Lantec, Inc. v. Novell, Inc.

F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
SEP 19 2002
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT

LANTEC, INC., a Utah corporation; LANCOMPANY
INFORMATICA LTDA., a Brazil corporation;
LANTEC INFORMATICA LTDA., a Brazil
corporation; LANTRAINING INFORMATICA
LTDA., a Brazil corporation, No. 01-4109

Plaintiffs - Counter-Defendants - Appellants,

v.

NOVELL, INC., a Delaware corporation,

Defendant - Counter-Claimant - Appellee.

Appeal from the United States District Court
for the District of Utah
(D.C. No. 2:95-CV-97-ST)

P. Bruce Badger (Robert A. Garda and Stanford B. Owen of Fabian & Clendenin,
Salt Lake City, Utah; and Evan A. Schmutz of Hill, Johnson & Schmutz, P.C.
Provo, Utah, with him on the briefs) of Fabian & Clendenin, Salt Lake City, Utah,
for Plaintiffs - Counter-Defendants - Appellants.

Stanley J. Preston (R. Brent Stephens and Maralyn M. Reger with him on the
brief) of Snow, Christensen & Martineau, Salt Lake City, Utah, for Defendant -
Counter-Claimant - Appellee.

Before KELLY, Circuit Judge, BRORBY, Senior Circuit Judge, and HARTZ,
Circuit Judge.
BRORBY, Senior Circuit Judge.

While the Microsoft antitrust case has captured much media attention, this

antitrust case is just as important to the computer program developers involved.

Here, the Lantec companies appeal a district court order dismissing state-law

contract and promissory estoppel claims on summary judgment. The Lantec

companies also argue the district court incorrectly granted Novell, Inc.’s

(“Novell”) motion for judgment as a matter of law on several antitrust claims.

The facts and legal issues in this case are complex and will be discussed at length.

However, the Lantec companies’ basic argument is Novell drove them out of

business.

We exercise jurisdiction pursuant to 28 U.S.C. § 1291 and affirm.

FACTUAL BACKGROUND

Beginning in the mid-1980s, Novell sold a network operating system for

connecting computers called NetWare. James E. Gaskin, Mastering NetWare 5,

20 (1999). A network operating system “is the software used to connect

computers and other devices, share resources, transfer files, and perform other

network services and activities.” Sue Plumley, Network Administration Survival

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Guide 25 (1999). It controls access to the network and allows users to share data.

Id.

Novell also distributed Message Handling System and Global Message

Handling System. These products were messaging transport agents 1 for NetWare.

A messaging transport agent essentially acts as the computer version of a post

office; it routes, stores, and delivers messages sent by e-mail or groupware

programs. 2 Message Handling System and Global Message Handling System were

designed to be used with the NetWare operating system and groupware programs.

In addition to routing messages, Message Handling System and Global Message

Handling System allow groupware to access security features, printing, file

sharing, and other data shared through the NetWare operating system.

Although Novell began marketing Message Handling System and Global

1
Throughout the record and the briefs, messaging transport agents are
variously referred to as messaging engines, messaging transcript agents, and
messaging transfer agents. Some of the discrepancies may be attributed to the
fact some testimony was translated from Portuguese to English. Because
“messaging transport agent” appears to be the preferred term, we have chosen to
use it in this opinion.

2
The parties agree the term “groupware” refers to any software containing
an e-mail application plus one other collaborative application such as calendaring,
scheduling, or task management.

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Message Handling System in the early 1990s, it did not immediately develop

groupware programs to be used with Message Handling System and Global

Message Handling System. Instead, independent software programers developed

this groupware. By making the application program interfaces 3 in Message

Handling System and Global Message Handling System publicly available, Novell

enabled independent programers to write groupware. Software designed using the

Message Handling System and Global Message Handling System application

program interfaces can communicate with Message Handling System or Global

Message Handling System and therefore with NetWare.

In addition to providing application program interfaces, Novell participated

in a group known as the Message Handling System Alliance. The Alliance was a

group of independent software developers interested in Message Handling

System. Through this group, Novell helped independent software programers

3
Application program interfaces allow a programer writing an application
to instruct an operating system or another program to carry out specific tasks. In
essence, application program interfaces act as building blocks. When programers
have the application program interfaces, they can create software to complete
tasks through the program providing the interfaces by putting the interfaces
together. See United States v. Microsoft Corp., 253 F.3d 34, 53 (D.C. Cir.), cert.
denied, 122 S. Ct. 350 (2001). If programers do not have the application program
interfaces they must completely recreate instructions for the tasks with original
code. Id.

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market, and provide technical support for, their groupware products.

Lantec, Inc. (“Lantec”), LanCompany Informatica Ltda. (“LanCompany”),

Lantec Informatica Ltda. (“Lantec Brazil”), and LanTraining Informatica Ltda.

(“LanTraining”) (collectively “the Lantec companies”) were interested in making

groupware using the application program interfaces in Message Handling System

and Global Message Handling System. All the Lantec companies grew out of a

predecessor Brazilian software development company called DataRede.

Originally, DataRede worked with Novell to distribute NetWare in Brazil. At that

time, Brazil refused to allow foreign software developers access to the Brazilian

market unless there were no similar software products designed by Brazilian

companies. DataRede conducted similarity tests to help convince Brazilian

regulators to allow Novell’s products in Brazil.

One of the contract disputes in this case arises from a February 1990 letter

from Novell to DataRede that discusses DataRede’s participation in the similarity

tests. LanCompany now refers to this letter as the “DataRede Agreement” and

claims Novell breached the Agreement by failing to fully compensate DataRede or

its successor company for conducting the similarity tests.

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 Although disputes subsequently developed, DataRede began doing more

work with Novell. As DataRede’s Novell business increased, it transferred that

business to three new companies headed by Marcello Thoillier and other partners

in the DataRede organization. Lantec Brazil was created to develop software

compatible with Novell products, particularly NetWare and Message Handling

System. LanCompany was to market Novell software, and LanTraining was to

train people to use Novell products. In Utah during 1991, Mr. Thoillier and his

associates incorporated Lantec, an American sister corporation to the Brazilian

companies. Lantec was charged with translating Lantec Brazil’s products from

Portuguese to English. Lantec also began looking for companies to manufacture,

market, and distribute the products in the United States.

The Lantec companies developed XPostWare, a package of software

containing menu, e-mail, fax, and calendaring applications. XPost, the e-mail

portion of XPostWare, used Novell’s Message Handling System to transport

messages using NetWare. Lantec and Lantec Brazil each entered an Original

Equipment Manufacturer Agreement with Novell to allow them to package

XPostWare with Novell’s NetWare and Message Handling System.

Just as Lantec was on the verge of offering its XPostWare package in the

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United States, Novell and WordPerfect announced plans to merge. At this point,

the relationship between Novell and the Lantec companies became strained. The

day of the announcement, Mr. Thoillier indicated he was going to shut down

Lantec’s business. The next day, the Lantec companies put all their marketing,

advertising, and packaging projects on hold. Less than a month later, a Novell

executive left Mr. Thoillier a voice message stating other executives at Novell

wanted to terminate the relationship between Novell and the Lantec companies.

Although Novell subsequently sent a letter stating it was willing to work with the

Lantec companies and continue the Original Equipment Manufacturer

Agreements, Lantec and Lantec Brazil argue the letter should be discounted

because another Novell executive later threatened to drive the Lantec companies

out of business. The Lantec companies never shipped XPostWare and made no

attempt to actively sell XPostWare after the Novell/WordPerfect merger.

The Novell/WordPerfect merger changed Novell’s approach to Message

Handling System and Global Message Handling System. After the merger, Novell

released GroupWise. Rather than being solely a messaging transport agent like

Message Handling System and Global Message Handling System, GroupWise

contains both the messaging transport agent and groupware. This software design

strategy was similar to WordPerfect’s pre-merger messaging software which also

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contained both the messaging transport agent and groupware. Ultimately, Novell

quit developing Message Handling System and focused solely on GroupWise.

PROCEDURAL HISTORY

Based on these facts, in 1995, Lantec filed a complaint in federal district

court in Utah. More than a year later, Lantec Brazil, LanCompany, and

LanTraining joined the suit as plaintiffs. The Lantec companies brought state law

tort claims, breach of contract claims, and a promissory estoppel claim. In

addition, they alleged Novell violated federal and state antitrust laws by (1)

unlawfully merging with WordPerfect; (2) contracting combining, or conspiring

to unreasonably restrain trade; (3) monopolizing, attempting to monopolize, and

conspiring to monopolize the worldwide groupware for NetWare market; (4)

unlawfully using its monopoly power in the network operating system market to

gain a competitive advantage in what the Lantec companies designate the

“groupware for NetWare market”; and (5) unlawfully tying the sale of its

groupware to NetWare. See 15 U.S.C. §§ 1, 2, 14, 18; Utah Code Ann. § 76-10-

914(1), (2).

