American Banana Co. v. J. Bonafede Co.

407 F. App'x 520
Court of Appeals for the Second Circuit·Decided November 3, 2010·No. No. 09-4561-cv·Published·Cited by 3 cases

Opinion

SUMMARY ORDER

Plaintiffs-Appellants American Banana Co., Inc., Just-A-Mere Trading Company LLC, Meijer, Inc., and Meijer Distribution, Inc. appeal from the September 30, 2009 judgment of the District Court for the Southern District of New York (Berman, J.) granting defendants’ motion to exclude expert testimony and for summary judgment. Plaintiffs also challenge the November 9, 2007 Order of the district court denying plaintiffs’ objections to the magistrate judge’s January 4, 2007 Memorandum and Order denying plaintiffs’ motion under Federal Rule of Civil Procedure 37 to compel production of documents on the basis of the “crime-fraud” exception to the attorney-client privilege. We assume the parties’ familiarity with the facts and procedural history of the case.

Plaintiffs assert claims of monopolization under section 2 of the Sherman Act, 15 U.S.C. § 2, alleging that defendants improperly monopolized the market for fresh, whole, extra-sweet pineapples by (1) sending intentionally false and misleading letters (so-called “threat letters”) to competitors and others giving the impression that the Fresh Del Monte Gold® pineapple, also known as the MD-2 pineapple, was patented by defendants; and (2) engaging in sham patent litigation against Maui Land & Pineapple, Co. (“Maui”) in order to deter competition in the market. Plaintiffs argue principally that the district court erred in granting summary judgment to defendants and in excluding the testimony of plaintiffs’ expert economist and patent-law expert. We review the [522] district court’s summary judgment decision de novo, but we note that “summary judgment is particularly favored [in antitrust cases] because of the concern that protracted litigation will chill pro-competitive market forces.” PepsiCo, Inc. v. Coca-Cola Co., 315 F.3d 101, 104 (2d Cir.2002) (citing Tops Mkts., Inc. v. Quality Mkts., Inc., 142 F.3d 90, 95 (2d Cir.1998)). Therefore, “[although all reasonable inferences will be drawn in favor of the nonmovant, those inferences ‘must be reasonable in light of competing inferences of acceptable conduct.’ ” Id. at 105 (quoting Tops Mkts., 142 F.3d at 95). The exclusion of expert testimony under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), is reviewed for abuse of discretion and will be overturned only if it is “manifestly erroneous.” Amorgianos v. Nat’l R.R. Passenger Corp., 303 F.3d 256, 264-65 (2d Cir.2002) (quoting McCullock v. H.B. Fuller Co., 61 F.3d 1038, 1042 (2d Cir.1995)) (internal quotation marks omitted). The district court is accorded “broad discretion in determining what method is appropriate for evaluating reliability under the circumstances of each case.” Id. at 265.

To succeed on a section 2 monopolization claim, plaintiffs must establish both “(1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.” PepsiCo, Inc., 315 F.3d at 105 (quoting United States v. Grinnell Corp., 384 U.S. 563, 570-71, 86 S.Ct. 1698, 16 L.Ed.2d 778 (1966)). The second element requires “[p]roof of willful intent and unreasonable exclusionary or anticompetitive effects” so that a trier of fact may distinguish “between conduct that defeats a competitor because of efficiency and consumer satisfaction, and conduct that ‘not only (1) tends to impair the opportunities of rivals, but also (2) either does not further competition on the merits or does so in an unnecessarily restrictive way.’ ” Trans Sport, Inc. v. Starter Sportswear, Inc., 964 F.2d 186, 188-89 (2d Cir.1992) (quoting U.S. Football League v. Nat’l Football League, 842 F.2d 1335, 1359 (2d Cir.1988)) (internal quotation marks omitted). Therefore, assuming arguendo that plaintiffs are correct that defendants possessed monopoly power in a market limited to MD-2 pineapples, plaintiffs’ claims nonetheless fail because they cannot show that the threat letters or the alleged sham litigation had the requisite anticompetitive effect of delaying competitors’ entry into this market.

Defendants asserted their patent infringement counterclaim in the litigation with Maui in June 2001. Even assuming that plaintiffs can successfully argue that this counterclaim was a sham — that is, “objectively baseless” such that “no reasonable litigant could realistically expect success on the merits,” Prof'l Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 60, 113 S.Ct. 1920, 123 L.Ed.2d 611 (1993) — the record does not indicate how this litigation involving the CO-2 pineapple, which was commenced after Dole Food Company (“Dole”) had entered the MD-2 market, could have caused anticompetitive effects in a market that was, according to plaintiffs, entirely distinct from the market containing the CO-2 pineapple.

Assessing the effect of the threat letters is slightly more complex. In 1995, Daniel Funk, a former Del Monte Vice President of Research and Development, sent five letters to various Costa Rican laboratories involved in the propagation of MD-2 pineapple seeds. The letters were the same in essentials: they referenced the theft of [523] Del Monte’s MD-2 plant material, stated that Del Monte intended to protect its interests, and then referenced an unrelated patent on the CO-2 pineapple. A copy of one of these letters was apparently forwarded by the laboratory that received it to Dole. The letters are capable on their face of creating the impression that the patent covered the MD-2, but that is not the end of the analysis. Although the record reflects that various competitors were confused, at least initially, as to whether the MD-2 was patented, plaintiffs must also show that this confusion was a “material cause” of delayed or deterred entry into the market. Blue Tree Hotels Inv. (Canada), Ltd. v. Starwood Hotels & Resorts Worldwide, Inc., 369 F.3d 212, 220 (2d Cir.2004).

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American Banana Co. v. J. Bonafede Co., 407 F. App'x 520 (2d Cir. 2010).

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