Gorlick Distribution Centers, LLC v. Car Sound Exhaust System, Inc.

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

GORLICK DISTRIBUTION CENTERS, No. 10-36083

LLC, a Washington limited liability

company, D.C. No.

Plaintiff-Appellant, 2:07-cv-01076-

RAJ

v.

CAR SOUND EXHAUST SYSTEM, INC., OPINION

Defendant,

and

ALLIED EXHAUST SYSTEMS, INC., a

California corporation,

Defendant-Appellee.

Appeal from the United States District Court

for the Western District of Washington

Richard A. Jones, District Judge, Presiding

Argued and Submitted October 12, 2011

Resubmitted June 19, 2012

Seattle, Washington

Filed July 19, 2013

2 GORLICK DISTRIB. CTRS. V. CAR SOUND EXHAUST SYS.

Before: Alex Kozinski, Chief Judge, Richard A. Paez and

Johnnie B. Rawlinson,* Circuit Judges.

Per Curiam Opinion;

Partial Concurrence and Partial Dissent by Judge Paez

SUMMARY**

Antitrust

The panel affirmed the district court’s summary judgment

in an action alleging that the defendant, the plaintiff’s

competitor in auto parts markets, violated antitrust laws in the

receipt of favorable prices from a manufacturer.

The panel held that the plaintiff did not show that the

defendant knowingly received discriminatory prices not

justified by savings to the manufacturer, in violation of the

Robinson-Patman Act. The panel concluded that the plaintiff

failed to show that the defendant had actual knowledge, trade

knowledge, or a duty to inquire whether the favorable prices

it received might be prohibited by the Act.

The panel also held that the plaintiff did not show that the

defendant entered into an agreement in restraint of trade with

the manufacturer, in violation of the Sherman Act. Affirming

*

Judge Rawlinson was drawn as a member of this panel following the

death of Judge Beezer in March 2012.

**

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

GORLICK DISTRIB. CTRS. V. CAR SOUND EXHAUST SYS. 3

on different grounds from the district court, the panel held

that, under a rule of reason analysis, even assuming the

defendant and the manufacturer had an agreement, the

Sherman Act claim failed because the plaintiff produced no

evidence that the vertical restraint actually injured

competition.

Concurring in part and dissenting in part, Judge Paez

wrote that he would affirm the dismissal of the Robinson-

Patman Act claims. Disagreeing with the majority’s decision

to reach the merits of the Sherman Act claim, he wrote that he

would remand that claim to the district court for further

proceedings, including further development of the record on

the alleged anticompetitive effect of the defendant’s

agreement with the manufacturer.

COUNSEL

David C. Lundsgaard (argued) and Diane M. Meyers, Graham

& Dunn PC, Seattle, Washington, for Plaintiff-Appellant.

Timothy G. Leyh (argued), Randall T. Thomsen and

Katherine Kennedy, Danielson Harrigan Leyh & Tollefson

LLP, Seattle, Washington, for Defendant-Appellee.

OPINION

PER CURIAM:

Plaintiff Gorlick Distribution Centers and defendant

Allied Exhaust Systems compete fiercely in the auto parts

markets in Washington, Oregon and California. Gorlick

4 GORLICK DISTRIB. CTRS. V. CAR SOUND EXHAUST SYS.

believed that Allied was receiving favorable prices from a

manufacturer, and thus turned from the marketplace to the

courts. We must decide whether Allied (1) knowingly

received discriminatory prices not justified by savings to the

manufacturer, in violation of the Robinson-Patman Act, and

(2) entered an agreement in restraint of trade with the

manufacturer, in violation of the Sherman Act.

I. Background

Gorlick and Allied distribute aftermarket automotive

parts. Both deal in products made by Car Sound Exhaust

System, a muffler and catalytic converter manufacturer.

Gorlick challenges the preferential terms that Car Sound

allegedly offered to Allied but not to Gorlick, including free

shipping of its product to the Pacific Northwest; lower prices

on merchandise; volume discount pricing even when the

volume requirements weren’t met; and higher year-end sales

rebates. Gorlick alleges that Allied knew these favorable

shipping, pricing and rebate terms were not justified by cost

differences, in violation of section 2(f) of the Robinson-

Patman Act, 15 U.S.C. § 13(f).1 Allied doesn’t dispute, for

the most part, that it received advantageous terms. Instead,

Allied argues that it didn’t know what prices other

distributors received, and therefore couldn’t knowingly have

received discriminatory prices. Allied also argues that the

preferential terms had valid defenses under the Robinson-

Patman Act.

