IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
F I L E D
August 13, 2007
No. 06-60305
Charles R. Fulbruge III
Clerk
TUNICA WEB ADVERTISING, et al.
Plaintiffs-Appellants
v.
TUNICA CASINO OPERATORS ASSOCIATION, INC; et al.
Defendants
BARDEN MISSISSIPPI GAMING LLC; doing business as
Fitzgerald’s Casino; BL DEVELOPMENT CORP, doing business
as Grand Casino Tunica; ROBINSON PROPERTY GROUP L P,
doing business as Horseshoe Casino & Hotel; TUNICA PARTNERS
II L P; BALLY’S OLYMPIA LIMITED PARTNERSHIP, doing
business as Bally’s Saloon & Gambling Hall; HOLLYWOOD CASINO
CORPORATION; BOYD TUNICA INC, doing business as Sam’s Town
Hotel & Gambling Hall; SHERATON TUNICA CORPORATION
Defendants-Appellees
Appeal from the United States District Court
for the Northern District of Mississippi
Before DAVIS, DENNIS, and PRADO, Circuit Judges.
DENNIS, Circuit Judge:
Appellants Cherry Graziosi and Tunica Web Advertising, Inc. (“TWA”)
appeal the district court’s December 19, 2005 decision granting summary
judgment in favor of appellees, a number of casinos located in Tunica County,
No. 06-60305
Mississippi,1 on appellants’ federal and state antitrust claims. Appellants claim
generally that the casinos and others engaged in a concerted refusal to deal with
TWA, and that their conduct is a per se violation of section 1 of the Sherman
Antitrust Act, 15 U.S.C. § 1. For the reasons stated below, we reverse and
remand.
I.
In November 1999, Graziosi purchased the domain names
“tunicamiss.com” and “tunicamississippi.com” for roughly $140 from the domain
name registrar Network Solutions, Inc. Shortly thereafter, Graziosi leased those
domain names to Circus Circus Mississippi, Inc., d/b/a Gold Strike Casino Resort
(“Gold Strike”)2 for one year, at a rate of $2,000 per month. No website was
established at either of the domain names; rather, a user who entered either of
the domain names into his or her internet browser was, under the terms of the
lease, automatically redirected to Gold Strike’s website,
goldstrikemississippi.com. When the lease expired, Gold Strike continued to
lease the domain names from Graziosi on an exclusive, month-to-month basis for
$5,000 per month.
In 2000, Graziosi formed appellant TWA. Graziosi is the CEO and sole
shareholder of TWA. TWA acquired the domain name “tunica.com” from another
company for approximately $20,000, and in November 2000, TWA leased
“tunica.com” to Gold Strike for 90 days for $3,000 per month. Gold Strike
continued to lease “tunica.com” from TWA through April 30, 2001.
1
Appellees are Bally’s Olympia Limited Partnership (d/b/a Bally’s Saloon & Gambling
Hall), Barden Mississippi Gaming, LLC (d/b/a Fitzgerald’s Casino and Hotel), BL Development
Corp. (d/b/a Grand Casino Tunica), Boyd Tunica, Inc. (d/b/a Sam’s Town Hotel & Gambling
Hall), HWCC-Tunica, Inc. (d/b/a Hollywood Casino Tunica), Robinson Property Group, Ltd
Partnership (d/b/a Horseshoe Casino & Hotel), Sheraton Tunica Corporation (d/b/a Sheraton
Casino & Hotel), and Tunica Partners II LP (d/b/a Harrah’s Tunica Mardi Gras Casino).
2
Gold Strike was originally named as a defendant in this action, but it later settled
plaintiffs’ claims against it.
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No. 06-60305
The Tunica County Tourism Commission (the “TCTC”), filed a lawsuit
against Graziosi. In its suit, the TCTC claimed that Graziosi was a
“cybersquatter” — i.e., one who purchases a domain name with the hope of
profiting from another person’s trademark — and that she had no right to own
“tunicamiss.com” or “tunicamississippi.com.” The TCTC and Graziosi eventually
settled the suit. As part of the settlement, Graziosi transferred her rights in
“tunicamiss.com” and “tunicamississippi.com” to the TCTC, and the TCTC
relinquished all claims to the domain name “tunica.com.”
In May 2001, TWA appeared before the TCTC and proposed to lease
“tunica.com” collectively to all of the casinos in Tunica County, Mississippi.
