Heath Consultants, Inc. v. Precision Instruments, Inc.
| Decision Date | 27 January 1995 |
| Docket Number | No. S-93-412,S-93-412 |
| Citation | 527 N.W.2d 596,247 Neb. 267 |
| Parties | , 1995-1 Trade Cases P 70,894 HEATH CONSULTANTS, INC., Appellee, v. PRECISION INSTRUMENTS, INC., Appellant, and Katherine Waldmann and Tim Waldmann, as Individuals, Appellees. |
| Court | Nebraska Supreme Court |
Syllabus by the Court
1. Summary Judgment. Summary judgment is to be granted only when the pleadings, depositions, admissions, stipulations, and affidavits in the record disclose that there is no genuine issue as to any material fact or as to the ultimate inferences that may be drawn from those facts and that the moving party is entitled to judgment as a matter of law.
2. Vendor and Vendee. A tying arrangement is an agreement by a party to sell one product, but only on the condition that the buyer also purchase a different, or tied, product, or at least agree that it will not purchase that product from another supplier.
3. Vendor and Vendee: Contracts. A tying arrangement need not be expressly embodied in written contracts; such an arrangement may be deduced from a course of conduct.
4. Vendor and Vendee. A tying arrangement unlawfully restrains trade or commerce if the seller has appreciable economic power in the tying product market and if the arrangement affects a substantial volume of commerce in the tied market.
5. Vendor and Vendee: Evidence. A plaintiff alleging an unlawful tying arrangement must produce some evidence of the following elements: (1) the existence of two distinct products or services; (2) sufficient economic power on the part of the defendant in the tying market to appreciably restrain competition in the tied product market, combined with the exercise of such power to coerce the purchaser to buy both items; and (3) that the amount of commerce affected is not insubstantial.
6. Vendor and Vendee: Words and Phrases. Appreciable economic power in the tying market concerns market power, which is the power to force a purchaser to do something that the purchaser would not do in a competitive market.
7. Sales: Words and Phrases. Market power is the ability of a single seller to raise price and restrict output.
8. Vendor and Vendee. Tie-ins are unreasonable in and of themselves whenever a party has sufficient economic power with respect to the tying product to appreciably restrain free competition in the market for the tied product and a not insubstantial amount of interstate commerce is affected.
9. Words and Phrases. Monopolization consists of two elements: (1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.
10. Vendor and Vendee. A tying arrangement which affects consumers in Nebraska by denying them the advantage of parts sold in a freely competitive market establishes anticompetitive and monopolistic restraint of trade and commerce within the State of Nebraska.
11. Constitutional Law: Sales: Statutes: States. The Commerce Clause of the U.S. Constitution does not necessarily preclude the application of state antitrust laws to interstate commerce.
12. Sales: Statutes: States. Where a state statute regulates evenhandedly to effectuate a legitimate local public interest and its effects on interstate commerce are only incidental, the statute will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits.
Jeffrey A. Silver, Omaha, for appellant.
Dan H. Ketcham and Amy Sherman LaFollette of Hansen, Engles & Locher, P.C., Omaha, for appellee Heath Consultants.
Through its counterclaim, the defendant-appellant, Precision Instruments, Inc., asserts that it has been damaged as the result of the unlawful anticompetitive and monopolistic restraint of trade or commerce practiced by the plaintiff-appellee, Heath Consultants, Inc. Concluding that the record failed to so establish, the district court sustained Heath's motion for summary judgment and dismissed Precision's counterclaim. Precision appealed to the Nebraska Court of Appeals, assigning the ruling as error. We, on our own motion, removed the matter to this court in order to regulate the caseloads of the two appellate tribunals. We now reverse the judgment of the district court and remand the cause for further proceedings consistent with this opinion.
Summary judgment is to be granted only when the pleadings, depositions, admissions, stipulations, and affidavits in the record disclose that there is no genuine issue as to any material fact or as to the ultimate inferences that may be drawn from those facts and that the moving party is entitled to judgment as a matter of law. First Nat. Bank in Morrill v. Union Ins. Co., 246 Neb. 636, 522 N.W.2d 168 (1994).
Heath is a Delaware corporation in the business of manufacturing, selling, and repairing leak detection equipment primarily used by the utilities industry. It maintains its principal office in Massachusetts, its operations and manufacturing headquarters in Texas, and its repair facilities in California, Massachusetts, Pennsylvania, and Texas. Until sometime in 1989, it also maintained an office in Omaha. The record further establishes that Heath operates in at least a 15-state area extending from the Mexican border to the Canadian border and from Hawaii and Alaska to the Missouri River.
Precision is an Iowa corporation in the business of repairing leak detection equipment, maintaining its office in Iowa. Both corporations service customers in Nebraska and have Nebraska customers in common, which include Precision's two largest accounts.
Precision claims that because Heath is the exclusive manufacturer and distributor of the equipment bearing its name and because it refuses to sell replacement parts for use in repairs to be made by Precision, Precision cannot repair Heath equipment and is thereby damaged.
Precision can replicate some of Heath's parts by reference to Heath schematics, which Precision has obtained from a variety of sources, and the use of generic components. However, other Heath parts cannot be replicated either because the particular parts are specific to Heath or because the specifications require the use of the manufacturers' parts. Moreover, a number of parts specific to Heath are not interchangeable with parts made by other manufacturers.
