author: PATEL, District Judge.

text:
    Charles E. HAFF, Plaintiff, v. JEWELMONT CORPORATION and Mervyns, Inc., Defendants.
    No. C-83-3104-MHP.
    United States District Court, N.D. California.
    Oct. 5, 1984.

      Christopher R. Lucas, Law Offices of Edward A. Weiss, Walnut Creek, Cal., for plaintiff.
    Stephen C. Tausz, Keith R. Weed, Bronson, Bronson & McKinnon, San Francisco, Cal., for Mervyn’s, Inc.
    Ralph C. Alldredge, San Francisco, Cal., Thomas Darling, Dylan J. McFarland, Cray, Plant, Mooty, Mooty & Bennett, Minneapolis, Minn., for Jewelmont Corp.
   OPINION

PATEL, District Judge.

This matter is before the court on a motion to dismiss. The issue addressed by the motion is whether plaintiff has standing to sue for alleged violations of § 2(c) of the Clayton Act, as amended by the Robinson-Patman Act, 15 U.S.C. § 13(c) (1970), the so-called “brokerage” provision of the Robinson-Patman Act.

I. FACTS

Plaintiff,, Charles E. Haff (“Haff”), is engaged in the business of selling jewelry from wholesale manufacturers to retailers on a commission basis. Prior to August 1, 1981 Haff was employed by defendant Jewelmont Corporation (“Jewelmont”) as a manufacturer’s representative, at a 12% commission rate, to sell Jewelmont’s Golden Mist line of jewelry. Haff was given an exclusive territory to sell the Golden Mist line to department stores and retail chain jewelry stores in the western United States. As Jewelmont’s manufacturer’s representative, Haff developed an account with defendant Mervyn’s, Inc. (“Mervyn’s”), a large California-based chain department store. Haff earns substantial commissions from Jewelmont’s sales to Mervyn’s prior to August 1, 1981.

On August 1, 1981, Jewelmont converted the Mervyn’s account into a “house account.” Under this arrangement, Jewelmont sold directly to Mervyn’s, with no commissions payable to Haff. This action breached an alleged oral agreement between Haff and Jewelmont that Jewelmont would not convert any accounts developed by Haff into house accounts. Mervyn’s was granted an 18% discount on these direct sales, or 6% more than Haff had been receiving in commissions prior to August 1, 1981. This 18% discount was not made available to other Jewelmont buyers.

Count I of the complaint alleges violations of § 2(c) of the Clayton Act, as amended by the Robinson-Patman Act, 15 U.S.C. § 13(c) (1970), in that the discount to Mervyn’s was “in lieu of” brokerage previously paid to Haff. Counts II through V are pendent state claims for conspiracy, intentional interference with business advantage, fraudulent misrepresentation, and negligent misrepresentation.

Jewelmont and Mervyn’s have both moved to dismiss the antitrust claim on the ground that Haff does not allege the requisite competitive injury to confer standing under the antitrust laws. In addition, Jewelmont argues that even if Haff does have standing, a manufacturer’s conversion from the use of a broker to a direct selling arrangement, at a discount reflecting the elimination of commissions, does not without more constitute a violation of § 2(c).

Because the court concludes plaintiff lacks antitrust standing, the merits of this § 2(c) argument are not reached except to the extent necessary to resolve the standing issue.

II. DISCUSSION

A. The Legislative Intent Behind § 2(c)

Haff claims that the defendants’ actions violated the “brokerage” provision of the Robinson-Patman Act, § 2(c) of the Clayton Act, as amended by the Robinson-Patman Act, 15 U.S.C. § 13(c) (1970). Section 2(c) provides:

It shall be unlawful for any person engaged in commerce, in the course of such commerce, to pay or grant, or to receive or accept, anything of value as a commission, brokerage, or other compensation, or any allowance or discount in lieu thereof, except for services rendered in connection with the sale or purchase of goods, wares, or merchandise, either to the other party to such transaction or to an agent, representative, or other intermediary therein where such intermediary is acting in fact for or in behalf, or is subject to the direct or indirect control, of any party to such transaction other than the person by whom such compensation is so granted or paid.

The legislative history of § 2(c) establishes that the section was primarily designed to prohibit “dummy brokerage” arrangements by which large, institutional buyers would exercise their leverage to demand discounts under the guise of “brokerage.” See H.R.Rep. No. 2287, 74th Cong., 2d Sess. 15 (1936). As the Supreme Court noted in its most comprehensive analysis of § 2(c):

The Robinson-Patman Act was enacted in 1936 to curb and prohibit all devices by which large buyers gained discriminatory preferences over smaller ones by virtue of their greater purchasing power. A lengthy investigation revealed that large chain buyers were obtaining competitive advantages in several ways other than direct price concessions and were thus avoiding the impact of the Clayton Act. One of the favorite means of obtaining an indirect price concession was by setting up “dummy” brokers who are employed by the buyer and who, in many cases, rendered no services. The large buyers demanded that the seller pay “brokerage” to these fictitious brokers who then turned it over to their employer. This practice was one of the chief targets of § 2(c) of the Act.
Congress enacted the Robinson-Pat-man Act to prevent sellers and sellers’ brokers from yielding to the economic pressures of a large buying organization by granting unfair preferences in connection with the sale of goods.

FTC v. Henry Broch & Co., 363 U.S. 166, 168-69, 174, 80 S.Ct. 1158, 1160, 4 L.Ed.2d 1124 (1960). By outlawing such indirect price concessions, Congress hoped “to force price discriminations [achieved by manipulation of brokerage fees and discounts] out into the open where they would be subject to the scrutiny of those interested, particularly competing buyers.” Biddle Purchasing Co. v. FTC, 96 F.2d 687, 692 (2d Cir.1938); see also Allen Pen Co. v. Springfield Photo Mount Co., 653 F.2d 17, 25 (1st Cir.1981).

B. Antitrust Standing, Antitrust Injury, and § 4 of the Clayton Act

Sec. 2(c) of the Clayton Act is the substantive provision which plaintiff claims establishes his entitlement to relief for an abuse of the brokerage function. Plaintiff confuses this section, which defines the anticompetitive conduct, with the procedural or remedial requirements of § 4 of the Clayton Act, 15 U.S.C. § 15 which gives the right to sue to a person injured “by reason of” an antitrust violation. Cf. Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 486, 97 S.Ct. 690, 696, 50 L.Ed.2d 701 (1977) (“Intermeshing a statutory prohibition against acts that have a potential to cause certain harms with a damage action intended to remedy those harms is not without difficulty.”) Whether a party’s interests are protected by the antitrust laws is analytically distinct from whether that party has standing to sue under the antitrust laws. As one antitrust scholar has remarked, “[E]ven where there is a violation and an injury to competition, the plaintiff may still not be the ‘right’ person to complain of these acts.” E. Kintner & J. Bauer, Federal Antitrust Law, Vol. Ill § 30.11, at 663 (1983).

Whether one has standing to sue under the antitrust laws is determined by reference to § 4. This inquiry is not conducted solely in the vacuum of § 4. As the Supreme Court has pointed out in its recent efforts to lay down some specific guidelines for determining antitrust standing, “the question requires us to evaluate the plaintiff’s harm, the alleged wrongdoing by the defendants and the relationship between them.” Associated General Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519, 103 S.Ct. 897, 907, 74 L.Ed.2d 723 (1983). See also Blue Shield of Virginia v. McCready, 457 U.S. 465, 482, 102 S.Ct. 2540, 2550, 73 L.Ed.2d 149 (1982) (“the injury should reflect the anticompetitive effect either of the violation or of anticompetitive acts made possible by the violation”) (quoting Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. at 489, 97 S.Ct. at 697). Nevertheless, the inquiry begins with § 4, a provision wholly overlooked by plaintiffs.

The class of persons who may maintain a private action for treble damages under the antitrust laws is broadly defined in § 4 of the Clayton Act, 15 U.S.C. § 15:

Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages, by him sustained, and the cost of suit, including a reasonable attorney’s fee.

On its face, § 4 seems broad enough “to encompass every harm that can be attributed directly or indirectly to the consequences of an antitrust violation.” Associated General, 459 U.S. at 529, 103 S.Ct. at 904. However, for a variety of reasons not the least of which is the fear that the lure of treble damages and attorney’s fees would inundate the courts with spurious antitrust claims, the judiciary has consistently limited the scope of recovery under § 4. Id. at 912 (citing Illinois Brick Co. v. Illinois, 431 U.S. 720, 745, 97 S.Ct. 2061, 2074, 52 L.Ed.2d 707 (1977)). See also Calderone Enterprises Corp. v. United Artists Theatre Circuit, Inc., 454 F.2d 1292, 1295 (2d Cir.1971). It is by now well-established that the “by reason of” language of § 4 imposes a standing requirement on private antitrust plaintiffs which requires proof of legal causation, similar to the concept of proximate cause in the law of torts, as a predicate to recovery. Berger & Bernstein, An Analytical Framework for Antitrust Standing, 86 Yale L.J. 809, 810-11 (1977); see also Associated General, 103 S.Ct. at 906-08. As the Supreme Court recently noted:

An antitrust violation may be expected to cause ripples of harm to flow through the Nation’s economy; but “despite the broad wording of § 4 there is. a point beyond which the wrongdoer should not be held liable.” [Citation omitted]. It is reasonable to assume that Congress did not intend to allow every person tangentially affected by an antitrust violation to maintain an action to recover threefold damages for the injury to his business or property.