Under the terms of TWA’s proposal, each casino in Tunica County would pay
TWA $2,500 per month, and, in return, all visitors to “tunica.com” would be
redirected to the TCTC’s website, which already featured information about all
of the casinos. The casinos would also collectively have the right of first refusal
to purchase “tunica.com.” Karen Sock, a TCTC member and the general
manager of the Grand Casino Tunica, referred the matter to the Tunica Casino
Operators Association (the “TCOA”), a trade association formed by the Tunica
casinos. On May 30, 2001, the TCOA held a meeting at which the members
discussed “tunica.com” and TWA’s proposal. None of the casinos agreed to
TWA’s proposal, and the casinos apparently reached a consensus to not jointly
utilize the “tunica.com” domain name.
Appellants contend that the May 30, 2001 meeting also gave rise to an
agreement among the casinos to refuse to deal with TWA on any terms. Shortly
after the TCOA meeting, Clyde Callicott, the marketing director for Gold Strike,
allegedly told Graziosi that the casinos had entered into a “gentlemen’s
agreement” to not do business with TWA, either individually or as a group.3 On
3
Callicott attended the May 30, 2001 TCOA meeting.
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No. 06-60305
June 6, 2001, Graziosi received an email from Callicott, stating that he had been
instructed to terminate Gold Strike’s existing relationship with TWA: “I was
informed by my VP/GM (based on that discussion held at the TCOA meeting) to
terminate the business relationship we have created with the ‘tunica.com’ site.
I wish I could do more but my hands have been officially tied by the TCOA on
this issue.”
Appellants suggest that the motivation for the casinos’ refusal to deal with
TWA was to cause the value of “tunica.com” to decline. Graziosi asserts that
Callicott told her that, at the May 30, 2001 meeting, Robert McQueen, General
Manager of the Horseshoe Casino, stated that the domain name would be
worthless if none of the casinos dealt with TWA. This understanding was also
apparently confirmed by a conversation between Graziosi and Ellen Duffin, a
marketing executive at the Grand Casino Tunica, sometime after the May 30,
2001 meeting.
After the May 30, 2001 meeting, TWA changed its business model. It
created a website at “tunica.com” and hoped to generate revenue through casino
advertising and/or commissions from online hotel bookings. With this new
business model in place, TWA4 approached a number of the casinos individually
with proposals to advertise on “tunica.com,” but none of the casinos chose to
advertise on the site.5 Appellants contend that the casinos’ continued refusal to
advertise on “tunica.com” was on account of their earlier agreement to boycott
“tunica.com.” Appellants also argue that the casinos reaffirmed their boycott of
“tunica.com” at a November 2002 TCOA meeting. On November 19, 2002,
Callicott, then the marketing director for the Sheraton Casino and Bally’s,
4
In mid-2002, Callicott and Memphis radio personality Rudi Schiffer also became
involved with TWA’s efforts to market “tunica.com” to the casinos.
5
Gold Strike entered into a contract with TWA whereby TWA was permitted to book
certain bus tours to Gold Strike on a commission basis. TWA never referred any bus tours to
Gold Strike under the contract.
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emailed Graziosi and told her that he understood that the TCOA had recently
held a meeting at which the casinos voted to stay away from “tunica.com” “so it
could evently [sic] be sold and bought at a later date by them.”
Graziosi and TWA filed this action in 2003, asserting state and federal
antitrust claims against the casinos, the TCTC, and the TCOA, as well as
several state causes of action not relevant here.6 On November 24, 2004, the
district court dismissed the antitrust claims against the TCTC, holding that the
TCTC was immune from antitrust liability under the Local Government
Antitrust Act, 15 U.S.C. § 35(a) (the “LGAA”), and the Parker state-action
immunity doctrine.7 The court rejected the other defendants’ claims that they
were entitled to immunity from plaintiffs’ antitrust claims under the LGAA, the
Parker doctrine, and the Noerr-Pennington doctrine.8 The TCOA and Gold
Strike were later dismissed from the suit by agreement of the parties.
On December 19, 2005, the district court granted summary judgment in
favor of the remaining defendants (appellees here) on TWA’s antitrust claims.9
The district court found that: (1) the casinos’ alleged conduct could not amount
to a per se violation of section 1 of the Sherman Act; (2) any concerted refusal to
deal with TWA arising from the May 30, 2001 TCOA meeting was not an
unreasonable agreement in restraint of trade because it was a joint response to
a joint proposal and because TWA did not produce sufficient evidence to show
any anticompetitive effect; and (3) TWA did not show that the casinos’ post-May
6
The casinos also filed a number of counterclaims against Graziosi and TWA, but those
counterclaims are not at issue on this appeal.
