# Amicus Curiae Brief — Mobil Oil Corporation v. Jerry A. Blanton and Roy H. Healey

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1985
- **Citation:** 471 U.S. 1007

## Text

~
a

No. 83-1896

An the Supreme Court of the Hnited

Octoper Term, 1984

Mosii O11 CORPORATION, PETITIONER
Vv.

Jerry A. BLANTON, Roy H. HEALEY

ON PETITION FOR A WRIT OF CERTIORARI TO
THE UNITED STATES COURT OF APPEALS FOR
THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

Rex E. Les
Solicitor General

J. Paut McGratu
Assistant Attorney General

CHARLES F. RULE
Deputy Assistant Attorney General

JERROLD J. GANZFRIED
Assistant to the Solicitor General

CATHERINE G. O’SULLIVAN
Nancy C. GARRIS_N

Attorneys
Department of Justice

Washington, D.C. 20530
(202) 633-2217

QUESTION PRESENTED

Whether the court of appeals’ erroneous statement that a
relevant market finding is not necessary to establish an
attempt to monopolize under Section 2 of the Sherman Act
warrants this Court's review of the court of appeals’ judg-
ment upholding a jury verdict for respondents where the
jury found that petitioner had attempted to monopolize a
specified relevant market and the court of appeals con-
cluded that petitioner “[hjad pointed to nothing in the
record that would lead [the reviewing court] to question the
jury’s ‘actual finding.”

(1)

TABLE OF CONTENTS

Page
tien cceeeuedeoeuevooeseseeensoeeens l
hits ceacepeeepedesaneneeseeeeseceses 3
REE SbeOh Sade scdeddedesédoccotcoceccoscce 18
TABLE OF AUTHORITIES
Cases:
Agrashell, Inc. v. Hammons Products
Co., 479 F.2d 269, cert. denied, 414 U.S. |
BE Web dubwededdeddtdedeoucccccccececece 16
Berenyi v. Immigration Director,
PPE GubSeetdesesUeeWecccccceesces 16
Berkey Photo, Inc. v. Eastman Kodak Co.,
603 F.2d 263, cert. denied, 444 U.S.
SE Mae bedddsddecewcoewesessoceccceueces 5
Commonwealth v. Peaslee, 177 Massachusetts
DID. cocceéspecconserenseroeeeses 9
Copperweld Corp. v. Independence Tube
Corp., No. 82-1260 (June 19,
RD. Sececaqncecdéeednébooees 4, 5, 6, 7, 11, 17
E.J. Delaney Corp. v. Bonne Bell, Inc.,
525 F.2d 296, cert. denied, 425 U.S.
Dt ict debistbebbelbdeheéedcececcescoesece 5,6

Edward J. Sweeaey & Sons, Inc. v. Texaco,
Inc., 637 F.2d 105, cert. denied, 451 U.S.
Di Renaeaneeaseesecoedséoeeetessooeseqe ce 16

FLM Collision Parts, Inc. v. Ford Motor
Co., 543 F.2d 1019, cert. denied, 429 U.S.
ahd Eee eRe ede eeu eséensocoese 16

IV
Page
Cases—Continued:

George R. Whitten, Jr., Inc. v. Paddock Pool

Builders, Inc., 508 F.2d 547, cert. denied,

kf * SEPT rrrT TTT TT eTTTTITTT 5, 16
Gough v. Rossmoor Corp., 585 F.2d 381,

cert. denied, 440 U.S. 936 ............55. 10, 11
Graver Tank & Mfg. Co. v. Linde Co.,

FE RE eebecccecncecencsecnccessoess 16
Greyhound Computer Corp. v. International

Business Machines Corp., 559 F.2d 488,

cert. denied, 434 U.S. 1040 .............. a
Harold Friedman, Inc. v. Kroger Co.,

eee 5
Hyde v. United States, 225 U.S. 347 ........... 9
International Boxing Club v. United States,

PPE concccpcsceccacceceseceeneece 14
Lektro-Vend Corp. v. Vendo Co., 660 F.2d 255,

cert. denied, 455 U.S. 921 .......... ccc eeeees 5
Lessig v. Tidewater Oil Co., 327 F.2d

459, cert. denied, 377 U.S.

GED sécéccede 4, 7, 8, 10, 11, 12, 13, 14, 16, 17, 18
Martin B. Glauser Dodge Co. v. Chrysler

Corp., 570 F.2d 72, cert. denied, 436 U.S.