McCready, 457 U.S. at 476-77, 102 S.Ct. at 2547.

C. The Evolution of Antitrust Standing

Although there has been substantial agreement that § 4 imposes a standing requirement on private antitrust plaintiffs, the lower courts have not agreed as to the precise contours of antitrust standing analysis. Absent guidance from the Supreme Court, which has been provided only very recently, the lower courts have developed several different tests for determining antitrust standing. The Ninth Circuit, for example, has for many years applied the so-called “target area” test, under which the plaintiff “must show that he is within that area of the economy which is endangered by a breakdown of competitive conditions in a particular industry.” Conference of Studio Unions v. Loew’s, Inc., 193 F.2d 51, 54-55 (9th Cir.1951), cert. denied, 342 U.S. 919, 72 S.Ct. 367, 96 L.Ed. 687 (1952); accord, Pan-Islamic Trade Corp. v. Exxon Corp., 632 F.2d 539, 546-47 (5th Cir.1980); Engine Specialties, Inc. v. Bombardier Ltd., 605 F.2d 1, 17-18 (1st Cir.1979); Calderone Enterprises Corp. v. United Artists Theatre Circuit, Inc., 454 F.2d at 1295. This approach focuses on both the directness of the plaintiff’s injury and the intention of the antitrust violator to injure the plaintiff: “[T]he rule is that one who is only incidentally injured by a violation of the antitrust laws — the bystander who was hit but not aimed at — cannot recover against the violator.” Karseal Corp. v. Richfield Oil Corp., 221 F.2d 358, 363 (9th Cir.1955).

Both parties to the instant case implicitly assumed in their briefs that the “target area” approach to standing is still the test to be applied by courts in the Ninth Circuit. As discussed infra, however, the Supreme Court’s recent decisions in Associated General, 103 S.Ct. at 907-08 n. 31 and. McCready, 457 U.S. at 476-79 n. 12, 13, 14 and 15, 102 S.Ct. at 2547-48 n. 12, 13, 14 and 15, demonstrate that there is little vitality left to the “target area” approach to antitrust standing. The lesson of these most recent cases is that formalistic tests are disfavored and the totality of the circumstances must be considered in light of the principles in these cases. Even this Circuit now disagrees as to its commitment to the “target area” test. Compare Parks v. Watson, 716 F.2d 646, 658 (9th Cir.1983) (“We have used the ‘target area’ approach____”) with Ostrofe v. H.S. Crocker Co., Inc., (“Ostrofe I”), 670 F.2d 1378, 1382-83, n. 7 (9th Cir.1982), vacated and remanded, 460 U.S. 1007, 103 S.Ct. 1244, 75 L.Ed.2d 475 (1983) (remanding for reconsideration in light of Associated General), Ostrofe v. H.S. Crocker Co., Inc., (“Ostrofe II”), 740 F.2d 739 (9th Cir.1984) (on remand).

Other circuits have focused exclusively on the directness of the injury, see, e.g., Reibert v. Atlantic Richfield Co., 471 F.2d 737, 731 (10th Cir.1973), while still others have looked to see whether the injury is “arguably within the zone of interests protected by the antitrust laws.” Malamud v. Sinclair Oil Corp., 521 F.2d 1142, 1151-52 (6th Cir.1975). More recently, the Third Circuit adopted a “balance of factors” test which combines the direct injury test with a policy analysis. Bravman v. Bassett Furniture Industries, Inc., 552 F.2d 90, 99-100 (3d Cir.1977).

Only recently has the Supreme Court attempted to provide some guidance to the lower courts as to the factors to be examined in determining whether a given plaintiff’s injury is sufficiently related to an antitrust violation to confer a private cause of action under the antitrust laws. Beginning with Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977), which clearly imposed a competitive injury requirement on all private antitrust suits, and continuing with McCready, 457 U.S. at 465, 102 S.Ct. at 2540 (1982) and Associated General, 459 U.S. 519, 103 S.Ct. at 897 (1983), the Supreme Court has refined the various tests employed by the lower courts and adopted a unitary, more flexible approach to antitrust standing.

Brunswick involved a claim by certain operators of bowling alleys that Brunswick Corp.’s acquisition of competing bowling centers violated § 7 of the Clayton Act, since “because of its size, [Brunswick] had the capacity to lessen competition in the markets it had entered by driving smaller competitors out of business.” 429 U.S. at 481, 97 S.Ct. at 693. Plaintiffs alleged lost profits on the theory that if Brunswick had not merged with the local bowling centers, these centers would have gone out of bhsiness and plaintiffs’ profits would therefore have been greater. Id.

In holding that § 4 did not allow private damage suits for such injury, the Court clearly related recovery under § 4 to proof of competitive injury:

[W]hile respondents’ loss occurred “by reason of” the unlawful acquisitions,. it did not occur “by reason of” that which made the acquisitions unlawful____ [F]or plaintiffs to recover treble damages [under § 4] on account of § 7 violations, they must prove more than injury causally linked to an illegal presence in the market. Plaintiffs must prove antitrust injury, which is to say injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants’ acts unlawful. The injury should reflect the anticompetitive effect either of the violation or of anti-competitive acts made possible by the violation.

429 U.S. at 488-89, 97 S.Ct. at 697 (emphasis added). The Court pointed out that plaintiffs’ injury — the loss of income which would have accrued had the acquired centers gone bankrupt — was completely unrelated to the potential anti-competitive effects which made the merger unlawful under § 7:

Respondents would have suffered the identical “loss” — but no compensable injury — had the acquired centers instead obtained refinancing or been purchased by “shallow pocket” parents ... Conversely, had petitioner acquired thriving centers — acquisitions at least as violative of § 7 as the instant acquisitions — respondents would not have lost any income that they otherwise would have received.

429 U.S. at 487 & n. 12, 97 S.Ct. at 697 & n. 12. Since the alleged injury was not of “the type that the statute was intended to forestall,” 429 U.S. at 487-88, 97 S.Ct. at 696-97 (quoting Wyandotte Co. v. United States, 389 U.S. 191, 202, 88 S.Ct. 379, 386, 19 L.Ed.2d 407 (1967)), recovery under § 4 was unauthorized.

The Court expanded on this theme in McCready, 457 U.S. 465, 102 S.Ct. at 2540, and in so doing took an important step in clarifying antitrust standing analysis. McCready involved a claim by a group health plan subscriber that she had been injured by a conspiracy between Blue Shield and an organization of Virginia psychiatrists to restrain competition in the psychotherapy market. The health plan allowed reimbursement for services performed by psychiatrists, but denied reimbursement for comparable work performed by psychologists unless such claims were billed to a physician. Plaintiff was thus faced with a “Hobson’s choice” in that she was compelled to choose between visiting a psychologist and forfeiting reimbursement under the plan, or receiving reimbursement by. foregoing treatment by the practitioner of her choice. 457 U.S. at 483, 102 S.Ct. at 483.

The Court, examining the record on a motion to dismiss, held that the plaintiff had standing to sue under § 4 for the alleged violation. In evaluating whether the alleged injury was “too remote” to confer standing, quoting Illinois Brick Co. v. Illinois, 431 U.S. 720, 728 n. 7, 97 S.Ct. 2061, 2065 n. 7, 52 L.Ed.2d 707 (1977), the Court looked at two factors: “(1) the physical and economic nexus between the alleged violation and the harm to the plaintiff; and (2), the relationship of the injury alleged with those forms of injury about which Congress was likely to have been concerned in making defendants’ conduct unlawful ....” McCready, 457 U.S. at 477-78, 102 S.Ct. at 2547-48.

With regard to the first factor, the Court found that plaintiffs alleged injury was an' integral aspect of the conspiracy, since the denial of reimbursement to consumers was the “very means by which it is alleged that Blue Shield sought to achieve its illegal ends.” 457 U.S. at 479, 102 S.Ct. at 2548. The Court rejected defendants’ argument that only participants in the group health care market — in other words, competitors of the defendants — had standing to sue.

With regard to the second factor, the Court concluded that McCready’s alleged injury was “inextricably intertwined” with the injury the alleged conspirators sought to inflict on psychologists and the psychotherapy market. Quoting from Brunswick, the Court found that McCready’s alleged injury fell squarely within the area of congressional concern in passing § 1 of the Sherman Act, and therefore “flow[ed] from that which [made] defendants’ acts unlawful.” 457 U.S. at 484, 102 S.Ct. at 2551 quoting Brunswick, 429 U.S. at 489, 97 S.Ct. at 697.

