Liu v. AMERCO

• Decision Date: 04 May 2012
• Docket Number: No. 11–2053.,11–2053.
• Citation: 677 F.3d 489
• Parties: Marcia Mei–Lee LIU, individually and on behalf of a class of all others similarly situated, Plaintiff, Appellant, v. AMERCO; U–Haul International, Inc., Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

677 F.3d 489

Marcia Mei–Lee LIU, individually and on behalf of a class of all others similarly situated, Plaintiff, Appellant,

v.AMERCO; U–Haul International, Inc., Defendants, Appellees.

No. 11–2053.

United States Court of Appeals, First Circuit.

Heard Feb. 9, 2012.Decided May 4, 2012.

Charles E. Tompkins with whom Ian J. McLoughlin, Robert E. Ditzion and Shapiro Haber & Urmy LLP were on brief for appellant.

G. Patrick Watson with whom David A. Zetoony, Bryan Cave, LLP, W. Scott O'Connell and Nixon Peabody, LLP were on brief for appellees.

Before BOUDIN, LIPEZ and THOMPSON, Circuit Judges.

BOUDIN, Circuit Judge.

On July 21, 2010, Marcia Liu filed a complaint in federal district court in Massachusetts charging Amerco, Inc. and its wholly owned subsidiary U–Haul International, Inc.—collectively “U–Haul”—with violating Massachusetts General Laws ch. 93A. The complaint asserted that U–Haul had engaged in what was in substance an attempted price-fixing scheme and the complaint sought damages on behalf of both Liu and a large class of persons who rented U–Haul vehicles for certain trips within a specified period.

Ordinarily, when a seller of goods or services attempts to fix prices with a competitor but fails in that endeavor, no consumer is damaged; but Liu's complaint alleged peculiar facts not uncovered by Liu but recounted in documents stemming from an investigation by the Federal Trade Commission (“FTC”); the documents included the summary of a proposed consent order between U–Haul and the agency made public in the month before Liu filed her own law suit. Federal Trade Commission, U–Haul Int'l, Inc. and AMERCO, 75 Fed.Reg. 35033, 35034 (June 21, 2010) (hereinafter “ FTC Summary ”).

According to the FTC complaint and the summary of the proposed consent order, in 2006 Edward Shoen—the chairman and president of Amerco and the chairman and chief executive officer of U–Haul—planned and took steps to implement a scheme to collude with U–Haul's major competitors—Avis Budget Group, Inc. (“Budget”) and Penske Truck Leasing Co., L.P. (“Penske”)—to raise prices in the market for one-way truck rentals. As summarized by the FTC, the initial strategy was straightforward:

Mr. Shoen instructed U–Haul regional managers to raise rates for truck rentals, and then contact Budget to inform Budget of U–Haul's conditional rate increase and encourage Budget to follow, or U–Haul's rates would be reduced to the original level.

At about the same time, Mr. Shoen also instructed local U–Haul dealers to communicate with their counterparts at Budget and Penske, with the purpose of re-enforcing the message that U–Haul had raised its rates, and competitors' rates should be raised to match the increased U–Haul rates.

FTC Summary, 75 Fed.Reg. at 35034.

According to the FTC, this “plan” was communicated to U–Haul's regional managers and local dealers in memoranda sent by Shoen in October and November of 2006.¹ The memoranda even included suggested talking points for managers making calls to competitors. The FTC recounted evidence from a U–Haul regional manager in Tampa, Florida, who corroborated the existence of the memoranda, confirmed that he acted in conformity with the plan as described, and wrote a follow-up email to U–Haul's senior executives describing his actions to implement the plan. In re U–Haul Int'l, Inc., 2010 WL 2966779, at *3.

The FTC also set forth comments made by Shoen during an earnings conference call with analysts that took place on February 7, 2008. Shoen was allegedly aware that Budget would monitor the call, so he announced U–Haul's unilateral price increase and said that U–Haul would keep its prices at the elevated level if Budget responded in kind with rates that were within 3 to 5 percent of U–Haul's.² The FTC made no findings as to the consequences of the direct or indirect attempts, concluding that the overtures were unlawful regardless of whether the parties reached and successfully implemented an agreement to collude on prices. FTC Summary, 75 Fed.Reg. at 35034–35.

The FTC concluded that U–Haul's “particularly egregious conduct,” FTC Summary, 75 Fed.Reg. at 35035, violated Section 5 of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 45(a)(1), which forbids “[u]nfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce.” The proposed consent order provided injunctive relief designed to prevent U–Haul “from inviting collusion and from entering into or implementing a collusive scheme.” FTC Summary, 75 Fed.Reg. at 35035. U–Haul consented to the relief sought, but did not admit either to the conduct or to the violation. In re U–Haul Int'l, Inc., 2010 WL 2966779, at *20–21.

