[00:00:04] Speaker 00: The United States Court of Appeals for the Federal Circuit is now open and in session. [00:00:08] Speaker 00: God save the United States and this honorable court. [00:00:16] Speaker 01: Good morning again. [00:00:17] Speaker 01: This is case 19, 1805, Power Analytics Corporation versus Operation Technology. [00:00:31] Speaker 01: Mr. Ruyak. [00:00:34] Speaker 03: Thank you, Your Honor, and may it please the court. [00:00:37] Speaker 03: I'm here on behalf of Power Analytics Corporation. [00:00:41] Speaker 03: We have appealed to reverse errors by the lower court that are very straightforward, but which permeate the entire decision granting the motion to dismiss below. [00:00:51] Speaker 03: The defendants insisted and the court accepted a very clearly erroneous antitrust standard, assessing the complaint overall. [00:01:01] Speaker 03: And that result is the court got wrapped up in demanding [00:01:05] Speaker 03: that we plead factual allegations that are not required in order to assert our antitrust claims. [00:01:12] Speaker 03: In addition, I will address also that the court engaged in some inappropriate fact finding and acceptance of adverse inferences that were suggested by the defendants, which are contrary to law and should not occur at the motion to dismiss stage. [00:01:29] Speaker 01: Let me ask you about the major [00:01:33] Speaker 01: issue. [00:01:33] Speaker 01: You're now arguing that the court should have dealt with it as a refusal to deal rather than exclusive dealing. [00:01:41] Speaker 01: But I looked over your complaint, 85 page complaint, and it was dealing with contracts. [00:01:49] Speaker 01: I'm not sure I may have missed it. [00:01:52] Speaker 01: I'm not sure I saw the words refusal to deal. [00:01:57] Speaker 01: It seems like an exclusive dealing [00:02:01] Speaker 01: complaints, you use language such as restraint of trade and competitive, but really related to the agreement, isn't that correct? [00:02:10] Speaker 03: No, Your Honor, not completely. [00:02:12] Speaker 03: I think if you look at the pleadings, while there were agreements and some of them were at least in some written form, what we're alleging here is that there was an overall conspiracy to restrain trade, part of which was agreements to do certain things and other activities. [00:02:31] Speaker 03: which resulted in the restraint. [00:02:35] Speaker 03: We specifically declined and set in the complaint, and that's in 1418 paragraph 79 and 1455, 197, but this was not a vertical arrangement, an exclusive dealing arrangement between buyers and sellers. [00:02:52] Speaker 03: That's not what we alleged here. [00:02:54] Speaker 03: Was there some attempts at [00:02:56] Speaker 03: Dealing only with certain people, yes, but that's not an exclusive dealing arrangement under the law. [00:03:03] Speaker 03: And even if that were the case, even though that were the case, the things that the plaintiffs, the defendants, allege we need to prove are not true. [00:03:13] Speaker 03: Coercion is not required under any of those standards. [00:03:17] Speaker 05: But more importantly, Your Honor... Mr. Ruriak, I just want a clarification on what you said. [00:03:25] Speaker 05: What you said is consistent with what I understand from your brief. [00:03:28] Speaker 05: For example, at reply brief page four, you say the anti-competitive agreements here, because they are not exclusive dealing arrangements, and you actually italicize that portion, do not implicate those presumed pro-competitive benefits. [00:03:42] Speaker 05: So in your view, this is not, and your complaint has not alleged this case to be an antitrust violation as an exclusive dealing arrangement. [00:03:54] Speaker 05: Is that correct? [00:03:55] Speaker 03: That's correct, Your Honor, particularly in the way that is categorized under the law, which is between a vertical arrangement between buyers and sellers. [00:04:03] Speaker 03: This is a horizontal conspiracy between competitors and those who have control over the market by having dominant position with purchasers. [00:04:14] Speaker 05: So to the extent, let me please follow up, to the extent that we understand certain portions of the district court's opinion to be [00:04:22] Speaker 05: analyzing your claims under an exclusive dealing arrangement exclusively, that isn't relevant