DUBINA, Circuit Judge:
This is an appeal from a jury verdict imposing civil liability for alleged predatory pricing in violation of the antitrust laws. More specifically, appellants Rule Industries, Inc. ("Rule") and Tie Down Engineering, Inc. ("Tie Down"), defendants below, appeal the district court's denial of their motions for judgment notwithstanding the verdict on claims by U.S. Anchor Manufacturing, Inc. ("U.S. Anchor") that Rule and Tie Down attempted and conspired to monopolize the United States market for light weight fluke-style anchors for small boats by means of below-cost pricing intended to drive out competition. U.S. Anchor cross-appeals the district court's order of a directed verdict on its state law claims arising from the same allegations. We reverse the denial of defendants' motions concerning the federal claims. With respect to the state law claims, we certify the dispositive issues for authoritative resolution by the Supreme Court of Georgia.
This case involves several manufacturers and suppliers of light weight anchors for ultimate retail purchase by owners of recreational boats and small commercial fishing craft. As the district court observed in denying cross-motions for summary judgment,
U.S. Anchor Mfg. v. Rule Indus., 717 F.Supp. 1565, 1568 (N.D.Ga.1989).
Within the general category of fluke anchors are four distinct product groups recognized in the industry: (1) expensive premium anchors, (2) the "Danforth Standard" brand line of anchors sold only by Rule, (3) so-called "generic" versions of the Danforth Standard, and (4) inexpensive economy anchors used primarily for lake boating.
Rule is a diversified Massachusetts firm that sells an assortment of marine, hardware and automotive products to wholesale distributors. It entered the fluke anchor industry in 1983 when it obtained the rights to sell the Danforth brand line of anchors. Prior to 1985, Danforth anchors were manufactured for Rule exclusively by the Jacquith Company ("Jacquith") in New York. Tie Down is a smaller manufacturing firm in Georgia that began selling generic and economy fluke anchors in the late 1970s under the "Hooker" brand name. In May 1985 Rule obtained the Hooker trademark and the exclusive right to purchase and distribute Tie Down's anchor production in a transaction that U.S. Anchor has characterized as a "merger." After it sold the right to market its own anchors, Tie
U.S. Anchor is a Georgia company founded in 1985 by William Chapman ("Chapman"), the immediate past president of Tie Down whose responsibilities there had recently ended. U.S. Anchor both manufactures and distributes generic and economy fluke anchors under the "Sentinel" brand name. Between August 1985 when it first sent out price lists and December 31, 1990, its market share increased to between 45 and 68%, depending on how the relevant product market is defined and measured.
Shortly after U.S. Anchor entered the market in August 1985, on the eve of the 1985-86 marine products season,
After the pricing conduct at issue in this case began, distributors' prices for generic brands in the smaller, popular sizes ranged between $3 and $14 depending on weight, and prices for Danforths were spread 50 to 96% higher.
At trial the parties noted differing possible measures of Rule's share of the relevant product market after the acquisition of Tie Down's anchor line in May 1985, four months before the close of the 1984-85 marine season at the end of August. This dispute encompassed two aspects of market share: whether to define the product market as including the high priced Danforth anchors or only the less expensive generic and economy models, and whether to measure market shares in terms of unit sales or dollar revenues. Including the Danforth line and measuring market shares in revenue, U.S. Anchor asserts that Rule and Tie Down together
II. PROCEDURAL HISTORY
In November 1985 Rule filed suit against U.S. Anchor for various violations of state and federal law not involving predatory pricing. The suit was settled on March 19, 1986, when U.S. Anchor and Rule executed an agreement releasing each other from liability for all events occurring prior to the date of the release. Tie Down was a party to neither the litigation nor the ensuing release.
On November 13, 1986, U.S. Anchor sued Rule and Tie Down, alleging that Rule had attempted to monopolize the fluke anchor market in violation of section 2 of the Sherman Act
III. CONTENTIONS OF THE PARTIES
Rule contends that it engaged in no predatory conduct and disputes U.S. Anchor's showing of Rule's and Tie Down's costs of producing the anchors. Since a predatory pricing claim requires proof that defendants attempted or conspired to drive a competitor out of the relevant market by "pricing below some appropriate measure of cost," the issue of which costs to count may be vital. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585 n. 8, 106 S.Ct. 1348, 1355 n. 8, 89 L.Ed.2d 538 (1986) (noting but not resolving debate over which costs are "relevant"), on remand, In re Japanese Elec. Prods. Antitrust Litig., 807 F.2d 44 (3d Cir.1986), cert. denied, 481 U.S. 1029, 107 S.Ct. 1955, 95 L.Ed.2d 527 (1987). Rule advances numerous criticisms of U.S. Anchor's expert testimony on this point. Tie Down contends that U.S. Anchor failed to adduce any evidence that Tie Down's prices to Rule were below Tie Down's cost, that Tie Down had any knowledge of (or control over) Rule's other costs, or that it had any control over Rule's prices.
