CACI No. 3408. Vertical Restraints - “Coercion” Explained

Judicial Council of California Civil Jury Instructions (2020 edition)

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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 the reseller’s 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/
nonbinary pronoun/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/nonbinary pronoun/its]
suggestions;
(b) Whether [name of defendant] made or threatened to make an
important benefit depend on [name of plaintiff] following [his/her/
nonbinary pronoun/its] suggestions;
(c) Whether [name of defendant] required [name of plaintiff] to get
approval before doing something other than what
[he/she/nonbinary pronoun/it] suggested; and
(d) The relative bargaining power of [name of defendant] and [name of
plaintiff].
New September 2003; Revised May 2020
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
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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 (10th ed. 2005) Contracts, §§ 591-607
49 California Forms of Pleading and Practice, Ch. 565, Unfair Competition,
§ 565.52[5] (Matthew Bender)
CACI No. 3408 CARTWRIGHT ACT
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