California Civil Jury Instructions (CACI)

3301. Below Cost Sales - Essential Factual Elements

[Name of plaintiff] claims that [name of defendant] engaged in unlawful sales below cost. To establish this claim, [name of plaintiff] must prove all of the following:

1. [That [name of defendant] [offered to sell/sold] [product/ service] at a price that is below cost;]

[That [name of defendant] gave away [product/service];]

2. That [name of defendant]'s purpose was to injure competitors or destroy competition;

3. That [name of plaintiff] was harmed; and

4. That [name of defendant]'s conduct was a substantial factor in causing [name of plaintiff]'s harm.

Directions for Use

The word "price" as used here should be read sufficiently broadly to include "special rebates, collateral contracts, or any device of any nature whereby such sale below cost is in substance or fact effected." (Bus. & Prof. Code, § 17049.) To the extent the circumstances of the case warrant it, the word "price" in the instruction may be supplemented or supplanted by other such price-related terms.

For instructions on "cost," see CACI No. 3303, Definition of "Cost"; CACI No. 3304, Presumptions Concerning Costs—Manufacturer; CACI No. 3305, Presumptions Concerning Costs—Distributor; and CACI No. 3306, Methods of Allocating Costs to an Individual Product.

Business and Professions Code sections 17071 and 17071.5 create rebuttable presumptions of the purpose or intent to injure competitors or destroy competition. The Supreme Court has observed "[t]he obvious and only effect of this provision is to require the defendants to go forward with such proof as would bring them within one of the exceptions or which would negative the prima facie showing of wrongful intent." (People v. Pay Less Drug Store (1944) 25 Cal.2d 108, 114 [153 P.2d 9].)

Sources and Authority

Business and Professions Code section 17043 provides: "It is unlawful for any person engaged in business within this State to sell any article or product at less than the cost thereof to such vendor, or to give away any article or product, for the purpose of injuring competitors or destroying competition."

Business and Professions Code section 17024 provides, in part: " 'Article or product' includes any article, product, commodity, thing of value, service or output of a service trade."

"The purpose of the Unfair Practices Act (UPA) is 'to safeguard the public against the creation or perpetuation of monopolies and to foster and encourage competition, by prohibiting unfair, dishonest, deceptive, destructive, fraudulent and discriminatory practices by which fair and honest competition is destroyed or prevented.' It forbids most locality discriminations, the use of loss leaders, gifts, secret rebates, boycotts, and 'deceptive, untrue or misleading advertising.' It also prohibits the sale of goods and services below cost." (Pan Asia Venture Capital Corp. v. Hearst Corp. (1999) 74 Cal.App.4th 424, 431-432 [88 Cal.Rptr.2d 118], internal citations omitted.)

"Section 17043 uses the word 'purpose,' not 'intent,' not 'knowledge.' We therefore conclude that to violate section 17043, a company must act with the purpose, i.e., the desire, of injuring competitors or destroying competition." (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 174-175 [83 Cal.Rptr.2d 548, 973 P.2d 527].)

"Proof that a defendant sold or distributed articles or products below cost will be 'presumptive evidence of the purpose or intent to injure competitors or destroy competition.' " (Pan Asia Venture Capital Corp., supra, 74 Cal.App.4th at p. 432, internal citation omitted.)

"Determination of the defendant's cost has always been treated as an issue of fact." (Pan Asia Venture Capital Corp., supra, 74 Cal.App.4th at p. 432.)

Business and Professions Code section 17082 provides, in part: "In any action under this chapter, it is not necessary to allege or prove actual damages or the threat thereof, or actual injury or the threat thereof, to the plaintiff. But, in addition to injunctive relief, any plaintiff in any such action shall be entitled to recover three times the amount of the actual damages, if any, sustained by the plaintiff, as well as three times the actual damages, if any, sustained by any person who has assigned o the plaintiff his claim for damages resulting from a violation of this chapter."

"While, similar to other cases, damages cannot be awarded in antitrust cases upon sheer guesswork or speculation, the plaintiff seeking damages for loss of profits is required to establish only with reasonable probability the existence of some causal connection between defendant's wrongful act and some loss of the anticipated revenue. Once that has been accomplished, the jury will be permitted to act upon probable and inferential proof and to 'make a just and reasonable estimate of the damage based on relevant data, and render its verdict accordingly.' " (Suburban Mobile Homes, Inc. v. AMFAC Communities, Inc. (1980) 101 Cal.App.3d 532, 545 [161 Cal.Rptr. 811], internal citations omitted.)

The federal law most comparable to the Unfair Practices Act is the Robinson-Patman Act (15 U.S.C. § 13 et seq.); that act differs substantially from the Unfair Practices Act, however. For a discussion of this subject, see Turnbull & Turnbull v. ARA Transportation (1990) 219 Cal.App.3d 811 [268 Cal.Rptr. 856]. One notable difference is that the Robinson-Patman Act requires at least two actual sales. Thus, mere offers to sell cannot violate that act.

Secondary Sources

1 Witkin, Summary of California Law (9th ed. 1987) Contracts, §§ 591- 596, pp. 534-539

1 Antitrust and Trade Regulation Law Section, State Bar of California, California Antitrust Law (2d ed. 1997), § 1.02A

3 Levy et al., California Torts, Ch. 40, Fraud and Deceit and Other Business Torts, § 40.153 (Matthew Bender)

49 California Forms of Pleading and Practice, Ch. 565, Unfair Competition (Matthew Bender)

23 California Points and Authorities, Ch. 235, Unfair Competition (Matthew Bender)

(New September 2003)