Liu v. Amerco

United States Court of Appeals
For the First Circuit

No. 11-2053

MARCIA MEI-LEE LIU, individually and on behalf of a class of all
others similarly situated,

Plaintiff, Appellant,

v.

AMERCO; U-HAUL INTERNATIONAL, INC.,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. George A. O'Toole, Jr., U.S. District Judge]

Before

Boudin, Lipez and Thompson,

Circuit Judges.

Charles E. Tompkins with whom Ian J. McLoughlin, Robert E.
Ditzion and Shapiro Haber & Urmy LLP were on brief for appellant.
G. Patrick Watson with whom David A. Zetoony, Bryan Cave, LLP,
W. Scott O'Connell and Nixon Peabody, LLP were on brief for
appellees.

May 4, 2012
 BOUDIN, Circuit Judge. On July 21, 2010, Marcia Liu

filed a complaint in federal district court in Massachusetts

charging Amerco, Inc. and its wholly owned subsidiary U-Haul

International, Inc.--collectively "U-Haul"--with violating

Massachusetts General Laws ch. 93A. The complaint asserted that U-

Haul had engaged in what was in substance an attempted price-fixing

scheme and the complaint sought damages on behalf of both Liu and

a large class of persons who rented U-Haul vehicles for certain

trips within a specified period.

Ordinarily, when a seller of goods or services attempts

to fix prices with a competitor but fails in that endeavor, no

consumer is damaged; but Liu's complaint alleged peculiar facts not

uncovered by Liu but recounted in documents stemming from an

investigation by the Federal Trade Commission ("FTC"); the

documents included the summary of a proposed consent order between

U-Haul and the agency made public in the month before Liu filed her

own law suit. Federal Trade Commission, U-Haul Int'l, Inc. and

AMERCO, 75 Fed. Reg. 35033, 35034 (June 21, 2010) (hereinafter "FTC

Summary").

According to the FTC complaint and the summary of the

proposed consent order, in 2006 Edward Shoen--the chairman and

president of Amerco and the chairman and chief executive officer of

U-Haul--planned and took steps to implement a scheme to collude

with U-Haul's major competitors--Avis Budget Group, Inc. ("Budget")

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and Penske Truck Leasing Co., L.P. ("Penske")--to raise prices in

the market for one-way truck rentals. As summarized by the FTC,

the initial strategy was straightforward:

Mr. Shoen instructed U-Haul regional managers
to raise rates for truck rentals, and then
contact Budget to inform Budget of U-Haul's
conditional rate increase and encourage Budget
to follow, or U-Haul's rates would be reduced
to the original level.
At about the same time, Mr. Shoen also
instructed local U-Haul dealers to communicate
with their counterparts at Budget and Penske,
with the purpose of re-enforcing the message
that U-Haul had raised its rates, and
competitors' rates should be raised to match
the increased U-Haul rates.

FTC Summary, 75 Fed. Reg. at 35034.

According to the FTC, this "plan" was communicated to U-

Haul's regional managers and local dealers in memoranda sent by

Shoen in October and November of 2006.1 The memoranda even

included suggested talking points for managers making calls to

competitors. The FTC recounted evidence from a U-Haul regional

manager in Tampa, Florida, who corroborated the existence of the

memoranda, confirmed that he acted in conformity with the plan as

described, and wrote a follow-up email to U-Haul's senior

1
The FTC complaint quoted specific portions of the memoranda.
For example: "Budget continues in some markets to undercut us on
One-Way rates. Either get below them or go up to a fair rate.
Whatever you do, LET BUDGET KNOW. Contact a large Budget Dealer
and tell them. Contact their company store and let the manager
know . . . My direction is either get up to a fair rate or get down
below the competitor. EITHER WAY, LET THEM KNOW." In re U-Haul
Int'l, Inc., 2010 WL 2966779, at *2-3 (F.T.C. July 14, 2010).

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executives describing his actions to implement the plan. In re U-

Haul Int'l, Inc., 2010 WL 2966779 at *3.

The FTC also set forth comments made by Shoen during an

earnings conference call with analysts that took place on February

7, 2008. Shoen was allegedly aware that Budget would monitor the

call, so he announced U-Haul's unilateral price increase and said

that U-Haul would keep its prices at the elevated level if Budget

responded in kind with rates that were within 3 to 5 percent of U-

Haul's.2 The FTC made no findings as to the consequences of the

direct or indirect attempts, concluding that the overtures were

unlawful regardless of whether the parties reached and successfully

implemented an agreement to collude on prices. FTC Summary, 75

Fed. Reg. at 35034-35.

