California Civil Jury Instructions (CACI) (2017)

3402. Horizontal Restraints - Dual Distributor Restraints— Essential Factual Elements

Download PDF
3402.Horizontal Restraints—Dual Distributor
Restraints—Essential Factual Elements
[Name of plaintiff] claims that [name of defendant] [stopped doing
business with/refused to deal with/restrained] [[him/her/it]/a reseller]. To
establish this claim, [name of plaintiff] must prove all of the following:
1. That [name of defendant] sold [products] directly in competition
with [[name of plaintiff]/a reseller] to a significant portion of
[[name of plaintiff]/the reseller]’s customers or potential
customers;
2. That [name of defendant] [stopped doing business with/refused to
deal with/restrained] [[name of plaintiff]/the reseller];
3. That a motivating reason for the decision to [end business with/
refuse to deal with/restrain] [[name of plaintiff]/the reseller] was
[his/her/its] refusal to agree to [name of defendant]’s [specify the
claimed restraint, e.g., territorial or customer restrictions];
4. That [name of plaintiff] was harmed; and
5. That [name of defendant]’s conduct was a substantial factor in
causing [name of plaintiff]’s harm.
New September 2003
Directions for Use
The appropriate bracketed options should be selected and the balance deleted
depending on the specific facts. For example, the word “reseller” should be used
instead of plaintiff if the plaintiff is not the reseller—such as, when the plaintiff is a
government enforcer.
Sources and Authority
• Trusts Unlawful and Void. Business and Professions Code section 16726.
“Trust” Defined. Business and Professions Code section 16720(a).
• “We hold that it is unlawful for a manufacturer who also distributes its own
products in one geographic area to terminate an independent distributor when a
substantial factor in bringing about the termination is the distributor’s refusal to
accept the manufacturer’s attempt to enforce or impose territorial or customer
restrictions among distributors.” (Guild Wineries & Distilleries v. J. Sosnick and
Son (1980) 102 Cal.App.3d 627, 630 [162 Cal.Rptr. 87].)
• “ ‘[A] refusal of a manufacturer to deal with a distributor can constitute a
“combination” in restraint of trade within the purview’ of the Sherman
Act . . . . We conclude that this case . . . is governed by a per se principle.”
506
0010
(Guild Wineries & Distilleries, supra, 102 Cal.App.3d at p. 633.)
• In Dimidowich v. Bell & Howell (9th Cir. 1986) 803 F.2d 1473, 1482–1484,
opn. mod. (9th Cir. 1987) 810 F.2d 1517, the Ninth Circuit Court of Appeals
rejected the holding in Guild Wineries, supra, that the per se standard applied,
and predicted that the California Supreme Court would overrule Guild Wineries.
This has not yet occurred. In the meantime, the decision in the Guild court
remains binding on all subordinate state courts. (Auto Equity Sales v. Superior
Court (1962) 57 Cal.2d 450, 455 [20 Cal.Rptr. 321, 369 P.2d 937].)
• “It is settled that distributors cannot lawfully agree to divide territories or
customers. Such conduct is sometimes called a ‘horizontal restraint,’ and is a
per se violation of the Sherman Act . . . . When Guild became a distributor the
same rule became applicable to it. Guild could not lawfully coerce a fellow
distributor into allocating customers any more than Sosnick and other
distributors could lawfully agree to such an allocation.” (Guild Wineries &
Distilleries, supra, 102 Cal.App.3d at p. 633.)
• “The alleged antitrust violation need not be the sole or controlling cause of the
injury in order to establish proximate cause, but only need be a substantial
factor in bringing about the injury.” (Saxer v. Philip Morris, Inc. (1975) 54
Cal.App.3d 7, 23 [126 Cal.Rptr. 327], internal citation omitted.)
• “The plaintiff in a Cartwright Act proceeding must show that an antitrust
violation was the proximate cause of his injuries. The frequently stated
‘standing to sue’ requirement is merely a rule that an action for violation of the
antitrust laws may be maintained only by a party within the ‘target area’ of the
antitrust violation, and not by one incidentally injured thereby. An ‘antitrust
injury’ must be proved; that is, the type of injury the antitrust laws were
intended to prevent, and which flows from the invidious conduct which renders
defendants’ acts unlawful. Finally, a plaintiff must show an injury within the
area of the economy that is endangered by a breakdown of competitive
conditions.” (Kolling v. Dow Jones & Co. (1982) 137 Cal.App.3d 709, 723–724
[187 Cal.Rptr. 797], internal citations and footnote omitted.)
• “The exact parameters of ‘antitrust injury’ under section 16750 have not yet
been established through either court decisions or legislation.” (Cellular Plus,
Inc. v. Superior Court (1993) 14 Cal.App.4th 1224, 1234 [18 Cal.Rptr.2d 308].)
Secondary Sources
1 Witkin, Summary of California Law (10th ed. 2005) Contracts, §§ 591–607
6Antitrust Laws and Trade Regulation, Ch. 105, California, § 105.02 (Matthew
Bender)
3 Levy et al., California Torts, Ch. 40, Fraud and Deceit and Other Business Torts,
§ 40.168 (Matthew Bender)
49 California Forms of Pleading and Practice, Ch. 565, Unfair Competition,
§ 565.77[3] (Matthew Bender)
CARTWRIGHT ACT CACI No. 3402
507
0011