The Court’s most recent explication of antitrust standing principles is found in Associated General. Associated General does not represent a departure from McCready. It merely amplifies upon the considerations spelled out in McCready and gives further direction to the lower courts. Once again the Supreme Court discouraged the use of a formalistic test and emphasized the need for a case-by-case analysis. The court denied standing to plaintiff unions (the “Union”) which alleged that an employer’s association had coerced certain third parties to enter into business relations with nonunion firms, in violation of § 1 of the Sherman Act. The Union alleged that this coercion adversely affected the trade of certain unionized firms, and thus restrained the Union’s business activities.

In discussing § 4 of the Clayton Act, the Court stated that the issue of whether a private antitrust plaintiff may recover treble damages under § 4 “requires us to evaluate the plaintiff’s harm, the alleged wrongdoing by the defendants, and the relationship between them.” 103 S.Ct. at 907. Observing that the various tests employed by the lower courts for determining standing “may lead to contradictory and inconsistent results,” id. at 907-08 n. 33, the Court substituted a flexible, multifactor analysis in an attempt to bring some coherence to the complicated area of antitrust standing.

The Court discussed three factors to be used in exploring the relationship between the plaintiff’s harm and the defendants’ alleged wrongdoing. First, it must be determined whether the alleged injury “was of a type that Congress sought to redress in providing a private remedy for violations of the antitrust laws.” Id. at 909, citing McCready, 102 S.Ct. at 2550, and Brunswick, 429 U.S. at 488-89, 97 S.Ct. at 697. In applying this factor to the case at hand, the Court noted that the antitrust laws were enacted for the protection of competition, and-, in contrast to the health plan subscriber in McCready, “the Union was neither a consumer nor a competitor in the market in which trade was restrained ... Moreover, it has not even alleged any marketwide restraint of trade.” 103 S.Ct. at 909 & n. 40. The Court further distinguished McCready on the ground that the Union’s alleged injury was not “inextricably intertwined” with the competitive restraint giving rise to the antitrust violation, since “[i]t [was] not clear whether the Union’s interests would be served or disserved by enhanced competition in the market.” Id.

A second factor to be examined in each case is the “directness or indirectness of the asserted injury.” Id. at 910. In contrast to the consumer’s injury in McCready, which was a direct result of the alleged conspiracy between Blue Shield and the psychiatric organization, the Union’s alleged injuries “were only an indirect result of whatever harm may have been suffered by ‘certain’ contractors and subcontractors.” Id. Moreover, because of -the absence of specific allegations in the complaint demonstrating the causal connection between the Union’s injuries and the alleged group boycott, the Court found that the Union’s damages claim was “highly speculative.” Id. at 911.

A final, somewhat related factor is whether the damages sought would create “the risk of duplicate recoveries on the one hand, or the danger of complex apportionment of damages on the other.” Id. at 912, citing Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481, 88 S.Ct. 2224, 20 L.Ed.2d 1231 (1968) and Illinois Brick Co. v. Illinois, 431 U.S. 720, 737-38, 97 S.Ct. 2061, 2070, 52 L.Ed.2d 707 (1977). The Court found that the Union’s complaint, if allowed to stand, would burden the district court with the task “of identifying damages and apportioning them among directly victimized contractors and subcontractors and indirectly affected employees and union entities.” 103 S.Ct. at 912. The difficulty of such apportionment created a risk of duplicative recovery, which is contrary to public policy. Id. at 911-12.

D. The Application of Current Antitrust Standing Analysis to the Facts of the Present Case

When the facts of the present case are examined in light of the principles developed in Brunswick, McCready and Associated General, there can be no doubt that the complaint must be dismissed for failure to state a claim upon which relief may be granted. Although Haff’s injury is certainly a direct consequence of defendants’ alleged anti-competitive conduct, thus satisfying one of the criteria set forth in Associated General and earlier antitrust standing cases, the nature of Haff’s injury is completely independent of any antitrust violation. Hence his injury is not of the type Congress sought to prevent in allowing private actions under the antitrust laws. Moreover, because Haff’s alleged damages overlap whatever damages might be claimed by injured competitors of Mervyn’s, there is a risk of duplicative recovery which counsels against allowing this action to proceed.

1. The Nature of Haffs Alleged Injury

Haff claims that he has lost substantial commissions as a result of Jewelmont’s conversion of the Mervyn’s account into a “house account.” The complaint alleges that not only did this action breach an oral agreement between Haff and Jewelmont, but the subsequent 18% discount to Mervyn’s is said to violate § 2(c) since it constitutes a discount “in lieu of” brokerage previously paid to Haff.

The fact of the matter, however, is that Haff’s injury — lost commissions — has nothing whatsoever to do with the alleged antitrust violation, and hence is not “of a type that Congress sought to redress in providing a private remedy for violations of the antitrust laws.” Associated General, 103 S.Ct. at 909, citing McCready, 457 U.S. at 483, 102 S.Ct. at 2550, and Brunswick, 429 U.S. at 488-89, 97 S.Ct. at 697. To illustrate this point, the injury to Haff would have been precisely the same if Jewelmont had converted all of its accounts to “in-house” accounts and had not granted preferential treatment to Mervyn’s. Haff would still have lost his commissions, but there would have been no violation of § 2(e). See FTC v. Henry Broch & Co., 363 U.S. 166, 176, 80 S.Ct. 1158, 1164, 4 L.Ed.2d 1124 (1960) (stating in dicta that a price reduction based upon savings in brokerage expenses does not violate § 2(c) if given to all customers). To further illustrate the independence of Haff’s injury and the injury to competition which is the gravamen of § 2(c) violation (or of any antitrust violation, for that matter), if Jewelmont had not converted the Mervyn’s account but had instead paid Mervyn’s a disguised rebate, Haff would not have been injured at all, yet there would still be a violation of § 2(c). This analysis is precisely the same as in Brunswick, where the Court noted that plaintiffs’ alleged injury— the loss of profits which would have been earned had the acquired bowling centers gone bankrupt — was completely unrelated to the potential anticompetitive effects which made the “deep-pocket” merger unlawful under § 7 of the Clayton Act. This is reinforced by the reasoning in Lupia v. Stella D’Oro Biscuit Co., Inc., 586 F.2d 1163, 1169 (7th Cir.), cert. denied, 440 U.S. 982, 99 S.Ct. 1791, 60 L.Ed.2d 242 (1979), where the Seventh Circuit held that an exclusive distributor did not have standing to sue regarding a 5% discount paid directly to favored buyers and charged back to the distributor, since “[t]he defendant’s anticompetitive action, the 5 percent rebate to chain stores, would have been equally anticompetitive if plaintiff had not been required to absorb it.”

Haff, like the Union in Associated General “was neither a consumer nor a competitor in the market in which trade was restrained.” Associated General, 103 S.Ct. at 909. Haff has not alleged, nor could he allege, that he is a participant in either the seller’s (Jewelmont) or the buyer’s (Mervyn’s) market. Moreover, Haff “has not even alleged any marketwide restraint of trade.” Id. at 909 n. 40. For this reason alone, Haff must be denied standing to sue for the alleged antitrust violation. Though he may have been injured “by reason of” defendants’ actions, he was not injured “by reason of” that which made defendants’ actions unlawful. See Brunswick, 429 U.S. at 489, 97 S.Ct. at 697.

2. Risk of Duplicative Recovery

A second reason why Haff must be denied standing in this case is because an award of damages to Haff would implicate the important public • policy concern of avoiding the risk of duplicative recoveries. Associated General, 103 S.Ct. at 912; see also Illinois Brick Co. v. Illinois, 431 U.S. 720, 737, 97 S.Ct. 2061, 2070, 52 L.Ed.2d 707 (1977); Hawaii v. Standard Oil Co., 405 U.S. 251, 92 S.Ct. 885, 31 L.Ed.2d 184 (1972). This is due to the fact that any recovery by Haff would significantly, if not completely, duplicate actual damages claimed in future actions by direct competitors of Mervyn’s under § 2(a) of the Robinson-Patman Act, since Haff’s lost commissions (12%) constitute a substantial portion of the price determination (18%) allegedly allowed to Mervyn’s. Were we to allow Haff to maintain this action, Jewelmont would be exposed to the “risk of multiple liability” from future § 2(a) lawsuits. Illinois Brick, 431 U.S. at 737 n. 18, 97 S.Ct. at 2070 n. 18.