7
See Parker v. Brown, 317 U.S. 341 (1943).
8
See Eastern R.R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127
(1961); United Mine Workers v. Pennington, 381 U.S. 657 (1965).
9
The district court held that Graziosi did not individually have standing to pursue the
antitrust claims. Although Graziosi is listed as an appellant, she does not appear to challenge
the district court’s standing ruling on appeal.
5
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30, 2001 refusals to deal with TWA and “tunica.com” were the result of concerted
action, in part because TWA did not provide the details of any of its post-May 30,
2001 proposals to the casinos.
II.
This court reviews the district court’s grant of summary judgment de novo.
Stewart Glass & Mirror, Inc. v. U.S. Auto Glass Discount Ctrs., 200 F.3d 307,
312 (5th Cir. 2000). A party is entitled to summary judgment only if “the
pleadings, depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment as a matter of
law.” Fed. R. Civ. P. 56(c). On a motion for summary judgment, the court must
view the facts in the light most favorable to the non-moving party and draw all
inferences in its favor. See Stewart Glass & Mirror, 200 F.3d at 312.
Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1, provides: “Every
contract, combination in the form of trust or otherwise, or conspiracy, in
restraint of trade or commerce among the several States, or with foreign nations,
is declared to be illegal.” In order to state a claim under section 1 of the
Sherman Act, a plaintiff must show that the defendants “(1) engaged in a
conspiracy (2) that restrained trade (3) in a particular market.” Spectators’
Commc’n Network Inc. v. Colonial Country Club, 253 F.3d 215, 220 (5th Cir.
2001).10 A necessary ingredient of any section 1 conspiracy is a showing of
concerted action on the part of the defendants. See Monsanto Co. v. Spray-Rite
Serv. Corp., 465 U.S. 752, 761 (1984). To establish concerted action, the plaintiff
must present “evidence that reasonably tends to prove that the [defendants] had
a conscious commitment to a common scheme designed to achieve an unlawful
10
The district court found, and the parties do not dispute, that TWA’s federal and state
antitrust claims are analytically identical. See Walker v. U-Haul Co. of Miss., 734 F.2d 1068,
1070 (5th Cir. 1984).
6
No. 06-60305
objective.” Id. at 768. In other words, “[t]here must be evidence that tends to
exclude the possibility of independent action.” Id.; Bell Atl. Co. v. Twombly, 127
S. Ct. 1955, 1964 (2007) (“[A]t the summary judgment stage a § 1 plaintiff’s offer
of conspiracy evidence must tend to rule out the possibility that the defendants
were acting independently.”). Concerted action may be shown by either direct
or circumstantial evidence. Monsanto Co., 465 U.S. at 764; Viazis v. Am. Ass’n
of Orthodontists, 314 F.3d 758, 762 (5th Cir. 2002). Direct evidence of concerted
action “is that which ‘explicitly refer[s] to an understanding’ between the alleged
conspirators,” while circumstantial evidence requires additional inferences in
order to support a claim of conspiracy. Viazis, 314 F.3d at 762 (quoting
Southway Theatres, Inc. v. Ga. Theatre Co., 672 F.2d 485, 493 n.8 (5th Cir.
1982)) (alteration in original).
Circumstantial evidence of a conspiracy in restraint of trade must be
strong in order to survive summary judgment, because “antitrust law limits the
range of permissible inferences from ambiguous evidence in a § 1 case.”
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 588 (1986).
Courts considering section 1 cases “will not draw inferences to support a claim
that makes no economic sense; such a claim will require unusually persuasive
evidence to withstand summary judgment.” Spectators’ Commc’n Network, 253
F.3d at 219-20; Matsushita, 475 U.S. at 587 (“[I]f the factual context renders
respondents’ claim implausible — if the claim is one that simply makes no
economic sense — respondents must come forward with more persuasive
evidence to support their claim than would otherwise be necessary.”). In
addition, “conduct as consistent with permissible competition as with illegal
conspiracy does not, standing alone, support an inference of antitrust
conspiracy.” Matsushita, 475 U.S. at 588. In sum, a plaintiff can survive
summary judgment only if it “show[s] that the inference of conspiracy is
7
No. 06-60305
reasonable in light of the competing inferences of independent action or collusive
action that could not have harmed” the plaintiff. Id.