The FTC concluded that U-Haul's "particularly egregious

conduct," FTC Summary, 75 Fed. Reg. at 35035, violated Section 5

of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §

45(a)(1), which forbids "[u]nfair methods of competition in or

affecting commerce, and unfair or deceptive acts or practices in or

2
Specific examples of the comments included: "we're very, very
much trying to function a price leader [sic] and not give away
[market] share"; "me trying to get us to exercise price leadership
every time we get what we consider to be an opportunity, it's
another indicator to [Budget] as to, hey, don't throw the money
away"; "[i]f [Budget] cave[s] on prices the net effect is we got
less money"; "if [Budget] perceive[s] that we'll let them come up
a little bit [on price], I remain optimistic they'll come up, and
it has a profound effect on us." In re U-Haul Int'l, Inc., 2010 WL
2966779 at *4-5.

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affecting commerce." The proposed consent order provided

injunctive relief designed to prevent U-Haul "from inviting

collusion and from entering into or implementing a collusive

scheme." FTC Summary, 75 Fed. Reg. at 35035. U-Haul consented to

the relief sought, but did not admit either to the conduct or to

the violation. In re U-Haul Int'l, Inc., 2010 WL 2966779 at *20-

21.

Liu's suit was a follow-on action brought after a

proposed government consent decree--fairly common in antitrust

cases; but, as the FTC Act contains no private right of action and

the Sherman Act--which does create such a right--is of doubtful

application to a failed attempt to conspire on prices, see note 4,

below, Liu's suit rested instead on chapter 93A. Chapter 93A, like

section 5, prohibits "[u]nfair methods of competition and unfair or

deceptive acts or practices in the conduct of any trade or

commerce," Mass. Gen. Laws ch. 93A, § 2(a), but also provides a

right of action to consumers and permits class actions. Id. § 9.

Liu alleged that U-Haul's "intentional and purposeful

anticompetitive acts"--pertinently, the invitations to collude and

U-Haul's price increases incident to those invitations--caused her

to pay at least 10 percent more for two one-way truck rentals than

she would have absent U-Haul's unlawful action. Chapter 93A is

limited to transactions connected to Massachusetts, § 1(b); Liu's

proposed class included "[a]ll persons who purchased one-way truck

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rentals from [U-Haul] for transportation to, from or within . . .

Massachusetts between September 2006 and September 2008."

U-Haul filed a motion to dismiss for failure to state a

claim, Fed. R. Civ. P. 12(b)(6), which the district court granted

in a short written opinion. The district court assumed arguendo

that an invitation to collude was actionable under chapter 93A; but

it found that Liu had failed plausibly to allege injury, noting

that she had failed to "set forth any facts about her own

transactions, such as what she paid . . . or what available

competitors' rates were at the time." Liu v. Amerco, No. 10-11221,

slip op. at 1 (D. Mass. Aug. 22, 2011).

Liu has now appealed, contending that her complaint did

set forth a claim under chapter 93A and that it adequately alleged

injury and should have survived the motion to dismiss. Both issues

raise questions of law that are reviewed de novo. Poirier v. Mass.

Dep't of Corr., 558 F.3d 92, 94 (1st Cir. 2009); United States v.

Troy, 618 F.3d 27, 35 (1st Cir. 2010). But we begin by noting sua

sponte, as we are required to do, an unaddressed question as to the

district court's subject matter jurisdiction.

Diversity of citizenship exists between Liu and the

defendants, but there is no likelihood that damages for her two

rentals would meet the ordinary requirement for diversity cases

that the amount in controversy exceed $75,000. 28 U.S.C. §

1332(a). However, the Class Action Fairness Act of 2005, 28 U.S.C.

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§ 1332(d), provides an alternative basis for jurisdiction so long

as (1) minimal diversity exists (as it does here) and (2) the

amount in controversy for aggregated claims of the whole class

exceeds $5 million. Id.

Liu has limited her class to rentals to, from or within

Massachusetts during the period in which U-Haul prices were

allegedly elevated. Questioned by the court at argument, Liu

contended that the minimum statutory damages under chapter 93A--$25

per incident (which could potentially be trebled under that statute

to $75, Mass. Gen. Laws ch. 93A, § 9(3)-(3A))--would exceed the

minimum $5 million figure given the thousands of U-Haul rentals to,

from and within Massachusetts that would likely be encompassed by

the two year period.3

Given the good faith representations by Liu's counsel,

which have not been challenged, see Coventry Sewage Assocs. v.

