Petition for Writ of Certiorari — Innovation Ventures, LLC, et al., Petitioners v. U.S. Wholesale Outlet & Distribution, Inc., et al.
Supreme Court briefApr 5, 2024
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No. 23-_____
IN THE
Supreme Court of the United States
__________
INNOVATION VENTURES, LLC AND
LIVING ESSENTIALS, LLC,
Petitioners,
v.
U.S. WHOLESALE OUTLET & DISTRIBUTION, INC.;
TREPCO IMPORTS AND DISTRIBUTION, LTD.;
L.A. INTERNATIONAL CORPORATION;
CALIFORNIA WHOLESALE; YNY INTERNATIONAL, INC.;
EASHOU, INC., DBA SAN DIEGO CASH AND CARRY;
AND SANOOR, INC., DBA L.A. TOP DISTRIBUTOR,
Respondents.
__________
On Petition for a Writ of Certiorari
to the United States Court of Appeals
for the Ninth Circuit
__________
PETITION FOR A WRIT OF CERTIORARI
__________
E. POWELL MILLER
MARTHA J. OLIJNYK
DANIEL L. RAVITZ
THE MILLER LAW FIRM,
P.C.
950 W. University Drive
Suite 300
Rochester, Michigan 48307
(248) 841-2200
April 5, 2024
DAVID C. FREDERICK
Counsel of Record
DANIEL G. BIRD
COLLIN R. WHITE
KYLE C. BAILEY
KELLOGG, HANSEN, TODD,
FIGEL & FREDERICK, P.L.L.C.
1615 M Street, N.W., Suite 400
Washington, D.C. 20036
(202) 326-7900
(dfrederick@kellogghansen.com)
QUESTIONS PRESENTED
The Robinson-Patman Act, 15 U.S.C. § 13, prohibits
“secondary line” price discrimination, which is “price
discrimination that injures competition among” the
“customers” of a “discriminating seller[ ]” of a commodity. Volvo Trucks N. Am., Inc. v. Reeder-Simco GMC,
Inc., 546 U.S. 164, 176-77 (2006). Below, a fractured
panel of the Ninth Circuit created two circuit splits
about what a private plaintiff must prove to win such
a claim:
1. Whether a secondary-line price-discrimination
plaintiff must prove that it competes with the allegedly favored firm for sales to the same customers,
as four circuits have concluded, or not, as the Ninth
Circuit held below.
2. Whether a claim of antitrust injury can be defeated by an analysis of consumer behavior showing
that the allegedly favored firm and the plaintiff do not
compete on price, as the Second Circuit has held, or
whether that analysis instead is legally irrelevant to
antitrust injury, as the Ninth Circuit held below.
ii
PARTIES TO THE PROCEEDINGS
Petitioners Innovation Ventures, LLC and Living
Essentials, LLC were the defendants in the district
court and the appellees in the court of appeals.
Respondents U.S. Wholesale Outlet & Distribution,
Inc.; Trepco Imports and Distribution, Ltd.; L.A.
International Corporation; California Wholesale; YNY
International, Inc.; Eashou, Inc., dba San Diego Cash
and Carry; and SaNoor, Inc., dba L.A. Top Distributor
were the plaintiffs in the district court and the appellants in the court of appeals.
iii
RULE 29.6 STATEMENT
Pursuant to Supreme Court Rule 29.6, petitioners
Innovation Ventures, LLC and Living Essentials, LLC
state the following:
Innovation Ventures, LLC is the parent company
of Living Essentials, LLC. There is no publicly held
corporation that owns 10% or more of the stock in
Innovation Ventures, LLC. There is no publicly held
corporation that owns 10% or more of the stock in
Living Essentials, LLC.
iv
RELATED CASES
U.S. Wholesale Outlet & Distrib., Inc. v. Innovation
Ventures, LLC, 89 F.4th 1126 (9th Cir. Dec. 22, 2023)
(No. 21-55397)
U.S. Wholesale Outlet & Distrib., Inc. v. Innovation
Ventures, LLC, 74 F.4th 960 (9th Cir. July 20, 2023)
(No. 21-55397)
U.S. Wholesale Outlet & Distrib., Inc. v. Living
Essentials, No. Cv 18-1077 CBM (Ex), ECF No. 617,
2021 WL 3418584 (C.D. Cal. Aug. 5, 2021)
U.S. Wholesale Outlet & Distrib., Inc. v. Living
Essentials, No. Cv 18-1077 CBM (Ex), ECF No. 603
(C.D. Cal. Apr. 28, 2021)
U.S. Wholesale Outlet & Distrib., Inc. v. Living
Essentials, No. Cv 18-1077 CBM (Ex), ECF No. 599
(C.D. Cal. Apr. 1, 2021)
v
TABLE OF CONTENTS
Page
QUESTIONS PRESENTED ........................................ i
PARTIES TO THE PROCEEDINGS ......................... ii
RULE 29.6 STATEMENT ......................................... iii
RELATED CASES ..................................................... iv
TABLE OF AUTHORITIES .................................... viii
OPINIONS BELOW ................................................... 1
JURISDICTION.......................................................... 1
STATUTORY PROVISIONS INVOLVED ................. 1
INTRODUCTION ....................................................... 1
STATEMENT .............................................................. 4
A. Statutory Background...................................... 4
B. Factual Background ......................................... 7
C. Proceedings Below ........................................... 8
REASONS FOR GRANTING THE PETITION ....... 13
I. THE COURT SHOULD REVIEW THE
NINTH CIRCUIT’S HOLDING THAT
SECTION 2(d) PLAINTIFFS NEED NOT
PROVE THEY ARE COMPETING WITH
ALLEGEDLY FAVORED CUSTOMERS
FOR THE SAME BUYERS............................ 13
A. The Ninth Circuit’s Judgment Conflicts With Decisions Of Other Circuits About Volvo’s “Same Customer”
Standard.................................................... 13
B. The Ninth Circuit’s Aberrant Reading Of Volvo Is Erroneous And Will
Sow Confusion........................................... 17
vi
1. The Ninth Circuit’s Decision Is
Erroneous............................................... 17
2. The Ninth Circuit’s Decision
Resurrects The Confusion Volvo
Sought To Resolve ............................... 21
II. THE NINTH CIRCUIT’S ANTITRUSTINJURY
HOLDING
WARRANTS
REVIEW ......................................................... 22
III. THIS COURT SHOULD RESOLVE
BOTH QUESTIONS IN THIS CASE ............ 24
CONCLUSION.......................................................... 25
APPENDIX:
Amended Opinion of the United States Court
of Appeals for the Ninth Circuit and Order
Denying Rehearing, U.S. Wholesale Outlet &
Distrib., Inc. v. Innovation Ventures, LLC,
No. 21-55397 (Dec. 22, 2023) .................................... 1a
Opinion of the United States Court of Appeals
for the Ninth Circuit, U.S. Wholesale Outlet
& Distrib., Inc. v. Innovation Ventures, LLC,
No. 21-55397 (July 20, 2023) .................................. 47a
Order of the United States District Court for
the Central District of California re Findings of
Fact and Conclusions of Law, U.S. Wholesale
Outlet & Distrib., Inc. v. Living Essentials,
No. CV 18-1077 CBM (Ex) (Aug. 5, 2021) .............. 91a
Order of the United States District Court for
the Central District of California re Adjudication
of Plaintiffs’ Section 2(d) Claim, § 17200 and
Plaintiffs’ Request for Permanent Injunction,
U.S. Wholesale Outlet & Distrib., Inc. v. Living
Essentials, No. CV 18-1077 CBM (Ex) (Apr. 28,
2021) ...................................................................... 103a
vii
In Chambers Order of the United States District Court for the Central District of California
re Adjudication of Plaintiffs’ Second and Fifth
Cause of Action and Plaintiffs’ Request for
Permanent Injunction, U.S. Wholesale Outlet
& Distrib., Inc. v. Living Essentials, No. CV
18-1077 CBM (Ex) (Apr. 1, 2021) ......................... 114a
Statutory Provisions Involved .............................. 116a
Robinson-Patman Act, 15 U.S.C. § 13 et seq.:
§ 2, 15 U.S.C. § 13 ...................................... 116a
Clayton Act, 15 U.S.C. § 12 et seq.:
§ 4, 15 U.S.C. § 15 ...................................... 119a
§ 11, 15 U.S.C. § 21 .................................... 121a
§ 16, 15 U.S.C. § 26 .................................... 129a
viii
TABLE OF AUTHORITIES
Page
CASES
Ag-Chem Equip. Co. v. Hahn, Inc., 350 F. Supp.
