Optronic Technologies, Inc. v. Ningbo Sunny Electronic Co. ( 2021 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
OPTRONIC TECHNOLOGIES, INC., No. 20-15837
DBA Orion Telescopes &
Binoculars, D.C. No.
Plaintiff-Appellee, 5:16-cv-06370-
EJD
v.
NINGBO SUNNY ELECTRONIC CO.,
LTD.,
Defendant-Appellant,
and
SUNNY OPTICS, INC.; MEADE
INSTRUMENTS CORP.; DOES, 1–25,
Defendants.
2 OPTRONIC TECH. V. NINGBO SUNNY ELEC.
OPTRONIC TECHNOLOGIES, INC., No. 20-15940
DBA Orion Telescopes &
Binoculars, D.C. No.
Plaintiff-Appellant, 5:16-cv-06370-
EJD
v.
NINGBO SUNNY ELECTRONIC CO., OPINION
LTD.; SUNNY OPTICS, INC.; MEADE
INSTRUMENTS CORP.; DOES, 1–25,
Defendants-Appellees.
Appeals from the United States District Court
for the Northern District of California
Edward J. Davila, District Judge, Presiding
Argued and Submitted August 31, 2021
Seattle, Washington
Filed December 6, 2021
Before: A. Wallace Tashima and Ronald M. Gould, Circuit
Judges, and Jed S. Rakoff, * District Judge.
Opinion by Judge Gould
*
The Honorable Jed S. Rakoff, United States District Judge for the
Southern District of New York, sitting by designation.
OPTRONIC TECH. V. NINGBO SUNNY ELEC. 3
SUMMARY **
Antitrust
The panel affirmed in part and vacated in part the district
court’s judgment, after a jury trial, in favor of Optronic
Technologies, Inc., also known as Orion Telescopes &
Binoculars, in Orion’s lawsuit alleging that Ningbo Sunny
Electronic Co. Ltd. and Sunny Optics, Inc., violated federal
antitrust law and California laws.
Orion alleged that Sunny conspired with Suzhou Synta
Optical Technology Co. Ltd. and other “Synta Entities” to
fix prices and allocate the telescope market.
The panel held that the district court properly admitted
the expert report and testimony of Drs. Jose Sasian and
J. Douglas Zona, Orion’s telescope manufacturing expert
and damages expert, and properly excluded the testimony of
Jeffrey Redman, a rebuttal expert for Sunny.
The panel held that the district court did not abuse its
discretion by giving the jury a mid-trial curative instruction
limiting the scope of the testimony of Dr. Celeste Saravia, a
rebuttal expert on damages.
The panel held that Orion presented sufficient evidence
to support the jury’s verdict in Orion’s favor on its Sherman
Act § 1 claims. First, sufficient evidence supported the
jury’s verdict that Sunny conspired with horizontal
competitor Synta to ensure that Sunny acquired Meade
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
4 OPTRONIC TECH. V. NINGBO SUNNY ELEC.
Instruments Corp., another telescope manufacturer, to
protect their market share and guarantee that competitor
Jinghua Optics & Electronics would not buy Meade.
Second, sufficient evidence supported the jury’s alternative
findings that Sunny conspired with a competitor to fix prices
or credit terms in violation of § 1. Third, sufficient evidence
supported the jury’s verdict that Sunny agreed with Synta, a
horizontal competitor, either not to compete with one
another in the market, or to divide customers or potential
customers between them.
The panel held that the evidence supported the jury’s
verdict for Orion on its Sherman Act § 2 claims of attempted
monopolization and conspiracy to monopolize the global
telescope manufacturing market. The panel concluded that
the jury’s verdict imposing § 2 liability did not depend on an
improper joint monopoly theory. The panel held that Orion
sufficiently defined the relevant market through expert
testimony by Dr. Zona. In addition, sufficient evidence
supported the jury’s findings that Sunny expressed a specific
intent to gain monopoly power and was dangerously close to
attaining monopoly power.
The panel affirmed the jury’s verdict for Orion on its
Clayton Act § 7 claim, based on the jury’s finding of a
reasonable likelihood that Sunny’s acquisition of Meade
would substantially reduce competition in the telescope
manufacturing market or create a monopoly. The panel held
that Sunny was not entitled to a new trial on the issue of § 7
liability because Orion presented evidence of antitrust
injury, and the jury’s finding as to damages was neither
grossly excessive unsupported, nor the result of guesswork.
The panel held that the district court did not abuse its
discretion in imposing injunctive relief against Sunny under
Clayton Act § 16.
