NO. 93-097
IN THE SUPREME COURT OF THE STATE OF MONTANA
1993
RICHARD W. SMITH, d/b/a HIGH PLAINS
GAMING-SMITH BROTHERS AMUSEMENTS;
DENNIS H. DANIELS, d/b/a FLEETWOOD
AMUSEMENT OF MISSOULA; DAVID G. KELMAN,
d/b/a AMERICAN MUSIC COMPANY: EVELYN
KELMAN, d/b/a ARCHER'S CASINO; THOMAS
HEISLER, d/b/a BINGO BONANZA: CHARLES
P. WIECK, d/b/a BEDROCK GAMING; JON
L. DEHLER, d/b/a FLEETWOOD AMUSEMENTS:
and GLEN ALEXANDER, d/b/a ACE AMUSEMENT,
Plaintiffs and Appellants,
--vs.-
VIDEO LOTTERY CONSULTANTS, INC., a
Montana corporation,
Defendant and Respondent.
APPEAL FROM: District Court of the Eighteenth Judicial District,
In and for the County of Gallatin,
The Honorable Larry A. Moran, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
George T. Radovich, Billings, Montana
For Respondent:
Tom Stonecipher and Peter M. Kirwan, Kirwan &
Barrett, P.C., Bozeman, Montana
Submitted on Briefs: July 15, 1993
Decided: August 17, 1993
Clerk
Justice James C. Nelson delivered the Opinion of the Court.
This is an appeal from an Order of the Eighteenth Judicial
District Court granting Defendant's (Video Lottery's) motion to
dismiss the Plaintiffs' amended complaint for failure to state a
claim upon which relief may be granted. We affirm in part and
reverse in part.
We restate the issues on appeal as follows:
1. Did the District Court err in dismissing the Plaintiffs'
restraint of trade claim against Video Lottery?
2. Did the District Court err in dismissing the Plaintiffs'
monopoly and rebates claims against Video Lottery?
In their amended complaint, the Plaintiffs allege the
following facts. The Plaintiffs are engaged in the retail gambling
business. Video Lottery is engaged in selling wholesale gambling
machines and in operating retail gambling machines. Video Lottery
is a competitor of the Plaintiffs and has refused to provide its
machines to the Plaintiffs on a wholesale level. Plaintiffs filed
an amended complaint against Video Lottery, alleging that its
failure to sell the machines to the Plaintiffs violated three
sections of the Montana Unfair Trade Practices Act, 55 30-14-201,
et seq., MCA. The Plaintiffs also requested an injunction of the
alleged violative conduct.
Video Lottery moved to dismiss the amended complaint pursuant
to Rule 12(b)(6), M.R.Civ.P., for failure to state a claim upon
which relief could be granted. The district judge granted this
motion, and the Plaintiffs appealed.
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In reviewing a Rule 12 motion to dismiss, we will construe the
complaint in the light most favorable to the plaintiffs and take
the allegations of the complaint as true. Willson v. Taylor
(1981), 194 Mont. 123, 126, 634 P.2d 1180, 1182. The dismissal
will be affirmed only if this Court finds that the plaintiffs are
not entitled to relief under any set of facts which could be proven
in support of the claim. Proto v. Missoula County (1988), 230
Mont. 351, 352-53, 749 P.2d 1094, 1095-96.
I - RESTRAINT OF TRADE CLAIM
The Plaintiffs allege that Video Lottery has violated !j 30-14-
205(2) cc), MCA, which provides:
It is unlawful for a person or group of persons, directly
or indirectly: . . .
(2) for the purpose of creating or carrying
out any restriction in trade, to: . . d
(c) prevent competition in the
distribution or sale of
merchandise or commodities.
Although this section is modeled after § 1 of the Sherman Act, it
differs in one critical respect. The Sherman Act requires two or
more persons to be involved in the unlawful trade restraint: in
effect, a conspiracy must exist. 15 U.S.C. 5 1; Copperweld Corp.
v. Independence Tube Corp. (1984), 467 U.S. 752, 767-6,8, 104 S.Ct.
2731, 2739-40, 81 L.Ed.2d 628, 641. However, the Montana
counterpart states that a "person" may violate this section. Thus,
the Montana statute on restraint of trade facially appears to be
broader than the Sherman Act, as one person acting alone may
violate the Montana statute.