to our review and we need not resolve whether or not the court got the exclusive dealing portion of the opinion correct. [00:04:41] Speaker 05: Is that right? [00:04:43] Speaker 03: No, Your Honor, I think it is irrelevant. [00:04:45] Speaker 03: That's right. [00:04:46] Speaker 03: And I think that that should be put aside because in this case, what we've alleged here is a [00:04:51] Speaker 03: I'll say a garden variety, if you will, agreement to restrain trade and exclude competitors by other competitors. [00:04:59] Speaker 03: So it's not vertical. [00:05:00] Speaker 03: It is not a case. [00:05:01] Speaker 03: And the court, unfortunately, got off on the exclusive dealing. [00:05:06] Speaker 04: When you say, counsel, when you say unfortunately got off on that topic, isn't that because that's all you argued below until the final hearing? [00:05:16] Speaker 03: No, your honor, it's not. [00:05:17] Speaker 03: I think the confusion is we repeatedly told the court in the second and third of many complaints that this was not a vertical agreement. [00:05:26] Speaker 03: There, use the word exclusivity happens all the time because you're excluding people. [00:05:31] Speaker 03: In this particular case, there are a number of things that happened. [00:05:34] Speaker 03: And I think that's important to understand that are pled. [00:05:37] Speaker 03: Uh, it's not just, uh, you know, uh, uh, some kind of exclusivity. [00:05:43] Speaker 03: There was, in fact, refusals to participate or deal with the plaintiff. [00:05:48] Speaker 03: There was also use of a dominant position in all those cases to impose unreasonable restrictions on customer choice. [00:05:56] Speaker 03: You know, we can only use your software if not blocking market access. [00:06:00] Speaker 04: Counsel, I don't think you've answered my question. [00:06:02] Speaker 04: I'm sorry. [00:06:04] Speaker 04: Putting aside what the complaint might theoretically support, [00:06:09] Speaker 04: Did you ever argue to the district court before that final hearing that your theory, that your legal theory under the antitrust laws was refusal to deal as opposed to an exclusive dealing arrangement? [00:06:24] Speaker 03: We argued repeatedly that it was not exclusive dealing, and there were multiple issues here, one of which was refusal to deal, which we put in the complaint. [00:06:34] Speaker 03: We said that there was refusals to deal. [00:06:36] Speaker 04: But we didn't care... Where did you argue in your briefs that you were not pursuing an exclusive dealing arrangement and that you were only pursuing a refusal to deal claim? [00:06:48] Speaker 03: Well, we didn't argue it that way, Your Honor, because we don't need to. [00:06:54] Speaker 03: What we said, we specifically said, and I'd say a paragraph right in the complaint, it's paragraphs 14, 18, 79 and 14, 55, 197. [00:07:02] Speaker 03: We particularly said, and I can read it to you, [00:07:05] Speaker 03: that the anti-competitive agreement alleged here is not a vertical agreement with a buyer and seller or a manufacturer and retailer, but instead agreement between two sellers of independent but necessarily interconnected products to foreclose and exclude existing and potential competitors from providing products in the market. [00:07:24] Speaker 03: That's the one agreement, and we do the same thing in the other. [00:07:27] Speaker 05: It's not between buyers. [00:07:28] Speaker 05: Council, the difficult thing for me is that in the, [00:07:34] Speaker 05: hearing on the third amended complaint after you were given multiple attempts to amend, counsel for your client stood up and said, so what, this is where in giving this thought over the past couple of months, these agreements function as refusals to deal. [00:07:52] Speaker 05: These are refusals to deal. [00:07:54] Speaker 05: This is the very first time these words, as far as I can tell, were uttered by your party. [00:08:01] Speaker 05: and opposing counsel said that we've gone through four complaints and three amendments and we've never before heard that this claim is actually a refusal to deal and then they said but i want to echo the point if you're going inclined to consider plaintiff's counsel's new refusal to deal argument which hasn't been briefed we would ask for additional briefing here because that is new to us and that was the