1044 (D. Minn. 1972), aff ’d in part, vacated
in part, 480 F.2d 482 (8th Cir. 1973) .................. 16
Atlantic Richfield Co. v. USA Petroleum Co.,
495 U.S. 328 (1990) .................................... 4, 22-23
Brooke Grp. Ltd. v. Brown & Williamson Tobacco
Corp., 509 U.S. 209 (1993) ................ 3-4, 20, 23-24
Brown Shoe Co. v. United States, 370 U.S. 294
(1962) .............................................................. 18-19
Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc.,
429 U.S. 477 (1977) ......................................... 7, 22
Cargill, Inc. v. Monfort of Colorado, Inc.,
479 U.S. 104 (1986) ......................................... 7, 22
Cash & Henderson Drugs, Inc. v. Johnson &
Johnson, 799 F.3d 202 (2d Cir. 2015) ........... 14-15,
21, 23-24
Eastman Kodak Co. v. Image Tech. Servs., Inc.,
504 U.S. 451 (1992) ............................................. 19
Feesers, Inc. v. Michael Foods, Inc.:
498 F.3d 206 (3d Cir. 2007) ................................. 15
591 F.3d 191 (3d Cir. 2010) ...........................10, 12,
15-16, 18, 21
FTC v. Fred Meyer, Inc., 390 U.S. 341 (1968) .... 6-8, 18
FTC v. Simplicity Pattern Co., 360 U.S. 55
(1959) ............................................................... 6, 23
Great Atl. & Pac. Tea Co. v. FTC, 440 U.S. 69
(1979) .................................................... 4, 20, 23-24
ix
Infusion Resources, Inc. v. Minimed, Inc.,
351 F.3d 688 (5th Cir. 2003) .......................... 16-17
M.C. Mfg. Co. v. Texas Foundries, Inc., 517 F.2d
1059 (5th Cir. 1975) .................................. 12, 16-18
NCUA v. First Nat’l Bank & Tr. Co., 522 U.S.
479 (1998) ............................................................ 18
Reiter v. Sonotone Corp., 442 U.S. 330 (1979) ........... 4
Texaco Inc. v. Hasbrouck, 496 U.S. 543 (1990) ........ 22
The Shell Co. (Puerto Rico) Ltd. v. Los Frailes
Serv. Station, Inc., 605 F.3d 10 (1st Cir.
2010).......................................................... 14, 21-22
Tri-Valley Packing Ass’n v. FTC, 329 F.2d 694
(9th Cir. 1964)........................................................ 9
Volvo Trucks N. Am., Inc. v. Reeder-Simco GMC,
Inc., 546 U.S. 164 (2006) .......... 2-6, 8-15, 17-22, 25
STATUTES AND RULES
Clayton Act, 15 U.S.C. § 12 et seq. ................... 1, 3-5, 7
§ 4, 15 U.S.C. § 15 .................................................. 5
§ 4(a), 15 U.S.C. § 15(a) ......................................... 5
§ 11, 15 U.S.C. § 21 ................................................ 4
§ 11(a), 15 U.S.C. § 21(a) ....................................... 5
§ 16, 15 U.S.C. § 26 ................................................ 5
Robinson-Patman Act, 15 U.S.C. § 13 et seq. ..... 1-5, 8,
13-14, 19-25
§ 2, 15 U.S.C. § 13 .................................................. 1
§ 2(a), 15 U.S.C. § 13(a) ................................. 2, 5-9,
13-15, 18-19, 23-24
x
§ 2(d), 15 U.S.C. § 13(d) ................... 2-3, 6-9, 12-15,
17-18, 20, 22-25
28 U.S.C. § 1254(1) ..................................................... 1
Fed. R. Civ. P. 12(b)(6) .............................................. 20
ADMINISTRATIVE MATERIALS
U.S. Dep’t of Justice & Fed. Trade Comm’n,
Merger Guidelines (2023), https://www.
justice.gov/atr/2023-merger-guidelines ......... 18-19
OTHER MATERIALS
Phillip E. Areeda & Herbert Hovenkamp,
Antitrust Law (2023) ...................................... 17-18
Robert H. Bork, The Antitrust Paradox (1978) .......... 4
Brian Callaci, Daniel A. Hanley & Sandeep
Vaheesan, The Robinson-Patman Act as a
Fair Competition Measure, Open Markets
Institute (Dec. 6, 2023), https://www.open
marketsinstitute.org/s/The-Robinson-PatmanAct-as-a-Fair-Competition-Measure-11-2823.pdf ................................................................... 20
Prepared Remarks of Commissioner Alvaro
M. Bedoya, FTC, “Returning to Fairness,”
Midwest Forum on Fair Markets: What the
New Antimonopoly Vision Means for Main
Street (Sept. 22, 2022), https://www.ftc.gov/
system/files/ftc_gov/pdf/returning_to_
fairness_prepared_remarks_commissioner_
alvaro_bedoya.pdf ................................................ 20
Petitioners Innovation Ventures, LLC and Living
Essentials, LLC (“Living Essentials”) petition for a
writ of certiorari to review the judgment of the Ninth
Circuit in this case.
OPINIONS BELOW
The order and amended opinion of the court of
appeals (App. 1a-46a) is reported at 89 F.4th 1126.
