USA Petroleum Company v. Atlantic Richfield Company

13 F.3d 1276, 94 Cal. Daily Op. Serv. 160, 94 Daily Journal DAR 304, 1994 U.S. App. LEXIS 131, 1994 WL 1944

• Court: Court of Appeals for the Ninth Circuit
• Decided: January 6, 1994
• Docket: 87-5681
• Status: Published

Opinions

ORDER

The Petition for Rehearing is granted. The opinion filed on August 12,1992, is hereby withdrawn and the following opinion substituted in its place. The suggestion for reconsideration en banc is therefore moot.

OPINION

D.W. NELSON, Circuit Judge:

Atlantic Richfield Co. (“ARCO”) is one of the “major” oil companies; USA Petroleum Co. (“USA”) is an “independent” gasoline marketer. USA alleged that ARCO and its dealers conspired to drive USA and other independents out of the retail gasoline market by agreeing to set retail gasoline prices “below market levels” and contends that this vertical agreement to fix maximum resale prices violates section 1 of the Sherman Act, 15 U.S.C. § 1.

USA appealed from the decision of the district court granting summary judgment in favor of defendant ARCO on the antitrust claims. We reversed, holding that USA had standing to challenge ARCO’s alleged vertical maximum resale price maintenance scheme. See USA Petroleum v. Atlantic Richfield Co., 859 F.2d 687, 697 (9th Cir.1988). The Supreme Court in turn reversed the judgment of this court, holding that a competitor does not have standing to challenge such a scheme unless it amounts to “predatory pricing.” Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 339, 110 S.Ct. 1884, 1891, 109 L.Ed.2d 333 (1990). On remand, USA argues that the grant of summary judgment still must be reversed on the alternative ground that the district court wrongly dismissed USA’s Sherman Act section 1 claims. We disagree, and now affirm the judgment of the district court.

I. Factual and Procedural Background

USA filed this antitrust action in 1983, alleging that ARCO had agreed with its independent dealers to set below-market prices in the retail gasoline market in an effort to drive independent producers like USA out of business. USA alleged that ARCO’s conduct violated the antitrust laws in two ways. First, USA asserted that an agreement to set maximum resale prices is illegal per se under section 1 of the Sherman Act. Second, USA alleged that ARCO’s prices were “predatory” and constituted an attempt to monopolize in violation of section 2 of the Sherman Act, 15 U.S.C. § 2. On April 28, 1986, USA voluntarily dismissed its section 2 attempted monopolization claim because it could not show the “dangerous probability of success” necessary to prevail on that claim. USA, however, continued to press its section 1 claim.

On June 30,1986, ARCO moved for partial summary judgment on USA’s section 1 claim. ARCO offered two arguments in support of this motion. First, it argued that USA had no standing to assert the claim, because USA could not suffer antitrust injury from a conspiracy to set maximum prices unless those prices were predatory. Second, ARCO argued that USA could not prove that ARCO’s prices were predatory because USA could not show a dangerous probability of successful monopolization. USA responded to the motion for summary judgment by asserting that it did not need to show antitrust injury or, in the alternative, that predatory pricing under Sherman Act section 1 did not require a dangerous probability of success. The district court granted ARCO’s motion for summary judgment. It held that, “[e]ven assuming that [USA] can establish a vertical conspiracy to maintain low prices, [it] cannot satisfy the ‘antitrust injury¹ requirement of Clayton Act § 4, without showing such prices to be predatory.” The court reasoned that USA could not show that ARCO’s prices were predatory because ARCO did not possess sufficient market power and therefore was unlikely to succeed in monopolizing the market.

We reversed the district court. We held that USA did have standing to challenge a conspiracy to set maximum prices under section 1. See USA Petroleum, 859 F.2d at 689. Because we found antitrust injury based on the per se illegality of a conspiracy to fix maximum resale prices, we did not reach the issue of whether ARCO had engaged in predatory pricing. The Supreme Court in turn reversed. The Court held that “[although a vertical, maximum-price-fixing agreement is unlawful under § 1 of the Sherman Act, it does not cause a competitor antitrust injury unless it results in predatory pricing. Atlantic Richfield, 495 U.S. at 339, 110 S.Ct. at 1891 (emphasis added). The Court then remanded the case to this court for “proceedings consistent with this opinion.” Id. at 346, 110 S.Ct. at 1895.

