Opposition Brief — Aquatherm Industries, Inc. v. Florida Power & Light Co.

}

|

| 7 | MAR 5

No. 98-1135 -

ee

'

IN THI ae

Supreme Court of the United States

OCTOBER TERM, 1998

TE He ee on

AQUATHERM INDUSTRIES, IN

FLORIDA POWER & LIGHT COM

ON PETITION FOR WRIT OF CERTIORAR

lO THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUI1

RESPONDENT?’S BRIEF IN OPPOSITION

ELIZABETH J. DU FRESNI]

Counsel of Record

TIMOTHY T. HUGHES

DAVID M. LINDSEY

CARLOTTA J. ROOS

STEEL HECTOR & DAVIS

ittorneys for Respondent

200 South Biscayne Boule

Miami, Flonda 33 )3

(305) 577-2855

I].

II]

QUESTIONS PRESENTED

Whether the Court should grant a Writ of Certiorari

where Petitioner bases its arguments for review on dicta

from the appeals court decision.

Whether the Court should grant a Writ of Certiorari where

Petitioner incorrectly categorizes the case as a regulatory

circumvention case.

Whether the Court should grant a Writ of Certiorari where

the appeals court affirmed dismissal because Aquatherm

could prove no facts to support its claim.

il

STATEMENT PURSUANT TO RULE 29.6

FPL Group, Inc. is the parent company of Florida Power

& Light Company. There are no nonwholly owned

subsidiaries of Florida Power & Light Company.

ll

TABLE OF CONTENTS

Questions Presented .........-----e2eeeeeeeees

Statement Pursuant to Rule 29.6 ............-+-.

| Ge eer re

Table of Cited Authorities ............---5:

Statement of the Case ............20-- ee eeeee:

A. Procedural History .............+--++:

B. Statement of the Facts .............---:+--

Reasons for Denying the Writ ...........---++--

I. Dicta In Footnote Four Does Not Warrant

Se ple ee ea

A. Footnote Four is Dicta. ..............

R. Footnote Four is a Correct Statement of

Law Under the Specific Circumstances of

es encase ee es

C. Case Law Cited by Aquatherm is

Inapposite. ........----- eee ee eeees

Il. This Case Is Not A Regulatory Circumvention

es i ects we vee sence eee

Page

ill

nN

WN

6

Contents

Page

lll. The Eleventh Circuit Properly Affirmed

Dismissal Of The Sections 1 And 2 Conspiracy

Counts With Prejudice Because It Was Clear

Beyond Doubt That Aquatherm Could Prove No

Set Of Facts In Support Of Its Claim. ...... 14

A. The Appeals Court Properly Affirmed

Dismissal of the Section 2 Claim. ..... 15

B. The Appeals Court Properly Affirmed

Dismissal of the Section 1 Claim. .... 17

LD once eel oaosereseuataskeee tee a eases 19

TABLE OF CITED AUTHORITIES

Cases:

Albrecht v. Herald Co., 390 U.S. 145 (1968) ......

Brown Shoe Co. v. United States, 370 U.S. 294 (1962)

Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., et al.,

DEF Wide ETE GURUED 6 kc ewestvknesnadeeeverss

Cape Cod Food Products, Inc. v. National Cranberry

Ass'n, 119 F. Supp. 900 (D. Mass. 1954) .......

Commonwealth of Pennsylvania v. Pepsico, 836 F.2d

Peet Ge ee | error or ere

Conley v. Gibson, 355 U.S. 41 (1957) ............

DuPont Glore Forgan, Inc. v. AT&T, 437 F. Supp. 1104

8 ss a nA ype ten i

Klor’s v. Broadway-Hale Stores, Inc., 359 U.S. 207

CRONE t doneet ten cadees wa oeerene cue eaeic.

Nash v. United States, 229 U.S. 373 (1913) .......

NYNEX Corp. v. Discon, Inc., _ U.S. __,119 S. Ct.

i i en a an ee ed fe BG cee,

Olympia Equipment Leasing Co. v. Western Union

Telegraph Co., 797 F.2d 370 (7th Cir. 1986) ....