The initial opinion of the court of appeals (App. 47a90a) is reported at 74 F.4th 960. Relevant orders of
the district court (App. 91a-115a) are not reported.
JURISDICTION
The court of appeals entered judgment on July 20,
2023, and denied petitions for rehearing on December
22, 2023 (App. 2a). On March 14, 2024, Justice Kagan
extended the time for filing a petition for a writ of
certiorari to and including April 5, 2024. This Court’s
jurisdiction is invoked under 28 U.S.C. § 1254(1).
STATUTORY PROVISIONS INVOLVED
Relevant provisions of the Robinson-Patman Act and
the Clayton Act are reproduced at App. 116a-129a.
INTRODUCTION
This case concerns the Robinson-Patman Act of
1936, 15 U.S.C. § 13 (“RPA” or the “Act”), which bars
price discrimination that harms competition. Respondent wholesalers contend that petitioner Living Essentials violated the RPA by offering Costco Wholesale Corporation (“Costco”) lower prices to buy 5-hour
ENERGY® (“5HE”) than Living Essentials offered to
the wholesalers. In a sharply divided opinion, which
departs from the holdings of other circuits and invites
litigation that will punish the price competition that
antitrust law aims to encourage, the Ninth Circuit
held that Living Essentials could be enjoined from discounting its prices in selling its popular energy shots,
2
5HE. The Court should review that decision because
it departs from the holdings of other circuits on a
fundamental question of antitrust law: whether price
discounts that enhance consumer welfare may be held
illegal under the RPA solely to protect the interests of
a putatively disfavored purchaser.
Courts consistently have held that, in order to prove
liability under Sections 2(a) and 2(d) of the RPA, a
plaintiff must establish that it is in actual competition
with the allegedly favored customer – here, that the
wholesalers actually compete with Costco for the sale
of 5HE. But as the economy of the 1930s gave way
to increasingly complex modern markets, the lower
courts struggled to settle on a clear legal standard
that a plaintiff must satisfy to prove that it competes
with a favored purchaser. This Court sought to
resolve that confusion when it held in Volvo Trucks
North America, Inc. v. Reeder-Simco GMC, Inc., 546
U.S. 164 (2006), that Section 2(a) requires competition
among purchasers “for the same customer.” Id. at 178.
In today’s economy, buyers do not necessarily view
two firms as substitute suppliers simply because they
simultaneously sell the same good at the same level in
a supply chain and in the same geographic market.
See id. at 177-79. They must instead sell to “the same
customer[s].” Id. at 178.
As the Ninth Circuit’s decision in this case illustrates, courts of appeals are confused about how to
implement the Volvo standard, which is now nearly
two decades old. The Ninth Circuit majority decision
expands the reach of the RPA by concluding that, for
the “typical chainstore-paradigm case,” App. 32a, a
Section 2(d) plaintiff may prove that it is “competing”
with an allegedly favored purchaser by satisfying a socalled “functional-level” test: showing that it operates
3
in the same geographic market, at the same time, and
at the same level of the supply chain as that purchaser
– regardless of whether they sell to “the same customers.” As Judge Miller’s dissent recognized, the majority’s standard creates a circuit split regarding the
definition of competition under the RPA and engenders confusion regarding the reach of Volvo beyond its
factual circumstances.
The Ninth Circuit’s decision also opens another
circuit split on a related issue: antitrust standing.
The panel majority initially forgot to address that core
element. After Living Essentials’ rehearing petition
alerted the panel, it issued an amended opinion. But
the majority adopted an antitrust-injury standard
that, taken to its logical conclusion, can be read as
excusing private plaintiffs in Section 2(d) cases from
ever confronting empirical evidence proving they do
not compete with the allegedly favored firm. The
conclusion that Section 2(d) plaintiffs are exempt
from the antitrust-injury requirement creates a direct
conflict with the Second Circuit and renders the RPA
an outlier among the antitrust laws.
Left uncorrected, the decision below will encourage
inefficient sellers hoping to increase consumer prices
to turn to price-discrimination litigation – inviting
cases that undermine modern antitrust law’s “traditional concern for consumer welfare and price competition.” Brooke Grp. Ltd. v. Brown & Williamson
Tobacco Corp., 509 U.S. 209, 221 (1993). The antediluvian functional-level test the Ninth Circuit majority
reanimated is a throwback to a time when antitrust
courts segmented distribution chains by label – a
standard too simplistic for today’s economy. And the
majority’s gutting of antitrust injury ignores decades
of this Court’s cases confirming that the Clayton Act
4
does not invite private litigation aiming to increase
consumers’ prices. Because the Ninth Circuit’s decision will undermine this Court’s settled teaching that
antitrust law is “a consumer welfare prescription,”
Reiter v. Sonotone Corp., 442 U.S. 330, 343 (1979)
(quoting Robert H. Bork, The Antitrust Paradox 66
(1978)), the Court should grant the petition.
STATEMENT
A. Statutory Background
1. Passed in 1936, the RPA was Congress’s attempt
“to target the perceived harm to competition” when
powerful buyers are able to purchase goods at prices
disproportionately lower than other buyers in certain
circumstances. Volvo Trucks N. Am., Inc. v. ReederSimco GMC, Inc., 546 U.S. 164, 175 (2006). “Mindful
of the purposes of the Act and of the antitrust laws
generally,” however, this Court has held that the RPA
“does not ban all price differences,” but instead “proscribes price discrimination only to the extent that it
threatens to injure competition.” Id. at 176 (cleaned
up). As the Court has explained, the “ ‘Act should be
construed consistently with broader policies of the
antitrust laws,’ ” including their “traditional concern
for consumer welfare and price competition.” Brooke
Grp. Ltd. v. Brown & Williamson Tobacco Corp.,
509 U.S. 209, 220, 221 (1993) (quoting Great Atl. &
Pac. Tea Co. v. FTC, 440 U.S. 69, 80 n.13 (1979)).
Those policies are of paramount importance because
“ ‘[l]ow prices benefit consumers regardless of how
those prices are set’ ” – a principle this Court enforces
“ ‘regardless of the type of antitrust claim involved.’ ”
Id. at 223 (quoting Atlantic Richfield Co. v. USA
Petroleum Co., 495 U.S. 328, 340 (1990)).
Section 11 of the Clayton Act generally empowers
the Federal Trade Commission (“FTC”) “to enforce
5
compliance with” the RPA. 15 U.S.C. § 21(a). The
Clayton Act also authorizes private plaintiffs injured
by an RPA violation to sue for damages under Section
4, see id. § 15, and those subject to the threat of future
injury to seek an injunction under Section 16, see id.
§ 26. A prevailing plaintiff also is entitled to attorney’s fees from the defendant. See id. §§ 15(a), 26.
