Labrador, Inc.; Labrador Ii, Inc., Plaintiffs-appellants, v. the Iams Company; Petco Animal Supplies, Inc.; Petsmartinc., Defendants-appellees, 105 F.3d 665 (9th Cir. 1997)

MEMORANDUM^* 

Labrador, Inc. and Labrador II, Inc. ("Labrador") appeal from the district court's grant of summary judgment to The Iams Company, Petco Animal Supplies, Inc., and Petsmart Inc. ("Iams") on Labrador's antitrust claims. Labrador alleges that Iams sells its pet food products to Petco and Petsmart, two large national retail stores, at prices that are significantly lower than those offered to Iams' independent distributors, from whom Labrador purchases Iams' products. Labrador also claims that Iams provides certain retailers with incentives, payments, services, and discounts that are not made available to Labrador. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm.

STANDARD OF REVIEW

A grant of summary judgment is subject to de novo review. Bagdadi v. Nazar, 84 F.3d 1194, 1197 (9th Cir. 1996); Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir. 1995), cert. denied, 116 S. Ct. 1261 (1996). This court must determine, viewing the evidence in the light most favorable to the nonmoving party, whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law. Bagdadi, 84 F.3d at 1197; Warren, 58 F.3d at 441.

Summary judgment is favored in antitrust cases where the record, taken as a whole, could not lead the trier of fact to find for the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986). In opposing a motion for summary judgment in an antitrust case, the nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Id. at 586. " [W]hile the moving party has the initial burden of establishing the absence of a genuine issue of material fact, the nonmoving party must go beyond the pleadings and identify facts showing the existence of a genuine issue for trial." Sicor Ltd. v. Cetus Corp., 51 F.3d 848, 853 (9th Cir.) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986)), cert. denied, 116 S. Ct. 170 (1995).

STANDING

Labrador's damages claims fail because Labrador lacks standing to sue under the Clayton Act. Section 4 of the Clayton Act, which delimits the class of plaintiffs that may bring damage actions under the Act, is limited by the direct purchaser doctrine. See Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977). Illinois Brick establishes a simple rule: Indirect purchasers cannot state a cause of action against manufacturers for damages under the Clayton Act.

It is undisputed that Labrador is an indirect purchaser of Iams' products. Labrador relies on two cases, both of which antedate Illinois Brick, to demonstrate that the direct purchaser rule does not apply to its claims. This reliance is utterly misplaced. In Federal Trade Comm'n v. Fred Meyer, Inc., 390 U.S. 341 (1968), the Court held that retailers who purchase from a supplier's independent distributors are protected as "customers" under § 2(d) of the Clayton Act. Fred Meyer expands the class of retailers protected under § 2(d) of the Clayton Act; it does not permit indirect purchasers to bring claims themselves against manufacturers pursuant to § 4 of that Act. Indeed, Fred Meyer does not involve a private plaintiff. And Perkins v. Standard Oil Co., 395 U.S. 642 (1969), involved a direct-purchaser plaintiff whose ability to bring a cause of action under § 4 of the Clayton Act was unchallenged. In short, neither Fred Meyer nor Perkins involved an indirect-purchaser plaintiff. Therefore, neither case undermines the general rule that only direct purchasers may bring a damages claim against a manufacturer under the Clayton Act.

To escape the barrier of Illinois Brick, Labrador argues that Iams exerts sufficient control over its distributors to invoke the "ownership or control" exception to the direct purchaser rule. See Illinois Brick, 431 U.S. at 736 n. 16; Arizona v. Shamrock Foods Co., 729 F.2d 1208, 1212 n. 2 (9th Cir. 1984), cert. denied, 469 U.S. 1197 (1985). Labrador claims that the exception applies to this case because Iams controls its distributors, transforming those distributors into sellers and Labrador into a direct purchaser.

This argument is unavailing. Any exception to the direct purchaser rule is to be construed narrowly. See Illinois Brick, 431 U.S. at 745; Burkhalter Travel Agency v. MacFarms Intern., Inc., 141 F.R.D. 144, 148 (N.D. Cal. 1991). Labrador has failed to demonstrate a relationship between Iams and Iams' distributors "involving such functional economic or other unity ... that there effectively has been only one sale." Jewish Hosp. Ass'n Inc. v. Stewart Mechanical Enters., Inc., 628 F.2d 971, 975 (6th Cir. 1980), cert. denied, 450 U.S. 966 (1981).¹  Accordingly, the "ownership or control" exception to the direct purchaser rule does not apply, and Illinois Brick precludes Labrador from bringing its damages claims against Iams under the Clayton Act.

Indirect purchasers are not barred from bringing an antitrust claim for injunctive relief against manufacturers under § 16 of the Clayton Act. See In re Coordinated Pretrial Proceedings in Petroleum Products Antitrust Litigation, 497 F. Supp. 218, 228-29 (C.D. Cal. 1980). However, such purchasers must satisfy the requirements of "antitrust standing." See Cargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 104, 113 (1986). This doctrine "requires an inquiry beyond that performed to determine standing in a constitutional sense." Bubar v. Ampco Foods, Inc., 752 F.2d 445, 448 (9th Cir.), cert. denied, 472 U.S. 1018 (1985). Specifically, a private plaintiff must demonstrate that it is threatened by "antitrust injury," or injury "of the type the antitrust laws were designed to prevent and that flows from that which makes defendants' acts unlawful." Cargill, 479 U.S. at 113 (quoting Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977)). Antitrust injury means injury to competition generally and not only to a specific competitor. Brooke Group, Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 220 (1993); Foremost Pro Color, Inc. v. Eastman Kodak Co., 703 F.2d 534, 548 (9th Cir. 1983), cert. denied, 465 U.S. 1038 (1984).

Labrador alleges in its complaint that the effect of Iams' unlawful price discrimination "may be to substantially lessen competition." However, to withstand a motion for summary judgment, Labrador "must go beyond the pleadings and identify facts showing the existence of a genuine issue for trial." Sicor, 51 F.3d at 853. Labrador has not offered evidence to support this general allegation.³  Rather, Labrador's specific alleged injuries include reduced profit margins on Iams' products and an inability to participate in Iams' promotional programs. But reduced profits do not constitute antitrust injury. See Rutman Wine Co. v. E. & J. Gallo Winery, 829 F.2d 729, 735 (9th Cir. 1987). Furthermore, Labrador's nonparticipation in Iams' promotional programs was voluntary. Such nonparticipation was therefore not "the type [of injury] the antitrust laws were designed to prevent and that flows from that which makes defendants' acts unlawful." Cargill, 479 U.S. at 113. Labrador has not demonstrated that it is threatened by antitrust injury. Therefore, it lacks standing to seek injunctive relief under § 16 of the Clayton Act.⁴ 

CONCLUSION

For the foregoing reasons, the district court's judgment is AFFIRMED.