# Opposition Brief — PSKS, Inc. v. Leegin Creative Leather Products, Inc. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_2753%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Opposition Brief - **Published:** January 1, 2011 - **Citation:** 562 U.S. 1217 ## Text ™ ' A 3 D | (y IAN 18 209 No. 10-653 CCE OF trie Gy, ect IN THE Supreme Court of the Anited States PSKS., INC. D/B/A KAY’S KLOSET...KAY’S SHOES. Petitioner, y LEEGIN CREATIVE LEATHER PRODUCTS, INC., Respondent On Petition for a Writ of Certiorari to the United States Court of Appeals for the Fifth Circuit BRIEF IN OPPOSITION ROHIT K. SINGLA JEFFREY 1. WEINBERGER MUNGER, TOLLES & Counsel of Record OLSON LLP JEFFREY Y. WU 560 Mission Street MUNGER, TOLLES & 27th Floor OLSON LLP San Francisco, CA 94105 355 South Grand Avenue (415) 512-4000 35th Floor Los Angeles, CA 90071 (213) 683-9100 jeffrey.weinberger@mto.con ’ " ; Counsel for Respondent January 18, 201] VILSON-EPES PRINTING CO. IN (202) 789-009 WASHINGTON. D.C. 20002 RULE 29.6 STATEMENT Respondent Leegin Creative Leather Products, Inc., now known as Brighton Collectibles, Inc., is wholly owned by Jerry Kohl and Terri Kohl as Trustees of the Jerry and Terri Kohl Living Trust, dated October 18, 2006. Respondent has no parent corporation. No publicly held company owns more than 10% of Respondent’s stock. (1) TABLE OF CONTENTS RULE 29.6 STATEMENT TABLE OF AUTHORITIES BRIEF IN OPPOSITION INTRODUCTION ............ STATEMENT OF THEE CASE REASONS FOR DENYING THE PETITION . Il THERE IS NO CONELICT REGARD- ING THE POTENTIAL FOR A MARKET DEFINED BY A’) SINGLE PRUE TATED oes saksdvcesesnssacvensacenie are uae THE ISSUERS REGARDING WHOLE SALE MARKETS DO NOT WARRANT REVIEW.......... usd dcsicused ee . A. The Wholesale Market Issues Are Not Clearly Presented ....... B. The Supposed Conflict Regarding Wholesale Markets Is Illusory.......... , THE ISSUES REGARDING MARKET POWER DO NOT WARRANT REVIEW... A. Petitioner Has Waived Its Argument Against the Market Power Require IE assess vvicvna acon cpusenuedeiiec eee B. There Ils No Conflict Regarding the Fifth Circuit’s Market Power Re GUNOMNGN. ... 5.x ica C. There Is No Conflict Regarding “Direct” Proof of Market Power .... (111) Pape 1\ TABLE OF CONTENTS—Continued Drape }). The Market Power Issues Are Not Ripe For Review » IV. PETITIONERS NEW HORIZONTAL CLAIMS DO NOT WARRANT REVIEW A. There Is No Inter-Circuit Conflict Regarding the Mandate Rule 24 B. The Dismissal of Petitioner’s Hor zontal Theories Does Not Warrant Review 7 a |. Petitioner’s Reliance on Dual Distribution 27 2. Petitioner’s Failure to Plead a Retailer Cartel 29 CONCLUSION 2 ¥y TABLE OF AUTHORITIES CASES Page Ad-Vantage Tel. Directory Consultants, Inc. v. GTE Directories Corp., 849 F.2d 1336 CSRs a. Fe accede ea 16 Allen-Myland, Inc. v. Intl Bus. Machs. Corp., 33 F.3d 194 (3d. Cir. 1994)............ 22 Ashcroft v. Iqbal, U.S. _, 129 S. Ct. Se (Oe iii Gicssnat aenseent 2, 11, 29, 30 Ball Memorial Hosp., Inc. v. Mutual Hosp. Ins., Inc., 784 F.2d 1325 (7th Cir. 1986) .. 21-22 Bell Atlantic Corp. v. Twombly, 550 U.S. OG AE Boks knncinconursinsseaesees eprenecetee ee passim Brown Shoe Co. v. United States, 370 U.S. Bre CT ncicsesteece toe eee 10 Catalano, Inc. v. Target Sales, Inc., 446 Coco, Ge CR inno kctenec eee eas 30 City of Cleveland v. Cleveland Elec. Illumi nating Co., 734 F.2d 1157 (6th Cir. 3 | RO pees Pe et ed le Eien BP ey ee 14 Continental T.V., Inc. v. GTE Sylvania Frac. , BBO Ue. SO CIE Gin os cvnccccccncesescc, 19, 22. 25 Continental T.V., Inc. v. GTE Sylvania Inc., 694 F.2d 1132 (9th Cir. 1982) .......... 20 Crocker v. Piedmont Aviation, Inc., 49 F.3d Tae CAs Sr CE cccveans cecaacene 25, 26 Curtis Publ’g Co. v. Butts, 388 U.S. 130 CREE Biicrckehccieteie ee eee 26 Dimmit Agri Indus., Inc. v. CPC Int'l, Inc., G78 F.24 516 (1962) «22.02.0050: Pieters. 21 Donald B. Rice Tire Co. vo Michelin Tire Corp., 638 F.2d 15 (4th Cir. 1981)............ 28 EKastern States Retail Lumber Dealers’ Ass'n vu. United States, 234 U.S. 600 bg 2 et ts Be LOND AA. 9 baat 30 Vl TABLE OF AUTHORITIES— Continued Page Eastman Kodak Co. v. Image Technical Serus., Inc., 504 U.S. 451 (1992)............... 10 Edward J. Sweeney & Sons, Inc. v. Texaco, Inc., 637 F.2d 105 (3d Cir. 1980) ENERO 9,12 Flegel v. Christian Hosp., Northeast Northwest, 4 F.3d 682 (8th Cir. 1993)...... Y FTC v. H.d. Heinz Co., 246 F.3d 708 (D.C. er acs eran kes cara ae aie a ne 14-15 FTC v. Indiana Fed’n of Dentists, 476 U.S. a Set: | SERRA GR Ne eee eer Ree ann Ret 16, 17, 18 FTC v. Staples, Inc., 970 F. Supp. 1066 a ry, EE ocd ienn esau ectavsbunesncciewsetieenssens 9 FTC v. Whole Foods Market, Inc., 548 F.3d ee i i I oo aviv k vaccine cacesimenvaes 9 Hampton Audio Elecs., Ine. v. Conte Cellular, Inc., 1992 WL 131169 (4th Cir. a I asec ee sg rs 28 Illinois Tool Works Inc. v. Independent Fre. tne. . SOT TFS. SEA ZIOS) oocccnecevasesses ses. 12 In re Brand Name Prescription Drugs Anti trust Litig., 186 F.3d 781 (7th Cir. 1999). 10, 21 INS v. Lopez-Mendoza, 468 U.S. 1032 De he oa ae een 24 Intl Boxing Club of New York Inc. v. United States, 358 U.S. 242 (1959) .......... 10-11 Interstate Circuit, Inc. v. United States TR GF re ee Cine on encvndntcccavackesnssesecees 30 Jacobs v. Tempur-Pedic Int, Ras 626 Dk LAST CE IGI CAE, DOI iovcncceceesacevesnssaes 11, 20 JBL Enters., Inc. v. Jhirmack Enters., Inc., 698 F.2d 1011 (9th Cir. 1983).....0.000.0.0..... 14 Jones v. Cain, 600 F.3d 527 (5th Cir. 2010) 16 Vil TABLE OF AUTHORITIES—Continued Page K.M.B. Warehouse Distributors, Inc. v. Walker Mfg. Co., 61 F.3d 123 (2d Cir. | SEER ar aR E REE ea Janabik aaabadeeneian 3. Zs Kentucky Speedway v. NASCAR, 588 F.3d EN Gt, I en cccneicasadcscsunpoaveesscccvacsess 9 Krehl v. Baskin-Robbins Ice Cream Co., 664 F.2d 1348 (9th Cir. 1982)...........0.00.... = Leegin Creative Leather Products, Inc. v. Fone, inc., 651 US. 877 (2007)............ passim Loudermill v. Cleveland Bd. of Educ., 844 F.2d 304 (Gth Cir. 1968)............................ 26 Midwestern Waffles, Inc. v. Waffle House, Inc., 734 F.2d 705 (11th Cir. 1984) .......... 28 Natl Collegiate Athletic Ass’n v. Board of Regents of Univ. of Okla., 468 U.S. 85 Neovo cay avec dueeavsnsinecscesducunnerperaeeawaneaeaen: 10 Ntakirutimana v. Reno, 184 F.3d 419 (5th AE, ERO eRe pe P np PpedsenTon Pos Pi 16 Oltz v. St. Peter’s Cmty. Hosp., 861 F.2d Cie Oe L. | ne a neeeN es 19 Omni Outdoor Adver., Inc. v. Columbia Outdoor Adver., Inc., 974 F.2d 502 (4th Ro Ns sees pcske sacs tus eae 25,27 Paschall v. Kansas City Star Co., 727 F.2d ie IN ck cnce scence 15 PSKS, Inc. v. Leegin Creative Leather Pro ducts, Inc., 615 F.3d 412 (5th Cir. 2010)... passim PSKS, Inc. v. Leegin Creative Leather Pro ducts, Inc., No. 2:03-CV-107-TJW, 2009 WL 938561 (E.D. Tex. Apr. 6, 2009) ....... passim Re/Max Int'l, Inc. v. Realty One, Inc., 173 F.3a 995 (Gth Cir. 1906).........<...c<.sc0...05....: 21 Viil TABLE OF AUTHORITIES—Continued Page Red Diamond Supply, Inc. v. Liquid Carbonic Corp., 637 F.2d 1001 (5th Cir. Me antes yan takt Ue ee a eee ae 28 Ryko Mfg. Co. v. Eden Servs., 823 F.2d ALD Lh ae bY 2 ae 19, 23, 27, 28 Queen City Pizza, Inc. v. Domino's Pizza, Inc., 124 F.3d 430 (3d Cir. 1997).............. 9, 10 Schuylkill Energy Res., Inc. v. Pa. Power & Light, 113 F.3d 405 (3d Cir. 1997)........... 15 Tanaka v. Univ. of S. Cal., 252 F.3d 1059 | De: 0 SERN oes Once ae nee 11, 20 Tarrant Serv. Agency, Inc. v. American Standard, Inc., 12 F.3d 609 (6th Cir. EE coun src casa buve coves saedonies Lie Rb A ee ee 9 Telecor Commins, Inc. v. Southwestern Bell Tel. Co., 305 F.3d 1124 (10th Cir. 2002).. 