Ramsey v. National Ass'n of Music Merchants, Inc.
2015 U.S. App. LEXIS 14960
| 9th Cir. | 2015Background
- Guitar Center, the largest US music retailer, and five guitar manufacturers allegedly adopted MAP policies restricting advertising prices 2004–2009.
- NAMM, a trade association, allegedly facilitated and encouraged MAP adoption; FTC later investigated NAMM and reached a consent decree.
- Plaintiffs allege horizontal conspiracy among manufacturers supported by Guitar Center’s pressure, constituting a hub-and-spoke scheme.
- District court dismissed § 1 claim as pleading mere parallel conduct lacking plausible agreement under Twombly; limited discovery was allowed.
- This court reviews de novo: whether the complaint pleads enough nonconclusory facts to infer an agreement, considering plus factors.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether parallel MAP conduct with plus factors pleads a § 1 conspiracy | Plaintiffs claim plus factors make parallel conduct plausible conspiracy | Defendants contend parallel conduct could be independent action in an interdependent market | No; insufficient nonconclusory facts to plausibly infer agreement |
| Role of hub-and-spoke structure and treatment of vertical vs horizontal agreements | Hub-and-spoke demonstrates horizontal manufacturer agreement via rim | Configuration does not prove horizontal agreement unless pleaded with facts | Hub-and-spoke is analyzed as both vertical and horizontal; plaintiffs failed to plead a plausible horizontal agreement |
| Effect of NAMM/NAMM meetings and trade association participation on plausibility | NAMM involvement plus meetings indicate collusion | Trade associations facilitate legitimate information exchange; not evidence of conspiracy | Participation and NAMM activities do not alone reveal an illegal agreement |
| Impact of FTC investigation/consent decree on plausibility of conspiracy | FTC inquiry and consent decree suggest collusion among manufacturers | FTC action under §5 does not prove §1 conspiracy and may be independent of it | FTC actions do not establish a conspiracy under §1; insufficient on their own |
| Do rising prices with falling demand plausibly indicate an illegal agreement | Price increases amid declining sales support conspiracy plausibility | Price trends could result from multiple market factors; not proof of agreement | Raised prices with falling demand are not by themselves enough to plead §1 conspiracy |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (plausibility pleading standard; requires nonconclusory facts)
- United States v. Trenton Potteries Co., 273 U.S. 392 (Supreme Court 1927) (horizontal price fixing per se)
- United States v. Topco Assocs., 405 U.S. 596 (Supreme Court 1972) (horizontal market division per se)
- Nw. Wholesale Stationers, Inc. v. Pac. Stationery & Printing Co., 472 U.S. 284 (Supreme Court 1985) (concerted refusal to deal)
- Broadcast Music, Inc. v. CBS, 441 U.S. 1 (Supreme Court 1979) (horizontal agreements inherently anti-competitive)
- United States v. Socony-Vacuum Oil Co., 310 U.S. 150 (Supreme Court 1940) (per se violations for horizontal agreements)
- Leegin Creative Leather Prods. v. PSKS, Inc., 551 U.S. 877 (Supreme Court 2007) (vertical restraints may be procompetitive under rule of reason)
- In re Citric Acid Litig., 191 F.3d 1090 (9th Cir. 1999) (plus factors used to infer conspiracy; context matters)
- In re Text Messaging Antitrust Litig., 630 F.3d 622 (7th Cir. 2010) (parallel conduct with pricing structure discussions as evidence)
- Dickson v. Microsoft Corp., 309 F.3d 193 (4th Cir. 2002) (rimmed vs rimless hub-and-spoke conspiracies)