Rule also contends that it had no dangerous probability of successfully achieving a monopoly. The parties first dispute the existence of barriers to entry in the relevant market. Rule and Tie Down contend that without high barriers, a successful monopolist would not have been able to recoup the foregone profits inherent in below-cost pricing by charging supra-competitive prices following the end of the victim's competitive presence.
Rule and Tie Down also challenge the sufficiency of the evidence of unlawful conspiracy. The parties dispute the inference to be drawn from plaintiff's exhibit 683, the MacKarvich market report. U.S. Anchor contends that MacKarvich was proposing to drive the new entrant from the marketplace. Defendants offered expert testimony, corroborated by MacKarvich himself, that studies
Rule and Tie Down challenge the sufficiency of U.S. Anchor's proof concerning damages. They argue that at least some of their price cuts were instituted to meet competition from foreign fluke anchor manufacturers and any loss of sales by U.S. Anchor resulting from such reductions is not antitrust injury. Moreover, they contend, the base price from which U.S. Anchor's revenue losses were calculated should have reflected competitive levels as shown by Rule's and U.S. Anchor's early, allegedly non-predatory reductions rather than prices prevailing before U.S. Anchor's entry into the market.
Rule and U.S. Anchor dispute the scope and effect of their settlement agreement in the prior litigation. Rule contends that liability for all predatory sales before the date of the release was discharged. Moreover, Rule maintains that the alleged predatory scheme was ongoing at the time the contract was executed and therefore all post-release liability was discharged as well. U.S. Anchor contends that a general release is ineffective to discharge undiscovered antitrust liability as a matter of law and, moreover, that post-release damages were not waived. We do not reach this dispute as it applies to the federal antitrust claims.
In its cross-appeal U.S. Anchor also argues that the district court should not have granted a directed verdict on its state law claims because Georgia law allows private damage actions for conspiracies in restraint of trade. Rule and Tie Down disagree with U.S. Anchor's interpretation of Georgia law.
IV. STANDARD OF REVIEW
We review rulings on motions for judgment as a matter of law by applying de novo the same legal standards used by the district court. Miles v. Tennessee River Pulp & Paper Co., 862 F.2d 1525, 1528 (11th Cir.1989). Both courts consider all the evidence, but all reasonable inferences must be drawn in the nonmovant's favor. If the jury verdict is supported by substantial evidence — that is, enough evidence that reasonable minds could differ concerning material facts — the motion should be denied. A mere scintilla of evidence in the entire record, however, is insufficient to support a verdict. See Hessen ex rel. Allstate Ins. Co. v. Jaguar Cars, Inc., 915 F.2d 641, 644 (11th Cir.1990). Denial of a motion for a new trial is reviewed for clear abuse of discretion. Id. at 644-45. A district court's evidentiary rulings are not disturbed unless there is a clear showing of abuse of discretion. Id. at 645.
V. ATTEMPTED MONOPOLIZATION
There are three essential elements of a claim alleging attempted monopolization under section 2 of the Sherman Act. First, the plaintiff must show that the defendant possessed the specific intent to achieve monopoly power by predatory or exclusionary conduct. Second, the defendant must in fact commit such anticompetitive conduct. Third, there must have existed a dangerous probability that the defendant might have succeeded in its attempt to achieve monopoly power. Spectrum Sports, Inc. v. McQuillan, ___ U.S. ___, ___, 113 S.Ct. 884, 890, 122 L.Ed.2d 247 (1993); see McGahee v. Northern Propane Gas Co., 858 F.2d 1487, 1493 (11th Cir.1988), cert. denied, 490 U.S. 1084, 109 S.Ct. 2110, 104 L.Ed.2d 670 (1989); 3 Phillip Areeda & Donald F. Turner, Antitrust Law ¶ 820 at 312 (1978) [hereinafter Areeda & Turner, Antitrust Law]. We address these elements in reverse order.
A. Dangerous Probability of Success
To have a dangerous probability of successfully monopolizing a market the defendant must be close to achieving monopoly power.
International Tel. & Tel. Corp., 104 F.T.C. 208, 412 (1984) (citation and footnotes omitted). Despite the seemingly broad array of factors employed by the Federal Trade Commission, the principal judicial device for measuring actual or potential market power remains market share, typically measured in terms of a percentage of total market sales. Thus, at the outset the appropriate market must be defined or identified.