The RPA claims at issue here concern “secondary
line” liability. Secondary-line liability captures the
idea that a seller may not favor one purchasing customer over another by forcing the disfavored customer
to pay higher prices and thereby injure its ability to
compete with a favored customer. As a result, such
claims “involve price discrimination that” (allegedly)
“injures competition among the discriminating seller’s
customers” – that is, customers in “actual competition”
with each other. Volvo, 546 U.S. at 176-77. This case
concerns alleged secondary-line liability under two
subsections of the Act.
The first is Section 2(a). It requires proof (among
other things) that the challenged price discrimination
“ ‘may . . . injure, destroy, or prevent competition’ to
the advantage of a favored purchaser, i.e., one who
‘received the benefit of such discrimination.’ ” Id.
(quoting 15 U.S.C. § 13(a)) (cleaned up).
Volvo settled that the term “competition” in Section
2(a) means competition for the same customer. There,
the Court “granted certiorari to resolve this question:
May a manufacturer be held liable for secondary-line
price discrimination under the Robinson-Patman Act
in the absence of a showing that the manufacturer
discriminated between dealers competing to resell
its product to the same retail customer?” Id. at 175
(citation omitted). The lower court there focused on
6
whether the plaintiff and the allegedly favored competitors had competed “at the same functional level” –
which is to say, had been retailers, wholesalers, or
manufacturers – “and within the same geographic
market.” Id. at 178. But the Court rejected that test,
concluding that the “selective comparisons” that the
plaintiff mustered did “not show the injury to competition targeted by the Robinson-Patman Act,” given
that Section 2(a) addresses competition “for the
same customer.” Id. The Court held that the plaintiff
could not satisfy that burden without comparisons
supported by a “systematic study” of competition. Id.
The second provision at issue here is Section 2(d). It
prohibits manufacturers from paying “customers”
that are “competing” with each other disproportionate
amounts for “services or facilities” that those customers provide. 15 U.S.C. § 13(d). Years ago, this Court
stated on review of an FTC order that, “[u]nlike
§ 2(a),” Section 2(d) does not “require[ ], as proof of
a prima facie violation, a showing that the illicit
practice has had an injurious or destructive effect on
competition.” FTC v. Simplicity Pattern Co., 360 U.S.
55, 65 (1959) (emphasis added). That is because
“the antitrust laws are not strangers to the policy of
nipping potentially destructive practices before they
reach full bloom.” Id. at 68.
This Court never has held that firms that are not in
actual competition for purposes of Section 2(a) can still
be “competing” for purposes of Section 2(d). On the
contrary, in FTC v. Fred Meyer, Inc., 390 U.S. 341
(1968), the Court concluded that the class of “customers competing in the distribution of [the relevant] products or commodities” addressed in Section 2(d) extends
only to that subset of competing firms that compete
“directly” – in the language typical of the time, at “the
7
same functional level.” Id. at 343, 356-57. This class
of competitors was, in the Court’s view, narrower than
that addressed in Section 2(a). See id. at 357.
2. Beyond their prima facie burden under Section
2(d), private plaintiffs seeking damages or an injunction must show an actual or threatened “antitrust
injury, which is to say injury of the type the antitrust
laws were intended to prevent and that flows from
that which makes defendants’ acts unlawful.” E.g.,
Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S.
477, 489 (1977); see Cargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 104, 112 (1986) (“It would be
anomalous, we think, to read the Clayton Act to
authorize a private plaintiff to secure an injunction
against a threatened injury for which he would not
be entitled to compensation if the injury actually
occurred.”). That means the plaintiff must point to an
injury (past or threatened) to competition, not only an
injury to the plaintiff alone. See Cargill, 479 U.S. at
111. This rule ensures that private plaintiffs’ interests are aligned with consumers’ interests in lower
prices; a contrary rule would have the “perverse
result” of punishing the “vigorous competition” protected by the antitrust laws. Id. at 116; see id. (“To
hold that the antitrust laws protect competitors from
the loss of profits due to [vigorous] price competition
would, in effect, render illegal any decision by a firm
to cut prices in order to increase market share.”).
B. Factual Background
Living Essentials makes and distributes 5-hour
App. 48a.
Respondents are seven
ENERGY®.
consumer-goods wholesalers (“Wholesalers”) that buy
5HE and resell it “to convenience stores and grocery
stores, among other retailers.” Id. Wholesalers sued
Living Essentials, claiming that the prices Whole-
8
salers paid for 5HE were higher than those paid by
Costco, “which purchases 5-hour Energy for resale at
its Costco Business Centers – stores geared toward
‘Costco business members,’ such as restaurants, small
businesses, and other retailers, but open to any person
with a Costco membership.” Id. As relevant to
this petition, Wholesalers sought damages for price
discrimination under Section 2(a) of the RPA and an
injunction for disproportionate service payments
under Section 2(d). App. 49a-50a.
C. Proceedings Below
1. At summary judgment, the district court found
that Wholesalers proved all but one element of their
Section 2(a) claim – whether they suffered a competitive injury, including whether they were in competition with Costco for the sale of 5HE. App. 51a. The
parties tried the Section 2(a) claim to a jury and tried
Wholesalers’ Section 2(d) claim to the court. Id.
Under both provisions, Wholesalers’ claims require
proof of actual competition between the alleged
favored and disfavored purchasers. See Volvo, 546
U.S. at 177; Fred Meyer, 390 U.S. at 349; see also App.
116a-118a. The trial turned on whether Wholesalers
compete with Costco. App. 51a. The parties relied on
different types of evidence. Most notably, only Living
Essentials proffered the testimony of an expert economist. As elaborated below, after examining Wholesalers’ own sales data, the expert “opined that Plaintiffs
and Costco were not competitors because ‘none of
the plaintiffs had an economically significant loss of
customers associated with the [challenged] promotions
of 5 hour energy.’ ” App. 107a (quoting Trial Tr. 107:17110:20 (Oct. 16, 2019), ECF No. 548). In the economist’s expert opinion, petitioners and respondents were
not selling to the same customers.
9
The jury rejected Wholesalers’ Section 2(a) claim,
and the district court rejected Wholesalers’ Section
2(d) claim. App. 53a. “[B]ased on its own independent
review of the evidence,” the court held “that the
Wholesalers had ‘failed to prove by a preponderance of
the evidence that they competed with Costco for
resale’ of 5-hour Energy.” Id. (quoting App. 110a111a). Instead, the court found that “Defendants have
proven the lack of competition.” App. 97a (heading
formatting removed). It also held that, “[h]aving concluded that Plaintiffs have not proven they competed
with Defendants, it follows that Plaintiffs likewise
cannot prove an antitrust injury.” Id.
2. Wholesalers appealed. Judges Miller (who authored the controlling opinion regarding Section 2(a))
and Ikuta rejected Wholesalers’ arguments challenging the jury verdict, over Judge Gilman’s dissent. But
over Judge Miller’s dissent, Judges Ikuta and Gilman
vacated the district court’s ruling in favor of defendants
under Section 2(d). Their disagreement concerned when
“customers” are “competing” under that provision.