Page

1]

18

1]

14

13,14

Cited Authorities

Page

Parmelee Transportation v. Keeshin, 292 F.2d 794 (7th

Soe. ee ee age ar ee a ote a 1]

Perington Wholesale, Inc. v. Burger King Corp., 631

Fae Lee Cet Ge. SOTO) vines saweccevdeceess 1]

Perma Life Mufflers, Inc. v. International Parts Corp.,

SPE Was RO EEDD bas cee ccexeess er ee 1]

St. Paul Fire & Marine Insurance Co. v. Barry, 438

Lys ETD 9 0 0 dd nw cokes aes Uae eewn ass 1]

United States vy. General Motors Corp., 121 F.2d 376

Rot Ae) re eee eee rere er re IY:

Van Dyke Ford, Inc. v. Ford Motor Co., 399 F. Supp.

raphe MS Sy) ee ears 12

Statutes:

_sepeom Aot § 4. 15 UDA. © ID 6 ccc cee wesseees 2

Fla. Admin. Code r. 25-17.051(10) .............. 3

Fla. Admin. Code r. 25-17.057(2) ............... 3

se SR Fe eee 2

Sherman Act §§ 1 and 2, 15 U.S.C. §§ 1,2 ....... passim

Cited Authorities

Page

Rule:

i See A) ere rae are 2

Other Authorities:

3 PHittie E. AREEDA & HERBERT HOVENKAMP, ANTITRUST

Pm) gh, |) ee ere rr er ey ee 12

3A PHILLIP E. AREEDA & HERBERT HOVENKAMP,

ANTITRUST Law, 4 809 (1996) ................. 13

HERBERT HOVENKAMP, FEDERAL ANTITRUST POLICY,

OS FS Pa CTP OOD he cicicsuvvtescceasanaeanes 13

a

g

3

;

l

STATEMENT OF THE CASE

A. Procedural History

On December 5, 1991, Agquatherm Industries, Inc.

(““Aquatherm’’), a manufacturer of solar pool heaters, filed a

complaint in the Circuit Court for Palm Beach County,

Florida, against Florida Power & Light Company (“FPL”),

alleging that FPL engaged in false and deceptive advertising,

violated Florida’s antitrust laws, and violated the Florida

Energy Efficiency and Conservation Act. Two months later,

the state court dismissed all four counts, with leave to amend

the antitrust claims. Plaintiff amended, alleging the following

state antitrust violations: (1) Lanham Act false and deceptive

advertising (federal) (2) monopoly leveraging (state);

(3) attempted monopolization (state); and (4) conspiracy to

monopolize (state).

FPL removed the case to the United States District Court

for the Southern District of Florida. In turn, Aquatherm

withdrew the federal claims, so the cause was remanded to

State court, where on November 20, 1992, after argument,

the third amended complaint was dismissed with prejudice.

The dismissal was subsequently affirmed without opinion.

Aquatherm Indus., Inc. v. Florida Power & Light Co., 635

So. 2d 26 (Fla. Dist. Ct. App. 1994).

While the state action was pending, Aquatherm filed this

action in the United States District Court for the Middle

District of Florida, alleging violations of federal antitrust

statutes virtually identical to the earlier alleged state antitrust

claims plus Lanham Act claims. Soon thereafter, Aquatherm

amended its federal complaint, adding Counts VI through IX

alleging the same antitrust violations as in Counts | through

2

IV, but seeking treble damages for them under the Clayton

Act, 15 U.S.C. § 15. The district court granted FPL’s motion

to dismiss upon a determination that the state court dismissal

of the trade libel and disparagement claim and state antitrust

claims was res judicata on the federal Lanham Act and federal

antitrust claims. On appeal, the Eleventh Circuit affirmed in

part and reversed in part, holding that res judicata barred the

Lanham Act claims, but not the later-filed federal antitrust

claims. Aquatherm Indus., Inc. v. Florida Power & Light Co.,

84 F.3d 1388 (11th Cir. 1996).

After remand, FPL filed a renewed Rule 12(b)(6) motion

to dismiss on the merits the remaining Sherman Act Sections

1 and 2 claims: (1) monopoly leveraging; (2) attempted

monopolization; (3) conspiracy to monopolize; and

(4) restraint of trade. On July 9, 1997, the district court entered

an Order granting FPL’s renewed motion to dismiss the

Amended Complaint and directing the clerk to close the file.

Aquatherm appealed the district court’s dismissal,

making arguments essentially identical to those in this petition

for a writ of certiorari. The Eleventh Circuit affirmed the

district court’s dismissal. Aguatherm Indus., Inc. v. Florida

Power & Light Co., 145 F.3d 1258 (11th Cir. 1998).

B. Statement of the Facts

Aquatherm’s brief misrepresents FPL’s obligations under

the Florida Energy and Efficiency Act (“FEECA’’), Fla. Stat.