III.
A.
We first consider whether TWA has presented sufficient evidence of a
conspiracy or concerted action on the part of the casinos to survive summary
judgment. See AD/SAT v. Associated Press, 181 F.3d 216, 232 (2d Cir. 1999)
(“Only after an agreement is established will a court consider whether the
agreement constituted an unreasonable restraint of trade.”).
The district court held that, viewing all of the summary judgment evidence
in the light most favorable to TWA, the evidence was insufficient to establish
concerted action by the casinos. The court found that the casinos’ decision (at
the May 30, 2001 TCOA meeting) to reject TWA’s proposal that each casino pay
TWA $2,500 per month to have visitors to “tunica.com” redirected to the TCOA’s
website could not be an unlawful agreement in restraint of trade because it was
merely a joint response to a joint offer. The district court also held that TWA
could not establish that the casinos’ refusals to deal with TWA and “tunica.com”
after May 30, 2001 were the result of concerted action, because the record did
not contain any evidence of the details of the proposals that TWA made to the
casinos after May 30, 2001.
We agree with the district court that the casinos’ initial decision to reject
TWA’s $2,500 per-casino-per-month proposal was not an unreasonable
agreement in restraint of trade. Given the joint nature of TWA’s initial proposal,
which invited the casinos to respond together as a single entity, the casinos’
decision to reject that proposal is not concerted action subject to section 1. Cf.
Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 771 (1984) (holding
that joint actions of parent company and wholly-owned subsidiary are not
subject to section 1 liability because the parent and subsidiary have “a complete
8
No. 06-60305
unity of interest”); VII Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law
¶ 1477, at 315-16 (2d ed. 2003) (noting that actions of trade associations can, in
some situations, be treated as actions of a single entity).
Our analysis does not end there, however. TWA submitted evidence that
would tend to prove that the casinos did more than simply reject TWA’s joint
offer. TWA’s evidence — such as Callicott’s statements and emails to Graziosi
indicating that the casinos had entered into a “gentlemen’s agreement” to not
deal with “tunica.com” and that Gold Strike had to terminate its relationship
with “tunica.com” as a result of the casinos’ agreement at the May 30, 2001
meeting — is, if credited, direct evidence that the casinos agreed not only to
reject TWA’s initial proposal, but also to refuse to do business with TWA and
“tunica.com” individually. Although the district court purported to analyze
TWA’s claims on the assumption that all of the evidence proffered by TWA was
true, it did not give meaningful consideration to Callicott’s statements (allegedly
later confirmed by Duffin) that the casinos had a “gentlemen’s agreement” to not
deal with TWA, and it failed to explain why that evidence, if credited, does not
create a fact issue about whether the casinos engaged in concerted action. We
believe that it does.
Moreover, if TWA’s evidence of the casinos’ actions after the May 30, 2001
TCOA meeting is credited, that evidence likewise creates an issue of fact as to
whether the casinos engaged in concerted action. According to another email
from Callicott to Graziosi, the casinos met in November 2002 and again decided
to refuse to advertise on “tunica.com,” in the hopes that the value of the domain
name would decrease and the casinos could buy it at a later date. If TWA can
establish concerted action by the casinos through this sort of direct evidence,
then it is not required to provide circumstantial evidence, such as the details
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No. 06-60305
surrounding its later proposals to the casinos, from which a concerted refusal to
deal can be inferred.11
The casinos assert that much or all of TWA’s direct evidence that they
engaged in concerted action, including the statements and emails attributed to
Callicott, is inadmissible hearsay. TWA counters that the challenged statements
are admissible, non-hearsay evidence because they are admissions of a party
opponent and/or statements of a co-conspirator. See Fed. R. Evid. 801(d)(2).
Although the district court expressed some skepticism about the admissibility
of much of TWA’s evidence, it assumed for purposes of its summary judgment
order that all of TWA’s evidence was admissible, and it did not make any specific
determinations about whether or not any particular piece of evidence was
admissible.