14 Texas Democratic Party v. Benkiser, 45% otk Soe CEM CAP, BOG)... ccecsciccceessssesenss: 16 Todd v. Exxon Corp., 275 F.3d 191 (2d Cir. , it) | re ASR eh RAMEN DT aaa IES On eT ERO 21 Toys “R” Us, Ine. v. FTC, 221 F.3d 928 (7th SS RE RRIR RE S ee eee Ser oom ee 21, 30 United States v. Atehortva, 69 F.3d 679 (2d ae tari eceucculawecce 24 United States v. Baker Hughes, Inc., 908 ee Ok CED... Cie, TOBY icvicccsecscveasccscesess 21 United States v. Broughton-Jones, 71 F.3d CT 25 United States v. ET. du Pont de Nemours & Co. (Cellophane), 351 U.S. 377 (1956).. passim United States v. General Motors Corp., 384 et Oe OI vacccanennsvacyascuseanccancesasvenesavace 30 1X TABLE OF AUTHORITIES—Continued United States v. Ponce, 51 F.3d 820 (9th Roe I oc ucane eta e canta eto eoaaeac eee 25 United States v. Quintiert, 306 F.3d 1217 eB le Re, _.) SAD Lees raed RES Tse ea 24 United States v. Socony-Vacuum Oil Co., OU EPs BU CR iaiicictnakccaveseapanecsesessaresas 26 United States v. Ticchiarelli, 171 F.3d 24 (lst Cir. 1999) ........... ASAE Ree eee 24 United States v. Whren, 111 F.3d 956 (D.C. eer co oe ee 24 Will v. Comprehensive Acct. Cerp., 776 P’.20 GES CIE Cir, TGS). oaccccccccccccccscocesceses iZ RULES ee aki cree cdciswas sich nghsncaercnciees 13 le PN Be vv venasesncscsnrsntcisinainavicervcas 13 POM, Fe, CAV. B. GEMS? csccvensscesescriccesssees ee 26 TE, We, Gi SOD oe cinesicvencecrncnsccsensxasscets 6 en ae, aus roses cuseesusiessscancs iets ee ee OTHER AUTHORITIES § Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1282 COUN UNIS INES hci capdadareiadonsaavesrcectime ssa 26 18B Charles Alan Wright et al., Federal Practice & Procedure § 4478.3 (2d ed. Sor eee ee te tt 24 IN THE Supreme Court of the United States No. 10-653 PSKS, Inc. D/B/A KAY’S KLOSET...KAY’S SHOES, Petitioner, Vv. LEEGIN CREATIVE LEATHER PRODUCTS, INC., Respondent. On Petition for a Writ of Certiorari to the United States Court of Appeals for the Fifth Circuit BRIEF IN OPPOSITION INTRODUCTION In Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877 (2007), the Court held that antitrust challenges to resale price maintenance (RPM) programs must be adjudged under the rule of reason, like other vertical restraints. Jd. at 881-882. The Court reasoned that RPM, by restricting intrabrand competition, tended to encourage retailers to make investments that invigorate competition between brands to the benefit of consumers. 7d. at 889-92. This is procompetitive and beneficial because “the antitrust laws are designed primarily to protect interbrand competition.” Jd. at 895. That RPM could raise retail prices for Respondent’s own Brighton- 9 brand products is no cause for suspicion, because the idea behind RPM is to use higher prices to fund greater investment by retailers in marketing, dis- plays, and customer service. /d. at 895-97. The Court also refused to entertain Petitioner’s argument that Respondent’s RPM program constituted a hori- zontal restraint, because Petitioner never raised it below. Jd. at 907-08. The Court vacated the judgment entered below and remanded for further proceedings. On remand, the district court and the Fifth Circuit faithfully followed the Court’s mandate and applied the same rule of reason standard that have for decades been applied to other vertical restraints. This meant that Petitioner had to allege sufficient facts to identify a plausible relevant product market, to plausibly allege that Respondent had power in that market, and to plausibly allege that Respondent’s RPM program harmed interbrand competition. Peti- tioner did none of that. Its newly amended complaint was consequently dismissed on the pleadings, and that dismissal was affirmed by the Fifth Circuit. Now Petitioner argues that the Fifth Circuit’s decision contains no less than seven conflicts with the decisions of its sister circuits and of this Court. But no such conflicts exist. The Fifth Circuit applied well-established principles of antitrust law over which there is uniform agreement. Nor do the remand proceedings present any federal question of general importance. Applying Leegin as well as the pleading standards set forth in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, __ U.S. __, 129 S. Ct. 1937 (2009), the Fifth Circuit determined that Petitioner failed to plausibly plead sufficient facts to state a claim. 3 Whether Petitioner's allegations are sufficient in the unique circumstances of this case is not any more worthy of review than the thousands of other dismis- sals entered by the lower courts each year. Petitioner argues that the Fifth Circuit imposed a rule of per se legality for RPM. Pet. 34. The Fifth Circuit did no such thing. Rather the Fifth Circuit applied the rule of reason to the specific facts before it, and (correctly) concluded that Petitioner had not alleged any facts showing that RPM was being used to anticompetitive effect. It is indisputable that Respondent is a small company in one of the most competitive sectors of the economy: women’s fashion accessories. It is difficult to imagine markets more fragmented and competitive than the markets for handbags, jewelry, belts, and other accessories. Countless styles and brands straddling every poten- tial price range are available to consumers in retail outlets ranging from “big box” stores to department stores to small boutiques to online shops. It is thus not surprising that Petitioner could not plausibly allege any harm to interbrand competition. Petitioner’s complaint was conspicuously silent as to Respondent’s market share in any market. Instead, Petitioner premised its claims on conclusory and legally untenable allegations such as_ that Brighton handbags do not compete with other brands of handbags. The only harm to competition alleged was that the price of Respondent’s own products were higher than they would have been absent ,RPM— which Leegin explained is not evidence of anything anticompetitive. 551 U.S. at 895-97. Petitioner’s complaint was dismissed not because there is some- thing wrong with the rule of reason, but because Petitioner could not plausibly allege an antitrust 4 market, market power on Respondent’s part, or harm to interbrand competition in the particular circums- tances of this case. It is also premature to revisit the standards gov- erning RPM just three years after Leegin. The Court then stated that the lower courts could further refine the rule of reason as applied to RPM as they “gain experience considering the effects of these re- straints.” 551 U.S. at 898. Insufficient time has passed for the lower courts to do so. Tellingly, Petitioner cites not a single other appellate decision applying Leegin, let alone one that conflicts with the Fifth Circuit. The Petition should be denied. STATEMENT OF THE CASE 1. On remand from Leegin, Petitioner filed a second amended complaint (“SAC”) attempting to allege that Respondent's RPM program harmed competition under the rule of reason, and alterna- tively that Respondent’s RPM program constituted a per se unlawful horizontal restraint. a. Petitioner alleged two alternative relevant product markets: (1) the “retail market for Brighton’s women’s accessories,” and (2) the “wholesale sale of brand-name women’s accessories to independent retailers.” SAC 4] 24; Pet. App. 41a. Petitioner did not allege Respondent’s share of either of the alleged markets. To support the Bmghton-only retail market, Petitioner alleged that Brighton products are “unique, “distinct,” “differentiated,” and “characterized by an inelasticity in demand,” because the products “coor- dinate from head to toe.” SAC 49 16, 25, 26; Pet. »”» 5 App. 38a, 4la. Petitioner aileged no other facts to show inelasticity of demand or why consumers could not substitute accessories from any of the hundreds of purveyors of fashion accessories. With regard to the alleged wholesale market, Petitioner alleged Respondent has “market power because it occupies a dominant position as supplier to independent women’s specialty stores.” SAC J 