This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat.§ 480A.08, subd. 3 (1996).

STATE OF MINNESOTA

IN COURT OF APPEALS

C8-96-2139

Tremco, Inc.,

Appellant,

vs.

William J. Holman (a/k/a William J. Holman, Jr.), et al.,

Respondents,

B & B Sheetmetal and Roofing, Inc., et al.,

Defendants.

Filed July 29, 1997

Affirmed

Kalitowski, Judge

Carver County District Court

File No. C5941729

John B. Lunseth II, Timothy J. Nolan, William P. Wassweiler, Eric J. Magnuson, Rider, Bennett, Egan & Arundel, LLP, 333 South Seventh Street, Minneapolis, MN 55402 (for Appellant)

Norman J. Baer, Karlyn Vegoe Boraas, Fruth & Anthony, P.A., 3750 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402 (for Respondents)

Considered and decided by Kalitowski, Presiding Judge, Randall, Judge, and Schumacher, Judge.

U N P U B L I S H E D O P I N I O N

KALITOWSKI, Judge

Appellant Tremco, Inc. (Tremco) challenges the district court decisions (1) granting summary judgment on Tremco's antitrust claim, and (2) dismissing Tremco's claims under the Minnesota Unlawful Trade Practices Act, the Minnesota Uniform Deceptive Trade Practices Act, and the Minnesota Consumer Protection Act for failure to state a claim. Tremco also challenges the district court's limitation of the scope of discovery. We affirm.

D E C I S I O N

I.

On appeal from a summary judgment, the reviewing court must determine (1) whether there are genuine issues of material fact, and (2) whether the district court erred in its application of the law. Wartnick v. Moss & Barnett, 490 N.W.2d 108, 112 (Minn. 1992). In doing so, the court views the evidence in the light most favorable to the nonmoving party. State by Beaulieu v. City of Mounds View, 518 N.W.2d 567, 571 (Minn. 1994).

The district court granted summary judgment on Tremco's antitrust claim against Holman and Moore, concluding: (1) Tremco lacked standing; and (2) Tremco failed to raise genuine issues of material fact establishing an antitrust violation.

1. Standing under Minn. Stat. § 325D.57

Minn. Stat. § 325D.57 (1996), which authorizes private damage suits for violations of the state antitrust laws, states:

Any person, any governmental body, or the state of Minnesota or any of its subdivisions or agencies, injured directly or indirectly by a violation of sections 325D.49 to 325D.66, shall recover three times the actual damages sustained, together with costs and disbursements, including reasonable attorneys' fees. In any subsequent action arising from the same conduct, the court may take any steps necessary to avoid duplicative recovery against a defendant.

Tremco claims it has standing to bring an antitrust claim against Holman and Moore under Minn. Stat. § 325D.57 and the district court erred in applying federal and common law to deny Tremco standing. We disagree.

"[M]innesota antitrust law should be interpreted consistently with federal court interpretations of the Sherman Act unless state law is clearly in conflict with federal law." State by Humphrey v. Alpine Air Products, Inc., 490 N.W.2d 888, 894 (Minn. App. 1992), aff'd, 500 N.W.2d 788 (Minn. 1993). In State by Humphrey v. Philip Morris Inc., 551 N.W.2d 490 (Minn. 1996), the Minnesota Supreme Court examined Minn. Stat. § 325D.57 and the federal concept of standing barring indirect purchasers from suing in antitrust, and concluded that it was the intent of the Minnesota legislature to depart from the federal law and allow indirect purchasers to have a cause of action. Id. at 497. In so holding, the supreme court noted Minn. Stat. § 325D.57 allows any person injured directly or indirectly by a violation of the antitrust laws to sue in antitrust. Id.

