Ramsey v. NAMM, No. 12-56674 (9th Cir. 2015)Annotate this Case
Plaintiffs, a putative class, filed suit alleging that Guitar Center and the manufacturer defendants, as well as NAMM, conspired to implement and enforce minimum-advertised-price policies (MAP policies) that fixed the minimum price at which any retailer could advertise the manufacturers’ guitars and guitar amplifiers. Plaintiffs claimed that these MAP policies tended to raise retail prices and restrain competition in violation of section 1 of the Sherman Act, 15 U.S.C. 1. Plaintiffs allege that each manufacturer agreed with Guitar Center to adopt MAP policies and that the manufacturers agreed among themselves to adopt the MAP policies proposed by Guitar Center. The district court granted defendants' motion to dismiss for failure to state a claim and dismissed with prejudice. At issue was whether plaintiffs have pleaded sufficient facts to provide a plausible basis from which the court can infer the alleged agreements’ existence. Because plaintiffs lack direct evidence of horizontal agreements among the manufacturers, they plead that defendant manufacturers’ parallel conduct in adopting MAP policies, in conjunction with several “plus factors,” plausibly suggests the existence of horizontal agreements. The court concluded that plaintiffs have indeed provided a context for the manufacturers’ adoption of MAP policies, but not one that plausibly suggests they entered into illegal horizontal agreements. Accordingly, plaintiffs failed to state a claim under section 1 and the court affirmed the judgment of the district court.
Court Description: Antitrust. The panel affirmed the district court’s dismissal of a claim under § 1 of the Sherman Act, alleging a price-fixing conspiracy among guitar manufacturers. A putative class of guitar and guitar amplifier purchasers alleged that certain guitar manufacturers each adopted similar advertising policies under circumstances suggesting that they agreed among themselves to adopt those policies. They thus alleged a hybrid horizontal and vertical agreement, or “hub-and spoke” agreement. The panel held that the respective parts of a hub-and-spoke conspiracy are analyzed separately, the vertical components under the rule of reason and the horizontal components as violations per se. The panel stated that the key agreements here were those among the defendant manufacturers. Plaintiffs’ allegations of parallel conduct, in conjunction with several “plus” factors, were insufficient to provide a plausible basis from which to infer the existence of these alleged horizontal agreements. Accordingly, plaintiffs failed to state a claim under § 1. Dissenting, Judge Pregerson wrote that plaintiffs pleaded enough factual matter (taken as true) to suggest that a horizontal agreement existed between defendants. 4 IN RE: MUSICAL INSTRUMENTS