18; Pet. App. 38a. Petitioner alleged no facts regarding the demand inelasticity of “brand-name” accessories sold to “independent retailers.” Petitioner further alleged that “brand-name women’s accessories can be characterized by the wide-spread adoption of practices” that limit interbrand competi- tion. SAC J 32; Pet. App. 43a. Petitioner did not allege what those practices are, whether RPM is one of the practices, or whether the supposed practices were adopted by Respondent or anyone else. b. As an alternative to its rule of reason theory, Petitioner claimed that Respondent’s RPM program constituted a horizontal price-fixing agreement sub- ject to per se condemnation. Petitioner alleged that Respondent “formed” a RPM program, known as the “Heart Store” program, in 1998. Petitioner alleged that Respondent then “solicited agreements” from retailers to not discount, “invited” retailers to par- ticipate in the Heart Store program, “provided incen- tives” for them to do so, “required” retailers to execute RPM agreements, and “fixed suggested retail prices.” SAC {| 9-10; Pet. App. 36a. After forming the Heart Store program, Respon- dent allegedly “began to enforce the [RPM] Policy with greater regularity” and “made changes” to the RPM Policy” “at the insistence of many of its most 6 faithful dealers.” SAC 4 13; Pet. App. 37a. But the only supposed change identified is the allegation that Respondent “invited” some unidentified retailers to a meeting in Hawaii in 2003, where a “consensus of the retailers was reached” and led to a policy whereby Brighton products could be discounted on a cus- tomer’s birthday. SAC J 14; Pet. App. 37a. 2. The district court dismissed the second amended complaint for failure to state a claim under Fed. R. Civ. P. 12(b)(6). PSKS, Inc. v. Leegin Creative Leather Products, Inc., No. 2:03-CV-107-TJW, 2009 WL 938561 (E.D. Tex. Apr. 6, 2009); Pet. App. 17a- 32a. Petitioner did not request leave to amend. The lhifth Circuit then affirmed. PSKS, Inc. v. Leegin Creative Leather Products, Inc., 615 F.3d 412 (5th Cir. 2010); Pet. App. la-15a. a. The Fifth Circuit held that each of Petitioner’s alleged product markets excluded products that are reasonably interchangeable with Brighton-brand accessories and henceforth failed the market defini- tion test established in United States v. El. du Pont de Nemours & Co. (Cellophane), 351 U.S. 377 (1956). First, while acknowledging that “[i]n rare circum- stances[} a single brand of a product” could constitute a relevant market, the Fifth Circuit held that Peti- tioners’ allegations failed to satisfy the conditions for recognizing such a market. 615 F3d at 418; Pet. App. 9a. Second, the Fifth Circuit rejected the alleged wholesale market on four independently sufficient bases, holding that Petitioner: (1) improperly limited the market to the wholesale level when the complaint concerned retail pricing and competition; (2) failed to allege non-conclusory facts that Brighton products are not reasonably interchangeable with non-“brand- name” products; (3) failed to allege non-conclusory 7 facts showing that independent retailers do not com- pete with other retailers; and (4) improperly alleged an overly broad and overly vague market that included all “women’s accessories” even though dif- ferent categories of accessories (e.g., handbags and jewelry) are not interchangeable for the same use. 615 F.3d at 418; Pet. App. 9a-10a; see also Pet. App. 22a-25a. Following Leegin’s reasoning that abuse of RPM may not be a concern unless the entity has market power, the Fifth Circuit further determined that Petitioner was required to plead market power. 615 F.3d at 418; Pet. App. 10a. Unless a defendant had market power, interbrand competition would prevent it from sustaining artificially high prices above the competitive level. 615 F.3d at 419; Pet. App. lla. Consumers would simply switch to competing prod- ucts in response to an anti-competitive price increase. Petitioner failed to provide any non-conclusory alle- gation that Respondent exercised such market power, or that Respondent’s RPM program actually harmed interbrand competition. 615 F.3d at 419; Pet. App. 1 la-12a. Petitioner’s allegations of anticompetitive harm, the Fifth Circuit determined, were likewise irade- quate. Petitioner’s allegation of higher prices for Bnghton products did not by itself plausibly plead any anticompetitive effect, because interbrand com- petition would still prevent Respondent from keeping its prices artificially high vis-a-vis its competitors. 615 F.3d at 419; Pet. App. lla. Nor did Petitioner allege any of the scenarios identified in Leegin whereby RPM could be used for anticompetitive ends. Cf. Leegin, 551 U.S. at 892-94. In particular, the Fifth Circuit determined that Petitioner failed to 8 allege that a retailer cartel or a dominant retailer was the source of Respondent’s RPM program. 615 F.3d at 419; Pet. App. 12a. b. Turning to Petitioner’s horizontal allegations, the Fifth Circuit determined at the threshold that they were never raised before the appeal to this Court and were therefore barred by the mandate rule. 615 F.3d at 420 & n.6; Pet. App. I38a. In the alternative, the Fifth Circuit also ruled that Peti- tioner failed to sufficiently allege an_ horizontal agreement under the Twombly standard. First, as noted above, Petitioner failed to allege facts showing that “retailers were the source of the price restraint” or that “retailers agreed to RPM among themselves.” 615 F.3d at 420; Pet. App. 18a. Second, the mere fact that Respondent operated some of its own retail stores did not transmute its otherwise vertical RPM arrangements with retailers into per se unlawful horizontal agreements. 615 F.3d at 420-21; Pet. App. 14a-15a. Petitioner did not request rehearing from the Fifth Circuit, either by the panel or en banc. REASONS FOR DENYING THE PETITION I. THERE IS NO CONFLICT REGARDING THE POTENTIAL FOR A MARKET DEFINED BY A SINGLE BRAND Petitioner pled a relevant market defined solely by the “Bnghton” brand, which the Fifth Circuit re- jected. Petitioner claims that decision conflicts with other circuit court decisions as well as the decisions of this Court. Pet. 6-10. In fact, there is no conflict. First, none of the circuit decisions cited by Peti- tioner approved a product market defined by a single 9 brand. Most of them in fact affirmatively rejected single-brand markets, just as the Fifth Circuit did, for the common-sense reason that almost every branded product is interchangeable with competing products from other brands and therefore belong in the same market with them. See Edward J. Sweeney & Sons, Inc. v. Texaco, Inc., 637 F.2d 105, 117 (3d Cir. 1980) (“The evidence mandates the conclusion that the [relevant market] .. . includes all brands of gasoline . . . .”); Tarrant Serv. Agency, Inc. v. American Standard, Inc., 12 F.3d 609, 614 (6th Cir. 1993) (“This case does not represent one of those circumstances where a single product constitutes a relevant market.”); Queen City Pizza, Inc. v. Domino’s Pizza, Inc., 124 F.3d 430, 437-41 (3d Cir. 1997) (rejecting market of Domino’s-approved ingredients for excluding other brands of pizza _ ingredients); Flegel v. Christian Hosp., Northeast-Northwest, 4 F.3d 682, 690 (8th Cir. 1993) (similar); Kentucky Speedway v. NASCAR, 588 F.3d 908, 917-18 (6th Cir. 2009) (similar). In other cases cited by Petitioner, the court accepted a functional product market that happened to be dominated by two merging companies, not markets defined by a single brand or trademark. In FTC v. Whole Foods Market, Inc., 548 F.3d 1028, 1032, 1037-41 (D.C. Cir. 2008), for example, the court found the relevant market for merger analysis to be “premium, natural, and organic supermarkets,” including Whole Foods, Wild Oats, and