California Civil Jury Instructions (CACI) (2017)

3420. Tying - Real Estate, Products, or Services—Essential Factual Elements (Bus. & Prof. Code, § 16720)

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3420.Tying—Real Estate, Products, or Services—Essential
Factual Elements (Bus. & Prof. Code, § 16720)
[Name of plaintiff] claims that there is an unlawful tying arrangement in
which [specify the particular real estate, product, or services] is the tying
product and [specify the particular real estate, product, or services] is the
tied product. A “tying arrangement” is the sale of one product, called
the “tying product,” in which the buyer is required or coerced to also
purchase a different, separate product, called the “tied product.” For
example, if a supermarket sells flour only if its customers also buy
sugar, that supermarket would be engaged in tying. Flour would be the
tying product and sugar the tied product.
To establish this claim against [name of defendant], [name of plaintiff]
must prove all of the following:
1. That [tying item] and [tied item] are separate and distinct;
2. That [name of defendant] will sell [tying item] only if the buyer
also purchases [tied item], or that [name of defendant] sold [tying
item] and required or otherwise coerced buyers to [also purchase
[tied item]] [agree not to purchase [tied item] from any other
supplier];
3. That [name of defendant] has sufficient economic power in the
market for [tying item] to coerce at least some buyers of [tying
item] into [purchasing [tied item]] [agreeing not to purchase [tied
item] from a competitor of [name of defendant]];
4. That the conduct involves a substantial amount of sales, in terms
of the total dollar value of [tied item];
5. That [name of plaintiff] was harmed; and
6. That [name of defendant]’s conduct was a substantial factor in
causing [name of plaintiff]’s harm.
New September 2003; Revised October 2008
Directions for Use
This instruction is written for claims brought under Business and Professions Code
section 16720. A claim under this section may involve products, land, or services
as the tying item and products, land, or services as the tied item. Section 16720
applies a stricter test for unlawful tying than does Business and Professions Code
section 16727. (See CACI No. 3421, Tying—Products or Services—Essential
Factual Elements.) Therefore, if products are the tying item and products or
services the tied item, CACI No. 3421 should be used instead.
534
0038
The example given in the instruction involving flour and sugar was used in two
federal cases, Northern Pacific Railway Co. v. United States (1958) 356 U.S. 1, 5–6
[78 S.Ct. 514, 2 L.Ed.2d 545] and Jefferson Parish Hospital District No. 2 v. Hyde
(1984) 466 U.S. 2, 12 [104 S.Ct. 1551, 80 L.Ed.2d 2], but also can help explain
the Cartwright Act. The terms “product,” “sell,” and “purchase” used in this
instruction may need to be modified to reflect the facts of the particular case, since
tying arrangements challenged under Business and Professions Code section 16720
may involve services, real property, intangibles, leases, licenses, and the like.
An unlawful tying arrangement may also be shown if the buyer agrees not to
purchase the tied product or service from any other supplier as a condition of
obtaining the tying product. If the tying claim involves such a “tie-out” agreement,
select the appropriate options in elements 2 and 3.
If the “tying product” is land and the “tied product” is a service or a commodity,
logic suggests that the first element, i.e., their distinctness, is beyond dispute and
that including this element may create confusion. In such a case, the court may
recite this element and then advise the jury that it has been established by the
plaintiff or is undisputed by the defendant. The word “parcels,” “lots,” or similar
terms should be used if both items are land, as in these cases the separateness of
the tying and tied land could be in dispute.
Sources and Authority
• “Trust” Defined. Business and Professions Code section 16720.
“It is unlawful under California’s Cartwright Act, as relevant here, for a seller
to use its market power in one market to force or coerce a buyer to purchase its
product or service in a distinct market in which the seller does not have such
market power or to refrain from buying from the seller’s competitor. The result
of such coercion is called a tying arrangement, in which the market controlled
by the seller consists of sales of the ‘tying’ product or service, and the market
over which derivative power is exercised consists of sales of the ‘tied’ product
or service. Where such an arrangement is found, it is illegal per se; that is, the
seller’s justifications for the arrangement are not measured by a rule of
reasonableness.” (UAS Management, Inc. v. Mater Misericordiae Hospital
(2008) 169 Cal.App.4th 357, 368–369 [87 Cal.Rptr.3d 81].)
