Heath Consultants, Inc. v. Precision Instruments, Inc.

527 N.W.2d 596, 247 Neb. 267, 1995 Neb. LEXIS 24
CourtNebraska Supreme Court
DecidedJanuary 27, 1995
DocketS-93-412
StatusPublished
Cited by47 cases

This text of 527 N.W.2d 596 (Heath Consultants, Inc. v. Precision Instruments, Inc.) is published on Counsel Stack Legal Research, covering Nebraska Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Heath Consultants, Inc. v. Precision Instruments, Inc., 527 N.W.2d 596, 247 Neb. 267, 1995 Neb. LEXIS 24 (Neb. 1995).

Opinions

Caporale, J.

I.STATEMENT OF CASE

Through its counterclaim, the defendant-appellant, Precision Instruments, Inc., asserts that it has been damaged as the result of the unlawful anticompetitive and monopolistic restraint of trade or commerce practiced by the plaintiff-appellee, Heath Consultants, Inc. Concluding that the record failed to so establish, the district court sustained Heath’s motion for summary judgment and dismissed Precision’s counterclaim. Precision appealed to the Nebraska Court of Appeals, assigning the ruling as error. We, on our own motion, removed the matter to this court in order to regulate the caseloads of the two appellate tribunals. We now reverse the judgment of the district court and remand the cause for further proceedings consistent with this opinion.

II.SCOPE OF REVIEW

Summary judgment is to be granted only when the pleadings, depositions, admissions, stipulations, and affidavits in the record disclose that there is no genuine issue as to any material fact or as to the ultimate inferences that may be drawn from those facts and that the moving party is entitled to judgment as a matter of law. First Nat. Bank in Morrill v. Union Ins. Co., 246 Neb. 636, 522 N.W.2d 168 (1994).

III.FACTS-

Heath is a Delaware corporation in the business of manufacturing, selling, and repairing leak detection equipment primarily used by the utilities industry. It maintains its principal office in Massachusetts, its operations and manufacturing headquarters in Texas, and its repair facilities in California, Massachusetts, Pennsylvania, and Texas. Until sometime in 1989, it also maintained an office in Omaha. The record further establishes that Heath operates in at least a 15-state area extending from the Mexican border to the Canadian border and [270]*270from Hawaii and Alaska to the Missouri River.

Precision is an Iowa corporation in the business of repairing leak detection equipment, maintaining its office in Iowa. Both corporations service customers in Nebraska and have Nebraska customers in common, which include Precision’s two largest accounts.

Precision claims that because Heath is the exclusive manufacturer and distributor of the equipment bearing its name and because it refuses to sell replacement parts for use in repairs to be made by Precision, Precision cannot repair Heath equipment and is thereby damaged.

Precision can replicate some of Heath’s parts by reference to Heath schematics, which Precision has obtained from a variety of sources, and the use of generic components. However, other Heath parts cannot be replicated either because the particular parts are specific to Heath or because the specifications require the use of the manufacturers’ parts. Moreover, a number of parts specific to Heath are not interchangeable with parts made by other manufacturers.

Precision ordered parts from Heath in order to make repairs on three separate occasions. Apparently because of an inadvertent error, Heath sent Precision all the parts requested on the first order. However, Heath sent only some of the parts that Precision requested on its second order and failed to send any of the items that Precision requested on its third order.

Heath advised Precision that it would not supply Precision with parts until the litigation between them was resolved. However, Heath admits that its policy is to sell parts only to end users of its equipment and that the repair service market for Heath equipment is limited because of Heath’s control of the parts.

Nonetheless, Heath contends that several competitors exist which are capable of repairing Heath equipment and that end users of its equipment can obtain parts to repair their own equipment, employ Heath’s repair service, or employ any other repair service.

At times, Precision has been able to obtain Heath parts through end users of Heath equipment. However, on one occasion, Heath failed to fill a parts order for an Iowa end user [271]*271which wanted to avail itself of Precision’s repair service. At least one of the parts could not be duplicated; ultimately, Precision sent the equipment to a Heath repair center. Although the record does not expressly explain Heath’s refusal to send parts to the end user, it does contain a letter in which the end user advised Heath that it elected to employ Precision rather than Heath because Precision had submitted a lower bid.

■A Michigan repair service which has access to Heath parts and advertises the repair of Heath equipment also refused to sell Heath parts to Precision. The repair service indicated, however, that it would repair Heath equipment for Precision.

IV. ANALYSIS

Precision relies on Nebraska’s unlawful restraint of trade act, Neb. Rev. Stat. §§ 59-801 through 59-831 (Reissue 1993). Section 59-801 provides:

Every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce, within this state, is hereby declared to be illegal. Every person who shall make any such contract or engage in any such combination or conspiracy shall be deemed guilty of a Class IV felony.

Section 59-802 reads: “Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce, within this state, shall be deemed guilty of a Class IV felony.”

In addition to imposing criminal penalties, the act provides for the recovery of damages by one injured as the result of forbidden or unlawful conduct. § 59-821.

Precision’s position, in essence, is that although there is no formal written agreement between Heath and its end users requiring the latter to purchase parts and service only from Heath, Heath’s policies nonetheless create such a tying arrangement, which results in the unlawful restraint and monopolization of trade or commerce.

1. Tying Arrangement

Section 59-829 declares: “When any provision of . . . Chapter 59 is the same as or similar to the language of a federal [272]*272antitrust law, the courts of this state in construing . . . any provision of Chapter 59 shall follow the construction given to the federal law by the federal courts.”

Assuming without deciding that this provision raises no distribution of powers issue, the legal reality is that with or without that statutory provision, federal cases interpreting federal legislation which is nearly identical to the Nebraska act constitute persuasive authority. Having rendered no prior decisions concerning tying arrangements, we look to federal law for guidance, at the least.

(a) Existence of Arrangement

A tying arrangement has been defined as an agreement by a party to sell one product, but only on the condition that the buyer also purchase a different, or tied, product, or at least agree that it will not purchase that product from another supplier. Northern Pac. R. Co. v. United States, 356 U.S. 1, 78 S. Ct. 514, 2 L. Ed. 2d 545 (1958). A tying arrangement “ ‘need not be expressly embodied in written contracts. Such arrangements may be deduced from a course of conduct.’ ” Associated Press v.

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Bluebook (online)
527 N.W.2d 596, 247 Neb. 267, 1995 Neb. LEXIS 24, Counsel Stack Legal Research, https://law.counselstack.com/opinion/heath-consultants-inc-v-precision-instruments-inc-neb-1995.