Aquatherm Ind. v. Florida Power

                                                                     PUBLISH
                 IN THE UNITED STATES COURT OF APPEALS

                       FOR THE ELEVENTH CIRCUIT
                    ______________________________

                              No. 97-2959
                    ______________________________
                  D.C. Docket No. 92-1047-Civ-Orl-22

AQUATHERM INDUSTRIES, INC.,

                                        Plaintiff-Appellant,

     versus

FLORIDA POWER & LIGHT COMPANY,

                                        Defendant-Appellee.

_________________________________________________________________

           Appeal from the United States District Court
                for the Middle District of Florida
_________________________________________________________________

                             (July 8, 1998)

Before HATCHETT,     Chief   Judge,   RONEY   and    LAY*,    Senior    Circuit
Judges.


LAY, Senior Circuit Judge:


     Aquatherm    Industries   (“Aquatherm”)        appeals    the     district

court’s dismissal under Federal Rule of Civil Procedure 12(b)(6) of

antitrust claims filed against Florida Power & Light (“FPL”).                  We

affirm.




     *
      Honorable Donald P. Lay, Senior U.S. Circuit Judge for the
Eighth Circuit, sitting by designation.
                                       I.

     Aquatherm is a Delaware corporation that manufactures solar-

powered heating systems for swimming pools.             FPL is the exclusive

provider of electric power in approximately two-thirds of the state

of Florida. In 1988, through advertising and direct mailing to its

customers, FPL promoted the use of electric pool-heating pumps

(“PHPs”) as an economical way to heat residential swimming pools.

FPL does not sell PHPs or any other swimming pool equipment.                Its

admitted sole purpose was to increase use of electrical power. The

campaign promoted electric PHPs as “the most cost-effective pool

heating method available.”          FPL made these comparisons to natural

gas, propane, and other fossil-fuel heating alternatives, but made

no comparisons to solar pool heaters.

     Aquatherm filed this action alleging that FPL, through false

advertising relating to PHPs, had violated federal antitrust and

Lanham Act provisions.        The district court dismissed the suit in

December   1994,    stating    an    earlier   state    court    determination

constituted   res   judicata    on    Aquatherm’s      federal   claims.1    On


     1
      In December 1991, Aquatherm originally filed suit against FPL
in Florida state court, alleging the company engaged in false and
deceptive advertising, violated Florida’s antitrust laws, and
Florida’s Energy Efficiency and Conservation Act.      In February
1992, the state court dismissed all four counts, but granted leave
to amend the antitrust claims. Aquatherm amended its complaint to
include federal trade and antitrust violations, including false and
deceptive     advertising,    monopoly    leveraging,     attempted
monopolization, and conspiracy to monopolize.

     FPL removed the case to federal court, and Aquatherm in turn

                                       -2-
appeal, this court held that res judicata barred any Lanham Act

claims, but not the later-filed federal antitrust claims.       See

Aquatherm Indus., Inc. v. Florida Power & Light Co., 84 F.3d 1388

(11th Cir. 1996).   Upon remand, FPL filed a 12(b)(6) motion as to

the remaining antitrust claims.     The district court2 granted the

motion to dismiss the case with prejudice, finding Aquatherm had

failed to state a claim upon which relief could be granted.     See

Aquatherm Indus., Inc. v. Florida Power & Light Co., 971 F. Supp.

1419 (M.D. Fla. 1997).    This appeals follows.

                  II.   Aquatherm’s Section 2 Claims

A.   Monopolization/Attempt to Monopolize

      Aquatherm asserts that FPL has violated § 2 of the Sherman

Antitrust Act which prohibits both monopolization and attempted

monopolization.   See 15 U.S.C. § 2.    In asserting its § 2 claims,

Aquatherm identifies two possible relevant markets, arguing that

FPL either 1) wrongly attempted to prevent erosion of its electric

power monopoly, or 2) wrongly interfered with the pool-heater

market in order to increase its profits.3         We find that the


withdrew its federal claim for unfair competition under the Lanham
Act, 15 U.S.C. § 1125(a). The case was remanded to state court,
where in November 1992, the third amended complaint was dismissed
with prejudice. The dismissal was affirmed without opinion by the
Florida Court of Appeals in March 1994.
      2
      The Honorable Anne C. Conway, District Judge for the Middle
District of Florida, presiding.
      3
     In granting FPL’s motion to dismiss, the district court found
that “the market for sale of electric power is not the relevant

                                  -3-
monopolization and attempted monopolization claims are problematic

under either relevant market formulation asserted by Aquatherm.

      First, as FPL correctly points out, under the facts pled there

exists no allegation that FPL’s actions increased its market share

in the electric power market (which, as a regulated monopoly,

stands at 100%), or erected any kind of barrier of entry into the

electric power market.     On the other hand, if pool heaters are the

relevant market, there is no allegation that FPL held or attempted

to create a monopoly in this market.        In fact, Aquatherm does not

assert that FPL ever competed in the pool-heater market.