1

Gorlick’s original complaint also named Car Sound as a defendant, but

Gorlick eventually dismissed Car Sound from the case.

GORLICK DISTRIB. CTRS. V. CAR SOUND EXHAUST SYS. 5

Gorlick further alleges that Car Sound’s shipping policy

was the product of an agreement or conspiracy between

Allied and Car Sound in restraint of trade, in violation of

section 1 of the Sherman Act, 15 U.S.C. § 1. Because it

incurred shipping, handling and storage costs not borne by

Allied, Gorlick claims it had difficulty matching its

competitor’s prices for Car Sound products.

After discovery, the district court granted summary

judgment for Allied on all but one of the claims. It held that

there was a genuine issue as to whether Allied’s receipt of

free shipping from Car Sound and knowledge that Gorlick

had to pay its own shipping costs violated the Robinson-

Patman Act. Rather than proceed to trial, Gorlick voluntarily

dismissed the remaining claim and timely appealed the

district court’s grant of partial summary judgment for Allied.2

II. Discussion

We review de novo the district court’s grant of a motion

for summary judgment. Goodman v. Staples The Office

Superstore, LLC, 644 F.3d 817, 822 (9th Cir. 2011). We

must determine, viewing the evidence in the light most

favorable to the nonmoving party, whether there are any

genuine issues of material fact and whether the district court

correctly applied the law. Id.

2

We ordered the parties to brief whether Gorlick’s dismissal without

prejudice violated our final judgment rule. Because we detect no intent to

manipulate our appellate jurisdiction, we’re satisfied that Gorlick appeals

from a final judgment. See James v. Price Stern Sloan, Inc., 283 F.3d

1064, 1070 (9th Cir. 2002).

6 GORLICK DISTRIB. CTRS. V. CAR SOUND EXHAUST SYS.

A. Robinson-Patman Act Claims

The Robinson-Patman Act targets “the perceived harm to

competition occasioned by powerful buyers” that have “the

clout to obtain lower prices for goods than smaller buyers

could demand.” Volvo Trucks N. Am., Inc. v. Reeder-Simco

GMC, Inc., 546 U.S. 164, 175 (2006). The act prohibits

sellers from discriminating on price in the sale of like goods,

and thereby reducing competition, unless the price

differential can be justified by savings to the seller. See

15 U.S.C. § 13(a). The act contains a counterpart provision

that makes it unlawful for buyers “knowingly to induce or

receive a discrimination in price which is prohibited by this

section.” Id. § 13(f).

Buyers are not liable if they are innocent beneficiaries of

discriminatory prices. See Automatic Canteen Co. of Am. v.

FTC, 346 U.S. 61, 70–71 (1953). Plaintiff thus bears the

burden of showing that the buyer knew both that (1) he was

receiving a lower price than a competitor and (2) the seller

would have “little likelihood of a defense” for offering that

price. Id. at 74, 79–80. Restricting liability to situations

where the buyer knowingly accepted illegal prices prevents

section 2(f) from “putting the buyer at his peril whenever he

engages in price bargaining.” Id. at 73.

The district court assumed that the prices Allied paid were

prohibited by the Robinson-Patman Act. Nevertheless, it held

that Gorlick had not raised a genuine issue of fact as to

whether Allied had the requisite knowledge under section

2(f). Gorlick appeals, arguing that the district court

overlooked evidence that Allied had actual knowledge, trade

knowledge and a duty to inquire whether it was receiving

prohibited prices.

GORLICK DISTRIB. CTRS. V. CAR SOUND EXHAUST SYS. 7

1. Actual Knowledge

Allied was undoubtedly aware of its favored position

among Car Sound buyers. Its salesmen bragged that they

were “buying better” than their competition, and internal

memos trumpeted Allied’s superior purchasing discounts.

Gorlick also suggests that Allied would have known it was

receiving better prices because it could “reverse engineer”

wholesale prices from retail prices.

