Twin Laboratories, Inc. v. Weider Health & Fitness

• Citation: 900 F.2d 566
• Decision Date: 09 April 1990
• Docket Number: No. 978,D,978
• Parties: 1990-1 Trade Cases 68,991 TWIN LABORATORIES, INC., Appellant, v. WEIDER HEALTH & FITNESS, a corporation, I, Brute Enterprises, Inc., Appellees. ocket 89-7972.
• Court: U.S. Court of Appeals — Second Circuit

Page 566

900 F.2d 566

1990-1 Trade Cases 68,991

TWIN LABORATORIES, INC., Appellant, v. WEIDER HEALTH & FITNESS, a corporation, I, Brute Enterprises, Inc., Appellees.

No. 978, Docket 89-7972.

United States Court of Appeals Second Circuit.

Argued March 7, 1990.

Decided April 9, 1990.

David M. Malone, Uniondale, N.Y. (David E. Steckler, Lawrence B. Bernard, and Rivkin, Radler, Dunne & Bayh, Uniondale, N.Y., on the brief), for appellant Twin Laboratories, Inc.

Alan R. Malasky, Washington, D.C. (Salvatore A. Romano, Joyce L. Bartoo, Lewis Rose, Jennifer A. Albert, and Arent, Fox, Kintner, Plotkin & Kahn, Washington, D.C.; Anthony L. Tersigni, and Meyers, Tersigni, Lurie, Feldman & Gray, New York City, on the brief), for appellees Weider Health & Fitness and I, Brute Enterprises, Inc.

Before TIMBERS, MESKILL and ALTIMARI, Circuit Judges.

TIMBERS, Circuit Judge:

Appellant Twin Laboratories, Inc. ("Twinlab") appeals from a summary judgment entered August 30, 1989 in the Southern District of New York, Michael B. Mukasey, District Judge, in favor of appellees Weider Health & Fitness ("Weider") and I., Brute Enterprises, Inc. ("Brute").

The final judgment entered August 30, 1989 was based on two prior orders. The first, dated July 21, 1989, granted appellees' motion for summary judgment on all of Twinlab's antitrust claims. The second, dated August 25, 1989, 720 F.Supp. 31 (S.D.N.Y.1989), denied Twinlab's motion for reconsideration of the "essential facilities" antitrust count and granted appellees' motion for summary judgment on Twinlab's pendent claim of prima facie tort under New York law.

On appeal, Twinlab presses claims of error on two antitrust counts--essential facilities and attempted monopolization--and on the prima facie tort count. It asserts that the court misconstrued the applicable law and, in violation of its duty at the summary judgment stage, failed to draw proper factual inferences in its favor.

For the reasons which follow, we affirm the judgment of the district court.

I.

We summarize only those facts and prior proceedings believed necessary to an understanding of the issues raised on appeal. Since we are reviewing a summary judgment in favor of appellees, we view the evidence in the light most favorable to Twinlab.

Twinlab and Weider produce competing nutritional supplements for bodybuilders. According to the testimony of Twinlab's expert witness, Dr. Thomas Overstreet, Weider's supplements comprised 10-25% of the market, depending on the market definition, and Twinlab's share of the same market was 5-12%.

Weider, through its wholly-owned subsidiary, Brute, publishes what are universally acknowledged to be the two leading magazines in the bodybuilding field: Muscle & Fitness and Flex. Twinlab owns Muscular Development, a competing magazine, but Twinlab's magazine has a far smaller circulation--less than 10% of the combined circulation of Weider's magazines. For several years, Twinlab used Muscle & Fitness and Flex as the primary advertising vehicles for its nutritional supplements. In late 1988, however, Weider gave Twinlab notice that it would accept no more advertising for Twinlab's products. From the January 1989 issues through the present, no Twinlab advertising has appeared in either magazine.

Based on Weider's refusal to accept its ads, Twinlab commenced the instant action in February 1989 by filing a five-count complaint. Three counts were based on Sec. 2 of the Sherman Act, 15 U.S.C. Sec. 2 (1988). They were: (1) monopolization; (2) denial of essential facilities; and (3) attempted monopolization. The complaint also alleged two counts of actionable conduct under New York State law--intentional interference with business relations and prospective economic advantage; and prima facie tort. By its opinion and order dated July 21, 1989, the court granted Weider's motion for summary judgment on all counts except the prima facie tort count. Weider renewed its summary judgment motion on the latter count, and Twinlab cross-moved for reconsideration of the essential facilities count. By its opinion and order dated August 25, 1989, the court granted Weider's motion and denied Twinlab's cross-motion. The judgment dismissing Twinlab's complaint in its entirety was entered August 30.

There followed this appeal during which Twinlab has dropped the counts alleging monopolization and intentional interference with business relations and prospective economic advantage.

II.