nature of the hearing and then in the district court opinion [00:08:29] Speaker 05: The district court said and found that you had waived as not raising this issue. [00:08:35] Speaker 05: And he dismissed without prejudice, which allowed you the opportunity to amend your complaint for the fourth time. [00:08:44] Speaker 05: And you could have simply added this allegation. [00:08:47] Speaker 05: Why are you wasting our time with this appeal? [00:08:51] Speaker 05: Why did you not pursue the district court's express invitation to refile? [00:08:57] Speaker 03: Your honor, there's nothing more that we could allege. [00:09:00] Speaker 03: we had alleged everything in in opposition motion dismissed if you look at uh... page appendix uh... nineteen lines eleven to twenty one uh... and appendix nineteen thirty two lines nine to twelve and twenty two to twenty five but specifically say that they were refusing to deal with us but that's not the characterization of the entire agreement it's only a portion of it and and we don't have to put labels as a plaintiff in a motion [00:09:30] Speaker 03: on a motion dismissed and looking at a complaint, you need not put labels on that. [00:09:35] Speaker 03: We had nothing else that we could really allege in this case. [00:09:41] Speaker 03: We alleged everything. [00:09:42] Speaker 03: We alleged all of the activities. [00:09:43] Speaker 04: But counsel, when you say you don't need to put labels on it, you may not need to put labels on it in the complaint itself. [00:09:51] Speaker 04: But once you start making arguments to the court, the court doesn't have an obligation to look for legal theories. [00:10:00] Speaker 04: if you recite if you argue a particular legal theory and you pursue that throughout all of the briefing every time you respond to a motion to dismiss then the court has has the right to say i'm not gonna except a brand new theory at the last minute well your honor i i would i would beg to disagree a little bit i think that we've tried repeatedly convinced the court that this was not a vertical vertical [00:10:29] Speaker 03: However you label it, it was not a vertical agreement. [00:10:33] Speaker 04: But the vertical horizontal doesn't do much for you because even there are horizontal relationships that could constitute exclusive dealing arrangements. [00:10:44] Speaker 03: Yes, Your Honor, but only in the vertical arrangements. [00:10:47] Speaker 03: Only in the vertical arrangements are the things that the court found we lacked. [00:10:50] Speaker 03: Lacked coercion, lacked some kind of a binding agreement over time. [00:10:54] Speaker 03: Those are critical only in the case of a vertical arrangement. [00:10:58] Speaker 03: This was never played vertically. [00:11:00] Speaker 03: We repeatedly said that we didn't want to put a label on it because it is a combination of things. [00:11:05] Speaker 03: There were multiple things that were done here. [00:11:08] Speaker 03: The case that I would refer the court to is Columbia medical versus Kaiser and Lumen is the base antitrust case that we pled. [00:11:14] Speaker 03: And what it says there is when you have an independent competitor in an oligopolistic market like this, few competitors, that limits the power of the dominant firms. [00:11:24] Speaker 03: If they're excluded, [00:11:25] Speaker 03: And when such an exclusion is constantly brought about by concerted action, which we had here, no one complains, no one says there wasn't an agreement in which a dominant entity is a party than a reasonable restrained trade is found. [00:11:39] Speaker 01: And I think that's the basis. [00:11:40] Speaker 01: Counsel, you're well into your rebuttal time. [00:11:43] Speaker 01: Why don't we hear from the other side and we'll give you your five minutes for rebuttal. [00:11:48] Speaker 01: Thank you, your honor. [00:11:49] Speaker 01: Mr. Stockinger. [00:11:50] Speaker 02: Thank you, your honor. [00:11:53] Speaker 02: May it please the court? [00:11:54] Speaker 01: Take a minute and proceed with your argument. [00:11:58] Speaker 02: Certainly, Your Honor. [00:12:01] Speaker 02: I will focus then on the one issue that this court has been focused on, which I think is the crux, that this decision can be affirmed on the waiver alone. [00:12:13] Speaker 02: Now, counsel, I think this court is correct as pointing out that [00:12:18] Speaker 02: Power Analytics raised this issue for the first time that the oral argument was given an opportunity to reallege and to brief the issue, did not take it and appealed. [00:12:28] Speaker 02: Having done that, it cannot raise the issue again. [00:12:30] Speaker 02: That said, Mr. Ryak has said repeatedly that it was the defendants that were insisting on this theory [00:12:41] Speaker 02: and has said that the refusal to deal theory is somehow different and therefore there are allegations and factual allegations that do not need to be alleged that the district court found did need to be alleged. [00:12:55] Speaker 02: I'd like to draw this court's attention, however, to the reply brief filed by Power Analytics at page 6. [00:13:06] Speaker 02: There, they argue, on page six and seven repeatedly, but I'll just quote from page six, that the refusal to deal theory, quote, did not alter the theory of recovery one iota, end quote. [00:13:20] Speaker 02: And this is an argument to try to get out. [00:13:23] Speaker 04: But, Council, let me ask you, isn't it true that factual allegations in a complaint could theoretically support two different antitrust theories? [00:13:38] Speaker 02: Your Honor, that is correct. [00:13:40] Speaker 02: They theoretically could. [00:13:42] Speaker 02: But as was pointed out by the court in questioning, the counsel needs to provide those theories to the court, and it did not do so here. [00:13:54] Speaker 01: Counsel, a real question here is whether the case should have been decided under 12b6. [00:14:01] Speaker 01: This is a complicated factual situation, and I see [00:14:08] Speaker 01: assertions of 76%, 97% market share, which sounds fairly dominant. [00:14:15] Speaker 01: And so why weren't there questions about the extent to which other options were open? [00:14:25] Speaker 02: So, Your Honor, if I could point this court to Trinko, the court has made clear that the mere possession of monopoly power is not actionable. [00:14:35] Speaker 02: So what we need to look for here is an agreement. [00:14:39] Speaker 01: Is it not relevant to exclusive dealing? [00:14:44] Speaker 02: Your Honor, it's relevant. [00:14:45] Speaker 02: But what the exclusive dealing case law makes clear is that there needs to be some forcing and foreclosure. [00:14:52] Speaker 02: And that was the point I wanted to make, which is that if power analytics believes that the exclusive dealing case law [00:15:00] Speaker 02: and the refusal to deal case law and its theories are the same, then the same elements of requiring coercion or some long-term agreement that is difficult to terminate is necessary here. [00:15:14] Speaker 02: I will point out that at the opening brief at page 44, Power Analytics seems to take that position by arguing that the court should look at exclusive dealing case law on foreclosure [00:15:28] Speaker 02: even when assessing the refusal to deal. [00:15:30] Speaker 02: And what that case law makes clear is that you need to assess the relative market strength of the parties to see whether there's some forcing here. [00:15:42] Speaker 02: If you look at ZF Meritor, if you look at Ben Skly, if you look at 3M, the exclusive dealing case law, they all turn on the sort of foreclosure forcing that is necessary and found in those contracts. [00:15:56] Speaker 02: And that was pretty well summarized in the Ninth Circuit Aerotech decision. [00:16:01] Speaker 02: Now, why is that necessary? [00:16:04] Speaker 02: Because without that type of binding that happens, these look like just contracts that are found in the competitive market. [00:16:15] Speaker 02: They don't have additional anti-competitive exclusionary effects [00:16:21] Speaker 02: And so if we look here, for example, at the Schneider ETAF agreement, the agreement is simply alleged in paragraph 204 to be one in which, and that's found at volume two, appendix 1546, is alleged to be one in which Schneider is purchasing an ETAF suite of power system software for use within the company's engineering services business. [00:16:51] Speaker 02: Now that's a contract that is, as Aerotech Decision would say, is a contract simplicitaire, which is not illegal. [00:16:59] Speaker 02: And given that there are no additional allegations of some exclusivity coming out of that contract, there is no binding effect