But Allied is not liable under section 2(f) unless Gorlick

shows Allied knew the prices it received likely did not qualify

for a Robinson-Patman Act defense, see id. at 71, a burden

Gorlick fails to meet. Gorlick and Allied were very different

Car Sound customers. Allied made Car Sound its flagship

brand, purchased Car Sound products in much higher

volumes and provided promotional services for Car Sound

products that Gorlick did not. A Car Sound executive

testified that Allied promoted only Car Sound products, while

Gorlick pushed products sold by Car Sound’s competitors.

Even if Allied knew it received superior prices and discounts,

Gorlick presents no evidence that Allied knew these benefits

resulted from anything other than the significant differences

in how the two companies did business.

Gorlick argues that, at the summary judgment stage, we

must infer that Allied knew it was receiving unfair prices

because Car Sound offered it bulk discounts even when it

failed to buy bulk quantities. According to Gorlick, where a

seller publishes its prices, any departure from the schedule

places the buyer on notice that he is receiving discriminatory

prices. But the Robinson-Patman Act doesn’t prohibit buyers

from haggling for a better deal. Id. at 73. To put a buyer at

risk of liability any time he asks for a lower-than-listed price

8 GORLICK DISTRIB. CTRS. V. CAR SOUND EXHAUST SYS.

would do enormous damage to the “sturdy bargaining

between buyer and seller for which scope was presumably

left” by our antitrust laws. Id. at 74. The receipt of better-

than-published prices, without more, does not satisfy section

2(f)’s knowledge requirement.

In any event, Gorlick itself received advantageous pricing

even when it failed to meet Car Sound’s targets. In 2004 and

2006, Gorlick didn’t buy enough product to qualify for a

rebate, but Car Sound gave it credit anyway. A Car Sound

executive testified that his company offered all distributors

“trailer pricing” even when they purchased less than a

trailer’s worth of parts. A buyer’s receipt of discounted

prices doesn’t run afoul of the act “if all purchasers were

given an equal opportunity to purchase [at] the less

expensive” price. FLM Collision Parts, Inc. v. Ford Motor

Co., 543 F.2d 1019, 1025 (2d Cir. 1976).

Gorlick offered other evidence of Allied’s alleged actual

knowledge, none of which raises a triable issue of fact. It

points to an e-mail in which Car Sound informed Allied that,

because of its settlement with Gorlick, it would

“unfortunately” have to offer the two companies the same

prices. But Gorlick hasn’t explained why we should assume

that Allied knew what prices its competitor was getting

before the litigation began. Gorlick also introduced a meeting

agenda showing that Allied was planning to ask Car Sound to

raise Gorlick’s prices. But these pre-meeting notes don’t

show that Allied ever followed through with the request, nor

are they accompanied by evidence that Car Sound acceded or

even took the request seriously.

GORLICK DISTRIB. CTRS. V. CAR SOUND EXHAUST SYS. 9

2. Trade Experience Knowledge

Gorlick argues that, even if Allied did not actually know

it was receiving discriminatory prices, its “trade experience”

would have placed Allied on notice that those prices were

prohibited by the Robinson-Patman Act. Gorlick has two

routes to making a prima facie case of trade knowledge.

First, it may show that Allied secured “a substantial price

differential” while knowing that Car Sound sold its products

to Gorlick in the same quantities, in the same manner and

“with the same amount of exertion.” See Automatic Canteen,

346 U.S. at 80. Second, if there were differences in the

quantities ordered or manner of sale, Gorlick must

demonstrate that Allied knew those differences did not justify

the price breaks it received. Id.

Because Allied and Gorlick were very different

customers, only the second test is relevant here. Allied was

Car Sound’s “number one account” and purchased roughly

fifteen times the dollar amount of product that Gorlick did.

Allied also developed an electronic ordering system that

reduced errors and streamlined its dealings with Car Sound.

Gorlick hasn’t presented evidence that Allied knew the deals

it received were anything other than an incentive for its

continued loyalty, much less that Allied had any insight into

the pricing Car Sound offered competitors. Car Sound’s

president testified that “we never show the price of one

company to another.”

Gorlick cites to In re D & N Auto Parts Co., 55 F.T.C.

1279 (1959), but that case can be distinguished on its facts.