other com- petitors. The court did not in any way find a market that consisted of “Whole Foods brand super- markets”—the analogue to the market of Brighton products that Petitioner aileged. See also FTC v. Staples, Inc., 970 F. Supp. 1066, 1080 (D.D.C. 1997) (market of “sale of consumable office supplies through 10 office supply superstores” included Staples, Office Depot, and others). In the remaining circuit case Petitioner cites, the court did not even reach the question of whether a single brand market was possible. See In re Brand Name Prescription Drugs Antitrust Litig., 186 F.3d 781, 784 (7th Cir. 1999) (market definition not relevant because “only per se violations are charged in this case”). Second, there is no conflict either between the Fifth Circuit and this Court’s precedents. It is long settled that a viable product market must include all “com- modities reasonably interchangeable by consumers for the same purpose.” du Pont, 351 U.S. at 395; see also Brown Shoe Co. v. United States, 370 U.S. 294, 325 (1962). Petitioner relies heavily on Kastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 482 (1992), but that case involved after-market repair parts and services for consumers who bought Kodak-brand copiers and physically could not use parts from other copier brands for their Kodak copiers. See id. at 457 (observing that “Kodak parts are not compatible with other manufacturers’ equip- ment, and vice versa.”). A single-brand market remains untenable as a matter of law under Kodak if it excludes products interchangeable for the same use, Queen City Pizza, 124 F.3d at 439-40, which is precisely the situation here. Petitioner fares no better with its reliance on Nat? Collegiate Athletic Ass'n v. Board of Regents of Univ. of Okla., 468 U.S. 85 (1984). That case did not approve a market defined by a brand or a trademark; rather, consistent with du Pent, it defined a market based on a functional product (“intercollegiate foot- ball telecasts”) that facts showed to be not inter- changeable with others. /d. at 111-12; see also Intl 1] Boxing Club of New York, Inc. v. United States, 358 U.S. 242, 250 (1959) (market of championship boxing contests). Third, the Fifth Circuit acknowledged expressly that “in rare circumstances[] a single brand of a product” could constitute a relevant market, but con- cluded that Petitioner had not plausibly alleged such a market. 615 F.3d at 418; Pet. App. 9a. Thus, the Fifth Circuit did not reject the notion that a single- brand market is sometimes possible. The Petitioner may disagree with the Fifth Circuit’s application of the law to the allegations here, but that does justify review by this Court. See Sup. Ct. R. 10 (“certiorari is rarely granted when the asserted error consists of . the misapplication of a properly stated rule of law.”). In any event, it is indisputable that the fashion accessories industry is among the most competitive imaginable, with countless styles and brands from which consumers can choose. Brighton handbags, belts, and sunglasses are plainly “interchangeable by consumers for the same purpose” with the handbags, belts, and sunglasses made by competing manu- facturers. Cf. du Pont, 351 U.S. at 395. Petitioner's bare allegations that Brighton’s products are “distinc- tive” and “unique” are insufficient, under settled case law, to plead a single-brand market. See Iqbal, 129 S. Ct. at 1949 (“naked assertions’ devoid of ‘further factual enhancement” do not state a claim) (citation omitted); Tanaka v. Univ. of S. Cal., 252 F.3d 1059, 1063 (9th Cir. 2001) (“[Clonclusory assertion that [product] is ‘unique’ and hence ‘not interchangeable with any other program .. .’ is insufficient.”); Jacobs v. Tempur-Pedic Int'l, Inc., 626 F.3d 1327, 1338 (11th Cir. 2010) (proposed market implausible where com- 12 plaint merely alleges that product is “distinct” and has “unique attributes”). The same assertions of product distinctiveness could, after all, be made of many brands from Burger King to Ann Taylor to Mercedes. If that were enough, as one of Petitioner’s own authorities observed, then “every manufacturer of a trademarked product has monopoly power over that product. No legal precept stands for this proposition.” Edward J. Sweeney & Sons, 637 F.2d at 118 (citing du Pont, 351 U.S. at 393); see also Illinois Tool Works Inc. v. Independent Ink, Inc., 547 U.S. 28, 43 (2005) (mono- poly power cannot be presumed even for patented products). Treating every brand as a monopoly would impose the specter of treble damages on any business that attempts to differentiate its products through trademarks and brand-building. “Sellers may strive to differentiate their products from others in order to compete for the custom of patrons with slightly different needs or tastes. It would be perverse to turn this ordinary attribute of the competitive struggle into a source of illegality.” Will v. Comprehensive Acct. Corp., 776 F.2d 665, 673 n.4 (7th Cir. 1985). ll. THE ISSUES REGARDING WHOLESALE MARKETS DO NOT WARRANT REVIEW A. The Wholesale Market Issues Are Not Clearly Presented This case 1s an inappropriate vehicle for review of Petitioner’s arguments regarding defining the market at the wholesale level. Because Petitioner does not seek to challenge all the grounds the Fifth Circuit relied on for its decision, the judgment would stand regardless of Petitioner's arguments. The Fifth Circuit rejected the alleged market of “wholesale sale 13 of brand-name women’s accessories to independent retailers” not only because it was improper to allege a wholesale market to challenge a retail pricing restraint, but also on three additional, independently sufficient grounds. As the Fifth Circuit held, Peti- tioner failed to make any non-conclusory factual allegations to establish that the market should (1) be limited to “brand-name” products, (2) include only “independent retailers,” and (3) encompass all kinds of “women’s accessories” that are not interchangeable with each other for the same use, like picture frames and jewelry and handbags. 615 F.3d at 418; Pet. App. 9a-10a; see also Pet. App. 22a-25a. To reach Petitioner’s challenge, the Court would first need to consider each of these independently sufficient grounds for rejecting Petitioner’s proposed market. Petitioner mentions the brand-name issue only in passing in a footnote. Pet. 14 n.2. With respect to independent retailers, Petitioner argues only that the Fifth Circuit did not consider its assertion that Respondent prefers to sell through independent retailers.’ Pet. 14. That fails to ade- quately allege that independent retailers are a market onto themselves, and is in any event the kind of case-specific determination that is inappropriate for review by this Court. Most importantly, Peti- tioner does not challenge at all the Fifth Circuit’s conclusion that the category of “women’s accessories’ is too broad and vague a definition to constitute a market.” 