On an appeal from a summary judgment, we review the record de novo to determine whether there are genuine issues of material fact. Fed.R.Civ.P. 56(c). We assess the record in the light most favorable to the nonmovant and draw all reasonable inferences in its favor. Ramseur v. Chase Manhattan Bank, 865 F.2d 460, 465 (2 Cir.1989). A non-movant who bears the ultimate burden of proof, however, must demonstrate in opposing a summary judgment motion that there is some evidence which would create a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). Conclusory allegations will not suffice to create such a genuine issue. There must be more than a "scintilla of evidence", Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986), and more than "some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986).

III.

Turning first to Twinlab's essential facilities count, it asserts that Sec. 2 of the Sherman Act imposes a duty on Weider to make available advertising space in Muscle & Fitness and Flex. This is so, it claims, because the magazines are facilities essential to competition in the nutritional supplement business; that is, one cannot effectively compete without advertising in these magazines. The policy behind prohibiting denial of an essential facility to a competitor, at least in part, is to prevent a monopolist in a given market (here, bodybuilding magazines) from using its power to inhibit competition in another market (here, nutritional supplements for bodybuilders). E.g., Flip Side Productions, Inc. v. Jam Productions, Ltd., 843 F.2d 1024, 1033 (7 Cir.), cert. denied, --- U.S. ----, 109 S.Ct. 261, 102 L.Ed.2d 249 (1988); Areeda & Hovenkamp, Antitrust Law p 736.1, at 655 (1988 supp.).

Antitrust law, however, does not require one competitor to give another a break just because failing to do so offends notions of fair play. Cf. Olympia Equipment Leasing Co. v. Western Union Telegraph Co., 797 F.2d 370, 375-76 (7 Cir.1986), cert. denied, 480 U.S. 934, 107 S.Ct. 1574, 94 L.Ed.2d 765 (1987). "A particular plaintiff's plight is relevant only as it bears on market effects." Areeda & Hovenkamp, supra, p 736.2, at 676. The existence of a facility, even if essential in a technical sense, does not constitute an antitrust violation if the plaintiff cannot allege harm to competition. E.g., McKenzie v. Mercy Hospital, 854 F.2d 365, 370 (10 Cir.1988); Colonial Penn Group, Inc. v. American Ass'n of Retired Persons, 698 F.Supp. 69, 73 (E.D.Pa.1988).

At the very least, a plaintiff must demonstrate that "duplication of the facility would be economically infeasible" and that "denial of its use inflicts a severe handicap on potential [or current] market entrants." Hecht v. Pro-Football, Inc., 570 F.2d 982, 992 (D.C.Cir.1977) (emphasis added), cert. denied, 436 U.S. 956, 98 S.Ct. 3069, 57 L.Ed.2d 1121 (1978); see also MCI Communications Corp. v. American Tel & Tel. Co., 708 F.2d 1081, 1132-33 (7 Cir.) (four-part test for finding essential facilities liability: "(1) control of the essential facility by a monopolist; (2) a competitor's inability practically or reasonably to duplicate the essential facility; (3) the denial of the use of the facility to a competitor; and (4) the feasibility of providing the facility."), cert. denied, 464 U.S. 891, 104 S.Ct. 234, 78 L.Ed.2d 226 (1983).

A leading antitrust commentator would limit the analysis to "facilities that are a natural monopoly, facilities whose duplication is forbidden by law, and perhaps those that are publicly subsidized and thus could not practicably be built privately." Areeda & Hovenkamp, supra, p 736.2, at 680-81. Most of the successful essential facility claims fall within the categories stated by this commentator. E.g., Otter Tail Power Co. v. United States, 410 U.S. 366, 93 S.Ct. 1022, 35 L.Ed.2d 359 (1973) (electric power lines); Fishman v. Estate of Wirtz, 807 F.2d 520 (7 Cir.1987) (basketball arena); Aspen Highlands Skiing Corp. v. Aspen Skiing Co., 738 F.2d 1509 (10 Cir.1984) (mountain), aff'd on other grounds, 472 U.S. 585, 105 S.Ct. 2847, 86 L.Ed.2d 467 (1985); Hecht, supra, 570 F.2d 982 (football stadium). In cases finding liability in other categories, however, the facility in question was more than dominant; it was effectively the only one in town. E.g., Lorain Journal Co. v. United States, 342 U.S. 143, 72 S.Ct. 181, 96 L.Ed. 162 (1951) (ads in monopolist newspaper); Home Placement Service, Inc. v. Providence Journal Co., 682 F.2d 274 (1 Cir.1982) (newspaper's classified listings), cert. denied, 460 U.S. 1028, 103 S.Ct. 1279, 75 L.Ed.2d 500 (1983).

Twinlab asserts that sales of Weider's magazines account for 66% of all bodybuilding magazine sales. The district court assumed without deciding that Weider had monopoly power in the magazine market. We also accept that assumption. We nevertheless conclude that Weider's conduct did not constitute an antitrust violation.

We reach that conclusion despite our acceptance of Twinlab's assertion that the district court failed to draw certain factual inferences in its favor. Specifically, the court held that Muscle & Fitness and Flex could not be essential facilities primarily because Twinlab had the means to turn Muscular Development into a strong competitor and had promised to do so in its promotional literature...