GED 0db0666666666806666hsdsbdbcdccccccces 14
Merit Motors, Inc. v. Chrysler Corp.,

417 F.Supp. 263, aff'd, 569 F.2d 666 .......... 5
Monsanto Co. v. Spray-Rite Service Corp.,

No. 82-914 (Mar. 20, 1984) ............405. 4,5

Page
Cases—Continued:
Nifty Foods Corp. v. Great Atlantic & Pacific
Fe Gs SE oc ddcccccccccceceeces: 5
Opper v. United States, 348 U.S. 84 .......... 13
Paterson Parchment Paper Co. v. Story
- Parchment Co., 37 F.2d 537, rev'd, 282
es BP ceeceesecosbeseeeeoceneasecscesss 7,8
Photovest Corp. v. Fotomat Corp., 606 F.2d |
704, cert. denied, 445 U.S. 917 ...........5.. 16
Rogers v. Lodge, 458 U.S. 613 .........000055 16
Spectrofuge Corp. v. Beckman Instruments,
Inc., 575 F.2d 256, cert. denied, 440 U.S.
GE ccoccccccccscccssocceccosoncevecces 5, 14
Swift & Co. v. United States, 196 U.S.
BED dececcccccoescceeuesssecccoccecccces 8,9
Tampa Electric Co. v. Nashville Coal Co.,
FED Gh BED cccccccvescscosccccecocecccess 7

Telex Corp. v. International Business Machines
Corp., 510 F.2d 894, cert. dismissed, 423 U.S.

Be cocccccecsoescodesocaneccescoceoocecs 14
United States v. Dairymen, Inc., 660 F.2d

EE Gbbnesedossebnceceboeeseaeseséocecs 5, 13
United States v. duPont & Co.,

Be EE ET Socceeeseccccoescecccecees 7, 8, 15

United States v. Empire Gas Corp.,
537 F.2d 296, cert. denied, 429 U.S.
GEE edcccccecoeenses secndseucccccococces 5

United States v. Grinnell Corp., 384 U.S.
BED ccbeccccecocesecesececccoccescoccceces 7

VI
Page
Cases—Continued:
Walker Process Equipment, Inc. v. Food

Machinery & Chemical Corp., 382 U.S.

DE dans dbdedbssdbbebetasensedeececscece 4,7
Watkins v. Sowders, 449 U.S. 341 ............ 13
White Bag Co. v. International Paper Co.,

PEED chodecedochedeeesesosococececs 5
White & White, Inc. v. American Hospital

Supply Corp., 723 F.2d 495 ........ccceeeees 7
William Inglis & Sons Baking Co. v. ITT

Continental Baking Co., 668 F.2d 1014,

CE GG EE GED bb cededéccocoscece 11

Statutes and rule:
Clayton Act, 15 U.S.C. 12 et seq. :
ih Min EE eaccccocecccncecesesss 1,2
en ED onecescsecéeseesdococes 13
Sherman Act, 15 U.S.C. | et seq. :
PEPE D Scsceceotécceeccescese 1,2, 5
PR UCU ee 1, 3, 4, 5, 6, 9, 13, 16

Washington Franchise Investment Protection
Act, Wash. Rev. Code Ann. § 19.86.010
GOGRD GRPOED Cec cncccedcaccecusscesteséccces 1

. 5 Re AS BPTTTTITTITe Tree. 13

Vil

Page
Miscellaneous:
U.S. Dep't of Justice, Merger Guidelines
(June 14, 1984):

5 * BPYYTTTTTELT LEP LPT LE EEL 13
ED ececesoceocccceccovcesecoessoeces 15
EEE Socccoccocevececesosscceseseonses 16
SEE Sceccceceecooscecescosoncnceces 7, 15
ERE nccocoecooncesoeececoseesoesoenes 16

Ju the Supreme Court of the Hnited States

Octoser Term, 1984

No. 83-1896
Mosit Orr CORPORATION, PETITIONER

Vv

Jerry A. BLANTON, Roy H. HEALEY

ON PETITION FOR A WRIT OF CERTIORARI TO
THE UNITED STATES COURT OF APPEALS FOR
THE NINTH CiRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

This brief is submitted in response to the Court’s invita-
tion to the Solicitor General to express the views of the
United States.

STATEMENT

1. Respondents Blanton and Healey formerly leased and
operated Mobil service stations in the Seattle, Washington
area. They sued petitioner Mobil Oil Corp. (Mobil) seeking
damages for alleged violations of Sections | and 2 of the
Sherman Act, 15 U.S.C. 1 and 2, and Section 3 of the

Clayton Act, 15 U.S.C. 14.' By special verdict, the jury
found that Mobil had subjected Blanton and Healey to an

'They also alleged fraud, breach of contract and violation of
Washington's Franchise Javestment Protection Act (FIPA), Wash.
Rev. Code Ann. § 19.86.010 et seg. (1978). The district court granted a
directed verdict in favor of Mobil on the FIPA claim (Pet. App. A2).