§ 366.80 et seq. See Pet. 5. FPL was never mandated to advise

its customers to replace with solar pool heaters any pool

heating systems that rely on non-renewable energy sources.

FEECA requires FPL to provide energy audits for its

customers at their request. The Florida Public Service

5

.

;

|

3

Commission (“FPSC”) rules implementing FEECA require

the auditor to provide the customer with an estimate of the

energy and overall cost savings, installation cost, annual

maintenance costs, first year’s energy savings, and payback

period of certain “conservation measures.” Fla. Admin. Code

r. 25-17.057(2). The list of 20 conservation measures includes

installation of “heat pump or natural gas water heaters” and

the use of “solar domestic water heating” and “solar

swimming pool heating (where pools are presently heated

with a non-renewable resource).” Fla. Admin. Code r. 25-

17.051(10). If requested by a customer, FPL will explain the

different types of pool heating systems (solar, natural gas,

heat pump, and electric resistance) and provide a list of

suppliers. There has never been, however, a requirement to

encourage solar pool heating.

Petitioner’s brief also misrepresents FPL’s “Heat Pump

Program.” See Pet. 5-8. FPL’s failure to refer to solar heaters

in promotional materials does not constitute an implied

representation that solar heaters do not exist. FPL’s

employees did not refuse to inform customers about solar

heaters. And, FPL did not lie about the merits of PHPs.

FPL is a regulated utility in the markets for the

generation, transmission and distribution of electric energy

in Florida. It does not manufacture, sell, or install pool heating

pumps (“PHPs”) and has no economic or other ownership

interest in any entity that manufactures, sells or installs PHPs

or any other pool heating equipment. FPL’s interest in PHPs

is two-fold: (1) FPL has traditionally given customers

information on technologies like PHPs that are effective and

efficient; and (2) PHPs operate at a constant, high load factor,

which indirectly benefits FPL by improving the efficiency

of utilization of its system. FPL receives no income from the

4

sale of PHPs. PHP manufacturers and contractors receive no

income from the sale of electricity.

In 1987, FPL began a program promoting the use of PHPs

as an economical way to heat commercial swimming pools.

In 1988, FPL expanded the program to residential swimming

pools. Part of FPL’s PHP program was an advertising

campaign, including a direct mailing to FPL’s residential

customers with swimming pools. FPL’s promotional

materials for the PHP program directly compared PHPs to

natural gas, propane and other fossil-fuel alternatives. See

Pet. App. 70-73. No comparison was made to solar pool

heaters.

Under this promotional program, FPL offered residential

customers the following benefits: (1) a free in-home

consultation by an FPL representative “in order to determine

approximately how much it will cost to heat your pool using

a heat pump”; (2) a $50 reimbursement incentive for FPL

customers who completed a questionnaire after installation

of a PHP; and (3) a list of FPL participating contractors who

sell/install PHPs. FPL gave similar benefits to commercial

customers: (1) FPL representatives to answer technical

questions and calculate the savings one could expect from a

PHP; (2) a list of participating contractors; and (3) favorable

financing for PHPs through C&S Bank.

The “participating contractors” were contractors who

manufactured, installed and/or serviced residential and

commercial swimming pool equipment. These contractors

dealt directly with the ultimate purchasers of PHPs and were

not required to deal exclusively in PHPs. They were free to

sell other pool heating systems such as solar, oil, or natural

gas heating systems. Many did, in fact, offer other types of

5

pool heating equipment. The listed contractors were given

permission, subject to certain restrictions, to use FPL’s

corporate logo to show their participation in the PHP program.

As the Eleventh Circuit correctly noted, “there is no allegation

or evidence that FPL refused to allow participating contractors

to buy or sell solar pool heaters.” 145 F.3d at 1263.

FPL’s analysis of the costs and benefits of the program

did not demonstrate cost-effectiveness. Consequently, FPL

terminated this incentive program in 1990, less than three

years after it began and about one year before Aquatherm

filed its original suit in state court in December 1991.

REASONS FOR DENYING THE WRIT

The Eleventh Circuit’s ruling does not warrant review.

Its holding that Petitioner failed to state a claim under

Sections | or 2 of the Sherman Acct is correct and creates no

conflict with decisions of this Court or other courts of appeals.

Moreover, this case turns on its particular facts and does not

state any new or controversial general rules of law.

