Grason Elec. v. Sacramento Municipal Utility Dist., Civ. No. S-79-861 LKK.

• Court: United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
• Writing for the Court: John F. Downey, David S. Kaplan, Sacramento, Cal., Ronald F. Lipp, Cloverdale, Cal., for defendants
• Citation: 571 F. Supp. 1504
• Decision Date: 23 September 1983
• Docket Number: Civ. No. S-79-861 LKK.
• Parties: GRASON ELECTRIC COMPANY, et al., Plaintiffs, v. SACRAMENTO MUNICIPAL UTILITY DISTRICT, Defendants.

571 F. Supp. 1504

GRASON ELECTRIC COMPANY, et al., Plaintiffs,
v.
SACRAMENTO MUNICIPAL UTILITY DISTRICT, Defendants.

Civ. No. S-79-861 LKK.

United States District Court, E.D. California.

September 23, 1983.

571 F. Supp. 1505

COPYRIGHT MATERIAL OMITTED

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Robert A. Susk, G. Joseph Bertain, Jr., San Francisco, Cal., for plaintiffs

John F. Downey, David S. Kaplan, Sacramento, Cal., Ronald F. Lipp, Cloverdale, Cal., for defendants.

MEMORANDUM AND ORDER

KARLTON, Chief Judge.

Long in gestation, a new theory of liability under the federal antitrust laws was delivered by the Second Circuit Court of Appeals in Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263 (2d Cir.1979), cert. denied, 444 U.S. 1093, 100 S.Ct. 1061, 62 L.Ed.2d 783 (1980). For want of a better term, this theory may be described as "monopoly leveraging." It purportedly derives from the more traditional and better defined offense of monopolization, which is proscribed by Section 2 of the Sherman Antitrust Act, 15 U.S.C. § 2. The essence of the new theory is that "a firm violates § 2 by using its monopoly power in one market to gain an unwarranted competitive advantage in another." M.A.P. Oil Co., Inc. v. Texaco, Inc., 691 F.2d 1303, 1305-06 (9th Cir.1982).

The plaintiffs in the case at bar are thirteen electrical contractors who do business in and around Sacramento, California; they are suing the publicly owned utility that provides electricity to much of the greater Sacramento area. This opinion considers only the plaintiffs' motion for summary judgment specifically on a "monopoly leveraging" theory.¹ They claim that the defendant has unlawfully used its alleged monopoly power in the retail electrical energy market to preclude the plaintiffs from obtaining work constructing what they call "electrical distribution systems," and to compete unfairly for work installing and maintaining street lighting and outdoor (security) lighting systems.

It would take very little to establish that the plaintiffs have not, for summary judgment purposes, made out the necessary elements of their monopoly leveraging claims. Nonetheless, it appears worthwhile to explore these claims at some length in order to attempt to narrow the focus of the legal and factual inquiry which they present. As I shall explain, the appellate courts have made that task fairly complicated by announcing what amounts to a new antitrust offense without exploring the practical ramifications of that expansive move.

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I

THE SUMMARY JUDGMENT STANDARD

There are repeated suggestions in the cases that the summary judgment device is somehow different when it is invoked in the context of an antitrust action. Thus it has been noted that "summary judgment is disfavored in antitrust cases in which motive and intent are important factors...." Aydin Corp. v. Loral Corp., 718 F.2d 897 at 901 (9th Cir. July 12, 1983), citing Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962). Nonetheless, "its use is not prohibited and may save judicial resources." Aydin, supra, citing First National Bank v. Cities Service Co., 391 U.S. 253, 288-90, 88 S.Ct. 1575, 1592-93, 20 L.Ed.2d 569 (1968). In short, although the court will entertain such a motion, "the moving party is subject to a `particularly rigorous' burden in antitrust cases." Aydin, supra at 902, quoting Mutual Fund Investors, Inc. v. Putnam Management Co., 553 F.2d 620, 624 (9th Cir.1977); accord, Javelin Corp. v. Uniroyal, Inc., 546 F.2d 276, 280 (9th Cir.1976), cert. denied 431 U.S. 938, 97 S.Ct. 2651, 53 L.Ed.2d 256 (1977).