There, the Federal Trade Commission concluded that auto

parts jobbers who “were successful operators in a highly

competitive market and knew the facts of life so far as the

10 GORLICK DISTRIB. CTRS. V. CAR SOUND EXHAUST SYS.

automotive parts market was concerned” should have known

that their discounts were unjustified by the volume and

manner of their purchases. Id. at 1295. But the jobbers there

had joined together in membership corporations to secure

discounts and rebates based, not on the volume of their

individual purchases, but on the combined quantities

purchased by the group. Id. Gorlick hasn’t explained why

Allied, which was not part of such an organization, should

have known that the favorable prices it received from Car

Sound were unwarranted.

3. Duty to Inquire

Finally, Gorlick argues that Allied’s dealings with Car

Sound put it on inquiry notice that it was receiving

discriminatory prices not within a Robinson-Patman Act

defense. Gorlick identifies only one case where we found

that a buyer had a duty to inquire, Fred Meyer, Inc. v. FTC,

359 F.2d 351 (9th Cir. 1966), rev’d on other grounds,

390 U.S. 341, 358 (1968), but there the buyer induced the

preferential prices and insisted that none of its competitors be

offered the same deal. Id. at 365–66.

Gorlick produced no evidence showing that Allied did

anything of the sort. The closest it comes is the meeting

agenda showing that Allied planned to ask Car Sound to raise

Gorlick’s prices but, as discussed above, there is no evidence

that Allied followed through or that Car Sound acquiesced.

Holding that Allied had a duty to inquire into the prices

offered to its competitors would drastically expand the scope

of that duty, and we decline to do so here.

In sum, we affirm the grant of summary judgment

because Gorlick fails to show that Allied had actual

GORLICK DISTRIB. CTRS. V. CAR SOUND EXHAUST SYS. 11

knowledge, trade knowledge or a duty to inquire whether the

favorable prices it received might be prohibited by the

Robinson-Patman Act.

B. Sherman Act Claim

Section 1 of the Sherman Act proscribes contracts,

combinations or conspiracies that unreasonably restrain trade.

15 U.S.C. § 1; State Oil Co. v. Khan, 522 U.S. 3, 10 (1997).

We test the legality of a restraint under the rule of reason,

asking whether it “is such as merely regulates and perhaps

thereby promotes competition or whether it is such as may

suppress or even destroy competition.” FTC v. Indiana

Fed’n of Dentists, 476 U.S. 447, 458 (1986). To sustain a

section 1 claim under the rule of reason, a plaintiff must show

(1) the parties to the agreement intend to harm or restrain

competition, (2) the agreement actually injures competition

and (3) “the restraint is unreasonable as determined by

balancing the restraint and any justifications or pro-

competitive effects of the restraint.” Cal. Dental Ass’n v.

FTC, 224 F.3d 942, 947 (9th Cir. 2000).

Gorlick claims that Allied and Car Sound together

devised a shipping policy that violated section 1. Car Sound

would ship its products to Allied’s facilities in the Pacific

Northwest without charge but refused to ship to Gorlick

outside of California, even if Gorlick paid the shipping costs.

Gorlick worked around the refusal by having Car Sound

products delivered to its California warehouses and

transporting the goods to the Northwest at its own expense.

The district court rejected Gorlick’s section 1 claim,

concluding that the evidence, viewed in the light most

favorable to Gorlick, failed to establish that Allied and Car

12 GORLICK DISTRIB. CTRS. V. CAR SOUND EXHAUST SYS.

Sound acted in concert to limit Gorlick’s access to Car Sound

products in the Pacific Northwest. Even if the evidence

established that Car Sound refused to ship to Gorlick outside

of California, the district court wasn’t persuaded that Car

Sound made this decision “at Allied’s behest.” In the

alternative, it held the Sherman Act claim time-barred.

We affirm, but on different grounds. See Rano v. Sipa

Press, Inc., 987 F.2d 580, 584 (9th Cir. 1993). Even

assuming that Allied and Car Sound had an agreement, the

Sherman Act claim fails because Gorlick produced no

evidence that the vertical restraint actually injured

competition. See Cal. Dental Ass’n, 224 F.3d at 947.