Defining the market is a necessary step in any analysis of market power and thus an indispensable element in the consideration of any monopolization or attempt case arising under section 2. Walker Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172, 177, 86 S.Ct. 347, 350, 15 L.Ed.2d 247 (1965); American Key, 762 F.2d at 1579. Although the issue is fully developed in the fact section of Rule's brief, the argument section does not address the precise question of market definition. U.S. Anchor, in the fact section of its brief, contends that the question of market definition is not appropriately before us because Rule does not argue the point. (U.S. Anchor's Br. at 3 n. 1). We must consider the question nevertheless before passing on the legal significance of evidence concerning Rule's potential market power. As the issue of Rule's dangerous probability of success has been preserved through argument, the subsidiary question of market definition is also preserved because it is set forth fully in the fact section of Rule's brief.
The definition of the relevant market is essentially a factual question, so the precise issue we first must address is whether U.S. Anchor introduced sufficient evidence to raise a jury question on the inclusion of Danforths. See, e.g., Yoder Bros. v. California-Florida
1. Defining the Market
"Defining a relevant product market is primarily `a process of describing those groups of producers which, because of the similarity of their products, have the ability — actual or potential — to take significant amounts of business away from each other.'" General Indus. Corp. v. Hartz Mountain Corp., 810 F.2d 795, 805 (8th Cir. 1987) (quoting SmithKline Corp. v. Eli Lilly & Co., 575 F.2d 1056, 1063 (3d Cir.), cert. denied, 439 U.S. 838, 99 S.Ct. 123, 58 L.Ed.2d 134 (1978)). The reasonable interchangeability of use or the cross-elasticity of demand
Id. at 325 & n. 42, 82 S.Ct. at 1523-24 & n. 42 (citations and footnotes omitted). As the Supreme Court's language itself suggests, defining a "submarket" is the equivalent of defining a relevant product market for antitrust purposes. International Telephone & Telegraph adequately summarizes our view of the relevant proof:
104 F.T.C. at 409 (quoting Grand Union Co., 102 F.T.C. 812, 1041 (1983)) (footnotes omitted).
We note that Danforth brand anchors are functionally interchangeable with their equivalent counterparts among the generic brands. Indeed, among smaller sized anchors the Hooker and Danforth anchors have always been virtually identical. (R30-131-33; R33-129-31.) This interchangeability suggests a likelihood that consumers of generic brands would willingly switch to Danforths in the event of significant price increases among generics. Similarly, Danforth customers might switch to generic brands if Rule implemented a significant increase in the price of Danforths. The likelihood of demand substitution, if proven, weighs strongly in favor of including the two categories of product within a single market for antitrust analysis. This is so because the very purpose of defining the relevant market under section 2 is to determine whether a monopolist, cartel or oligopoly in that market would be able to reduce marketwide output simply by cutting its own output, and thereby
We hold, however, that the relevant market in this case constituted light weight generic and economy fluke anchors. Four of the Brown Shoe factors weigh strongly in favor of excluding Danforths from the relevant market: distinctly higher prices, a distinct group of customers, strongly inelastic demand and limited substitution of supply. Moreover, the higher prices charged for Danforths are evidence that a distinct group of customers was unwilling to switch away from the prestigious branded product in response to price increases above competitive levels. The fact that this group remained loyal to Danforths despite prices 50 to 96% and more above prices for functionally interchangeable alternative products shows inelastic demand and limited demand interdependence. More importantly, U.S. Anchor showed no reasonable possibility that a significant number of consumers would have switched to Danforths, many of which were offered at nearly double the price of their generic substitutes, in response to more modest increases in generic prices. And as more fully discussed below, there is no evidence that Rule had (or would have) varied its output of Danforths in response to price changes in the broader market. We hold, therefore, that the record provides no support for finding significant cross-elasticity of demand or supply between Danforths and generic anchors.