Prior to trial, the district court granted Novell’s motion for summary

judgment on the tort, contract, and promissory estoppel claims. It also dismissed

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the antitrust claims brought by LanCompany and LanTraining for lack of

standing. The case, however, proceeded to trial on the remaining antitrust

claims. After the Lantec companies presented their case to the jury, Novell

moved for judgment as a matter of law. The district court ruled in Novell’s favor.

Lantec, Inc. v. Novell, Inc., 146 F. Supp. 2d 1140, 1142 (D. Utah 2001).

On appeal, the Lantec companies raise several issues. We first address the

contract and promissory estoppel issues and then examine the antitrust issues.

CONTRACT AND PROMISSORY ESTOPPEL CLAIMS

The Lantec companies argue the district court erred in granting summary

judgment on (1) the breach of contract claim based on the “DataRede

Agreement”; (2) the breach of contract claim based on the Original Equipment

Manufacturing Agreements; (3) the breach of the oral “Message Handling System

Agreement” claim; and (4) the promissory estoppel claim.

We review a grant of summary judgment de novo. Cliffs Synfuel Corp. v.

Norton, 291 F.3d 1250, 1257 (10th Cir. 2002). Summary judgment is only

appropriate “if the pleadings, depositions, answers to interrogatories, and

admissions on file, together with the affidavits, if any, show that there is no

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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). “In applying this standard,

we examine the factual record and draw reasonable inferences therefrom in the

light most favorable to the nonmoving party.” Clinger v. New Mexico Highlands

Univ., 215 F.3d 1162, 1165 (10th Cir. 2000), cert. denied, 531 U.S. 1145 (2001).

We will address the Lantec companies’ contract and promissory estoppel

arguments in light of this standard.

I. THE “DATAREDE AGREEMENT”

LanCompany argues the district court erred in granting summary judgment

on its claim Novell breached the “DataRede Agreement.” 4 The “DataRede

Agreement” claim is based on a February 7, 1990 letter from Novell’s director of

new business development to DataRede. Prior to the letter, DataRede had, under

the direction of Novell, conducted similarity tests necessary to allow Novell to

distribute NetWare in Brazil. After the completion of the similarity tests, Novell

sent the February letter promising a license to build network interface cards with

4
Paulo Rufino, a former president of DataRede, testified DataRede
assigned the agreement to LanCompany. Consequently, LanCompany is the sole
entity appealing this issue.

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no up-front fee. LanCompany refers to this letter as the “DataRede Agreement”.

Specifically, the letter states: “Novell has agreed to the following measures

as recognition of DataRede’s special contribution to the registration and approval

of NetWare .... No up-front fee for NE1000 & NE2000.” NE1000 and NE2000

are network interface cards. They are essentially hardware that allows a computer

to communicate with a network. Although Novell had the technology for these

cards, it typically licensed the technology to other hardware manufacturers rather

than producing the cards itself. LanCompany contends Novell breached the

Agreement by failing to deliver the license.

The district court granted summary judgment in favor of Novell, concluding

there was no contract because there was no consideration for the letter. The court

found “there was no consideration for the claimed contract because the benefits

granted by the letter were past consideration for DataRede’s earlier participation

in the Brazilian registration process, a process completed two months before the

... [l]etter.” Furthermore, the court said even if the “letter was an agreement, the

evidence is that Novell did comply with the terms of the letter.” The district

court later denied a request for rehearing on this issue.

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 LanCompany argues there was sufficient consideration for an enforceable

contract because the parties had intended Novell “to compensate DateRede for its

participation in the similarity test.”LanCompany explains “[e]ven though the

DataRede Agreement is dated after the similarity test, Novell’s promises that were

memorialized in the document were not made independent of DataRede’s

promised performance.” LanCompany claims “DateRede, therefore, had a claim

for its efforts, and even if the claim for a reward might not have been enforceable,

the surrender of its claim in exchange for the DataRede Agreement was sufficient

consideration for the contract.” Although LanCompany does not specifically

mention accord and satisfaction, it directs us to accord and satisfaction cases.

Generally, past services cannot serve as consideration for a subsequent

promise. Dementas v. Estate of Tallas ex rel. First Security Bank, 764 P.2d 628,

633 (Utah Ct. App. 1988) (“Events which occur prior to the making of the

promise and not with the purpose of inducing the promise in exchange are viewed

as ‘past consideration’ and are the legal equivalent of ‘no consideration.’”);

Jensen v. Anderson, 468 P.2d 366, 368 (Utah 1970) (“Past services, when

rendered under ... circumstances as to create no legal liability, are not

consideration for a subsequent promise” (citations omitted).). Utah law does,

however, enforce a subsequent promise based on completed services when the

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completed service was not meant to be gratuitous and the subsequent promise

meets the requirements of an accord and satisfaction. See England v. Horbach,

905 P.2d 301, 304 (Utah Ct. App. 1995), rev’d on other grounds, 944 P.2d 340,

344 (Utah 1997); Jensen, 468 P.2d at 368 n.6. “A party seeking to prove an

accord and satisfaction must show (1) an unliquidated claim or a bona fide

dispute over the amount due; (2) a payment offered as full settlement of the entire

dispute; and (3) an acceptance of the payment as full settlement of the dispute.”

ProMax Dev. Corp. v. Raile, 998 P.2d 254, 259 (Utah 2000).

We are not persuaded by LanCompany’s arguments. The “DataRede

Agreement” lacks sufficient consideration to constitute an enforceable contract.

LanCompany readily admits DataRede completed the registration tests before

Novell sent the letter allegedly creating the DataRede Agreement. Although

LanCompany’s brief suggests the letter simply “memorialized” promises made

prior to the completion of the registration tests, there is no evidence in the record

to support this suggestion. Viewed in the light most favorable to LanCompany,

the record merely reveals testimony the parties expected DataRede would receive

some compensation. But, the parties had not agreed upon the terms of

DataRede’s compensation before Novell sent the February 7, 1990 letter. We,

therefore, will enforce the promises in the letter only if they meet the

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requirements of an accord and satisfaction.

Even assuming LanCompany is correct in its assertion there was a dispute

as to the compensation Novell owed LanCompany for conducting the similarity

tests, we cannot conclude the DataRede Agreement amounts to an enforceable

accord and satisfaction. In this case, LanCompany needed to show the agreement

was in satisfaction of the dispute. See ProMax Dev., 998 P.2d at 259. But, there

is no indication DataRede or LanCompany ever surrendered any of its potential

claims against Novell. In fact, the letter embodying the DataRede Agreement

shows the Agreement was not in satisfaction of any claims. As the letter itself

explains:

In the course of events, DataRede made special requests to
Novell .... These requests were made without prior agreements, and,
in some cases, without a precise definition of the scope or [sic] the
request. Some of the requests have been granted, others have been
subject to negotiation, and still others must be further defined.

As the letter states, negotiations were still underway concerning DataRede’s

requests made incident to the registration tests. Furthermore, LanCompany does

not direct us to any other evidence suggesting the “DataRede Agreement” was

reached in satisfaction of any claims or in full settlement of any dispute. There is

simply no evidence to support LanCompany’s contention it surrendered potential

claims against Novell to receive the benefits in the February 1990 letter.

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Consequently, the alleged “DataRede Agreement” fails for lack of consideration.

Because we conclude the promises in the letter lack consideration, we need

not consider whether Novell breached the alleged agreement. The district court

was correct in granting summary judgment on the breach of the “DataRede

Agreement” claim.

II. BREACH OF ORIGINAL EQUIPMENT MANUFACTURER AGREEMENT

Lantec and Lantec Brazil claim Novell breached its Original Equipment

Manufacturer Agreements. These Agreements allowed Lantec and Lantec Brazil

to package their products with Novell’s NetWare and Message Handling System

products. Lantec and Lantec Brazil claim Novell terminated the Agreements in

April 1994 when Ron Palmeri, a Novell executive, left Mr. Thoillier a voice mail

message. They also claim Tom Pesut, a Novell executive, subsequently confirmed

the repudiation when he “declared that [Novell] would refuse to do business in

the future with any of the Lantec Companies.”

The district court granted Novell’s motion for summary judgment

dismissing the claims involving the Original Equipment Manufacturer Agreements

because there was “no showing of anticipatory repudiation by Novell.” The court

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concluded the Agreements “required written notice of termination and none was

given.” In addition, the court noted Novell sent a letter reaffirming the

Agreements and “demonstrated a willingness to continue with the agreement[s] as

[they] existed or to modify [them] in a way that would be acceptable to all” at a

subsequent meeting with the Lantec companies. The district court later denied

Lantec and Lantec Brazil’s motion for reconsideration on this issue.

