California Civil Jury Instructions (CACI) (2017)

3406. Horizontal and Vertical Restraints - "Agreement" Explained

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3406.Horizontal and Vertical Restraints—“Agreement” Explained
An agreement exists if two or more persons or companies combine or
join together for a common purpose. No written document or specific
understanding is necessary for an agreement to exist. For [name of
defendant] to be part of an agreement, [he/she/it] must have known [he/
she/it] was joining in an agreement, even if [he/she/it] was not aware of
all of its aspects.
[An agreement also may exist if a [person/company] unwillingly
participates—that is, if another person coerces [him/her/it] to join the
agreement against [his/her/its] wishes.]
[To prove the existence of an agreement, [name of plaintiff] must show
more than a similarity between [name of defendant]’s conduct and the
conduct of others. Independent business judgment in response to market
forces sometimes leads competitors to act in a similar way because of
their individual self-interests. That conduct alone is not enough to prove
an agreement. However, similar behavior, along with other evidence
suggesting joint conduct, may be used to decide whether there was an
In deciding whether [name of defendant]’s conduct was the result of an
agreement, you may consider, among other factors, the following:
(a) The nature of the acts;
(b) The relationship between the parties;
(c) Whether the conduct was contrary to the best interests of some
of the persons or companies in question;
(d) Whether the conduct lacked a legitimate business purpose; and
(e) Whether the conduct occurred following communications
concerning the subject of the conduct.
New September 2003
Directions for Use
The third paragraph should be read only where a horizontal agreement is involved.
Sources and Authority
• “Trust” Defined. Business and Professions Code section 16720(a).
“The Cartwright Act, like the Sherman Act, requires an illegal ‘combination’ or
‘conspiracy’ to restrain trade.” (Kolling v. Dow Jones & Co. (1982) 137
Cal.App.3d 709, 720 [187 Cal.Rptr. 797], internal citations omitted.)
• “ ‘[A] combination means a concert of action by individuals or entities
maintaining separate and independent interests.’ ” (Roth v. Rhodes (1994) 25
Cal.App.4th 530, 543 [30 Cal.Rptr.2d 706], internal citations omitted.)
• “[A] necessary ‘conspiracy’ or ‘combination’ cognizable as an antitrust action is
formed where a trader uses coercive tactics to impose restraints upon otherwise
uncooperative businesses. If a ‘single trader’ pressures customers or dealers into
pricing arrangements, an unlawful combination is established, irrespective of
any monopoly or conspiracy, and despite the recognized right of a trader to
determine with whom it will deal.” (G.H.I.I. v. Mts, Inc. (1983) 147 Cal.App.3d
256, 268 [195 Cal.Rptr. 211], internal citations omitted.)
• “In United States v. International Harvester Co., 274 U.S. 693, 47 S.Ct. 748, 71
L.Ed. 1302 (1927), the Court acknowledged as lawful, competitors’ practice of
independently, and as a matter of business judgment, following the prices of an
industry leader. ‘[T]he fact that competitors may see proper, in the exercise of
their own judgment, to follow the prices of another manufacturer, does not
establish any suppression of competition or show any sinister domination.’ ”
(Wilcox v. First Interstate Bank of Oregon (9th Cir. 1987) 815 F.2d 522, 526.)
• “[P]arallel changes in prices and exchanges of price information by competitors
may be motivated by legitimate business concerns.” (City of Long Beach v.
Standard Oil Co. (9th Cir. 1989) 872 F.2d 1401, 1406.)
• “Price information published without ‘plus factors,’ which indicate an
agreement, is judged under the rule of reason. If the exchange of price
information constitutes reasonable business behavior the exchange is not an
illegal agreement. In order to prevail, ‘plaintiff must demonstrate that the
allegedly parallel acts were against each conspirator’s self interest, that is, that
the decision to act was not based on a good faith business judgment.’ ”
(Supermarket of Homes, Inc. v. San Fernando Valley Bd. of Realtors (9th Cir.
1986) 786 F.2d 1400, 1407, internal citations omitted.)
Secondary Sources
1 Witkin, Summary of California Law (10th ed. 2005) Contracts, §§ 591–607
3Levy et al., California Torts, Ch. 40, Fraud and Deceit and Other Business Torts,
§ 40.160[2] (Matthew Bender)