Dworkin Realty Co., 71 F.3d 1, 5-6 (1st Cir. 1995), we find the

jurisdiction to exist. Further, the statutory damages are merely

a minimum under chapter 93A; conceivably some of the class member

rentals were for larger sums; and the 10 percent estimate of

damages was seemingly a floor figure rather than a ceiling. It is

3
Whether prospective attorneys' fees would be included is a
question we need not resolve. Spielman v. Genzyme Corp., 251 F.3d
1, 7 (1st Cir. 2001), held that the plaintiff's own fees could be
included in a chapter 93A claim but not those of the class; but
Spielman was not dealing there with CAFA which looks to aggregated
class damages to meet the $5 million threshold.

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not clear to a legal certainty that the amount in controversy is

less than $5 million. Id. at 6. So we proceed to the merits.

The district court's dismissal rested solely on the lack

of an adequate allegation of harm--the full, albeit brief, holding

is quoted below--but defendants, while agreeing with the court that

injury was inadequately alleged, also suggest that the allegations

of wrongdoing fail to state a cognizable claim under chapter 93A.

We decide both issues in the interest of judicial economy, see New

Hampshire Motor Transp. Ass'n. v. Flynn, 751 F.2d 43, 52 (1st Cir.

1984) (Breyer, J.), and begin with the question of whether the

alleged acts violate chapter 93A.

As alleged in the complaint, U-Haul is the largest U.S.

provider of one-way truck rentals with about 54 percent of the

market; Budget is their largest competitor, bringing their joint

share to about 70 percent. But market size and definition would

not matter under the antitrust laws if U-Haul's alleged proposal to

fix prices had been accepted: U-Haul and Budget compete in truck

rentals, and price fixing is a per se offense, United States v.

Socony-Vacuum Oil Co., 310 U.S. 150, 223-24 (1940), entailing both

criminal and civil liability under section 1 of the Sherman Act, 15

U.S.C. § 1.

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 Section 1 of the Sherman Act, however, does not condemn

an attempt to conspire,4 nor a solicitation to conspire, compare 18

U.S.C. § 373 (solicitation to commit a crime of violence); there is

no general federal attempt statute; and the general solicitation

statute, 18 U.S.C. § 2, is violated only if the underlying crime is

completed. United States v. Korab, 893 F.2d 212, 213 (9th Cir.

1989). The federal mail and wire fraud statutes, 18 U.S.C. §§ 1341

et seq., have sometimes been deployed against attempted price-

fixing, e.g. United States v. Ames Sintering Co., 927 F.2d 232 (6th

Cir. 1990), but have no civil-remedy provisions.

But while such an unsuccessful attempt is not a violation

of section 1 of the Sherman Act, section 5 of the FTC Act, 15

U.S.C. § 45(a)(1), embraces unilateral acts by one defendant, FTC

v. Brown Shoe Co., 384 U.S. 316, 322 (1966); a proposal to engage

in horizontal price fixing is dangerous merely because of its

potential to cause harm to consumers if the invitation is accepted;

and the FTC's complaint in this case makes clear that it has

4
Section 2 of the Sherman Antitrust Act, 15 U.S.C. § 2, does
cover "attempt[s] to monopolize"; and one circuit court did treat
a failed attempt to conspire in a two-carrier market as attempt at
"shared" monopolization, United States v. Am. Airlines, Inc., 743
F.2d 1114 (5th Cir. 1984)--a debatable approach. VI Areeda
Antitrust Law ¶ 1407f, at 36-39 (1986).

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adopted such a theory.5 Nothing said by defendants suggests any

obvious flaw in that position.

Chapter 93A's relevant language parallels that of section

5, and the Massachusetts legislature in chapter 93A provided that

"[i]t is the intent of the legislature that in construing [the Act]

. . . courts will be guided by the interpretations given by the

Federal Trade Commission and the Federal Courts to section 5(a)(1)

of the Federal Trade Commission Act . . . ." Mass. Gen. Laws ch.

93A, § 2(b). The courts have been thus guided. In re TJX Cos.

Retail Sec. Breach Litig., 564 F.3d 489, 495-97 (1st Cir. 2009);

Ciardi v. F. Hoffman-La Roche, Ltd., 762 N.E.2d 303, 309 (Mass.

2002).