(1)

2

unlawful tying arrangement in violation of Section | of the
Sherman Act and Section 3 of the Clayton Act, and that
Mobil had subjected Blanton to cocrced resale price main-
tenance and a group boycott. Pet. App. A2-A6. The jury
also found that Mobil had attempted to monopolize “a
relevant submarket consisting of sales of ‘Mobil-branded
and non-Mobil-branded oil, lubricants, and TBA&S [tires,
batteries, accessories and specialty items] to Mobil deal-
ers.’ ” Jd. at A10.? Damages resulting from this attempted
were assessed at $134,585 for Blanton and
$19,967 for Healey. Jd. at A2.* The district court trebled the

damages upon entry of judgment. E.R. 237-238.

2. Mobil appealed the attempted monopolization award,
and the Ninth Circuit affirmed.‘ The court of appeals
rejected Mobil’s contention that there was reversible error
in the jury’s relevant submarket finding.* The existence of a

?The jury found that there also existed a relevant market “for the sale
of any and ail oil, lubricants and TBAAS to gasoline station dealers”
but that Mobil had not monopolized or attempted to monopolize that
market. E.R. 243. “E.R.” refers to the Excerpt of Clerk's Record in the
court of appeals.

The jury found “$0” damages from the other antitrust violations but
it indicated that damages resulting from those violations were included
im the attempted monopolization verdict. The jury also found that
ee ee ne a > ORE
damages. Pet. App. A2.

‘Mobil also appeaied the contract-fraud awards. Blanton and Healey

the directed verdict in favor of Mobil on the FIPA
claim. The court of appeals reversed and remanded both the contract-
fraud and the FIPA judgments (Pet. App. A3, A27). Those issues are
not presented in the petition for a writ of certiorari.

‘Mobil made two other arguments in its antitrust appeal: It argued
that the special verdicts with respect to damages were inconsistent, and
that Blanton and Healey had failed to prove causal antitrust damages.
The court of appeals rejected both these arguments, and Mobil does not
raise either of them in this Court.

3

particular market, the court held, is an issue of fact, and
“Mobil has pointed ‘o nothing in the record that would lead
us to question the jury's factual finding.” Pet. App. All.
Because Mobil had not challenged the sufficiency of the
evidence as such, the court concluded that Mobil was
“apparently ask[ing the court] to rule as a matter of law that
a relevant submarket cannot consist of sales to dealers
licensed by a common oil company.” /bid. The court
declined to resolve this “legal question,” however, “because
it is clear that the jury’s attempted monopolization finding
may be sustained under Lessig v. Tidewater Oil Co., 327
F.2d 459 (9th Cir.), cert. denied, 377 U.S. 993 * * * (1964),
and its progeny.” Pet. App. All. Under what the court
referred to as the “modified Lessig doctrine,” it stated (id.
at Al2):

We cannot reverse the jury’s finding of attempted
monopoly by reason of its definition of the relevant
market because the jury's finding of per se violations of
the Sherman Act makes the relevant market finding
unnecessary to establish liability.

DISCUSSION

The court of appeals’ discussion of attempted monopoli-
zation is inconsistent with the rationale of decisions of this
Court and of other courts of appeals. Nonetheless, the
United States does not believe that further review is
warranted.

There are, to be sure, serious flaws in the court of appeals’
the court's statements that, on the facts of this case, there
was no aeed to define a relevant market before imposing
liability under Section 2 (15 U.S.C. 2) and that, under the
Ninth Circuit’s “Lessig rule,” a plaintiff may establish
attempted monopolization without proving that actual

monopolization is the probable result. Moreover, the Les-
sig rule reflects a misunderstanding of the Sherman Act's

4
“basic distinction between concerted and independent
action.” Copperweild Corp. v. Independence Tube Corp.,
No. 82-1260 (June 19, 1984), slip op. 12, quoting Monsanto
Co. v. Spray-Rite Service Corp., No. 82-914 (Mar. 20,
1984), slip op. 6.

The case does not, however, merit review at this time. In
this case, as in several other Ninth Circuit decisions that cite
Lessig v. Tidewater Oil Co., 327 F.2d 459, cert. denied, 377
U.S. 993 (1964), the Lessig rule was not the only, or even the
primary, basis for decision. Here, the jury was not instructed,
and did not find liability, in accordance with Lessig; to the
contrary, the district court instructed (Br. in Opp. App. a2)
that in order for respondents to prevail on their attempted
monopolization claim, the jury must find “a dangerous
probability that [petitioner] will achieve a monopoly of the
relevant market” (id. at a3). In response to special interrog-
atories, the jury found that a specific relevant market
existed and that Mobil had attempted to monopolize that
market. On appeal Mobil “pointed to nothing in the record
that would lead [the court] to question the jury's factual
finding” (Pet. App. All). Accordingly, the court of appeals’
judgment could be affirmed on the basis of the findings of
fact in which both lower courts concurred.