We will consider each fact relevant to Novell’s alleged wrongful breach of

the Original Equipment Manufacturer Agreements in turn. We first consider

whether Mr. Palmeri’s telephone message constitutes triable evidence indicating

Novell repudiated the Original Equipment Manufacturer Agreements. Next, even

if Novell did repudiate, we ask whether Novell successfully retracted the

repudiation. Finally, we address whether the district court abused its discretion in

striking a portion of an affidavit Lantec and Lantec Brazil intended to use to

establish Mr. Pesut’s alleged threat to refuse to deal with the Lantec companies.

Ultimately, we affirm the district court’s decisions related to the Agreements.

A. Voice Mail Message

In April 1994, Mr. Palmeri of Novell left a voice mail message for Mr.

Thoillier. In relevant part, it stated:

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 I had a meeting with Tom Pesut yesterday and Jim Sullivan, who is
the director of channel sales and they want to terminate the
relationship between the companies. I want to let you know. Leave
me a voice mail and let me know that you did get in fact this
message, I don’t want you to be surprised when the letter comes
from our legal. OK? I’ll try to give you a ring back again but it is
just gonna be a lit [sic] tough to reach for the next couple of days.

Lantec and Lantec Brazil argue this message could reasonably be viewed as an

anticipatory repudiation of the Original Equipment Manufacturer Agreements.

A repudiation occurs when a party to a contract makes “an overt

communication of intention or an action which renders performance impossible or

demonstrates a clear determination not to continue with performance.” Uniform

Commercial Code § 2-610 cmt. 1 (1989). “[T]o constitute a repudiation, a party’s

language must be sufficiently positive to be reasonably interpreted to mean that

the party will not perform.” Scott v. Majors, 980 P.2d 214, 218 (Utah Ct. App.

1999) (quotation marks and alterations omitted). See also Utah Code Ann. § 70A-

2-610. “Mere expression of doubt as to [a party’s] willingness or ability to

perform is not enough to constitute a repudiation.” Restatement (Second) of

Contracts § 250 cmt. b (1979). Anticipatory repudiation requires more than

statements revealing a party does not want to perform the contract or has

misgivings about the contract. Hurwitz v. David K. Richards & Co., 436 P.2d

794, 795-96 (Utah 1968).

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 Viewing Mr. Palmeri’s voice message in the light most favorable to Lantec

and Lantec Brazil, we conclude the message was not definite enough to serve as

an anticipatory repudiation. The message only states two Novell executives

wanted to terminate Novell’s relationship with the Lantec companies. Nowhere in

the message does it state Novell would not perform its duties under the Original

Equipment Manufacturer Agreements.

B. Retraction

Even if the voice mail message had been definite enough to act as a

repudiation, the undisputed facts show Novell subsequently reaffirmed the

Agreements. Utah law provides a repudiating party “can retract [its] repudiation

unless the aggrieved party has since the repudiation canceled or materially

changed [its] position or otherwise indicated that [it] considers the repudiation

final.” Utah Code Ann. § 70A-2-611(1). A party may retract “by any method

which clearly indicates to the aggrieved party that the repudiating party intends to

perform.” Utah Code Ann. § 70A-2-611(2).

After receiving the telephone message, Mr. Thoillier sent Novell a letter

stating: “I am writing this letter to confirm your termination of the [Original

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Equipment Manufacturer] Agreement[s].” 5 Novell responded with a letter stating:

“I must take exception to [a] comment[] made in your letter. .... [Y]ou referred to

Novell’s ‘termination’ of the Lantec agreement[s]. [Those] agreement[s] can only

be terminated in writing and with appropriate notice.” On appeal, Lantec and

Lantec Brazil argue “the notion that Novell could not repudiate unless it

terminated the contract[s] in writing was simply nonsensical and poorly

reasoned.” Assuming termination did not need to be in writing, the letter

nevertheless shows Novell did not intend to terminate the Agreements. Further

5
The letter further states: “I received notice of your termination by
telephone message from Ron Palmeri last week.” In their reply brief, Lantec and
Lantec Brazil argue this letter shows they treated the telephone call as a final
repudiation. They therefore argue Novell’s “attempt to retract the repudiation
came too late” under Utah Code § 70A-2-611. We conclude Lantec and Lantec
Brazil waived this argument. In spite of the fact the district court’s opinion
concluded Novell retracted any repudiation, they did not raise their argument that
Novell’s retraction was ineffective in their initial appellate brief. In fact, prior to
the reply brief, the only time the Lantec companies raised this argument was in a
motion for reconsideration before the district court. The district court denied the
motion for reconsideration because the argument “could have been, but was not,
raised in the prior briefing and is therefore inappropriate in a motion to
reconsider.” Similarly, the Lantec companies’ argument has been brought to our
attention too late. “We are not obligated to address an argument which was not
[properly] made in the district court, nor even in this court until the reply brief.”
Mountain Fuel Supply v. Reliance Ins. Co., 933 F.2d 882, 887 (10th Cir. 1991).
See also Stump v. Gates, 211 F.3d 527, 533 (10th Cir. 2000) (explaining
arguments initially raised in a reply brief “rob[] the appellee of the opportunity to
demonstrate that the record does not support an appellant’s factual assertions and
to present an analysis of the pertinent legal precedent”). Thus, we decline to
consider this argument.

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showing Novell’s commitment to the Agreements, the letter established a meeting

between Novell and the Lantec companies on May 4, 1994, in Las Vegas. In

closing, the letter reaffirmed, “Novell is willing to consider any reasonable

proposal with respect to the ... [a]greement[s] to make th[ose] agreement[s]

workable for Lantec (e.g., mutual termination of the agreement[s], restructuring

of payment terms, reduction of volume commitment, etc.). I think you will find

Novell to be very accommodating on this issue.”

Novell’s actions following the reaffirming letter also demonstrate a

commitment to the Original Equipment Manufacturer Agreements. In May 1994,

the parties met in Las Vegas to discuss the Agreements. The undisputed outcome

of the meeting was that “[t]he parties did not reach any agreement as to their

respective rights and duties under the Lantec [Original Equipment Manufacturer]

[A]greement[s],” but that the Lantec companies would “evaluate their business

relationship with Novell.”

Consequently, we conclude the undisputed material evidence shows Novell

successfully retracted any repudiation of the Original Equipment Manufacturer

Agreements.

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 C. Alleged Threat

In their appellate brief, Lantec and Lantec Brazil argue a threat made by

Tom Pesut immediately following the Las Vegas meeting “raised a clear disputed

fact about Novell’s intention to repudiate the [Original Equipment Manufacturer]

Agreement[s].” According to a portion of an affidavit submitted by Marcello

Thoillier, Mr. Pesut, a Novell executive, said if the Lantec companies opposed the

Novell/WordPerfect merger “Novell would immediately sever its relationship with

these companies and put them out of business.” Lantec and Lantec Brazil argue

the alleged threat “belied the notion that Novell intended to continue doing

business with Lantec.”

The district court did not consider whether the alleged threat created a

material issue of fact. Instead, the district court struck the portion of Mr.

Thoillier’s affidavit pertaining to the threat because the court found it was an

attempt to create a “sham issue of fact.” The court noted “Mr. Thoillier was

extensively deposed over a period of several days on the same subject matters

which form the bases for his affidavit.” The court determined the relevant

allegation “conflicts with Mr. Thoillier’s prior deposition testimony regarding the

meeting.”

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 We review a district court’s decision to exclude evidence at the summary

judgment stage for abuse of discretion. Sports Racing Servs., Inc. v. Sports Car

Club, 131 F.3d 874, 894 (10th Cir. 1997). Under this standard we will not disturb

the district court’s decision “unless [we have] a definite and firm conviction that

the lower court made a clear error of judgment or exceeded the bounds of

permissible choice in the circumstances.” United States v. Ortiz, 804 F.2d 1161,

1164 n.2 (10th Cir. 1986.)

There is authority for the proposition that in determining
whether a material issue of fact exists, an affidavit may not be
disregarded because it conflicts with the affiant’s prior sworn
statements. In assessing conflict under there circumstances,
however, courts will disregard a contrary affidavit when they
conclude that it constitutes an attempt to create a sham fact issue.

Franks v. Nimmo, 796 F.2d 1230, 1237 (10th Cir. 1986) (citations omitted). In

deciding whether an affidavit is an attempt to create a sham issue of fact, the

relevant factors are “whether the affiant was cross-examined during his earlier

testimony, whether the affiant had access to the pertinent evidence at the time of

his earlier testimony or whether the affidavit was based on newly discovered

evidence, and whether the earlier testimony reflects confusion which the affidavit

attempts to explain.” Id.

Lantec and Lantec Brazil argue affidavit references to the alleged threat did

not directly contradict Mr. Thoillier’s deposition testimony. According to their

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argument, counsel for Novell never asked Mr. Thoillier about his meeting with

Mr. Pesut. Instead, Mr. Thoillier’s deposition testimony only concerned the May

1994 meeting in Las Vegas with Novell officials and counsel for the Lantec

companies and Novell. According to the affidavit, Mr. Pesut’s threat came not in

the scheduled meeting, but in a private conversation immediately following the

meeting.