E. Prior § 2(c) Standing Cases

Today’s holding, that Haff lacks standing to sue under the antitrust laws for the alleged violation of § 2(c), is consistent with every single case which has previously addressed this issue. See, Larry R. George Sales Co. v. Cool Attic Corp., 587 F. 2d 266, 270-72 (5th Cir.1979); J.F. Reed Co., Inc., et al. v. K-Mart Corp., 1982-1 Trade Cases ¶¶ 64,499-500 (E.D.Mich.1981); Green Bay Packaging, Inc. v. Hoganson & Associates, Inc., 362 F.Supp. 78, 82 (N.D.Ill.1973); Robinson v. Stanley Home Products, Inc., 178 F.Supp. 230 (D.Mass.1959), aff’d, 272 F.2d 601, 603-04 (1st Cir.1959). These cases all stand for the proposition that an eliminated middleman has not suffered the requisite competitive injury to maintain a private action for treble damages under § 4 for an alleged violation of § 2(c) of the Robinson-Patman Act.

Robinson v. Stanley Home Products, Inc., is squarely on point. Plaintiff was a manufacturer’s representative with an exclusive territory in the New England area to sell defendant’s products. After the representative had secured two orders from a large buyer, the seller terminated him and dealt directly with the buyer. As in the present case, the plaintiff alleged that the price paid by the buyer for the direct sales was discriminatory. The district court held that plaintiff had failed to state a claim under § 2(c): “The reduction or elimination of a commission or brokerage fee payable by the seller to its own agent to enable the seller to sell at a lower price is not forbidden by [§ 2(c)].” 178 F.Supp. at 232. The court went on to note that even if defendants’ conduct did constitute a violation of § 2(c), plaintiff nonetheless could not recover under § 4. The court’s reasoning is persuasive:

[T]he only specific injury [plaintiff] sets forth is that he has not been paid commissions due to him ... Failure to pay these commissions would have no conceivable connection with any subsequent violation of the antitrust laws____
Only one who has been directly injured by a violation of the antitrust laws is entitled to recover damages under § 15. Persons whose only loss is from the interruption or diminution of a profitable relationship with a party directly affected by the violation have been held to have been injured only remotely and indirectly. [Citations and footnote omitted].
It is difficult to see how in this case the claimed injury could be considered the direct result of the alleged violation. Assuming that Plura sold cups to Stanley at a lower price than it charged competitors of Stanley, this price differential was not the cause of plaintiffs loss of his commission ... If under his agreement with Plura plaintiff was entitled to the exclusive right to sell to Stanley or was entitled to commissions on all sales to Stanley even though he played no part in them, then his injury was caused by Plura’s breach of contract, or possibly by wrongful interference by Stanley with his contractual relationship with Plura. The lower price allowed to Stanley by Plura may have been a source of injury to some competitor of Stanley. It did not cause plaintiffs injury. The fact that elimination of plaintiffs commission may have been economically a condition precedent to the granting of a lower price by Plura does not make the failure to pay that commission a result of the lower price.

Id. at 233.

The First Circuit affirmed, agreeing that the granting of a price reduction following a seller’s conversion to a direct selling arrangement does not, without more, constitute a violation of § 2(c). 272 F.2d at 603-04. Robinson was cited with approval by the Supreme Court in FTC v. Henry Broch & Co., Inc., 363 U.S. at 176 n. 18, 80 S.Ct. at 1164 n. 18 (1960).

Similarly, in Larry R. George Sales Co. v. Cool Attic Corp., plaintiff, a manufacturer’s representative for a producer of attic fans, alleged that defendant had violated § 2(c) by paying a commission to a broker under the buyer’s control instead of to plaintiff. Relying upon Robinson and the Ninth Circuit’s “target area” standing test, the Fifth Circuit held that the eliminated manufacturer’s representative lacked standing to sue under the antitrust laws since his alleged injury was not competitive in nature:

[T]he alleged anti-competitive conduct of Defendants was “targeted” at the attic fan and ventilator industry. The alleged illegality on the part of Defendant Cool Attic, even if proved, would have anti-competitive effect only upon that industry. The Plaintiff George would be damaged, if at all, by the ripple effects of the antitrust violation alleged. Congress did not intend the antitrust laws to provide a remedy in damages for all injuries which might be conceivably traced to an antitrust violation.
This Court is in agreement with Judge Singleton’s holding in Computer Statistics, Inc. v. Blair, 418 F.Supp. 1339 (S.D.Tex.1976), that some anti-competitive effect is necessary to maintain an action under 15 U.S.C. § 13(c) ... Only if Plaintiff was in the same business and in competition with S.S. Kresge Co. or the Defendants would he have standing under 15 U.S.C. § 15 ... Like the Plaintiff in Robinson v. Stanley Home Products, Plaintiff George may well have suffered an economic loss as a result of Defendant’s actions. The non-competitive nature of that loss, however, is fatal to George’s attempt to maintain an action under 15 U.S.C. § 13(c).

587 F.2d at 272.

These cases, though decided before Brunswick, McCready and Associated General, are consistent with them. This court finds no case holding that a broker or manufacturer’s representative eliminated by conversion to direct selling has standing to sue for an alleged violation of § 2(c). Accordingly, under both the general standards announced by the Supreme Court and the specific cases discussed above, Haff lacks standing to bring this action. Accordingly,

IT IS HEREBY ORDERED that the complaint be DISMISSED with prejudice in its entirety.

      . Both Jewelmont and Mervyn's also urge dismissal of the pendent state claims, since dismissal of the antitrust claim would leave this court without federal question jurisdiction. Because this court's jurisdiction obviously depends upon resolution of the antitrust standing issue, today’s holding, that Haff lacks standing to sue under the antitrust laws, mandates dismissal of the entire complaint. The court does not thereby express any opinion as to the state causes of action.

      . There has been a tremendous amount of confusion among courts and commentators as to the difference, if any, between the terms "antitrust standing” and "antitrust injury.” See, e.g., Ostrofe v. H.S. Crocker Co., Inc., ("Ostrofe I"), 670 F.2d 1378, 1386 & n. 23 (9th Cir.1982) (noting that the distinction between antitrust standing and antitrust injury is "unclear”), vacated and remanded, 460 U.S. 1007, 103 S.Ct. 1244, 75 L.Ed.2d 475 (1983) (remanding for reconsideration in light of Associated General), 740 F.2d 739 (9th Cir.1984) ("Ostrofe II") (on remand). Many courts, including the Ninth Circuit, have regarded the two as opposite sides of the same coin, and have merged standing analysis with antitrust injury analysis. See, e.g., Lupia v. Stella D’Oro Biscuit Co., Inc., 586 F.2d 1163, 1167-69 (7th Cir.), cert. denied, 440 U.S. 982, 99 S.Ct. 1791, 60 L.Ed.2d 242 (1979); John Lenore & Co. v. Olympia Brewing Co., 550 F.2d 495, 499-500 (9th Cir.1977); GAF Corp. v. Circle Floor Co., 463 F.2d 752 (2d Cir.1972), cert. denied, 413 U.S. 901, 93 S.Ct. 3058, 37 L.Ed.2d 1045 (1973); but see Handler, Changing Trends in Antitrust Doctrines: An Unprecedented Supreme Court Term —1977, 77 Colum.L.Rev. 979, 996-97 (1977) (arguing that antitrust injury and antitrust standing are "related, but, nonetheless, disparate doctrines”). The Supreme Court, in Associated General, has recently noted that "the focus of the doctrine of ‘antitrust standing' is somewhat different from that of standing as a constitutional doctrine," since “[hjarm to the antitrust plaintiff is sufficient to satisfy the constitutional standing requirement- of injury in fact, but the court must make a further determination whether the plaintiff is a proper party to bring a private antitrust action.” 103 S.Ct. at 907 n. 31.
      The indiscriminate merging of the two doctrines may sometimes generate analytical confusion; however, the distinction seldom, if ever, makes a practical difference. The primary difference between "antitrust standing" and "antitrust injury” is the point in the proceedings where the plaintiff's right to recover under the antitrust laws is challenged. To say that a plaintiff lacks "standing" is to say that there is no set of facts which could be adduced at trial to show the requisite competitive injury; this decision can be made on a motion to dismiss. To say that a plaintiff has not proved "antitrust injury,” on the other hand, is to say that plaintiff has not satisfied the burden of showing that he or she has been injured "by reason of” the antitrust laws. In most cases, this decision cannot be made until after trial. Hence one may have "standing” sufficient to survive a motion to dismiss, yet be unable to prove "antitrust injury" at trial. This may be why the Supreme Court spoke of “antitrust injury" in Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S.Ct. 690, 697, 50 L.Ed.2d 701 (1977), a case which went to trial, while it spoke of "antitrust standing" in Blue Shield of Virginia v. McCready, 457 U.S. 465, 477, 102 S.Ct. 2540, 2547, 73 L.Ed.2d 149 (1982), a case decided on the basis of a motion to dismiss. There is no indication in Associated General, that the Court regards the difference between the two concepts as having any practical significance, and therefore this court refers to "antitrust standing" in this case in its present posture. As discussed above, McCready and Associated General make it clear that antitrust injury must be looked at in order to evaluate antitrust standing.