The majority read pre-Volvo circuit precedent to hold
“that, to establish that ‘two customers are in general
competition,’ it is ‘sufficient’ to prove” three elements:
“(1) one customer has outlets in ‘geographical proximity’ to those of the other; (2) the two customers ‘purchased goods of the same grade and quality from the
seller within approximately the same period of time’;
and (3) the two customers are operating ‘on a particular functional level such as wholesaling or retailing.’ ”
App. 65a (quoting Tri-Valley Packing Ass’n v. FTC,
329 F.2d 694, 708 (9th Cir. 1964)). Reversing the
district court, the majority relied primarily on lay
witness testimony, a marketing expert’s discussion of
ordinary-course evidence, and a store-location map to
10
hold the first and third of these satisfied, remanding
the timing question for further proceedings. App. 70a73a.
Judge Miller dissented on the ground that “a
common position in the supply chain in a shared
geographical market is not sufficient, by itself, to
establish actual competition.” App. 84a (Miller, J.,
dissenting in relevant part). Instead, he explained,
Volvo requires a plaintiff to show that the businesses
were competing “for the same customer.” Id. Put
differently, as “other circuits have held,” “ ‘two parties
are in competition only where, after a “careful analysis of each party’s customers,” [a court] determine[s]
that the parties are “each directly after the same
dollar.” ’ ” App. 84a-85a (quoting Feesers, Inc. v.
Michael Foods, Inc., 591 F.3d 191, 197 (3d Cir. 2010);
citing other cases).
Judge Miller also explained why Wholesalers
could not satisfy that standard. First, they could not
prove “that Costco sold to the same retailers as the
Wholesalers,” in light of “substantial differences in
operations” that “may well have appealed to different
customers.” App. 85a. These comparisons included
(for example) Costco’s business practice of pre-set pricing and most Wholesalers’ willingness to negotiate,
and Costco Business Centers’ openness “to any
consumer with a Costco membership, some of
whom were” (unlike Wholesalers’ customers) “endconsumers.” Id.
Second, Judge Miller pointed to the analysis performed by Living Essentials’ economic expert – again,
the only antitrust economist to testify at trial. That
expert examined Wholesalers’ sales data and found no
evidence that Wholesalers and Costco competed on
11
price. App. 85a-87a. More specifically, as Judge Miller explained, the expert’s analysis showed that some
Wholesalers had higher prices than Costco did, but did
not see “any economically significant customer loss” to
Costco: “the maximum level of customer switching
across the Wholesalers and Costco was ten times
lower than the switching attributable to ordinary customer ‘churn.’ ” App. 42a. Reinforcing this evidence
“that the Wholesalers’ customers did not treat Costco
as a substitute supplier of 5-hour Energy,” Judge
Miller explained, the expert found “that even the
opening of three new Costco Business Centers had
no statistically significant effect on the Wholesalers’
5-hour Energy sales.” Id. Their customer bases may
have differed, the expert posited, because “the Wholesalers might draw customers interested in buying on
credit” (which Costco did not offer) or “in the unique
products the Wholesalers offer.” App. 42a-43a.
The majority seemed to agree that “it is not clear
[Costco and Wholesalers] sold to the same buyers.”
App. 74a. But it minimized that issue by limiting
Volvo to what it called an “unusual circumstance”:
one in which there is no “possibility of competition between customers” because each of them sells to a
“ ‘separate and discrete’ buyer” or “group of buyers.”
App. 69a, 76a. In contrast, the court viewed this case
as “a typical chainstore-paradigm case where the
Wholesalers and Costco carried and resold an inventory of 5-hour Energy to all comers,” and distinguished
Volvo on that ground. Id.
It further held the operational differences between
Costco and Wholesalers were irrelevant because
“customers may compete for purposes of section 2(d)
even if they operate in different manners.” App. 73a74a. According to the majority, “the question whether
12
one business lost buyers to another does not shed light
on whether the businesses are in competition, but only
on whether there has been an injury to competition,
meaning that the seller’s price concessions caused
buyers to switch from one business to another.” App.
75a. That is so, held the majority, because “a plaintiff ” need not “show potential injury to competition . . .
to make a claim under section 2(d).” Id. Accordingly,
the majority stated, expert “testimony about a lack of
switching between Costco and the Wholesalers does
not undermine the Wholesalers’ claim that they are in
competition with Costco for resales of 5-hour Energy.”
Id.
3. Living Essentials petitioned for rehearing.
Echoing Judge Miller, it argued that the panel’s decision is contrary to Volvo and other circuits’ decisions.
To illustrate the Ninth Circuit’s conflict with the other
circuits, Living Essentials cited decisions from multiple circuits holding that proving competition requires
“ ‘careful analysis of each party’s customers’ ” to determine whether the two firms are “ ‘each directly after
the same dollar.’ ” Feesers, 591 F.3d at 197 (quoting
M.C. Mfg. Co. v. Texas Foundries, Inc., 517 F.2d 1059,
1068 n.20 (5th Cir. 1975)). Living Essentials also
explained that the panel had overlooked the district
court’s antitrust-injury holding (even though Living
Essentials’ brief had defended it), and highlighted
that the court’s decision directly conflicted with a
decision of the Second Circuit.
The Ninth Circuit subsequently issued an amended
opinion and otherwise denied rehearing. App. 2a. The
amendments did not alter the Section 2(d) holding.
But they did address Wholesalers’ burden to “show a
threat of antitrust injury.” App. 5a. In a new footnote,
the majority held that, “[o]n remand, the district court
13
should consider whether there is any violation of the
antitrust laws that threatens loss or damage to the
Wholesalers” – but on the new premise that the
majority’s application of pre-Volvo precedent also
governed the meaning of “competition” for antitrustinjury purposes. App. 32a n.7.1
REASONS FOR GRANTING THE PETITION
I. THE COURT SHOULD REVIEW THE NINTH
CIRCUIT’S HOLDING THAT SECTION 2(d)
PLAINTIFFS NEED NOT PROVE THEY ARE
COMPETING WITH ALLEGEDLY FAVORED
CUSTOMERS FOR THE SAME BUYERS
A. The Ninth Circuit’s Judgment Conflicts
With Decisions Of Other Circuits About
Volvo’s “Same Customer” Standard
The Ninth Circuit’s decision creates a circuit split
regarding the meaning of “competition” under the
RPA. In Volvo, this Court granted review to address
a question regarding Section 2(a) that is virtually
identical to the one addressed below regarding Section
2(d): whether evidence that two firms operated “at the
same functional level and within the same geographic
market,” 546 U.S. at 178 (cleaned up), is sufficient
to show they were in “competition” under Section 2(a)
“in the absence of a showing that the manufacturer
discriminated between dealers competing to resell
its product to the same retail customer,” id. at 175.
The Court held that it is not, because “competition”
under Section 2(a) means competition “for the same
customer.” Id. at 178.
1 The court of appeals also amended a portion of its opinion
regarding a different issue (the district court’s treatment of
functional discounts, see App. 15a-16a), but those amendments
do not bear on the questions presented.