Contrary to Tremco's argument, the holding in Philip Morris Inc. does not require us to conclude Tremco has standing. To have standing, Tremco must establish: (1) the injury was of a type that the antitrust laws were designed to address; (2) a causal connection between the alleged antitrust violation and the harm Tremco suffered; and (3) a reasonable certainty as to the damages. See McDonald v. Johnson & Johnson, 722 F.2d 1370, 1374 (8th Cir. 1983) (the 8th Circuit court identified six factors in the standing analysis: (1) the causal connection between the alleged antitrust violation and the harm to the plaintiff; (2) improper motive; (3) whether the injury was of a type that Congress sought to redress with the antitrust laws; (4) the directness between the injury and the market restraint; (5) the speculative nature of the damages; and (6) the risk of duplicative recoveries or complex damage apportionment), cert. denied, 469 U.S. 870 (1984).

The threshold inquiry for the standing determination is the plaintiff's alleged injury. Midwest Communications, Inc. v. Minnesota Twins, Inc., 779 F.2d 444, 450 (8th Cir. 1985), cert. denied, 476 U.S. 1163 (1986). A plaintiff must prove that it suffered the type of injury the antitrust laws were designed to prevent. Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S. Ct. 690, 697 (1977). The antitrust laws were intended for the protection of competition, and, therefore, standing is generally limited to consumers and competitors. Associated Gen. Contractors of Cal., Inc. v. California State Council of Carpenters, 459 U.S. 519, 538, 103 S. Ct. 897, 908 (1983).

Tremco alleges the following conduct by Holman and Moore violated Minn. Stat. § 325D.53, subd. 1(2) (1996): (1) Holman and Moore acted as agents for Hickman while providing roofing consulting services to the school districts in 1993, and as such they wrote bidding specifications in favor of contractors who bid Hickman products and allowed the contractors to substitute materials that did not meet the project specifications; and (2) Holman, Moore, the contractors, and Hickman conspired with one another to exclude Tremco products from the school projects.

The district court found that Tremco did not suffer the type of injury the antitrust laws were designed to prevent. We agree. Holman and Moore were roofing consultants to the school districts, and Tremco, as a roofing material manufacturer, was neither a consumer of Holmes's and Moore's services nor a competitor with Holman and Moore on the school projects.

Moreover, the district court found Tremco failed to show the requisite causal connection between the alleged antitrust violations and injuries to Tremco. In a detailed, well-reasoned opinion, the district court found:

The record reflects that in this case, Tremco's asserted injury stems from its failure to sell its products by having one of its contractors obtain the bids for the roofing work at the Anoka, Chaska and Wayzata school districts in 1993. Tremco has not established that its alleged injury is directly related to any alleged actions taken by Holman and Moore. * * * As discovery has demonstrated, Tremco's asserted injury may have been caused by a number of possible factors: (1) Tremco did not have any salesperson assigned to the territory of Anoka, Chaska and Wayzata; (3) Mr. Doner [Tremco salesman] did not call on Anoka, Wayzata or Chaska; (4) Tremco instructed Mr. Doner to shift his focus away from school districts; (5) Tremco's focus was shifting to cold applied products; (6) Tremco did not deal with contractors that were successfully obtaining school district reroofing projects; (8) Tremco's approved contractors did not bid Tremco's materials when making school district bids; and (9) Tremco's approved contractors were not the lowest responsible bidder on any of the school bids.

The record supports the district court's findings. The antitrust laws do not require the defendant's illegal conduct to be the sole cause of any alleged injury; the plaintiff, however, must prove "the defendant's illegal conduct materially contributed to the injury." McClure v. Undersea Industries, Inc., 671 F.2d 1287, 1289 (11th Cir. 1982) (emphasis added) (citation omitted), cert. denied, 460 U.S. 1037 (1983). The record supports the district court's conclusion that Tremco failed to show that Holman's and Moore's alleged illegal conduct was a material cause of Tremco's failure to have its products used on the school projects. Tremco may not recover for losses due to factors other than the alleged antitrust violations by Holman and Moore. See Amerinet, Inc. v. Xerox Corp., 972 F.2d 1483, 1494 (8th Cir. 1992), cert. denied, 506 U.S. 1080 (1993) (a treble-damage plaintiff may not recover for losses due to factors other than the defendant's anticompetitive violations). Further, the district court found Tremco's claimed damages impermissibly called for speculation. As the court in MCI Communications Corp. v. American Tel. & Tel. Co. stated:

When a plaintiff improperly attributes all losses to a defendant's illegal acts, despite the presence of significant other factors, the evidence does not permit a jury to make a reasonable and principled estimate of the amount of damages. This is precisely the type of "speculation or guesswork" not permitted for antitrust jury verdicts. To allow otherwise would force a defendant to pay treble damages for conduct that was determined to be entirely lawful.

