# Amicus Curiae Brief — Leegin Creative Leather Products v. PSKS, Inc. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0300%3A16 ## Record - **Collection:** Supreme Court brief - **Document type:** Amicus Curiae Brief - **Published:** January 1, 2007 - **Citation:** 551 U.S. 877 ## Text 23 No. 06-480 Jn the Supreme Court of the United States LEEGIN CREATIVE LEATHER PRODUCTS, INC., PETITIONER Vv. PSKS, INc., dba KAY’S KLOSET... KAY’S SHOES ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT BRIEF FOR THE UNITED STATES AS AMICUS CURIAE SUPPORTING PETITIONER PAUL D. CLEMENT Solicitor General Counsel of Record THOMAS O. BARNETT Assistant Attorney General WILLIAM BLUMENTHAL THOMAS G. HUNGAR’ General Counsel Deputy Solicitor General Federal Trade Commission GERALD F. MASOuUDI Washington, D.C. 20580 Deputy Agsectont Attorney enera LISA S. BLATT Assistant to the Solicitor General CATHERINE G. O’SULLIVAN DAVID SEIDMAN Attorneys Department of Justice Washington, D.C. 20530-0001 (202) 514-2217 1/22/06 QUESTION PRESENTED Whether vertical minimum resale price maintenance agreements should be deemed per se illegal under Section 1 of the Sherman Act, 15 U.S.C. 1, or whether they should instead be evaluated under the rule of reason. (I) TABLE OF CONTENTS Page Interest of the United States .............. cece cece eens 1 PR hctkcdevaencomeieassenesuSedatcceecesncsecidde 2 I os cc chcnecucnsenduaednecen eect 3 Argument: This Court should overrule Dr. Miles and subject resale price maintenance to the rule of reason ................ 6 A. Per se condemnation applies only to restraints that are almost invariably anticompetitive .......... 6 B. Resale price maintenance does not meet this court’s criteria for application of aperserule ....... 9 1. RPM will often have procompetitive justifi- cations because it can stimulate interbrand SIE Cd.Gacceeucesusncdneensdsvtscebeces 10 2. RPM may reduce retailers’ incentives to IIE nncccecéndccsensanaaseces 12 3. RPM may promote the sale of the manufacturer’s product even absent free riding ................ 15 C. The various justifications that have been offered for the per se ban on RPM do not withstand Sc acdiudndsciaddeossediséseweenisehisass 16 1. Dr. Miles’s reasoning has been thoroughly undermined by this Court’s precedents ......... 16 2. The remaining proffered justifications for the per se rule do not support its retention .......... 18 D. Considerations of stare decisis do not justify retention of the Dr. Miles rule .................4. 24 EE i Le Chet Se ated tateeuntuapeosenee 29 (111) IV TABLE OF AUTHORITIES Cases: Page Albrecht v. Harald Co., 390 U.S. 145 (1965) ............. 6 Arizona v. Maricopa County Med. Soc’y, 457 U.S. 322 nkécamadibdhabatadsduel okhsbmowuseenokis 8,9 Business Elecs. Corp. v. Sharp Elecs. Corp., GP OEE esccccacdencccccs 7, 8, 12, 13, 16, 20 Continental T.V., Inc. v. GTE Sylvania Inc., SI i eal passim Dr. Miles Med. Co. v. John D. Park & Sons Co., EE oo once oebacendenaaws 2, 16, 18 FTC v. Indiana Fed’n of Dentists, 476 U.S. 447 (1986) ... 9 Illinois Tool Works Inc. v. Independent Ink, Inc., LR I ne ee 25 Lapides v. Board of Regents of Univ. Sys., 535 U.S. SE Sccancuk eich sabsedded dkddsedatisasies 28 Monsanto Co. v. Spray-Rite Serv. Corp., ED ac codadauhs ite kenoees 10, 12, 13, 27 NYNEX Corp. v. Discon, Inc., 525 U.S. 128 (1998) ..... 7,8 Northern Pac. Ry. v. United States, 356 U.S. 1 (1958) .. 8,9 Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co., 472 U.S. 284 (1985) .... 7,20 Payne v. Tennessee, 501 U.S. 808 (1991) ........... +. - 2 Ring v. Arizona, 536 U.S. 584 (2002) ................. 28 Simpson v. Union Oil Co., 377 U.S. 13 (1964) .......... 