occurring. [00:17:10] Speaker 04: Counsel, going back to Judge Laurie's point, though, because this was all framed in motions to dismiss, [00:17:18] Speaker 04: Your motion to dismiss was the original place in which you characterized the facts as alleging an exclusive dealing arrangement, right? [00:17:32] Speaker 02: Well, Your Honor, there is a long history here. [00:17:35] Speaker 02: So if we look back to the original complaint and the first amended complaint, there were direct terms that this was a de facto exclusive dealing arrangement alleged. [00:17:47] Speaker 02: And there is, in fact, a Clayton Act Section 3 claim alleged, which is a specific statute dealing with exclusive dealing arrangements. [00:17:56] Speaker 02: So I don't believe it. [00:17:58] Speaker 04: But the Clayton Act claim was dismissed. [00:18:01] Speaker 02: It was. [00:18:01] Speaker 02: But then that theory continued into the first and second complaint. [00:18:06] Speaker 02: And it persists even now. [00:18:09] Speaker 02: If we look, for example, at Volume 2, Appendix 1511, paragraph 95, [00:18:17] Speaker 02: The ETAB and OSI agreement is alleged to be binding the two parties to anti-competitive exclusivity mechanisms. [00:18:27] Speaker 02: And then before that, paragraph 80 describes the agreement as an exclusive arrangement. [00:18:34] Speaker 02: And if we look at Schneider at appendix 1545, paragraph 203, you find the same types of allegations that the agreement is one for sole sourcing and exclusivity. [00:18:47] Speaker 02: And so when you read the allegations as a whole, what you see is that the complaint as a whole reads like an exclusive dealing claim. [00:18:58] Speaker 02: In other words, OSI and Schneider are alleged to have entered into agreements with ETAP to only deal with this. [00:19:07] Speaker 02: That is different than a concerted refusal to deal, which typically is some agreement in which the parties agree not to deal with something. [00:19:15] Speaker 02: But that's not what the allegations here say. [00:19:18] Speaker 02: Specifically, the agreements themselves are to only deal with ETAF. [00:19:22] Speaker 02: And that puts us under the exclusive dealing case law. [00:19:25] Speaker 04: Is it correct that the first time it was described as a refusal to deal claim was the final hearing? [00:19:35] Speaker 02: That is correct, Your Honor. [00:19:37] Speaker 02: And because we're on the telephone, I have trouble determining which judge said it. [00:19:42] Speaker 02: I'm sorry. [00:19:43] Speaker 06: Judge O'Malley. [00:19:44] Speaker 02: I believe you pointed out that if you look at Appendix 1994, opposing counsel noted for the first time that this was a new thought that came up in the past couple months between the briefing and the oral argument. [00:20:00] Speaker 05: Just to clarify, that was Judge Moore that noted that, not Judge O'Malley. [00:20:03] Speaker 05: All of us gals must sound the same. [00:20:05] Speaker 05: Go ahead. [00:20:06] Speaker 02: No, no, not at all. [00:20:07] Speaker 02: I have trouble on the phone. [00:20:13] Speaker 02: So just to continue, yeah, I don't know if there's another question, but just to continue on the point of coercion and the relative strength of the parties here, I did want to note that here the exclusion is, you know, the exclusion, the parties that are said to not be dealing with power analytics are OSI and Schneider. [00:20:38] Speaker 02: And yet if we look to the actual allegations [00:20:41] Speaker 02: And we remember that Tampa Electric requires some analysis, even under the allegations of the relative financial strength of the parties, to determine foreclosure. [00:20:52] Speaker 02: Here, if you look, for example, at Volume 2, Appendix 1543, paragraph 197, Schneider is alleged to have a substantial market power in the EMS bundled market. [00:21:04] Speaker 02: And if you look at OSI, it's alleged to be a critical bridge into the Newpick markets. [00:21:09] Speaker 02: That's at paragraph 97. [00:21:11] Speaker 02: Volume 2, Appendix 1511. [00:21:14] Speaker 02: So here, if we're looking at the financial strength from the allegations themselves, and you look at the lawyer argument here that these two, Schneider and OSI, are gatekeepers into the market, that negates some inference that it is ETAF who is coercing [00:21:34] Speaker 02: Schneider and OSI to make