14
The majority below limited Volvo to its facts and
revived the “functional level” test for Section 2(d)
cases. As a result, throughout the Ninth Circuit,
firms not in “competition” under Section 2(a) still
can be “competing” under Section 2(d). That decision
breaks from other courts of appeals’ holdings that
apply Volvo to mean that two firms are in competition
under the RPA only if they actually compete for the
same customers.
First Circuit. In The Shell Co. (Puerto Rico) Ltd.
v. Los Frailes Service Station, Inc., 605 F.3d 10 (1st
Cir. 2010), a gas station franchisee alleged that Shell
violated Section 2(a) of the RPA by offering other gas
stations more favorable prices on fuel. Id. at 14, 25.
To support its argument that it was competing with
the favored gas stations, the franchisee relied on
evidence that three of the favored gas stations were
within two miles of the franchisee’s gas station. Yet
the First Circuit demanded more specific proof that
the stations competed for the same customers. See id.
at 25-26. The court held that the franchisee lacked
that proof, reasoning that the franchisee had not
“explained why consumers would in practice choose
among these stations.” Id. at 26. Because the franchisee failed to show it was in actual competition
with the favored gas stations, the court affirmed the
district court’s grant of summary judgment rejecting
the franchisee’s Section 2(a) claim. Id.
Second Circuit. In Cash & Henderson Drugs, Inc.
v. Johnson & Johnson, 799 F.3d 202 (2d Cir. 2015),
independent retail pharmacies claimed that pharmaceutical manufacturers had violated (as relevant here)
Sections 2(a) and 2(d) by giving better pricing to
(among others) “pharmacy benefit managers” – organizations that “sometimes engage in retail sales
15
directly or through mail-order pharmacies that they
control.” Id. at 206. The Second Circuit read Volvo
to have looked to “the existence and degree of actual
competition among different purchasers” – and, “[i]n
particular,” to “the number of instances in which
plaintiff and a favored purchaser competed headto-head, [seeking] instances where sales had been
diverted from the former to the latter.” Id. at 210-11.
The Second Circuit did not view as necessary an
analysis of whether the firms in question operated
on the same functional level (retail) and in the same
places (through mail-order or otherwise). It instead
affirmed the lower court’s grant of summary judgment
on the plaintiffs’ Section 2(a) claim because data
documenting patient behavior showed that independent
pharmacies had lost virtually no patients to the allegedly favored purchasers. See id. at 207-08, 211-13. It
also held that the same evidence doomed the plaintiffs’ Section 2(d) claim for the separate failure to prove
antitrust injury (addressed below). Id. at 215.
Third Circuit. In Feesers, Inc. v. Michael Foods,
Inc., 591 F.3d 191 (3d Cir. 2010), a plaintiff food
distributor alleged that the defendant sold egg and
potato products to a food service management company
at a lower price. Id. at 193. To determine whether
those firms were competing, the court analyzed
whether the parties were “ ‘directly after the same
dollar.’ ” Id. at 197 (quoting Feesers, Inc. v. Michael
Foods, Inc., 498 F.3d 206, 214 (3d Cir. 2007)). The
court concluded they were not, because the relevant
competition between the companies occurred during
a bidding stage, which was “prior to [the defendant’s]
sales of food products” to the companies. Id. at 203.
The competition at that stage was “irrelevant to the
sales made by [the defendant] after that competition
16
was complete.” Id. Because the subsequent resales of
the defendant’s products by each company were part
of “mutually exclusive commitments,” the court held
that the plaintiff and the food service management
company did not “compete for the same dollar.” Id. at
206.
Fifth Circuit. In M.C. Manufacturing Co. v. Texas
Foundries, Inc., 517 F.2d 1059 (5th Cir. 1975), both
the plaintiff and another company manufactured military hardware. Id. at 1061. After a bidding process,
each company separately contracted to produce it for
the government. Id. at 1061-62. To create the product, both companies purchased a component from the
same subcontractor. Id. at 1061. The plaintiff alleged
that the subcontractor charged the plaintiff a higher
price than the other company. Id. The court reasoned
that the “government’s selection under both [contracts]
of a single producer for each precluded the possibility
of competition between these suppliers as a matter
of law.” Id. at 1066-67. Although the government
was the ultimate buyer under each of the contracts,
the court concluded that the companies “were not
competing for the same consumer dollar.” Id. at 1068;
see also id. at 1068 n.20 (“ ‘Competition is determined
by careful analysis of each party’s customers. Only if
they are each directly after the same dollar are they
competing.’ ”) (quoting Ag-Chem Equip. Co. v. Hahn,
Inc., 350 F. Supp. 1044, 1051 (D. Minn. 1972), aff ’d in
part, vacated in part on other grounds, 480 F.2d 482
(8th Cir. 1973)).
Similarly, in Infusion Resources, Inc. v. Minimed,
Inc., 351 F.3d 688 (5th Cir. 2003), the Fifth Circuit
affirmed a grant of summary judgment because the
plaintiffs failed to show “actual competition with a
favored purchaser,” which the court explained
17
required a showing that the favored and disfavored
purchasers were “ ‘directly after the same dollar.’ ” Id.
at 692-93 (quoting M.C. Mfg., 517 F.2d at 1068 n.20).
B. The Ninth Circuit’s Aberrant Reading Of
Volvo Is Erroneous And Will Sow Confusion
1. The Ninth Circuit’s Decision Is Erroneous
Under a proper understanding of Volvo and the
majority approach among the circuits, this is a straightforward case. Wholesalers proffered only anecdotal
evidence that Wholesalers and Costco were competing
for the same customers. Volvo, however, requires
more robust economic analysis. Here, the only empirical study of consumer substitution in the record
shows that petitioners and Wholesalers were not
competing for the same customers. The district court
and Judge Miller therefore correctly rejected Wholesalers’ Section 2(d) claim.
The majority erred in relying on pre-Volvo circuit
precedent focusing on whether firms operated at the
same “functional level” and in the same place. Volvo
rejected that test because, as Judge Miller explained,
it “is contrary to the economic reality that markets can
be segmented by more than simply functional level,
geography, and grade and quality of goods.” App. 44a
(Miller, J., dissenting in relevant part); see also
Phillip E. Areeda & Herbert Hovenkamp, Antitrust
Law ¶ 2363c2 (2023) (“Areeda & Hovenkamp, Antitrust
Law”) (“Even two resellers of the same product are
not necessarily in competition with one another. For
example, they may . . . serve different types of customers . . . .”). Put differently, much more than two blocks
separates Pineapple and Pearls from the Eastern
Market Starbucks in any competition to sell coffee –
and the Ninth Circuit’s Section 2(d) test ignores all
of it.