1. A dangerous probability of successful monopoliza-
tion of a relevant market is an essential element of the
offense of attempted monopolization under Section 2 of the
Sherman Act. This Court has specifically stated that “[t]o
establish * * * attempt to monopolize * * * it [is] necessary
to appraise the exclusionary power * * * in terms of the
relevant market.” Walker Process Equipment, Inc. v. Food
Machinery & Chemical Corp., 382 U.S. 172, 177 (1965).
Moreover, the Court noted last Term that “{t}he conduct of
a single firm * * * is unlawful only when it threatens actual
monopolization” (Copperweld Corp. v. Independence
Tube Corp., slip op. 12-13). All courts of appeals, other

5

than the Ninth Circuit, are in accord in holding that proof
of dangerous probability of monopolization of a relevant
market is required in order to establish an attempt to
monopolize.§

These holdings reflect the “ ‘basic distinction between
concerted and independent action’ ” under the Sherman
Act. Copperweld, slip op. 12, quoting Monsanto Co. v.
Spray-Rite Service Corp., slip op. 6. Concerted action is
illegal under Section | if it constitutes an unreasonable
restraint of trade. But single firm action that creates a.
similar restraint “is not enough” to establish liability under
Section 2, which alone governs single firm conduct. Cop-
perweld, slip op. 13. Unless it threatens to create a monop-
oly, a single firm's conduct does not violate the Sherman

6

independent centers of decisionmaking that competi-
tion assumes and demands. In any conspiracy, two or
more entities that previously pursued their own inter-
ests separately are combining to act as one for their
directions in which economic power is aimed but sud-
denly increases the economic power moving in one
particular direction. Of course, such mergings of
resources may well lead to efficiencies that benefit
cient to warrant scrutiny even in the absence of incip-
ent monopoly.
Unilateral conduct that does not threaten actual monopoli-
zation, on the other hand, is not subject to the Sherman Act
“LiJn part because it is sometimes difficult to distinguish
petitive effects.” Copperweld, slip op. 13. Judging unilateral
conduct by the standards of Section 2, which focuses on the
threat of monopoly power, “reduces the risk that the anti-
trust laws will dampen the competitive zeal of a single
aggressive entrepreneur.” Copperwelid, slip op. 13.

The danger that monopoly power will result from a
course of anticompetitive conduct can be meaningfully
evaluated only in the context of a relevant market. Market
definition is the process of isolating a product (or group of
products) and a geographic area within which a firm could
charge a price significantly higher than the price that would
prevail if there were multiple competing sellers. If a seller
“controls” only a product and geographic area that does not
constitute a relevant market, however, an increase in that
seller's price will simply cause buyers to shift to other substi-
tute products.’ Such a seller does not “control price” and,

’Similarly, manufacturers of other products that consumers do not
view as reasonable substitutes may be willing and able to shift to
production of the product “controlled” by the seller, Where such shifts

7

thus, does not have monopoly power. See United States v.
duPont & Co., 351 U.S. 377, 379 (1956); United States v.

Grinnell Corp., 384 U.S. 563, 571 (1966).*

2. More than 20 years ago, before this Court's decisions
in Walker Process and Copperweld, the Ninth Circuit
“reject{ed] the premise that probability of actual monopoli-
zation is an essential element of proof of attempt to monop-
olize.” Lessig v. Tidewater Oil Co., 327 F.2d 459, 474

(1964). It added that: “When the charge is attempt (or con-

spiracy) to monopolize, rather than monopolization, the
relevant market is ‘not in issue.’ ” Jbid.

The Ninth Circuit provided ao economic justification for
these statements. Moreover, the authorities on which Lessig
relies provide no support for the conclusions the court
reached. The opinion in Lessig quotes (327 F.2d at 474) a
footnote from this Court's opinion in duPont (351 U.S. at
395 n.23) for the proposition that market definition is “ ‘not
in issue.’ ” This Court's comment in that footnote, however,
was not directed to the legal proposition the Ninth Circuit
adopted. To the contrary, the duPont opinion extensively
discussed the concept of relevant market as it applied in
proving monopolization. The quoted footnote merely des-
cribed the opinion in Story Parchment Co. v. Paterson
Co., 282 U.S. 555 (1931), and, in so doing, stated factually

can occur relatively quickly (i... within 12 months), that manufacturing
capacity prevents the exercise of monopoly power power and should be
included in the relevant market. See Tampa Electric Co. v. Nashville
Coal Co., 365 U.S. 320, 331-333 (1961), U.S. Dep’ of Justice, Merger
Guidelines § 2.21 (June 14, 1984).