After reviewing the deposition and affidavit, we conclude the district court

did not abuse its discretion in ruling parts of the affidavit contradicted Mr.

Thoillier’s deposition testimony. During the deposition Mr. Thoillier was

specifically asked whether Mr Pesut was “receptive to a discussion” about

continuing Novell’s association with the Lantec companies. Mr. Thoillier

answered he did not “recall these exact words.” Counsel for Novell then asked

whether “Novell had communicated that as far as it was concerned, it was

prepared to go ahead with the [Original Equipment Manufacturer Agreements].”

Mr. Thoillier said it “was discussed.” Searching for further clarification, counsel

for Novell asked to identify the result of the meeting. Mr. Thoillier admitted

Lantec and Lantec Brazil were supposed to decide whether they wanted to modify

their agreements with Novell and then schedule another meeting with Novell.

Nothing in the deposition questioning suggested Mr. Thoillier should limit his

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answers to discussions occurring when all of the people attending the meeting

were present. During his deposition, Mr. Thoillier never mentioned any threats

from Mr. Pesut. Consequently, the district court did not abuse its discretion in

concluding the portions of the affidavit related to the alleged threat were

contradictory.

Lantec and Lantec Brazil also argue the relevant portion of the affidavit

was not “intended to create a sham issue of fact.” They point to the deposition

testimony of LanCompany’s Chief Financial Officer, Ovidio Rovell, who testified

Mr. Thoillier told him of Mr. Pesut’s alleged threat. Novell conducted Mr.

Rovell’s deposition before Mr. Thoillier’s. Because Mr. Rovell’s testimony of

Mr. Thoillier’s hearsay statements gave Novell prior notice of the alleged threat,

Lantec and Lantec Brazil argue the affidavit cannot be viewed as an attempt “to

fabricate a disputed factual issue.”

While it is true Novell had notice of the alleged threat, we cannot conclude

the district court abused its discretion when other factors suggest the affidavit

was intended to create a sham issue of fact. First, Mr. Thoillier was represented

by counsel and cross-examined during his deposition. See Franks, 796 F.2d at

1237. Second, because the alleged threat is not newly discovered evidence, there

-24-
is no question Mr. Thoillier should have known about the alleged threat at the

time of the deposition. See id. Third, there is nothing in the deposition testimony

reflecting any level of confusion or uncertainty concerning Mr. Thoillier’s

testimony requiring clarification or explanation. See id. Given these

circumstances, we do not have a definite and firm conviction the district court

exceeded the bounds of permissible choice in striking the portions of Mr.

Thoillier’s affidavit related to the alleged threat. Consequently, we will not

consider whether the alleged threat would have raised a material issue of fact.

In short, we conclude Novell was entitled to summary judgment on the

claims involving the Original Equipment Manufacturer Agreements. Mr.

Palmeri’s telephone message was not definite enough to amount to a repudiation

of the Agreements. Even assuming otherwise, the record shows Novell

subsequently sent a letter reaffirming the Agreements and acted in accordance

with the reaffirmation at a subsequent meeting. Aside from properly stricken

portions of an affidavit, Lantec and Lantec Brazil have not directed us to any

portion of the record suggesting otherwise. Therefore, we affirm the district

court’s grant of summary judgment on the breach of the Original Equipment

Manufacturer Agreement claims.

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III. THE ALLEGED MESSAGE HANDLING SYSTEM ORAL AGREEMENT

Lantec and Lantec Brazil next argue Novell breached an oral agreement

regarding Messaging Handling System. According to the verified complaint,

Novell agreed to provide:

(1) increased marketplace exposure; (2) approval and promotion of
the manufacturer’s messaging applications; (3) competitive
advantages in the messaging applications marketplace because of
association with NetWare; (4) opportunity for direct input to Novell
concerning the growth and development direction of [Message
Handling System]; (5) heavy support and promotion of [Message
Handling System] as the dominant [Network Operating System]
messaging [transport agent] and promotion of [Message Handling
System] for many years to come; and (6) freedom from the fear or
competition with the [network operating system] or messaging
[transport agent] manufacturer – Novell.

In return, Lantec and Lantec Brazil contend they agreed to “(1) join in and

actively (but not financially) support the [Message Handling System] Alliance; (2)

convert existing products to [Message Handling System]; (3) migrate exclusively

to the [Message Handling System] engine for development of future messaging

applications; and (4) promote NetWare as the [Network Operating System] of

choice for all messaging applications.” They believe Novell broke these promises

by merging with WordPerfect, manufacturing GroupWise, and failing to develop

Message Handling System and Global Message Handling System after the merger.

The district court granted Novell’s motion for summary judgment. The

-26-
court stated Lantec and Lantec Brazil “rely exclusively upon the allegations of

their Verified Amended Complaint to show the existence and terms of the alleged

[Message Handling System] oral agreement.” The court concluded Lantec and

Lantec Brazil had not produced specific evidence “to show the existence of the

alleged oral [Message Handling System] Agreement.”

Unsatisfied, Lantec and Lantec Brazil filed a motion for reconsideration

arguing they should have been allowed to rely on their verified complaint at the

summary judgment stage. In ruling on the motion, the court recognized that

verified complaints can sometimes be used to avoid summary judgment. The

district court, however, determined the relevant paragraphs of the complaint could

not be treated as an affidavit because they did not relate to facts within Mr.

Thoillier’s personal knowledge. The court further stated “the factual allegations

relied upon for this motion ... are conclusory .... For example, the [complaint]

lack[s] specific details of who made the alleged promises on behalf of Novell.”

For these reasons, the district court also denied the motion for reconsideration.

On appeal, Lantec and Lantec Brazil argue the district court erred in

refusing to consider the averments in their amended verified complaint as

evidence of the contract. They believe the verified complaint shows genuine

-27-
issues of material fact precluding summary judgment.

“[W]e review a district court’s decision to exclude evidence at the summary

judgment stage for abuse of discretion.” Sports Racing Servs., 131 F.3d at 894.

Under this standard, we will not disturb a district court’s ruling “unless [we have]

a definite and firm conviction that the lower court made a clear error of judgment

or exceeded the bounds of permissible choice in the circumstances.” Ortiz, 804

F.2d at 1164 n.2.

A district court may treat a verified complaint “as an affidavit for purposes

of summary judgment if it satisfies the standards for affidavits set out in Rule

56(e).” Conaway v. Smith, 853 F.2d 789, 792 (10th Cir. 1988). According to

Rule 56(e), an affidavit must “be made on personal knowledge, shall set forth

such facts as would be admissible in evidence, and shall show affirmatively that

the affiant is competent to testify to the matters stated therein.” Fed. R. Civ. P.

56(e). Furthermore, a district court need not treat a verified complaint as an

affidavit if “the allegations contained in the pleading are merely conclusory.”

Conaway, 853 F.2d at 793. See Adler v. Wal-Mart Stores, Inc., 144 F.3d 664,

671-72 (10th Cir. 1998) (“The conclusory allegation in Plaintiff’s complaint,

although verified, are of ... little help in carrying her burden under Rule 56(e).”);

-28-
Sheinkopf v. Stone, 927 F.2d 1259, 1262 (1st Cir. 1991) (holding a trial court

must disregard conclusory allegations in a verified complaint when considering a

motion for summary judgment).

We conclude the district court did not abuse its discretion in refusing to

consider the amended verified complaint as an affidavit for summary judgment

purposes. We agree the allegations in the complaint were conclusory and the

district court was, therefore, free to disregard these allegations. This case is

similar to Mitchael v. Intracorp, Inc., 179 F.3d 847 (10th Cir. 1999), where we

stated an affidavit was “conclusory, vague, and/or lacking in foundation” and was

insufficient to support the conclusion an agreement had been formed. Id. at 855

n.9. In Mitchael, the affiant “fail[ed] to state how he learned of [the] agreement,

who exactly represented the other ... companies, how he could speak for what they

wanted or needed, when this agreement or understanding was formed, and how it

was to operate.” Id. Here, Mr. Thoillier’s averments in the complaint do not

reveal who represented Novell in making the oral contract. He did not state

where or how the agreement was communicated and explains only that the

agreement was reached “in approximately June 1993.” With respect to the

formation of the alleged Message Handling System oral contract, the amended

verified complaint did little more than state a legal conclusion as to the terms of

-29-
the contract. Thus, we hold the district court was within the bounds of

permissible choice in concluding the verified complaint was conclusory and

refusing to consider the complaint as an affidavit.

Lantec and Lantec Brazil do not direct us to portions of the record, other

than their verified complaint, to support the alleged breach of the Message

Handling System oral contract. This is so even though Mr. Thoillier provided an

extensive deposition and a supplemental affidavit. Because Lantec and Lantec

Brazil have not provided record citations, we need not sift through the record in

an attempt to find evidence of the alleged oral contract. See Gross v. Burggraf

Constr. Co., 53 F.3d 1531, 1546 (10th Cir. 1995). For these reasons, the breach

of the Message Handling System oral contract claim fails.