Defendants say that there is no Massachusetts decision

finding that an unsuccessful attempt to fix prices violates chapter

93A; but naturally precedent is scarce since an unsuccessful

attempt rarely causes damages. Assuming consumer harm were proved

(a quite separate question), we would expect Massachusetts courts

to follow FTC precedent that sensibly holds unlawful pernicious

conduct with a clear potential for harm and no redeeming value

5
FTC Summary, 75 Fed. Reg. at 35034 ("[I]nvitations to collude
increase the risk of anticompetitive harm to consumers, and as
such, can violate Section 5 of the FTC Act."); see also id. at
35034 n.3 (listing prior FTC actions based on invitations to
collude); In re Valassis Commc'ns, Inc., 2006 WL 1367833 (F.T.C.
Apr. 19, 2006); In re Stone Container Corp., 125 F.T.C. 853, 854
(1998).

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whatever. In re TJX, 564 F.3d at 497. If U-Haul did what is

alleged, its conduct perfectly fits this paradigm.6

The alleged conduct is not mere oligopolistic pricing in

which a unilateral price increase is made by a dominant player in

the hope that competitors will follow with matching increases.

Pure parallel pricing gambits in markets with few competitors are

not easily regulated and are not automatically condemned under the

Sherman Act. Theatre Enters., Inc. v. Paramount Film Distrib.

Corp., 346 U.S. 537, 540-41 (1954); see generally, VI Areeda,

Antitrust Law ¶¶ 1432-33. What is alleged here are express

proposals to a competitor to raise prices, which are unambiguous,

more dangerous, and serve no proper purpose.

A spurned attempt to fix prices standing alone would--

because spurned--cause no direct harm to consumers. But here Liu

alleged conduct that did not consist merely of unrequited

proposals; it included as part of the plan unilateral increases by

U-Haul as an indicator of its intentions and a target for increases

by competitors. As alleged, the increases were part of an

orchestrated illegal effort to conspire with Budget to raise

6
U-Haul argues that Liu must satisfy the FTC's "consumer
injury test" to state a claim for unfairness under Chapter 93A.
The test is limited to consumer unfairness claims and does not
govern Liu's claim based on an alleged unfair method of
competition. See FTC Policy Statement on Unfairness appended to In
re Int'l Harvester Co., 104 F.T.C. 949, 1070-76 (1984).

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prices, tainting the U-Haul increases even if Budget failed to

follow them.

And if such harm did occur, recovery would not be barred

by any notion that the harm was outside of the zone of interests

which the statute was meant to protect. Cf. Brunswick Corp. v.

Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977); Atl. Richfield

Co. v. USA Petroleum Co., 495 U.S. 328, 334 (1990). The very

reason for chapter 93A to encompass a failed attempt to fix prices

is because of the threat that the attempt could result in price

increases. If Liu is correct, the attempt to conspire did result

in just such harm.

Rule v. Fort Dodge Animal Health, Inc., 607 F.3d 250 (1st

Cir. 2010), cited to us by U-Haul, did not involve an attempt to

conspire with a competitor to raise prices; it concerned

undisclosed risks. There, the defendant sold a medicine to prevent

canine heartworms and, so far as anyone knows, the medicine did

provide such protection to the plaintiff's dog. Id. at 251-52.

The plaintiff's chapter 93A claim was that the medicine also had an

undisclosed capacity to cause harm to the dog, although it was

conceded that the medicine had not caused any harm to the

plaintiff's dog. Id.

We concluded that no economic damage had been inflicted

on the plaintiff under chapter 93A since plaintiff had gotten the

protection sought and had suffered no detriment from the concealed

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latent defect. Rule, 607 F.3d at 254-55. In Rule, disclosure of

the defect would not have lowered the price, but would instead have

eliminated the product. Id. at 253. Here, by contrast, plaintiff

has alleged that the defendants' attempted price fixing scheme

directly raised the price charged by U-Haul and paid by Liu--

economic damage by any test.

This brings us to the question whether Liu properly pled

enough detail to show damages. The district judge, as already

noted, rested his dismissal on the ground that Liu "has failed

plausibly to allege an injury." Liu, No. 10-11221, slip op. at 1.

The court recognized that Liu had claimed to have undertaken two U-

Haul rentals--one from New York to Massachusetts in 2007 and the

other an intra-Massachusetts trip in 2008--but then explained why

the court deemed this inadequate:

The plaintiff does not set forth any facts
about her own transactions, such as what she
paid for her one-way truck rentals or what
available competitors' rates were at the time.
Even if U-Haul had committed an actionable
wrong that had a price-raising effect
generally on the national market, the basic
facts about the plaintiff's individual
transactions are necessary to judge whether
she was in fact harmed by those general
phenomena. Whether she overpaid, and whether
such overpayment was caused by U-Haul's
unrequited attempts to collude with Avis
Budget Group, Inc., is left entirely to
conjecture.