The Eleventh Circuit affirmed dismissal of Aquatherm’s

Sherman Act Section 2 conspiracy to monopolize claim

because it was clear beyond doubt that Aquatherm could

prove no set of facts in support of its claim, including specific

intent to monopolize. Pet. App. 4-5, 11. The appeals court

affirmed dismissal of the monopolization and attempted

monopolization claims because Aquatherm failed to allege

and could prove no set of facts showing that FPL was engaged

in a regulatory circumvention scheme. Pet. App. 3-4, 6-7,

11. Finally, the Eleventh Circuit affirmed dismissal of the

Section | conspiracy in restraint of trade count because there

simply was no allegation nor set of facts which Aquatherm

6

could prove to show injury to competition as a whole rather

than injury to Petitioner itself as an individual competitor.

Pet. App. 6, 11.

Despite Aquatherm’s protests, the Eleventh Circuit’s

opinion does not preclude the possibility of a conspiracy to

monopolize a market in which a defendant does not

participate; it merely states this particular Petitioner’s

inability to plead such a claim under these facts. The Eleventh

Circuit’s opinion does not reject the possibility that a

regulated monopolist might violate Section 2 of the Sherman

Act through a regulatory circumvention scheme. Finally, the

opinion does not hold that the failure to name co-conspirators

is, Standing alone, a sufficient basis for dismissing a claim

for conspiracy to monopolize. Thus, the “questions” raised

by Petitioner do not challenge the opinion rendered by the

Eleventh Circuit, and, accordingly, this Court should deny

the instant petition.

I.

DICTA IN FOOTNOTE FOUR DOES

NOT WARRANT REVIEW.

A. Footnote Four is Dicta.

Petitioner would have this Court grant certiorari in order

to gratuitously clarify a correct, if incomplete, footnote to

the Eleventh Circuit’s opinion that amounts to no more than

dicta. Pet. 16. The footnote is an additional but unnecessary

basis for upholding the district court’s dismissal of

Aquatherm’s Section 2 conspiracy claim. In the body of the

opinion, the court spells out the factors that form the basis

for its ruling: Aquatherm’s inability to allege, under these

circumstances, any facts showing “concerted action

8 FSR rl epee a

7

deliberately entered into with the specific intent of achieving

a monopoly.” Pet. App. 6.

The dicta in the footnote upon which Aquatherm’s

argument relies states in full:

Equally fatal to Aquatherm’s conspiracy allegation

is the fact that no authority exists holding a

defendant can conspire to monopolize a market in

which it does not compete. The cases relied upon

by Aquatherm offer no support under § 2. See, e.g.,

Nash v. United States, 229 U.S. 373 (1913)

(Section 1 conspiracy claim alleged in restraint of

trade is not the equivalent of a § 2 monopolization

claim). The plaintiff can cite to no case in which

at least one of the defendants charged with

conspiracy to monopolize was not a competitor in

the relevant market.

Pet. App. 6, n.4.

The appellate court below did not base its affirmation of

the district court’s dismissal on the reasoning in this footnote.

When the court said “equally fatal” (emphasis added), it made

quite clear that factors discussed in the body of the court’s

opinion not addressed in the footnote were fatal to

Aquatherm’s conspiracy allegation.

B. Footnote Four is a Correct Statement of Law Under

the Specific Circumstances of this Case.

Aquatherm not only relies on dicta for the basis of its

Petition, but also misrepresents the meaning of the dicta in

an effort to argue that it somehow creates a conflict with other

8

circuits requiring the attention of this Court. Out of context,

the Eleventh Circuit’s footnote perhaps raises an academic

question: Can a party be liable under Section 2 of the Sherman

Act for conspiring to monopolize for itself or for others a

market in which it does not compete? In context, it is clear

that the Eleventh Circuit was referring only to the inability

of FPL to monopolize for itself a market in which it does not

compete. The dicta in the footnote clearly does not preclude

the possibility of a conspiracy to monopolize for others a

market for others in which a defendant does not participate.

This dicta was stated in the context of three Sherman

Act Section 2 counts alleged in the complaint: Section 2

monopoly leveraging, Section 2 attempted monopolization,

and Section 2 conspiracy to monopolize. In dismissing the

monopoly leveraging and attempted monopolization claims,

the court reasoned that FPL could not be liable for the

monopolization or attempted monopolization of a market in

which it does not compete, never has competed and has no

plans to enter. Pet. App. 4. Petitioner does not challenge the

court’s reasoning as applied to the monopolization and

attempted monopolization claims. For those two claims, there

can be no doubt that Petitioner was accusing FPL of using its

monopoly to leverage itse/f into a market and attempt to

monopolize a market for itself.