IV. PROMISSORY ESTOPPEL

The Lantec companies next appeal the district court’s grant of summary

judgment on their promissory estoppel claim. They argue, under the doctrine of

promissory estoppel, Novell should be held to its promises: “(1) Novell would

never compete in the applications market; (2) developers who agreed to work with

Novell would be given access to technical information necessary to write

applications for NetWare; and (3) those developers would profit by designing

-30-
applications solely for NetWare.”The Lantec companies allege they relied on

these promises to their detriment and should therefore be compensated.

The district court held Novell was entitled to summary judgment because

the Lantec companies had not presented any evidence to support their contention

Novell made enforceable promises to the Lantec companies. It pointed out “Mr.

Thoillier ... candidly admits he can’t recall any occasion when a representative of

Novell ever said that Novell would ‘never, ever’ enter the applications business.

As to the other alleged promises, plaintiffs have pointed to no evidence of such

promises other than the allegations in their Amended Verified Complaint.” Thus,

the district court concluded, “[t]his is [a] case where plaintiffs rely on their

subjective understanding of alleged vague and nonspecific conversations with

Novell representations. This is not sufficient to support a promissory estoppel

claim.”

The Lantec companies first argue the district court “improperly disregarded

the Amended Verified Complaint in reaching its determination.” In our prior

discussion of the alleged Message Handling System oral contract, we rejected the

argument that the district court acted inappropriately in refusing to consider

portions of the amended verified complaint relevant to the oral contract claim.

-31-
Here, we conclude the portion of the complaint related to the promissory estoppel

claim is similarly conclusory. The complaint does not reveal which of Novell’s

officers or employees made the alleged promises nor does it reveal when, where,

or how the promises were communicated. Instead the complaint merely recites

the alleged promises and concludes Novell “made the representations and

promises ... with the knowledge and intention that Lantec and Lantec Brazil

would detrimentally rely on such representations and promises.”The district court

did not abuse its discretion in refusing to consider these conclusory allegations as

an affidavit. See Conaway, 853 F.2d at 792-93.

The Lantec companies have not directed us to any portion of the record,

other than their complaint, to support their claim Novell promised to give

developers technical information. Likewise, they have not provided citations to

the record to support their claim Novell promised developers would profit by

designing applications solely for NetWare. Because these alleged promises have

no support in the record, the district court properly dismissed them.

The Lantec companies have, however, directed us to portions of the record

to support their claim Novell promised to never enter the applications business.

Therefore, we must decide whether this evidence supports a promissory estoppel

-32-
claim. We conclude it does not.

Under Utah law, the elements of promissory estoppel are:

(1) The promisee acted with prudence and in reasonable
reliance on a promise made by the promisor; (2) the promisor knew
that the promisee had relied on the promise which the promisor
should reasonably expect to induce action or forbearance on the part
of the promisee or a third person; (3) the promisor was aware of all
material facts; and (4) the promisee relied on the promise and the
reliance resulted in a loss to the promisee.

J.R. Simplot Co. v. Sales King Int’l, Inc., 17 P.3d 1100, 1107 (Utah 2000)

(quotation marks and alterations omitted). “[T]he alleged promise must be

reasonably certain and definite, and a claimant’s subjective understanding of the

promissor’s statements cannot, without more, support a promissory estoppel

claim.” Nunley v. Westates Casing Servs., Inc., 989 P.2d 1077, 1089 (Utah 1999).

See also J.R. Simplot, 17 P.3d at 1107.

The Lantec companies argue the district court “improperly disregarded”

deposition testimony from Mr. Thoillier, deposition testimony from two

independent software developers, and internal Novell documents. We will begin

our analysis with Mr. Thoillier’s testimony. The Lantec companies direct us to a

portion of Mr. Thoillier’s deposition. It states:

Q: The allegation is made Novell promised developers,
including Lantec and Lantec Brazil, that Novell was only in the

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 business of marketing, distributing NetWare and would never
compete with such developers in the NetWare applications market.
Were you ever present when such representations were made?

A: Yes

Mr. Thoillier continued, saying Novell employees Jared Blauser, Roy Olsen, and

Ray Noorda all made such promises.

But this is not the end of Mr. Thoillier’s testimony. Upon further

questioning, Mr. Thoillier retreats from the position he heard specific promises

Novell would not enter the applications business. When asked specifically what

Novell said, Mr. Thoillier answered:

It was the same speech. We are in the application business. We are
not in the – I’m sorry, we are in the operating systems business. We
are not in the application business blah-blah-blah. We are – in fact,
the whole industry talks about Novell being the Switzerland of the
software. That’s why Novell partnered with so much [sic]. That’s
why you have so may application vendors that began to develop for
Novell networks.

While this statement supports the proposition Novell was not then in the

applications business, it does not show a certain and definite promise not to enter

the applications business. In fact, Mr. Thoillier eventually admitted he could not

recall an instance where Novell promised it would never enter the applications

business.

Q: ... Do you recall any occasion when any Novell officer or
director or employee in your presence said under no circumstances,

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 or words to that effect, will Novell get in the quote-unquote
“applications” business?

A: I don’t recall. I just recall until such a time as the merger
happened the speech was the same. Novell was not going to enter
into the application business until the time the merger happened.
And then everyone was, even the Novell employees ... were all
speechless.

Q: But you do not recall an occasion where Novell said – when
anyone associated with Novell ever said Novell, under no
circumstances, will ever get into the applications business; isn’t that
true?

A: No. I don’t recall.

Mr. Thoillier’s testimony established only that Novell had stated it was not in the

applications business. This is not a clear and definite promise. Furthermore, to

the extent Mr. Thoillier’s deposition claims a promise, it is only his subjective

understanding of Novell’s statements that is insufficient to support the claim

Novell promised it would not enter the applications business.

In addition to Mr. Thoillier’s testimony, other Lantec employees testified

they could not recall any instance where Novell clearly stated it would never enter

the applications business. The Lantec companies never produced an employee or

officer of any kind who heard Novell make a clear or definite promise Novell

would not enter the applications business. We cannot see how, as a matter of law,

the Lantec companies could reasonably rely on a promise when nobody at the

-35-
Lantec companies can recall Novell specifically making that promise.

Nevertheless, we turn to other evidence offered by the Lantec companies.

They direct us to the testimony of two independent software developers who were

making applications for use with Message Handling System. One developer

testified Novell repeatedly said it was not in the applications business. “[T]he

phrase that I kept hearing from Novell people was that we are not in the

application – we don’t develop applications. We develop the network operating

system or as they call it, the plumbing.” Again, this testimony, at most,

establishes the fact Novell was not initially in the applications business, but does

not show Novell promised it would never enter the applications business. Other

similar testimony is, likewise, unhelpful to the Lantec companies’ argument.

Finally, the Lantec companies direct us to internal Novell documents

written by Jeff Callo, a Novell employee. Novell argues “these documents were

not part of the record below when the district court granted summary judgment

and Lantec cannot rely upon them now.” The Lantec companies do not respond to

this argument in their reply brief. After reviewing the copies of the summary

judgment motion and response provided as part of the record on review, it appears

these documents, while referenced in the Lantec companies brief, were not

-36-
presented to the district court. Our examination on review “is confined to an

examination of materials before the lower court at the time the ruling was made.”

Allen v. Minnstar, Inc., 8 F.3d 1470, 1475 (10th Cir. 1993) (quotation marks and

alterations omitted). We “will not reverse the grant of summary judgment based

on evidence not before the district [court].” Id. (quotation marks and alterations

omitted). Consequently, we will not consider the documents written by Mr. Callo.

In sum, we affirm the grant of summary judgment on the promissory

estoppel claim. The Lantec companies are not entitled to rely on their conclusory

verified complaint. They have offered no additional evidence on their claim

Novell promised it would provide technical information or their claim Novell

promised the Lantec companies would profit by developing Message Handling

System applications. In addition, the Lantec companies failed to produce any

evidence of a clear and definite promise Novell would never enter the

applications business. Further, the Lantec companies’ reliance on any promise

was unreasonable when they could not produce a single officer or employee who

remembered hearing the promise.

ANTITRUST CLAIMS

Having resolved the contract and promissory estoppel claims, we turn to the

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antitrust claims. In their complaint, the Lantec companies alleged: (1) the

Novell/WordPerfect merger was an unlawful vertical 6 merger because it lessened

competition in the “groupware for NetWare” market in violation of 15 U.S.C.