First, U.S. Anchor's evidence was insufficient for a reasonable juror to conclude that there was a significant cross-elasticity of demand. U.S. Anchor's evidence demonstrated that an increase in the spread between prices for Danforths and other anchors had coincided with lower sales of Danforths. During the period from September 1985 until August 1990, sales of Danforths fell by 61.5% while the spread between the prices of Danforths and other anchors increased by 9.1%. (USTX 638; R40-106.) (According to the exhibit, Danforth prices rose while Sentinel and Hooker prices fell). Although we recognize that correlation is often relied upon to infer causation, see, e.g., Cellophane, 351 U.S. at 400, 76 S.Ct. at 1010, we do not believe that this aggregation of sales data over five years provided a sufficiently close correlation between changes in demand and price to justify the inference that consumers were willing and able to switch away from Danforths because of increasing price differences. The exhibit wholly fails to take account of factors other than price (or quality) which may have affected demand for Danforths. If changes in relative prices had been more closely correlated in time with shifting purchases then it might have been reasonable to infer that the demand shifts were caused by the price differences. As the evidence stands, however, the datum aggregating demand behavior from 1985 to 1990 fails to provide any basis from which the jury could have inferred that the demand shifts were caused by prices instead of other factors. Those non-price, non-quality factors might well have included consumers' increased awareness of the similarities between Danforths and other brands (perhaps caused by U.S. Anchor's successful promotion of its own products), changing attitudes concerning thrift and the value of money, the decline in demand for fluke anchors generally after the 1987-88 season, (see USTX 479), or competition from Rule's own more expensive premium Deepset line. Over time the shape of a demand curve changes independently of variations in the pricing and quality of particular substitute products. Aggregate (or average) evidence of demand over too long a period of time provides no support for inferring that changes apparently correlated with substitute price movements represent shifts in the curve caused by those variations in prices. Given the changes in the behavior of competitors that occurred over the five years in
Just as an increase in Danforth prices might have been expected to drive customers away from Rule and into the arms of generic manufacturers, an increase in prices for generic brands would likely cause some otherwise price-sensitive customers to prefer the more expensive Danforths. Nonetheless, the present record provides no basis other than guesswork for concluding that a shift away from generics would have been significant in magnitude;
Second, the evidence was insufficient for a reasonable juror to find a significant cross-elasticity of supply. The jury could not reasonably have found that the manufacturing capacity used to make Danforths likely would have been switched to making generic anchors in response to moderate price increases by a sole seller of the lower priced products. To be sure, the productive processes employed in manufacturing Danforths were virtually identical to those used for generics. (R33-145-50.) Yet it defies logic to suggest that a rational supplier
Moreover, the record demonstrates that the Danforth line, although functionally equivalent to their counterparts, may have constituted its own market based on consumer brand loyalty. The fluke anchor industry presented the unusual circumstance of severe price discrimination against a distinct group of consumers based solely on brand preference. U.S. Anchor's expert, Dr. Willard F.
The understanding that brand loyalty may facilitate monopolization is consistent with the general proposition that the ability to discriminate against a distinct group of customers by charging higher prices for otherwise similar products demonstrates the existence of market power with respect to that group. See United States v. Grinnell Corp., 384 U.S. 563, 574, 86 S.Ct. 1698, 1706, 16 L.Ed.2d 778 (1966).
We do not suggest that the existence or hypothetical possibility of monopoly power over one product automatically excludes it from a broader market. "[S]ubmarkets are not a basis for the disregard of a broader line of commerce that has economic significance." United States v. Phillipsburg Nat'l Bank & Trust Co., 399 U.S. 350, 360, 90 S.Ct. 2035, 2041, 26 L.Ed.2d 658 (1970). We do hold, however, that regardless of which party in the case bears the ultimate burden of persuasion, the broader economic significance of a submarket must be supported by demonstrable empirical evidence. Although perhaps difficult to come by, evidence that the dominant firm within a submarket costs of production were insensitive to changes in the quantity of goods sold, suggesting that its only rational response would be to increase output to satisfy the higher demand in the event of price increases above competitive levels in the broader market, might show that submarket production in fact disciplined price levels in the broader market. Especially if the submarket represents a premium-priced segment of the broader market, the relevance of proof regarding elasticity of supply would depend on the validity of the assumption that significant numbers of consumers would switch in response to significant price increases in the broader market, an assumption that may or may not be supported by evidence or common experience. In the present case U.S. Anchor can rely upon neither evidence nor inference. Simpler evidence of supply and demand substitution, like proof that producers in the submarket had actually increased or decreased their sales in response to corresponding price
Considering all the evidence in light of the factors identified by Cellophane and Brown Shoe and explained in subsequent decisions, we conclude as a matter of law that the relevant product market was light weight generic and economy fluke anchors.
2. Measuring Power in the Market
The principal measure of actual monopoly power is market share, and the primary measure of the probability of acquiring monopoly power is the defendant's proximity to acquiring a monopoly share of the market. Thus, a sufficiently large market share may alone create a genuine dispute over whether the defendant possessed a dangerous probability of successfully monopolizing a market despite the existence of other facts tending to make monopolization unlikely, thereby precluding summary judgment for the defendant. McGahee v. Northern Propane Gas Co., 858 F.2d at 1506. When assessing market shares for the purpose of ascertaining market power the appropriate measure of a firm's share is the quantity of goods or services actually sold to consumers. Although revenues are often relied upon as a surrogate for quantity, actual unit sales must be used whenever a price spread between various products would make the revenue figure an inaccurate estimator of unit sales. Brown Shoe, 370 U.S. at 341 n. 69, 82 S.Ct. at 1533 n. 69.