OPTRONIC TECH. V. NINGBO SUNNY ELEC. 5
The panel held that Orion offered substantial evidence in
support of the district court’s finding that the conspiracy
between Sunny and Synta continued post 2016, and Sunny
was not entitled to judgment as a matter of law on the issue
of whether Orion was entitled to post-September 2016
damages.
Vacating in part, the panel held that the district court
abused its discretion by excluding under Fed. R. Civ. P. 26
and 37 the declaration that Dr. Saravia gave in support of
Sunny’s motion to alter or amend the judgment with regard
to the valuation of a settlement set-off. The panel remanded
for further proceedings.
On Orion’s cross-appeal, the panel affirmed the district
court’s grant of summary judgment for Sunny on the issue
of whether Sunny caused Orion’s failure to acquire Meade.
6 OPTRONIC TECH. V. NINGBO SUNNY ELEC.
COUNSEL
Karin Bohmholdt (argued) and Hannah B. Shanks-Parkin,
Greenberg Traurig LLP, Los Angeles, California, for
Defendant-Appellant.
J. Noah Hagey (argued), Matthew Borden, Jeffrey M.
Theodore, Ronald J. Fisher, and Athul K. Acharya,
BraunHagey & Borden LLP, San Francisco, California, for
Plaintiff-Appellee.
OPINION
GOULD, Circuit Judge:
Optronic Technologies, Inc., also known as Orion
Telescopes & Binoculars (“Orion”), filed a lawsuit alleging
that Ningbo Sunny Electronic Co., Ltd. and Sunny Optics,
Inc., collectively “Sunny,” violated federal antitrust law and
California laws. The case went to trial and the jury gave its
verdict for Orion, awarding it $16.8 million in damages.
Sunny appealed this verdict and several district court rulings.
We have jurisdiction under 28 U.S.C. § 1291, and we affirm
the jury’s verdict. In so holding, we comment on the legal
analysis a district court may use to resolve pre-and-post-trial
motions in similar cases, and the evidence necessary to
support a jury verdict in antitrust cases.
I. FACTUAL AND PROCEDURAL BACKGROUND
A. The Parties
Orion is an American telescope company that designs
and markets telescopes but does not make them. Sunny is a
Chinese telescope manufacturer owned by Peter Ni, and
OPTRONIC TECH. V. NINGBO SUNNY ELEC. 7
James Chiu controls Sunny’s manufacturing activities.
Orion alleged that Sunny violated federal antitrust law and
related California laws by unlawfully conspiring with
Suzhou Synta Optical Technology Co. Ltd. (“Suzhou
Synta”), Synta Technology Corp. (“Synta Tech”), and
Celestron Acquisition LLC (“Celestron”), collectively the
“Synta Entities.” Sunny and Suzhou Synta are two of the
biggest manufacturers of telescopes sold in the United
States. The relationship between Suzhou Synta and Synta
Tech is disputed, but David Shen is the principal of both
companies, collectively “Synta.” Celestron is a Suzhou
Synta subsidiary and the largest telescope distributor in the
United States. Celestron made its own telescopes but
stopped after being acquired by Synta. Joe Lupica was
Celestron’s CEO and CFO but resigned to work on Sunny’s
2013 acquisition of Meade Instruments Corp. (“Meade”),
another telescope manufacturer. Sunny hired Lupica as
Meade’s CEO.
B. The Telescope Manufacturing Market
During the relevant time period, the key telescope
distributors were Celestron, Meade, and Orion, whereas the
main telescope manufacturers were Sunny, Synta, and
Meade. Because most telescope manufacturers are private,
market share data is not readily available. But public
customs data show that, since 2012, Sunny and Synta have
together accounted for up to 80 percent of telescopes
imported into the United States. In 1991, the Federal Trade
Commission (“FTC”) blocked a proposed joint venture
between Celestron and Meade. The FTC decided that this
joint venture would “be a virtual monopolist in the
manufacture and sale of [certain telescopes].” Meade had
tried to acquire Celestron’s assets in 2002, but the FTC
prevented this deal “to maintain competition.” In 2005,
8 OPTRONIC TECH. V. NINGBO SUNNY ELEC.
Synta bought all of Celestron’s assets, including its
intellectual property, and moved Celestron’s telescope
manufacturing to Synta’s factory in China.
C. The Meade Deal
Meade made itself available for purchase in early 2013.
Orion offered $4.5 million, but Meade chose to proceed with
a different $4.5 million offer from Jinghua Optics &
Electronics (“JOC”) and announced the proposed merger in
May 2013. Sunny intervened by submitting an unsolicited
$5.87 million bid for Meade. Meade terminated the JOC
merger and accepted Sunny’s offer. Sunny created a holding
company called Sunny Optics, to facilitate its acquisition of
Meade. Orion claims Celestron and Synta colluded with
Sunny to help it acquire Meade. The parties agree that a
company called Sky Rainbow—which Orion insists is
jointly owned by Peter Ni, the principal of Sunny, and David
Shen, the principal of Synta—financed Sunny’s acquisition
of Meade. Sunny also admits it reached out to Celestron—
now owned by Synta—to request that Celestron pay for
already-purchased telescopes faster than it was obliged to
do.