1. Anticompetitive effects

Gorlick complains that the alleged Allied–Car Sound

agreement handicapped its ability to sell Car Sound products

at competitive prices. But the antitrust laws “were enacted

for the protection of competition, not competitors.”

Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477,

488 (1977) (internal quotation marks omitted). Gorlick must

demonstrate injury to competition in the market as a whole,

not merely injury to itself as a competitor. See Brantley v.

NBC Universal, Inc., 675 F.3d 1192, 1200 (9th Cir. 2012);

McDaniel v. Appraisal Inst., 117 F.3d 421, 423 (9th Cir.

1997); Zoslaw v. MCA Distrib. Corp., 693 F.2d 870, 887 (9th

Cir. 1982).

Gorlick tries to translate its individual harm into harm to

competition by relying on the concentrated nature of the

market. As it notes, Gorlick and Allied together account for

seventy percent of the market in parts of Oregon and

Washington. Because Gorlick is Allied’s main rival, Gorlick

GORLICK DISTRIB. CTRS. V. CAR SOUND EXHAUST SYS. 13

argues that anything that hobbles its own business gives

Allied increased market power and hurts competition overall.

This theory of anticompetitive harm might be plausible if

we were looking only at the market for Car Sound products.

But, as Gorlick concedes, the relevant market is “the market

for aftermarket automotive exhaust products provided

through traditional warehouse distributors.” A number of

other manufacturers, including CATCO, Eastern, Walker,

Flowmaster, Jones Exhaust, Schultz and the International

Muffler Company, serve this market and provide substitutable

products.

It doesn’t matter whether Car Sound’s products are fully

interchangeable with those of its competitors because perfect

fungibility isn’t required. United States v. E.I. du Pont de

Nemours & Co., 351 U.S. 377, 394 (1956). If it were, “only

physically identical products would be a part of the market.”

Id. Instead, products must be reasonably interchangeable,

such that there is cross-elasticity of demand. Brown Shoe Co.

v. United States, 370 U.S. 294, 325 (1962).

Nothing in the record suggests that the price Allied

charged for Car Sound products was insensitive to the prices

charged for competing products. That companies make a

significant investment in new product lines isn’t surprising,

and it’s certainly not probative of whether products are

sensitive to price competition. And even if Allied charges

higher prices than Gorlick for Car Sound products, that says

nothing about how competitive Car Sound’s products were

vis-a-vis other brands. In short, Gorlick fails to show how the

alleged Allied–Car Sound pact dampens competition among

these interchangeable brands, several of which it sells.

Absent an allegation that Car Sound was the only, or even the

14 GORLICK DISTRIB. CTRS. V. CAR SOUND EXHAUST SYS.

dominant, brand of automotive exhaust parts, the supposed

arrangement between Car Sound and Allied doesn’t affect

competition in the relevant market.

So long as other manufacturers compete with Car Sound,

which they do, and Gorlick sells those other brands, which it

does, vibrant interbrand competition will act as a check on

any intrabrand advantage that Allied may receive on Car

Sound products. If Allied tries to charge monopoly prices on

Car Sound parts, consumers will simply switch to the other

brands. Nothing in the alleged Allied–Car Sound agreement

affects Gorlick’s ability to sell competing products. In fact,

Gorlick was the principal distributor for CATCO, Car

Sound’s main competitor, and had exclusive arrangements

with at least two other suppliers.

Perhaps recognizing that the record supports the existence

of strong interbrand competition, Gorlick focuses instead on

intrabrand competition among Car Sound distributors. But it

is interbrand competition that is “the primary concern of

antitrust law.” Continental T. V., Inc. v. GTE Sylvania Inc.,

433 U.S. 36, 52 n.19 (1977). Gorlick claims that a reduction

in interbrand competition isn’t required where there’s a

concentrated market, but the only case it cites for this

proposition is an out-of-circuit district court decision from

1988.

