California Civil Jury Instructions (CACI)

3335. Affirmative Defense - "Good Faith" Explained

In deciding whether [name of defendant] acted in good faith in attempting to meet competition, you must decide whether [his/ her/its] belief was based on facts that would lead a reasonable person to believe that the price he or she was offering would meet the legal price of his or her competitor. You must consider all of the facts and circumstances present, including, but not limited to:

1. The nature and source of the information on which [name of defendant] relied;

2. [Name of defendant]'s prior experience, if any, with similar information or with persons who provided the information;

3. [Name of defendant]'s prior pricing practices; and

4. [Name of defendant]'s general business practices.

[Name of defendant] does not have to prove that [his/her/its] price did actually meet the legal price of its competitor; only that [he/ she/it] reasonably believed that [he/she/it] was offering a price that would meet the competitor's price.

Directions for Use

This instruction provides the jury with a general listing of circumstances against which it might consider evidence in the record to decide whether a defendant's attempts to meet competition were in good faith. The final paragraph eases the defendant's burden of proof with respect to the "meet but don't beat" element because a defendant is required only to prove its reasonable belief that its prices would meet, but not beat, a competitor's prices.

Sources and Authority

Business and Professions Code section 17050(d) and (e) provides, in part: "The prohibitions of this chapter against locality discriminations, sales below cost, and loss leaders do not apply to any sale made . . . [i]n an endeavor made in good faith to meet the legal prices of a ompetitor selling the same article or product, in the same locality or trade area and in the ordinary channels of trade [or] [i]n an endeavor made in good faith by a manufacturer, selling an article or product of his own manufacture, in a transaction and sale to a wholesaler or retailer for resale to meet the legal prices of a competitor selling the same or a similar or comparable article or product, in the same locality or trade area and in the ordinary channels of trade."

"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." (People v. Pay Less Drug Store (1944) 25 Cal.2d 108, 117 [153 P.2d 9].)

Secondary Sources

1 Witkin, Summary of California Law (9th ed. 1987) Contracts, §§ 591- 596, pp. 534-536

1 Antitrust and Trade Regulation Law Section, State Bar of California, California Antitrust Law (2d ed. 1997), § 1.03A

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)