Unpublished Disposition, 912 F.2d 468 (9th Cir. 1990)

No. 89-15483.

United States Court of Appeals, Ninth Circuit.

Before SCHROEDER and CANBY, Circuit Judges and LEW,^*  District Judge.

MEMORANDUM^** 

Appellant Honey Guyon was suspended from the Chinese Shar-Pei Club of America, Inc. ("Club") upon the finding of the Club's Hearing Committee that she had bred three female Shar-Peis to multiple males during the same estrus cycle in violation of the Club's rules and regulations. Honey Guyon and her husband, Michael, subsequently sued the Club and the members of the Hearing Committee under the Sherman Act, 15 U.S.C. §§ 1 and 2, and brought a pendent state libel claim against the Club and Bob and Marge Calltharp. The district court granted the defendants' motion for summary judgment on the antitrust claims, dismissed the pendent state claims, and found that it lacked personal jurisdiction over the Calltharps. The Guyons appeal these rulings. We affirm.

DISCUSSION

The gravamen of the Guyon's antitrust claim is that the true motive of the members of the Hearing Committee, some of whom breed and sell Shar-Peis, was to eliminate the Guyons as competitors in the sales market for the dogs. To be sold as a show quality pure bred Shar-Pei dog, the dog must be registered. The Club maintains the only viable register for pure bred Shar-Peis in the United States. The Guyons contend that by suspending their registration, the Club effectively put them out of business. We review the district court's grant of summary judgment de novo. Kruso v. International Tel. & Tel. Corp., 872 F.2d 1416, 1421 (9th Cir. 1989), cert. denied, --- U.S. ----, 1990 WL 60388 (June 18, 1990).

The Guyons first suggest that the Club's action constitutes a group boycott in violation of section 1 of the Sherman Act. Section 1 declares illegal " [e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States...." 15 U.S.C. § 1. Although the Club's suspension of the Guyons restrained trade, the Sherman Act was intended to prohibit only unreasonable restraints of trade. Chicago Bd. of Trade v. United States, 246 U.S. 231, 238 (1918). Our task is to determine whether the restraint here was unreasonable.

The reasonableness of a restraint is evaluated under either a per se analysis or the rule-of-reason. The per se approach is generally limited to "agreements or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use." Northwest Wholesale Stationers v. Pacific Stationery & Printing Co., 472 U.S. 284, 289 (1985) (quoting Northwest Pacific Ry. Co. v. United States, 356 U.S. 1, 5 (1988)). "The decision to apply the per se rule turns on 'whether the practice facially appears to be one that would always or almost always tend to restrict competition and decrease output ... or instead one designed to increase economic efficiency and render markets more, rather than less, competitive.' " Northwest Stationers, 472 U.S. at 289-90 (quoting Broadcast Music, Inc. v. Columbia Broadcasting Sys. Inc., 441 U.S. 1, 19-20 (1979)). Here, the defendants had a valid procompetitive motive for suspending the Guyons. Rules prohibiting improper breeding practices are well-established in the animal club world. Preserving the accuracy of the register is essential for maintaining the integrity of the market for show quality Shar-Peis and for administering the dog shows involving this breed. The Club would jeopardize the accuracy of its records were it to register the litter from the Guyon's dam when the parentage of that litter was in doubt. Where, as here, the challenged practice has an arguably efficiency-enhancing purpose, rule-of-reason analysis generally applies. Id. at 296 n. 7. Applying this reasoning, several courts have rejected a per se approach in examining the legality of actions that restrain trade when taken by sporting and trade associations. See, e.g., NCAA v. Board of Regents of Univ. of Oklahoma, 468 U.S. 85 (1984); Les Shockley Racing v. National Hot Rod Ass'n., 884 F.2d 504 (9th Cir. 1989); United States Trotting Ass'n v. Chicago Downs Ass'n, Inc., 665 F.2d 781 (7th Cir. 1981) (en banc); Hatley v. American Quarter Horse Ass'n., 552 F.2d 646 (5th Cir. 1977). We therefore apply the rule of reason.