The Supreme Court has recognized that vertical restraints

on intrabrand competition can actually promote interbrand

competition and are therefore consistent with a competitive

market. See Leegin Creative Leather Prods., Inc. v. PSKS,

Inc., 551 U.S. 877, 889–92 (2007). In that case, a leather

belts manufacturer refused to sell its products to retailers that

discounted below a certain price. Id. at 883. The Court held

GORLICK DISTRIB. CTRS. V. CAR SOUND EXHAUST SYS. 15

that such vertical price restraints are not a per se violation of

section 1, because, among other procompetitive effects, they

help protect investments in customer service. Id. at 890–91,

907. A manufacturer might wish retailers to advertise its

products, conduct demonstrations or hire knowledgeable

employees. Id. at 890–91. In the absence of a price restraint,

a discounting retailer that provides no such services might

undercut a competitor that has spent resources generating

demand for the manufacturer’s product. Id. This free-riding

could ultimately hurt consumers:

If the consumer can . . . buy the product from

a retailer that discounts because it has not

spent capital providing services or developing

a quality reputation, the high-service retailer

will lose sales to the discounter, forcing it to

cut back its services to a level lower than

consumers would otherwise prefer.

Id. at 891.

Allied provided just these sorts of benefits to Car Sound.

Before Allied began selling Car Sound’s products in the

Pacific Northwest, Car Sound had no presence in the region.

Allied built brand recognition for the company by hosting

seminars for muffler shops and making sales calls—

“missionary work,” as Allied called it—alongside Car Sound

employees. Gorlick, on the other hand, aggressively drove

down the price for Car Sound products. Had Car Sound

extended it free shipping, Gorlick might have undercut

Allied’s investment in the product line. Far from hampering

competition, the alleged vertical restraint helped ensure that

Allied would continue promoting Car Sound parts, so they

could compete effectively against products offered by other

16 GORLICK DISTRIB. CTRS. V. CAR SOUND EXHAUST SYS.

manufacturers. See Continental T. V., 433 U.S. at 54–55;

8 Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law ch.

16A–3, at 136–42 (3d ed. 2010).

In sum, Gorlick hasn’t provided a plausible explanation

for how the alleged agreement between a manufacturer and

a distributor, concerning a product line without market

dominance, causes harm to competition in the entire

automotive exhaust product market. While Gorlick may be

unhappy that Allied got a better deal, it can’t turn its

individual grievance into a general claim of harm to

competition. Furthermore, its allegation of market

concentration isn’t proof of anticompetitive harm because Car

Sound’s competitors, whose products Gorlick continues to

sell, act as a check on Allied’s ability to increase prices

across the board.

2. Issue Fairly Raised Below

Gorlick protests that the record on anticompetitive effects

is undeveloped and that it would be prejudiced if we affirmed

the district court on that ground. But the parties discussed the

anticompetitive effect of the alleged Allied–Car Sound

agreement in supplemental briefs before the district court.

Gorlick had a chance to present its side of the argument, and

even included expert economic testimony. Furthermore, the

parties conducted supplemental briefing following oral

argument before us. There’s no indication of what more

Gorlick would prove if it had another opportunity.

Sending this issue back to the district court would be a

waste of time and judicial resources. There are no disputed

material facts. Even assuming that a vertical agreement

existed and that it affected the price of Car Sound products,

GORLICK DISTRIB. CTRS. V. CAR SOUND EXHAUST SYS. 17

there’s no plausible showing of harm to competition in the

market for automotive exhaust products as a whole. Gorlick

loses as a matter of law.

* * *

Favorable prices that improve one distributor’s

competitive position do not necessarily violate the antitrust

laws. Here, Gorlick hasn’t shown that Allied knew the price

advantages it received resulted from any factor other than its

large volume of purchases and enthusiastic salesmanship of

Car Sound products. Nor has Gorlick demonstrated that any

alleged agreement between Allied and Car Sound stifled

competition in the market for aftermarket auto parts as a

whole. We must return this capitalist rumble to the forum

where it belongs: the market.

AFFIRMED.

PAEZ, Circuit Judge, concurring in part and dissenting in

part:

I join Parts I and II.A of the majority opinion and would

affirm the dismissal of Gorlick’s Robinson-Patman Act

claims. But I cannot agree with the majority’s decision to

reach the merits of Gorlick’s Sherman Act claim. I would

remand that claim to the district court for further proceedings,

including further development of the record on the alleged

anticompetitive effect of Allied’s agreement with Car Sound.

The district court would then be in the best position,

assuming there are no genuine factual disputes, to apply the

rule of reason analysis.

