                                                                     United States Court of Appeals
                                                                              Fifth Circuit
                                                                             F I L E D
                                                                             August 25, 2003
                                     In the
                                                                       Charles R. Fulbruge III
                                                                               Clerk
               United States Court of Appeals
                           for the Fifth Circuit
                               _______________

                                 m 02-50811
                               _______________


                            RONALD CLEVELAND,
                 DOING BUSINESS AS LONE STAR VIDEOTRONICS;
                 PHOENIX-MERCHANT INVESTMENTS INC.,
                        DOING BUSINESS AS 49ER VIDEO;
                       THE BIG PICTURE VIDEO INC.,
         ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED,


                                                    Plaintiffs-Appellants,

                                    VERSUS

                            VIACOM INC., ET AL.,

                                                    Defendants,

                           VIACOM INC.;
 PARAMOUNT HOME VIDEO, INC.; BUENA VISTA HOME ENTERTAINMENT, INC.;
COLUMBIA TRI-STAR HOME VIDEO, INC.; UNIVERSAL STUDIOS HOME VIDEO, INC.;
 TWENTIETH CENTURY FOX HOME ENTERTAINMENT, INC.; BLOCKBUSTER INC.,

                                                    Defendants-Appellees.


                         _________________________

                   Appeal from the United States District Court
                        for the Western District of Texas
                              m SA-99-CA-783-EP
                         _________________________
Before DAVIS, SMITH, and DUHÉ,                            time, neither independent retailers, such as
  Circuit Judges.                                         plaintiffs, nor large chains, such as Block-
                                                          buster, had sufficient copies of “new release”
JERRY E. SMITH, Circuit Judge:*                           titles available (“copy depth”) at the time cus-
                                                          tomer demand was highest. The result was
   Plaintiffs, independent video retailers, sued          customers frustrated by their inability to rent
Blockbuster Inc.(“Blockbuster”), its parent               the movies they most desired to see.
company Viacom Inc.(“Viacom”), and the
home-video affiliates of the seven major Holly-              Until 1997, distributors serving independent
wood movie studios,2 alleging price discrimin-            retailers and large chains such as Blockbuster
ation and antitrust violations. The claims turn           typically purchased tapes from the studios
largely on the studios’ output revenue-sharing            through traditional purchases for a set price or
agreements with Blockbuster, whereby rental               through “cherry pick” revenue sharing, neither
tapes are made available to Blockbuster for a             of which options provided adequate copy
low initial price in exchange for a portion of            depth. Beginning in late 1997, however,
rental revenues and a long-term commitment                Blockbuster entered into long-term output rev-
to purchase all the movies released by each               enue sharing contracts with the studios,3 en-
studio. At the close of the plaintiffs’ case-in-          abling Blockbuster significantly to increase its
chief, the defendants moved for judgment as a             new release copy depth, improving its ability
matter of law (“j.m.l.”), which the district              to provide customers with desired titles.
court granted. We affirm.
                                                              Plaintiffs sued Blockbuster, Viacom, and
                       I.                                 the studio defendants, alleging that Blockbust-
   Plaintiffs Ronald Cleveland, d/b/a Lone Star           er conspired with the studios to deny indepen-
Videotronics, Phoenix-Merchant Investments                dent retailers long-term output revenue-shar-
Inc., d/b/a 49er Video, and The Big Picture               ing agreements functionally equivalent to its
Video Inc., are independent video retailers in            own. On the basis of these allegations, plain-
competition with Blockbuster, a large national            tiffs asserted claims under § 1 of the Sherman
chain. The parties agree that by 1997, the                Act, 15 U.S.C. § 1; the Robinson-Patman Act,
home-video rental market was struggling.                  15. U.S.C. § 13; and parallel California stat-
Under the pricing models prevalent at that                utes.