II. Contentions of the Parties Upon Remand

USA now asserts that because the Supreme Court did not reach the question of whether the prices ARCO charged were predatory, see Atlantic Richfield, 495 U.S. at 333 n. 3, 110 S.Ct. at 1888 n. 3, this court should reexamine the district court’s definition of predatory pricing. Specifically, USA contends that the Court’s recent decision in Brook Group Ltd. v. Brown & Williamson Tobacco Corp., — U.S. -, 113 S.Ct. 2578, 125 L.Ed.2d 168 (1993), establishes that USA must show that ARCO engaged in “below-cost” pricing for which it had a “reasonable prospect ... of recouping” any losses suffered, id at -, 113 S.Ct. at 2588 (quoted in Appellant’s 1993 Supp.Brief at 1, 5). Consequently, USA requests this court to remand the case for further discovery on these two issues.

ARCO, by contrast, asserts that USA abandoned its section 1 predatory pricing claims by failing to present any evidence of predatory pricing in opposition to ARCO’s motion for summary judgment or, in the alternative, failed to contest the district court’s definition of predatory pricing on appeal. ARCO further argues that the Supreme Court’s decision in this case expressly decided that predatory pricing in the section 2 sense is a prerequisite for antitrust injury even if the claim is premised on section 1. Finally, ARCO contends that Brook Group is inapplicable because it only addressed the standard for substantive liability for primary-line price discrimination under Robinson-Patman Act § 2(a) and did not disturb what ARCO views as the Supreme Court’s clear mandate that section 2 predatory pricing standards should control. For these reasons, ARCO asserts that the district court should be affirmed.

Assuming arguendo that USA’s characterization of the appropriate predatory pricing standard is correct, I nonetheless believe that USA would not be entitled to further discovery on the issue of below-cost pricing. Accordingly, the judgment of the district court must be affirmed.

III. Jurisdiction

Initially, we reject ARCO’s various jurisdictional challenges. First, as discussed below, it is clear that USA did not abandon the issue of what constitutes the correct predatory pricing standard in the district court. Rather, the district court rejected USA’s predatory pricing theory on its merits. Second, USA appeared to raise the issue of whether its section 1 predatory pricing standard was the proper one in its first appeal to this court. See Appellant’s 1987 Opening Brief at 31-32 & n. 16. Even if USA did not adequately raise the issue in its opening brief, ARCO thoroughly discussed the question in its own brief, see Appellee’s 1987 Brief at 35-44, which we believe would justify excusing the waiver, see, e.g., United States v. Ullah, 976 F.2d 509, 514 (9th Cir.1992); Eberle v. City of Anaheim, 901 F.2d 814, 818 (9th Cir.1990); International Union of Bricklayers & Allied Craftsman Local Union No. 20, AFL-CIO v. Martin JASKA, Inc., 752 F.2d 1401, 1404 n. 4 (9th Cir.1985). Finally, we reject the notion that the Supreme Court’s decision in this case decided that section 2 predatory pricing standards should control. Noting that we had not reached the question of the proper definition of predatory pricing, the Court stated: “For the purposes of this case, we likewise assume that petitioner’s prices were not predatory in nature,” Atlantic Richfield, 495 U.S. at 333, n. 3 (emphasis added), 110 S.Ct. at 1888 n. 3; moreover, the Court noted that it “had no occasion ... to consider the proper definition of predatory pricing,” id. at 341 n. 10, 110 S.Ct. at 1893 n. 10. Accordingly, the issue of the appropriate predatory pricing standard was adequately preserved to be considered at this stage of the proceedings.

IV. The Summary Judgment Standard

It is an established principle that an appellate court may affirm a lower court’s grant of summary judgment on any basis supported by the record even if the lower court applied the incorrect legal standard. See Henry v. Gill Indus., Inc., 983 F.2d 943, 950 (9th Cir.1993); accord Diaz v. Am. Tel. & Tel., 752 F.2d 1356, 1362 (9th Cir.1985); cf. Helvering v. Gowran, 302 U.S. 238, 245, 58 S.Ct. 154, 157, 82 L.Ed. 224 (1937) (“[T]he rule is settled that if the decision below is correct, it must be affirmed, although the lower court relied upon a wrong ground or gave a wrong reason.”). See generally 10 Charles A. Wright & Arthur R. Miller, Federal Practice & Procedure § 2716, at 658-60 & n. 16 (citing cases) (1983 & Supp.1992).

It is assumed that the district court applied the incorrect predatory pricing standard and that the appropriate one is, as USA contends, that articulated in Brook Group for section 2(a) of the Robinson-Patman Act: below cost pricing coupled with a reasonable prospect of recoupment. However, USA concedes that it. has not yet presented any evidence of below-cost pricing. Because USA contends that it must show below-cost pricing and recoupment,' failure of proof on below-cost pricing alone would provide a basis for affirming the district court. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986).¹ Only the record that was before the district court is normally considered, see Harkins Amusements Enters., Inc. v. General Cinema Corp., 850 F.2d 477, 482 (9th Cir.1988), cert. denied sub nom. United Artists Theatre Circuit, Inc. v. Harkins Amusements Enters., Inc., 488 U.S. 1019, 109 S.Ct. 817, 102 L.Ed.2d 806 (1989), and the summary judgment record cannot be supplemented on appeal, see United States v. Elias, 921 F.2d 870, 874 (9th Cir.1990). Thus, the narrow question that must be addressed is whether USA is entitled to more discovery on below-cost pricing; if it is not, then there is no issue of material fact left to be tried, and the judgment must be affirmed.