615 F.3d at 418; Pet. App. 10a. That affirmed the district court’s determination that the 'To the extent Petition claims that the Fifth Circuit neg- lected to consider any allegation, Petitioner should have peti tioned for rehearing. Cf. Fed. R. App. P. 35, 40. Petitioner did not do so 14 market definition failed “because it groups together products that are not interchangeable with each other” such as picture frames and handbags (Pet. App. 24a), and is alone sufficient to dispose of these allegations of a proposed wholesale market.” B. The Supposed Conflict Regarding Wholesale Markets Is Illusory Review is not warranted for the further reason that Petitioner’s supposed circuit split simply does not exist. Petitioner’s proposed wholesale market is in- appropriate because the restraint at issue here is resale price maintenance, i.e., Respondent’s supposed agreements regarding retail prices. The alleged RPM program is not alleged to have affected wholesale prices. Of the cases cited by Petitioner for the sup- posed “conflict,” only two approved wholesale mar- kets, and neither involved restraints that operated only at the retail level. JBL Enters., Inc. v. Jhirmack Enters., Inc., 698 F.2d 1011 (9th Cir. 1983) (restraints on wholesale of cosmetic products to retail outlets); Telecor Comm’ns, Inc. v. Southwestern Bell Tel. Co., 305 F.3d 1124 (10th Cir. 2002) (restraint on dealings between service provider and retailer). The other cases cited by Petitioner in fact rejected the proposed wholesale markeis at issue. City of Cleveland v. Cleveland Elec. Illuminating Co., 734 F.2d 1157, 1166 (6th Cir. 1984) (“[T]he only relevant product market in this case is the retail electrical power market.”); FTC v. H.J. Heinz Co., 246 F.3d “ Indeed, Petitioner did not address the “independent retailer” and “women’s accessories” issues even 1n its Fifth Circuit brief- ing, in spite of the fact that the district court had expressly based its rejection of Petitioner’s wholesale market on those factors, Pet. App. 22a-25a 15 708, 719 n.17 (D.C. Cir. 2001) (“the wholesale market cannot be separated out for analysis”); Ad-Vantage Tel. Directory Consultants, Inc. v. GTE Directories Corp., 849 F.2d 1336, 1345 (11th Cir. 1987) (similar). Petitioner’s remaining authorities did not even pre- sent any analysis of market definition. Paschall v. Kansas City Star Co., 727 F.2d 692, 696 (8th Cir. 1984) (no detailed market definition analysis); Schuylkill Energy Res., Inc. v. Pa. Power & Light, 113 F.3d 405 (3d Cir. 1997) (dismissal on antitrust injury grounds with no analysis of market definition). Petitioner now argues about whether retailers could switch to other wholesale suppliers if a “whole- sale monopolist” raised its prices (Pet. 15), but there is no allegation here that Respondent’s RPM program affected wholesale prices. Petitioner cites no author- ity from any circuit for the proposition that a restraint on retail prices should be analyzed at the wholesale level. lil. THE ISSUES REGARDING MARKET POWER DO NOT WARRANT REVIEW A. Petitioner Has Waived Its Argument Against the Market Power Require- ment Petitioner now argues that “direct” demonstration of anticompetitive effects obviates any need to show power in a relevant market (Pet. 19), but this argu- ment was not properly raised below and has therefore been waived. In the district court and in its opening brief in the Fifth Circuit, Petitioner argued only that pleading “the existence of the agreement and the scope of its operation,” without more, sufficed to state a rule of reason violation. E.g., 615 F.3d at 417; Pet. App. 7a (noting Petitioner's argument). It was not 16 until its reply brief in the Fifth Circuit that Peti- tioner urged, for the first time, a “quick look” rule of reason standard, under which a direct demonstration of anticompetitive effects sufficed to establish a restraint’s unreasonableness without detailed analy- sis of market definition and market power. See Reply Brief of Appellant at 11, PSKS, Inc. v. Leegin Crea tive Leather Products, Inc., 615 F.3d 412 (5th Cir 2010) (No. 09-40506), 2009 WL 6479733. That was not enough to preserve the argument, because it was improper to raise an argument not made in the district court or to raise it for the first time on reply. Cf. Ntakirutimana v. Reno, 184 F.3d 419, 429 n.19 (5th Cir. 1999) (arguments not raised in the district court deemed waived); Jones v. Cain, 600 F.3d 527, 541 (5th Cir. 2010) (“Arguments raised for the first time in a reply brief are generally waived.”); see also Appellee’s Answering Brief at 20 21, PSKS, Inc. v. Leegin Creative Leather Products Inc., 615 F.3d 412 (5th Cir. 2010) (No. 09-40506), 2009 WL 6479732 (arguing waiver).” B. There Is No Conflict Regarding the Fifth Circuit’s Market Power Require- ment Petitioner’s challenge to the market power require ment does not warrant review for the further reason that the conflicts asserted by Petitioner do not exist. There is no conflict between the Fifth Circuit's decision and FTC v. Indiana Fed’n of Dentists, 476 U.S. 447 (1986). Nor is there a circuit split over ‘An amicus curiae tried to advance the “quick look” argu ment in the Fifth Circuit, but amicus could not preserve an argument waived by the party it supports. Texas Democratv Party v. Benkiser, 459 F.3d 582, 595 (5th Cir. 2006) 17 whether Indiana Federation applies to vertical re- straints generally, let alone to RPM specifically. First, the Fifth Circuit’s decision is perfectly consis- tent with Indiana Federation, which held in the context of a horizontal restraint that detailed analy- sis of market definition and market power may be obviated by proof of “actual detrimental effects, such as a reduction of output,” 476 U.S. at 460-61. Here, the Fifth Circuit did analyze at length Petitioner's allegations of anticompetitive effects, and rejected them because they were not adequately pled. 615 F.3d at 419-21; Pet. App. lla-1l2a Thus, even assuming that Jndiana Federation applies to vertical restraints, there is no conflict because Petitione: simply failed to plausibly allege anticompetitive harm Petitioner's disagreement with the Fifth Circuit's fact-bound analysis of its allegations doe not warrant review by this Court Just as importantly, the Fifth Circuit’s analysis was sound Petitioner alleged higher prices for Brnghton products and reduced price competition among Brighton dealers. SAC J 27; Pet. App. 41la The Fifth Circuit found that inadequate to plead anticompetitive harm (615 F.3d at 419; Pet. App. lla for the same reason that Leegin rejected Respon- dent’s reliance on alleged increases in intrabrand prices: “[Petitioner] is mistaken in relying on the pricing effects absent a further showing of anticom- petitive conduct.” Leegin, 551 U.S. at 895. Leegin explained that the entire point of RPM is to reduce price competition among a brand's retailers to en- courage retailers to invest in “fine showrooms,”* ‘ Petitioner lost its Status a featured “Heart Store” for the Brighton brand because its showroom was “unattractive Leegin, 551 U.S. at 884 18 “a reputation for selling high-quality merchandise,” and other forms of non-price competition. /d. at 891. Thus, higher intrabrand prices caused by RPM are no more suspicious than higher prices caused by “better inputs that improve product quality” or by the use of “an advertising agency to promote awareness” of the product. Jd. at 896. Certainly, Petitioner has not cited any case from any circuit suggesting that a vertical restraint violates the rule of reason merely because it led to higher prices for the defendant’s own products. 3ecause “the antitrust laws are designed primarily to protect interbrand competition,” Leegin, 551 U.S at 895, Petitioner would need to plausibly allege that Brighton’s RPM policies led to reduced interbrand competition and higher interbrand prices to plead a direct anticompetitive effect. But as the Fifth Circuit correctly held, “nothing in [the] complaint plausibly alleges harm to interbrand competition.” 