a decision it wouldn't otherwise make in a competitive environment, and that's really the key in order to show injury to competition. [00:21:43] Speaker 02: There must be some showing that these decisions by Schneider and OSI to not deal with power analytics are brought about by something anti-competitive and would not otherwise arise in the competitive market. [00:21:59] Speaker 01: Mr. Ryek mentions [00:22:02] Speaker 01: Vertical arrangements. [00:22:08] Speaker 01: This doesn't seem to me to be a question of vertical arrangements. [00:22:11] Speaker 01: Whether it's exclusive dealing or refusal to deal, they're horizontal, are they not? [00:22:18] Speaker 02: Your Honor, I do think these are vertical agreements. [00:22:22] Speaker 02: Typically, exclusive dealing arises out of vertical agreements in which you have [00:22:28] Speaker 02: parties at different levels in the economy. [00:22:31] Speaker 02: So if you look at, for example, business electronic, it makes it clear that restraints imposed by agreements between competitors [00:22:39] Speaker 02: are denominated as horizontal restraints. [00:22:42] Speaker 02: Those imposed by agreements between firms at different levels of distribution are vertical restraints. [00:22:48] Speaker 02: So I understand that Mr. Reac points to certain allegations where they deny that these are vertical agreements. [00:22:54] Speaker 02: But if you look to the remaining allegations, the factual allegations, it is clear these are vertical agreements. [00:23:01] Speaker 02: If you look, for example, at paragraph 204, the press release, [00:23:06] Speaker 02: That specifically says that Schneider is purchasing products from ETAP. [00:23:11] Speaker 02: That is a vertical arrangement between a buyer and seller. [00:23:15] Speaker 02: Right. [00:23:16] Speaker 02: And then if you look at the OSI allegations, paragraphs, for example, 92 and 93, found at volume two, appendix 1510. [00:23:28] Speaker 02: They are alleging that the exclusivity comes out of license agreements in which OSI as a licensor at one level of the economy is licensing to ETAP technology. [00:23:40] Speaker 02: So these are clearly as alleged vertical agreements despite the conclusory allegation in the beginning of each section. [00:23:49] Speaker 01: Thank you. [00:23:53] Speaker 01: I haven't heard the time is up. [00:23:57] Speaker 01: Is it? [00:23:59] Speaker 00: There's three minutes remaining, Judge Laurie. [00:24:06] Speaker 01: Please continue if you wish, Ms. [00:24:08] Speaker 01: Carpenter. [00:24:10] Speaker 02: Certainly, Your Honor. [00:24:12] Speaker 02: I'm not sure I have many more points here. [00:24:14] Speaker 02: I will note just that I do want to ensure, and I'm sure the Court does, I wanted to look at some of the other allegations quickly and just touch on them. [00:24:25] Speaker 02: that beyond the specific terms of the agreements, if we look at them at paragraphs 92 through 94 on the OSI side, there is nothing alleged here of an exclusivity mechanism. [00:24:39] Speaker 02: And so what I understand Power Analytics to argue is that they are looking at allegations of circumstantial evidence to show the agreement. [00:24:50] Speaker 02: For example, that contemporaneous with the agreements [00:24:54] Speaker 02: OSI and Schneider ended dealings with Power Analytics. [00:25:01] Speaker 02: I would point out that those allegations are contradicted, that if you look at the actual pleadings at paragraph 195 that Schneider was alleged, affirmatively alleged to have continued to deal with ETAP for three years after the agreement was in place. [00:25:22] Speaker 02: And if you look at paragraph 100, [00:25:24] Speaker 02: That paragraph expressly says that OSI was allowing power analytics to interconnect with the historian software. [00:25:35] Speaker 02: So the idea that Schneider and OSI were even [00:25:42] Speaker 02: We're even not dealing with power analytics is negated by the allegations themselves. [00:25:48] Speaker 02: And beyond that, these allegations of a refusal, of the refusal to deal or the not dealing with power analytics under Colgate has long been recognized as part of the competitive environment. [00:25:59] Speaker 02: And under Twombly and NBC Brantley should not be credited because allegations that are consistent with competition cannot plausibly stay the