But Aquatherm was very vague about what market or

markets were relevant. In trying to construe the complaint

liberally the Eleventh Circuit struggled to imagine what

markets Aquatherm might be referring to and identified two,

the electric power and pool heater equipment markets. Pet.

App. 4. It then carefully went through each Section 2 claim.

Monopolization of the electric generation and transmission

market? Not possible because FPL cannot increase or lose

ee

9

its monopoly share of that statutorily protected market. Pet.

App. 3-4. The overall market for all sources of energy used

in heating pools? FPL has no monopoly there to maintain or

enhance, and Aquatherm did not allege that FPL has enough

power in that overall market to present a dangerous

probability of success in an attempt to monopolize it.'

Attempted monopolization of the market for pool heating

equipment? Not possible because FPL was not a market

participant. Pet. App. 3-4. Monopoly leveraging by extracting

monopoly rents out of the pool heating equipment market?

Again, not possible because FPL is not a market participant.

Pet. App. 6-7.

The Eleventh Circuit’s footnote, which Aquatherm now

challenges, is nothing more than the court’s attempt to patch

together a possible fact pattern that theoretically Aquatherm

might have wanted to allege, but did not. In this footnote the

appeals court attempted to conjure a best case scenario for

Aquatherm. It was truly a “best” case scenario because

Aquatherm had alleged at least some facts regarding FPL’s

market power and alleged illegal conduct, but had alleged

nothing whatsoever about the structure of the PHP market,

the power of its participants, jointly or severally, or any

agreement among its members. The court of appeals,

therefore, focused on one possible fact pattern. It asked if

FPL could be liable for conspiring with others to monopolize

the PHP manufacturing and installation markets for itself,

the only defendant and the only “conspirator” about whom

the court was told anything in the pleadings. The answer was,

of course, no. Just as a party cannot monopolize or attempt

1. Aquatherm now complains that the Eleventh Circuit “cast

aside” that possible theory. Pet. 24. In fact, the Eleventh Circuit

graciously gave it more attention than Aquatherm had ever given it,

in its complaint or its briefs.

{

10

to monopolize a market for itself if it is not a competitor in

or potential entrant into that market, a party cannot conspire

to monopolize that same market for itself. A party cannot

have the specific intent to monopolize for itself if it has no

intent to sell products or services in the market. The court’s

conclusion follows logically from the requirement of specific

intent to monopolize.

Aquatherm never raised in its complaints nor in its briefs

to the Eleventh Circuit the other conceivable fact pattern —

where FPL allegedly conspired with the PHP manufacturers

and installers to monopolize the market for them. It did not

name or sue PHP manufacturers or installers. Thus, it is not

surprising that the Eleventh Circuit would speak only to the

first fact pattern, which is the scenario that Aquatherm

appeared to focus on throughout its complaint and its appeal

to that court. So it is in that context that the appeals court

made the statement contained in footnote four.

The Petitioner would now like this Court to take up what

is a purely academic question in this case: Can one party be

liable under Section 2 for conspiring to monopolize for others

a market in which it does not itself compete or sell products?

But the Eleventh Circuit did not even address this admittedly

controversial issue. It is therefore hardly ripe for this Court’s

consideration.

C. Case Law Cited by Aquatherm is Inapposite.

Aquatherm cites numerous cases purportedly to

demonstrate that footnote four is an incorrect general

statement of law. These cases are legally and factually

distinguishable. In fact, all but one of the Supreme Court

cases to which Petitioner cites is a Sherman Act Section 1

oe Aen ie he phe ec ee

11

case. See Nash v. United States, 229 U.S. 373 (1913) (Section

1 case); Albrecht v. Herald Co., 390 U.S. 145 (1968) (Section

1 case arising from a vertical maximum price fixing

agreement); St. Paul Fire & Marine Insurance Co. v. Barry,

438 U.S. 531 (1978) (Section 1 case arising from horizontal

agreements among competitors to boycott certain customers).

Perma Life Mufflers, Inc. v. International Parts Corp., 392

U.S. 134 (1968) (Section 1 and Clayton Act, Section 3

(exclusive dealing) case arising from vertical agreements in

which franchisees agree to install only the manufacturer/

franchisor’s mufflers). Only Klor’s v. Broadway-Hale Stores,

Inc., 359 U.S. 207 (1959) has a Section 2 claim in addition

to its Section 1 claim. And, in Klor’s all parties who were

alleged to have engaged in monopolizing the appliance

market, participated in the affected appliance market, some

as appliance manufacturers and others as appliance retailers.