615 F.3d at 419; Pet. App. 12a. Petitioner made only a throw away, conclusory allegation regarding interbrand competition among manufacturers, alleging that women’s accessonmes “can be characterized by the wide-spread adoption of practices that have the effect of limiting price competition among competing brands.” SAC J 32; Pet. App. 43a. Petitioner identified neither what those practices were, nor which manufacturers adopted them, nor how they limited interbrand price competition—much less how Respondent’s RPM poli- cies had anything to do with those unidentified practices. See Twombly, 550 U.S. at 555 (“labels and conclusions” not sufficient to state an antitrust violation). Second, no intercircuit conflict exists regarding the application of Indiana Federation to vertical re- 19 straints, because even the cases Petitioner cites (Pet. 20) required a showing of market power, just as the Fifth Circuit did. See K.M.B. Warehouse Distribu- tors, Inc. v. Walker Mfg. Co., 61 F.3d 123, 129 (2d Cir. 1995) (plaintiff must “establish that the defendants possess the requisite market power and thus the capacity to inhibit competition market-wide”) (cita- tion omitted); Ryko Mfg. Co. v. Eden Servs., 823 F.2d 1215, 1231 (8th Cir. 1987) (plaintiff must “prove the defendant’s substantial market power in a relevant market”) (citation omitted). The third case Petitioner cites, Oltz v. St. Peter’s Cmty. Hosp., 861 F.2d 1440 (9th Cir. 1988), did not even involve a vertical re- straint; it concerned a horizontal boycott.” Third, the Fifth Circuit was correct to require a showing of market power in the context of this case. The Court recognized long ago that interbrand com- petition “provides a significant check” on a manu- facturer’s ability to use vertical restraints in an anti- competitive manner. Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 52 n.19 (1977). Consum- ers dissatisfied with a defendant’s offering have “the ability ... to substitute a different brand of the same product,” ibid., for example by buying one of the countless other brands of belts available rather than a Brighton belt. Thus, even Petitioner’s own author- ity recognized that market power is an “essential” requirement in a vertical case, because “[f]irms lack- ing market power... cannot adopt restraints that have anticompetitive effects ... .” Ryko Mfg., 823 F.2d at 1231. Indeed, Leegin equated the rule of reason with “an inquiry into market power and ’ In any event, in Oltz the Ninth Circuit found that the defen- dants did have power in the relevant market. 861 F.2d at 1446 47 (defendants had “overwhelming majority of the market”) 20 market structure designed to assess [a restraint’s] actual effect,” 551 U.S. at 885-86, reasoning that anticompetitive use of RPM “may not be a serious concern unless the relevant entity has market pow- er,” id. at 898. C. There Is No Conflict Regarding “Direct” Proof of Market Power Petitioner also asserts an inter-circuit conflict as to whether conclusory allegations of “product dif- ferentiation, demand inelasticity for its brand, and low cross-elasticity for other brands” suffice to plead market power. Pet. 15-18. However, not a single one of the authorities cited by Petitioner found market power sufficiently pled by a sheer allegation of “product differentiation” or “demand inelasticity.” To state an allegation of “inelasticity” is nothing more than reciting the conclusion of the du Pont inter- changeability test. Cf. du Pont, 351 U.S. at 395. Petitioner’s assertions are nothing more than “labels and conclusions” that do not suffice to plead a plausible antitrust violation. Twombly, 550 U.S. at 555; see also Tanaka, 252 F.3d at 1063; Jacobs, 626 F.3d at 1338. Petitioner's argument is just a repackaging of its single-brand market theory, u.e., that other brands of handbags, belts, picture frames, and jewelry are not interchangeable with Brighton products. See supra at 11. The mere fact that Brighton products are “differentiated” in appearance and _ styling is not enough to plead market power. Every trademarked product is differentiated from other trademarked products. That is the entire point of branding. If Petitioner has its way, then every producer of a trademarked good would be considered a monopolist. 21 But as the Court recognized long ago, the power that “automobile or soft-drink manufacturers have over their trademarked products is not the power that makes an illegal monopoly. Illegal power must be appraised in terms of the competitive market for the product.” du Pont, 351 U.S. at 393. Petitioner did not plead sufficient facts to show Respondent’s power over any interbrand market, and the Fifth Circuit was right to find a failure to plead market power. Petitioner also appears to argue that a defendant’s ‘control over prices” suffices to plead market power. Pet. 17. There is no circuit split on whether such allegations suffice to plead market power in the con- text of a vertical restraint. The Court has expressly “rejected the approach of reliance on rules governing horizontal restraints when defining rules applicable to vertical ones.” Leegin, 551 U.S. at 888. None of the supposedly conflicting authorities cited by Peti- tioner addressed vertical restraints. Petitioner's cases instead addressed horizontal restraints or unila- teral conduct. See Dimmit Agri Indus., Inc. v. CPC Intl, Inc., 679 F.2d 516 (1982) (monopolization claim based on unilateral price-setting aimed at horizontal competitors); Re/Max Int'l, Inc. v. Realty One, Inc., 173 F.3d 995 (6th Cir. 1999) (horizontal boycott and monopolization); Jn re Brand Name _ Prescription Drugs, 186 F.3d at 783-784 (horizontal price-fixing); Toys “R” Us, Inc. v. FTC, 221 F.3d 928, 936 (7th Cir. 2000) (facially vertical restraint deemed horizontal group boycott); Todd v. Exxon Corp., 275 F.3d 191 (2d Cir. 2001) (horizontal information exchange and price coordination). Three other cited cases assessed market power by analyzing barriers to entry, a factor not alleged here. United States v. Baker Hughes, Inc., 908 F.2d 981, 984-989 (D.C. Cir. 1990) (no market power due to low barriers to entry); Ball Memorial 22 Hosp., Inc. v. Mutual Hosp. Ins., Inc., 784 ¥.2d 1325, 1334-36 (7th Cir. 1986) (similar); Allen-Myland, Inc. v. Intl Bus. Machs. Corp., 33 F.3d 194, 209-11 (3d. Cir. 1994) (analyzing entry barriers and technological progress). The fundamental differences between the antitrust analysis of horizontal and vertical cannot be ignored. As noted above, Leegin emphasized that anticompeti- tive use of RPM may not be a serious concern unless the defendant has market power. 551 U.S. at 898. Control over prices of a defendant’s own products, of course, is the very essence of RPM, because such control can invigorate interbrand competition. Id. at 890-892. Vertical restraints are perfectly consistent with vigorous interbrand competition; that 1s why they are judged under the rule of reason. GTE Sylvania, 433 U.S. at 52 n.19 (“The degree of intra- brand competition is wholly independent of the level of interbrand competition confronting the manufac- turer.”). ‘he Court’s vertical restraint jurisprudence thus forecloses Petitioner’s argument that vertical restrictions over intrabrand prices constitutes in- dependent evidence of market power. ° D. The Market Power Issues Are Not Ripe For Review Even if there are questions regarding how the market power requirement applies to RPM cases, review at this juncture is premature given the paucity of cases applying Leegin to RPM practices. ® Petitioner also claims that the Fifth Circuit “conflicts” with several scholarly articles that purportedly suggest alternatives to market definition analysis in evaluating a defendant's market power. Pet. 18. “Conflict” with an academic publication does not satisfy the Court’s established standards for exercise of its certiorari jurisdiction. Cf. Sup. Ct. R. 10 23 Allowing more time for RPM jurisprudence to per- colate in the lower courts would produce a more fulsome body of cases and analyses for the Court to draw on if the need arises to clarify the law. As Petitioner’s own authorities demonstrate, the lower courts, applying the same market power requirement to vertical non-price restraints, have produced a con- siderable body of decisions informed by more supple records than Petitioner’s bare-bones complaint. See, e.g., Ryko Mfg., 823 F.2d 1215; K.M.B. Warehouse, 61 F.3d 