In McGahee we noted in dicta that several factors may be relevant to whether a particular market share evidences a dangerous probability of success. 858 F.2d at 1505 (citing McGahee v. Northern Propane Gas Co., 658 F.Supp. 189, 196-97 (N.D.Ga.1987), rev'd, 858 F.2d 1487 (11th Cir.1988)). In finding no dangerous probability of success the district court had relied upon the ease of entry by new firms and expansion from adjacent geographic markets, the number and size of alleged victims of the predation and the defendant's declining market share during the alleged attempt to monopolize. 658 F.Supp. at 196-97. Nevertheless, we held:
McGahee, 858 F.2d at 1506. Finding it "undisputed" that the defendant possessed such a share, we reversed the district court's order of summary judgment for the defendant and remanded for further proceedings. Our holding in McGahee that market share estimated with reasonable confidence to fall between 60 and 65% suffices to raise a jury question concerning dangerous probability of success is binding circuit precedent. Sherry Mfg. Co. v. Towel King, Inc., 822 F.2d 1031, 1034 n. 3 (11th Cir.1987). We do note, however, the tension between McGahee's bright-line approach and Cliff Food Stores, Inc. v. Kroger, Inc., 417 F.2d 203 (5th Cir.1969), in which the court noted that "one must be particularly wary of the numbers game of market percentage when considering an `attempt to monopolize' suit" under the dangerous probability standard. 417 F.2d at 207 n. 2; cf. United States v. Columbia Steel Co., 334 U.S. 495, 528, 68 S.Ct. 1107, 1124, 92 L.Ed.d 1533 (1948) ("the relative effect of percentage command of a market varies with the setting in which that factor is placed") (actual monopolization case). We believe the cases may be reconciled by requiring a careful definition of the relevant market (as mandated by Walker Process and American Key)
In Cliff Food Stores the former Fifth Circuit stated that something more than 50% market share would be required to show actual monopoly, at least in the absence of collusive price leadership or tacit coordination in an industry. 417 F.2d at 207 n. 2. The Second Circuit in Broadway Delivery Corp. v. United Parcel Service of America, Inc., 651 F.2d 122 (2d Cir.), cert. denied, 454 U.S. 968, 102 S.Ct. 512, 70 L.Ed.2d 384 (1981), similarly suggested that the absence of actual monopoly power could be found as a matter of law when the defendant supplies only 50% of the market, "or even somewhat above that figure, [when] the record contains no significant evidence concerning the market structure to show that the defendant's share of that market gives it monopoly power." 651 F.2d at 129. Despite these suggestions, we have discovered no cases in which a court found the existence of actual monopoly established by a bare majority share of the market. Nevertheless, a dangerous probability of achieving monopoly power may be established by a 50% share. For this reason, it is usually necessary to evaluate the prospects for monopolization as they existed when the alleged attempt began. As shown by the undisputed facts discussed infra, Rule never possessed a dangerous probability of success during the time for which U.S. Anchor seeks damages.
U.S. Anchor points to the combined market shares of Rule and Tie Down at the end of the 1984-85 season, immediately before the transaction that eliminated Tie Down as a supplier and transferred its production to Rule. Accepting arguendo the implicit contention that Tie Down's pre-transaction market share should be attributed to Rule, we conclude from the undisputed evidence that Rule's market share on August 31, 1985, the eve of the 1985-86 season, was 61.5%, (RTX 674), and its aggregate (average) share over the entire season was 30.1%, (id.; RTX 675 at 1).
Rule has argued that we should not attribute all of Tie Down's pre-transaction market share to it. After the transaction Tie Down had no need for its anchor sales representatives, many of whom found engagements with U.S. Anchor and employed their connections and reputation on behalf of the newcomer's selling efforts. Moreover, U.S. Anchor's Chapman was well known to customers from his days with Tie Down. Thus, according to Rule, U.S. Anchor stepped into Tie Down's shoes and inherited at least some of Tie Down's pre-transaction market share, presumably that portion which U.S. Anchor had the productive capacity to satisfy. This argument is persuasive, although it may be subject to rebuttal on at least two grounds. Cf. American Academic Suppliers, Inc. v. Beckley-Cardy, Inc., 922 F.2d 1317, 1321-22 (7th Cir.1991). First, the depth of Rule's product line and the expertise of its own sales force conferred competitive advantages which might have induced some of Tie Down's former customers to stay with the Hooker line. Second, the anchor industry was highly concentrated and customers had few alternative sources of supply, a factor that is especially important in view of Rule's effort to link purchase of the Deepset anchors to exclusive dealing arrangements with distributors. We need not reach the merits of Rule's contention, however, because even if we consider Rule to have had 61.5% of the market on August 31, 1985, there was insufficient evidence from which the jury could have found a dangerous probability of monopolization in October.
As we have outlined above, Rule's average market share for the 1985-86 season was 30.1%, a fact which strongly indicates that Rule's share declined sharply from 61.5% after U.S. Anchor's entry into the market in August. For the month of October, U.S. Anchor's sales of generic and economy anchors exceeded Rule's by 5.7%. (RTX 675 at 15). Prior to October U.S. Anchor had no sales at all, but the firm was accepting orders
Rule argues that the district court should have granted its motion for judgment notwithstanding the verdict based on its contention that there can be no dangerous probability of successful monopolization by predatory pricing unless it is shown that the defendant would have recouped the foregone revenues associated with its price-cutting strategy.
