• Parties: (10th Cir. 1999) FULL DRAW PRODUCTIONS, A COLORADO CORPORATION,, v. EASTON SPORTS, INC., A CALIFORNIA CORPORATION; PAPES, INC., A KENTUCKY CORPORATION; BROWNING ARMS COMPANY, A UTAH CORPORATION; PRECISION SHOOTING EQUIPMENT, A DELAWARE CORPORATION; HOYT U.S.A., INC., A CALIFORNIA CORPORATION; BEAR ARCHERY, INC., A DELAWARE CORPORATION; ACI CONSOLIDATED, INC., A MICHIGAN CORPORATION; OUTTECH, INC., A NEW JERSEY CORPORATION; EHLERT PUBLISHING COMPANY, A SUBSIDIARY OF AFFINITY GROUP, INC.; ARCHERY MANUFACTURING AND MERCHANTS ORGANIZATION, A FLORIDA TRADE ASSOCIATION; SAUNDERS ARCHERY CO., INC., A NEBRASKA CORPORATION; NEW ARCHERY PRODUCTS CORPORATION, AN ILLINOIS CORPORATION; DARTON ARCHERY, A MICHIGAN CORPORATION; AND BEMANS U.S.A., INC., A UTAH CORPORATION,
• Court: U.S. Court of Appeals — Tenth Circuit

Page 745

182 F.3d 745 (10th Cir. 1999)

FULL DRAW PRODUCTIONS, A COLORADO CORPORATION, PLAINTIFF-APPELLANT, v. EASTON SPORTS, INC., A CALIFORNIA CORPORATION; PAPES, INC., A KENTUCKY CORPORATION; BROWNING ARMS COMPANY, A UTAH CORPORATION; PRECISION SHOOTING EQUIPMENT, A DELAWARE CORPORATION; HOYT U.S.A., INC., A CALIFORNIA CORPORATION; BEAR ARCHERY, INC., A DELAWARE CORPORATION; ACI CONSOLIDATED, INC., A MICHIGAN CORPORATION; OUTTECH, INC., A NEW JERSEY CORPORATION; EHLERT PUBLISHING COMPANY, A SUBSIDIARY OF AFFINITY GROUP, INC.; ARCHERY MANUFACTURING AND MERCHANTS ORGANIZATION, A FLORIDA TRADE ASSOCIATION; SAUNDERS ARCHERY CO., INC., A NEBRASKA CORPORATION; NEW ARCHERY PRODUCTS CORPORATION, AN ILLINOIS CORPORATION; DARTON ARCHERY, A MICHIGAN CORPORATION; AND BEMANS U.S.A., INC., A UTAH CORPORATION, DEFENDANTS-APPELLEES.

No. 98-1026

U.S. Court of Appeals, Tenth Circuit

June 29, 1999

Appeal from the United States District Court for the District of Colorado (D.C. No. 97-WY-1121-CB) [Copyrighted Material Omitted] James A. Jablonski (Harry L. Pliskin with him on the briefs), of Gorsuch Kirgis Llp, Denver, Colorado, for Plaintiff-Appellant.

John M. Peterson (Jonathan T. Howe with him on the brief), of Howe & Hutton, Ltd., Chicago, Illinois, for Defendants-Appellees.

Before Tacha, Ebel and Kelly, Circuit Judges.

Ebel, Circuit Judge.

Full Draw Productions ("Full Draw"), an archery trade show promoter, brought an antitrust suit against Easton Sports, Inc., and other co-defendants, who are archery manufacturers and distributors, a publishing company, a representative for archery manufacturers, and an archery trade association (collectively, "defendants"). Full Draw brought a private antitrust suit under Clayton Act § 4, alleging violations of Sherman Act §§ 1 & 2 from defendants' alleged group boycott of Full Draw's Bowhunting Trade Show ("BTS"). In addition, Full Draw claimed violations of Colorado antitrust laws and common-law tortious interference. The district court dismissed both federal and state antitrust claims under Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief can be granted, on the grounds that (1) Full Draw failed to allege antitrust injury, and (2) Full Draw failed to plead sufficiently the elements of Sherman Act offenses. The district court then dismissed the pendant state tortious interference claim. We reverse and remand.

BACKGROUND

Facts

Since this is an appeal from a dismissal under Fed. R. Civ. P. 12(b)(6), we must "accept[] the well-pleaded allegations of the complaint as true and construe[] them in the light most favorable to the plaintiff." Yoder v. Honeywell, Inc., 104 F.3d 1215, 1224 (10th Cir.) (quotations and citation omitted), cert. denied, 115 S Ct. 55 (1997). In that regard, we draw the facts from Full Draw's second amended complaint.¹

Full Draw, a Colorado corporation, was formed to organize and present a trade show for the archery industry. In 1990, Full Draw held its first BTS, which at the time was the only merchandise mart devoted solely to archery equipment. Archery manufacturers and distributors purchased exhibition space and dealers paid a fee to attend. The corporate defendants (all defendants except the Archery Manufacturing & Merchants Organization ("AMMO")) were, for the most part, the large manufacturers (and some distributors) of archery equipment, and they all rented space and participated in the BTS.

That same year, Full Draw entered into a five-year agreement with AMMO, a trade association to which the other defendants belonged, and in which they actively participated. Under the agreement, Full Draw paid AMMO 10% of its BTS gross revenues in exchange for AMMO's endorsement of the show.