Aquatherm also cites to appeals court and district court

opinions as support for the proposition that a party can be

liable under Section 2 for conspiring to monopolize a market

in which it does not compete. Again, the cases cited provide

no support for Aquatherm’s argument and do not conflict with

the Eleventh Circuit’s opinion.” Rather, these cases consist

2. See, e.g., Perington Wholesale, Inc. v. Burger King Corp.,

631 F.2d 1369 (10th Cir. 1979) (Burger King allegedly conspired

with a paper products distributor to replace Perington as paper cup

supplier with-a Burger King supplier; Burger King derived direct

financial benefit from its subsidiary’s paper cup sales); Parmelee

Transportation v. Keeshin, 292 F.2d 794 (7th Cir. 1961) (ICC

Commission, upon receiving bribe from Keeshin, persuaded six

railroads to use Keeshin’s company to transport passengers from one

railroad station to another. District court dismissed saying “this case

does not belong in the family of anti-trust cases under any

conditions.”); United States v. General Motors Corp., 121 F.2d 376

(Cont’d)

12

of vertical restraints and tying cases. In both categories, the

manufacturer, wholesaler or franchisor uses its power in the

primary market to coerce agreements or conspire to lessen

competition in a secondary market. In vertical restraints cases,

the manufacturer, wholesaler or franchisor sells or leases its

products through a down-line distributor or retailer, deriving

direct benefit from the sale of its product at the distribution

or retail level. In tying cases, the manufacturer, wholesaler

or franchisor itself sells or leases both the tying and tied

products, deriving direct benefit from the sale of both

products. In both scenarios, the defendant derives direct

financial benefit from sales in the second market.

The distinction between a Section | and a Section 2 case

is significant. Section 1 is clearly directed at agreements in

restraint of trade, whereas Section 2 is directed at conspiracies

to monopolize markets for the conspirators themselves. See

3 PHILLIP E. AREEDA & HERBERT HOVENKAMP, ANTITRUST Law,

{ 651le, at 81-82 (1996). Scholars have questioned whether

(Cont’d)

(7th Cir. 1941) (Section 1 conspiracy in which GM allegedly

conspired with its dealers to force other dealers to use GMAC for

financing); DuPont Glore Forgan, Inc. v. AT&T, 437 F. Supp. 1104

(S.D.N.Y. 1977) (Vertical and intra-enterprise agreements allegedly

in violation of Section 1 only. AT&T agreed with its affiliates to fix

rates); Van Dyke Ford, Inc. v. Ford Motor Co., 399 F. Supp. 277

(E.D. Wis. 1975) (Bank allegedly conspired with auto dealership

against plaintiff and dealer. Case involves both Section 1 and Section

2 violations. Court’s statement that there is no requirement that all

conspirators must be competitors is directed at allegations of Section

1 conspiracy to destroy a competitor); Cape Cod Food Products,

Inc. v. National Cranberry Ass'n, 119 F. Supp. 900 (D. Mass. 1954)

(This is a jury instruction, not a case opinion. It does stand for

Petitioner’s proposition. But, a jury instruction from a 1954 district

court does not contradict the Eleventh Circuit’s statement that “no

authority exists.”).

13

there is such a thing as a conspiracy to monopolize under

Section 2 based on an agreement among parties at different

levels in a market or, as here, in different markets altogether.

See 3A PHILLIP E. AREEDA & HERBERT HOVENKAMP, ANTITRUST

Law, § 809, at 372-73 (1996). Aquatherm’s Petition confuses

these distinctions by relying on a series of inapplicable

Section 1 cases. But the Eleventh Circuit does not wade into

this debate as Aquatherm obviously invites this Court to do.

Rather, the Eleventh Circuit simply points out, in a footnote

amounting to dicta, that Aquatherm had cited no case showing

a Section 2 violation such as Aquatherm had alleged. This

was fair judicial comment on the blatant inadequacy of the

totality of Aquatherm’s meager argument.

Il.

THIS CASE IS NOT A REGULATORY

CIRCUMVENTION CASE.