The relevant inquiry is whether USA was given a full and fair opportunity to address the issue of below-cost pricing in response to ARCO’s summary judgment motion. See, e.g., 6A Jeremy C. Moore et al., Moore’s Federal Practice ¶ 56.27[1], at 56-858 n. 55 (1993) (“But if a genuine issue of fact exists under the proper legal standard and the appellant has not had a fair opportunity to challenge the facts, summary judgment should not be affirmed.” (emphasis added)); International Union, United Auto., Aerospace & Agric. Implement Workers of Am. v. National Right to Work Legal Defense and Educ. Found., Inc., 590 F.2d 1139, 1151 (D.C.Cir.1978); Heirs of Fruge v. Blood Servs., 506 F.2d 841, 844 n. 2 (5th Cir.1975).² Although recognizing that “in deciding whether summary judgment is proper under the new legal standard, the appellate court must proceed cautiously,” International Union, 590 F.2d at 1151 (citing 10 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure, Civil § 2716, at 439-42 (1973 & 1977 Supp.)), I conclude that USA was afforded a full and fair opportunity to'pursue the issue of below-cost pricing in the district court. Specifically, I believe that USA, in response to ARCO’s summary judgment motion, waived the right to present evidence of below-cost pricing. Moreover, there is no reason why USA should now receive a second bite at the apple. Although in analogous circumstances this court has remanded to the district court to determine whether the party against whom summary judgment might be entered was afforded a “reasonable opportunity” to present its proof, Callahan v. Woods, 736 F.2d 1269, 1275 (9th Cir.1984), the record is clear enough in this case that a remand is not necessary.

Y. Analysis

A.

ARCO moved for partial summary judgment under Rule 56 and for a Rule 16 pretrial order. The purpose of both was to “formulat[e] the litigable issues presented by plaintiff [USA’s] Sherman Act section l.case by ... dismissing USA’s section 1 ease in its entirety as legally insufficient.” Defendant’s Motion for a Pretrial Order at 1; see also Defendant’s Motion for Partial Summary Judgment at 1-2. The motion raised both empirical and legal challenges to USA’s case. The empirical argument was that, unless USA could demonstrate the existence of a genuine issue of material fact concerning dangerous probability of success, summary judgment should be granted. See, e.g., Defendant’s Motion for a Pretrial Order at ISIS. This contention, in turn, necessarily was premised on the theoretical assertion that antitrust injury required demonstrating predatory pricing, and that Sherman Act section 2 standards for predatory pricing standards, which ARCO defined as requiring a “dangerous probability that the defendant(s) may achieve monopoly with the concomitant ability to raise prices in the future,” id. at 17-18, should control. See, e.g. id. Ex. 1 at 39 — 42.

USA’s response • to ARCO’s motion contained two theoretical propositions of its own. The first, rejected by the district court and ultimately by the Supreme Court, was that the harm flowing from per se illegal conduct, here a scheme to engage, in vertical maximum resale price fixing, necessarily constitutes antitrust injury. However, USA also contended that if it needed to demonstrate that ARCO’s prices were “predatory,” the appropriate standard should not be that drawn from Sherman Act section 2, but rather, a very different standard based on Sherman Act section 1.

Specifically, USA asserted that the Supreme Court’s decision in Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986), defined “‘predatory’ under § 1 as below-market pricing, and nothing more.” Plaintiffs Opposition to Defendant’s Motion for a Pretrial Order at 8 [hereinafter USA’s Opposition] (emphasis added). USA based this assertion on the Matsushita Court’s statement that:

There is a good deal of debate, both in the eases and in the law reviews about what ‘cost’ is relevant in [§ 2 predatory pricing] cases. We need not resolve this debate here, because unlike the cases cited above, this is a Sherman Act § 1 case. For the purposes of this case, it is enough to note that respondents have not suffered an antitrust injury unless petitioners conspired to drive respondents out of the relevant market by (i) pricing below the level necessary to sell their products, or (ii) pricing below some appropriate measure of cost.