§ 18; 7 (2) Novell contracted, combined, and conspired to unreasonably restrain

trade and commerce in violation of 15 U.S.C. § 1; (3) Novell monopolized,

attempted to monopolize, and conspired with WordPerfect to monopolize the

groupware for NetWare market in violation of 15 U.S.C. § 2; and (4) Novell

unlawfully used its monopoly power in the network operating system market as

leverage to gain a competitive advantage in the groupware for NetWare market in

violation of 15 U.S.C. § 2. 8 The Lantec companies also brought identical claims

6
“Economic arrangements between companies standing in a supplier-
customer relationship are characterized as ‘vertical.’” Brown Shoe Co. v. United
States, 370 U.S. 294, 323 (1962). “The primary vice of a vertical merger or other
arrangement tying a customer to a supplier is that, by foreclosing the competitors
of either party from a segment of the market otherwise open to them, the
arrangement may act as a ‘clog on competition.’” Id. at 323-24 (citation omitted).

7
The Lantec companies originally alleged unlawful competition in the
“NetWare Messaging Applications Market.” Later, the Lantec companies refined
their description to the “groupware for NetWare market.” Following the parties
and the district court we use the latter term. Lantec, 146 F. Supp. 2d at 1144 n.1.

8
The Lantec companies also brought a claim alleging Novell unlawfully
tied its groupware product to NetWare thereby lessening competition in the
groupware for NetWare market in violation of 15 U.S.C. § 14. The district court
dismissed this claim, Lantec, 146 F. Supp. 2d at 1155, and Lantec and Lantec
Brazil have not appealed the dismissal.

-38-
under Utah antitrust statutes. See Utah Code Ann. § 76-10-914(1), (2). 9

Prior to trial, the district court granted Novell’s motion to dismiss the

antitrust claims brought by LanCompany and LanTraining finding the court

lacked subject matter jurisdiction. Neither LanCompany or LanTraining appealed

this ruling.

The case proceeded to trial on the antitrust claims brought by Lantec and

Lantec Brazil. After Lantec and Lantec Brazil presented their case, Novell moved

for judgment as a matter of law. Lantec, 146 F. Supp. 2d at 1142. The district

court granted the motion concluding the antitrust claims should fail because (1)

Lantec and Lantec Brazil failed to establish the existence of the alleged

groupware for NetWare market; (2) Lantec and Lantec Brazil failed to produce

evidence of any conspiracy between Novell and WordPerfect; and (3) Lantec and

Lantec Brazil failed to produce evidence of antitrust injury. Id. at 1156. In their

appeal, Lantec and Lantec Brazil challenge each of these conclusions.

9
The parties agree the Utah antitrust claims are duplicative of the federal
antitrust claims. We, therefore, will not address the Utah antitrust claims
separately.

-39-
 We review the district court’s grant of judgment as a matter of law de novo,

using the same standard as the district court. Baty v. Willamette Indus., Inc., 172

F.3d 1232, 1241 (10th Cir. 1999). According to the Federal Rules of Civil

Procedure, “[i]f during a trial by jury a party has been fully heard on an issue and

there is no legally sufficient evidentiary basis for a reasonable jury to find for that

party on that issue, the court ... may grant a motion for judgment as a matter of

law against that party.” Fed. R. Civ. P. 50(a)(1). Judgment as a matter of law “is

warranted only if the evidence points but one way and is susceptible to no

reasonable inferences supporting the party opposing the motion.” Baty, 172 F.3d

at 1241 (quotation marks and citation omitted). We must, however, affirm the

grant of judgment as a matter of law in favor of Novell “if there is no legally

sufficient evidentiary basis with respect to a claim ... under the controlling law.”

Id. (quotation marks and alterations omitted). With this standard in mind, we will

examine each of the district court’s conclusions.

I. Relevant Market

Lantec and Lantec Brazil argue they produced evidence sufficient to

establish a world-wide groupware for NetWare market. We disagree.

The relevant market is “a market relevant to the legal issue before the

-40-
court.” SCFC ILC, Inc. v. Visa USA, Inc., 36 F.3d 958, 966 (10th Cir. 1994)

(quotation marks and citation omitted). In order to prevail on all their antitrust

claims, except the conspiracy to monopolize claim, 10 Lantec and Lantec Brazil

must establish the relevant market. United States v. E.I. du Pont de Nemours &

Co., 353 U.S. 586, 593 (1957) (holding “[d]etermination of the relevant market is

a necessary predicate to a finding of” unlawful merger under 15 U.S.C. § 18); TV

Communications Network, Inc. v. Turner Network Television, Inc., 964 F.2d 1022,

1027 (10th Cir. 1992) (holding a 15 U.S.C. § 1 unreasonable restraint of trade

claim requires proof “the defendant entered a contract, combination or conspiracy

that unreasonably restrains trade in the relevant market” (emphasis added)); Full

Draw Prods. v. Easton Sports, Inc., 182 F.3d 745, 756 (10th Cir. 1999) (holding

monopolization and attempted monopolization claims under 15 U.S.C. § 2 require

10
See Salco Corp. v. General Motors Corp., 517 F.2d 567, 576 (10th Cir.
1975) (“Specific intent to monopolize is the heart of a conspiracy [to monopolize]
charge [under 15 U.S.C. §2], and a plaintiff is not required to prove what is the
‘relevant market.’”). We note there is a split among the circuits as to whether
proof of the relevant market is required to prove a conspiracy to monopolize
claim. Compare Salco, 517 F.2d at 576 (holding proof of relevant market is not
required) with Doctor’s Hosp. of Jefferson, Inc. v. Southeast Med. Alliance, Inc.,
123 F.3d 301, 311 (5th Cir. 1997); Bill Beasley Farms, Inc. v. Hubbard Farms,
695 F.2d 1341, 1343 (11th Cir. 1983) (holding proof of relevant market is
required). In this case, Novell does not argue Lantec and Lantec Brazil should be
required to establish the relevant market to succeed on the conspiracy to
monopolize claim. Furthermore, we are bound by our precedent and therefore
need not revisit this rule. See In re Smith, 10 F.3d 723, 724 (10th Cir. 1993).

-41-
proof of the relevant market); Catlin v. Washington Energy Co., 791 F.2d 1343,

1349 (9th Cir. 1986) (holding leveraging claims under 15 U.S.C. § 2 require proof

of the relevant primary and secondary markets). 11

In this case, Lantec and Lantec Brazil bear the burden of defining the

relevant market. See Tarabishi v. McAlester Reg’l Hosp., 951 F.2d 1558, 1569

n.15 (10th Cir. 1991). The relevant market is made up of the product at issue and

available substitutes for that product. See Visa USA, 36 F.3d at 966. “In defining

the relevant market, two aspects must be considered: the product market and the

geographic market.” Rural Tel. Serv., Co. v. Feist Publ’ns, Inc., 957 F.2d 765,

768 n.2 (10th Cir. 1992). In this case, we divide our discussion of Lantec and

Lantec Brazil’s evidence of a worldwide groupware for NetWare market first into

expert testimony and then into lay testimony.

11
There is a circuit split as to whether leveraging is an independent claim
under 15 U.S.C. § 2. See Eleven Line, Inc. v. North Tex. State Soccer Ass’n, Inc.,
213 F.3d 198, 206 n.16 (5th Cir. 2000) (recognizing circuit split). We have not
yet decided whether leveraging is an independent claim in the Tenth Circuit and
need not reach the issue in this case. Even assuming the existence of an
independent § 2 leveraging cause of action, Lantec and Lantec Brazil’s leveraging
claim fails because they have not established the relevant market.

-42-
 A. Expert Testimony

Lantec and Lantec Brazil argue the testimony of their economic expert, Dr.

John C. Beyer, is sufficient to establish the groupware for NetWare market. Dr.

Beyer testified the relevant market was “groupware for NetWare users.” After

hearing Dr. Beyer’s testimony at trial, the district court found the testimony

lacked foundation, was unreliable, and should be excluded in its entirety. The

district court concluded “Dr. Beyer did not employ in the courtroom the same

level of intellectual rigor that characterizes an expert in the field of economics

and industrial organization.” Specifically, the court stated Dr. Beyer (1) used

unreliable data; (2) did not understand computers or the computer market; (3)

testified the relevant market was determined by consumer purchasing patterns but

did not conduct or cite surveys revealing consumer preferences; (4) did not

calculate the cross-elasticity of demand to determine which products were

substitutes; (5) changed his opinion from the opinion he gave in an earlier expert

report; and (6) did not address changes in the computer market. Further, the

district court found portions of Dr. Beyer’s testimony were non-technical in

nature and would not assist the jury. We agree with the district court’s

assessment.

Federal Rule of Evidence 702 governs the admissibility of expert witness

-43-
testimony. Fed. R. Evid. 702. Under Rule 702, expert testimony is admissible if

it will assist the trier of fact and if “(1) the testimony is based upon sufficient

facts or data, (2) the testimony is the product of reliable principles and methods,

and (3) the witness has applied the principles and methods reliably to the facts of

the case.” Id. Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 593-95

(1993), outlines the framework a district court should use in determining whether

to admit evidence under Rule 702.