      . Despite the clear disfavor shown by the Supreme Court for these formalistic tests and the adoption of a multifactor test, despite the application of such a test just eight days earlier in Chelson v. Oregonian Publishing Co., 715 F.2d 1368 (9th Cir.1983) and despite its acceptance by the Circuit once again in Solinger v. A. & M. Records, Inc., 718 F.2d 298 (9th Cir.1983), another panel of this Circuit proceeded to use the "target area” test saying that:
      If no clear answer emerges [from this analysis] we must determine standing by balancing competing policy interests, principally those of effective enforcement of the antitrust laws on the one hand and avoiding vexatious litigation and excessive liability on the other. Parks v. Watson, 716 F.2d 646, 659 (9th Cir.1983) citing Ostrofe I and Associated General. Now apparently in Ostrofe II some form of
      the Associated General analysis has been adopted. Ostrofe II placed particular emphasis on McCready, 457 U.S. 465, 102 S.Ct. at 2540. Curiously, under the "target area” approach it is difficult to see how plaintiff McCready could have survived a standing challenge. She was not a direct target; the targets were the psychologists. Unless the "target areá" was defined without perimeters, McCready would find herself out of court in "target area” jurisdictions.
      In any event, it makes no difference to the outcome of this case whether we employ the "target area” approach or the multifactor approach of Associated General, since even under the "target area” test it is clear that Haff, being a competitor of neither Jewelmont nor Mervyn’s, is not within "that area of the economy which is endangered by a breakdown of competitive conditions." Conference of Studio Unions v. Loew’s, Inc., 193 F.2d at 54-55. Moreover, though Haff has certainly been "hit,” there is no allegation that he has been "aimed at.” See Karseal Corp. v. Richfield Oil Corp., 221 F.2d at 363-64.

      . The Court specifically refused to consider the propriety of any of the various tests employed by the lower courts to determine antitrust standing: "We have no occasion here to evaluate the relative utility of any of these possibly conflicting approaches toward the problem of remote antitrust injury." 457 U.S. at 476 n. 12, 102 S.Ct. at 2547 n. 12. As discussed infra, however, the Court in Associated General resolved the "conflicting approaches” of the circuits by adopting its own unitary, multifactor analysis.

      . The Ninth Circuit, in the recent case of Chelson v. Oregonian Publishing Co., 715 F.2d at 1371, suggested in dicta that whether an antitrust plaintiff's interests "would be served or disserved by enhanced competition in the market" is a factor to be examined in each case under the analysis set forth in Associated General. Chelson involved an antitrust action brought by certain news dealers who alleged that defendant newspaper publisher had violated the Sherman Act by selling newspapers to dealers on the condition that they refuse to deal with the publisher’s competitor. Although the Ninth Circuit remanded for determination of further facts, and hence did not directly decide the issue, some of the court's language could be construed to mean that a private antitrust plaintiff who is neither a consumer nor a competitor in • the relevant market would have standing under Associated General provided his or her interests "would be served by enhanced competition in that market.” Id.

      This court does not attach much significance to this language. Many individuals benefit from increased competition in a given market, but this has never been enough to confer standing. Neither Associated General nor Chelson stands for a rule that any person, no matter how tangentially he or she might benefit from increased competition in a given market, has standing to complain of an antitrust violation. Rather, if any rule emerges from Associated General, it is that only consumers or competitors in a relevant market who are injured “by reason of" an antitrust violation have standing to sue under § 4.
      Actually this language appears to come from Associated General's analysis of the plaintiff union which, it noted, was neither a competitor nor a consumer. The Court noted in passing that it was not clear how the interest of the union would be served by increased competition. This made it all the more clear that the union’s injury, if any, was not the result of any anti-competitive conduct contemplated by the antitrust laws, but rather was the result of its labor interest protected by the labor laws.

      . In discussing the factors to be examined in determining whether a given plaintiff has standing to sue under § 4, the Court in Associated General did not attempt to rank these factors in terms of their relative importance. However, this court is of the opinion that the directness of a plaintiff's injury is a far less salient variable than the relationship between the injury and the antitrust violation. Not only is this suggested by the manner in which these factors were discussed in Associated General, but it is also suggested by the Court’s reasoning in Brunswick and McCready.

      . Like the Union’s in Associated General, it is also unclear whether Haff’s interests would be served or disserved by increased, competition in either the seller’s (Jewelmont) or the buyer’s (Mervyn’s) market. If, for example, Jewelmont were the sole seller of jewelry, it could presumably charge a higher price for its products reflecting its monopoly power. Whether this would benefit Haff, as manufacturer’s representative earning a 12% commission on all sales, would clearly depend upon the elasticity of demand for jewelry in the applicable price range. If a 10% price increase generated a decrease in jewelry sales of more than 10%, Jewelmont’s total revenues, and hence Haff’s commissions, would decline. Conversely, if the same 10% price increase caused less than a 10% decline in volume, Haff’s commissions would increase. A similar result would obtain were Mervyn’s the sole buyer of jewelry, and it attempted to exercise its monopsony power to lower the market price of jewelry. Unlike the health plan subscriber in McCready, 457 U.S. at 484, 102 S.Ct. at 2551, Haff's alleged injury is not “inextricably intertwined” with the competitive restraint giving rise to the § 2(c) violation, since the extent to which Haff would benefit or suffer from increased competition is unclear.

      . Section 2(a) of the Clayton Act, as amended by the Robinson-Patman Act, 15 U.S.C. § 13(a) (1970), provides, in pertinent part:
      It shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchases involved in such discrimination are in commerce ... and where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them____


source: Caselaw Access Project

author: RUSSELL E. SMITH, District Judge.

license: Public Domain

text:
    Albert SOUZA, et al., Plaintiffs, v. ESTATE OF Bernice Pauahi BISHOP, et al., Defendants, and Olita Merseberg, et al., Indispensable Parties.
    Civ. No. 79-0339.
    United States District Court, D. Hawaii.
    Oct. 5, 1984.

      Alvin H. Goldstein, Charles J. Wisch, San Francisco, Cal., for plaintiff.
    Martin Anderson and Mark B. Desuñarais, Goodsill, Anderson, Quinn & Stifel, Honolulu, Hawaii, for Castle defendants.
    Harold W. Nickelsen, G. Richard Morry, J. Stephen Street, Honolulu, Hawaii, for Bishop Estate.
    Michael C. Webb, Lawrence S. Okinaga, Honolulu, Hawaii, for indispensable parties, State Sav. & Loan Ass’n and Oahu Educ. Employees Federal Credit Union.
   OPINION

RUSSELL E. SMITH, District Judge.

BACKGROUND

This case, in which motions and cross-motions for summary judgment have been filed, presents difficult problems relating to land usage in Hawaii. The Hawaii Legislature has been considering these problems for over two decades and in 1967 enacted the Hawaiian Land Reform Act (Act), Hawaii Rev.Stat., ch. 516, which permits the State under some circumstances to condemn the fee of leased lands and transfer the fee to the lessees of the land. The Supreme Court of the United States in Hawaii Housing Authority v. Midkiff, — U.S. —, 104 S.Ct. 2321, 81 L.Ed.2d 186 (1984), held that the State land oligopoly, traceable to the monarch, could be regulated and that the Act was constitutional.

In this case the plaintiffs Chun and Merseberg seek relief from the defendants under the Sherman and Clayton Acts, and their Hawaii equivalents and the Hawaii Fair Trade Statutes, because of dealings with the Bishop Estate. In 1966 Chun and Merseberg leased separate residential sites in the Halawa Valley Estates on Oahu. The Bishop Estate owned the land and leased it to American Factors, which in turn subleased it. Ultimately one Ujimori built houses on the land, and it was he who dealt with the plaintiffs here. The plaintiffs entered into two separate agreements — one for the purchase from Ujimori of the house and the off-site improvements and the other for the lease of the land. Except for the names and dates, the plaintiffs’ leases are identical. Parties to the leases are the Bishop Estate and a joint venture consisting of Central Oahu Land Company and Hawaiian Pacific Industries, lessors, and the plaintiffs, lessees. The terms of the leases are 55 years. The lease rents are $165 per year for forty years; the rents for the remaining fifteen years are to be determined by agreement or by arbitration. There are options to extend the leases, and the rents during the periods of extension are to be similarly determined by agreement or by arbitration. The arbitrations are to some extent controlled by specific formulae. The plaintiffs are to pay all taxes and levies for special improvements, and at the end of the term are privileged to remove all buildings. The effect of all of this is that upon the termination of the leases the lands together with all off-site improvements will revert to the Bishop Estate.

The plaintiffs’ transactions were typical of the manner in which the Bishop Estate lands were subdivided and sold, and while the Bishop Estate played no active role in the subdivision of the lands, the construction of off-site improvements, and the construction of the houses, it is clear that the Bishop Estate orchestrated all that was done.