Precision ordered parts from Heath in order to make repairs on three separate occasions. Apparently because of an inadvertent error, Heath sent Precision all the parts requested on the first order. However, Heath sent only some of the parts that Precision requested on its second order and failed to send any of the items that Precision requested on its third order.
Heath advised Precision that it would not supply Precision with parts until the litigation between them was resolved. However, Heath admits that its policy is to sell parts only to end users of its equipment and that the repair service market for Heath equipment is limited because of Heath's control of the parts.
Nonetheless, Heath contends that several competitors exist which are capable of repairing Heath equipment and that end users of its equipment can obtain parts to repair their own equipment, employ Heath's repair service, or employ any other repair service.
At times, Precision has been able to obtain Heath parts through end users of Heath equipment. However, on one occasion, Heath failed to fill a parts order for an Iowa end user which wanted to avail itself of Precision's repair service. At least one of the parts could not be duplicated; ultimately, Precision sent the equipment to a Heath repair center. Although the record does not expressly explain Heath's refusal to send parts to the end user, it does contain a letter in which the end user advised Heath that it elected to employ Precision rather than Heath because Precision had submitted a lower bid.
A Michigan repair service which has access to Heath parts and advertises the repair of Heath equipment also refused to sell Heath parts to Precision. The repair service indicated, however, that it would repair Heath equipment for Precision.
Precision relies on Nebraska's unlawful restraint of trade act, Neb.Rev.Stat. §§ 59-801 through 59-831 (Reissue 1993). Section 59-801 provides:
Every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce, within this state, is hereby declared to be illegal. Every person who shall make any such contract or engage in any such combination or conspiracy shall be deemed guilty of a Class IV felony.
Section 59-802 reads: "Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce, within this state, shall be deemed guilty of a Class IV felony."
In addition to imposing criminal penalties, the act provides for the recovery of damages by one injured as the result of forbidden or unlawful conduct. § 59-821.
Precision's position, in essence, is that although there is no formal written agreement between Heath and its end users requiring the latter to purchase parts and service only from Heath, Heath's policies nonetheless create such a tying arrangement, which results in the unlawful restraint and monopolization of trade or commerce.
Section 59-829 declares: "When any provision of ... Chapter 59 is the same as or similar to the language of a federal antitrust law, the courts of this state in construing ... any provision of Chapter 59 shall follow the construction given to the federal law by the federal courts."
Assuming without deciding that this provision raises no...
To continue reading
Request your trial
-
Rlh Industries v. Sbc Communications
...Other states have applied their antitrust laws to out-of-state conduct injuring their residents. In Heath Consultants v. Precision Instruments (1995) 247 Neb. 267, 527 N.W.2d 596 (Heath), the Supreme Court of Nebraska allowed a nonresident company to assert a state law antitrust claim again......
-
Emergency One, Inc. v. Waterous Co., Inc.
...86 (1989); Watson v. Buck, 313 U.S. 387, 61 S.Ct. 962, 85 L.Ed. 1416 (1941). See also Heath Consultants, Inc. v. Precision Instruments, Inc., 247 Neb. 267, 527 N.W.2d 596, 606-07 (Neb.1995) (citing state and federal cases concluding that the Constitution and federal law do not bar applicati......
-
Brand Name Prescription Drugs Antitrust Litigation, In re
...commerce. E.g., R.E. Spriggs v. Adolph Coors Co., 37 Cal.App.3d 653, 112 Cal.Rptr. 585 (1974); Heath Consultants, Inc. v. Precision Instruments, Inc., 247 Neb. 267, 527 N.W.2d 596, 607 (1995) (citing cases). The reading is constitutionally permissible, Clay v. Sun Ins. Office, Ltd., 377 U.S......
-
Archer Daniels Midland Co. v. Seven Up Bottling Co.
...citing R.E. Spriggs Co. v. Adolph Coors Co., 37 Cal.App.3d 653, 112 Cal.Rptr. 585 (1974), and Heath Consultants, Inc. v. Precision Instruments, Inc., 247 Neb. 267, 527 N.W.2d 596 (1995). 2. The Legislature had enacted a law, approved on February 23, 1883, regulating the "pooling of "Section......
-
Liability for Indirect Purchaser Claims
...the state; statutory reference to "state" modifies trade and commerce, not illegal conduct); Heath Consultants v. Precision Instruments, 527 N.W.2d 596, 601, 606 (Neb. 1995) (quoting citation omitted) (Nebraska antitrust statute, which prohibits combinations "in the restraint of trade or co......
-
Table of cases
...102 Hawksbill Sea Turtle v. Fed. Emergency Mgmt. Agency, 126 F.3d 461 (3d Cir. 1997), 45 Heath Consultants v. Precision Instruments, 527 N.W.2d 596 (Neb. 1995), 39 Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408 (1984), 90 Hershey v. ExxonMobil Oil Corp., 2012 WL 1205724 (D. Kan. ......
-
Table of cases
...U.S. 324 (1989) ..................................................................... 37, 38 Heath Consultants v. Precision Instruments, 527 N.W.2d 596 (Neb. 1995) ....................................................... 32, 37 Hercules Carriers v. Claimant Fla., Dep’t of Transp., 768 F.2d 1......
-
Legal enforcement and limitations
...Louisiana antitrust law may apply to in-state effects of conduct with interstate aspects); Heath Consultants v. Precision Instruments, 527 N.W.2d 596, 606–07 (Neb. 1995) (noting that Nebraska antitrust law extends to interstate commerce where no undue burden is imposed); Two Queens, Inc. v.......