   *
    Pursuant to 5TH CIR. R. 47.5, the court has de-
termined that this opinion should not be published
                                                             3
and is not precedent except under the limited cir-              Under revenue sharing agreements, studios
cumstances set forth in 5TH CIR. R. 47.5.4.               lease tapes to retailers for lower up-front payments
                                                          in return for a percentage of their revenues. Under
   2
     Defendants Paramount Home Video, Inc.;               “cherry pick” revenue sharing agreements, retailers
Buena Vista Home Entertainment, Inc.; Time War-           are permitted to choose the specific tapes it wanted
ner Entertainment Company, L.P.; Columbia Tri-            to purchase on a title by title basis. “Output” rev-
Star Home Video, Inc., Twentieth Century Fox              enue sharing agreements, by contrast, require the
Home Entertainment, Inc.; and Metro-Goldwyn-              retailer to acquire all titles a studio releases, re-
Mayer Home Entertainment, Inc. (collectively              gardless of box office performance and local mar-
“studios” or“studio defendants”).                         ket considerations.

                                                      2
                         II.                              v. Amer. Ass’n of Orthodontists, 314 F.3d
   We review a j.m.l. de novo. Arguello v.                758, 762 (5th Cir. 2002) (citing Matsushita
Conoco, Inc., 330 F.3d 355, 357 (5th Cir.                 Elec. Indus. Co. v. Zenith Radio Corp., 475
2003). “A j.m.l. is appropriate only where                U.S. 574, 588 (1986)), cert. denied, 123 S. Ct.
‘there is no legally sufficient basis for a reason-       2078 (2003). “Accordingly, evidence of con-
able jury to find for [a] party.’”4 To defeat a           duct that is ‘as consistent with permissible
motion for j.m.l., the nonmovant must point to            competition as with illegal conspiracy’ cannot
a conflict in substantial evidence. Casarez v.            support an inference of conspiracy.” Id. (cit-
Burlington N./Santa Fe Co., 193 F.3d 334,                 ing Matsushita, 475 U.S. at 588).
336 (5th Cir. 1999). Substantial evidence is
evidence “of such quality and weight that rea-                Therefore, in the absence of direct evidence
sonable and fair-minded men in the exercise of            of conspiracy, a plaintiff must introduce cir-
impartial judgment might reach different con-             cumstantial evidence that “tends to exclude the
clusions.” Id.                                            possibility of independent action.” Monsanto
                                                          Co. v. Spray-Rite Service Corp., 465 U.S.
                       A.                                 752, 768 (1984); Viazis, 314 F.3d at 762. At-
   Plaintiffs advance two theories of concerted           tempting to satisfy this standard, plaintiffs in-
action in violation of § 1. First, they allege a          troduced documentary evidence and testimony
horizontal conspiracy among the studios that              concerning defendants’ parallel behavior. Nei-
was orchestrated by Blockbuster. Specifically,            ther, however, tended to exclude the possibil-
they contend that, at Blockbuster’s instigation,          ity of independent conduct.
the studio defendants conspired with each
other to exclude independents from enjoying                                          1.
pricing terms similar to those provided to                    First, plaintiffs rely on evidence demonstrat-
Blockbuster. Second, plaintiffs argue that                ing that Blockbuster planned to increase mar-
Blockbuster’s separate agreements with the in-            ket share by “owning” the new release market.
dividual studio defendants constitute a series            Plaintiffs also point to Blockbuster’s 1998
of vertical conspiracies to exclude independ-             Business Plan, which projected increasing its
ents from enjoying favored pricing arrange-               market share from 25% to 50%, a goal plain-
ments.                                                    tiffs argue is unreasonable absent some sort of
                                                          favorable pricing.
    Plaintiffs rely entirely on circumstantial evi-
dence in support of their claims. In reviewing                Whatever these items of evidence are in-
a j.m.l., we consider all evidence in the light           tended to prove, they cannot support an infer-
most favorable to the nonmovant, Giles v.                 ence of conspiracy. A company can set ambi-
Gen. Elec. Co., 245 F.3d 474, 481 (5th Cir.               tious competitive goals for itself, such as
2001), and draw all inferences from the evi-              “owning” a portion of the market or signifi-
dence in favor of the party opposed to the mo-            cantly increasing its market share, without giv-
tion, id. In antitrust cases, however, “the               ing rise to a presumption that it intends to use
range of permissible inferences is limited by             illegal means to achieve those goals.
particular principles of antitrust law.” Viazis
                                                             Plaintiffs also rely on the statement of a Fox
                                                          vice-president that Blockbuster had requested
   4
       Id. (citing FED. R. CIV. P. 50(a)(1)).