Although market share is often the best evidence of the likelihood of
successful monopolization, high market share does not always indicate
a dangerous probability. Ease of entry into the market, rapidly chang-

ing technology, and other conditions may make it inappropnate to infer
dangerous probability from market share alone. See, ¢... Whie &
=— v. American Hospital Supply Corp., 723 F.2d 495 (6th Cir.
I

that in that case “the scope of the market was not in issue.”

This was not a description or adoption of a legal principle at
all, but was merely an accurate recitation of the facts and
procedural posture of a particular case.’ Indeed, this
Court's opinion in Story Parchment reveals that while the
parties did not challenge the market definition in this Court
— and hence it was “not in issue” — the case had nonethe-
less been litigated with the confines oi a relevant market in
mind. See 282 U.S. at 559 (“This 1s an action * * * to
recover damages resulting from an alleged conspiracy * * *
to monopolize interstate trade and commerce in vegetable
parchment.”)."*

The second stated source for the Lessig rule is equally
unavailing to support the Ninth Circuit's conclusion. In
Lessig the court of appeals (327 F.2d at 474 n.46) read this
Court's reference in Swift & Co. v. United States, 196 U.S.
375, 396 (1905) to “intent and the consequent dangerous
probability” as establishing that dangerous probability may
be inferred merely from intent. The court of appeals thus
placed upon the word “consequent” more weight than its
context in Swift will bear. Justice Holmes’ opinion for the
Court in Swift states (ibid.) that intent is essential to prove
an attempt to monopolize and that “[wJhere acts are not
sufficient in themselves to produce a result which the law

*In any event, Story Parchment was, as the Court stated in duPont
(351 U.S. at 395 n.23), “based on proven ; sSeumbientonend
conspiracy to monopolize ~ It was, a case that involved
concerted rather than unilateral conduct.

“Moreover, the opimon of the court of appeals in Story Parchment
shows that while market definition was not a contested issue on appeal,
a market had nonetheless been defined. Paterson Parchment Paper Co
v. Story Parchment Co., 37 F_2d $37, 538 (ist Cir. 1930), rev'd, 282 U.S.
555 (1931) (three companies “were the only producers in this country of
no, another tententiendeen oo anew suuiiiiecnesue

a
the trade in this country”). -_ “

9

seeks to prevent — for instance, the monopoly — but
require further acts in addition to the mere forces of nature
to bring that result to pass, an intent to bring it to pass is
necessary in order to produce a dangerous probability that
it will happen. Commonwealth v. Peaslee, 177 Massachu-
setts 267, 272.” The point is simply that intent is an essen-
tial element of dangerous probability in this context, as it is
of any culpable attempt; not that intent supplants danger-

ous probability of success.’ Justice Holmes had earlier
explained the rule in his opinion for the Supreme Judicial
Court of Massachusetts in Commonwealth v. Peaslee, 177
Mass. 267, 272, 59 N.E. 55, 56 (1901):

That an overt act although coupled with an intent to
commit the crime commonly is not punishable if
further acts are contemplated as needful, is expressed
in the familiar rule that preparation is not an attempt.
But some preparations may amount to an attempt. It is
a question of degree. If the preparation comes very
near to the accomplishment of the act, the intent to
complete it renders the crime so probable that the act
will be a misdemeanor * * *.
And, in his subsequent opinion dissenting on other grounds
in Hyde v. United States, 225 U.S. 347, 387-388 (1912),
Justice Holmes recapitulated the Swift formulation in a
way that lays to rest the contention that Swift can be read to
eliminate the need to prove dangerous probability (empha-
sis added):
But combination, intention and overt act may all be
present without amounting to a criminal attempt — as

“The Court stated in Swift, 196 U.S. at 402, that determining
whether an act “done with intent to produce an unlawful result is
unlawful * * * is a question of proximity and degree.” Thus, the holding
of Swift is that the proper inquiry in an attempted monopolization case
involves intent plus the proximity of the challenged conduct to the harm

— monopolization — that Section 2 is designed to prevent.

10

if all that were done should be an agreement to murder
a man fifty miles away and the purchase of a pistol for

the purpose. There must be dangerous proximity to
success.

3. Inits original form, the Lessiy rule would in particular
cases do away with the need to define a relevant market or
to prove a dangerous probability of actual monopolization.
But, as the panel in this case concluded (Pet. App. A11),
“the sweeping language of Lessig” has been narrowed by
subsequent Ninth Circuit decisions, and that court does
“require a showing of a relevant market in circumstances
where the conduct of the attempted monopolizer is ambig-
uous or not clearly predatory.” The court (id. at Al1-A12)
found “[{tJhe current statement of the Lessig doctrine” in
Gough v. Rossmoor Corp., 585 F.2d 381, 390 (9th Cir.
1978), cert. denied, 440 U.S. 936 (1979):

[Ijn the absence of proof of relevant market and
market power, the plaintiff must prove either preda-
tory conduct or a per se violation of § 1 to prove an
attempt to monopolize.

