Antitrust Law Daily Wrap Up, ANTITRUST—9th Cir.: Dismissal of prosthetic knee producer’s restraint of trade and monopoly claims against competitor upheld, (Feb 25, 2014)

By Linda O’Brien, J.D., LL.M.

A producer of prosthetic and orthotic supplies was properly granted summary judgment against a competitor’s restraint of trade and monopolizations claims in relation to the sale of prosthetic microprocessor knee products in the United States market, the U.S. Court of Appeals in San Francisco has ruled (Daw Industries, Inc. v. Hanger Orthopedic Group, Inc., February 24, 2014, Per Curiam).

Daw Industries, Inc., a producer of prosthetic and orthotic supplies, filed suit against Hanger Orthopedic Group, alleging that the company (1) engaged in unfair business practices; (2) committed trade libel; and (3) conspired to restrain trade and monopolize the market in prosthetic microprocessor-controlled knees in the United States in violation of California’s Cartwright Act. A district court granted Hanger’s motion for summary judgment on Daw’s claims, and Daw appealed.

The court found that Daw failed to show that Hanger or its alleged co-conspirators adversely affected competition in the relevant market. To show a claim for conspiracy in restraint of trade under the Cartwright Act, a plaintiff must prove that the conspirators acted in restraint of trade. Daw presented no evidence or expert testimony that Hanger acted pursuant to an anticompetitive conspiracy. In the years of the purported conspiracy, evidence indicated that several new prosthetic microprocessor knee products entered the United States market and competition remained robust, notwithstanding any damages to Daw’s sales, the court noted. Moreover, Daw presented no evidence as to each competitor’s share of the market to show that the alleged conspiracy had a “dangerous probability of obtaining a monopoly.”

Daw also failed to specifically identify any customers or transactions that were lost due to the alleged trade libel. A general decline in business was insufficient to show causation as a result of the falsehood. Finally, Daw’s unfair business practices claim failed since it was premised on the restraint of trade and monopolization claims, the court concluded.

The case is No. 11-56858.

Attorneys: Edward John McIntyre (Solomon Ward Seidenwurm & Smith, LLP) for Daw Industries, Inc. Terry Anastassiou (Ropers, Majeski, Kohn & Bentley) for Hanger Orthopedic Group, Inc.

Companies: Daw Industries, Inc.; Hanger Orthopedic Group, Inc.

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