18
The Ninth Circuit’s opinion could be read to suggest
that Volvo governs only Section 2(a) cases (like Feesers
and M.C. Mfg.), in which harm to competition is an
element of a prima facie case. That holding also would
be erroneous. FTC v. Fred Meyer, Inc., 390 U.S. 341
(1968), held that the class of firms “competing” under
Section 2(d) is narrower than the class of firms
“competing” under Section 2(a) – limited to those that
compete “at the same functional level.” Id. at 356-57.
Under the statutory text, there is no plausible argument that Section 2(d) broadens the set of “competing”
firms beyond the limits of Section 2(a). See Areeda
& Hovenkamp, Antitrust Law ¶ 2363c (“Section 2(d)
of the Robinson-Patman Act refers to ‘competing’
commodities in such a way as to make that idea analogous to . . . the general secondary-line requirement
that the favored and disfavored purchasers be in
competition with one another.”); see also NCUA v.
First Nat’l Bank & Tr. Co., 522 U.S. 479, 501 (1998)
(applying “the established canon of construction that
similar language contained within the same section of
a statute must be accorded a consistent meaning”).
Indeed, the majority’s departure from Volvo constitutes a more fundamental error of antitrust law. The
majority opinion states that “the question whether
one business lost buyers to another does not shed light
on whether the businesses are in competition.” App.
6a, 30a-31a. But courts long have considered evidence
showing how buyers respond to different sellers’
pricing relevant “to recogniz[ing] competition where,
in fact, competition exists.” Brown Shoe Co. v. United
States, 370 U.S. 294, 325-27 (1962). Indeed, both
merger and conduct cases often turn on evidence about
the substitutes that consumers choose in response to
price increases. See, e.g., U.S. Dep’t of Justice & Fed.
19
Trade Comm’n, Merger Guidelines § 4.2.A, at 35-36
(2023) (in subsection regarding “Generally Applicable
Considerations” in “Evaluating Competition Among
Firms,” explaining that “[c]ustomers’ willingness to
switch between different firms’ products is an
important part of the competitive process” and that
“[e]vidence commonly analyzed to show the extent of
substitution among firms’ products includes,” among
other things, “how customers have shifted purchases
in the past in response to relative changes in price or
other terms and conditions”), https://www.justice.gov/
atr/2023-merger-guidelines; see also Eastman Kodak
Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 469
(1992) (similar); Brown Shoe, 370 U.S. at 325 (same;
further concluding that “sensitivity to price changes”
may support a narrower “submarket”). The Ninth
Circuit identified no reason to treat the evidence
regularly used to determine the boundaries of competition in antitrust cases as irrelevant under the RPA,
and no such reason exists.
The majority’s decision goes further than the test
rejected in Volvo for another reason Judge Miller
identified. Volvo held that a Section 2(a) plaintiff ’s
“functional level” evidence was legally insufficient
even to support a jury verdict that it had won – rejecting the post-trial judgments of both the district judge
and the court of appeals. But under the decision
below, “a defendant is barred from rebutting the
inference of competition” supported by that test “by
presenting evidence that two resellers at the same
functional level and in the same geographic area are
not, in fact, in actual competition with each other.”
App. 44a (Miller, J., dissenting in relevant part)
(emphasis added). Even if evidence satisfying the
“functional level” test can support a reasonable
20
inference (e.g., under Rule 12(b)(6)) that two firms are
in competition in some circumstances, an empirical
study of consumers’ behavior must remain relevant as
rebuttal evidence: that behavior may (as it did in
Volvo and here) reveal a market that is “segmented by
more than simply functional level, geography, and
grade and quality of goods.” Id
The Ninth Circuit is the only court of appeals to
hold that empirical economic evidence of the kind used
routinely in antitrust cases is legally irrelevant to
whether firms are “competing” under Section 2(d).
That holding will embolden those who hope to cleave
the RPA from the “ ‘broader policies of the antitrust
laws,’ ” Brooke Grp. Ltd. v. Brown & Williamson
Tobacco Corp., 509 U.S. 209, 220 (1993) (quoting
Great Atl. & Pac. Tea Co. v. FTC, 440 U.S. 69, 80 n.13
(1979))2 – harming the consumers the antitrust laws
protect. It thus warrants review.
2
See, e.g., Prepared Remarks of Commissioner Alvaro M.
Bedoya, FTC, “Returning to Fairness,” Midwest Forum on Fair
Markets: What the New Antimonopoly Vision Means for Main
Street at 1-2 (Sept. 22, 2022), https://www.ftc.gov/system/files/ftc_
gov/pdf/returning_to_fairness_prepared_remarks_commissioner_
alvaro_bedoya.pdf; see id. at 8 (“I think we need to step back and
question the role of efficiency in antitrust enforcement. . . .
I think it is time to return to fairness” by, among other things,
pursuing RPA cases.); Brian Callaci, Daniel A. Hanley & Sandeep
Vaheesan, The Robinson-Patman Act as a Fair Competition
Measure at 59, Open Markets Institute (Dec. 6, 2023) (arguing
for expanded RPA enforcement and contending that “competition
is not a categorical good”), https://www.openmarketsinstitute.org/
s/The-Robinson-Patman-Act-as-a-Fair-Competition-Measure11-28-23.pdf.
21
2. The Ninth Circuit’s Decision Resurrects
The Confusion Volvo Sought To Resolve
The majority below sought to limit Volvo to the “unusual circumstance” in which there is no “possibility
of competition between customers” because each of
them sells to a “ ‘separate and discrete’ buyer” or
“group of buyers.” App. 24a, 31a-32a. The majority
similarly read the same limitation into the Third
Circuit’s precedent. App. 26a (reasoning that Feesers
“suggest[ed] that there may be no actual competition
where customers are selling to ‘two separate and
discrete groups’ of buyers”). The majority thus concluded that Volvo has nothing to say about “a typical
chainstore-paradigm case.” App. 31a-32a.
But that is backwards. What drove Volvo is that
modern distribution chains are more complicated than
the functional-level test can capture. That is as true
of “chainstores” as it is of others; that label proves
nothing about whether the City Center Hermès is
competing with the T.J. Maxx, Macy’s, and Nordstrom
Rack locations a short walk away. Far from being a
fact-bound outlier, Volvo exemplifies the Court’s effort
to “refine[ ]” its reading of the RPA “over the course of
several decades,” Cash & Henderson Drugs, 799 F.3d
at 210, as antitrust law has replaced hoary formalism
like the functional-level test with modern economics
to better capture these subtler competitive dynamics.
By inventing its limitation on Volvo, the Ninth
Circuit’s decision creates confusion regarding the
applicability of Volvo beyond its facts. For example,
the Ninth Circuit attempted to distinguish this case
from Volvo by concluding (erroneously) that “the Wholesalers and Costco carried and resold an inventory of
5-hour Energy to all comers.” App. 32a. That reasoning directly conflicts with the First Circuit’s decision
in Shell, where the customers at issue were all retail
22
gas stations selling gasoline to the general public. See
Shell, 605 F.3d at 25. The First Circuit did not find
it sufficient that the gas stations were selling to all
consumers; instead, the court looked for evidence the
stations were actually competing for the same customers. Id. at 25-26. Yet under the Ninth Circuit’s reasoning, the fact that the gas stations were all retailers
selling to the general public in the same geographical
area would mandate a finding that the gas stations
were competing, regardless of the lack of evidence
of actual competition. The Ninth Circuit thus has created uncertainty for upstream firms deciding whether
to grant discounts in instances where their customers
sell to the general public, even if those customers do
not compete with each other for the same consumers.