claim. [00:26:10] Speaker 02: I think with that, if there aren't further questions, I will conclude the argument. [00:26:16] Speaker 02: The waiver has occurred here. [00:26:18] Speaker 02: There seems to be a little argument that the allegations of coercion or long-term agreements that cannot easily be terminated have not been made here. [00:26:28] Speaker 02: Those types of allegations, in any case, would be required under either theory. [00:26:34] Speaker 02: Thank you. [00:26:36] Speaker 01: Thank you, Mr. Skalkin. [00:26:37] Speaker 01: Mr. Royak has five minutes for a bottle for you. [00:26:41] Speaker 03: Thank you. [00:26:41] Speaker 03: Yes, I would like that, Your Honor. [00:26:42] Speaker 03: Thank you. [00:26:44] Speaker 03: First of all, I think that even if this case were an exclusive dealing arrangement as vertical, which it is not, and I'll get into that in a minute, coercion is not required. [00:26:54] Speaker 03: And the court made an error in adopting, and you heard Mr. Stockinger argue repeatedly coercion is required. [00:27:01] Speaker 03: It is not, even under an exclusive dealing arrangement. [00:27:05] Speaker 03: 90% of antitrust agreements are between willing parties. [00:27:09] Speaker 03: In this case, it's willing parties. [00:27:11] Speaker 03: If that were the case that coercion is required, then you could never have an antitrust conspiracy exclude competition where two willing parties agree. [00:27:22] Speaker 03: And Schneider, one of the defendants here, admitted in his briefing, and that's at 1723 and 24, that coercion is not required even in exclusive dealing arrangement to state a claim. [00:27:37] Speaker 03: It can be evidence of it, but it's not required. [00:27:40] Speaker 03: And I think that's the case. [00:27:41] Speaker 03: Even if we did look at this, which we should not as an exclusive dealing arrangement, the key element that they hang their hat on, that the court relied upon, this coercion does not exist. [00:27:54] Speaker 03: It is not a requirement in the pleading. [00:27:56] Speaker 03: Because here, it was between willing parties wanting to exclude ETAP from the market. [00:28:02] Speaker 03: Secondly, the fact that there were at times purchases of product between [00:28:08] Speaker 03: the parties does not make it a vertical arrangement. [00:28:11] Speaker 03: That's not what the agreement was. [00:28:13] Speaker 03: The agreement was to exclude a competitor, which is ETAP. [00:28:17] Speaker 03: And it had multiple ways to do that. [00:28:20] Speaker 03: One was no longer participating with them in any commercial way. [00:28:25] Speaker 03: You could say that's refusal of view. [00:28:26] Speaker 03: You could say it's exclusivity, whatever you want to say, but it's refusing to participate. [00:28:30] Speaker 03: They also restricted the customer base. [00:28:33] Speaker 03: Because in each case, OSI and Schneider were critical bridges. [00:28:37] Speaker 03: The way you got to the customers was through them. [00:28:40] Speaker 05: And if you could not... Mr. Verriak, what paragraphs of your third amended complaint would you refer me to as the clearest places where you believe the district court should have construed this complaint as a refusal to deal complaint? [00:28:58] Speaker 03: Well, again, Your Honor, I think that refusal to deal is only one element. [00:29:01] Speaker 03: But there are specific, there are very specific paragraphs. [00:29:04] Speaker 03: I'll try to pull them up for you here. [00:29:09] Speaker 03: I apologize. [00:29:16] Speaker 03: I think I've lost those. [00:29:28] Speaker 03: There are specific paragraphs in each where they said that there was a refusal on the part of OSI to do that. [00:29:40] Speaker 03: I apologize, we're trying to find these now. [00:29:42] Speaker 03: I should have had them at my elbow here. [00:29:48] Speaker 03: I think that if you look at, okay, if you look at appendix 1420 paragraph 85, 1431 to 1334, 120 to 133. [00:29:59] Speaker 03: Okay, I'm on paragraph 85. [00:30:01] Speaker 05: This is the one, just to make sure we're both looking at the same document. [00:30:06] Speaker 05: ETAP learned of the press release and immediately recognized [00:30:09] Speaker 05: power alien exposed a competitive threat? [00:30:12] Speaker 05: That one? [00:30:14] Speaker 03: Yes. [00:30:15] Speaker 05: And how is