Liu's suit was a follow-on action brought after a proposed government consent decree—fairly common in antitrust cases; but, as the FTC Act contains no private right of action and the Sherman Act—which does create such a right—is of doubtful application to a failed attempt to conspire on prices, see note 4, below, Liu's suit rested instead on chapter 93A. Chapter 93A, like section 5, prohibits “[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce,” Mass. Gen. Laws ch. 93A, § 2(a), but also provides a right of action to consumers and permits class actions. Id. § 9.

Liu alleged that U–Haul's “intentional and purposeful anticompetitive acts”—pertinently, the invitations to collude and U–Haul's price increases incident to those invitations—caused her to pay at least 10 percent more for two one-way truck rentals than she would have absent U–Haul's unlawful action. Chapter 93A is limited to transactions connected to Massachusetts, § 1(b); Liu's proposed class included “[a]ll persons who purchased one-way truck rentals from [U–Haul] for transportation to, from or within ... Massachusetts between September 2006 and September 2008.”

U–Haul filed a motion to dismiss for failure to state a claim, Fed.R.Civ.P. 12(b)(6), which the district court granted in a short written opinion. The district court assumed arguendo that an invitation to collude was actionable under chapter 93A; but it found that Liu had failed plausibly to allege injury, noting that she had failed to “set forth any facts about her own transactions, such as what she paid ... or what available competitors' rates were at the time.” Liu v. Amerco, No. 10–11221, slip op. at 1 (D.Mass. Aug. 22, 2011).

Liu has now appealed, contending that her complaint did set forth a claim under chapter 93A and that it adequately alleged injury and should have survived the motion to dismiss. Both issues raise questions of law that are reviewed de novo. Poirier v. Mass. Dep't of Corr., 558 F.3d 92, 94 (1st Cir.2009); United States v. Troy, 618 F.3d 27, 35 (1st Cir.2010). But we begin by noting sua sponte, as we are required to do, an unaddressed question as to the district court's subject matter jurisdiction.

Diversity of citizenship exists between Liu and the defendants, but there is no likelihood that damages for her two rentals would meet the ordinary requirement for diversity cases that the amount in controversy exceed $75,000. 28 U.S.C. § 1332(a). However, the Class Action Fairness Act of 2005, 28 U.S.C. § 1332(d), provides an alternative basis for jurisdiction so long as (1) minimal diversity exists (as it does here) and (2) the amount in controversy for aggregated claims of the whole class exceeds $5 million. Id.

Liu has limited her class to rentals to, from or within Massachusetts during the period in which U–Haul prices were allegedly elevated. Questioned by the court at argument, Liu contended that the minimum statutory damages under chapter 93A—$25 per incident (which could potentially be trebled under that statute to $75, Mass. Gen. Laws ch. 93A, § 9(3)-(3A))—would exceed the minimum $5 million figure given the thousands of U–Haul rentals to, from and within Massachusetts that would likely be encompassed by the two year period. ³

Given the good faith representations by Liu's counsel, which have not been challenged, see Coventry Sewage Assocs. v. Dworkin Realty Co., 71 F.3d 1, 5–6 (1st Cir.1995), we find the jurisdiction to exist. Further, the statutory damages are merely a minimum under chapter 93A; conceivably some of the class member rentals were for larger sums; and the 10 percent estimate of damages was seemingly a floor figure rather than a ceiling. It is not clear to a legal certainty that the amount in controversy is less than $5 million. Id. at 6. So we proceed to the merits.

The district court's dismissal rested solely on the lack of an adequate allegation of harm—the full, albeit brief, holding is quoted below—but defendants, while agreeing with the court that injury was inadequately alleged, also suggest that the allegations of wrongdoing fail to state a cognizable claim under chapter 93A. We decide both issues in the interest of judicial economy, see New Hampshire Motor Transp. Ass'n v. Flynn, 751 F.2d 43, 52 (1st Cir.1984) (Breyer, J.), and begin with the question of whether the alleged acts violate chapter 93A.

As alleged in the complaint, U–Haul is the largest U.S. provider of one-way truck rentals with about 54 percent of the market; Budget is their largest competitor, bringing their joint share to about 70 percent. But market size and definition would not matter under the antitrust laws if U–Haul's alleged proposal to fix prices had been accepted: U–Haul and Budget compete in truck rentals, and price fixing is a per se offense, United States v. Socony–Vacuum Oil Co., 310 U.S. 150, 223–24, 60 S.Ct. 811, 84 L.Ed. 1129 (1940), entailing both criminal and civil liability under section 1 of the Sherman Act, 15 U.S.C. § 1.

Section 1 of the Sherman Act, however, does not condemn an attempt to conspire,⁴ nor a solicitation to conspire, compare 18 U.S.C. § 373 (solicitation to commit a crime of violence); there is no general federal attempt stat...