California Civil Jury Instructions (CACI)

3408. Vertical Restraints - "Coercion" Explained

Coercion is conduct that interferes with the freedom of a reseller to sell in accordance with his or her own judgment. [It may include a threat by [name of defendant] to stop doing business with [[name of plaintiff]/a reseller] or to hold back any product or service important to [his/her/its] competition in the market.] A unilateral decision to deal or refuse to deal with a particular reseller does not constitute coercion.

Coercion may be proven directly or indirectly. In deciding whether there was coercion, you may consider, among other factors, the following:

(a) Whether [name of defendant] penalized or threatened to penalize [name of plaintiff] for not following [his/her/its] suggestions;

(b) Whether [name of defendant] made or threatened to make an important benefit depend on [name of plaintiff] following [his/her/its] suggestions;

(c) Whether [name of defendant] required [name of plaintiff] to get approval before doing something other than what [he/ she/it] suggested; and

(d) The relative bargaining power of [name of defendant] and [name of plaintiff].

Directions for Use

In the bracketed portion of the first paragraph, the word "reseller" should be used if the plaintiff is not the reseller.

Sources and Authority

"[T]he 'conspiracy' or 'combination' necessary to support an antitrust action can be found where a supplier or producer, by coercive conduct, imposes restraints to which distributors involuntarily adhere. If a 'single trader' pressures customers or dealers into adhering to resale price maintenance, territorial restrictions, exclusive dealing arrangements or illegal 'tieins,' an unlawful combination is established, irrespective of ny monopoly or conspiracy, and despite the recognized right of a producer to determine with whom it will deal." (Kolling v. Dow Jones & Co. (1982) 137 Cal.App.3d 709, 720 [187 Cal.Rptr. 797], internal citations omitted.)

"If a seller does no more than announce a policy designed to restrain trade, and declines to sell to those who fail to adhere to the policy, no illegal combination is established." (Kolling, supra, 137 Cal.App.3d at p. 721, internal citations omitted.)

"A manufacturer may choose those with whom it wishes to deal and unilaterally may refuse to deal with a distributor or customer for business reasons without running afoul of the antitrust laws. It will thus be rare for a court to infer a vertical combination solely from a business's unilateral refusal to deal with distributors or customers who do not comply with certain conditions. Nonetheless, there is a line of cases that supports the proposition that a manufacturer may form a 'conspiracy' or 'combination' under the antitrust laws if it imposes restraints on dealers or customers by coercive conduct and they involuntarily adhere to those restraints." (Dimidowich v. Bell & Howell (9th Cir. 1986) 803 F.2d 1473, 1478, internal citations omitted.)

Secondary Sources

1 Witkin, Summary of California Law (9th ed. 1987) Contracts, §§ 575- 590

2 Antitrust and Trade Regulation Law Section, State Bar of California, California Antitrust Law (2d ed. 2001), § 10.04B

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

(New September 2003)