Matsushita, 475 U.S. at 585 n. 8, 106 S.Ct. at 1355 n. 8 (emphasis added). From USA’s discussion of this passage in its brief I distill two basic points. First, USA clearly believed that demonstrating 'either below-market level pricing or below-cost pricing alone would be sufficient to sustain allegations of predatory pricing in a section 1 vertical maximum price-fixing case. Second, USA only relied on the “below market” pricing branch of the test.³ These very points were reiterated at oral argument:

Mr. Bleeher: We need not resolve this debate [concerning the relevant cost-based test in predatory pricing under Sherman Act § 2] because unlike the cases cited above, this is a ... Sherman Act Section 1 case. In other words, you don’t need, to address the question of cost or what cost is the appropriate measure to use in a Section 1 case, we have a different standard. And what is that standard?

For the purposes of this case, it is enough to note that respondents have not suffered an antitrust injury unless petitioners conspired to drive respondents out of the relevant market by pricing below the level necessary to sell their products.

Now that’s all we need to show, that they were out to drive us out of business or to impair the vigor of our ability to compete- by pricing below the level necessary to sell their products. And [footnote 8 of Matsushita stated] “or, ” or pricing below some appropriate measure of cost. They don’t say that is a prerequisite.

RT 10/14/86 at 20 (emphasis added).

Just as.in its opposition papers, USA asserted that footnote 8 of Matsushita was an accurate statement of the law, but denied that it wished to rely on its below-cost prong.⁴ Moreover, USA’s counsel conceded that it could not meet the predatory pricing standards under section -2 “even by the most liberal standard.” RT 10/14/86 at 19.⁵ With only a section 1 predatory pricing theory-advanced in its brief, and with that theory expressly limited to “below-market pricing,” we cannot take USA’s above statement as anything other than an express abandonment of an acknowledged ability to demonstrate that ARCO’s prices were predatory because they were-below costs.

If any doubts remained, they are resolved by the absence of references to below-cost pricing from USA’s “Statement of Genuine Issues.” Local Rule 7.14.2 required a party opposing summary judgment to submit a “ ‘Statement of Genuine Issues,’ setting forth all material facts as to which it contend[s] there exists a genuine issue necessary to be litigated.” Cent.Dist.CaI.R. 7.14.2 (1986) (emphasis added). USA contended that the only material facts relevant to the case were:

1. Whether ARCO has engaged in a vertical price-fixing conspiracy with ARCO-branded distributors and ARCO-brand-ed dealers to fix prices at artificially low levels?

2. Whether ARCO’s vertical price-fixing conspiracy has caused USA injury and in what amount?

Plaintiffs Statement of Genuine Issues at 1-2. As discussed below, USA argues no waiver can be found because ARCO’s summary judgment motion was limited to the empirical issue of dangerous probability of success. See infra p. 1282. This reasoning implies that Local Rule 7.14.2 only required USA to list those empirical issues that were raised by ARCO’s summary judgment motion and that it wished to contest. However, on this view, because USA conceded that it could not demonstrate dangerous probability of success, it should have listed nothing in its Statement of Genuine Issues; yet, USA listed what amounts to all the elements necessary to its below-market level pricing theory of Sherman Act section 1 predatory pricing.⁶ Thus, the only plausible reading of the Statement of Genuine Issues is that, whatever Local Rule 7.14.2 might actually have required, USA believed that it was required too list all the issues that it wished to contest at trial. Consequently, USA’s failure to list below-cost pricing among them is strong evidence of waiver.

Finally, it should be noted that in its Supplemental Brief responding to ARCO’s submission to the district court of the Supreme Court’s decision in Cargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 104, 107 S.Ct. 484, 93 L.Ed.2d 427 (1986), USA phrased the “critical question” in the case as “whether concerted pricing activities could arguably be legal merely because the prices are not below cost.” Plaintiffs Memorandum Re Cargill at 3 (emphasis added).

The inescapable conclusion based on the above is that, although USA recognized below-cost pricing as an independent available theory of predatory pricing under Sherman Act section 1, it made the tactical decision not to rely on that theory but instead chose to advance only its below-market level predation theory. USA thus had a full and fair opportunity to ventilate its views with respect to below-cost pricing; however, USA chose to remove the issue from the case, and thus waived its right to adduce evidence on the matter.

B.

USA responds to these contentions with two arguments. First, USA asserts that ARCO conceded for the purposes of summary judgment that its prices were set at “predatory levels,” see Appellant’s 1993 Supp.Brief at 5; second, USA contends that ARCO’s “partial” summary judgment motion was premised solely on USA’s inability to demonstrate dangerous probability of success, and therefore, “did not challenge USA’s predatory price-fixing allegations.” Appellant’s 1992 Brief in Response to Appellee’s Pet. for Rehearing and Suggestion for En Banc at 5 (emphasis in original). Because of the limited basis of the summary judgment motion, USA maintains, no waiver based on its nonintroduction of evidence can be found. Both these arguments lack merit.

1.