that? [00:30:16] Speaker 03: You have to take them. [00:30:17] Speaker 03: I think I'm taking them in the course, Your Honor, through this. [00:30:20] Speaker 03: It's a number of pleadings. [00:30:22] Speaker 03: It starts out with the fact that they acknowledged the fact that there was exclusive arrangement. [00:30:29] Speaker 03: They would not permit other competitors to participate. [00:30:34] Speaker 03: So all of these paragraphs that I was giving you are portions of it. [00:30:37] Speaker 03: We don't have a written agreement here. [00:30:39] Speaker 03: that as the court said below, you wouldn't put in writing that you're doing something illegal. [00:30:45] Speaker 05: No, but I guess what I'm still stuck on is trying to understand how it is the court should have construed your complaint as alleging the cause of action related to refusal to deal under the Sherman Act. [00:31:01] Speaker 05: And so what I'm looking for from you are the paragraph, because I mean, you know, your first amended complaint made it [00:31:08] Speaker 05: Your first complaint made it incredibly clear that this was an exclusive dealing cause of action. [00:31:13] Speaker 05: You said so explicitly. [00:31:15] Speaker 05: And there's no doubt that things have changed and morphed through the process. [00:31:20] Speaker 05: But I'm trying to wrap my hands around your argument that the district court erred in not appreciating [00:31:26] Speaker 05: that the claim had morphed into clearly a refusal to deal claim and that the district court was in error in continuing to analyze and think about it under the rubric of exclusive dealing. [00:31:36] Speaker 05: So I'm trying to find where in your complaint is something that should have keyed the district court into the fact that you had changed paths. [00:31:48] Speaker 03: Well, Your Honor, our allegations remain the same throughout. [00:31:52] Speaker 05: Yes, but don't you agree that your earlier complaints expressly called this an exclusive dealing concern under both the Clayton Act and the Sherman Act? [00:32:03] Speaker 03: Yes, Your Honor, that's correct, because there was an element of exclusivity to it. [00:32:08] Speaker 03: But I would say even if in this case we were bound by that, if we could not argue that this is a broader agreement, [00:32:16] Speaker 05: I'm not suggesting you're bound by that, but clearly your arguments have evolved over time, at least the causes of action that you would like interpreted. [00:32:26] Speaker 05: And so what I'm trying to understand is how did this district court judge miss the ball in terms of the refusal to deal? [00:32:35] Speaker 05: What in your complaint, your third amended complaint, should have made it really clear to him that this is no longer an exclusive dealing concern? [00:32:44] Speaker 05: It's a refusal to deal. [00:32:46] Speaker 05: Are there any other, your time is probably winding down, and are there any other particular paragraphs in this complaint that you think I really need to focus on as should have evidence to the district court this is a refusal to deal complaint? [00:33:01] Speaker 03: Yes, if you look at paragraphs 104 through 107, the only change that occurred was the ceasing of doing business. [00:33:09] Speaker 03: They were doing business, there are allegations that start back in 100 all the way through, [00:33:15] Speaker 03: where the course of dealing that existed was that, and I'm talking now about the new pick market, but it's also the same in the other market, that OSI was courting power analytics. [00:33:27] Speaker 03: They were making sure that the software worked with their historian product, which was the critical bridge. [00:33:35] Speaker 03: They talked about going and visiting new pick customers together. [00:33:39] Speaker 03: And then what happened was after this arrangement occurred, [00:33:43] Speaker 03: then they refuse to do that. [00:33:45] Speaker 03: They refuse to participate them. [00:33:46] Speaker 03: We refuse to take them to customers, refuse to even answer their calls. [00:33:52] Speaker 01: I don't have a red light in front of me, but I'm confident the time has expired. [00:33:57] Speaker 01: So we'll continue and the case is submitted. [00:34:00] Speaker 01: Thank you very much. [00:34:03] Speaker 00: The honorable court is adjourned until tomorrow morning at 10 a.m.