123. Time should be allowed for similar jurisprudential development before the Court sets out more detailed standards for RPM. IV. PETITIONER’S NEW HORIZONTAL CLAIMS DO NOT WARRANT REVIEW The Fifth Circuit provided two independent grounds for dismissing Petitioner’s new allegations of horizon- tal conduct. First, the Fifth Circuit held that these claims, never raised in prior proceedings before Leegin, were barred by the mandate rule and deemed waived. Second, the Fifth Circuit held that the claims failed of their own accord because Respon- dent’s dual distribution arrangement did not convert its RPM program from a vertical to a horizontal restraint, and because Petitioner failed to satisfy the Twombly standard for pleading horizontal agree- ment. 615 F.3d at 420-21; Pet. App. 13a-15a. Petitioner claims the Fifth Circuit’s decision con- flicts with its sister circuits on each issue. That is incorrect. Regardless, the Fifth Circuit’s fact-bound analysis of these issues do not raise any significant questions that warrant review. Moreover, this case is a poor vehicle for reviewing any of these issues because, to affect the outcome, the Court would need 24 to grant review on both the waiver issue and the merits of Petitioner’s horizontal theories. A. There Is No Inter-Circuit Conflict Regarding the Mandate Rule Petitioner never asserted an horizontal agreement until its briefing before this Court in Leegin. The Court expressly declined to consider that claim be- cause it had not been raised below. 551 U.S. at 907- 08. On remand, the district court and the Fifth Circuit found the issue waived under the mandate rule, which “precludes litigation of waived issues on remand because they were never raised in the district court” before appeal. 615 F.3d at 420; Pet. App. 13a; Pet. App. 26a-27a. Petitioner has cited no authority, much less dem- onstrated any intercircuit conflict, to support its proposition that a civil plaintiff may assert upon remand new claims it could have presented, but did not previously present, in the district court. Peti- tioner relies on a series of criminal sentencing decisions: United States v. Quintieri, 306 F.3d 1217 (2d Cir. 1995); United States v. Atehortva, 69 F.3d 679 (2d Cir. 2002); United States v. Ticchiarelli, 171 F.3d 24 (1st Cir. 1999); and United States v. Whren, 111 F.3d 956 (D.C. Cir. 1997). These cases suggest that a criminal defendant may sometimes raise new arguments in re-sentencing proceedings upon remand if there was no incentive to raise them prior to the appeal. But these cases involve concerns unique to criminal re-sentencing proceedings. Cf, e.g., INS uv. Lopez-Mendoza, 468 U.S. 1032, 1038 (1984) (“various protections that apply in the context of a criminal trial do not apply in a (civil proceeding]”); 18B Charles Alan Wright et al., Federal Practice & Procedure § 4478.3 (2d ed. 2002) (“Criminal sentenc- 29 ing appeals have . . . a specialized set of mandate issues.”). They present an analytically distinct issue from whether a new civil claim can be raised for the first time after appeal. Indeed, in civil antitrust cases, the lower courts have consistently barred new claims and theories on remand from this Court. In the seminal GTE Sylvania case, after the Court held that vertical non- price restraints were subject to the rule of reason, the plaintiff attempted to replead its claim as horizontal in the hope of resurrecting the per se standard this Court rejected. The Ninth Circuit barred the new horizontal claims as waived. Continental T.V., Inc. v. 1TE Sylvania Inc., 694 F.2d 1132, 1136 n.6 (9th Cir. 1982). Likewise, when the plaintiff tried something similar after reversal by this Court in Omni Outdoor Advertising, the Fourth Circuit held that the plaintiff “cannot turn back the clock and resuscitate the monopolization . . . theories that it earlier chose not to pursue.”, Omni Outdoor Adver., Inc. v. Columbia Outdoor Adver., Inc., 974 F.2d 502, 505-06 (4th Cir. 1992). Notably, the Ninth and Fourth Circuits gener- ally permit new arguments on remand in resentenc- ing proceedings, which further demonstrates that Petitioner’s sentencing cases are distinguishable and irrelevant for the issue here. United States v. Ponce, 51 F.3d 820, 826 (9th Cir. 1995) (permitting resen- tencing de novo); United States v. Broughton-Jones, 71 F.3d 1143, 1149 n.4 (1995) (similar). The civil cases Petitioner does cite are notably off point, because they addressed either issues that were preserved or could not have been advanced in a prior proceeding. Crocker v. Piedmont Aviation, Inc., 49 F.3d 735 (D.C. Cir. 1995), considered whether a defendant could raise on appeal an issue that it 26 preserved in the district court but did not raise in a prior appeal. ZId. at 738-41. In Loudermill v. Cleveland Bd. of Educ., 844 F.2d 304 (6th Cir. 1988), the issue was whether a defendant could raise a defense that it could not have presented in a prior proceeding. Jd. at 309-10.’ Likewise, Curtis Publ’g Co. v. Butts, 388 U.S. 130 (1967), declined to find waiver where the defense at issue had not been available during the pendency of trial court proceed- ings. Id. at 142-44. The other authorities cited alongside Butts apply similar standards and are inapposite for the same reason. See Pet. 25 n.8. Petitioner does not, and cannot, contend that it had been previously unable to allege per se illegal hori- zontal agreements before the Leegin decision. The’ per se standard for horizontal agreements has been the law since at least United States v. Socony- Vacuum Oil Co., 310 U.S. 150, 216-17 (1940). The Federal Rules of Civil Procedure expressly allow pleading of alternative and even inconsistent theories in order to facilitate “a full presentation of all rele- vant facts and legal theories at trial and the final settlement of disputes on their merits.” 5 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1282 (3d ed. 2004); Fed. R. Civ. P. 8(d)(3). Petitioner chose not to do so, and must live with the consequences. Cf. Leegin, 551 U.S. at 907-08. Other- wise plaintiffs would be able to assert and try alter- native claims seriatim. “Trying cases one claim at a time is both unfair to the opposing party and ineffi- ’ The block quote from Loudermill Petitioner featured (Pet. 27) actually addressed the applicability of collateral estoppel and res judicata, which is irrelevant here. Loudermull, 844 F.2d at 309. 27 cient for the judicial system.” Omni Outdoor Adver., 974 F.2d at 505-06. In any case, as noted above, granting review on the waiver issue would not affect the outcome of the case unless the Court also reviewed the sufficiency of Peti- tioner’s horizontal allegations. As discussed below, review is not warranted on that question either. B. The Dismissal of Petitioner’s Horizon- tal Theories Does Not Warrant Review 1. Petitioner’s Reliance on Dual Distri- bution Petitioner alleges that Respondent’s RPM program constitutes a per se unlawful horizontal agreement, because Respondent is a “dual distribution” manufac- turer that maintains some of its own retail stores. But there is no more of an intercircuit conflict regarding dual distribution than there is for any other issue Petitioner raises. As the Fifth Circuit pointed out, its sister circuits have uniformly applied the rule of reason to vertical restraints implemented by a dual distribution manu- facturer. 