The court of appeals in Gough recognized that a plaintiff
must prove three elements of attempted monopolization
(585 F.2d at 390):

(1) specific intent to control prices or destroy competi-
tion with respect to a part of commerce, (2) predatory
or anticompetitive conduct directed to accomplishing
the unlawful purpose, and (3) a dangerous probability
of success.

But the court added that, in the Ninth Circuit, a “short cut”
based on Lessig is available to plaintiffs (ibid. ):

proof of probability of success can be supplied by
inference drawn from proof of specific intent and * * *
proof of specific intent can in turn be supplied by

inference drawn from proof of predatory or anticom-

petitive conduct which constitutes an unreasonable

restraint of trade. ['*]
The effect of this Ninth Circuit “short cut” is to eliminate
the element of dangerous probability of actual monopoliza-
tion and, thus, to eliminate the congressionally-mandated
distinction between unilateral conduct and concerted action
(see pages 4-6, supra).'* That approach is plainly inconsist-
ent with this Court’s analysis in Copperweld (see pages 5-6,
supra).

4. Despite the inconsistency of the Ninth Circuit’s Lessig
doctrine with the holdings of this Court and of other courts
of appeals, we do not believe that this case is an appropriate
vehicle for further review. The case was not tried in the
district court under the Lessig rule, and the jury’s relevant
market finding was upheld by the court of appeals.
Moreover, although Lessig and its progeny are an unfortu-
nate source of confusion in the Ninth Circuit, we see no

21 is not clear from the Ninth Circui Ce pee

conduct,” but Gough (585 F.2d at strongly suggests

P pm an ee aged om - of trade” imposed by a single firm

would be sufficient to eliminate the requirement that dangerous proba-
bility be proved.

‘The short-cut is not based on any assumption that particular types
of conduct are so likely to lead to monopoly that it is unnecessary to
prove dangerous probability in each case. To the contrary, the Ninth
Circuit's stated purpose is to apply Section 2 to impose liability on
unilateral anticompe .itive conduct by firms that are “ ‘not dangerously
close to monopoly power.’ ” 585 F.2d at 390 n.13, quoting Greyhound
Computer Corp. v. International Business Machines Corp., 559 F.2d
488, 504 (9th Cir. 1977), cert. denied, 434 U.S. 1040 (1978). See also,
e.g., William Inglis & Sons Baking Co. v. ITT Continental Baking Co.,
668 F.2d 1014, 1029 (9th Cir. 1981) ) (as amended), cert. denied, 459
U.S. 825 (1982) (“the dangerous probability of success requirement is
not designed as a means of screening out cases of minimal concern to
antitrust policy but is instead a way of gauging more accurately the
purpose of a defendant's actions”).

12

sufficient basis in this case for departure by this Court from
its usual practice of not considering cases in which an
alternative ground adequately supports the judgment below.

a. The jury’s verdict was not based on a Lessig theory
that dangerous probability of successful monopolization
may be inferred merely from intent or particular conduct.
The jury was instructed (Br. in Opp. App. a2) that:

An attempt to monopolize has three elements: (

cific intent to monopolize; (2) some act or acts in

furtherance of an intent to monopolize; and (3) which

although insufficient to actually produce monopoly

power creates a dangerous probability that the defend-

ant will achieve a monopoly of the relevant market.
The jury also was given a detailed instruction regarding
relevant market and its relationship to monopoly power (id.
at al-a2). At Mobil’s request, the jury was further instructed
that Mobil’s “natural monopoly over [its] own products”
was not in itself an antitrust violation."

Petitioner’s objections to the monopolization and
attempted monopolization instructions did not include a
specific request for any additional instructions on relevant
market or attempted monopolization.'"* Moreover, the

“Instruction No. 31, as given to the jury, stated:

A manufacturer has a natural monopoly over his own products,
especially when these products bear the manufacturer's trade-
mark, and, standing alone, that is not an antitrust violation. You
are instructed that unless you find that Mobil used its natural
monopoly in its own products to gain monopoly control of the
market in which its products compete, it is not an antitrust
‘olati

'SIn addition to objecting to all instructions on the ground that a
directed verdict should be entered in its favor, Mobil objected to the
monopolization and attempted monopolization instructions on essen-
tially three grounds: (i) that the instructions were “unnecessary and
misleading”, (ii) that “a manufacturer has a natural monopoly over its

13

substance of the instructions was a proper statement of the
relevant law. Although respondents had requested an
instruction based on Lessig, stating that specific intent
could be inferred from per se violations of the Sherman Act,
no such instruction was given.