Id. at 1-2.

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 Causation of damages is required for a chapter 93A claim,

Hershenow v. Enterprise Rent-A-Car Co., 840 N.E.2d 526, 532-33

(Mass. 2006); and Liu might (as the district court implied) have

compared her rental price with that of Budget for comparable

service if she knew what Budget was then charging. But a

comparison is not the only way to show injury; and here Liu--

relying on the FTC's allegations--asserted that U-Haul had raised

its own prices and that these "price increases were themselves an

essential element of the unlawful effort to collude."

The FTC had already pointed to evidence that Shoen

"instructed U-Haul regional managers to raise rates for truck

rentals, and then contact Budget to inform Budget of U-Haul's

conditional rate increase and encourage Budget to follow," FTC

Summary, 75 Fed. Reg. at 35034, and "also instructed local U-Haul

dealers to communicate with their counterparts at Budget and

Penske, with the purpose of re-enforcing the message that U-Haul

had raised its rates, and competitors' rates should be raised to

match the increased U-Haul rates." Id. These factual assertions

were backed by references to specific documents uncovered in the

FTC investigation.

The FTC's aim to achieve injunctive relief did not depend

on proving price effects, and it pointed to only one written

admission of impact: the regional manager in Florida, already

mentioned, who reassured senior executives in writing that he had

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implemented the plan. But one may infer that managers and dealers

generally did what the head of the company instructed.7 If this is

disputed, the matter can be resolved by evidence of U-Haul's

managers and staff in Massachusetts and a review of its records of

price changes there.

Additionally, the complaint (1) incorporates a graph of

truck rental prices, of which U-Haul is described as a driver

because of its large market share, showing a substantial jump of

over 40 percent in the index from September 2006 to September 2008

followed by a substantial drop; and (2) describes a study comparing

truck rental prices and car rental prices for the same period

indicating that truck rental prices markedly diverge upward when

compared to car rentals during the two year period of Liu's

complaint.

Attributing the greater divergence to U-Haul's actions,

Liu says that the economic analysis in the study suggests an

overcharge of at least 10 percent. This exercise provides some

further grounding for Liu's claim that U-Haul's representatives did

increase prices in response to Shoen's directive and that prices

remained at a super-competitive level for a considerable period and

7
A manager might well have balked at calling Budget if the
knowledge that price-fixing is a federal felony carrying a jail
sentence has spread beyond lawyers. But managers could easily not
understand that merely raising prices would be a basis for civil
actions under section 5 and chapter 93A if the increases were part
of Shoen's plan that the increases be accompanied by calls.

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until natural market forces compelled U-Haul to roll them back.

Taken with Shoen's instructions, this is hardly a complaint lacking

in evidence of damage to Liu.

U-Haul's brief raises fair questions about the power of

the analysis--for example, arguing that the indices used for truck

rentals are not specific to U-Haul and clearly include rental of

buses, truck tractors and semi-trailers in addition to the self-

drive trucks mainly deployed by U-Haul and Budget. And U-Haul says

it is unclear, and unproved, that passenger car rentals are a good

yardstick for comparison, noting that input costs and demand may

well vary as between the two industries.

Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and

Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), require that facts and

not mere generalities be set forth in a complaint, but only enough

facts to make the claim plausible, and at this stage reasonable

inferences are taken in favor of the pleader. SEC v. Tambone, 597

F.3d 436, 441 (1st Cir. 2010). The place to test factual

assertions for deficiencies and against conflicting evidence is at

summary judgment or trial; Liu's complaint is not "threadbare or

speculative." Peñalbert-Rosa v. Fortuña-Burset, 631 F.3d 592, 595

(1st Cir. 2011).

Of course, the underlying FTC allegations themselves

remain to be proved: the consent decree is neither an adjudication

nor an admission by U-Haul. But Liu's complaint does recite

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specific facts that make her claim plausible; and while damages to

Liu are surely modest, class actions for damages that are

significant only when aggregated for the class are common. See

Skirchak v. Dynamics Research Corp., 508 F.3d 49, 58 (1st Cir.

2007). Whether this is a suitable case for a class action is not

before us.

The judgment of the district court is vacated and the

matter remanded for further proceedings consistent with this

decision. Liu is entitled to costs on the appeal.

It is so ordered.

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