615 F.3d at 421 n.8; Pet. App. 15a. Peti- tioner fails to cite a single case that applied the per se rule merely because the defendant practiced dual distribution. Each and every case that Petitioner claims to conflict with the Fifth Circuit actually treated the challenged restraint as vertical and judged it under the rule of reason, just as the Fifth Circuit did. See Krehl v. Baskin-Robbins Ice Cream Co., 664 F.2d 1348, 1357 (9th Cir. 1982) (“dual distri- bution systems must be evaluated under the tradi- tional rule of reason standard”); Ryko Mfg., 823 F.2d at 1231 (holding that “the rule of reason applies” in 28 dual distribution context); Donald B. Rice Tire Co. v. Michelin Tire Corp., 638 F.2d 15, 16 (4th Cir. 1981) (similar); Hampton Audio Elecs., Inc. v. Contel Cellu- lar, Inc., 1992 WL 131169, at *3 (4th Cir. Aug. 6, 1992) (similar); Midwestern Waffles, Inc. v. Waffle House, Inc., 734 F.2d 705, 711 (11th Cir. 1984) (simi- lar). Ryko, Hampton, and Waffle House even expressly followed Fifth Circuit precedents. Ryko, 822 F.3d at 1231 (citing Red Diamond Supply, Inc. v. Liquid Carbonic Corp., 637 F.2d 1001 (5th Cir. 1981)); Hampton, 1992 WL 131169, at *3; Waffle House, 734 F.3d at 711. In an effort to manufacture a conflict out of thin air, Petitioner claims that the Fifth Circuit “categori- cally” declared all dual distribution arrangements to be subject to the rule of reason. Pet. 29. Not so. In the Fifth Circuit, “[clonspiracies between a manu- facturer and its distributors are only treated as horizontal ... when the source of the conspiracy is a combination of the distributors.” Red Diamond, 637 F.2d at 1004 (citations and quotation marks omitted). But if the restraint is imposed by the manufacturer, it is vertical and the rule of reason applies, just like in the other circuits. 7bid. Here, Petitioner “failed to allege that retailers were the source of the price restraint,” and the rule of reason therefore governed. 615 F.3d at 420; Pet. App. 13a. Tellingly, none of the decisions cited by Petitioner acknowledges any supposed conflict, because there is no conflict.* * None of the other decisions cited by Petitioner adopted a supposed ironclad, categorical rule either. Pet. 29 (citing authorities from the Second, Third, Sixth, Seventh, and Tenth Circuits). Those decisions recognized that the rule of reason generally applies to restraints imposed in the context of dual distribution, and applied in the specific circumstances of their 29 The lower courts have uniformly applied the rule of reason for good reasons. A dual distribution manufac- turer has the same incentive as any other manufac- turer to minimize retailer profit margins, since lower distribution costs reduce consumer prices and tend to lead to increased sales. Cf. Leegin, 551 U.S. at 779. Petitioner theorizes that dual distribution diminishes that incentive, but if a dual distribution manufac- turer truly wanted to increase its own margins without regard for services or marketing by distribu- tors, it could simply raise its wholesale prices. 615 F.3d at 421; Pet. App. 14a-15a. And if a dual distri- bution manufacturer truly wanted to insulate its own stores from intrabrand competition, it could raise its wholesale prices to third-party distributors or stop selling to them altogether. When a dual distribution manufacturer uses RPM, it is likely doing so to en- courage retailer investments which it hopes will lead to greater consumer demand for its products. See Leegin, 551 U.S. at 897. The rule of reason, not per se illegality, is the correct standard. 2. Petitioner’s Failure to Plead a Retailer Cartel Even if the mandate rule did not bar Petitioner’s new claims, whether the Fifth Circuit correctly applied Twombly and Iqbal to Petitioner’s horizontal cartel allegations does not implicate any issue of special significance. Every day federal courts apply the pleading standards set forth in those precedents, and merely claiming that the Fifth Circuit erred (though Petitioner does not even do that) in applying them to one complaint does not warrant review. cases, but none held that a per se rule could not apply if the source of the restraint is a horizontal cartel. 30 To allege an horizontal agreement, Petitioner had to plead facts showing “a preceding agreement, not merely parallel conduct that could just as well be independent action,” including who made the agree- ment as well as “when and where” the agreement took place. Twombly, 550 U.S. at 557, 565 n.10. The complaint must plead facts establishing “more than a sheer possibility” of illegality, and is insufficient if it “pleads facts that are ‘merely consistent with’ the defendant’s liability.” Jgbal, 129 S. Ct. at 1949 (citation omitted). The Fifth Circuit correctly applied Twombly and Iqbal in determining that Petitioner failed to allege sufficient facts to show that “retailers agreed to RPM among themselves.” 615 F.3d at 420; Pet. App. 14a. None of the cases Petitioner cites conflicts with the Fifth Circuit’s holding, because none addressed what factual allegations would suffice to plead an horizon- tal agreement in these circumstances and because all predate Twombly. See United States v. General Motors Corp., 384 U.S. 127 (1966) (appeal from judgment entered after trial); Jnterstate Circuit, Inc. v. United States, 306 U.S. 208 (1939) (similar); Toys “R” Us, 221 F.3d at 935 (similar); Hastern States Retail Lumber Dealers’ Ass’n v. United States, 234 U.S. 600 (1914) (similar). The only case decided on the pleadings, Catalano, Inc. v. Target Sales, Inc., 446 U.S. 643 (1980), addressed not whether an agree ment was adequately alleged, but what the liability standard was for the restraint at issue. Leegin likewise did not address the standard for pleading a horizontal cartel. Regardless, Petitioner's own complaint plainly demonstrates its failure to meet those standards. The SAC alleged that it was Respondent that 3] “solicitted] agreement” from retailers, “formed” the RPM program, “fixed suggested retail prices,” “invited” select retailers to participate, offered “incentives” such as payment terms, “required” participants to execute agreements, and “invited” some retailers to Hawaii in 2003. SAC JJ 9-10; Pet. App. 36a. Thus according to the SAC itself, it was Respondent, not a retailer cartel, that initiated the RPM program and set the prices. Nothing in the SAC “tend(s] to exclude the possibility” that retailers independently agreed with Respondent to resale price maintenance, Twombly, 550 U.S. at 554, rather than agreeing among themselves to act in concert. The first and only alleged communication among retailers took place in 2003, at least five years after the RPM program began in 1998, and even then ad- dressed not retail prices but just a birthday promo- tion for customers. That allegation does not show any “preceding agreement” among retailers as the impetus for the RPM program. Twombly, 550 U.S. at 557. Nor does Petitioner allege “which” retailers, “much less which of their employees,” agreed to the supposed horizontal restraints. Jd. at 565 n.10. There is no allegation that the retailers attending the 2003 meeting competed with one another; obviously, a store selling Brighton products in Florida does not complete with a store in California. Cf. Leegin, 551 U.S. at 886 (defining horizontal price-fixing as “horizontal agreements among competitors to fix prices”) (emphasis added). Petitioner has not even alleged that the birthday promotion had anything to do with its termination or any harm it suffered. What Petitioner has alleged is, at most, a plain vanilla RPM program established by a manufacturer, which as Leegin held must be adjudged under the rule of reason. 32 CONCLUSION The petition for a writ of certiorari should be denied. Respectfully submitted, ROHIT K. SINGLA JEFFREY 1. WEINBERGER MUNGER, TOLLES & Counsel of Record OLSON LLP JEFFREY Y. WU 560 Mission Street MUNGER, TOLLES & 27th Floor OLSON LLP San Francisco, CA 94105 355 South Grand Avenue (415) 512-4000 35th Floor Los Angeles, CA 90071 (213) 683-9100 jeffrey.weinberger@mto.com Counsel for Respondent January 18, 201] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_2753%3A2. Public record. Not legal advice.