• “Antitrust laws against tying arrangements seek to eradicate the evils that (1)
competitors are denied free access to the market for the tied product not
because the seller imposing the tying requirement has a better or less expensive
tied product, but because of the seller’s power or leverage in the market for the
tying product; and (2) buyers are forced to forego their free choice between
competing tied products. Tying arrangements are illegal per se ‘whenever a
party has sufficient economic power with respect to the tying product to
appreciably restrain free competition in the market for the tied product’ and
when ‘a total amount of business, substantial enough in terms of dollar-volume
so as not to be merely de minimis, is foreclosed to competitors by the tie.’ ”
(Freeman v. San Diego Assn. of Realtors (1999) 77 Cal.App.4th 171, 184 [91
CARTWRIGHT ACT CACI No. 3420
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Cal.Rptr.2d 534], internal citations omitted.)
• “Even when not per se illegal, a tying arrangement violates the Cartwright Act
if it unreasonably restrains trade.” (Morrison v. Viacom, Inc. (1997) 52
Cal.App.4th 1514, 1524 [61 Cal.Rptr.2d 544], internal citations omitted.)
• “The threshold element for a tying claim is the existence of separate products or
services in separate markets. Absent separate products in separate markets, the
alleged tying and tied products are in reality a single product.” (Freeman,
supra, 77 Cal.App.4th at p. 184, internal citations omitted.)
• “Plaintiff alleged the conspiratorial agreement among defendants constituted an
illegal tying arrangement per se pursuant to Business and Professions Code
section 16720. ‘The elements of a per se tying arrangement violative of section
16720 are: “(1) a tying agreement, arrangement or condition existed whereby
the sale of the tying product was linked to the sale of the tied product or
service; (2) the party had sufficient economic power in the tying market to
coerce the purchase of the tied product; (3) a substantial amount of sale was
affected in the tied product; and (4) the complaining party sustained pecuniary
loss as a consequence of the unlawful act.” ’ ” (SC Manufactured Homes, Inc. v.
Liebert (2008) 162 Cal.App.4th 68, 86 [76 Cal.Rptr.3d 73], footnotes and
internal citations omitted.)
• “ ‘ “[T]ying agreements serve hardly any purpose beyond the suppression of
competition.” They deny competitors free access to the market for the tied
product, not because the party imposing the tying requirements has a better
product or a lower price but because of his power or leverage in another
market. At the same time buyers are forced to forego their free choice between
competing products. For these reasons “tying agreements fare harshly under the
laws forbidding restraints of trade.” ’ ” (Suburban Mobile Homes v. AMFAC
Communities (1980) 101 Cal.App.3d 532, 542 [161 Cal.Rptr. 811], internal
citations omitted.)
• “[T]he burden of proving an illegal tying arrangement differs somewhat under
section 16720 and section 16727. Under section 16727 the plaintiff must
establish that the tie-in substantially lessens competition. This standard is met if
either the seller enjoys sufficient economic power in the tying product to
appreciably restrain competition in the tied product or if a not insubstantial
volume of commerce in the tied product is restrained. Under section 16720
standard, both conditions must be met.” (Suburban Mobile Homes, supra, 101
Cal.App.3d at p. 549, internal citation omitted.)
• “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.)
Secondary Sources
1 Witkin, Summary of California Law (10th ed. 2005) Contracts, §§ 591–607
6Antitrust Laws and Trade Regulation, Ch. 105, California, § 105.04 (Matthew
CACI No. 3420 CARTWRIGHT ACT
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0040
Bender)
3 Levy et al., California Torts, Ch. 40, Fraud and Deceit and Other Business Torts,
§ 40.168[4] (Matthew Bender)
49 California Forms of Pleading and Practice, Ch. 565, Unfair Competition,
§ 565.77 (Matthew Bender)
1 Matthew Bender Practice Guide: California Unfair Competition and Business
Torts, Ch. 5, Antitrust, 5.09[4], 5.15, 5.81, 5.82
CARTWRIGHT ACT CACI No. 3420
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