Determining whether the statements that TWA attempts to attribute to
the casinos via their employees are admissible as non-hearsay party admissions
and/or co-conspirator statements will require a number of preliminary fact
determinations, such as whether the speaker was authorized to speak on behalf
of any of the casinos and, if so, whether the statement was made within the
scope of the speaker’s employment. The district court is better suited to rule on
the admissibility of that evidence in the first instance, and, because the district
court assumed that the evidence was admissible, we do the same for purposes
11
Although, as the district court found, the casinos might well have had a number of
valid, independent reasons why they might decline to do business with TWA and “tunica.com,”
those plausible reasons for independent action do not establish that appellees are entitled to
summary judgment where the plaintiff has come forward with direct, rather than
circumstantial, evidence of concerted action, since direct evidence of agreement necessarily
tends to exclude the possibility of independent action. See Viazis, 314 F.3d at 762 (“[A]n
antitrust plaintiff who is unable to present direct evidence of a conspiracy must introduce
evidence that tends to exclude the possibility of independent action.”) (emphasis added)
(internal quotation marks omitted); Miles Distribs., Inc. v. Specialty Constr. Brands, Inc., 476
F.3d 442, 449 (7th Cir. 2007) (“When a plaintiff attempts to defeat summary judgment by
highlighting circumstantial evidence of a conspiracy, some of the evidence must tend to exclude
the possibility that the alleged conspirators acted independently rather than in concert.”)
(emphasis added).
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of this ruling. Cf. Spectators’ Commc’n Network, 253 F.3d at 224 n.3 (“Because
the district court did not rule on the admissibility of the evidence, we will not do
so in the first instance, but will consider it part of the record for the sake of
argument.”).
Accordingly, we hold that the district court erred when it found that
TWA’s proffered evidence did not create any issue of fact on the element of
concerted action. On remand, the district court should consider the casinos’
admissibility objections and determine whether the admissible evidence is
sufficient to establish concerted action.
B.
We next consider TWA’s argument that the casinos’ refusal to do business
with it amounts to a horizontal boycott that is per se unlawful under section 1.
To determine whether an agreement is an unlawful restraint on trade, we
generally apply the “rule of reason,” which requires us to consider whether the
particular agreement at issue in fact operates as an unreasonable restraint on
competition. See Bus. Elecs. Corp. v. Sharp Elecs. Corp., 485 U.S. 717, 723
(1988); Spectators’ Commc’n Network, 253 F.3d at 222-23. Under the rule of
reason, an agreement will be found unlawful only if the plaintiff shows that it
actually had an adverse effect on competition. See Consol. Metal Prods. v. Am.
Petroleum Inst., 846 F.2d 284, 292-93 (5th Cir. 1988). Some types of agreements
have, however, been found to be almost inherently anticompetitive. Such
agreements can be considered per se violations of section 1, meaning that the
law does not require a plaintiff to provide the usual proof that the agreement at
issue is actually anticompetitive in the particular case. See NYNEX Corp. v.
Discon, Inc., 525 U.S. 128, 133 (1998) (“[C]ertain kinds of agreements will so
often prove so harmful to competition and so rarely prove justified that the
antitrust laws do not require proof that an agreement of that kind is, in fact,
anticompetitive in the particular circumstances.”). On a general level, “[t]he
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decision to apply the per se rule turns on whether the practice facially appears
to be one that would always or almost always tend to restrict competition and
decrease output . . . or instead one designed to increase economic efficiency and
render markets more, rather than less, competitive.” Northwest Wholesale
Stationers, Inc. v. Pac. Stationery & Printing Co., 472 U.S. 284, 290 (1985)
(internal quotation marks omitted) (ellipses in original).
It is clear that certain group boycotts or concerted refusals to deal can be
per se violations of section 1. Precisely which group boycotts are subject to the
per se rule is, however, not always clear. Id. at 294; Spectators’ Commc’n
Network, 253 F.3d at 223. In NYNEX, the Supreme Court clarified that a
necessary precondition for a per se unlawful group boycott is that it must be
“horizontal,” i.e., it must involve an agreement among firms that ordinarily
compete with one another at the same level of the market. See NYNEX, 525
U.S. at 135 (“[P]recedent limits the per se rule in the boycott context to cases
involving horizontal agreements among direct competitors.”); see also Bus. Elecs.
Corp., 485 U.S. at 730 (“Restraints imposed by agreement between competitors
have traditionally been denominated as horizontal restraints, and those imposed
by agreement between firms at different levels of distribution as vertical
restraints.”).
Under the definition of “horizontal” found in NYNEX and Business
Electronics Corp., the casinos’ alleged agreement to not do business with TWA
is clearly a horizontal agreement, as the casinos are direct competitors of one
another. See Bus. Elecs. Corp., 485 U.S. at 730 n.4 (“[A] restraint is horizontal
not because it has horizontal effects, but because it is the product of a horizontal
agreement.”).