708 F.2d 1081, 1162-63 (7th Cir. 1983) (citations omitted), cert. denied, 464 U.S. 891 (1983). To survive summary judgment, an antitrust plaintiff must demonstrate a reasonable basis for determining the damages without undue speculation or guesswork. Amerinet, Inc., 972 F.2d at 1494. Because Tremco's failure to demonstrate that the alleged antitrust violation by Holman and Moore was the material cause of Tremco's losses, the district court did not err in determining the claimed damages were too speculative. Further, Tremco's market share theory does not provide a reasonable basis for calculating damages, because Tremco cannot seek damages for sales on projects its contractors never bid.

Because Tremco failed to demonstrate an antitrust injury, causal connection, and a reasonable basis for determining damages, we conclude the district court did not err in holding that Tremco did not establish standing to maintain an antitrust claim against Holman and Moore under Minn. Stat. § 325D.57. In addition, we reject Tremco's argument that Minn. Stat. § 8.31, subd. 3a (1996), in conjunction with Minn. Stat. § 325D.58 (1996), gives Tremco standing to seek injunctive relief more than a year after the alleged antitrust violations took place.

2. Tremco's failure to establish elements of antitrust claim

Even if Tremco had standing to bring an antitrust claim, Tremco is not entitled to relief because, as the district court properly determined, Tremco failed to raise genuine issues of material fact establishing the elements of its antitrust claim. Tremco's antitrust claim was based on Minn. Stat. § 325D.53, subd. 1(2), which provides:

Subdivision 1. Without limiting section 325D.51, the following shall be deemed to restrain trade or commerce unreasonably and are unlawful:

* * * *

(2) A contract, combination, or conspiracy between two or more persons whereby, in the letting of any public contract, (a) the price quotation of any bid is fixed or controlled, (b) one or more persons refrains from the submission of a bid, or (c) competition is in any other manner restrained.

Under this statute, to establish an antitrust claim a plaintiff must prove: (1) the existence of a contract or conspiracy between two or more persons; (2) causal connection between the conspiracy and the injury; and (3) damages.

The elements of a conspiracy are: (1) a concerted action, (2) specific intent to achieve an unlawful purpose, and (3) commission of an overt act in furtherance of the conspiracy. Prestressed Concrete, Inc. v. Bladholm Bros. Culvert Co., 498 N.W.2d 274, 277 (Minn. App. 1993), review denied (Minn. May 28, 1993). "No formal agreement is necessary to constitute an unlawful conspiracy." Id. Conspiracy may be proven by circumstantial evidence. Monument Builders of Greater Kansas City, Inc. v. American Cemetery Ass'n, 891 F.2d 1473, 1481 (10th Cir. 1989) (citation omitted), cert. denied, 495 U.S. 930 (1990). Although parallel behavior alone does not state a claim of conspiracy,

parallel behavior may support such a claim when augmented by "additional evidence from which an understanding among the parties may be inferred."

Id. (citation omitted).

Citing Monument Builders, Tremco alleges that a conspiracy was established by the fact that "parties on the same level of the conspiracy were conducting themselves in the same manner." Specifically, Tremco claims the following alleged facts show the existence of conspiracy among Holman, Moore, the contractors, and Hickman: (1) three different contractors all diluted materials used on three school projects on which Holman and Moore were the consultants in 1993; (2) Holman and Moore allowed contractors to substitute materials that did not meet the specifications of the projects; (3) both Holman and Moore attended Hickman's national sales conferences and received awards for their high level of sales, and both received compensation from Hickman without disclosure to the school districts; and (4) Holman's 1989 specifications at Moorhead, and Moore's specifications at Westonka in 1991 and 1992, contained the same "Table C" "that used the same performance values for the polymer modified material to be bid."