In moving for summary judgment ARCO conceded only “that USA could prove that Atlantic Richfield set the retail prices of the competing distributors or dealers at levels lower than would have prevailed but for the vertical conspiracy - and that these lower prices caused USA injury.” Defendant’s Motion for a Pretrial Order Ex. 1 at 35 (emphasis added). ARCO, therefore, posited only that it had engaged in a per se illegal maximum resale price-fixing scheme, not below-cost pricing. Moreover, USA raised the argument that ARCO had “assumed that USA could prove that ARCO fixed prices at predatory levels,” Appellant’s 1992 Motion for Clarification at 6 (emphasis added), only following remand of this ease from the Supreme Court. USA cannot now attempt to rewrite history.

2.

Furthermore, USA’s argument with respect to its summary judgment obligation misses the point. It is true, as USA maintains, that USA had no duty under Celotex to adduce specific facts demonstrating below-cost pricing. ARCO’s summary judgment motion, at least with respect to its empirical contentions, was premised on USA’s inability to demonstrate dangerous probability of success. Had USA adduced sufficient evidence of dangerous probability of success to survive summary judgment on that issue, we do not believe the district court could have granted summary judgment based on a lack of evidence of below-cost pricing. However, the dangerous probability of success issue was not the only issue raised by ARCO’s “partial” summary judgment motion.⁷ As discussed above, the motion did put at issue the definition of predatory pricing as this was the essential premise for ARCO’s contention that USA’s failure to demonstrate dangerous probability of success would be fatal. Cf. United States v. Lattauzio, 748 F.2d 559, 561 (10th Cir.1984) (refusing to consider on appeal the question of whether certain debtors were in default when the summary judgment motion, although addressing a different issue, was premised on the notion that the debtors were in default and the nonmoving party did not specifically controvert that assumption). The more limited reading of ARCO’s summary judgment motion now suggested by USA — that it was limited to the empirical issue of dangerous probability of success — is belied by USA’s own conduct. USA challenged both that predatory pricing was necessary and ARCO’s assertion that the section 2 definition was appropriate. Moreover, as discussed above, USA listed two issues in its Statement of Genuine Issues that ARCO had conceded for the purposes of the summary judgment motion, and these two issues were the very facts it believed necessary to sustain its section 1 predatory pricing theory.⁸

With the issue of the appropriate definition of predatory pricing in dispute, USA was required, should it wish to challenge on appeal ARCO’s contention that the section 2 predatory pricing standard applied, to present its contentions concerning the appropriate standard. See Singleton v. Wulff, 428 U.S. 106, 120-21, 96. S.Ct. 2868, 2877, 49 L.Ed.2d 826 (1976). In short, asserting that the section 2 predatory pricing standard applied fulfilled USA’s “initial responsibility of informing the district court of the basis for its motion,” Celotex, 477 U.S. at 323, 106 S.Ct. at 2553 (emphasis added), and thus placed on USA the duty of “argu[ing] that the law was on [USA’s] side regarding the legal theories on which the appellees focused or any other legal theory. ” Edmond v. U.S. Postal Serv. General Counsel, 949 F.2d 415, 430 (D.C.Cir.1991) (Silberman, J., concurring in part and dissenting in part) (emphasis in original).⁹ Without deciding that USA was required to assert every conceivable theory of what the appropriate standard might be on pain of waiver,¹⁰ there is no reason not to hold USA to the contentions that it did make.¹¹ It is a general rule that a party cannot revisit theories that it raises but abandons at summary judgment. See, e.g., Alaska Airlines, Inc. v. United Airlines, Inc., 948 F.2d 536, 546 n. 15 (9th Cir.1991) (“It is well established that an appellate court will not reverse a district court on the basis of a theory that was not raised below.”), cert. denied sub nom. People’s Express, Inc. v. United Airlines, Inc., — U.S. -, 113 S.Ct. 814, 121 L.Ed.2d 686 (1992); Liberies v. County of Cook, 709 F.2d 1122, 1126 (7th Cir.1983) (“It is a well-settled rule that a party opposing a summary judgment motion must inform the trial judge of the reasons, legal or factual, why summary judgment should not be entered. If it does not do so, and loses the motion, it cannot raise such reasons on appeal.” (quoted in Morrison v. Car, 797 F.2d 752, 757 (9th Cir.1986) (Kozin-ski, J., dissenting) (emphasis added)); Vaughner v. Pulito, 804 F.2d 873, 877 n. 2 (5th Cir.1986) (“If a party fails to assert a legal reason why summary judgment should not be granted, that ground is waived and cannot be considered or raised on appeal.”); Edward B. Marks Music Corp. v. Continental Record Co., 222 F.2d 488, 492 (2d Cir.) (“[A] plaintiff in his opposition to a motion for summary judgment cannot abandon an issue and then, after an unpalatable decision by the trial judge ... resurrect the abandoned issue.”), cert. denied, 350 U.S. 861, 76 S.Ct. 101, 100 L.Ed. 764 (1955); see also 10 Wright & Miller, supra, § 2716, at 651-54 (“[On appeal t]he parties cannot ... advance new legal theories or raise new issues in order to secure a reversal of the lower court’s [summary judgment] determination. ” (emphasis added) (footnotes omitted)); Edmond, 949 F.2d at 430-33 (Silberman, J., concurring in part and dissenting in part); cf. Lyons v. Jefferson Bank & Trust, 994 F.2d 716, 721-22 (10th Cir.1993) (collecting waiver cases and noting that waivers have been found when “issues were raised and then abandoned pre-trial”); United States v. Patrin, 575 F.2d 708, 712 (9th Cir.1978) (“It is immaterial whether the issue was not tried in the district court because it was not raised or because it was raised but conceded by the party seeking to revive it on appeal”).