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The casinos argue, and the district court essentially found (though using
the wrong terminology), that a group boycott can be per se unlawful only if it is
both horizontal and at least one of the conspirators is a direct competitor of the
victim. In support of this argument, the casinos seize on certain language from
decisions of this court and the Supreme Court that suggests that per se unlawful
boycotts are those intended to harm or disadvantage a competitor of the
conspirators. See Spectators’ Commc’n Network, 253 F.3d at 223 (noting that
earlier Supreme Court cases finding per se boycotts included a competitor of the
victim among the conspirators);12 Northwest Wholesale Stationers, 472 U.S. at
294 (“Cases to which the Court has applied the per se approach have generally
involved joint efforts by a firm or firms to disadvantage competitors by either
directly denying or persuading or coercing suppliers or customers to deny
relationships the competitors need in the competitive struggle.”) (internal
quotation marks omitted).13 In addition, several older cases from this circuit can
be read to require that the victim be a competitor of at least one member of the
12
Earlier in the opinion, however, the Spectators' Communication Network court noted
that “[t]o make a per se case, the horizontal agreement need not be between competitors of the
victim.” Id. at 223.
13
See also Adaptive Power Solutions, LLC v. Hughes Missile Sys. Co., 141 F.3d 947,
950 (9th Cir. 1998) (holding that horizontal boycott of supplier was not per se unlawful because
the “conspiracy did not disadvantage a competitor” of the boycotting parties); Kenneth L.
Glazer, Concerted Refusals to Deal Under Section 1 of the Sherman Act, 70 Antitrust L.J. 1,
31-41 (2002) (suggesting that per se rule should not apply to horizontal boycotts carried out
exclusively by firms that are not direct competitors of the victim, because firms that are either
upmarket or downmarket of the victim ordinarily have no economic incentive to reduce or
inhibit competition at the victim’s market level).
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alleged conspiracy before the per se rule will apply. See Blackburn v. Crum &
Forster, 611 F.2d 102, 104 (5th Cir. 1980) (stating that application of the per se
rule may be proper in cases “in which the plaintiff, the excluded party, is on the
same competitive level with one member of the conspiracy. In other words, in
such cases it may be proper to infer anti-competitive motive and effect because
the conspiracy has a horizontal aspect.”); see also Plueckhan v. Farmers Ins.
Exch., 749 F.2d 241, 246 n.8 (5th Cir. 1985) (“[In Blackburn], this court held that
the horizontal component [necessary for per se liability] was missing since the
alleged target did not compete with the alleged conspirators.”).
Nothing in Northwest Wholesale Stationers or the Supreme Court’s later
cases, however, establishes a bright-line rule limiting the application of the per
se rule to cases in which the victim is a competitor of at least one of the
conspirators, and no such rule is justified under the Court’s precedents.14 The
Northwest Wholesale Stationers court set out a number of factors that it found
relevant to the determination of whether the per se rule should apply to a
particular group boycott. First, as noted above, the Court observed that per se
unlawful boycotts generally involved joint efforts “to disadvantage competitors
by either directly denying or persuading or coercing suppliers to deny
14
This court’s decisions in Blackburn and Plueckhan are, of course, not good law to the
extent that they limit application of the per se rule to horizontal boycotts in a manner not
authorized by Northwest Wholesale Stationers and later cases. Moreover, Blackburn and
Plueckhan both rely on a definition of a “horizontal” agreement that is inconsistent with the
definition adopted by the Supreme Court in Business Electronics Corp. and NYNEX.
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relationships the competitors need in the competitive struggle.” Northwest
Wholesale Stationers, 472 U.S. at 294 (internal quotation marks omitted). The
Northwest Wholesale Stationers court went on, however, to discuss three other
attributes that were often found in per se cases: that “the boycott often cut off
access to a supply, facility, or market necessary to enable the boycotted firm to
compete;” that “frequently the boycotting firms possessed a dominant position
in the relevant market;” and that “the practices were generally not justified by
plausible arguments that they were intended to enhance overall efficiency and
make markets more competitive.” Id. The Court further stated that “a
concerted refusal to deal need not necessarily possess all of these traits to merit
per se treatment.” Id. at 295.
