Aquatherm Ind. v. Florida Power , 145 F.3d 1258 ( 1998 )

PUBLISH
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
______________________________
No. 97-2959
______________________________
D.C. Docket No. 92-1047-Civ-Orl-22
AQUATHERM INDUSTRIES, INC.,
Plaintiff-Appellant,
versus
FLORIDA POWER & LIGHT COMPANY,
Defendant-Appellee.
_________________________________________________________________
Appeal from the United States District Court
for the Middle District of Florida
_________________________________________________________________
(July 8, 1998)
Before HATCHETT, Chief Judge, RONEY and LAY*, Senior Circuit
Judges.
LAY, Senior Circuit Judge:
Aquatherm Industries (“Aquatherm”) appeals the district
court’s dismissal under Federal Rule of Civil Procedure 12(b)(6) of
antitrust claims filed against Florida Power & Light (“FPL”). We
affirm.
*
Honorable Donald P. Lay, Senior U.S. Circuit Judge for the
Eighth Circuit, sitting by designation.
I.
Aquatherm is a Delaware corporation that manufactures solar-
powered heating systems for swimming pools. FPL is the exclusive
provider of electric power in approximately two-thirds of the state
of Florida. In 1988, through advertising and direct mailing to its
customers, FPL promoted the use of electric pool-heating pumps
(“PHPs”) as an economical way to heat residential swimming pools.
FPL does not sell PHPs or any other swimming pool equipment. Its
admitted sole purpose was to increase use of electrical power. The
campaign promoted electric PHPs as “the most cost-effective pool
heating method available.” FPL made these comparisons to natural
gas, propane, and other fossil-fuel heating alternatives, but made
no comparisons to solar pool heaters.
Aquatherm filed this action alleging that FPL, through false
advertising relating to PHPs, had violated federal antitrust and
Lanham Act provisions. The district court dismissed the suit in
December 1994, stating an earlier state court determination
constituted res judicata on Aquatherm’s federal claims.1 On
1
In December 1991, Aquatherm originally filed suit against FPL
in Florida state court, alleging the company engaged in false and
deceptive advertising, violated Florida’s antitrust laws, and
Florida’s Energy Efficiency and Conservation Act. In February
1992, the state court dismissed all four counts, but granted leave
to amend the antitrust claims. Aquatherm amended its complaint to
include federal trade and antitrust violations, including false and
deceptive advertising, monopoly leveraging, attempted
monopolization, and conspiracy to monopolize.
FPL removed the case to federal court, and Aquatherm in turn
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appeal, this court held that res judicata barred any Lanham Act
claims, but not the later-filed federal antitrust claims. See
Aquatherm Indus., Inc. v. Florida Power & Light Co., 84 F.3d 1388(11th Cir. 1996). Upon remand, FPL filed a 12(b)(6) motion as to
the remaining antitrust claims. The district court2 granted the
motion to dismiss the case with prejudice, finding Aquatherm had
failed to state a claim upon which relief could be granted. See
Aquatherm Indus., Inc. v. Florida Power & Light Co., 971 F. Supp.
1419 (M.D. Fla. 1997). This appeals follows.
II. Aquatherm’s Section 2 Claims
A. Monopolization/Attempt to Monopolize
Aquatherm asserts that FPL has violated § 2 of the Sherman
Antitrust Act which prohibits both monopolization and attempted
monopolization. See 15 U.S.C. § 2. In asserting its § 2 claims,
Aquatherm identifies two possible relevant markets, arguing that
FPL either 1) wrongly attempted to prevent erosion of its electric
power monopoly, or 2) wrongly interfered with the pool-heater
market in order to increase its profits.3 We find that the
withdrew its federal claim for unfair competition under the Lanham
Act, 15 U.S.C. § 1125(a). The case was remanded to state court,
where in November 1992, the third amended complaint was dismissed
with prejudice. The dismissal was affirmed without opinion by the
Florida Court of Appeals in March 1994.
2
The Honorable Anne C. Conway, District Judge for the Middle
District of Florida, presiding.
3
In granting FPL’s motion to dismiss, the district court found
that “the market for sale of electric power is not the relevant
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monopolization and attempted monopolization claims are problematic
under either relevant market formulation asserted by Aquatherm.
First, as FPL correctly points out, under the facts pled there
exists no allegation that FPL’s actions increased its market share
in the electric power market (which, as a regulated monopoly,
stands at 100%), or erected any kind of barrier of entry into the
electric power market. On the other hand, if pool heaters are the
relevant market, there is no allegation that FPL held or attempted
to create a monopoly in this market. In fact, Aquatherm does not
assert that FPL ever competed in the pool-heater market.
In addition, there is no showing that FPL held any kind of
monopoly in a broader energy market, or that its alleged actions
raised a “dangerous probability” of achieving such a monopoly. See
Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 456 (1993);
Technical Resource Services, Inc. v. Dornier Medical Sys., Inc.,
134 F.3d 1458, 1466 (11th Cir. 1998). Aquatherm’s failure to
support these essential elements is fatal to any claims of
monopolization, or attempt to monopolize.
