Jacobs v. Tempur-Pedic International, Inc.
626 F.3d 1327
| 11th Cir. | 2010Background
- TPX manufactures visco-elastic Tempur-Pedic foam mattresses and sells them through distributors and its own website, comprising 80-90% of such mattresses sold in the United States.
- TPX sets minimum retail prices for distributors and enforces those minimums in its direct sales via its website.
- Jacobs purchased a Tempur-Pedic mattress from a TPX distributor in Rome, Georgia, at a price at or above the minimum.
- Jacobs brought a Sherman Act §1 antitrust action alleging vertical resale price maintenance and horizontal price fixing by TPX and its distributors, seeking treble damages and injunctive relief.
- The district court dismissed the complaint for failure to state a claim; Jacobs moved to alter or amend judgment or amend the complaint; TPX moved for dismissal, and Jacobs appealed.
- The Eleventh Circuit affirmed dismissal, holding the complaint failed to plead a plausible market definition and required anticompetitive effects, and that the horizontal claim was inadequately pleaded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Pleading vertical price maintenance plausibility | Jacobs alleges RPMS by TPX with distributors harm competition. | Allegations are too conclusory and fail to show market harm under rule of reason. | Vertical RPMS pleadings are insufficient; district court correct to dismiss. |
| Pleading horizontal price fixing plausibility | Dual distribution enables horizontal price fixing among TPX and distributors. | No freestanding horizontal agreement; pricing could arise from independent actions and market forces. | Horizontal price fixing claim dismissed; no plausible conspiracy shown. |
| Product market definition sufficiency | Visco-elastic foam mattresses constitute a separate submarket from general mattresses. | Complaint fails to plead a plausible product market with cross-elasticity and substitutes. | Product market allegations legally insufficient; no plausible submarket pled. |
| Harm-to-competition pleading under rule of reason | Alleged pricing restraints harm consumer welfare and interbrand competition. | Allegations are too conclusory and fail to connect power to market-wide harm. | Harm to competition adequately pled; but ultimately insufficient given market definition issues. |
| Post-judgment amendments | Twombly/Leegin postdates complaint; should be allowed to amend. | Rule 59(e) and Rule 15(a) limits apply; district court acted within discretion. | District court did not abuse discretion; no reversible error in post-judgment rulings. |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (plausibility standard for §1 pleadings; no bare conclusions)
- Ashcroft v. Iqbal, 129 S. Ct. 1937 (U.S. 2009) (dismissal standards; not all allegations of law and fact survive)
- Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877 (U.S. 2007) (overruled Dr. Miles; vertical resale price maintenance governed by rule of reason)
- Sylvania Elec. Prods. Co. v. United States, 433 U.S. 36 (U.S. 1977) (vertical restraints and rule of reason framework; pro/con considerations)
- Dr. Miles Med. Co. v. John D. Park & Sons Co., 220 U.S. 373 (U.S. 1911) (per se illegality of vertical resale price maintenance before Leegin)
- Cellophane, Ltd. v. United States, 351 U.S. 377 (U.S. 1956) (submarket/substitutability; market definition factors; substantiation via record)