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From Antitrust Law Daily, May 31, 2013

Rulings Upheld in Failed Ventilation Equipment Antitrust Litigation

By Tobias J. Gillett, J.D., LL.M.

Distributors of ventilation equipment were not entitled to reversal of a district court’s disposition of their federal and state antitrust claims over alleged anticompetitive conduct in the market for the provision of certain ventilation products for construction projects, the U.S. Court of Appeals in San Francisco has ruled (Advanced Microtherm, Inc. v. Norman Wright Mechanical Equipment Corp., May 30, 2013, Per Curiam).

Advanced Microtherm, Inc. and HVAC Sales, Inc. brought suit against Norman Wright Mechanical Equipment Corp., F.W. Spencer & Son, Inc., and other parties, alleging various violations of federal and state antitrust law in the supply of heating and ventilation products for construction projects. All defendants except Norman Wright and Spencer were later dismissed from the suit. The district court granted summary judgment to Norman Wright on bid-rigging, tying, conspiracy, and exclusive dealing claims, and summary judgment to Spencer on all claims against it. The jury decided for Norman Wright on remaining claims of attempted monopolization, commercial bribery, and intentional interference with a contract. The plaintiffs appealed.

Price fixing/bid rigging. The appeals court first affirmed the district court’s disposition of the price fixing and bid rigging claims against Norman Wright, noting that the plaintiffs’ attorney had stated in open court that “We have no claim for price fixing or bid rigging. It is not a claim for which we claim damages.” Without an injury, the plaintiffs lacked standing to bring those claims, the court concluded.

Tying. The court also upheld the district court’s grant of summary judgment on the tying claims. The court approved of the district court’s conclusion that the plaintiffs had not established that Norman Wright’s exclusive ability to distribute a product under a flat specification in a single construction project could be a relevant market. Although the court noted that a “less stringent standard” applied to claims under California’s Cartwright Act than federal law, the court found the plaintiffs had not shown that Norman Wright had market power under either standard.

Conspiracy/exclusive dealing. Similarly, the court concluded that the plaintiffs did not provide evidence of a conspiracy that would support their antitrust conspiracy and exclusive dealing claims. Evidence of an opportunity to engage in a conspiracy, of choosing a higher bidder, of realizing high profits, or of making take-it-or-leave-it offers was not sufficient without more.

Commercial bribery. Since the plaintiffs had “prepared a list of 150 P-Projects and stipulated that [they] would seek damages only for those projects,” the court agreed with the district court’s limitation of the evidence of commercial bribery to those projects.

Jury instructions. The court also rejected the plaintiffs’ objections to the jury instructions. The argument that the plaintiffs did not have to prove Norman Wright was engaged in interstate commerce—because Norman Wright had already admitted it—was waived because it was raised for the first time on appeal. Norman Wright had not asserted the in pari delictodefense, so there was no need for a jury instruction on it. Proposed jury instructions relating to the tying and exclusive dealing claims would not have been helpful because they “did nothing to clarify or particularize the law to the facts of the case” and, in any case, the district court had already granted summary judgment on those claims. Finally, the plaintiffs failed to object at trial or in their motion for a new trial to the district court’s refusal to instruct the jury on the tort of intentional interference with a prospective economic interest. Thus, the issue was waived on appeal.

The court noted that its analysis of the conspiracy and exclusive dealing claims was the same for Spencer as for Norman Wright. Moreover, the plaintiffs’ “examples of Spencer’s wrongdoing [were] unpersuasive.” A plumber who testified that Spencer was part of “a clique” in the industry admitted on cross-examination “that he had no direct knowledge of the bidding at issue.” Spencer’s statement at trial that he always accepted “the lowest responsive bid” was clarification of testimony that he always accepted “the lowest bid,” not prevarication.

The case is No. 11-16637.

Attorneys: Russell Brasso (Foreman & Brasso) for Advanced Microtherm, Inc. Michael David Abraham (Bartko Zankel Bunzel & Miller, PC) for Norman Wright Mechanical Equipment Corp. Sloan Christopher Bailey (Flynn Williams LLP) for F.W. Spencer & Son, Inc.

Companies: Advanced Microtherm, Inc.; HVAC Sales, Inc.; Norman Wright Mechanical Equipment Corp.; TempCo, Inc.; F.W. Spencer & Son, Inc.

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