17 State Oil Co. v. Khan, 522 U.S. 3 (1997) ........... passim United States v. Arnold, Schwinn & Co., ERE ERE itr Ca Ree 6,17 Cases—-Continued: Page United States v. Baush & Lomb Optical Co., 321 US. ED ceuctecdi Grimes suggests that, under a properly structured rule-of-reason analysis, RPM would more frequently be found anticompetitive than 27 3. Continuation of a per se ban on RPM poses signifi- cant practical risks to the procompetitive purposes of the antitrust laws. Most saliently, the per se ban on RPM prohibits conduct that would often be efficiency-enhanc- ing and beneficial, with the result that overall economic welfare is reduced. See pp. 9-16, supra. Perpetuation of unjustified per se rules also risks undermining the value of per se rules more generally. Per se rules are essential to effective enforcement of the antitrust laws. They es- tablish bright-line tests that identify plainly pernicious conduct, thereby deterring unlawful behavior and provid- ing clear guidance to the business community and anti- trust counselors. If a per se rule, once adopted, were to be treated as sacrosanct, it could make courts overly cau- tious in adopting such rules. Moreover, courts, agencies, and the business community should have confidence that per se rules are applied only to manifestly anticompeti- tive conduct. Application of a per se rule to conduct that often would be procompetitive has the potential to erode the rationale for per se treatment and foster judicial re- luctance to use such a blunt instrument even in those circumstances when it is appropriate. In Colgate, supra, the Court held that the antitrust laws permit a manufacturer unilaterally to announce that it will refuse to do business with dealers who se!! below the manufacturer's suggested retail price, provided that the dealer does not actually enter into an agreement to maintain retail price. But the distinction between unilat- eral conduct that is lawful under Colgate and an implicit agreement that is illegal per se under Dr. Miles is “often * * * difficult to apply in practice.” Monsanto, 465 U.S. at 762. The distinction has spawned considerable con- would some other vertical restraints. Grimes, supra, at 119-134. He nevertheless rejects a per se rule in favor of the rule of reason. 28 cern and uncertainty in the business community and the courts, potentially chilling even procompetitive conduct that might qualify as unilateral under Colgate. Cf. GTE Sylvania, 433 U.S. at 48 n.14 (discussing distinctions made by lower courts to limit Schwinn’s per se reach). 4. Nor does the per se rule of Dr. Miles comport with this Court’s closely related precedents. As discussed, the Court in GTE Sylvania and Khan overruled its prior decisions imposing a per se ban on other vertical re- straints with effects similar to those of RPM. See pp. 6, 9-10, supra. The similarity between RPM and other ver- tical restraints as to which per se treatment has been abandoned makes the continued survival of Dr. Miles impossible to justify. In other contexts, the Court has overruled anachronistic precedents that could not be squared with the reasoning of opinions in closely related cases. E.g. Lapides v. Board of Regents of Univ. Sys., 535 U.S. 613, 623 (2002); Ring v. Arizona, 536 U.S. 584, 602-609 (2002). The same result is appropriate here. The time has come to harmonize the law’s treatment of RPM with modern antitrust doctrine. There is no sound basis for treating RPM differently from other ver- tical agreements. The rule of reason offers protection against anticompetitive uses of RPM, while allowing de- fendants to defend their arrangements as legitimate and procompetitive. Moreover, analyzing RPM under the same standards that govern other vertical restraints will avoid the continued necessity to make tenuous distine- tions between economically indistinguishable conduct and will promote proper application of the per se rule, to the benefit of strong antitrust enforcement and a vigor- ously competitive economy. 29 CONCLUSION The judgment of the court of appeals should be re- versed and the case remanded for further proceedings. Respectfully submitted. WILLIAM BLUMENTHAL General Counsel Federal Trade Commission JANUARY 2007 PAUL D. CLEMENT Solicitor General THOMAS O. BARNETT Assistant Attorney General Tuomas G. HUNGAR Deputy Solicitor General GERALD F. MASOUDI Deputy Assistant Attorney eneral Lisa S. BLATT Assistant to the Solicitor General CATHERINE G. O'SULLIVAN DAVID SEIDMAN Attorneys --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0300%3A16. Public record. Not legal advice.