Thus, although direct competition with the victim will frequently exist in
cases of per se unlawful boycotts, nothing in Northwest Wholesale Stationers
indicates that it is an absolute prerequisite to a finding of per se illegality if the
agreement in question is marked by any of the other traits identified in that
case.15 In addition, the Supreme Court has itself found a horizontal boycott to
be per se unlawful where the conspirators were all suppliers, not competitors,
of the victim. In FTC v. Superior Court Trial Lawyers Ass’n, 493 U.S. 411,
422-23 (1990), the Court found a per se unlawful group boycott where a group
15
See also William C. Holmes, Antitrust Law Handbook § 2:19, at 303 (2007 ed.)
(noting category of per se cases involving concerted, horizontal action “directed ‘vertically’ at
. . . suppliers or customers”).
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of indigent criminal defenders agreed to not accept further appointments unless
they were paid at a higher rate.16
That the casinos’ alleged agreement was a horizontal one does not
necessarily mean that the agreement is per se unlawful. Northwest Wholesale
Stationers, 472 U.S. at 295; see also Paladin Assoc., Inc. v. Montana Power Co.,
328 F.3d 1145, 1155 (9th Cir. 2003); Diaz v. Farley, 215 F.3d 1175, 1182 (10th
Cir. 2000). “Sometimes group boycotts are called per se violations, but the label
here is only minimally useful since many arrangements that are literally
concerted refusals to deal have potential efficiencies and are judged under the
rule of reason.” The Stop & Shop Supermarket Co. v. Blue Cross & Blue Shield
of Rhode Island, 373 F.3d 57, 61 (1st Cir. 2004). Moreover, to the extent that
TWA alleges that the casinos endeavored to put it out of business, “the Supreme
Court rejected the argument that the defendants’ motive of putting the plaintiff
out of business [brings] the case within the per se rule.” Spectators’ Commc’n
Network, 231 F.3d at 1013 (citing NYNEX, 525 U.S. at 137-38).
The Supreme Court has recently reiterated that “[t]o justify a per se
prohibition a restraint must have manifestly anticompetitive effects and lack
any redeeming virtue.” Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 127
S. Ct. 2705, 2007 WL 1835892, at *7 (Jun. 28, 2007) (internal citations omitted).
16
Superior Court is, admittedly, somewhat distinguishable from this case, as it involved
a boycott that was specifically designed to effectuate a price-fixing agreement among the
conspirators, but it nevertheless undercuts appellees’ claim that direct competition with the
victim is an indispensable element of a per se unlawful boycott.
16
No. 06-60305
In Leegin, the Supreme Court emphasized its general reluctance to apply the per
se rule unless “the courts can predict with confidence that it would be
invalidated in all or almost all instances under the rule of reason.” Id.
Applying the foregoing principles, we conclude that the district court erred
in finding that the per se rule only applies in situations where one of the
conspirators is a direct competitor of the victim. Instead, to determine the
applicability of the per se rule in this case, the district court should have
analyzed the following factors: (1) whether the casinos hold a dominant position
in the relevant market; (2) whether the casinos control access to an element
necessary to enable TWA to compete; and (3) whether there exist plausible
arguments concerning pro-competitive effects. See Northwest Wholesale
Stationers 472 U.S. at 294, 296. Accordingly, we reverse the district court and
remand this case so it can consider these factors in the first instance.
CONCLUSION
For the reasons stated above, we reverse the district court’s grant of
summary judgment in favor of the casinos, and remand this case to the district
court for further proceedings consistent with this opinion.17
17
We agree with the district court that TWA and the casinos are not in competition with
each other. TWA operates a website. The casinos own and operate casinos, hotels, and other
leisure-related activities. They simply do not compete for the same customer base. Although
the casinos own and operate their own websites, they have never leased websites nor sold
internet advertising. As the district court correctly concluded, “the casinos were simply
prospective customers of [TWA], nothing more.”
Moreover, because we remand to the district court for consideration of the admissibility
of TWA’s proffered evidence, we do not reach the casinos’ additional argument that there is
17
No. 06-60305
REVERSED AND REMANDED.
insufficient evidence that Hollywood Casino participated in any conspiracy. We also do not
consider the casinos’ additional argument that TWA cannot establish an antitrust injury. The
district court did not reach that argument, and the defendants are free to reurge it on remand.
Finally, we reject the casinos’ immunity claims for essentially the reasons stated in the district
court’s November 24, 2004 order.
18