Case Information
*1 Before LOKEN and BYE, Circuit Judges, and BOGUE, [1] District Judge.
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*2
BYE, Circuit Judge.
Daniel Boone owns and operates Ozark Heartland Electronics, a retail electronics store once affiliated with Radio Shack, America’s largest retail electronics chain. In 1996, Ozark participated in a Radio Shack marketing campaign showcasing a satellite television service produced by Primestar. Radio Shack and Primestar later terminated Ozark’s participation in the marketing campaign, at which point Boone and Ozark sued them for violating the Sherman Act, 15 U.S.C. § 1, and Missouri law. The district court [2] granted summary judgment to Radio Shack and various Primestar partnerships. We affirm.
I
In the early 1990s, Primestar developed technology permitting customers to receive television signals from a small satellite dish at an affordable price. Primestar’s service includes an outdoor satellite dish and table-top receiver, plus satellite programming and regular maintenance. Primestar distributes the satellite television service to consumers through its Partner Affiliate Distributors (PADs). PADs authorize new subscriptions, install equipment, commence programming, bill and collect monthly fees, and bear the costs and expenses incurred in renting Primestar equipment to customers. When customers cancel subscriptions, PADs retrieve and disassemble the Primestar equipment. PADs also have discretion to establish installation fees and monthly prices for the Primestar service within their respective coverage areas.
In the mid 1990s, Primestar turned to Radio Shack seeking to expand its market presence. In February 1996, Radio Shack entered into a Marketing Agreement with Primestar. The agreement provided that Radio Shack and its affiliated stores would *3 promote Primestar’s satellite television service to consumers on behalf of Primestar’s PADs. The agreement authorized participating Radio Shack stores to display the Primestar service, solicit subscribers, answer customer inquiries, and collect from subscribers a prepayment on the local PADs’ installation fee.
When the Marketing Agreement took effect, Ozark had been operating as an independently-owned Radio Shack affiliate for nearly three years. Ozark agreed to participate in the Primestar marketing initiative and began displaying the satellite television service to customers in August 1996. At that time, Primestar had suggested a prepayment fee of $149, which many PADs adopted as their charge. Independent Radio Shack dealers collected the $149 fee from each new subscriber and retained a commission of $100. The dealers remitted the remaining $49 to Radio Shack, which received an additional $50 commission directly from Primestar.
Ozark declined to charge the $149 prepayment rate. Ozark charged customers only $99 because Boone believed he could draw additional business to his store by undercutting competitors’ prices. The PAD who serviced Ozark-generated customers learned of Ozark’s reduced price and complained to Primestar because the Marketing Agreement did not permit Radio Shack dealers to alter the prepayment amount charged to new subscribers. In November 1996, Primestar and Radio Shack ordered Boone to bill new subscribers at the $149 rate, but he refused. Radio Shack then stripped Ozark of its authority to sign new Primestar subscribers in December 1996.
Ozark continued to sell Radio Shack products under the terms of an authorized sales agreement until June 1997. Radio Shack severed its relationship with Ozark at that time because Ozark had not purchased for resale $30,000 in merchandise during the preceding fiscal year, a condition of the sales agreement.
Ozark and Boone sued Radio Shack and several Primestar partnerships in
December 1998. The complaint stated a claim of resale price maintenance, in
*4
violation of the Sherman Act, and claims of breach of contract and tortious
interference with contract under state law. The district court granted the defendants’
motions for summary judgment on each claim. Ozark and Boone now appeal, and we
review de novo the propriety of summary judgment. See Minn. Ass’n of Nurse
Anesthetists v. Unity Hosp.,
II
Ozark argues that Radio Shack and Primestar conspired to fix the price at which Ozark could sell the Primestar satellite television service to consumers. Ozark claims this was resale price maintenance, a per se violation of the Sherman Act.
The Sherman Act imposes liability on manufacturers who fix the minimum
price at which buyers must resell their products. Dr. Miles Med. Co. v. John D. Park
& Sons Co.,
from the Supreme Court’s decisions in Dr. Miles, General Electric and Simpson four
elements of a resale price maintenance claim. “To establish a case of resale price
maintenance by a manufacturer, the antitrust plaintiff must demonstrate that (1) the
manufacturer has contracted, combined, or conspired (2) with a separate economic
entity (3) to set the price at which the products are resold (4) in an independent
commercial transaction with a subsequent purchaser.” Ryko,
element—whether the manufacturer and the antitrust plaintiff were separate economic entities. We held Ryko did not violate the Sherman Act by requiring its distributor, Eden, to resell automatic car-washing equipment to customers at a fixed price because Eden was Ryko’s agent. Id. at 1226; see Pink Supply Corp. v. Hiebert, Inc., 788 F.2d 1313, 1316-18 (8th Cir. 1986) (holding that agents generally are incapable of engaging in antitrust conspiracies with their corporate principals).