A jury might find that most people desiring to buy homesites on Oahu could not readily find fee land which they could acquire or lease land upon which they themselves could build. A jury might likewise find that the Bishop Estate developed its land as it did because it believed that, for tax and other reasons, it was economically advantageous to lease the land rather than to sell it. A jury might also find that these practices resulted in excessive prices and that the Bishop Estate was motivated by profit.

Assuming that the Bishop Estate plan is antisocial, results in excessive prices, and that on the expiration of the leases many leaseholders will suffer some hardship, still the question remains: Were the antitrust laws violated?

THE MONOPOLIZATION CLAIM

In 1966 Section 2 of the Sherman Act, 15 U.S.C. § 2, read: “Every person who shall monopolize ... any part of the trade or commerce among the several States ... shall be deemed guilty of' a misdemeanor

Hawaii Rev.Stat. § 480-9 reads: “No person shall monopolize, or attempt to monopolize, or combine or conspire with any other person to monopolize any part of the trade or commerce in any commodity in any section of the State.”

Assuming for purposes of this opinion that the sections of the federal and Hawaii statutes dealing with monopolization apply to land, still the rationale of the monopoly cases is difficult to apply when the subject of the monopoly is land. The ordinary antitrust case involves dealings for goods. The market in cameras, for example, is the combined willingness of all people to. buy cameras. That combined willingness to buy may vary as the quality and price vary. The theory is that competition is healthy and results in lower prices. Each competitor’s share of the market depends upon his price and quality. As a competitor’s share of the market increases, the share of some of his competitors decreases. One competitor with market power may create impediments which prevent other competitors from entering the market. Not so when the subject matter is land. The quality of land is finite. That quantity does not increase or decrease as the price fluctuates. Landowners may compete in price, and one may sell more land than another at a given time; but normally what one landowner does with his own land does not prevent any other landowner from doing what he will with his own land.

An owner of land has monopoly power over his land. He may charge for it what he will or withhold it from the market if he so desires. He is under no compulsion to use the land for the public benefit or sell it at a price that someone can afford to pay. I think it obvious that the ownership of land is not in itself illegal despite the monopoly power that goes with it.

Historically the Bishop Estate has been the largest landowner in Oahu. Mere size, however, does not make a monopoly illegal. United States v. International Harvester Co., 274 U.S. 693, 708, 47 S.Ct. 748, 753, 71 L.Ed. 1302 (1927); United States v. United States Steel Corp., 251 U.S. 417, 451, 40 S.Ct. 293, 299, 64 L.Ed. 343 (1920); Deesen v. Professional Golfers’ Association, 358 F.2d 165, 171 (9th Cir.), cert. denied, 385 U.S. 846, 87 S.Ct. 72, 17 L.Ed.2d 76 (1966); United States v. Aluminum Co., 148 F.2d 416, 430 n. 2 (2d Cir.1945); Bailey’s Bakery, Ltd. v. Continental Baking Co., 235 F.Supp. 705, 718 (D.Hawaii 1964), aff’d, 401 F.2d 182 (9th Cir.1968), cert. denied, 393 U.S. 1086, 89 S.Ct. 874, 21 L.Ed.2d 779 (1969).

I conclude, therefore, that the monopoly power enjoyed by the Bishop Estate over its own vast lands was not in itself illegal, notwithstanding the language in United States v. Griffith, 334 U.S. 100, 68 S.Ct. 941, 92 L.Ed. 1236 (1948). There the Court said that “monopoly power, whether lawfully or unlawfully acquired, may itself constitute an evil and stand condemned under § 2 even though it remains unexercised. For § 2 of the Act is aimed, inter alia, at the acquisition or retention of effective market control.” Id. at 107, 68 S.Ct. at 945. (Footnote and citation omitted.) If the quoted language is taken literally, then the monopoly power which the Bishop Estate had over its own land was illegal. But the Court in Griffith was obviously using the word “monopoly” in the context of competitors and was talking about the effect of a monopoly on competitors. The Court cited United States v. Aluminum Co., 148 F.2d 416 (2d Cir.1945), for its authority. In that case Judge Learned Hand said:

Nevertheless, it is unquestionably true that from the very outset the courts have at least kept in reserve the possibility that the origin of a monopoly may be critical in determining its legality; and for this they had warrant in some of the congressional debates which accompanied the passage of the Act. This notion has usually been expressed by saying that size does not determine guilt; that there must be some “exclusion” of competitors; that the growth must be something else than “natural” or “normal”; that there must be a “wrongful intent,” or some other specific intent; or that some “unduly” coercive means must be used. At times there has been emphasis upon the use of the active verb, “monopolize,” as the judge noted in the case at bar. What engendered these compunctions is reasonably plain; persons may unwittingly find themselves in possession of a monopoly, automatically so to say: that is, without having intended either to put an end to existing competition, or to prevent competition from arising when none had existed; they may become monopolists by force of accident. Since the Act makes “monopolizing” a crime, as well as a civil wrong, it would be not only unfair, but presumably contrary to the intent of Congress, to include such instances.

Id. at 429-30. (Citations omitted.)

During the oral arguments, the court asked counsel for plaintiffs at what time the Bishop Estate’s ownership became illegal. Counsel answered that the Sherman Act restraints applied when the Bishop Estate chose to put the land in commerce. The Sherman Act, however,, does not regulate the price between- an owner and a buyer. The Sherman Act comes into play when an owner uses the power of his ownership to affect competition. As stated in Griffith, “the use of monopoly power ... to foreclose competition, to gain a competitive advantage, or to destroy a competitor, is unlawful.” Id 334 U.S. at 107, 68 S.Ct. at 945.

The District Court of Hawaii reached the same conclusion in Bailey’s Bakery, 235 F.Supp. at 718, where it was said that “[t]he Sherman Act does not make mere size nor continued exercise of its lawful power an offense when that size and power have been obtained by lawful means and developed by natural growth — absent the manifest purpose or intent to exclude competition.” (Footnote omitted.)

The courts have frequently condemned leasing. In the cases where leasing has been condemned, however, it is clear that the leasing was employed as an anticompetitive device. See Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481, 88 S.Ct. 2224, 20 L.Ed.2d 1231 (1968); Greyhound Computer Corp. v. International Business Machines Corp., 559 F.2d 488 (9th Cir.1977); United States v. Aluminum Co., 148 F.2d 416 (2d Cir.1945); United States v. United Shoe Machinery Corp., 110 F.Supp. 295 (D.Mass.1953), aff’d, 347 U.S. 521, 74 S.Ct. 699, 98 L.Ed. 910 (1954).

In this case there is no evidence from which a jury might find that what the Bishop Estate did was anticompetitive. The plaintiffs contend that people want to buy land for homesites in fee and that leases are less desirable. If the Bishop Estate leased only, then if leases were less desirable, the landowners who wished to sell in fee would have been benefited. If other landowners wished to lease, they were free to do so. In any event, the actions of the Bishop Estate did not in any way infringe on the capacity of other landowners to do as they wished with their own land.

The plaintiffs contend that the following clause in Bishop Estate development contract injured competitors:

DEVELOPER and any organizations controlled by it or any assignees of development rights hereunder shall not directly or indirectly during the term of this agreement without the prior written approval of BISHOP undertake the development of any other land in Central Oahu comprising the ahupuaas from Halawa to Waipio inclusive (except land of the Trustees of the Bernice P. Bishop Museum, land of The Queen’s Hospital at South Halawa and land now owned in fee simple by Oahu) which may interfere with the speedy and orderly subleasing of said land, provided that nothing herein shall prevent DEVELOPER or any organizations controlled by it in the normal course of their business from supplying materials or credit to other persons undertaking the development of such land.

(Emphasis supplied.) There is no evidence, however, that there was any shortage of developers. Apart from that, the contract itself requires no more than that the developer diligently perform his contract and not engage in other development activity which would prevent him from doing so.

Plaintiffs also contend that the Bishop Estate by reason of its power was able to deal with its developers in such a way that the developers made no profits out of the initial sale of a residence but recovered their profit over a period of time out of the rents to be paid. The net result was a low initial cost to the home buyer. Plaintiffs theorize that other landowners had no capacity to make development contracts which would result in such low initial costs, and for that reason other developers could not enter the residential lease market. It is not shown that there were landowners who wanted to but did not enter the residential lease market because of the Bishop Estate’s low initial cost. On a motion for summary judgment after there has been extensive discovery, the plaintiffs must be able to support their theories by showing some evidence on which a fact finding might be based. There is no such evidence here.

A jury might find that the prices charged by the Bishop Estate, bearing in mind the value of the reversion, were exorbitant and that only because of its monopoly was it able to charge such prices. But the ownership of the land carried with it the right to fix the price and as I see it the right to fix the method in which it should be paid, i.e., in cash or in the reversionary value of the land, improved as it would be.

On the facts presented here, a jury could not find the Bishop Estate to be in violation of Section 2 of the Sherman Act nor of Section 480-9 of the Hawaii Revised Statutes.