D. The Hayneedle Deal
In 2014, Hayneedle, an e-commerce company, decided
to sell certain website addresses—including telescopes.com,
on which Celestron relied heavily—known as the “Haystack
Assets.” Orion submitted the highest bid and signed a letter
of intent with Hayneedle in May 2014. The Synta Entities
sent an email advising Orion that the Synta Entities were
cutting off Orion’s line of credit. This email stated that “if
Orion really buys Hayneedle, this will be the beginning of
hazard [sic], we could not trust Orion’s credit any more.”
The Synta Entities forwarded this email to Sunny and asked
OPTRONIC TECH. V. NINGBO SUNNY ELEC. 9
Sunny to also withdraw Orion’s line of credit. Sunny sent
Orion an almost identical email. Not surprisingly, Orion’s
deal with Hayneedle fell through. Orion claims it was
unable to acquire the Hayneedle Assets after Synta and
Sunny cut off its lines of credit.
E. Procedural History
In September 2016, Orion entered into Settlement and
Supply Agreements with the Synta Entities to resolve
antitrust claims related to Sunny’s acquisition of Meade.
Orion then sent a demand letter to Sunny, after which Sunny
stopped selling telescopes to Orion. Orion filed this lawsuit
on November 1, 2016. The operative complaint set out four
claims against Sunny and two of its subsidiaries: (1) price-
fixing and collusion by competitors in violation of Sherman
Act § 1; (2) attempted monopolization and conspiracy to
monopolize in violation of Sherman Act § 2 and Clayton Act
§ 7; (3) violation of the California Unfair Competition Law
(“UCL”); and (4) collusion to restrain trade in violation of
California’s Cartwright Act. Orion also sought
compensatory and punitive damages, disgorgement,
divesture, injunctive relief, and restitution from Sunny.
Both parties moved for summary judgment. The district
court denied Orion’s motion for summary judgment, but
granted in part and denied in part Sunny’s motion for
summary judgment. Orion’s summary judgment motion
alleged that Sunny had violated Sherman Act § 1 by
conspiring with the Synta Entities to acquire Meade. Sunny
argued that Orion lacked standing on this claim because
Orion would not have acquired Meade regardless of
misconduct by Sunny or its subsidiaries. The district court
granted Sunny partial summary judgment on the issue of
standing, holding “that Orion would not have acquired
Meade in the absence of [Sunny’s] alleged misconduct; JOC
10 OPTRONIC TECH. V. NINGBO SUNNY ELEC.
would have.” But the district court found that Orion may
still have been harmed by Sunny’s acquisition of Meade
because it concentrated the telescope market “more than five
times the amount presumed to enhance market power.” The
district court found a genuine issue of material fact as to
whether Sunny and Synta had entered into an agreement that
harmed competition. Sunny also obtained summary
judgment on Orion’s below-cost pricing and refusal to deal
claims.
Before trial, Orion timely designated two expert
witnesses, Jose Sasian, PhD., and J. Douglas Zona, PhD.
Sunny did not timely disclose any expert witnesses, but later
disclosed fraud examiner Jeffrey Redman and economist
Celeste Saravia, Ph.D. as rebuttal experts. The parties cross-
filed motions to exclude the other’s experts. The district
court denied Sunny’s motion but granted Orion’s motion to
exclude Mr. Redman’s testimony. It partially granted
Orion’s motion to exclude Dr. Saravia.
A six-week jury trial was held. Dr. Saravia testified at
trial, and Orion objected that she was impermissibly offering
affirmative damages testimony. The district court sustained
this objection and instructed the jury that it was “not to
consider [Dr. Saravia’s] testimony as to any amount of
damages nor her opinion as to damages.” After Orion rested,
Sunny moved for judgment as a matter of law pursuant to
Federal Rule of Civil Procedure 50(a). The district court
denied this motion.
The jury reached a verdict on November 26, 2019. It
found Sunny liable on all claims tried before it and awarded
a total of $16.8 million in damages. Sunny and Meade filed
for bankruptcy on December 4, 2019, and litigation was
stayed as to them. The district court entered a partial
judgment for Orion and against Sunny on December 5, 2019.
OPTRONIC TECH. V. NINGBO SUNNY ELEC. 11
This partial judgment encompassed the Sherman Act §§ 1
and 2, Clayton Act § 7, California UCL, and California
Cartwright Act claims, collectively the “Damages Claims.”
