63 F.4th 813
9th Cir.2023Background
- Fashion Nova, a dominant fast-fashion retailer, threatened clothing vendors that it would stop buying from them unless they ceased selling to Honey Bum, a smaller rival; over 30 vendors complied.
- Honey Bum sued alleging a per se unlawful hub‑and‑spoke group boycott under Sherman Act § 1 and two California business torts: tortious interference with prospective economic relations (TIPER) and tortious interference with contract (TIC).
- The district court granted summary judgment for Fashion Nova, concluding Honey Bum failed to show a horizontal agreement among the vendors (the "spokes") required for a Klor’s‑style per se hub‑and‑spoke claim, and that Honey Bum lacked evidence of independent unlawfulness for its TIPER claim and of valid contracts/intent for TIC.
- Honey Bum did not pursue a Rule‑of‑Reason or Northwest Wholesale theory at summary judgment, did not define a relevant market or market power, and therefore relied on proving a per se hub‑and‑spoke boycott.
- On appeal the Ninth Circuit affirmed: it held a horizontal agreement among the spokes is required for the Klor’s‑style per se rule, found Honey Bum’s direct and circumstantial evidence insufficient, rejected California Bus. & Prof. Code § 16600 as a basis for independent unlawfulness here, and found no triable issue on the TIC elements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Fashion Nova organized a per se unlawful hub‑and‑spoke group boycott under Sherman Act § 1 | Fashion Nova (hub) pressured vendors (spokes) and the spokes agreed among themselves to boycott Honey Bum, so per se Klor’s‑style rule applies | No horizontal agreement among spokes; absent that, only vertical agreements exist and Rule of Reason applies | Affirmed for Fashion Nova: plaintiff failed to raise a genuine dispute that spokes had a horizontal agreement, so per se rule does not apply |
| Whether Honey Bum’s TIPER claim can rest on Sherman Act § 1 or another independent unlawfulness source | Section 1 provides independent unlawfulness; alternatively, § 16600 of California B&P does so | Section 1 claim fails, so it cannot supply independent unlawfulness; § 16600, properly read, is not a per se ban outside noncompete/employer‑employee context and requires Rule‑of‑Reason‑type analysis (which Honey Bum did not develop) | Affirmed: no valid independent unlawfulness shown, so TIPER fails |
| Whether Honey Bum proved tortious interference with contract (TIC) | Honey Bum identified emails/purchase orders showing existing contracts with vendors (e.g., Bear Dance, Viva USA) and evidence Fashion Nova intended to disrupt them | Purchase orders are offers under the UCC, not enforceable contracts until accepted; Bear Dance explicitly canceled the order; no evidence Fashion Nova intentionally induced breach of any existing contract | Affirmed: no triable issue that valid contracts existed and that Fashion Nova intentionally induced breach or disruption of existing contracts |
Key Cases Cited
- Flaa v. Hollywood Foreign Press Ass'n, 55 F.4th 680 (9th Cir. 2022) (explains group‑boycott frameworks and per se/Rule‑of‑Reason distinctions)
- Ohio v. Am. Express Co., 138 S. Ct. 2274 (U.S. 2018) (Rule‑of‑Reason requires fact‑specific assessment of competitive effects)
- Klor’s, Inc. v. Broadway‑Hale Stores, Inc., 359 U.S. 207 (U.S. 1959) (hub‑and‑spoke boycott condemned where spokes enter horizontal agreement)
- Fashion Originators’ Guild of Am. v. FTC, 312 U.S. 457 (U.S. 1941) (per se illegality for competitor boycotts designed to stifle competition)
- NYNEX Corp. v. Discon, Inc., 525 U.S. 128 (U.S. 1998) (per se Klor’s‑style rule requires a horizontal agreement among spokes)
- Nw. Wholesale Stationers, Inc. v. Pac. Stationery & Printing Co., 472 U.S. 284 (U.S. 1985) (modified per se analysis for restraints that cut off access to a necessary supply or facility)
- In re Musical Instruments & Equip. Antitrust Litig., 798 F.3d 1186 (9th Cir. 2015) (explains hub‑and‑spoke structure and necessity of horizontal agreements among spokes)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (U.S. 1986) (parallel conduct alone insufficient; need plus‑factors to infer conspiracy)
- In re Citric Acid Litig., 191 F.3d 1090 (9th Cir. 1999) (distinguishes direct from circumstantial evidence of conspiracy)
- Ixchel Pharma, LLC v. Biogen, Inc., 9 Cal. 5th 1130 (Cal. 2020) (California requires independent unlawfulness for TIPER; § 16600 interpreted as not broadly per se outside employer‑employee noncompetes)