Accordingly, the Court should grant the petition and
resolve the confusion about Volvo’s applicability.
II. THE NINTH CIRCUIT’S ANTITRUSTINJURY HOLDING WARRANTS REVIEW
The panel majority below also incorporated its
erroneous understanding of “competition” under the
RPA into its analysis of antitrust injury. That holding
likewise warrants review because it created an
additional circuit split.
A private plaintiff may bring an antitrust case only
to redress harm “ ‘of the type the antitrust laws were
designed to prevent and that flows from that which
makes defendants’ acts unlawful.’ ” Cargill, Inc. v.
Monfort of Colorado, Inc., 479 U.S. 104, 113 (1986)
(quoting Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc.,
429 U.S. 477, 489 (1977)); see also Atlantic Richfield
Co. v. USA Petroleum Co., 495 U.S. 328, 344 (1990)
(similar); Texaco Inc. v. Hasbrouck, 496 U.S. 543, 572
(1990) (similar). This limitation on private plaintiffs
applies with full force to Section 2(d).
23
To be sure, the FTC can prove “a prima facie
violation” of Section 2(d) without also proving “that
the illicit practice has had an injurious or destructive
effect on competition.” FTC v. Simplicity Pattern Co.,
360 U.S. 55, 65 (1959). But Congress’s supervisory
power can ensure the FTC wields that prophylactic
rule “ ‘consistently with broader policies of the antitrust laws.’ ” Brooke Grp., 509 U.S. at 220 (quoting
Great Atl. & Pac. Tea, 440 U.S. at 80 n.13). There is
no such screen in private litigation, which is why the
antitrust-injury doctrine exists – to stop a plaintiff
from weaponizing antitrust litigation to pursue interests that run counter to consumers’. See Atlantic
Richfield, 495 U.S. at 342 (explaining that the antitrustinjury requirement “ensures that the harm claimed
by the plaintiff corresponds to the rationale for finding
a violation of the antitrust laws in the first place”).
Section 2(d) cases present that risk at its acme:
raising consumer prices is often precisely what an
RPA plaintiff wants to accomplish through a court
order raising another firm’s costs.
The Second Circuit’s decision in Cash & Henderson
Drugs illustrates the proper application of antitrust
injury in a Section 2(d) case. As explained above, that
court held that a Section 2(a) claim failed on the
merits because the plaintiffs did not lose a substantial
number of customers to allegedly favored rivals. 799
F.3d at 213. The court also held that “[i]t follows” from
that failure to prove competitive injury that the plaintiffs “also fail to raise a question of material fact with
respect to whether their injuries are the type of injury
contemplated by the [RPA], as required to prove antitrust injury. The de minimis loss of sales, as well as
of customers, to the favored purchasers is a powerful
indication that price discrimination did not harm
competition.” Id. at 214 (citation omitted). The court
24
went on to hold that the same reasoning extended to
the plaintiffs’ Section 2(d) claim because, “[a]lthough
Section 2(d) does not require plaintiffs to establish
competitive injury, it does require them to establish
antitrust injury.” Id. at 215. The court reasoned that,
because the “plaintiffs failed to show competitive or
antitrust injury with regard to their Section 2(a)
claim, summary judgment is appropriate with respect
to their” Section 2(d) claim. Id.
The Ninth Circuit’s treatment of antitrust injury
squarely conflicts with Cash & Henderson Drugs.
After initially overlooking the issue, the majority (in
its amended opinion) relied on its merits reasoning to
conclude that Wholesalers could establish the existence of competition for purposes of antitrust injury
under the same “functional level” test, as well. App. 32a
n.7 In other words, in the Ninth Circuit, the “functional level” test now permits a Section 2(d) plaintiff
to show antitrust injury even if empirical evidence of
diverted sales shows that it and the allegedly favored
customer are not competing on price in the first place.
This hollowing-out of antitrust injury in Section 2(d)
undermines the principle that the RPA “ ‘should be
construed consistently with broader policies of the
antitrust laws.’ ” Brooke Grp., 509 U.S. at 220 (quoting Great Atl., 440 U.S. at 80 n.13). That conclusion
merits review, as well.
III. THIS COURT SHOULD RESOLVE BOTH
QUESTIONS IN THIS CASE
This is an excellent case in which to decide both
questions.
It arrives on appeal from the rare
price-discrimination case tried to both a jury and
a judge. The record starkly presents the issues, and
the questions have been aired ably by disagreeing
opinions below.
25
The issues also are important, for much the same
reasons the Court granted review in Volvo. To
manage complex modern distribution chains, upstream
firms need certainty about when a decision to grant a
downstream firm a discount – something the antitrust
laws ordinarily encourage them to do – will invite
private antitrust litigation from a disgruntled trading
partner hunting for treble damages, an intrusive
injunction, and attorney’s fees at the other side’s
expense. By attempting to distinguish this case as
emblematic of the “chainstore paradigm,” App. 32a,
the Ninth Circuit belies the complexity and variety of
modern distribution chains and greatly reduces the
flexibility of upstream firms. Any firm that sells its
products to a chainstore now risks liability if it grants
that chainstore a procompetitive discount, even if the
firm takes care to offer the same discount to its other
purchasers that compete for the same customers by
offering similar services as the chainstore.
The Ninth Circuit’s decision holding rigorous empirical evidence of competition irrelevant in Section 2(d)
cases will invite what Volvo turned away: RPA cases
based on “selective comparisons” and “mix-and-match,
manipulable” evidence, rather than evidence that
the favored and disfavored firms “in fact competed
for the same . . . sales.” 546 U.S. at 178-79. And by
doing the same for antitrust injury, the Ninth Circuit
has invited Section 2(d) cases that will punish price
competition and harm consumers. The Court should
not let that outcome stand.
CONCLUSION
The petition for a writ of certiorari should be
granted.
26
Respectfully submitted,
E. POWELL MILLER
MARTHA J. OLIJNYK
DANIEL L. RAVITZ
THE MILLER LAW FIRM,
P.C.
950 W. University Drive
Suite 300
Rochester, Michigan 48307
(248) 841-2200
April 5, 2024
DAVID C. FREDERICK
Counsel of Record
DANIEL G. BIRD
COLLIN R. WHITE
KYLE C. BAILEY
KELLOGG, HANSEN, TODD,
FIGEL & FREDERICK, P.L.L.C.
1615 M Street, N.W., Suite 400
Washington, D.C. 20036
(202) 326-7900
(dfrederick@kellogghansen.com)
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.