Under Daubert, courts measure reliability of scientific evidence by
considering (1) whether the technique can and has been tested; (2) whether
the technique has been subjected to peer review; (3) the known or potential
error rate of the technique; (4) the existence and maintenance of standards
controlling the technique’s operation; and (5) whether the technique has
gained general acceptance in the scientific community.

United States v. Call, 129 F.3d 1402, 1404 (10th Cir. 1997) (citing Daubert, 509

U.S. at 593-95), cert. denied, 524 U.S. 906 (1998). “We review de novo whether

the district court properly followed the framework set forth in Daubert.” Id. at

1405. If, however, the district court correctly applied the Daubert standards, we

may reverse only if we find the district court abused its discretion. Id.

From its order, it is clear the district court followed the Daubert

framework. Therefore, we look to see whether the district court abused its

discretion in excluding Dr. Beyer’s testimony. After reviewing Dr. Beyer’s

testimony, we conclude the district court order excluding the testimony is

-44-
thorough and well-reasoned. We see little benefit in reproducing the reasoning

from the district court’s eighteen-page order.

We will, however, comment on one particularly troubling aspect of Dr.

Beyer’s testimony. Throughout his testimony, Dr. Beyer relied heavily on his

personal experience as president of a consulting firm which installed a new

network operating system. Before Lantec and Lantec Brazil hired Dr. Beyer as an

economic expert, his consulting firm was looking for a new network operating

system. In an effort to make an informed purchase, Dr. Beyer spoke with the

technology experts at two or three other consulting firms in the Washington, D.C.

area. Lantec and Lantec Brazil characterize Dr. Beyer’s limited personal

experience as reliable and scientific “first-hand interviews.” In reality, Dr. Beyer

attempted to spin anecdotes from a handful of personal conversations with firms

in a limited geographic area into evidence of a worldwide product market. These

conversations are not sufficient facts or data to support Dr. Beyer’s conclusions.

The district court did not abuse its discretion in excluding Dr. Beyer’s testimony.

B. Lay Testimony

Lantec and Lantec Brazil argue “[e]ven without Dr. Beyer’s testimony,

there was more than sufficient evidence for the jury to find the existence of the

-45-
groupware for NetWare market.”

The district court held Lantec and Lantec Brazil had not produced

sufficient lay testimony or other evidence to establish a relevant market. Lantec,

146 F. Supp. 2d at 1149. It concluded Lantec and Lantec Brazil had not presented

evidence to support the groupware for NetWare product market because they did

not present “evidence on the costs of the various products or of how the consumer

would react to a price increase in such costs, there is no evidence of price

sensitivity. There is no evidence of consumer preferences.” Id. at 1148-49. The

district court also held the “skimpy evidence of [Lantec and Lantec Brazil’s] own

experiences” was not sufficient to support a world-wide geographic market. Id. at

1149.

In their opening brief, Lantec and Lantec Brazil argue the district court

impermissibly “weighed evidence and made credibility determinations in holding

as a matter of law that Lantec failed to establish the existence of the groupware

for NetWare market.” Lantec and Lantec Brazil point to Novell documents

stating Novell’s belief customers wanted groupware tightly integrated with

NetWare. They further claim “Lantec’s ... marketing firm ... recognized the

existence of the groupware for NetWare market ... [and] advised Lantec to focus

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on the submarket of groupware made for NetWare.”

While Lantec and Lantec Brazil offered lengthy arguments as to how the

record supports their definition of the product market, their opening brief did not

challenge the district court’s conclusion that they had not proven a geographic

market. Novell responded to Lantec and Lantec Brazil’s opening brief by arguing

Lantec and Lantec Brazil had waived any appeal of the district court’s ruling on

the geographic market. Only then, in their reply brief, did Lantec and Lantec

Brazil argue “the worldwide geographic market was established.”

We are under no obligation to address the district court’s geographic

market ruling because Lantec and Lantec Brazil did not raise the issue in their

opening brief. See Stump, 211 F.3d at 533. Since proof of relevant market

requires evidence of both a product market and a geographic market, Feist, 957

F.2d at 768 n.2, we can affirm the district court’s decision simply because Lantec

and Lantec Brazil failed to properly appeal the geographic market ruling.

Even if Lantec and Lantec Brazil had properly raised their argument against

district court’s ruling on the geographic market, their definition of a “worldwide

geographic market” fails. “The geographic market consists of the area of effective

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competition.” Bacchus Indus., Inc. v. Arvin Indus., Inc., 939 F.2d 887, 893 (10th

Cir. 1991). It is “the narrowest market which is wide enough so that products

from adjacent areas cannot compete on substantial parity with those included in

the market.” Westman Comm’n Co. v. Hobart Int’l, Inc., 796 F.2d 1216, 1222

(10th Cir. 1986) (quotation marks and alterations omitted), cert. denied, 486 U.S.

1005 (1988). The size of the relevant geographic market depends on a number of

factors, including “[p]rice data and such corroborative factors as transportation

costs, delivery limitations, customer convenience and preference, and the location

and facilities of other producers and distributors.” T. Harris Young & Assocs.,

Inc. v. Marquette Elecs., Inc., 931 F.2d 816, 823 (11th Cir. 1991). See also

Kaplan v. Burroughs Corp., 611 F.2d 286, 292 (9th Cir. 1979).

Lantec and Lantec Brazil have not pointed us to any facts in the

approximately 10,000 pages of record that specifically address price data, the

location and facilities of other producers, or any of the other factors cited by

courts as relevant to determining the relevant geographic market. Instead, Lantec

and Lantec Brazil claim they presented evidence sufficient to establish a

worldwide geographic market because “Lantec established that it sold XPost, its

first groupware product, around the world.”They also state they “established that

[Lantec] intended to sell XPostWare around the globe as evidenced by the

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numerous domestic and foreign distribution contracts it negotiated.”

Neither of Lantec and Lantec Brazil’s arguments is effective. First, under

Lantec’s definition of groupware (products containing e-mail and one other

messaging application), XPost is not groupware. XPost consisted solely of an e-

mail application. Consequently, sale of XPost in several different international

markets cannot establish a worldwide groupware market. 12 Second, the fact

Lantec and Lantec Brazil were, through distributorship agreements, attempting to

sell their products in several different countries is not, by itself, helpful. “[T]he

geographic market is not comprised of the region in which the seller attempts to

sell its product, but rather is comprised of the area where his customers would

look to buy such a product.” Tunis Bros. Co. v. Ford Motor Co., 952 F.2d 715,

726 (3rd Cir. 1992). See also Morgan, Strand, Wheeler & Biggs v. Radiology,

Ltd., 924 F.2d 1484, 1490 (9th Cir. 1991) (holding where the plaintiff company

12
The distinction between groupware and Lantec’s XPost e-mail
application is not merely semantic. Had Lantec and Lantec Brazil’s antitrust
claims survived judgment as a matter of law, they would have had a tactical
advantage in narrowly defining the “groupware for NetWare” market to exclude
competitors whose applications only contained an e-mail program. Since Lantec
and Lantec Brazil narrowly define the relevant product market in order to bolster
their product market and monopoly power arguments, Lantec and Lantec Brazil
must, at a minimum, live with this narrow definition in establishing the relevant
geographic market.

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competes does not define the relevant geographic market).

Because Lantec and Lantec Brazil have not properly appealed the district

court’s determination of the geographic market and, in any event, did not

introduce evidence from which a jury could find a worldwide market, we need not

consider whether they introduced evidence sufficient to establish a groupware for

NetWare product market. We, therefore, affirm the district court’s grant of

judgment as a matter of law on the unlawful vertical merger claim, conspiracy to

restrain trade claim, monopolization claim, attempted monopolization claim, and

leveraging claim.

II. Conspiracy

Having affirmed the dismissal of the other antitrust claims, we must now

consider whether Lantec and Lantec Brazil have established their conspiracy to

monopolize claim brought under 15 U.S.C. § 2. According to Tenth Circuit case

law, a conspiracy to monopolize claim requires proof of “(1) the existence of a

combination or conspiracy to monopolize; (2) overt acts done in furtherance of

the combination or conspiracy; (3) an effect upon an appreciable amount of

interstate commerce; and (4) a specific intent to monopolize.” TV

Communications Network, 964 F.2d at 1026 (quotation marks and citation

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omitted).

The district court granted judgment as a matter of law on the conspiracy to

monopolize claim, concluding Lantec and Lantec Brazil had not produced

sufficient evidence for a jury to find a conspiracy between Novell and

WordPerfect prior to the merger. The court stated: “[I]f this case the evidence

produced by Plaintiffs at trial is that WordPerfect and Novell representatives met

in the period between merger announcement and completion. Among other things

they discussed were [Message Handling System] and integration. Some persons

in the two companies were in favor of [Message Handling System] and some were

not.” Rather than suggesting a common scheme, the court concluded the evidence

“shows the opposite, that the companies had different views on how things should

proceed.” Consequently, the court held “Plaintiffs’ evidence is mere speculation

and conjecture, and that will not suffice.” Lantec and Lantec Brazil have

appealed the district court’s conclusion there was no evidence of a conspiracy.

