California Civil Jury Instructions (CACI) (2017)

3408. Vertical Restraints - "Coercion" Explained

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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
(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].
New September 2003
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 ‘tie-ins,’ an unlawful
combination is established, irrespective of any 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
• “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 (10th ed. 2005) Contracts, §§ 591–607
49 California Forms of Pleading and Practice, Ch. 565, Unfair Competition,
§ 565.52[5] (Matthew Bender)