B. Anticompetitive Conduct, Specific Intent and Damages
Our conclusion that U.S. Anchor failed to show a dangerous probability of success makes it unnecessary for purposes of resolving its attempt claim to evaluate the evidence of Rule's and Tie Down's costs, as would be required to classify its pricing conduct as anticompetitive. See Matsushita, 475 U.S. at 585 n. 8, 106 S.Ct. at 1355 n. 8; International Air Industries, Inc. v. American Excelsior Co., 517 F.2d 714, 723-25 (5th Cir.1975). The same is true with respect to the evidence of specific intent to achieve monopoly power by unlawful conduct, although we note that such intent may sometimes be inferred from predatory conduct itself. Spectrum Sports, ___ U.S. at ___, 113 S.Ct. at 892; International Tel. & Tel., 104 F.T.C. at 401-02; see also McGahee, 858 F.2d at 1503-04. Nor must we decide whether to parse this evidence for the precise level during each season at which Rule's prices unlawfully dropped below its costs in order to assess U.S. Anchor's proof of damages, as requested by Rule. See MCI Communications Corporation v. American Telephone and Telegraph Company, 708 F.2d 1081, 1162, 1165 (7th Cir.1983).
U.S. Anchor's conspiracy claims are distinct from its attempted monopolization claim. The elements of a conspiracy to monopolize under Section 2 are (1) an agreement to restrain trade, (2) deliberately entered into with the specific intent of achieving a monopoly rather than a legitimate business purpose, (3) which could have had an anticompetitive effect, and (4) the commission of at least one overt act in furtherance of the conspiracy. Seagood Trading Corp. v. Jerrico, Inc., 924 F.2d 1555, 1576 (11th Cir. 1991). The elements of a conspiracy to restrain trade under Section 1 are (1) an agreement to enter a conspiracy (2) designed to achieve an unlawful objective. Bolt v. Halifax Hosp. Medical Ctr., 891 F.2d 810, 820 (11th Cir.), cert. denied, 495 U.S. 924, 110 S.Ct. 1960, 109 L.Ed.2d 322 (1990), appeal after remand, 980 F.2d 1381 (11th Cir.1993). The plaintiff must also prove (3) "actual unlawful effects [or] facts which radiate a potential for future harm" to competition. Times-Picayune Publishing Co. v. United States, 345 U.S. 594, 622, 73 S.Ct. 872, 888, 97 L.Ed. 1277 (1953).
There is no requirement, however, that a conspiracy under either provision have a dangerous probability of successfully achieving its objectives. Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 767-68, 104 S.Ct. 2731, 2740, 81 L.Ed.2d 628 (1984). Moreover, "[a] section 1 plaintiff ... need not prove an intent on the part of the co-conspirators to restrain trade or to build a monopoly. So long as the purported conspiracy has an anticompetitive effect, the plaintiff has made out a case under section 1." Bolt, 891 F.2d at 819-20 (citations omitted). We have said, however, that "a section 1 claim and a section 2 conspiracy to monopolize
U.S. Anchor points to evidence of the unlawful intent necessary to create such an agreement. We have reviewed this evidence and find it sufficient to show an intent to achieve an unlawful objective on Rule's part, namely the use of predatory means to monopolize the fluke anchor market. Nevertheless, there is insufficient evidence linking Tie Down to Rule's efforts to support a finding of conspiracy between them. Federal antitrust law requires a plaintiff to introduce evidence that tends to exclude the possibility that the defendants acted independently or legitimately. Bolt, 891 F.2d at 819; see also Monsanto Co. v. Spray-Rite Serv. Co., 465 U.S. 752, 764, 104 S.Ct. 1464, 1470, 79 L.Ed.2d 775 (1984). U.S. Anchor did not meet this heightened standard of proof. Cf. Boczar v. Manatee Hosps. & Health Sys., Inc., 993 F.2d 1514, 1518-19 (11th Cir.1993) (finding sufficient evidence when defendant's supposed legitimate reasons for acting were shown to be fabricated and contrived).
Without Tie Down, there was no one with whom Rule could have conspired. Hence, its unilateral conduct was not actionable as a conspiracy under federal antitrust law. The district court erred in denying judgment as a matter of law for Rule and Tie Down on the Sherman Act conspiracy claims.