18 GORLICK DISTRIB. CTRS. V. CAR SOUND EXHAUST SYS.

“In the absence of genuine issues of material fact, we may

affirm the district court’s summary judgment on any ground

supported by the record, regardless of whether the district

court relied upon, rejected, or even considered that ground, if

the movant is entitled to judgment as a matter of law.” In re

ATM Fee Antitrust Litig., 686 F.3d 741, 748 (9th Cir. 2012)

(internal citations and quotations omitted). Here, while the

majority’s analysis may ultimately be correct, I do not think

the thin record in this case supports such a determination.

The majority recognizes that Gorlick’s theory of

anticompetitive harm—which was not the basis for Allied’s

motion for summary judgment—“might be plausible,” except

that the majority seems to assume that aftermarket

automobile exhaust parts are fungible and thus that “vibrant

interbrand competition will act as a check on any intrabrand

advantage that Allied may receive on Car Sound.” The

record, however, does not support the conclusion that such

products are “substitutable” or “interchangeable.” The record

only provides oblique and out-of-context hints that

aftermarket auto exhaust parts are so fungible. The only

evidence supporting such an inference comes from a

deposition of Allied manager Lawrence Contreras. While

testifying that he could infer his competitors’ prices from

Allied’s profit margins, the following exchange took place:

Q: When you say “they,” who is buying at the

same rate as you?

A: Anyone that would have the same like

product, not necessarily same brand.

Q: Same like product?

GORLICK DISTRIB. CTRS. V. CAR SOUND EXHAUST SYS. 19

A: Like product, not brand name.

Q: So like — let’s take Walker versus

MagnaFlow [Car Sound]. Is there a Walker

product that is like a MagnaFlow product —

A: Yes.

Q: — in the context that you just used?

A: Yes.

Q: What would that be? Give me an example.

A: Mufflers, catalytic converters, tubing, parts

and accessories. They’re all pretty close.

The other hints in the record are passing references in

depositions discussing the origins of the aftermarket market

(“Catalytic converters were just being developed as a

replacement part on a car. Prior to that they were — had to be

purchased from the car dealer.”), and the existence of several

competitors manufacturing catalytic converters. In my view,

this evidence does not conclusively establish that aftermarket

catalytic converters are fully interchangeable products such

that vibrant intrabrand competition can be assumed,

particularly in light of other suggestions in the record that

individual brands may be distinguishable. For example, a

former Gorlick General Manager testified about the

“investment” companies make in “shepherding [a new] line”

of a particular product, suggesting that customers may

systematically prefer one brand over another. Moreover,

Gorlick did present some evidence that the market was

sensitive to competition for distribution of Car Sound

20 GORLICK DISTRIB. CTRS. V. CAR SOUND EXHAUST SYS.

products. Gorlick’s expert opined that there was a likelihood

of anticompetitive effects from the allegedly wrongful

agreement between Allied and Car Sound. One of several

factors the expert relied on was a muffler retailer’s statement

bemoaning Car Sound’s decision to prevent Gorlick from

selling Car Sound products in his area because the retailer

“relie[d] on Gorlick’s to get a fair price” on Carsound

products. The expert also opined that Allied was able to

maintain monopoly prices while the alleged illegal agreement

was in effect. If interbrand competition was as robust as the

majority presumes, Allied would have been unlikely to

sustain higher prices on Car Sound products—and muffler

shops would be indifferent to Gorlick’s ability to sell Car

Sound products.

Even assuming, arguendo, that the anticompetitive issue

was fairly presented below, I do not see how Allied can

prevail on summary judgment on this record, particularly

when we must consider what little evidence there is in the

light most favorable to Gorlick. Goodman v. Staples The

Office Superstore, LLC, 644 F.3d 817, 822 (9th Cir. 2011).

Although we invited supplemental briefing on the

anticompetitive effects issue, I am not persuaded that we

should exercise our discretion to reach the merits of Gorlick’s

Sherman Act claim. Because of the way Allied’s summary

judgment motion evolved in the district court, the issue was

not thoroughly developed there, and I am reluctant to resolve

this claim on the merits when it was never the basis for

Allied’s summary judgment motion. Accordingly, I would

remand the Sherman Act claim to the district court for further

proceedings.