Here, USA contended that below-cost pricing was an available predatory pricing theory but expressly chose not to rely upon it. Having chosen to pursue only its below-market pricing theory, USA cannot now claim that, with respect to below-cost pricing, it lacked a fair and full opportunity to “ventilate the issue[].”¹² Waterbury v. T.G. & Y. Stores Co., 820 F.2d 1479, 1480 (9th Cir.1987) (internal quotations omitted).¹³

C.

The remaining question is whether the asserted change in law wrought by Brook Group should excuse USA’s abandonment of its right to demonstrate below-cost pricing. It should not.

To ask whether USA should be granted discovery on below-cost pricing is . essentially to ask if USA’s “waiver” of its right to demonstrate below-cost pricing should be excused because of changed circumstances. The general rule in such cases is that a waiver will be excused if “a new issue arises while appeal is pending because of a change in the law.” State of Cal. Dep’t of Educ. v. Bennett, 843 F.2d 333, 339 (9th Cir.1988) (emphasis added).

Even if, as USA contends, the “availability” of the particular combination of elements announced by Brook Group was insufficiently clear at the time of the summary judgment motion to render the entire theory “available,” this should not excuse USA’s earlier abandonment of the lesser showing in-volving below-cost pricing. As discussed above, USA contended at summary judgment that either below-market pricing or below-cost pricing alone could constitute “predatory” conduct in the context of a vertical conspiracy to engage in maximum resale price maintenance. Demonstrating below-cost pricing alone is a fortiori less onerous than meeting the Brook Group requirements of showing below-cost pricing with a reasonable prospect of recoupment. Thus, "with respect to below-cost pricing, Brook.Group did not make available a “new” theory, but only added a requirement to a previously available theory that USA had expressly chosen to forgo. Of course, adopting the Brook Group standard would have an equally important second effect: to make clear that above cost below-market level pricing even when coupled with a structural showing such as re-coupment, cannot constitute predatory pricing.¹⁴ Viewed in this manner, Brook Group did not so much as make a new theory available as negate the sole theory upon which USA had previously relied.

Conceptually, this situation does not differ significantly from the case in which a party alleges two different (and clearly established) legal theories, chooses to pursue only one at summary judgment, and then, when the first theory fails on the merits, seeks to revisit the discarded theory. In both cases, the reason .why the first theory failed is irrelevant to whether the complaining party had a full and fair opportunity to support the abandoned theory. With respect to the discarded theory, then, the two situations can be described as functionally equivalent. Accordingly, to grant USA discovery for the purpose of revisiting a theory that it recognized was available but expressly chose not to pursue would appear to countenance precisely the second bite at the apple that ordinarily is not permitted. See, e.g., Image Technical Serv., Inc. v. Eastman Kodak Co., 903 F.2d 612, 615 n. 1 (9th Cir.1990) (finding failure to raise a “rule of reason” theory of illegality in response to summary judgment to have waived it), aff'd, — U.S. -, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992); Lone Star Steel Co. v. United Mine Workers of Am., 851 F.2d 1239, 1243 (10th Cir.1989) (“Ordinarily, a party may not lose on one theory of the ease, and then prevail on appeal on a different theory.”); see also Cooper v. Lane, 969 F.2d 368, 371 (7th Cir.1992) (“We have long refused to consider arguments that were not presented to the district court in response to summary judgment motions.”); Savers Fed. Savs. & Loan Ass’n v. Reetz, 888 F.2d 1497, 1501 (5th Cir.1989) (citing cases); sources cited supra pp. 122-124.