VII. CLAIMS UNDER GEORGIA LAW
U.S. Anchor's complaint alleged violations of article III, § VI, ¶ 5 of the Georgia constitution and O.C.G.A. § 13-8-2(a)(2), which invalidate certain contracts in restraint of trade. (R1-1, ¶¶ 60-62.) U.S. Anchor concedes that these provisions merely render such agreements unenforceable and provide no cause of action for damages to those who are parties thereto, see E.T. Barwick Indus. v. Walter E. Heller & Co., 692 F.Supp. 1331, 1349 (N.D.Ga.1987), but argues that Georgia recognizes a common law tort action in favor of third parties who are injured by a conspiracy in restraint of trade. We agree with U.S. Anchor that its complaint stated a valid claim for damages as a result of a conspiracy in restraint of trade. See Blackmon v. Gulf Life Ins. Co., 179 Ga. 343, 175 S.E. 798, 802-03 (1934) (holding that allegations of predatory
We have previously held that Georgia law provides a cause of action for tortious interference with the business relationships between a plaintiff and its customers, suppliers or representatives. To be held liable the defendant "must have (1) acted improperly and without privilege, (2) purposely and with malice with the intent to injure, (3) induced a third party or parties not to enter into or continue a business relationship with the plaintiff, and (4) [caused] plaintiff [to] suffer some financial injury." DeLong Equip. Co. v. Washington Mills Abrasive Co., 887 F.2d 1499, 1518 (11th Cir. 1989) (quotation omitted), cert. denied, 494 U.S. 1081, 110 S.Ct. 1813, 108 L.Ed.2d 943 (1990), appeal after remand, 990 F.2d 1186 (11th Cir.1993), amended, 997 F.2d 1340 (11th Cir.1993) (per curiam); see also NAACP v. Overstreet, 221 Ga. 16, 142 S.E.2d 816, 822 (1965), cert. dismissed, 384 U.S. 118, 86 S.Ct. 1306, 16 L.Ed.2d 409 (1966). The defendant may show that competitive conduct is privileged by establishing that it used no improper means. Integrated Micro Sys., Inc. v. NEC Home Elecs. (USA), Inc., 174 Ga.App. 197, 329 S.E.2d 554, 559 (1985), cert. denied, No. 69405 (Ga. Apr. 24, 1985).
U.S. Anchor's complaint adequately pleads a claim for relief under this theory to present it for adjudication by the district court. Count V gave full notice to the defendants that U.S. Anchor sought recovery under Georgia law for "Unfair Methods of Competition and Unfair Acts and Practices," including conduct which was "inequitable, unfair, unscrupulous, in violation of public policy and unconscionable and tend[ing] to defeat or lessen competition. ..." (R1-1 ¶¶ 59-60.) The fact that paragraph 60 of the complaint also refers to the constitutional and statutory provisions which U.S. Anchor concedes confer no independent damages remedy does not by itself deprive the defendants of "fair notice of what the plaintiff's claim is and the grounds upon which it rests." Quality Foods de Centro Am., S.A. v. Latin Am. Agribusiness Dev. Corp., 711 F.2d 989, 995 (11th Cir.1983) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 103, 2 L.Ed.2d 80 (1957)); see Fed. R.Civ.P. 8(a)(2). The issue of whether the tort theory is applicable to the facts of this case was adequately argued to the district court in connection with U.S. Anchor's requested jury instructions, (R28-136-45), and thus preserved for appellate review. Cf. Weaver v. Casa Gallardo, Inc., 922 F.2d 1515, 1519 (11th Cir.1991).
The novel questions presented are whether below-cost pricing can satisfy the improper action element of the tort and whether low prices, standing alone, can constitute a prohibited inducement of the plaintiff's customers. Cf. Parks v. Atlanta News Agency, Inc., 115 Ga.App. 842, 156 S.E.2d 137, 140 (1967) (holding that solicitation of competitor's customers is not itself tortious, even when combined with "preferential" prices), cert. denied, No. 42624 (Ga. July 14, 1967). We regard it as unclear whether tortious interference with business relations under Georgia law may be established by a showing of predatory pricing and, if so, what sort of pricing conduct would be deemed predatory. We also have some doubt as to whether intentional interference with business relations is a distinct cause of action from the tort of conspiracy in restraint of trade, or whether there is only a single theory of relief, so that proof of a conspiracy to interfere with the plaintiff's business relations
Another issue affecting the outcome of U.S. Anchor's state law claims is the validity and effect of its settlement agreement with Rule, executed on March 19, 1986. The agreement provided that each party would release the other
(RTX 457.) Because the predatory pricing scheme allegedly began in October 1985, Rule contends that the settlement agreement operated as a release of U.S. Anchor's cause of action. U.S. Anchor contends that its predatory pricing claims were undiscovered at the time the release was executed and therefore were not intended to be released. In addition, it contends that injuries caused by predatory conduct occurring after the release would not have been discharged even if they arose as a result of a scheme or conspiracy that was ongoing when the release was signed.
The doctrine of pendent jurisdiction as outlined in United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966), gives the district court power to decide claims arising under state law as to which there was no independent basis for federal jurisdiction but which share a common nucleus of operative fact with federal claims. The court also has discretion not to hear such state law claims.
Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350, 108 S.Ct. 614, 619, 98 L.Ed.2d 720 (1988) (footnote omitted). While the doctrine is a flexible one according great leeway to the court, see id. at 350 n. 7, 108 S.Ct. at 619 n. 7, we have found an abuse of discretion in failing to dismiss a case when the federal claims were resolved early in the proceedings
In the present case, the federal claims have survived through trial and have only been resolved on appeal. Thus, the parties have already tried the state law claims in federal court, although the district court's ruling prevented the jury from considering them. The legal issues have been decided by the district court and are now properly before us for review, so that judicial economy and convenience weigh in favor of retaining jurisdiction. On the other hand some of the state law issues are novel, and comity between federal and state judicial systems weighs in favor of determination by state courts. Moreover, a ruling by this court in favor of U.S. Anchor's position would require a new federal trial in which only state law claims would be put in issue. Fairness to U.S. Anchor, however, prevents us from dismissing the state law claims. Dismissal would require the plaintiff to re-file its action in state court more than eight years after the allegedly tortious conduct began, thereby losing a substantial portion of its rights (if any) by application of Georgia's four-year statute of limitations.
Accordingly, we respectfully certify the following questions of law to the Supreme Court of Georgia and the Honorable Justices of that Court.
Questions for Certification
1. DOES A GENERAL RELEASE UNDER GEORGIA LAW DISCHARGE LIABILITY FOR INJURY CAUSED BY SUBSEQUENT ACTS IN THE COURSE OF A SCHEME OR CONSPIRACY THAT WAS ONGOING AT THE TIME THE RELEASE WAS EXECUTED BUT UNKNOWN TO THE RELEASING PARTY?
2. DOES A GENERAL RELEASE UNDER GEORGIA LAW DISCHARGE LIABILITY FOR INJURY CAUSED BY TORTIOUS CONDUCT ALREADY COMMITTED THAT WAS UNKNOWN TO THE
3. DOES THE TORT OF INTENTIONAL INTERFERENCE WITH BUSINESS RELATIONS ENCOMPASS PREDATORY PRICING BELOW SOME MEASURE OF THE DEFENDANT'S COSTS?
4. IF THE ANSWER TO QUESTION 3 IS YES, THEN IN A CASE OF ACTIONABLE PREDATORY PRICING BELOW SOME MEASURE OF COST BY A CONSPIRACY OR A SINGLE DEFENDANT, WHAT IS THE APPROPRIATE MEASURE OF THE DEFENDANTS' COSTS?
Our statement of the questions is not designed to limit the inquiry of the Supreme Court of Georgia. Instead, the Supreme Court has the widest possible latitude to consider the problems and issues involved in this case as it perceives them to be. Martinez v. Rodriquez, 394 F.2d 156, 159 n. 6 (5th Cir.1968), conformed to certified answer, 410 F.2d 729 (5th Cir.1969). To assist the Supreme Court, the entire record in this case and copies of the parties' briefs are transmitted herewith.
The judgment of the district court is reversed with respect to all federal law causes of action and judgment is rendered in favor of the defendants thereon. Dispositive questions of law respecting the plaintiff's state law causes of action are certified to the Supreme Court of Georgia.
REVERSED and JUDGMENT RENDERED in part and QUESTIONS CERTIFIED.
15 U.S.C. § 14. Among other possible differences between the Sherman Act and Robinson-Patman Act tying provisions is that the Sherman Act prohibition extends to arrangements affecting the sale of services and realty as well as goods. See, e.g., Tic-X-Press, Inc. v. Omni Promotions Co., 815 F.2d 1407 (11th Cir.1987) (tying arrangement conditioning the lease of coliseum theater space upon the employment of a ticket-selling agency affiliated with the lessor); see generally Thompson v. Metropolitan Multi-List, Inc., 934 F.2d 1566, 1574-79 (11th Cir. 1991), cert. denied, ___ U.S. ___, 113 S.Ct. 295, 121 L.Ed.2d 219 (1992).
Fox v. Ravinia Club, Inc., 202 Ga.App. 260, 414 S.E.2d 243, 244 (1991) (quotation omitted), cert. denied, No. A91A1136 (Ga. Feb. 4, 1992). As we understand the test, U.S. Anchor's cause of action (if any) continued to accrue with each predatory sale, and would be time-barred under O.C.G.A. § 9-3-31 with respect to each transaction occurring more than four years before commencement of the new action in state court. See Cleveland Lumber Co. v. Proctor & Schwartz, Inc., 397 F.Supp. 1088, 1094 (N.D.Ga.1975) (citing Georgia Power Co. v. Moore, 47 Ga.App. 411, 170 S.E. 520 (1933)); accord Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 338, 91 S.Ct. 795, 806, 28 L.Ed.2d 77 (1971) (federal antitrust law).