California Civil Jury Instructions (CACI) (2017)

3333. Affirmative Defense to Locality Discrimination, Below Cost Sales, and Loss Leader Sales Claims - Meeting

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3333.Affirmative Defense to Locality Discrimination, Below Cost
Sales, and Loss Leader Sales Claims—Meeting Competition
[Name of defendant] claims that any [locality discrimination/below cost
sales/loss leader sales] proven by [name of plaintiff] [is/are] justified by
the need to meet competition. To succeed, [name of defendant] must
prove that the sales of [product/service] were made in an attempt, in
good faith, to meet the legal prices of a competitor selling the same
[product/service] in the ordinary course of business in the same area.
To meet legal prices means to lower the price to a point that the seller
believes in good faith is at or above the legal price of the competitor it
is trying to meet. That is, a seller may attempt to “meet,” but not
“beat,” what in good faith it believes to be that competitor’s legal price.
New September 2003
Directions for Use
This defense applies to locality discrimination, sales below cost, and loss leader
sales only.
Sources and Authority
• Good-Faith Price to Meet Competition Permitted. Business and Professions
Code section 17050(d).
• “It is safe to assume that merchants generally know who are their competitors,
and from what locality or trade area they draw their customers.” (People v. Pay
Less Drug Store (1944) 25 Cal.2d 108, 116 [153 P.2d 9].)
• “The requirement [to ascertain the ‘legal prices’ of competitors] is not absolute.
It is merely that the defendants shall have endeavored ‘in good faith’ to meet
the legal prices of a competitor.” (Pay Less Drug Store, supra, 25 Cal.2d at p.
117.)
• “The operator of a service industry cannot legally reduce its prices to a below-
cost figure with intent to injure another or offer free service to prevent further
loss of business to a competitor ‘who is indiscriminately and deliberately
offering free service and below cost prices to such operator’s customers.’ Each
side must obey the law; the fact that one competing party disregards the statute
does not give the other side a legal excuse to do so.” (G.B. Page v. Bakersfield
Uniform & Towel Supply Co. (1966) 239 Cal.App.2d 762, 770 [49 Cal.Rptr.
46].)
Secondary Sources
1 Witkin, Summary of California Law (10th ed. 2005) Contracts, §§ 609–615
3Levy et al., California Torts, Ch. 40, Fraud and Deceit and Other Business Torts,
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0028
§ 40.153 (Matthew Bender)
49 California Forms of Pleading and Practice, Ch. 565, Unfair Competition,
§ 565.53 (Matthew Bender)
1 Matthew Bender Practice Guide: California Unfair Competition and Business
Torts, Ch. 5, Antitrust, 5.100[5]
UNFAIR PRACTICES ACT CACI No. 3333
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