VI. Conclusion

At summary judgment, USA was compelled to respond to ARCO’s contention that predatory pricing in the context of a vertical maximum resale pricing scheme should be judged by the Sherman Act section 2 standard. USA did respond, asserting that both below-cost and below-market pricing theories were applicable, but announcing that it would rely solely upon the latter. Now, in the wake of a new decision suggesting that its initial choice was erroneous, USA seeks to revisit the theory that it previously discarded. Because USA had a full and fair opportunity to preserve that theory, however, this request will not be granted. Therefore, the decision of the district court is AFFIRMED.

1 . The record also does not contain evidence on recoupment. However, because I find that USA had a full and fair opportunity to pursue below-cost pricing in response to ARCO’s summary judgment motion, I do not reach the question of whether discovery on the recoupment issue is warranted.

2 . Similarly, a court of appeals may enter summary judgment sua sponte against a party as, long as that party had a full and fair opportunity to contest the issue. See Fountain v. Filson, 336 U.S. 681, 682-83, 69 S.Ct. 754, 755-56, 93 L.Ed. 971 (1949); Cool Fuel, Inc. v. Connett, 685 F.2d 309, 311-12 (9th Cir.1982); see also Celotex, 477 U.S. at 326, 106 S.Ct. at 2554 (recognizing the practice).

3 .As USA put' it:

The Supreme Court recently established that to recover damages from a price fixing conspiracy, a competitor need only show that the conspiracy fixed prices below the market level.... [In Matsushita ], [t]he Court stated that a competitor suffers antitrust injury in a § 1 case:

[when the defendants conspire to drive ... [the plaintiffs] out of the relevant markets by (i) pricing below the level necessary to sell their products, or (ii) pricing below some appropriate measure of cost.

The court denied "predatory” under § 1 as below-market pricing, and nothing more.

USA's Opposition at 8 (alterations and emphasis in original).

USA expressly stated that it advanced this theory because "ARCO erroneously contend[ed] that 'predatory' pricing under § 1 has the same definition as 'predatory' pricing under § 2,” id. at 8 n. 2, a point it reemphasized at oral argument:

The Court: If there’s no likelihood of obtaining a monopoly ... that means there’s not predatory prices, I suppose, by definition.

Mr. Bleeher: No. That's where you're wrong. Let's start right there. If you say a Section 1 conspiracy has to have the probability of achieving the monopoly, you have equated Section 1 of the Sherman Act with Section 2.

RT 10/14/86 at 11.

4 . The Court later noted the essence of USA’s theory:

The Court: So you say that you have a cause of action if the defendant if ARCO conspired with its dealers to drive you out of a relevant market by pricing below the level necessary to sell their products.

Mr. Bleeher: Yes. And that’s what the charge — that is precisely what the charge is that remains. They fixed the price with their dealers at a level which did not permit us to make profit and to drive us out.

RT 10/14/86 at 22 (emphasis added).

5 . Judge Reinhardt in his dissent, see Dissent at 142 n. 4, mischaracterizes my use of this quotation. I mean only, and precisely, what USA's Counsel stated: that USA had abandoned any theory of predatory pricing premised on § 2.

6 . Thus, I disagree with Judge Reinhardt's discussion of the "Statement of Genuine Issues.” See Dissent at 141 n. 3. I think that the Statement fairly implies that USA at trial intended to show that ARCO’s prices were below market level. This is the only sensible reading of the allegation that ARCO “fix[ed] prices at artificially low levels” (emphasis added) in light of USA's contention at the summary judgment hearing that it only needed to demonstrate below-market pricing, see supra pp. 116-118 & n. 4.

7 . The use of the term "partial summary judgment” should not carry any talismanic significance. See 6A Moore's Federal Practice, supra, ¶ 56.20[3.-0] to [3.-3], at 56-684 to 56-699 (noting the variety of different situations to which the term is applied).

8 . This is not to intimate that uttering the magic words “summary judgment" requires the non-moving party to present evidence and make argument on every conceivable issue relevant to its case. As Judge Easterbrook put it, when a defendant’s summary judgment motion is limited, there is no rule that “requires a party to include all issues in every motion for summary judgment on pain of surrendering the point.” DeMallory v. Cullen, 855 F.2d 442, 451 n. 2 (7th Cir.1988) (Easterbrook, J., dissenting); see also Easterwood v. CSX Transp., Inc., 933 F.2d 1548, 1556 (11th Cir.1991) ("The district court may grant summary judgment on an issue only if a party moves for summary judgment on that issue.”), aff'd on other grounds - U.S. -, 113 S.Ct. 1732, 123 L.Ed.2d 387 (1993); cf. Fed.R.Civ.P. 56(b) (permitting the defendant to move for summary judgment on .their entire claim "or any part thereof”). I only contend that, in this case, ARCO's summary judgment motion fairly put the definition of predatory pricing at issue.