B. Conspiracy to Monopolize
Aquatherm also asserts that FPL conspired to monopolize the
“pool heater aftermarket,” by “conspiring with its ‘FPL
market for Aquatherm’s claims; the relevant market in this case is
some subset of the pool heater market, which has yet to be properly
defined by Aquatherm.” 971 F. Supp. at 1427.
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Participating Contractors’ and sellers of heat pump systems, who
are in competition with Aquatherm . . . .” Aquatherm Br. at 38.
In its amended complaint, Aquatherm alleges the following:
The Defendant [FPL] combined and conspired in a concerted
action with manufacturers and sellers of electric pool
heat pumps and pool contracting firms in its geographic
area with a specific intent to achieve a monopoly in the
pool heating market for the purpose of increased
consumption of power by [FPL] customers who purchase
these electric pool heat pumps in violation of 15
U.S.C.S. § 2.
1R.26 at 13. The district court correctly found that “[s]uch
vague, conclusory allegations are insufficient to state a claim
upon which relief can be granted.” 971 F. Supp. at 1429.
In Lombard’s, Inc. v. Prince Mfg., Inc., 753 F.2d 974 (11th
Cir. 1985), this court affirmed the dismissal of § 1 conspiracy
allegations which alleged only that “[Defendant], together and with
[Defendant’s] dealers and others at this time unknown to
[Plaintiff], have attempted, and are now attempting, to prevent
[Plaintiff] from making wholesale and mail order sales . . . .”
Id. at 975. The court stated: “Thus not only are no facts alleged
to demonstrate the conspiracy but the specific participants of the
conspiracy are not even identified. Such pleading is inadequate to
give the defendant fair notice of [Plaintiff]’s claim.” Id.
We find that the § 2 conspiracy claim offered by Aquatherm
suffers from the same defect. Aquatherm identifies other
conspirators only as “manufacturers and sellers of electric pool
heat pumps,” and specifies no fact in support of this allegation.
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Based on the facts presented, there is no showing of the requisite
specific intent — on the part of FPL or any other party — to
achieve a monopoly in the pool heater market.
Aquatherm essentially claims FPL entered an agreement with
manufacturers and sellers of electric pool heat pumps in order to
increase its sales of electric power. But “‘increasing sales’ and
‘increasing market share’ are normal business goals, not forbidden
by § 2 without other evidence of an intent to monopolize.” United
States Steel Corp. v. Fortner Enterprises, Inc., 429 U.S. 610, 612
n.1 (1977). Because there is no showing of concerted action
deliberately entered into with the specific intent of achieving a
monopoly in the pool-heater market,4 Aquatherm’s § 2 conspiracy
claim cannot stand.
C. Monopoly Leveraging
Aquatherm also asserts a claim under § 2 of “monopoly
leveraging,” under which a monopolist “us[es] its monopoly power in
one market to gain a competitive advantage in another.” Berkey
Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263, 275 (2d Cir. 1979).
As previously discussed, there is no showing the FPL in any way
4
Equally fatal to Aquatherm’s conspiracy allegation is the
fact that no authority exists holding a defendant can conspire to
monopolize a market in which it does not compete. The cases relied
upon by Aquatherm offer no support under § 2. See, e.g., Nash v.
United States, 229 U.S. 373 (1913) (Section 1 conspiracy claim
alleged in restraint of trade is not the equivalent of a § 2
monopolization claim). The plaintiff can cite to no case in which
at least one of the defendants charged with conspiracy to
monopolize was not a competitor in the relevant market.
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sought a competitive advantage in the pool-heater market, because
FPL did not compete in the pool-heater market.
By stating a monopoly leveraging claim under these facts,
Aquatherm in effect asks this court to extend Berkey Photo to a
situation in which a monopolist projects its power into a market it
not only does not seek to monopolize, but in which it does not even
seek to compete. There is no support for such an extension in
either the language of § 2 or the case law interpreting it.
III. Aquatherm’s Section 1 Claims
A. Conspiracy to Restrain Trade
Section 1 of the Sherman Act broadly prohibits “[e]very
contract, combination . . . or conspiracy, in restraint of trade or
commerce . . . .” A § 1 conspiracy to restrain trade does not need
to allege the specific element of a conspiracy to monopolize, but
must allege 1) an agreement to enter a conspiracy, 2) designed to
achieve an unlawful objective. See, e.g., United States Anchor
Mfg., Inc. v. Rule Indus., Inc., 7 F.3d 986, 1001 (11th Cir. 1993).
It is fundamental that a plaintiff establish an agreement between
two or more persons to restrain trade; unilateral conduct is not
prohibited by § 1. See Monsanto Co. v. Spray-Rite Serv. Corp., 465
U.S. 752, 761 (1984).
Aquatherm contends that FPL conspired to restrain competition
“through fraud and deception and misuse of monopoly profits [and]
unreasonably tilted the field of competition in favor of the
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substantially less energy-efficient heat pumps and thereby denied
sales and profits to Aquatherm.” Aquatherm Br. at 39.5
Even if Aquatherm’s contentions are true, we find FPL’s
actions do not rise to the level of an actual restraint on
competition. As the Supreme Court has stated:
Even an act of pure malice by one business competitor
against another does not, without more, state a claim
under the federal antitrust laws; those laws do not
create a federal law of unfair competition or ‘purport to
afford remedies for all torts committed by or against
persons engaged in interstate commerce.’
Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S.
209, 225 (1993) (citation omitted). A plaintiff who alleges unfair
competition must prove injury to competition in order to sustain a
federal antitrust claim. See Associated Radio Serv. Co. v. Page
Airways, Inc., 624 F.2d 1342, 1350 (5th Cir. 1980). In other
words, as courts have repeatedly stated, “[t]he antitrust laws are
intended to protect competition, not competitors.” Levine v.
Central Florida Medical Affiliates, Inc., 72 F.3d 1538, 1551 (11th
Cir.) (citing Brown Shoe Co. v. United States, 370 U.S. 294, 344
(1962)), cert. denied, ___ U.S. ___, 117 S. Ct. 75 (1996).
Aquatherm does not show, or even claim, that the actions by
FPL harmed competition in the pool-heater market. Its only claim
is FPL acted unfairly by disseminating false information, and this
5
At oral argument, Aquatherm stated that the actual restraint
on competition was FPL’s customer mailings, which the plaintiff
contends were “false representations to induce reliance thereon and
give an unfair competitive advantage to [electric pool heaters].”
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unfair competition in turn harmed Aquatherm’s business. This claim
of unfair competition is not sufficient to support a claim under §
1 or any other federal antitrust provision. As long as no
restraint on competition occurred, there is no cause of action
under § 1 resulting from FPL’s promotion of electric pool heaters.
B. Tying Arrangements
Section 1 also may be violated by an invalid “tying
arrangement,” in which a seller exploits its control over a “tying
product” to force the buyer to purchase a “tied product” that the
buyer either did not want at all, or might have preferred to
purchase elsewhere on different terms. See Jefferson Parish Hosp.
Dist. No. 2 v. Hyde, 466 U.S. 2, 12 (1984). “When such ‘forcing’
is present, competition on the merits in the market for the tied
item is restrained and the Sherman Act is violated.” Id.Therefore, in order for Aquatherm to state a valid § 1 claim
under the theory of an illegal tying arrangement, it would have to
show that FPL exploited its control over electrical power (the
“tying product”) in order to force pool owners to purchase PHPs
(the “tied product”) which they either did not want or might have
preferred to purchase elsewhere. The flaw in this argument is that
the essential element of coercion on the part of the product seller
is absent completely from the facts presented by Aquatherm. Cf.
Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451(1992). Even if, as the plaintiff asserts, FPL disseminated false
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or misleading advertisements to pool owners and offered them
incentives to buy a PHP, this does not rise to the level of
coercion necessary to constitute an illegal tying arrangement.
C. Group Boycotts
Lastly, Aquatherm contends its allegations support a § 1 group
boycott claim because “pool contractors — drawn by the enticements
of FPL . . . — refused to sell, or to make customer referrals to
makers or sellers (including Aquatherm) of, solar heaters.”
Aquatherm Br. at 39. The plaintiff claims “a substantial number of
pool contractors were, in effect, locked up by FPL.” Id. Once
again, we find that these allegations fall short of what is
necessary to make out a valid antitrust claim.
A group boycott under § 1 involves the “pressuring [of] a
party with whom one has a dispute by withholding, or enlisting
others to withhold, patronage or services from the target.” St.
Paul Fire & Marine Ins. Co. v. Barry, 438 U.S. 531, 541 (1978).
Group boycotts which have been deemed illegal per se “have
generally involved joint efforts by a firm or firms to disadvantage
competitors by ‘either directly denying or persuading or coercing
suppliers or customers to deny relationships the competitors need
in the competitive struggle.’” Northwest Wholesale Stationers, Inc.
v. Pacific Stationery & Printing Co., 472 U.S. 284, 294 (1985)
(citation omitted).
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As the district court correctly noted, Aquatherm claims only
that FPL recommended the use of electric pool heaters; there is no
allegation or evidence that FPL refused to allow participating
contractors to buy or sell solar pool heaters. The act of offering
“enticements” to contractors falls considerably short of
“withholding, or enlisting others to withhold, patronage or
services . . . .” St. Paul Fire & Marine, 438 U.S. at 541.
Additionally, as with its § 2 conspiracy claims, Aquatherm has
failed to identify any specific participants in the alleged group
boycott conspiracy. As stated earlier, under the law of this
circuit “[s]uch pleading is inadequate to give the defendant fair
notice of [Plaintiff]’s claim.” Lombard’s, 753 F.2d at 975.
IV. Conclusion
Even if the plaintiff were given leave to amend its complaint,
we conclude Aquatherm can prove no set of facts in support of its
claims which would entitle it to relief under the federal antitrust
laws. For these reasons, we affirm the district court’s dismissal
of the amended complaint with prejudice pursuant to Federal Rule of
Civil Procedure 12(b)(6).
Judgment AFFIRMED.
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