      In addition, there is no showing that FPL held any kind of

monopoly in a broader energy market, or that its alleged actions

raised a “dangerous probability” of achieving such a monopoly. See

Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 456 (1993);

Technical Resource Services, Inc. v. Dornier Medical Sys., Inc.,

134 F.3d 1458, 1466 (11th Cir. 1998).            Aquatherm’s failure to

support    these   essential   elements   is   fatal   to    any   claims   of

monopolization, or attempt to monopolize.

B.   Conspiracy to Monopolize

      Aquatherm also asserts that FPL conspired to monopolize the

“pool     heater   aftermarket,”   by     “conspiring       with   its   ‘FPL




market for Aquatherm’s claims; the relevant market in this case is
some subset of the pool heater market, which has yet to be properly
defined by Aquatherm.” 971 F. Supp. at 1427.

                                   -4-
Participating Contractors’ and sellers of heat pump systems, who

are in competition with Aquatherm . . . .”           Aquatherm Br. at 38.

     In its amended complaint, Aquatherm alleges the following:

     The Defendant [FPL] combined and conspired in a concerted
     action with manufacturers and sellers of electric pool
     heat pumps and pool contracting firms in its geographic
     area with a specific intent to achieve a monopoly in the
     pool heating market for the purpose of increased
     consumption of power by [FPL] customers who purchase
     these electric pool heat pumps in violation of 15
     U.S.C.S. § 2.

1R.26 at 13.     The district court correctly found that “[s]uch

vague, conclusory allegations are insufficient to state a claim

upon which relief can be granted.”           971 F. Supp. at 1429.

     In Lombard’s, Inc. v. Prince Mfg., Inc., 753 F.2d 974 (11th

Cir. 1985), this court affirmed the dismissal of § 1 conspiracy

allegations which alleged only that “[Defendant], together and with

[Defendant’s]    dealers      and   others    at   this   time   unknown     to

[Plaintiff], have attempted, and are now attempting, to prevent

[Plaintiff] from making wholesale and mail order sales . . . .”

Id. at 975.   The court stated: “Thus not only are no facts alleged

to demonstrate the conspiracy but the specific participants of the

conspiracy are not even identified. Such pleading is inadequate to

give the defendant fair notice of [Plaintiff]’s claim.”             Id.

     We find that the § 2 conspiracy claim offered by Aquatherm

suffers   from   the   same    defect.        Aquatherm   identifies      other

conspirators only as “manufacturers and sellers of electric pool

heat pumps,” and specifies no fact in support of this allegation.

                                     -5-
Based on the facts presented, there is no showing of the requisite

specific intent — on the part of FPL or any other party — to

achieve a monopoly in the pool heater market.

      Aquatherm essentially claims FPL entered an agreement with

manufacturers and sellers of electric pool heat pumps in order to

increase its sales of electric power.           But “‘increasing sales’ and

‘increasing market share’ are normal business goals, not forbidden

by § 2 without other evidence of an intent to monopolize.”               United

States Steel Corp. v. Fortner Enterprises, Inc., 429 U.S. 610, 612

n.1 (1977).       Because there is no showing of concerted action

deliberately entered into with the specific intent of achieving a

monopoly in the pool-heater market,4 Aquatherm’s § 2 conspiracy

claim cannot stand.

C.   Monopoly Leveraging

      Aquatherm    also   asserts   a   claim    under   §   2   of   “monopoly

leveraging,” under which a monopolist “us[es] its monopoly power in

one market to gain a competitive advantage in another.”                  Berkey

Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263, 275 (2d Cir. 1979).

As previously discussed, there is no showing the FPL in any way


      4
      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.

                                    -6-
sought a competitive advantage in the pool-heater market, because

FPL did not compete in the pool-heater market.

      By stating a monopoly leveraging claim under these facts,

Aquatherm in effect asks this court to extend Berkey Photo to a

situation in which a monopolist projects its power into a market it

not only does not seek to monopolize, but in which it does not even

seek to compete.    There is no support for such an extension in

either the language of § 2 or the case law interpreting it.

                III.    Aquatherm’s Section 1 Claims

A.   Conspiracy to Restrain Trade

      Section 1 of the Sherman Act broadly prohibits “[e]very

contract, combination . . . or conspiracy, in restraint of trade or

commerce . . . .”   A § 1 conspiracy to restrain trade does not need

to allege the specific element of a conspiracy to monopolize, but

must allege 1) an agreement to enter a conspiracy, 2) designed to

achieve an unlawful objective.      See, e.g., United States Anchor

Mfg., Inc. v. Rule Indus., Inc., 7 F.3d 986, 1001 (11th Cir. 1993).

It is fundamental that a plaintiff establish an agreement between

two or more persons to restrain trade; unilateral conduct is not

prohibited by § 1. See Monsanto Co. v. Spray-Rite Serv. Corp., 465

U.S. 752, 761 (1984).

      Aquatherm contends that FPL conspired to restrain competition

“through fraud and deception and misuse of monopoly profits [and]

unreasonably tilted the field of competition in favor of the


                                 -7-
substantially less energy-efficient heat pumps and thereby denied

sales and profits to Aquatherm.”   Aquatherm Br. at 39.5

     Even if Aquatherm’s contentions are true, we find FPL’s

actions do not rise to the level of an actual restraint on

competition.   As the Supreme Court has stated:

     Even an act of pure malice by one business competitor
     against another does not, without more, state a claim
     under the federal antitrust laws; those laws do not
     create a federal law of unfair competition or ‘purport to
     afford remedies for all torts committed by or against
     persons engaged in interstate commerce.’

Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S.

209, 225 (1993) (citation omitted). A plaintiff who alleges unfair

competition must prove injury to competition in order to sustain a

federal antitrust claim.   See Associated Radio Serv. Co. v. Page

Airways, Inc., 624 F.2d 1342, 1350 (5th Cir. 1980).         In other

words, as courts have repeatedly stated, “[t]he antitrust laws are

intended to protect competition, not competitors.”         Levine v.

Central Florida Medical Affiliates, Inc., 72 F.3d 1538, 1551 (11th

Cir.) (citing Brown Shoe Co. v. United States, 370 U.S. 294, 344

(1962)), cert. denied, ___ U.S. ___, 117 S. Ct. 75 (1996).

     Aquatherm does not show, or even claim, that the actions by

FPL harmed competition in the pool-heater market.   Its only claim

is FPL acted unfairly by disseminating false information, and this


     5
      At oral argument, Aquatherm stated that the actual restraint
on competition was FPL’s customer mailings, which the plaintiff
contends were “false representations to induce reliance thereon and
give an unfair competitive advantage to [electric pool heaters].”

                                -8-
unfair competition in turn harmed Aquatherm’s business. This claim

of unfair competition is not sufficient to support a claim under §

1 or any other federal antitrust provision.                As long as no

restraint on competition occurred, there is no cause of action

under § 1 resulting from FPL’s promotion of electric pool heaters.

B.   Tying Arrangements

      Section   1   also   may   be   violated   by   an   invalid   “tying

arrangement,” in which a seller exploits its control over a “tying

product” to force the buyer to purchase a “tied product” that the

buyer either did not want at all, or might have preferred to

purchase elsewhere on different terms.       See Jefferson Parish Hosp.

Dist. No. 2 v. Hyde, 466 U.S. 2, 12 (1984).           “When such ‘forcing’

is present, competition on the merits in the market for the tied

item is restrained and the Sherman Act is violated.”          Id.

      Therefore, in order for Aquatherm to state a valid § 1 claim

under the theory of an illegal tying arrangement, it would have to

show that FPL exploited its control over electrical power (the

“tying product”) in order to force pool owners to purchase PHPs

(the “tied product”) which they either did not want or might have

preferred to purchase elsewhere. The flaw in this argument is that

the essential element of coercion on the part of the product seller

is absent completely from the facts presented by Aquatherm.            Cf.

Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451

(1992).   Even if, as the plaintiff asserts, FPL disseminated false


                                      -9-
or misleading advertisements to pool owners and offered them

incentives to buy a PHP, this does not rise to the level of

coercion necessary to constitute an illegal tying arrangement.

C.   Group Boycotts

      Lastly, Aquatherm contends its allegations support a § 1 group

boycott claim because “pool contractors — drawn by the enticements

of FPL . . . — refused to sell, or to make customer referrals to

makers    or   sellers   (including   Aquatherm)     of,   solar    heaters.”

Aquatherm Br. at 39. The plaintiff claims “a substantial number of

pool contractors were, in effect, locked up by FPL.”                Id.    Once

again, we find that these allegations fall short of what is

necessary to make out a valid antitrust claim.

      A group boycott under § 1 involves the “pressuring [of] a

party with whom one has a dispute by withholding, or enlisting

others to withhold, patronage or services from the target.”                 St.

Paul Fire & Marine Ins. Co. v. Barry, 438 U.S. 531, 541 (1978).

Group    boycotts   which   have   been    deemed   illegal   per   se    “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.’” Northwest Wholesale Stationers, Inc.

v. Pacific Stationery & Printing Co., 472 U.S. 284, 294 (1985)

(citation omitted).




                                    -10-
        As the district court correctly noted, Aquatherm claims only

that FPL recommended the use of electric pool heaters; there is no

allegation or evidence that FPL refused to allow participating

contractors to buy or sell solar pool heaters. The act of offering

“enticements”     to    contractors   falls      considerably   short    of

“withholding,     or   enlisting   others   to   withhold,   patronage   or

services . . . .”      St. Paul Fire & Marine, 438 U.S. at 541.

        Additionally, as with its § 2 conspiracy claims, Aquatherm has

failed to identify any specific participants in the alleged group

boycott conspiracy.       As stated earlier, under the law of this

circuit “[s]uch pleading is inadequate to give the defendant fair

notice of [Plaintiff]’s claim.”       Lombard’s, 753 F.2d at 975.

                             IV.   Conclusion

        Even if the plaintiff were given leave to amend its complaint,

we conclude Aquatherm can prove no set of facts in support of its

claims which would entitle it to relief under the federal antitrust

laws.    For these reasons, we affirm the district court’s dismissal

of the amended complaint with prejudice pursuant to Federal Rule of

Civil Procedure 12(b)(6).

        Judgment AFFIRMED.




                                   -11-