The Guyons criticize the procedures followed in their hearing. This does not change our analysis.

" [T]he absence of procedural standards can in no sense determine the antitrust analysis.... If the challenged action would not amount to a violation of Sec. 1, no lack of procedural protection would convert it into a per se violation because the antitrust laws do not themselves impose on joint ventures a requirement of process."

Northwest Wholesale Stationers, 472 U.S. at 293.

To succeed under the rule-of-reason, the Guyons must establish three elements: 1) an agreement or conspiracy among two or more persons or distinct business entities; 2) by which the persons or entities intend to harm or restrain competition; and 3) which actually restrains competition. Thurman Indus., Inc. v. Pay'N Pak Stores, Inc., 875 F.2d 1369, 1373 (9th Cir. 1989). The Guyons have not satisfied these requirements.

The Guyons allege a conspiracy involving the Club, its president, and its regional directors. This does not satisfy the first requirement, however, because there can be no conspiracy or agreement between a corporation and its officers and agents to violate the antitrust laws. Joseph E. Seagram & Sons, Inc. v. Hawaiian Oke & Liquors, Ltd., 416 F.2d 71, 82-84 (9th Cir. 1969), cert. denied, 396 U.S. 1062 (1970).

To satisfy the remaining elements, the Guyons:

must prove antitrust injury, which is to say injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants' acts unlawful. The injury should reflect the anticompetitive effect either of the violation or of anticompetitive acts made possible by the violation.

Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1979) (emphasis in original). In other words, "section one claimants must plead and prove a reduction of competition in the market in general and not mere injury to their own positions as competitors in the market." Les Shockley Racing, 884 F.2d at 508. The Guyons have neither proved the relevant geographic and product markets nor demonstrated any antitrust injury. Thurman Indus., 875 F.2d at 1373. The Guyon's suspension had no significant effect on either the supply of or demand for Shar-Pei breeders or sellers. In fact, the number of sellers continues to increase. Nor did the Guyon's suspension have a measurable impact on the total number of Shar-Peis sold or on the prices paid for the dogs. In short, there has been no injury to competition. The Guyons have failed to raise a genuine issue of fact on the section 1 issue.

The Guyons also raise a monopolization claim under Sherman Act section 2. A section 2 claim is composed of two elements: 1) the defendant must possess monopoly power in the relevant market; and 2) the defendant must willfully acquire or maintain such power. Thurman Indus., 875 F.2d at 1373. Thus, as under a section 1 analysis, establishing the relevant geographic and product markets and demonstrating the effects of the restraint within those markets is indispensable to a monopolization claim. Id. The Guyons have failed to define a relevant market and have presented nothing to evidence any adverse impact on competition in a market.

Moreover, " [w]hen the nature of the industry requires some limitations upon entrance, Section 2 is not violated." Hatley, 552 F.2d at 654. Maintaining an accurate register of a particular breed of dog is best accomplished by limiting those providing registration services. The Club's rule authorizing the Guyon's suspension is facially neutral, designed to preserve the integrity of the registration system for Shar-Peis. The rule provides essential regulation and, thus, is procompetitive. The Guyon's section 2 claim fails.

B. Personal Jurisdiction Over the Calltharps

The Guyons also challenge the district court's dismissal of their claim against the Calltharps for lack of personal jurisdiction. The district court's ruling on personal jurisdiction is a legal conclusion reviewed de novo. Brainerd v. Governors of the Univ. of Alberta, 873 F.2d 1257, 1258 (9th Cir. 1989).

We first consider whether the district court has general personal jurisdiction over the Calltharps. General personal jurisdiction is established when a defendant has "substantial" or "continuous and systematic" contacts with the forum state. Data Disc, Inc. v. Systems Technology Assoc., Inc., 557 F.2d 1280, 1286 (9th Cir. 1977).