9 .The majority in Edmond did not disagree with Judge Silberman on this point. The court merely concluded that the specific theory they considered on appeal had been implicitly raised by the assertion of a broader theory. See Edmond v. U.S. Postal Serv. General Counsel, 949 F.2d 415, 421-22 (D.C.Cir.1991). Such ambiguity, however, is not present in this case. As discussed above, USA sharply distinguished below-cost from below-market theories of section 1 predatory pricing and made clear that it intended to rely exclusively upon the later.

10 . See infra note 14.

11 . In his dissent. Judge Reinhardt implies that my statement that "USA ... had no duty under Celotex to adduce specific facts. demonstrating below-cost pricing” somehow contradicts my earlier conclusion that "failure of proof on below-cost pricing alone would provide a basis for affirming the district court.” Dissent at 141 n. 2 (quoting supra pp. 121, 113 (emphasis in original)). However, I do not "affirm the district court's grant of summary judgment precisely because USA failed to present such evidence [of below-cost pricing].” Dissent at 141 n. 2 (emphasis added). Rather, I merely conclude that, even if USA was not required to present evidence of below-cost pricing in response to ARCO's summary judgment motion, it waived the right to make such a showing.

12 . Quite beside the point, then, is Judge Reinhardt's contention that "[i]f the district court ultimately concluded that a dangerous probability [of success] was un necessary, both parties understood that USA would have to conduct further discovery on the pricing issue. This would have been true whether the district court ultimately settled on a below-market of a below-cost standard." Dissent at 143 (emphasis in original). In response to ARCO's summary judgment motion, USA was required to advanced its theory of predatory pricing if it wished to challenge ARCO's definition of predatory pricing on appeal. In the process, USA waived any below-cost theory. Thus, any discovery that USA otherwise might have been entitled to had the district court denied summary judgment is irrelevant.

13 .It must be stressed that the question posed here is fundamentally different from the issue posed in Elder v. Holloway, 975 F.2d 1388 (9th Cir.1991), cert. granted, - U.S. -, 113 S.Ct. 3033, 125 L.Ed.2d 721 (1993) (No. 92-8579), which held that the plaintiff's summary judgment burden at summary judgment in a qualified immunity case "includes identifying the universe of relevant statutory or decisional law from which the court can determine whether the right violated was clearly established,” id. at 1393. This case does not involve a party "waiving” its right to cite relevant legal authority to an appellate court, or for that matter, waiving the right to challenge the law applied by the court below. To the contrary, the analysis proceeds on the assumption that the law is precisely what the complaining party contends. The question, rather, is whether more discovery is warranted. As Judge Kozinski wrote in dissent of this court's decision not to hear Elder en banc:

Every issue in every case turns on both fact and law; facts outside a legal framework are as irrelevant as abstract legal principles. When we say, for example, that the plaintiff must prove certain facts at trial, we mean he must first establish what the law is and then conform his proof to the applicable legal standard. If the plaintiff misunderstands the law, he may well prove up the wrong set of facts. The failure to get the law right in such a case may then be fatal, not because law is fact, but because a party can't supplément the record on appeal once it discovers that it missed the legal target in the district court.

Elder v. Holloway, 984 F.2d 991, 993 (9th Cir.1993) (Kozinski, J., dissenting from the order rejecting the suggestion for rehearing en banc).

Of course, it still must be enquired if a “full and fair opportunity” was provided to adduce the relevant facts, and this inquiry, in cases of omission, may well require courts to determine the precise extent to which a party waives available legal arguments by failing to advance them at summary judgment. But that is not this case. When a party asserts at summary judgment that a specific legal theory is available but fails to pursue it adequately, there is no difficulty concluding that such an opportunity has been granted. ‘

14 . USA appears to rely on the Brook Group Court’s statement that:

[A] plaintiff seeking to establish competitive injury resulting from a rival’s lower prices must prove that the prices complained of are below an appropriate measure of its rival's costs_ Although Cargill and Matsushita reserved as a formal matter the question whether recovery should ever be available ... when the pricing in question is above some measure of incremental costs ... the reasoning in both opinions suggests that only below-cost prices should suffice, and we have rejected elsewhere the notion that above-cost prices that are below general market levels or the costs of a firm’s competitors inflict injury to competition cognizable under the antitrust laws. See Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 340, 110 S.Ct. 1884, 1891, 109 L.Ed.2d 333 (1990).

Brook Group,-U.S. at-, 113 S.Ct. at 2588 (second emphasis added) (citations and footnotes omitted). Thus, USA’s reading of Brook Group appears to be that, even if the Supreme Court's opinion in Atlantic Richfield formally declined to revisit the definition of predatory pricing stated in footnote 8 of Matsushita, the Brook Group Court took the Atlantic Richfield Court's reasoning to exclude mere below-market level pricing from the ambit of predatory pricing.