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Nova Designs, Inc., Dba Performance Diver, Plaintiff-Counterdefendant-Appellant v. Scuba Retailers Association Professional Association of Dive Instructors, Electronic Instrumentation & Technology, Inc., Defendant-Counter Eit Manufacturing Opinion Princeton Tectonics Scuba Times Beuchat Usa, Inc. Robert Holston Harry Truitt Sal Zammitti, Performance, Inc., a North Carolina Corporation, Counter-Defendant, and International Padi, Inc.

Citation: 202 F.3d 1088Docket: 98-55358

Court: Court of Appeals for the Ninth Circuit; February 7, 2000; Federal Appellate Court

Narrative Opinion Summary

Nova Designs, Inc., operating as Performance Diver, alleged antitrust violations against the Professional Association of Dive Instructors (PADI) and others, claiming a conspiracy to block its market access through retailer boycotts and restricted advertising in scuba magazines. The claims invoked the Sherman Act, Cartwright Act, and related tortious interference and unfair competition violations. The district court granted summary judgment to PADI, concluding that Performance had waived its rule of reason claim, requiring a per se analysis. Performance failed to show evidence of PADI's market power or an agreement among its retailers. The Ninth Circuit, under 28 U.S.C. § 1291, reviewed the case de novo, affirming the lower court's decision. The court determined that the agreement between PADI and Rodale did not constitute a per se antitrust violation due to the absence of demonstrable economic impact. Without evidence of a horizontal group boycott or market control, Performance's federal claims failed, impacting its related state law claims. The court also found insufficient evidence for tortious interference and unfair competition, thus affirming summary judgment for PADI.

Legal Issues Addressed

Antitrust Violations under the Sherman Act

Application: The court applied a per se analysis, ruling that the plaintiff waived its right to claim under the rule of reason and failed to provide evidence of an agreement among PADI's retailers or PADI's market power.

Reasoning: The district court granted summary judgment for PADI, ruling that Performance had waived its right to claim under the rule of reason, thus applying a per se analysis.

California Cartwright Act Claims

Application: Performance's state law claims under the Cartwright Act were affected by the federal antitrust analysis, leading to summary judgment affirmation due to lack of supporting evidence.

Reasoning: The disposition of these claims also affects Performance's state law claims under the California Cartwright Act, which parallels the Sherman Act.

Conspiracy to Monopolize under Sherman Act § 2

Application: The failure of Performance's Sherman Act claims led to the dismissal of its § 2 conspiracy to monopolize claim due to lack of market power evidence.

Reasoning: Consequently, Performance's Sherman Act claims fail, undermining its § 2 conspiracy to monopolize claim.

Group Boycott and Market Power

Application: The court found insufficient evidence of a horizontal group boycott as mere membership in PADI does not constitute an agreement among retailer members, nor did Performance demonstrate market power or control over market access.

Reasoning: Performance's claim that this agreement constitutes a horizontal group boycott is unsupported, as mere membership in PADI does not imply an agreement among retailer members, and pressure from members does not establish collusion.

Rule of Reason versus Per Se Analysis

Application: The Ninth Circuit reviewed whether the alleged conduct could be considered a per se violation, determining that the short-lived agreement lacked demonstrable economic effects necessary for such classification.

Reasoning: Recent rulings emphasize that a departure from the rule of reason requires demonstrable economic effects. The short-lived agreement between PADI and Rodale regarding the exchange of customer information and advertising does not satisfy per se rule criteria.

Tortious Interference and Unfair Competition

Application: The court dismissed claims of tortious interference and unfair competition due to insufficient evidence or analysis presented by Performance.

Reasoning: Performance's arguments for tortious interference and unfair competition lack sufficient evidence or analysis, leading to the affirmation of the summary judgment in favor of PADI.