Bob Calltharp, as president of the Club, attended board meetings in California and is currently involved in state court litigation in California involving the Club.

Whatever effect these contacts might have had in subjecting the Club to jurisdiction in California, they are not sufficient to confer general individual jurisdiction over Calltharp. See Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 781 n. 13 (1984) (" [J]urisdiction over an employee does not automatically follow from jurisdiction over the corporation which employs him.... Each defendant's contacts with the forum State must be assessed individually"). Callthorp's appearances in California purely on behalf of the Club were not continuous and substantial, nor did they constitute personal activity of his own that would make it fair to subject him to general jurisdiction in California. See Seagate Technology v. A.J. Kogyo, Ltd., 268 Cal. Rptr. 586, 591 (Cal.App.1990) (analyzing acts of corporate officer to determine whether his activities on behalf of corporation within forum state amounted to personal tortious activity justifying personal jurisdiction).

The remaining activities of both Callthorps are equally insignificant for purposes of general personal jurisdiction. The Calltharps operate a small mail order business through which they sell Shar-Peis and dog related clothing. They run advertisements in The Barker, the Club's official magazine, which has a small circulation in California. Despite these advertisements, the Calltharps have sold no dogs in California. In Congoleum Corp. v. DLW Aktiengesellschaft, 729 F.2d 1240 (9th Cir. 1984), we affirmed an order dismissing a breach of licensing agreement and fraud action for lack of personal jurisdiction. The foreign corporation had begun to develop a sales market in the forum state by hiring consultants to solicit orders, recommend other sales agents, order samples, promote DLW products through the mail and a showroom display, and attend trade shows and sales meetings. We found these contacts insufficient to support the exercise of general jurisdiction over the foreign corporation. The Calltharp's contacts with California are no greater than those of DLW.

On occasion, Marge Calltharp has judged dog shows in California. She also is the publisher of The Barker. The magazine is published in Missouri and has a limited circulation in California. The magazine is unrelated to this suit. These isolated contacts with the State are not substantial, continuous, or systematic for purposes of our analysis. The district court did not have general personal jurisdiction over the Calltharps.

We next consider whether the Calltharps are subject to limited personal jurisdiction. The district court has limited jurisdiction over the Calltharps if: 1) they performed some act or consummated some transaction with California by which they purposefully availed themselves of the privilege of conducting activities in the state, thereby invoking the benefits and protections of its laws; 2) the claim arose out of the Calltharps' forum-related activities; and 3) exercise of jurisdiction is reasonable. Data Disk, 557 F.2d at 1287. Under this standard, there is no basis for exercising limited jurisdiction over the Calltharps.

The claim against the Calltharps arose out of statements Bob Calltharp made during a phone call he received in Missouri from a reporter in California. The reporter did not identify himself as a reporter for a California publication, did not indicate that he intended to publish Mr. Calltharp's comments in a California publication, and did not state that he was calling from within the State of California. By merely answering a telephone call, Bob Calltharp did not purposely avail himself of the privileges and benefits of conducting business within California. See Peterson v. Kennedy, 771 F.2d 1244, 1262 (9th Cir. 1985) (quoting Thos. P. Gonzalez Corp. v. Consejo Nacional de Produccion de Costa Rica, 614 F.2d 1247, 1254 (9th Cir. 1980)), cert. denied, 475 U.S. 1122 (1986) ("Both this court and the courts of California have concluded that ordinarily 'use of the mails, telephone, or other international communications simply do not qualify as purposeful activity invoking the benefits and protection of the [forum] state.' "). The district court was correct in dismissing the action against the Calltharps for lack of personal jurisdiction.

When, as here, the district court dismisses the sole federal claims in a lawsuit, leaving only state claims for resolution, it should decline jurisdiction over the state claims and dismiss them without prejudice. Les Shockley Racing, 884 F.2d at 509. The district court's dismissal of the pendent state libel claims was proper.

AFFIRMED.