In 1994, with support from other defendants, AMMO sought to increase to 30% its revenue share from the BTS. AMMO also discussed buying the show from Full Draw. During and subsequent to the negotiations, AMMO and other defendants threatened to boycott the BTS unless Full Draw sold the show to AMMO on terms AMMO offered. Full Draw and AMMO failed to reach an agreement.

In 1995, following the failed negotiations, AMMO and other defendants decided that AMMO would present its own archery trade show, to be held one week after the 1997 BTS. Defendants also decided to boycott the BTS in order to eliminate it as a competitor to AMMO's new trade show. In support of the boycott, defendants (1) advertised that they would attend only the AMMO trade show in 1997; (2) informed others at the 1996 BTS that they would attend only the AMMO trade show; (3) persuaded other entities into participating in the AMMO show rather than the BTS by repeatedly stating that key manufacturers and distributors would not attend the 1997 BTS, and that the BTS would be a failure and probably not even occur; (4) created "a climate of fear of retribution and loss of business" for attending the BTS, and retaliated in various ways against certain businesses which attended the 1997 BTS; (5) agreed among themselves and caused other AMMO members to agree not to attend the 1997 BTS; and (6) actually boycotted the 1997 BTS.

As a result of defendants' boycotting efforts, the 1997 BTS failed financially and was eliminated as a competitor to future AMMO shows, leaving AMMO as the only supplier in the alleged market of archery trade shows in the United States.

Procedural History

Full Draw filed a complaint against defendants on May 30, 1997, alleging violations of Sherman Act §§ 1 & 2 as well as a supplemental Colorado state law claim for tortious interference with prospective business advantage. Plaintiff subsequently amended its complaint to include additional monopoly claims and state antitrust claims. On August 18, 1997, defendants moved to dismiss pursuant to Fed. R. Civ. P. 12(b)(6). On October 16, 1997, Full Draw sought to amend its complaint again to add four new defendants and to add allegations against existing defendants.² Existing defendants objected to the new allegations against them, so Full Draw filed a new second amended complaint limiting its new allegations to the new defendants. Nevertheless, according to both Full Draw and defendants, the district court stated that it would consider the new allegations with respect to all defendants for purposes of the motion to dismiss, and we therefore consider all the new allegations in the second amended complaint to be directed against all defendants.

On December 23, 1997, the district court granted defendants' motion to dismiss. The court found that Full Draw failed adequately to allege antitrust injury. The court stated:

Simply put, Plaintiff has alleged that Defendants' competitive acts drove it out of business, but has not alleged that those same acts caused harm to consumers or competition-and this is unsurprising where Defendants are many of the relevant consumers and their acts increased, albeit temporarily, competition. By definition, it would seem that where a majority of consumers believe that a monopoly producer is not performing adequately and decide to provide an alternative for themselves and other consumers, there can be no antitrust injury, particularly where, as here, there have been no allegations that harm was caused to any other consumers (e.g., the other exhibitors or the attendees of the shows) by reduced output or increased prices.

The district court further noted that Full Draw failed to make specific factual allegations defining the relevant product and geographic markets, the number of market participants and their relevant market shares, or defendants' market power, all of which the court considered requisite elements of Sherman Act §§ 1 & 2 offenses. The court then dismissed the state antitrust claims, finding federal and Colorado antitrust laws sufficiently analogous. Finally, because the court dismissed all federal claims over which it had original jurisdiction, the court exercised its discretion under 28 U.S.C. § 1367(c)(3) to dismiss the remaining state claim of tortious interference.

Full Draw appeals.

DISCUSSION

The district court had original jurisdiction over the antitrust claims pursuant to 28 U.S.C. § 1337,³ and supplemental jurisdiction pursuant to 28 U.S.C. § 1367. We have jurisdiction under 28 U.S.C. § 1291.

"We review de novo a district court's dismissal of a cause of action for failure to state a claim upon which relief can be granted." Chemical Weapons Working Group, Inc. v. United States Dep't of the Army, 111 F.3d 1485, 1490 (10th Cir. 1997). Furthermore,

[w]e uphold a dismissal under Fed. R. Civ. P. 12(b)(6) only when it appears that the plaintiff can prove no set of facts in support of the claims that would entitle him to relief, accepting the well-pleaded allegations of the complaint as true and construing them in the light most favorable to the plaintiff.

Yoder, 104 F.3d at 1224 (quotations and citation omitted).

On appeal, Full Draw argues that it adequately alleged antitrust injury and the requisite elements of Sherman Act offenses. We agree, and address each issue in turn.

I. Antitrust Injury

A. General Legal Standard

Sherman Act § 1 prohibits "[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States." 15 U.S.C. § 1. Sherman Act § 2 prohibits "monopoliz[ing], or attempt[ing] to monopolize, or combin[ing] or conspir[ing] with any other person or persons, to monopolize any part of the trade or commerce among the several States." 15 U.S.C. § 2. Clayton Act § 4 creates a private cause of action for any person who has been "injured in his business or property by reason of anything forbidden in the antitrust laws," and provides for treble damages. 15 U.S.C. § 15(a).

To recover damages under § 4 of the Clayton Act, a private plaintiff must show "more than injury causally linked to an illegal presence in the market." Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977). Rather, the...