The two parties involved in this case were ski resorts and other businesses doing business in the San Bernardino Mountains of southern California. Both plaintiff and defendant were in the practice of selling affordable "ski packages" to customers. The resort owners in the area formed the Big Bear Lake Lodging Association, and entered into an agreement with the city of Big Bear wherein the city would not tax the resorts, so long as the resorts set aside money for the promotion of the area. Other provisions included reciprocal memberships with each other and that any inquiries to the city’s Chamber of Commerce would be forwarded to the Association. Businesses within the city limits paid 2.5% of their income to the Association as dues. Businesses located outside the city paid only 0.5%. In addition, people favored by the Directors of the Association received preferential treatment in terms of advertising and lodging services. After several members of the Association had their advertisements removed from the marketing associations marketing efforts, they quit the Association.

As the situation escalated, including threats to not honor the discount tickets, and removal of certain businesses from the Association because of alleged referrals to non-members, suit was filed, resting on California’s Cartwright Act and the Federal Sherman Antitrust Act. The district court which first heard the case dismissed plaintiffs’ complaint without leave to amend. The Court of Appeals noted that the district court had stated only that " ‘ [t]his is not an antitrust case, period.’" (See 1101).

The Court of Appeals began its analysis by first addressing the Sherman Act. "Horizontal price-fixing, market division, and certain types of group boycott are unlawful per se." (See id.) For many types of antitrust suits, the "rule of reason" is required. The court will consider all of the relevant circumstances surrounding a plaintiff’s allegations. In order for a plaintiff to have antitrust standing, the plaintiff must have an antitrust injury, or, in other words, an injury that the antitrust laws were designed to prevent.

Plaintiffs’ first dismissed allegation was that of price fixing. The Court of Appeals held that several of the plaintiffs who were able to show an inflated price to purchase lift tickets had an antitrust injury in the form of price fixing. The court also allowed the remaining plaintiffs to amend their complaint, so long as they could allege an injury similar to the inflated prices of the lift tickets. The court noted that it would not be unusual for the plaintiffs to actually benefit from any price-fixing, as they could undercharge the supracompetitive prices. However, if the price-fixing included removal of advertisements and refusal to honor tickets, the competitors had standing to sue on antitrust grounds. The plaintiffs did not allege this in their complaint; instead they attributed such practices to personal relations between themselves and defendants and the defendants and customers. The court also granted plaintiffs leave to amend their complaints to bring the price-fixing conspiracy action on proper grounds.

Next, the Court of Appeals directed their analysis to the agreement to sell tickets to lodge operators only if plaintiffs joined the Resort Association. This mandate, which goes beyond economic, competitive forces, violates the Sherman Act. The court noted that since the lift tickets had been purchased, a violation existed. Since a number of the plaintiffs had already purchased the tickets, the Court held that they did in sustain an injury under the Sherman Act. The court then allowed the remaining plaintiffs leave to amend their complaints to allege the same, if they were able to do so.

The third issue the Court addressed was a group boycott. The Association prohibited members from belonging to any other type of organization/association. In addition, the association would not allow members to refer business to non-members, and also refused to sell the discount lift tickets to non-members. The court held that any plaintiff affected by such a practice had an antitrust injury.

The court then reviewed and dismissed the dues-differential allegation. The Court noted that such practices did not fit within the framework of antitrust laws, and that the plaintiffs did not allege any anticompetitive effects from it.

Plaintiffs’ next allegation centered on monopolization. The court noted that for such a claim to be considered, a geographical and product-market analysis must be undertaken. Also, for a monopolization claim, there must be: 1) intent to monopolize and 2) a dangerous chance for success of an attempted monopolization. Plaintiffs, according to the Court of Appeals, did not sufficiently allege this in the complaint. The court did; however, grant plaintiffs leave to amend.

The court also discussed plaintiffs’ California state law claims (tortious interference claims and unfair competition laws). Although the court acknowledged that plaintiffs’ state law claims were inadequate at the pleading stage, the Court chose to allow plaintiffs the right to amend their complaint.

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