We note that there is minimal Montana law interpreting the
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Unfair Trade Practices Act, and no cases interpreting 5 30-14-
205(2) (c), MCA. We also recognize that cutting litigation short at
the initial pleading stage is not favored. Willson, 634 P.2d at
1183. This is especially true when the cause of action is based
upon a statute that has not been previously interpreted and where
no underlying factual record has been developed.
Therefore, because Montana's restraint of trade statute
differs in some respects from the Sherman Act, and because we have
not heretofore interpreted 5 30-14-205(2)(c), MCA, on appeal and in
the context of a factual record developed on the basis of the
granting of a mot:ion for summary judgment or on the basis of a
trial, we hold that dismissing the complaint on Count One was
premature and thus error. While not ruling on the merits of their
claim, we cannot say that the Plaintiffs are not entitled to relief
under any set of facts which could be proven in support of their
claim. We believe that the Plaintiffs' allegations should be more
fully developed through discovery. & Willson, 634 P.2d at 1183.
If the Plaintiffs cannot develop a sustainable action through
discovery, their claim under § 30-14-205(2)(c), MCA, may be
properly disposed of through summary judgment.
As to the Plaintiffs' request for an injunction under 5 30-14-
222, MCA, we hold that, if the Plaintiffs are able to develop and
maintain an action under § 30-14-205(2)(c), MCA, they may then be
entitled to injunctive relief. However, if the Plaintiffs cannot
factually develop and maintain an action under this section, then
an injunction wil:L not properly issue.
Accordingly, we reverse the District Court's dismissal of
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Counts One and Four, and remand for proceedings consistent with
this opinion.
II - MONOPOLY AND REBATES CLAIMS
The Plaintiffs also allege that Video Lottery has refused to
provide its machines to the Plaintiffs in order to create a
monopoly in the sale and use of Video Lottery machines. This claim
is based on § 30-14-205(2)(g), MCA, which provides:
It is unlawful for a person or group of persons, directly
or indirectly: . . .
(2) For the purpose of creating or carrying
out any restriction in trade, to: . . .
(4) create a monopoly in the
manufacture, sale, or
transportation of an article of
commerce.
This section of the Unfair Trade Practices Act is very similar to
§ 2 of the Sherman Act, which prohibits the creation of a monopoly.
Because the statutes are similar, we will give due weight to the
federal courts' interpretation of this type of alleged antitrust
violation.
In this case, the Plaintiffs allege that Video Lottery has
refused to sell its gambling machines to them. However, it is
clear that "[a] manufacturer has a natural monopoly over its own
products, especially when the products are sold under a trademark."
Sadler v. Rexair, Inc. (D.C.Mont. 1985), 612 F.Supp. 491, 494.
In Sadler, a supplier of Rainbow vacuum cleaners terminated a
distribution agreement with the plaintiff. The plaintiff filed an
action against the supplier, alleging antitrust violations. The
court held that "[a] 'brand' monopoly over the manufacturer's own
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product . . . is not a violation of 15 U.S.C. § 2" and dismissed
the action. Sadler, 612 F.Supp. at 494.
Following the reasoning of Sadler, we hold that a brand
monopoly over the manufacturer's own product does not violate 5 30-
14-205(2)(g), MCA. Here, Plaintiffs allege Video Lottery has
refused to sell Video Lottery gambling machines to them. This
allegation cannot sustain a cause of action under this section of
the Unfair Trade Practices Act.
The Plaintiffs also claim that Video Lottery's refusal to sell
its machines violates § 30-14-215(l), MCA, which prohibits secret
rebates, as follows:
(1) The secret payment or allowance of rebates, refunds,
commissions, or unearned discounts, whether in the form
of money or otherwise, or secretly extending to certain
purchasers special services or privileges not extended to
all purchasers purchasing upon like terms and conditions,
to the injury of a competitor and when such payment or
allowance tends to destroy competition, is an unfair
trade practice. . . . (emphasis added)
This section applies when a seller discriminates between
purchasers. The Plaintiffs have alleged that Video Lottery has
refused to sell to them. Therefore, the Plaintiffs are not
"purchasers" as contemplated by this statute. Because this section
of the Unfair Trade Practices Act applies only to discrimination
between purchasers, the Plaintiffs have failed to state a claim
under this section upon which relief may be granted.
We hold that the District Court properly dismissed Counts Two
and Three of the Plaintiffs' amended complaint.
Affirmed in part, reversed in part, and remanded for
proceedings consistent with this opinion.
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We concur:
A?‘
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