Aquatherm’s premise is that this case involves a classic

regulatory circumvention scheme in which a regulated utility

has much to gain from promoting sales of related equipment

because the revenue from the related equipment in an

unregulated market will escape the Public Service

Commission’s scrutiny.’ As both the district court and

the Eleventh Circuit found, Aquatherm’s premise is

3. Regulatory circumvention schemes are perhaps the one

situation in which current antitrust scholars and jurists acknowledge

that it makes economic sense for a monopolist to attempt to extend

its monopoly into an input or related equipment market, through

monopoly leveraging, attempted monopolization or a conspiracy to

monopolize. HERBERT HOVENKAMP, FEDERAL ANTITRUST Po_icy, §§ 7.9

& 9.3 (1994); Olympia Equipment Leasing Co. v. Western Union

(Cont’d)

14

fundamentally flawed. FPL 's increased revenues will come,

if at all, from an increased sale of electricity and will not

escape the regulatory agency's scrutiny. There were and

could be no allegations that FPL will sell or install PHPs and

will, thus, have cleverly “hidden” revenues from the sale of

this equipment. There were no “other markets” FPL was

reaching. It started out selling electric power — and that was

the only market from which it sought to increase revenues.

The Eleventh Circuit understood this basic flaw in

Aquatherm’s theory, and affirmed dismissal because of this

factual problem without in any way narrowing the Sherman

Act’s proscription of monopolists’ regulatory circumvention

schemes.

Il.

THE ELEVENTH CIRCUIT PROPERLY AFFIRMED

DISMISSAL OF THE SECTIONS 1 AND 2 CONSPIRACY

COUNTS WITH PREJUDICE BECAUSE IT WAS CLEAR

BEYOND DOUBT THAT AQUATHERM COULD PROVE

NO SET OF FACTS IN SUPPORT OF ITS CLAIM.

Aquatherm in its Petition makes a last gasp, after years

of litigation in two court systems, requesting yet another

opportunity to amend its pleadings. That request must be

denied. As stated by the district court, litigation today is “too

(Cont'd)

Telegraph Co., 797 F.2d 370, 374 (7th Cir. 1986) (J. Posner). This

Court recently addressed a similar situation in NYNEX Corp. v.

Discon, Inc.,__ U.S. __, 119 S. Ct. 493 (1998). In NYNEX a regulated

monopolist tried to enhance its profits allegedly by conspiring to

monopolize the sales of unregulated waste recycling services, from

which it received “rebates.” Unlike NYNEX, in the instant case no

additional revenue escaped regulatory scrutiny.

15

expensive a process to waste time on fanciful claims.” Pet.

App. 17 (quoting Commonwealth of Pennsylvania v. Pepsico,

836 F.2d 173, 182 (3d Cir. 1988)). Both the district court

and the Eleventh Circuit viewed Aquatherm’s claims and

reached the same conclusion: Aquatherm can prove no set of

facts in support of its claims that would entitle it to relief

under the federal antitrust statutes. Pet. App. 11, 16-18. See

also Conley v. Gibson, 355 U.S. 41, 45-46 (1957). (The fact

that Florida’s state courts reached the identical conclusion

regarding the state antitrust claims underscores how

thoroughly Petitioner has already had its opportunity to be

heard — and heard — and heard.)

A. The Appeals Court Properly Affirmed Dismissal of

the Section 2 Claim.

The Eleventh Circuit affirmed dismissal of the Section 2

conspiracy to monopolize claim for failure to allege any

specifics in support of the conspiracy, including specific

intent and at least some specifics on who the co-conspirators

were. Pet. App. 5-6. The Eleventh Circuit’s holding is

consistent with the law of this Court and is not in conflict

with any circuit.

Aquatherm now incorrectly asserts that the Eleventh

Circuit upheld the district court’s dismissal of the conspiracy

to monopolize solely because Aquatherm failed to name the

co-conspirators. The appeals court did no such thing. It upheld

the dismissal because Aquatherm

specifies no fact in support of this [conspiracy]

allegation. ... and there is no showing of the

requisite specific intent — on the part of FPL or

any other party — to achieve a monopoly.

16

Pet. App. 5. The Eleventh Circuit is, indeed, appropriately

critical of the Petitioner’s vague reference to the members of

the conspiracy, but does not rest its opinion on that single

flaw in the complaint. Instead, the Eleventh Circuit indicates

that a mere unspecified reference to a category of alleged

conspirators and a conclusory allegation that they had the

intent to monopolize is insufficient, without more, to state a

claim.

Notably, Aquatherm falls far short of identifying even a

group that may be involved the alleged conspiracy. The

alleged “group” of conspirators, by Aquatherm’s theory,

appears to be an ever growing and shrinking group of pool

heating installers who at any given moment might be

installing electric heating equipment. Or, is the alleged

“group” larger? Might not it also include every installer who

ever tried to persuade a homeowner to install an electric pool

heating system and every manufacturer of PHPs? FPL is lefi

to speculate about just how grand and fluid a group is involved

in this purported conspiracy. No defendant could rationally

know “whom” they were alleged to have conspired with from

Petitioner’s pleadings.