In the present case, the district court found instructive Ryko’s detailed
discussion of the “agency defense” to a resale price maintenance claim. Ryko defines
an agent as a party who bears few or none of the economic risks associated with
distributing the manufacturer’s product. Conversely, an independent economic actor
bears most or all of the relevant economic risks. Following Ryko’s mandate, the
district court “examine[d] the various substantive indicia of entrepreneurship and the
allocation of business risks,”
The district court had little difficulty concluding Ozark behaved as an agent—a
mere order-taker for Primestar’s PADs under the terms of the Marketing Agreement.
See Morrison v. Murray Biscuit Co.,
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We largely agree with the district court’s analysis, but we find it more
straightforward to approach this case under Ryko’s fourth element—whether the
antitrust plaintiff engaged in an independent transaction with a subsequent purchaser.
Cf. Hatchett v. Philander Smith Coll.,
The deposition testimony of Pamela Boone, Ozark’s store manager, confirms
the point. With respect to the Primestar service, Ms. Boone acknowledged that Ozark
operated, in effect, a showroom without inventory. Ozark never purchased
Primestar’s satellite equipment, stored or rented such equipment, sought or obtained
permission to provide subscribers the satellite signal or television programming, or
repaired, maintained or installed Primestar equipment or programming. Ozark’s
conduct was comparable to a travel agent, who brokers a transaction between an
airline and a consumer, but “does not purchase a seat for resale and does not hold an
inventory of seats.” Ill. Corp. Travel, Inc. v. Am. Airlines, Inc.,
Ozark distinguishes Ryko because it concerned the sale of goods (automatic
car-washing equipment) rather than services (Primestar programming). Ozark says
it makes sense to define an agency relationship in terms of risk-bearing when a
retailer purchases
goods
from a manufacturer, but not when a retailer purchases
*7
services
. This distinction is beside the point for our purposes because it addresses
Ozark’s argument that it is not an agent (Ryko’s second element), while we hold that
Ozark never resold the Primestar service (Ryko’s fourth element). But we are
inclined to reject Ozark’s distinction in any event. Both goods and services may be
resold, and the rule against resale price maintenance applies equally to both
categories. Cf. Broad. Music, Inc. v. Columbia Broad. Sys., Inc.,
Ozark did not engage in independent commercial transactions with Primestar
subscribers, Ryko,
III
We turn now to Ozark’s claims under Missouri law for breach of contract and tortious interference with contract.
Radio Shack terminated its authorized sales agreement with Ozark in June 1997. The agreement plainly stated Radio Shack could abandon the agreement (following appropriate notice) if Ozark failed to purchase at least $30,000 worth of merchandise for resale during the preceding fiscal year. On appeal, Ozark concedes it failed to meet the purchase requirement during the fiscal year preceding June 1997. Nothing in the authorized sales agreement provides Ozark an exception to the $30,000 purchase requirement based upon economic or other unforeseen difficulties. Ozark was strictly required to meet its purchasing obligation, and, by its own admission, it did not. Ozark’s breach of contract claim therefore fails.
Ozark also contends Primestar induced the breach of the authorized sales agreement with Radio Shack. Ozark says it drew many customers to its store by marketing the Primestar service. When Primestar forbid Ozark from marketing its service, Ozark claims it lost revenue, effectively preventing it from purchasing $30,000 of Radio Shack merchandise during the final year of the parties’ agreement.
The tortious interference claim based on these events fails because Ozark’s
underlying breach of contract claim lacks merit. Missouri law requires a plaintiff to
prove a contract was breached as part of his claim of tortious interference. Rice v.
Hodapp,
IV
We affirm the judgment of the district court in all respects.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
Notes
[1] The Honorable Andrew W. Bogue, United States District Judge for the District of South Dakota, sitting by designation.
[2] The Honorable Scott O. Wright, United States District Judge for the Western District of Missouri.