In considering whether Lantec and Lantec Brazil have produced evidence

of a conspiracy, we are guided by relevant case law. Initially, a conspiracy

requires at least two parties. A corporation is not capable of conspiring with

itself. Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 769-72

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(1984). A plaintiff can prove a conspiracy with either direct or circumstantial

evidence. See American Tobacco Co. v. United States, 328 U.S. 781, 809-10

(1946) (“The essential combination or conspiracy in violation of the Sherman Act

may be found in a course of dealing or other circumstances as well as in any

exchange of words.”). When a plaintiff attempts to prove conspiracy through

circumstantial evidence, “ambiguous conduct that is as consistent with

permissible competition as with illegal conspiracy does not by itself support an

inference of antitrust conspiracy.” Multistate Legal Studies, Inc. v. Harcourt

Brace Jovanovich Legal & Prof’l Publ’ns, Inc., 63 F.3d 1540, 1556 (10th Cir.

1995) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,

588 (1986)), cert. denied, 516 U.S. 1044 (1996). 13 “A plaintiff must offer

evidence tending to exclude the possibility that the alleged conspirators either

acted independently or colluded in a way that could not have harmed the

plaintiff.” Id.

13
In describing the necessary evidence to infer a conspiracy, both
Multistate Legal Studies and Matsushita are specifically addressing a conspiracy
to restrain trade under 15 U.S.C. § 1 rather than a conspiracy to monopolize under
15 U.S.C. § 2. However, the limits on inferences of concerted actions under § 1
apply in § 2 cases. See AD/SAT v. Associated Press, 181 F.3d 216, 232-33 (2d
Cir. 1999); In re Beef Indus. Antitrust Litig., 907 F.2d 510, 516 (5th Cir. 1990);
Stephen Jay Photography, Ltd. v. Olan Mills, Inc., 903 F.2d 988, 996 (4th Cir.
1990). But see H.L. Hayden Co. v. Siemens Med. Sys., Inc., 879 F.2d 1005, 1019
& n.9 (2d Cir. 1989) (raising the possibility inferential restraints under § 1 do not
apply to § 2).

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 A. Pre-Merger Conduct

In arguing for an inference of a pre-merger conspiracy, Lantec and Lantec

Brazil first direct us to several actions Novell took after merging with

WordPerfect. They claim: (1) “Novell created incompatibility with [Message

Handling System] and [Global Message Handling System] post-merger”(emphasis

added); (2) “Novell ‘did not do a lick’ to enhance [Message Handling System]

post-merger” (emphasis added); (3) Novell “refus[ed] to provide the [application

program interfaces] to GroupWise”; (4) “Novell refused to ‘unbundle’ the

GroupWise [message transport agent] from the rest of the application”; (5) Novell

prevented independent software programers “from using its trade dress after the

merger” (emphasis added); and (6) “Novell abandoned all marketing activities on

behalf of [independent software programers] after the merger” (emphasis added).

Although Lantec and Lantec Brazil appear to acknowledge Novell and

WordPerfect could not, as a matter of law, conspire after the merger, their theory

is the post-merger actions raise an inference Novell and WordPerfect conspired

before the merger.

In carefully reviewing the record, we could not find a shred of evidence

suggesting Novell and WordPerfect agreed to any of these post-merger changes

before the merger was complete. Novell’s post-merger actions taken alone are

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just “as consistent with permissible competition” agreed to after the merger as

they are “with [an] illegal conspiracy” agreed to before the merger. See

Multistate Legal Studies, 63 F.3d at 1556. Therefore, in this instance, Novell’s

post-merger actions are not sufficient to raise an inference of conspiracy to

monopolize. See id.

Lantec and Lantec Brazil next argue Novell’s “termination of the [Original

Equipment Manufacturer] Agreement[s] point[s] to a conspiracy.” This argument

fails because we have already concluded Novell did not terminate the

Agreements.

B. GroupWise Application Program Interfaces

Lantec and Lantec Brazil continue their attempt to show a conspiracy by

stating “the evidence established that the GroupWise developers within

WordPerfect received pre-release [NetWare application program interfaces] prior

to consummation of the merger, thus establishing, if not at least raising an

inference of, an agreement to monopolize.” According to Lantec and Lantec

Brazil, a GroupWise “version was released in October of 1994, at approximately

the same time as NetWare 4.1, yet was totally integrated with NetWare 4.1.

These circumstances strongly indicate that the GroupWise developers received

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pre-release [application program interfaces] before consummation of the merger.”

After reviewing the record, we conclude it lacks any evidence showing

GroupWise developers were given pre-release NetWare application program

interfaces. Lantec and Lantec Brazil’s assertions rest on the testimony of their

witness Antonio Sergio Martins. Mr. Martins’ testimony is speculative and does

not lead to the conclusion Novell and WordPerfect conspired. Mr. Martins

testified:

I am speaking theoretically, hypothetically. If GroupWise went out
on the market a few weeks after NetWare came out already prepared
as a ready product, a product that was edited, documented, already
produced for computers, it is very probable that the GroupWise team,
the group which was developing the software, would have had access
to that quite a bit before, previously. A few weeks before. I am
speaking hypothetically just based on my experience.

When asked whether he had “any specific knowledge as to whether or not

GroupWise developers actually received or actually wrote any GroupWise product

to any unpublished [application program interfaces],” Mr. Martins said he could

not “say anything about that except hypothetically.” Mr. Martins went on to

admit the application program interfaces from a previous version of NetWare

were publically released and could have been used to write the 1994 GroupWise

program. Other portions of the record uniformly state the GroupWise version

released in 1994 was written with the public application program interfaces from

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a prior version of NetWare. Consequently, the record does not support the

conclusion Novell conspired with WordPerfect by giving WordPerfect pre-release

NetWare application program interfaces.

C. Business Justification

Lastly, Lantec and Lantec Brazil claim there is evidence showing prior to

the merger Novell and WordPerfect intended to shift all of the Message Handling

System customers to GroupWise. They argue this is sufficient evidence to

support the inference Novell and WordPerfect conspired to monopolize. Novell

denies “that Novell and WordPerfect took any actions to migrate [Message

Handling System users] to GroupWise” during the time when a conspiracy could

have been formed. Novell further argues its shift from Message Handling System

to GroupWise was “fully justified by its efforts to compete with Microsoft and

Lotus in a market that was ever changing, rapidly evolving, fiercely competitive,

and technologically complex.” In response, Lantec and Lantec Brazil claim there

is no evidence in the record showing “Novell had a plausible business

justification to take these actions.”

After careful consideration of the record, we conclude any agreement

between Novell and WordPerfect to move from Message Handling System to

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GroupWise had legitimate business justifications. Uncontested evidence shows

the groupware, messaging engine, and e-mail markets were in flux. Novell’s key

rivals, Microsoft and Lotus, were developing completely new groupware products

to compete with Message Handling System, as well as with other groupware and

e-mail applications. Eventually, Microsoft, Lotus, and other developers began

giving e-mail applications away for free. Novell could not expect independent

developers to be interested in developing products other companies were giving

away. In this rapidly changing environment, there were obvious pro-competitive

justification for Novell to develop a new messaging engine and complimentary

groupware software. Because conduct as consistent with permissible competition

as with illegal conspiracy does not support an inference of antitrust conspiracy,

Matsushita Electric Indus., 475 U.S. at 588, any shift from Message Handling

System to GroupWise does not support the inference Novell and WordPerfect

conspired to monopolize.

In sum, we conclude Lantec and Lantec Brazil have not produced evidence

from which a jury could draw an inference of a conspiracy to monopolize.

Therefore, their conspiracy to monopolize claim under 15 U.S.C. § 2 fails.

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III. ANTITRUST INJURY

Because we have affirmed the district court’s decisions that Lantec and

Lantec Brazil failed to prove the relevant market and failed to prove a conspiracy,

there are no antitrust claims remaining. We, therefore, decline to address whether

Lantec and Lantec Brazil provided proof of an antitrust injury.

CONCLUSION

For the foregoing reasons, we AFFIRM the district court’s decision. 14

14
In its brief, Novell urges us to sanction the Lantec companies for
inaccurate and misleading record citations. We may impose sanctions if we
determine an appeal is frivolous. Fed. R. App. P. 38. While an appeal may be
frivolous if it consists “of irrelevant and illogical arguments based on factual
misrepresentations and false premises,” Romala Corp. v. United States, 927 F.2d
1219, 1222 (Fed. Cir. 1991), the Lantec companies’ misstatements are not
egregious enough to warrant sanctions in this case.

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