As stated above, alleged parallel behavior alone, without more, does not support a claim of conspiracy. Id. Based on the evidence presented, the district court found: (1) Holman did not act as a sales agent for Hickman or Jeanco in connection with the 1993 Anoka school district projects, and Holman's consulting fee was paid by the Anoka school district, not Hickman or Jeanco; (2) Moore was an independent sales broker for Hickman, but duly disclosed this relationship to the Wayzata and Chaska school districts; and (3) Holman's project specifications did not require Hickman or Jeanco products. The court then concluded Tremco failed to present any evidence of concerted action or an unlawful agreement among Holman, Moore, the contractors, and Hickman and that Tremco did not establish Holman and Moore had the necessary intent for bid rigging. We agree with the district court's conclusion.

A review of the record indicates: (1) the alleged substitution of materials was approved by the school district and the dilution of materials was for reasons not related to reducing costs; (2) the specifications Holman wrote for the Moorhead district in 1989 contain the same values Hickman products were tested to have, but Moore's 1991 and 1992 specifications for the Westonka school district do not. We conclude the district court did not err in determining there was no conspiracy.

The district court further held Tremco did not present evidence that: (1) the price quotations in bids were fixed or controlled; (2) one or more persons refrained from submitting a bid; or (3) competition was restrained in any other manner with respect to the school projects. The district court based its holding on the following: (1) Tremco contractors did not bid any of the school projects using Tremco materials from 1989 to 1993; (2) the specifications for all the 1993 projects did not call for any particular products, but merely stated the requirements that the roofing materials must meet; and (3) nothing in the specifications and the bidding process precluded a contractor from bidding Tremco products. The district court's findings are supported by the record. Because Tremco failed to raise material facts indicating Holman and Moore violated Minn. Stat. § 325D.53, summary judgment was proper.

II.

In reviewing cases dismissed for failure to state a claim upon which relief can be granted, the only question before the reviewing court is whether the complaint sets forth a legally sufficient claim for relief. Elzie v. Commissioner of Pub. Safety, 298 N.W.2d 29, 32 (Minn. 1980). A pleader is not required to allege facts and every element of a cause of action. Northern States Power Co. v. Franklin, 265 Minn. 391, 395, 122 N.W.2d 26, 29 (1963). A motion to dismiss will not be granted unless "it appears to a certainty that no facts, which could be introduced consistent with the pleading, exist which would support granting the relief demanded." Id. (footnote omitted).

1. Tremco's claim under the Minnesota Unlawful Trade Practices Act

Minn. Stat. § 325D.15 (1996) grants standing to "[a]ny person damaged or who is threatened with loss, damage, or injury by reason of a violation of sections 325D.09 to 325D.16" to sue for damages and injunctive relief. In addition, Minn. Stat. § 8.31, subd. 3a, allows any person injured by a violation of the unlawful trade practices act to sue for damages and equitable relief. Tremco claims standing under both statutes, arguing the district court erred in holding otherwise. We disagree.

Tremco alleges Holman and Moore violated Minn. Stat. § 325D.13 (1996) of the unlawful trade practices act. Minn. Stat. § 325D.13 states:

No person shall, in connection with the sale of merchandise, knowingly misrepresent, directly or indirectly, the true quality, ingredients or origin of such merchandise.

Tremco identifies the following alleged acts to support its claim under the unlawful trade practices act: (1) Holman, Moore, the contractors, and Hickman conspired to substitute products that did not meet the specifications; and (2) Holman and Moore misrepresented to the school districts the nature of their relationship with Hickman while acting as the districts' consultants. Tremco contends the alleged misrepresentations were designed to control the bidding process and limit the materials used on the projects.

