Unpublished Disposition, 878 F.2d 385 (9th Cir. 1989)

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U.S. Court of Appeals for the Ninth Circuit - 878 F.2d 385 (9th Cir. 1989)

Stephen P. ABE, for himself and on behalf of all otherssimilarly situated and as trustee in dissolutionof S.A. Enterprises, Inc., dba AutoArmor, Plaintiff-Appellant,v.SERVCO PACIFIC, INC.; Ala Moana Volkswagen, Inc.; BMW ofHonolulu, Ltd.; Cutter Dodge, Inc.; Cutter Ford, Inc.;Datsun of Honolulu, Inc., Honolulu Chrysler, Mike SaltaPontiac, Inc., dba Mike Salta Motors; Gilwick, Inc.;Honolulu Ford, Inc.; Pflueger Lincoln-Mercury, Inc.;Theodavies Euromotors, Ltd.; Wholesale Motors, Inc;Windward Honda; Windward Volkswagen, Inc., Defendants-Appellees,andTony Hawaii Corp., Defendant.

No. 88-2789.

United States Court of Appeals, Ninth Circuit.

Submitted*  April 3, 1989.Decided June 22, 1989.

Before GOODWIN, Chief Judge, and HUG and TANG, Circuit Judges.


Plaintiff Stephen B. Abe appeals the grant of summary judgment dismissing his tying claims against Class II defendants under Sherman Act Sec. 1, his attempted monopolization claims against Class I defendants under Sherman Act Sec. 2, and his tying claims against all defendants under Clayton Act Sec. 3. We have jurisdiction under 28 U.S.C. § 1291 (1982) and review de novo the grant of summary judgment against Abe. Christofferson Dairy, Inc. v. MMM Sales, Inc., 849 F.2d 1168, 1171 (9th Cir. 1988). We affirm.

* Abe contends the district court erred by concluding that he failed to raise a genuine issue of material fact as to his proposed product market definitions in support of the Sherman Act tying claims against Class II defendants and the attempted monopolization claims against Class I defendants. For antitrust purposes, a product market is typically defined to include the pool of goods or services that qualify as economic substitutes because they enjoy reasonable interchangeability of use and cross-elasticity of demand. Oltz v. St. Peter's Community Hosp., 861 F.2d 1440, 1446 (9th Cir. 1988).

Abe first argues that the tying product market for each Class II defendant should be defined solely to include the brands of cars sold by that defendant. In opposing summary judgment, however, Abe failed to submit any market studies, consumer surveys, or other evidence showing the absence of physical interchangeability or cross-price elasticity between the various brands of new cars sold on Oahu. In contrast, the Class II defendants submitted official state statistics of the total number of new cars registered by brand over the relevant period. These figures showed that no one brand of car constituted more than 17 percent of total new car sales on Oahu. Class II defendants also submitted their own affidavits asserting that they compete among themselves and with other dealers regardless of the specific brand of car sold. Finally, Class II defendants offered various examples of intense advertising campaigns among all car dealers on Oahu.

This evidence suggests that new car brands were sufficiently interchangeable in terms of use and cross price elasticity to qualify for inclusion in the same product market. The presence of this evidence and the paucity of support for the unnatural market division propounded by Abe would preclude a reasonable fact finder from determining that the car brands sold by Class II defendants and other car dealers are incapable of economic substitution. Thus, the district court properly rejected the market definitions on the Sherman Act tying claims.

Abe next argues that the relevant rustproofing and car care service market for his attempted monopolization claim against each Class I defendant should be defined solely to include the rustproofing and other services provided for the specific car brands sold by that defendant. Our review of the record has uncovered no support for such a complement of narrow market definitions. Nothing in the record suggests that the providers or purchasers of car care services distinguish the product exchanged on the basis of the brand of car involved. Indeed, excerpts of deposition testimony by independent providers of car care services indicated that such businesses typically solicit and obtain accounts to provide car care services on a variety of car brands. Thus, the evidence offered to the district court could not support a finding in favor of Abe's market definitions on the attempted monopolization claims, and the district court properly rejected those definitions.

Abe complains that the burden of affirmatively producing facts to support his market definitions was unreasonably heavy and should not have been imposed. This contention lacks merit. Antitrust plaintiffs bear the burden of proving the relevant market when such proof is required. Kaplan v. Burroughs Corp., 611 F.2d 286, 291 (9th Cir.), cert. denied, 447 U.S. 924 (1980). To avoid summary judgment, a nonmoving party who will bear the burden of proof on an essential element of the case at trial must make a showing sufficient to establish a genuine dispute of fact with respect to that element. California Architectural Bldg. Prod., Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466, 1468 (9th Cir. 1987), cert. denied, 108 S. Ct. 698-99 (1988). When a plaintiff's theory of recovery makes no economic sense, an even greater showing is required. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). Given the implausibility of Abe's market definitions, requiring some supporting evidence was not an improper burden.


Abe finally contends that the district court erred by concluding as a matter of law that the alleged tying of rustproofing to new car sales by all defendants failed to come within the purview of Clayton Act Sec. 3. Unlike Sherman Act Sec. 1, Clayton Act Sec. 3 applies only if both the tying product and the tied product fit the section's definition of " 'goods, wares, merchandise, machinery, supplies, or other commodities.' " Moore v. Jas. H. Mathews & Co., 550 F.2d 1207, 1214 (9th Cir. 1977) (quoting Clayton Act Sec. 3, 15 U.S.C. § 14 (1982)). The term "commodities" does not include services. Tri-State Broadcasting Co. v. United Press Int'l, Inc., 369 F.2d 268, 271 (5th Cir. 1966).

When a product involves the provision of both goods and services, the "dominant nature" of the product controls whether it qualifies as a commodity. E.g., id. See also May Dep't Store v. Graphic Process Co., 637 F.2d 1211, 1215 (9th Cir. 1980) (applying dominant nature test to the term "commodity" in the Robinson Patman Act, 15 U.S.C. §§ 13-14 (1982)). The dominant nature test is largely a factual inquiry into all the circumstances surrounding the transaction, in which the plaintiff bears the burden of proving that goods rather than services predominate. See May, 637 F.2d at 1215-16. A comparison of costs between the services and goods provided is relevant and useful but not controlling. Id. at 1215.

Abe's affidavits and exhibits assert that rustproofing requires the application of a dark fluid compound to the underside of vehicles and that it is the durability and adhesion of the compound to the car body that provides the protection. In response, defendants' affidavits assert that rustproofing is labor intensive and requires special tools. Furthermore, defendants' affidavits assert that the quality of protection afforded depends largely on the skill of the fluid applicator. The record does not reveal whether the fluid compound or the labor and tools needed to apply it account for the greater portion of costs in rustproofing a new car.

We conclude that the mere use of a fluid compound in the rustproofing process is inadequate to support a finding that the compound is the dominant nature of the product exchanged. Lacking the skill and tools needed for rustproofing application, most consumers would derive no benefit from a bare purchase of the rustproofing compound. As a result, the district court properly granted summary judgment against Abe on the Clayton Act tying claims.


For the reasons expressed above, the district court's grant of summary judgment dismissing Abe's complaint is AFFIRMED.


The panel unanimously finds this case suitable for decision without oral argument. Fed. R. App. P. 34(a) and 9th Cir.R. 34-4


This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3