As with much of the lore of antitrust law, the precise significance of the foregoing is lost on this workaday judge. It is of course important to recognize that questions of intent and motive are not generally susceptible to disposition on summary judgment, whether they arise in the antitrust context or elsewhere. See Soto v. County of Sacramento, 563 F.Supp. 520, 541 (E.D.Cal.1983); see generally 10A C. Wright, A. Miller & M. Kane, Federal Practice and Procedure § 2720 (2d ed. 1983). Moreover, because antitrust actions frequently turn on such inquiries into state of mind, and because they are often quite complex, they are "by their very nature poorly suited to disposition by summary judgment." Id. § 2732.1 at 313; see also II P. Areeda & D. Turner, Antitrust Law § 316b (1978) hereinafter cited as II Areeda & Turner. While these observations commend caution in proceeding in this context, they do not seem to establish the existence of a standard for antitrust summary judgment motions that is different in substance from the usual standard applied by courts when they consider motions under Fed.R.Civ.P. 56. II Areeda & Turner, supra at 62 ("The suggestion that summary procedures are less appropriate in antitrust cases as such may be put aside, for the Federal Rules make absolutely no distinction between antitrust and other cases." Id., discussing Poller v. CBS, supra.) Indeed, the same cases which gravely point out the "particular rigors" facing a party who moves for summary judgment in the antitrust context go on to delineate the applicable standard in precisely the same terms generally used to adjudicate motions under Rule 56. See Aydin at 902; Mutual Fund Investors, 553 F.2d at 624-25; Javelin Corp., 546 F.2d at 280. Accordingly, I shall employ that familiar set of tools in disposing of the present motion.

Summary judgment is proper only when the materials submitted by the moving party "show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); Aydin at 901-902. It is well settled that the moving party has the burden of establishing that this standard is satisfied. Adickes v. S.H. Kress & Co., 398 U.S. 144, 159-60, 90 S.Ct. 1598, 1609-10, 26 L.Ed.2d 142 (1970); Program Engineering, Inc. v. Triangle Publications, 634 F.2d 1188, 1192-93 (9th Cir.1980). However, if the moving party is successful in making out a prima facie case, that would entitle that party to a directed verdict if uncontradicted at trial, summary judgment will be granted unless the opposing party "presents specific facts demonstrating that there is a triable factual dispute about a material issue." Program Engineering, Inc. at 1193; see Aydin at 902. Throughout this process, "all evidence and inferences therefrom are to be construed in the light most favorable to the party opposing the motion." Mutual Fund Investors, 553 F.2d at 624, citing United States v. Diebold, 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962). "Nevertheless, the opponents' version of the facts

571 F. Supp. 1508

must support a viable legal theory which would entitle them, if accepted, to a judgment as a matter of law." Mutual Fund Investors, 553 F.2d at 624

Given the manner in which this motion was couched (see n. 2, infra), another observation regarding the summary judgment process is particularly in order. As this court has noted elsewhere, "in all summary judgment motions, the court's task is the discovery of material disputes of fact, not their resolution." Kouba v. Allstate Ins. Co., 523 F.Supp. 148, 154 (E.D.Cal.1981), rev'd on other grounds, 691 F.2d 873 (9th Cir.1982); see also 1 J. Weinstein & M. Berger, Weinstein's Evidence ¶ 20006 (1982) (hereinafter Weinstein & Berger) ("The summary judgment device is not intended to resolve issues which are within the traditional province of the trier of fact, but rather to see whether there are such issues." Weinstein & Berger, at 200-31, quoting James, Civil Procedure ¶ 6.18 (1965)). With these principles in mind, I turn first to an examination of the factual assertions underlying this motion.

II

FACTUAL BACKGROUND²

The defendant Sacramento Municipal Utilities District (SMUD) is a public entity created pursuant to state law.³ Its primary business is the retail sale of electrical energy. At the time that the complaint was filed in this action, SMUD's service area covered some 757 square miles including and adjacent to the City of Sacramento. Like most electric utility companies, SMUD is virtually the exclusive supplier of retail electricity within its service area.⁴ Unlike

571 F. Supp. 1509

many other utilities, however, SMUD (through its Board of Directors) makes its own rules and sets its own rates and charges. See Cal.Pub.Util.Code § 11885. Thus it can fairly be said that SMUD has absolute control over the price paid for electrical energy in its service area

The plaintiffs allege — and SMUD indignantly denies — that SMUD engages in business activities other than simply the retail sale and distribution of electricity. Specifically, the plaintiffs allege that SMUD constructs and maintains what the plaintiffs term "electrical distribution systems" in the SMUD service area. The plaintiffs also claim that SMUD is unfairly competing with them for work constructing what they call "street and outdoor lighting systems." SMUD's activities in these areas form the basis of this action; thus in order to explain what the parties are arguing about it is necessary to describe what is meant by "electrical distribution systems," "street lighting systems" and "outdoor lighting systems," and to attempt to tie those descriptions to undisputed facts regarding events in the real world.

The retail sale of electricity necessarily contemplates the distribution of that energy to the consumer. It is obvious that, up to a point, the installation and maintenance of facilities and equipment necessary to the delivery of retail electricity to SMUD's customers are merely part of SMUD's lawful activities as a provider of electrical energy. The assumption underlying this litigation is that, at some point, the delivery of SMUD's product turns into a different product (or service) in itself. In other words, the plaintiffs assert that there is some point, between the...