Tundra, Inc. v. Faire Wholesale, Inc.
3:23-cv-02513
N.D. Cal.Feb 25, 2025Background
- Tundra, Inc. and Faire Wholesale, Inc. both operate online wholesale marketplaces connecting retailers and brands.
- Tundra claims it offers a commission-free alternative business model, relying on advertising for revenue.
- Tundra brought suit against competitor Faire, alleging anticompetitive practices, including an allegedly perpetual “No Circumvention” clause in Faire's Terms of Service that prevents brands and retailers from transacting outside the Faire platform.
- Prior to this order, the court had already dismissed Tundra’s initial complaint for failing to allege a proper relevant market; the present order considers the sufficiency of the First Amended Complaint.
- Tundra’s claims included monopolization, attempted monopolization, unreasonable restraint of trade, unfair competition under California law, and tortious interference.
- Faire moved to dismiss, arguing failure to allege a relevant market, to show anticompetitive restraint, and that related tort claims were derivative.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Faire’s Terms create unlawful exclusive dealing | The “No Circumvention” clause operates as perpetual exclusive dealing | The Terms are easily terminable by either party, negating substantial foreclosure | For Defendant — Easy terminability defeats exclusivity claim |
| Sufficiency of alleged anticompetitive conduct | Conduct and policies constitute de facto exclusive dealing and threats | No de facto exclusive dealing under Ninth Circuit law; lacks coercive terms | For Defendant — No plausible de facto exclusivity alleged |
| Impact of additional conduct, e.g., threats, full catalog | Threats and catalog requirements supplement anticompetitive behavior | Such actions are contractual enforcement, not independently anticompetitive | For Defendant — Not independently actionable |
| Viability of the tortious interference claim | Asserted interference derives from antitrust conduct | No underlying anticompetitive conduct, so derivative claim fails | For Defendant — Claim dismissed as derivative |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (sets pleading standard for facial plausibility in federal cases)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (articulates plausibility standard for pleading antitrust claims)
- Allied Orthopedic Appliances, Inc. v. Tyco Health Care Grp. LP, 592 F.3d 991 (9th Cir. 2010) (exclusive dealing arrangements must substantially foreclose competition to violate antitrust law)
- Omega Envtl., Inc. v. Gilbarco, Inc., 127 F.3d 1157 (9th Cir. 1997) (easy terminability of exclusive deals usually negates substantial foreclosure)
- Aerotec Int’l, Inc. v. Honeywell Int’l, Inc., 836 F.3d 1171 (9th Cir. 2016) (de facto exclusive dealing only in limited, coercive circumstances)
- State Oil Co. v. Khan, 522 U.S. 3 (1997) (only unreasonable restraints of trade are actionable under Sherman Act)
- Bhan v. NME Hosps., Inc., 929 F.2d 1404 (9th Cir. 1991) (restraints must significantly impair competition to violate Sherman Act)