THE STANDARDIZED LEASE

Plaintiffs urge that the defendants’ actions in connection with the standardization of the lease form was equivalent to price-fixing and was a violation of Section 1 of the Sherman Act and Section 480-4 of the Hawaii Revised Statutes. As previously indicated, the development patterns of the Bishop Estate and the Castle defendants were similar in the general results reached. There was no uniformity in the prices paid or in the terms of the leases, and the details of the leases differed. All leases had to be approved by the FHA for FHA financing. Both defendants had been leasing for about a decade when in 1960 the FHA contacted all of the large landowners in Hawaii relative to the standardization of a lease form. The leases to the plaintiffs here were on forms approved by the FHA in 1963. The correspondence between the FHA and the landowners indicates that it was the FHA which was urging the standardization. The landowners did meet with each other and discuss the clauses in the standardized form of lease. There is no suggestion in any of the evidence that the FHA was seeking to improve the landowners’ position. Rather, it appears that the FHA was on the homeowners’ side and wanted clauses in the standardized form which would favor them. For instance, FHA insisted on the elimination of the consent to assignment clause and was successful. The lease forms used here provide for assignment without the consent of the lessor. It does not appear that the landowners agreed and presented a package to the FHA. Rather the landowners agreed reluctantly to some FHA demands. The evidence does not prove a contract between the Bishop Estate and the Castle defendants; rather it proves an acquiescence in some demands made by the FHA.

However, if it can be said that there was some sort of a contract between the landowners to standardize the lease form and that such was in violation of the antitrust laws, still the problem of damages remains. The standardization of the lease form did not bring about the lease-only policy; rather leasing had been the policy for many years. If the plaintiffs were injured by the standardization, it does not appear here just how. It is true that the plaintiffs’ theoretical power to negotiate was diminished, but, assuming (contrary to all of plaintiffs’ arguments on the monopolization issue) that they had a power to negotiate, they do not point to any clause in the standardized lease that was more onerous than the equivalent clause in previous leases; they do not single out any particular clause in the standard form that was onerous and as to which they would have negotiated; and they do not. show how any damages flowed from their lack of power to negotiate.

On the facts presented here, a jury could not find that the plaintiffs suffered any damage because of the defendants’ consents to the standardized lease form.

THE CONSPIRACY CLAIM

The plaintiffs assert that the Bishop Estate and the Castle defendants violated Section 1 of the Sherman Act and Hawaii Rev.Stat. § 480-4 by agreeing that they would engage in a lease-only policy, thus restricting the sale of residential lots in fee. The defendants deny any combination or conspiracy. The plaintiffs, conceding that there is no direct evidence of the conspiracy, claim that it may be inferred from a conscious parallel behavior of the defendants.

The acts of the defendants were parallel in that they employed the same general scheme in leasing their land. The defendants made master leases to developers. The effects of the leases were that the developers subdivided the lands and built the on- and off-site improvements and sold those improvements to the homeowners. The land was then sublet to the homeowners for a fixed period, with rights of renewal. The defendants required the developers to sell the houses at no profit and to take their compensation over a period of time by sharing the rentals. The details of the development contracts made by the Bishop Estate differed among developers and also differed from those of the Castle defendants. Except as to rent and term, the lease forms used by the defendants for the homeowner lessees were identical after the standardization.

By reason of the business, political, and social relationships of the principals and the trustees, the defendants had an opportunity to discuss their mutual problems; they exchanged information and lease forms; and they presented at times a common front in the political arena in matters affecting land ownership and land usage, such as federal income taxes and the efforts of the Hawaii Legislature to impose restrictions on the leasing of land.

The crucial question is whether the defendants’ conduct toward the plaintiffs stemmed from independent decision or from an agreement, tacit or express. Theatre Enterprises v. Paramount Film Distributing Corp., 346 U.S. 537, 540, 74 S.Ct. 257, 259, 98 L.Ed. 273 (1954). The Court of Appeals for the Ninth Circuit has stated that “[the plaintiff] need not show explicit contractual agreements in order to prove a conspiracy, but it must demonstrate more than that the alleged co-conspirators engaged in a course of conduct, even if conscious of each other’s parallel behavior, in which they would have engaged regardless of the others’ conduct.” Dahl, Inc. v. Roy Cooper Co., 448 F.2d 17, 19 (9th Cir.1971). In Blair Foods, Inc. v. Ranchers Cotton Oil, 610 F.2d 665 (9th Cir.1980), the court stated:

Summary judgment may properly be granted in an antitrust action on an allegation of conspiracy where there are understandable and legitimate business reasons for a defendant’s conduct. We believe that appellees have supplied an entirely plausible and justifiable explanation of their conduct, one consistent with proper business practices. Absent any evidence of an agreement with Glen-Webb, Ranchers’ refusal to deal with Blair does not constitute an antitrust law violation.

Id. at 672. (Citations omitted.)

The defendants’ conduct in leasing rather than selling residential lots was based on business judgment. It was the business judgment of the Bishop Estate that its investment in its own land was the best investment that it could make. The philosophy was expressed in 1963 by Trustee Midkiff in this language:

The value of the Bishop Estate in 1884 was $300,000. The assessed value of 1962 are over 209 million. Holding Mrs. Bishop’s lands since the Trust’s inception 75 years ago has resulted in increasing its value 696 times since 1884. No other type of corpus, securities, etc. can show any such gain.

The record confirms that the judgment of the defendants was in fact sound. The plaintiffs do not deny that the defendants were motivated by profit; rather, in their argument as to monopolization, they vehemently argue that profit was defendants’ motive. The cooperation of the large landowners in agreeing on a lease form is evidence of parallel conduct, but again the landowners wanted to facilitate the financing of their purchase, 90% of which was done through FHA and VA. This constitutes a legitimate business purpose.

It does not appear “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.” Zoslaw v. MCA Distributing Corp., 693 F.2d 870, 884 (9th Cir.1982), cert. denied, 460 U.S. 1085, 103 S.Ct. 1777, 76 L.Ed.2d 349 (1983).

On the facts presented here, a jury could not find that the defendants violated Section 1 of the Sherman Act or Section 480-4 of the Hawaii Revised Statutes.

THE TYING ARRANGEMENT

The plaintiffs assert that the Bishop Estate requirement that the house be built and bought before a sublease was made was in effect a tying arrangement (in violation of Section 1 of the Sherman Act and Hawaii Rev.Stat. §§ 480-4(a) and 480-5) in which the houses were the tying product and the leases were the tied product. The 'argument is that the homeowner in taking the tied product was required to accept the less desirable lease instead of the more desirable fee.

The concepts underlying the rule against tying do not fit this case. A principal difficulty lies in considering the lease of land and the purchase of a house for a residential dwelling as separate products. The Ninth Circuit, in Hirsh v. Martindale-Hubbell, Inc., 674 F.2d 1343, 1347 (9th Cir.), cert. denied, 459 U.S. 973, 103 S.Ct. 305, 74 L.Ed.2d 285 (1982), quoting Fortner Enterprises, Inc. v. United States Steel Corp., 394 U.S. 495, 507, 89 S.Ct. 1252, 1260, 22 L.Ed.2d 495 (1969), said: “ ‘There is, at the outset of every tie-in case, ... the problem of determining whether two separate products are in fact involved.’ ” It may be that there is some kind of a market for houses apart from the land, just as there may be a market for automobile engines apart from the whole motor car, but certainly the adjudicated cases are not based on such unusual divisions of a market. We do not visualize residences apart from the land on which they are located. It is the house and the land on which it is located which constitute the package which the ordinary homeowner considers. In this case the plaintiffs bought the package because they wanted to live in the area, and the houses suited their needs. I think that there was a market for residential houses located on a definite lot and that there were neither separate markets nor separate products.

Assuming that there were separate markets, there is no proof in this case that the Bishop Estate had any dominance in the market for the tying product, i.e., houses. As previously stated, the Bishop Estate did have a monopoly power over its own land. But, as to the tying product, while the Bishop Estate in its development contracts directed that the houses be built and reserved the right to approve the plans, and in effect required the homeowner to take the package, there is nothing to show that the houses were unique, that any builder could not duplicate them, or that there was a lack of builders.