                                                      3
a “special deal” and “did not want [that deal]                                     2.
to be given to independents.” The Fox officer                  Plaintiffs argue that in addition to the pre-
also stated, however, that during the meeting               viously discussed circumstantial evidence, the
at which that statement was made, Fox had                   studios’ parallel conduct gives rise to an infer-
refused to enter into any exclusive deal with               ence of conspiracy. The mere fact that defen-
Blockbuster.5                                               dants followed similar courses of action, how-
                                                            ever, does not support such an inference.
   It is on the basis of this circumstantial evi-
dence that plaintiffs attempt to establish con-                 The complained-of conduct is not the stu-
certed action. There is almost no evidence                  dios’ agreements with Blockbuster per se, but
whatsoever, circumstantial or otherwise, that               rather the alleged refusal of any of the studio
the studios engaged in any direct communica-                defendants to deal with the independents on
tion during their respective negotiations with              similar terms. That conduct constitutes an an-
Blockbuster or that any studio agreed, at                   titrust violation only if it is the result of an
Blockbuster’s request, not to make output rev-              agreement6 rather than of each studio’s inde-
enue-sharing terms available to independents.               pendent business judgment. Consequently,
                                                            plaintiffs must present “significant probative
                                                            evidence” that the studios’ parallel conduct
   5
     Plaintiffs also reference various internal mem-        “was contrary to their economic self-interest
oranda making somewhat similar points. A 1997               so as not to amount to a good-faith business
Fox memorandum described the Blockbuster pro-               judgment.” Royal Drug Co. v. Group Life &
posal as creating a favored revenue share rela-             Health Ins. Co., 737 F.2d 1433, 1437 (5th Cir.
tionship. The mere use of the word “favored” to
                                                            1984).7
describe a proposed business relationship, how-
ever, does not strongly support an inference of con-
spiracy, especially where, as plaintiffs concede,              Plaintiffs support their contention that de-
other large chain retailers eventually arranged simi-       fendants’ conduct was contrary to their eco-
lar deals.                                                  nomic self-interest with conclusional testimony
                                                            from their expert witness. That testimony is
    Plaintiffs also point to two Warner memos that          based in part on the simplistic assumption that
evidenced concern over industry backlash to the
Blockbuster proposal and the possibility that its
terms “[c]ould spur government inquiry into video              6
                                                                 Because plaintiffs allege horizontal and verti-
pricing practices.” Fear of the possible implica-           cal theories of conspiracy, the unlawful agreement
tions of the deal do not support an inference of con-       could be either among the studios generally or be-
spiracy to exclude the independents.                        tween each individual studio and Blockbuster.
                                                               7
    Finally, a Disney memo stated that the company               This is true regardless of whether Blockbuster
hoped to extend the Blockbuster terms to other key          wrongfully requested preferential treatment be-
retailers, but apparently not to independent retail-        cause, even in the face of such requests, a com-
ers. That memo does not imply that the decision             pany’s decision to take actions that are in its own
not to extend the terms to independents was in-             interest cannot support an inference of conspiracy.
fluenced by Blockbuster or another studio. In fact,         See Viazis, 314 F.3d at 764; Matrix Essentials,
none of these memos even indirectly refers to an            Inc. v. Emporium Drug Mart, Inc., 988 F.2d 587,
agreement between the studios or to an unlawful             594 (5th Cir. 1993); Lovett v. Gen. Motors Corp.,
request by Blockbuster to exclude independents.             998 F.2d 575, 579-81 (8th Cir. 1993).