The jury must be presumed to have followed the instruc-
tions that were given by the court. Opper v. United States,
348 U.S. 84, 95 (1954); Watkins v. Sowders, 449 U.S. 341,
347 (1981). And it was on the basis of these instructions that
the jury found that Mobil had attempted to monopolize the
market or submarket “for the sale of Mobil-branded and
non-Mobil-branded oil, lubricants, and TBA&S to Mobil
dealers” (Pet. App. Al0). Accordingly, the attempted
monopolization verdict was based on findings of dangerous
probability of monopolization in a relevant market. And,
the court of appeals specifically ruled that on appeal Mobil
had “pointed to nothing in the record that would lead [the
court] to question the jury's factual finding” (id. at All).
The Ninth Circuit’s Lessig discussion therefore was not
necessary to its affirmance of the jury's verdict.

own products, and there is no violation of law unless defendant uses
such natural monopoly to gain monopoly control of the overall market
in which its products compete”, and (iii) that submarket analysis applies
only in cases arising under Section 7 of the Clayton Act rather than
Section 2 of the Sherman Act (Objections to Court's Instructions at 3).

The first objection is too vague to satisfy the requirements of Fed. R.
Civ. P. 51. The second is, in effect, a request for an instruction (No. 31)
that was given (see note 14, supra). The third fails to recognize that in

exercised, although other, broader markets may exist. See Merger
Guidelines, supra, § 2.11, at 4; United States v. be
F.2d 192 (6th Cir. 1981). In any event, Mobil did not object to
court's failure to give additional instructions on market definition or
attempt to monopolize.

14

b. Mobil’s petition for a writ of certiorari fails to show
that the decision below rests on the Lessig doctrine. Mobil
does not specifically challenge the jury instructions nor does
it explicitly attack the sufficiency of the evidence to support
the jury’s relevant market finding. Rather, Mobil asserts
(Pet. i, 9) that the decision below must rest on the Lessig
holding because the relevant market found by the jury is “a
market which cannot constitute a relevant market under the
federal U.S. antitrust laws.” Petitioner also argues (id. at
11) that there was legal error below in that “the relevant
market must be defined to include sales of all interchange-
able products to similarly situated dealers with whom the
Mobil dealers compete.”

Mobil’s argument is essentially that non-Mobil dealers
ble with Mobil’s and that within a given geographic area
these dealers are necessarily part of any relevant market
that includes the Mobil dealers (see Pet. 10-11). In support
of this assertion, Mobil cites cases (Pet. 6-7; Reply Br. 3 n.2)
holding that, on the facts before those courts, the relevant
market was not shown to be limited to the products of a
single company."* Those cases are not controlling here,
however. As the court of appeals in this case recognized,
market definition is an issue of fact." While the factors

'*The inarket found by the jury in this case was not limited to sales of
Mobil-branded products, nor, as Mobil suggests in its petition (Pet. 10),
was the market restricted to sales by Mobil. See Pet. App. AJ0 n.4.

"See, e.g., International Boxing Club v. United States, 358 U.S. 242,
251 (1959) (district court's finding of relevant market must be upheld
because it was not “clearly erroneous”); Telex Corp. v. International
Business Machines Corp., 510 F.2d 894, 915 (10th Cir.), cert. dismissed,
423 U.S. 802 (1975) (“plain error” in lower court's market definition);
Spectrofuge Corp. v. Beckman Instruments, Inc., 575 F.2d 256, 276
(Sth Cir. 1978) (court reviewed evidence to determine whether it was
sufficient to support jury's verdict); Martin B. Glauser Dodge Co. v.
Chrysler Corp., 570 F.2d 72, 82 n.18 (3d Cir. 1977), cert. denied, 436
U.S. 913 (1978) (relevant market is a question of fact for the jury).

15
considered in other cases are relevant in determining
whether a court has applied the correct legal standard in
making findings in a non-jury case or in instructing a jury, a
factual finding based on a particular record is not control-
ling in a different case involving different parties.

The jury in this case found a market, consisting of sales cf
Mobil-branded and non-Mobil-branded TBA&S to Mobil
dealers. Such a market may be unusual, but it is not incon-
ceivable, nor is its existence precluded by any other finding
made by the jury.'* The court of appeals held that the record
supported the jury’s relevant market finding, and this Court

substitute one commodity for another.” United States v. duPont &
Co., 351 U.S. at 393. See Merger Guidelines, supra, § 2.21. Thus even
products that are functionally interchangeable from an objective stand-
point may not be in the same market. For example, customers may
ctor ib Go Be 6 0 ne Oe ee eS
be as part of different packages of goods
rious tor enieh te ee ee insignificant
part of the total cost.