The district court determined that Tremco's complaint does not support a conclusion that it was damaged or threatened with loss by any of the alleged acts. We agree. As the district court reasoned, taking Tremco's allegations as true, the only parties that could be injured were the school districts or taxpayers, not a manufacturer that never bid on the school projects. Without establishing injury, Tremco does not have standing to maintain a claim under the unlawful trade practices act. See Byrd v. Independent School Dist. No. 194, 495 N.W.2d 226, 231 (Minn. App. 1993) (stating that "[T]he law requires a party to show injury in fact to establish standing."), review denied (Minn. Apr. 20, 1993). Therefore, the district court correctly dismissed the claim.

2. Tremco's claim under the Minnesota Uniform Deceptive Trade Practices Act

Minn. Stat. § 325D.45 (1996) authorizes "[a] person likely to be damaged by a deceptive trade practice of another" to sue for injunctive relief in addition to remedies available under the common law or other statutes. Tremco alleges in its complaint that Holman and Moore violated Minn. Stat. § 325D.44 (1996). In particular, Tremco alleges Holman and Moore, by allowing contractors to substitute materials that did not meet the specifications,

misrepresented the standard, quality, or grade of the goods, have generally engaged in conduct which creates a likelihood of confusion or misunderstanding for the contracting school districts and the public in general, and have engaged in bait and switch tactics. * * *

We disagree. Tremco did not claim that Holman and Moore's alleged conduct created a likelihood of confusion or misunderstanding for Tremco. Because Tremco is not a party "likely to be damaged by a deceptive trade practice" of Holman and Moore, the district court did not err in concluding that Tremco lacks standing to bring a claim under the uniform deceptive trade practices act.

3. Tremco's claim under the Minnesota Consumer Protection Act

Tremco alleges a claim under Minn. Stat. § 325F.69, subd. 1 (1996) of the Minnesota Consumer Protection Act. Minn. Stat. § 325F.69, subd. 1, provides:

The act, use, or employment by any person of any fraud, false pretense, false promise, misrepresentation, misleading statement or deceptive practice, with the intent that others rely thereon in connection with the sale of any merchandise, whether or not any person has in fact been misled, deceived, or damaged thereby, is enjoinable as provided herein."Merchandise" includes goods and services. Minn. Stat. § 325F.68, subd. 2 (1996). Minn. Stat. § 8.31, subd. 3a, provides that a person injured by a violation of section 325F.69, subdivision 1, may maintain a civil action for damages and equitable relief. The consumer protection act is intended for the protection of consumers by balancing the disproportionate bargaining power present in consumer transactions. Alpine Air Products, 490 N.W.2d at 892.

Tremco alleges it has standing under the consumer protection act based on an alleged loss of business resulting from Holman and Moore's misrepresentation to the school districts concerning their "independent" services. The district court concluded Tremco could not assert a claim under the consumer protection act because it did not allege it was involved in the sale of merchandise between a buyer and a seller. See Cooperman v. R.G. Barry Corp., 775 F. Supp. 1211, 1213 (D.Minn. 1991) (holding a representative of a manufacturer has no standing under the consumer protection act because the alleged fraud did not occur in a sale of merchandise between a seller and a buyer). We agree. To maintain a claim under Minn. Stat. § 325F.69, subd. 1, a plaintiff must allege: (1) a fraudulent act or misrepresentation; (2) intent for others to rely on the misrepresentation; and (3) a connection with the sale of merchandise. Because Tremco did not allege it was a consumer of the services provided by Holman and Moore, Tremco does not have standing to bring a claim under the consumer protection act.

III.

Tremco argues the district court placed impermissible restrictions on discovery. We disagree. District courts have broad discretion in granting or denying discovery requests, and absent an abuse of discretion, the district court will not be reversed on appeal. Pearson v. Henkemeyer, 503 N.W.2d 504, 508 (Minn. App. 1993), review denied (Minn. Sept. 30, 1993). We conclude Tremco did not show an abuse of discretion by the district court in limiting the scope of discovery.

Affirmed.