                                                        4
because the studio’s received greater revenues                title-by-title after box office results were
under the terms of their deals with Block-                    known, while Blockbuster was committed to
buster, they likewise would have received                     purchasing a studio’s entire output. More-
greater revenues under similar deals with dis-                over, Blockbuster, unlike the distributors, un-
tributors serving independents. This approach                 dertook long-term obligations under its agree-
ignores significant differences between inde-                 ment with the studios. As a result of the sig-
pendent retailers and large chains such as                    nificant differences among between the terms
Blockbuster. Such speculative and self-serv-                  of the agreements, any disparities in amounts
ing expert testimony is an insufficient basis for             paid cannot support a claim for price discrimi-
plaintiffs’ claims of concerted action.8                      nation.10

                       B.                                                             III.
    To establish price discrimination, plaintiffs                 Plaintiffs appeal the denial of their request
rely on the disparity between the prices plain-               for injunctive relief under 15 U.S.C. § 26,
tiffs’ distributors paid for tapes and the                    which authorizes district courts to provide re-
amounts paid by Blockbuster. The Robinson-                    lief “against threatened loss or damage by a vi-
Patman Act and the California Unfair Trade                    olation of the antitrust laws.” We review a de-
Practices Act, however, prohibit price discrim-               nial of injunctive relief for abuse of discretion.
ination only where customers are otherwise                    Peaches Entm’t Corp. v. Entm’t Repertoire
purchasing on like terms and conditions.9                     Assocs., Inc., 62 F.3d 690, 693 (5th Cir.
                                                              1995). Consequently, we uphold a denial of
   As defendants point out, the transactions at               injunctive relief unless the district court has re-
issue here are not reasonably comparable.                     lied on clearly erroneous factual findings or er-
Most significantly, distributors servicing inde-              roneous conclusions of law. N. Alamo Water
pendents such as plaintiffs could select tapes                Supply Corp. v. City of San Juan, 90 F.3d
                                                              910, 916-17 (5th Cir. 1996).

   8
       See 7-Up Bottling Co. v. Archer Daniels                    Plaintiffs argue that they are entitled to such
Midland Co. (In re Citric Acid Litig.), 191 F.3d              relief even if their substantive claims are reject-
1090, 1106 n.9 (9th Cir. 1999); Aviation Special-             ed, because the relevant statutes do not require
ties, Inc. v. United Techs. Corp., 568 F.2d 1186,             actual injury, but merely threatened harm. The
1192 (5th Cir. 1978) (plaintiff’s assertion that de-          threatened harm, though, must be a result of “a
fendant’s conduct was contrary to its economic in-            violation of the antitrust laws.” 15 U.S.C.
terests held insufficient); id. at 1192 n.10 (pro-            § 26.11 Because plaintiffs have lost on the is-
fitable relationships with distributors insufficient to
show that defendant acted against its interests in
not adding plaintiff as distributor); Cf. Brooke
                                                                 10
Group Ltd. v. Brown & Williamson Tobacco                            Cf. Coastal Fuels, Inc. v. Caribbean, 990
Corp., 509 U.S. 209, 242 (1993) (“When an ex-                 F.2d 25, 27 (1st Cir. 1993) (“[The Robinson-
pert opinion is not supported by sufficient facts to          Patman Act does not] prohibit price differences be-
validate it in the eyes of the law . . . , it cannot          tween spot sales and long-term contract sales that
support a jury’s verdict.”).                                  reflect different market conditions.”).
   9                                                             11
     FTC v. Borden Co., 383 U.S. 637, 643                             Plaintiffs also requested injunctive relief un-
(1966).                                                                                               (continued...)

                                                          5
sue of whether a violation occurred, they are
not entitled to injunctive relief.

   AFFIRMED.




   11
     (...continued)
der parallel California statutes. See CAL. BUS. &
PROF. CODE §§ 16750(a), 17078-80, 17203. Like
their federal counterpart, these statutes authorize
injunctive relief only against violations of the law.

                                                        6