For these or other reasons, Mobil dealers might have been able to pay
similar” products. Thus, the relevant market could have been limited to
TBAA&S sales to Mobil dealers if, for example, those dealers were
subjected to price discrimination. Sellers engage in price discrimination
in an economic sense if they sell at two different prices to two groups of
customers as to whom the sellers’ costs are equal. Where price discrimi-
nation is possible, a seller can profitably impose a “small but significant
and nontransitory” increase in the price of its products to a group of
buyers who cannot easily substitute, while selling at a lower price to
another group of buyers who are more price-sensitive. In such situa-
tions, it is appropriate to view each of the two groups of buyers as a

16

customarily defers to the courts of appeals on such eviden-
tiary issues rather than undertaking its own examination of
the record."

c. This case does not appear to be one in which the Court
should depart from its normal practice and conside; an
issue that would not affect the outcome of the case. The
Lessig doctrine is obviously erroneous, but there appears to
be little risk that any of the other courts of appeals will
follow the Ninth Circuit's approach in attempted monopol-
ization cases. Indeed, most other circuits expressly have
declined to follow Lessig and its progeny.”* Moreover, even
within the Ninth Circuit the continuing impact of Lessig is
difficult to ascertain. That court rarely relies on Lessig as
the sole ground for decision in Section 2 attempt cases.
Most plaintiffs who prevail on Section 2 claims apparently

'*This Court has “frequently noted its reluctance to disturb findings
of fact concurred in by two lower courts.” Rogers v. , 458 US.
613, 623 (1982); Graver Tank & Mfg. Co. v. Linde Co., 3% U.S. 271,
275 (1949); Berenyi v. Immigration Director, 385 U.S. 630,635 (1967).

"See, e.g, Edward J. Sweeney & Sons, Inc. v. Texaco, Inc., 637 F.2d
05, 117 (34 Cir. 1980), cert. denied, 451 U.S. 911 (1981), Photovest

Corp. v. Fotomat Corp., 606 F.2d 704, 711-712 (7th Cir. 1979), cert.
denied, 445 U.S. 917 (1980), Spectrofuge . ¥. Beckman Instru-
ments, Inc., 575 F.2d at 276 & 2.69, FLM Collision Parts, Inc. v. Ford
Motor Co., $43 F.24 1019, 1030 (24 Cir. 1976), cert. deased, 429 U.S
1097 (1977), E.’. Delaney Corp. v. Bonne Bell, Inc., 525 F.2d at WS,
George R. Whitten, Jr., Inc. vy. Paddock, 908 F.2d at 530, Agrashell,
Inc. v. Hammons Products Co., 479 F.2d 269, 287 (8th Cir.), ceri.
denied, 414 U.S. 1022 (1973).

This is not to deny that Lessig may continue to have
serious adverse effects. It may, for example, make it more

between the Lessig doctrine and decisions of other courts of

the Ninth Circuit has not yet sat en banc to review a
case involving the Lessig doctrine . This may be due in part
to the presence of alternative grounds in those panel deci-
sions in which Lessig has been cited. Should a case arise in
which the Lessig doctrine is dispositive, the Ninth Circuit
may have an opportunity to resolve the existing conflict. In
doing so, it will have the benefit of this Court's opinion in
Copperweld, which provides an extensive explanation of

2! Because of the uncertainty in the application of Lessig, a prudent
Ninth Circuit plaintiff will attempt to prove relevant market and dan-
gerous Those who are unable to do so have apparently also
been unable in most cases to prove the other elements of a Section 2
‘ohesi

” As petitioner correctly notes (Pet. 19-21), some Ninth Circuit panels
appear to overlook the rule, others appear to require — or at least note
the presence of — a showing of dangerous probability and relevant
market, still others feel bound to follow Lessig although expressing
doubts about it.

the Sherman Act's distinction between unilateral and con-
certed action.” Until the Ninth Circuit has resolved its
intracircuit conflicts — or at least until it has deciined to
rehear en banc acase that squarely presents the Lessig issue
— it appears unnecessary for this Court to review a case in
which that doctrine provides only an alternative ground for
the judgment.
CONCLUSION
The petition for a writ of certiorari should be denied.

Respectfully submitted.

Rex E. Lee
Solicitor General

J. Paut McGratu
Assistant Attorney General

Cuarwes F. Rue
Deputy Assistant Attorney General

Jerro_p J. GANZFRIED
Assistant to the Solicitor General

Catuerine G. O’SULLIVAN
Nancy C. GARRISON

Attorneys

Pesruary 1985

” he court of appeals denied Mobu!'s petition for rehearing en banc
on February 21, 1984 — four months before this Court decided

DO)-\985-02

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_0774%3A5. Public record. Not legal advice.