Further, the Eleventh Circuit found that no such

conspiracy could be pled under these specific facts. It should

be remembered that the purpose of the conspiracy alleged

here purportedly was to monopolize the pool heating

equipment manufacture and installation market(s). Some

specific facts must, therefore, be supportable to suggest that

agreements with this specific purpese existed. But the only

agreements ever put forth were those that arose when poo!

heating installation contractors accepted FPL’s rebate offer.

The acceptance amounted to an agreement. Each time,

however, an installer did a job and was rebated, it was a single

17

transaction between FPL and the installation contractor, with

no strings attached. Accepting FPL’s rebate incentive on one

pool installation put the contractor under no obligations with

respect to subsequent installations.

Aquatherm never alleged, nor could it, that the installers

agreed among themselves to install only electric pool heating

equipment. Aquatherm has not alleged that an understanding

of any sort existed among any installers or that FPL was

accumulating a series of individual agreements with itself at

the center of the spokes coordinating a tacit conspiracy.

Indeed, Aquatherm has never suggested that the rebate

program in any way tied up installers or would have the

cumulative effect of leaving no one around to install solar or

gas heating systems.

An intent to monopolize means an intent to drive so many

competitors out of the market that the conspirators can raise

prices to monopoly levels. With literally no specifics

indicating something more nefarious than rebates from FPL

to installation contractors, Aquatherm’s complaint fails to

show a specific intent to monopolize.

B. The Appeals Court Properly Affirmed Dismissal of

the Section 1 Claim.

When ruling on the Section 1 conspiracy count, the

Eleventh Circuit never mentioned Aquatherm’s failure to

name co-conspirators as a basis for the dismissal. The

Eleventh Circuit affirmed dismissal of the Section 1

conspiracy to restrain trade because the complaint failed to

State an antitrust injury. Pet. App. 7-8. Aquatherm argues

that it did allege antitrust injury. Pet. 17, n.6. But the

complaint alleges only that deceptive advertising injured solar

18

pool heater sellers and Aquatherm.* Again, Aquatherm misses

the point. Injury must be to competition in a market. “The

antitrust laws . . . were enacted for ‘the protection of

competition not competitors.’ ” Brunswick Corp. v. Pueblo

Bowl-O-Mat, Inc., et al., 429 U.S. 477, 488 (1977) (quoting

Brown Shoe Co. v. United States, 370 U.S. 294, 320 (1962)).

Injury to Aquatherm alone is not enough, nor is injury to

solar pool heaters enough. Nowhere in its complaint or even

in these last-ditch efferts to salvage some kind of theory of

its case has Aquatherm ever suggested that solar pool heater

sellers are the relevant market.

4. As Petitioner notes, the Eleventh Circuit was silent on

whether “false advertising can be the basis for antitrust liability.”

Pet. 16. The court of appeals did not have to reach the issue. Even

assuming that deceptive advertising can be a basis for antitrust

liability, and taking Petitioner’s complaint allegation that FPL’s

advertising was deceptive as true for purposes of the Motion to

Dismiss, Petitioner failed to state a claim.

19

CONCLUSION

This case has been in and out of state and federal court

with a good number of complaints and amended complaints

and has gone up and down and back up the appeals process.

And, after all that, Aquatherm is still unable to state a viable

claim. Both the Eleventh Circuit and the district court held

that Aquatherm could prove no set of facts in support of its

claims which would entitle it to relief under federal antitrust

laws. Aquatherm’s Petition is based almost entirely on dicta

from a footnote in the Eleventh Circuit’s opinion that, even

if it was the holding of the case, would create no clear conflict

between federal courts. Further, no other arguments made in

the Petition present any conflicts between federal courts or

any other basis for granting the Petition. Accordingly, FPL

respectfully requests that the Court deny the Petition for Wnt

of Certiorari.

Respectfully submitted,

ELIZABETH J. DU FRESNE, P.A.

Counsel of Record

TIMOTHY T. HUGHES

DAVID M. LINDSEY

CARLOTTA J. ROOS

STEEL HECTOR & DAVIS LLP

Attorneys for Respondent

200 South Biscayne Boulevard

Miami, Florida 33131-2398

(305) 577-2855