Universal Grading Service v. Ebay, Inc.

FILED
NOT FOR PUBLICATION MAR 17 2014
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNIVERSAL GRADING SERVICE; 12-15294
JOHN CALLANDRELLO; JOSEPH
KOMITO; VADIM KIRICHENKO, D.C. No. 5:09-cv-02755-RMW
individually and on behalf of all others Northern District of California,
similarly situated, San Jose
Plaintiffs - Appellants,
MEMORANDUM*
v.
EBAY, INC., a foreign corporation,
Defendant - Appellee,
and
AMERICAN NUMISMATIC
ASSOCIATION; PROFESSIONAL
NUMISMATISTS GUILD, INC.,
Defendants.
Appeal from the United States District Court
for the Northern District of California
Ronald M. Whyte, District Judge, Presiding
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Cir. R. 36-3.
Argued and Submitted February 13, 2014
San Francisco, California
Before: TALLMAN and RAWLINSON, Circuit Judges, and GARBIS, Senior
District Judge.**
Universal Grading Service, LLC (“UGS”) appeals from the district court’s
order dismissing its Fourth Amended Complaint (“FAC”) with prejudice in its
antitrust suit against eBay, Inc. (“eBay”). We have jurisdiction pursuant to 28
U.S.C. § 1291, and we affirm.
In the FAC, UGS claimed that eBay (1) conspired, along with several
organizations related to the coin grading and coin sales industries, to restrain trade
in violation of Sherman Act § 1, (2) unlawfully tied the provision of a platform for
online auction of certified coins to the provision of coin grading services, (3)
maintained or attempted to acquire a monopoly of the coin sales market in
violation of Sherman Act § 2. UGS also presented several state law claims based
upon the alleged Sherman Act violations. The district court found the allegations
insufficient to present plausible claims of a conspiracy to restrain competition,
unlawful tying, or monopolization in a relevant market. The state claims were
dismissed as derivative of, and dependent upon, the Sherman Act claims. We
**
The Honorable Marvin J. Garbis, Senior United States District Judge
for the District of Maryland, sitting by designation.
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review the district court’s decision de novo. Manzarek v. St. Paul Fire & Marine
Ins. Co., 519 F.3d 1025, 1030 (9th Cir. 2008).
Liability under Sherman Act § 1 requires that the defendant (1) is party to an
agreement (2) that “is intended to harm or unreasonably restrain competition” and
(3) that “actually causes injury to competition” within the claimants’ field of
commerce beyond the impact on the claimants themselves. McGlinchy v. Shell
Chem. Co., 845 F.2d 802, 811 (9th Cir. 1988). UGS failed to plead sufficient facts
to present a plausible claim that there was an illegal agreement to restrain trade or
the potential for significant anti-competitive effects in the coin sales or grading
markets. UGS did not allege that the number of “certified” coins sold on eBay
was any more than de minimis in comparison to the sales of coins that were not
“certified.” Hence, the claimed conspiracy would have made no economic sense.
Further, eBay presented a valid business justification for its policy.
“A tying arrangement exists when a seller conditions the sale of one product
or service (the tying product or service) on the buyer’s purchase of another product
or service (the tied product or service).” Cnty. of Tuolumne v. Sonora Cmty. Hosp.,
236 F.3d 1148, 1157 (9th Cir. 2001) (citation omitted). In its briefing to the
district court, UGS abandoned its allegation that eBay unlawfully tied the
provision of a platform for online auction of certified coins to the provision of coin
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grading services. Instead, it argued that eBay tied the sale of certified coins to the
sale of coin grading services. But UGS has not alleged that eBay sells either
certified coins or coin grading services, and has thus failed to state a plausible
tying claim. See id.
“In order to state a claim for monopolization under Section 2 of the Sherman
Act, a plaintiff must prove: (1) [p]ossession of monopoly power in the relevant
market; (2) willful acquisition or maintenance of that power; and (3) causal
antitrust injury.” Pac. Express, Inc. v. United Airlines, Inc., 959 F.2d 814, 817 (9th
Cir. 1992)(citation omitted). The only market in which eBay was alleged to have a
monopoly is the market for the provision of online auction services, but this is not
a relevant market in which UGS is a competitor. UGS did not allege any “antitrust
injury” in this market, as required for claims of monopolization and attempted
monopolization. Nor did UGS allege facts to present a plausible claim that eBay
has, or intends to acquire, a monopoly in the online coin sales or coin grading
markets. Accordingly, these claims were also properly dismissed.
The dismissal of the Sherman Act claims requires dismissal of the state
statutory and tort-based derivative claims. See, e.g., Linzer Prods. Corp. v. Sekar,
499 F. Supp. 2d 540, 557 (S.D.N.Y. 2007) (“[Plaintiff’s] Donnelly Act claims
succeed or fail with its Sherman Act claims.”); see also Davis v. Pac. Bell, 204 F.
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Supp. 2d 1236, 1243 (N.D. Cal. 2002) (“Interpretation of federal antitrust law is . .
. applicable to the Cartwright Act.”). Because UGS’s state law claims were
derivative of the Sherman Act claims, dismissal was appropriate.
AFFIRMED.
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