Assuming that the Bishop Estate had some economic power over houses, still it is not shown just how the exercise of that power could affect competitors in the tied product market, i.e., leases of land. Most of the cases in which there has been a finding of an illegal tying arrangement relate the arrangement to a restraint of competition in the market for the tied product. Thus, in Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481, 88 S.Ct. 2224, 20 L.Ed.2d 1231 (1968), a consumer suit, the policy of the defendant was condemned because of the effect that it had on competing manufacturers of shoe machinery. In International Salt Co. v. United States, 332 U.S. 392, 68 S.Ct. 12, 92 L.Ed. 20 (1947), an action by the United States, the focus was on the injury to competitors in the tied product — salt. In Northern Pacific Railway Co. v. United States, 356 U.S. 1, 78 S.Ct. 514, 2 L.Ed.2d 545 (1958), an action by the United States, the tying product was land, and the injury was the restriction of trade in the transportation market. In Times-Picayune Publishing Co. v. United States, 345 U.S. 594, 73 S.Ct. 872, 97 L.Ed. 1277 (1953), where no Sherman Act violation was found, the Court said:

Tying arrangements, we may readily agree, flout the Sherman Act’s policy that competition rule the marts of trade. Basic to the faith that a free economy best promotes the public weal is that goods must stand the cold test of competition; that the public, acting through the market’s impersonal judgment, shall allocate the Nation’s resources and thus direct the course its economic development will take. Yet “[tjying agreements serve hardly any purpose beyond the suppression of competition.” Standard Oil Co. of California v. United States, 337 U.S. 293, 305 [69 S.Ct. 1051, 1058, 93 L.Ed. 1371] (1949).

Id. at 605, 73 S.Ct. at 878 (Footnote omitted.)

In Jefferson Parish Hospital v. Hyde, — U.S. —, 104 S.Ct. 1551, 80 L.Ed.2d 2 (1984) the court said:

It is far too late in the history of our antitrust jurisprudence to question the proposition that certain tying arrangements pose an unacceptable risk of stifling competition and therefore are unreasonable “per se.” The rule was first enunciated in International Salt Co. v. United States, 332 U.S. 392, 396, 68 S.Ct. 12, 15, 92 L.Ed. 20 (1947), and has been endorsed by this Court many times since. The rule also reflects congressional policies underlying the antitrust laws. In enacting § 3 of the Clayton Act, 15 U.S.C. § 14, Congress expressed great concern about the anticompetitive character of tying arrangements.

Id. 104 S.Ct. at 1556-57. (Footnotes omitted.)

I am aware that in United States v. Loew’s Inc., 371 U.S. 38, 83 S.Ct. 97, 9 L.Ed.2d 11 (1962), the Court struck down a tying arrangement that resulted in block-booking. The Supreme Court agreed with the district court finding “that since each defendant by reason of its copyright had a ‘monopolistic’ position as to each tying product, ‘sufficient economic power’ to impose an appreciable restraint on free competition in the tied product was present as demanded by the Northern Pacific decision.” Id. at 48, 83 S.Ct. at 104. Notwithstanding this language, it is not clear to me whether the Court condemned block-booking because of its effect on competition, or whether it considered that the use of monopoly power based on a copyright to require block-booking was an evil in and of itself. Nonetheless I believe that a court, in considering a tying case, should regard the injury to competition in the tied product as a factor. In this case no such injury is proved. As stated in the section of this opinion dealing with the monopolization claim, the fact that one landowner deals with his own land does not prevent any other landowner from dealing with his own land.

On the facts presented here, a jury could not find that there was an unlawful tying arrangement in this case.

UNFAIR TRADE PRACTICES AND UNFAIR METHODS OF COMPETITION

Hawaii Rev.Stat. § 480-2 provides that “[ujnfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are unlawful.” In enacting this statute, the Hawaii Legislature used language similar to that of Section 5(a)(1) of the Federal Trade Commission Act (15 U.S.C. § 45(a)(1)). Hawaii Rev.Stat. § 480-3 provides: “It is the intent of the legislature that in construing section 480-2 the courts will be guided by the interpretations given by the Federal Trade Commission and the federal courts to section 5(a)(1) of the Federal Trade Commission Act.” Section 480-13 provides a private remedy for violations of the Act. The plaintiffs make claims under these statutes.

Unless there is pendant jurisdiction over the claim made under Hawaii Rev. Stat. § 480-2, the court is without jurisdiction. It may well be that, since the court has disposed of the claims made under federal law, there can be no pendant jurisdiction. Thus, in United Mine Workers v. Gibbs, 383 U.S. 715, 726, 86 S.Ct. 1130, 1139, 16 L.Ed.2d 218 (1966), the Court said: “Certainly, if the federal claims are dismissed before trial, even though not insubstantial in a jurisdictional sense, the state claims should be dismissed as well.” (Footnote omitted.) The Court cited Wham-O-Manufacturing Co. v. Paradise Manufacturing Co., 327 F.2d 748, 752-754 (9th Cir.1964), but later decisions of the Court of Appeals for the Ninth Circuit, while approving the dismissal of state claims when the federal claims have been denied prior to trial, seem to make the exercise of pendant jurisdiction discretionary. Schmidt v. Oakland Unified School District, 662 F.2d 550 (9th Cir.1981); Sunbeam Lighting Co. v. Pacific Associated Lighting Inc., 328 F.2d 300 (9th Cir.1964). In any event, I decline to exercise pendant jurisdiction.

There is no judicial economy to be served in view of the court’s disposal of the federal claims.

All of the considerations which persuaded the Supreme Court to abstain in Railroad Commission v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941), are present here. The claims touch a sensitive area of social policy in Hawaii. See Hawaii Housing Authority v. Midkiff — U.S. —, 104 S.Ct. 2321, 81 L.Ed.2d 186 (1984). They also present difficult problems in the interpretation of the law of Hawaii. The path to be followed is not clear. While Hawaii Rev.Stat. § 480-3 states that decisions of the courts and the Fair Trade Commission shall be the guidelines, those decisions are fashioned for a regulatory scheme in which the Federal Trade Commission has both legislative and judicial power. Humphrey’s Executor v. United States, 295 U.S. 602, 55 S.Ct. 869, 79 L.Ed. 1611 (1935). A problem may arise as to the extent that the provisions of Section 480-2 . do incorporate, or should be interpreted by, the provisions of the Hawaii Unfair Practices Act (Hawaii Rev.Stat., ch. 481) and/or the Hawaii Deceptive Trade Practices Act (Hawaii Rev.Stat., ch. 481A). It is necessary to interpret the broad words “unfair methods of competition” and “unfair or deceptive acts or practices.” This task is complicated by the fact that most of the concepts involved in the fair trade world grew out of the market dealings in the trade and commerce of movable property and services, and not out of dealings in land.

To .paraphrase the Supreme Court in Railroad Commission v. Pullman Co., 312 U.S. at 501, 61 S.Ct. at 645, I should refrain from exercising pendant jurisdiction out of regard for the independence of the government of Hawaii;

CONTRACTS OF ADHESION

For the reasons previously stated, I refuse to take pendant jurisdiction of the claims made in plaintiffs’ eighth cause of action.

      . While the third amended complaint charges the Castle defendants with monopoly, there is no evidence of such, and the plaintiffs do not argue that there is. The fourth amended complaint omits the monopoly charges against the Castle defendants.

      . This assumption is correct only if there is considerable judicial stretching of the words used in the statutes. So far as the Sherman Act is concerned, the words "trade or commerce between the several States” would seem to exclude land because land obviously cannot be a part of the trade or commerce between the "several States.” The Hawaii statute forbids the monopolization of trade or commerce in any "commodity." In common parlance the word "commodity” is not used to describe real estate, and the dictionaries, both general and legal, defining "commodity" use the words “personal” and "movable” and do not use the term “real estate.” In Moore v. Jas. H. Matthews & Co., 550 F.2d 1207 (9th Cir.1977), the word "commodity" was held not to include land (cemetery lots). But the Hawaii Legislature defines the word “commodity” to include "any other business." Hawaii Rev.Stat. § 480-1(1). Perhaps leasing land is a business, and while there was no dealing for the business of leasing land, perhaps the definition includes land with which the business dealt.

      . But see footnote 10 in Griffith, where it is said that "mere size is not outlawed by § 2." 334 U.S. at 107, 68 S.Ct. at 945, quoting United States v. United States Steel Corp., 251 U.S. 417, 451, 40 S.Ct. 293, 299, 64 L.Ed. 343 (1920).

      . This clause differs from the clause in the Castie development contract.

      . For the purposes of this theory, the plaintiffs ignore the fact that the Castle defendants’ dealings with developers were very similar to those of the Bishop Estate. In another context, the plaintiffs argue that the similarity of the development contracts was evidence of parallel conduct.
      In Tax Zones 4-2 to 4-6, where both the Castle defendants and the Bishop Estate owned land in the years between 1946 and 1977, the Castle defendants sold 5,376 leaseholds, and the Bishop Estate sold 3,069. Castle was one of the smaller large landowners, having 2.45% of the land on Oahu, while Castle & Cook, Inc. had 11.13% and the James Campbell Estate had 13.20%.

      . Consider a tract of land that has been leased for growing crops and either of necessity or by contract the lessee would have to cut brush, level the land, and perhaps dig ditches. Would the lease be invalid merely because, at the end of the lease, the lessor would get back land which had been improved?

      . United. Mine Workers, 383 U.S. at 726 n. 16, 86 S.Ct. at 1139 n. 16.