The district court then trebled the damages that were listed
in the jury’s verdict, under the Clayton Act § 4, 15 U.S.C.
§ 15, and awarded Orion $50.4 million on the Damages
Claims.
Sunny renewed its motion for judgment as a matter of
law under Federal Rule of Civil Procedure 50(b) and moved
for a new trial under Federal Rule of Civil Procedure 59(a).
The district court denied these motions. Sunny also moved
to alter or amend the judgment under Federal Rule of Civil
Procedure 59(e) to offset the value of the Settlement and
Supply Agreements. The district court deducted
$3.1 million from Orion’s award, but did not offset any
profits Orion derived from the Supply Agreement. In its
view, Sunny had the burden of proof on this issue and the
evidence that it offered to this end—a declaration by
Dr. Saravia—was inadmissible as untimely under Federal
Rules of Civil Procedure 26 and 37.
Orion moved for equitable relief and judgment on its
UCL claim. The district court granted this motion, but
reduced the scope of Orion’s proposed injunction by
ordering Sunny to: (1) supply Meade and Orion at non-
discriminatory terms for five years; and (2) not communicate
with Synta to the extent that such communication violated
federal antitrust law.
On April 10, 2020, the United States Bankruptcy Court
for the Central District of California permitted the district
court to enter a final judgment against Defendants Sunny
Optics and Meade, which the district court did five days
later. Sunny timely appealed.
12 OPTRONIC TECH. V. NINGBO SUNNY ELEC.
II. STANDARDS OF REVIEW
We review evidentiary rulings for abuse of discretion
and will reverse only if incorrect evidentiary rulings were
prejudicial. Velazquez v. City of Long Beach, 793 F.3d 1010,
1017 (9th Cir. 2015).
A jury verdict will be upheld if supported by substantial
evidence. Castro v. County of Los Angeles, 833 F.3d 1060,
1066 (9th Cir. 2016). “[W]e may not weigh the evidence but
simply ask whether the plaintiff has presented sufficient
evidence to support the jury’s conclusion.” Id. Any
underlying legal analysis or statutory interpretation is
reviewed de novo. Mattel, Inc. v. Walking Mountain Prods.,
353 F.3d 792, 814 (9th Cir. 2003). But findings of fact will
be reversed only when the evidence “permits only one
reasonable conclusion, and that conclusion is contrary to the
jury’s verdict.” Castro, 833 F.3d at 1066.
We review de novo a district court’s denial of a renewed
motion for judgment as a matter of law. Id. We review for
abuse of discretion a district court’s rulings on motions to
alter or amend a judgment, Idaho Potato Comm’n v. G & T
Terminal Packaging, Inc., 425 F.3d 708, 718 (9th Cir. 2005),
motions for a permanent injunction, Bank of Am. v. City &
County of San Francisco, 309 F.3d 551, 557 (9th Cir. 2002),
and motions for a new trial, City Sols., Inc. v. Clear Channel
Commc’ns, 365 F.3d 835, 843 (9th Cir. 2004).
III. SUNNY’S APPEAL
A.
Sunny seeks reversal on the basis that the district court
made three erroneous evidentiary rulings as to experts. We
disagree.
OPTRONIC TECH. V. NINGBO SUNNY ELEC. 13
Sunny first challenges the district court’s admission of
the testimony of Dr. Sasian, Orion’s telescope
manufacturing expert. Dr. Sasian’s testimony that Sunny
and Synta could make the same telescopes supports an
inference that Sunny and Synta are horizontal competitors.
This inference is relevant because Orion alleged that Sunny
and Synta conspired to fix prices and allocate the telescope
market, which are per se antitrust violations when engaged
in by horizontal competitors. See Palmer v. BRG of Ga.,
Inc., 498 U.S. 46, 49 (1990); Knevelbaard Diaries v. Kraft
Foods, Inc., 232 F.3d 979, 986 (9th Cir. 2000).
Sunny argues that Dr. Sasian’s testimony was “junk-
science untethered to the facts of the case” because he only
visited Celestron’s factory for two hours roughly thirty-six
years ago and relied on publicly available data from Orion’s
website. But Dr. Sasian’s report and testimony explained
how he used the product specifications of telescopes made
by Sunny and Synta to determine that they could make each
other’s products. That these data were publicly available on
Orion’s website does not make Dr. Sasian’s report
untethered to the facts of this case.
Sunny also contends that Dr. Sasian’s admission that
60% of his report was written by counsel gives grounds for
reversal. Although the advisory notes to Federal Rule of
Civil Procedure 26(a)(2)(B) permit counsel to assist experts
in preparing reports, “the report, which is intended to set
forth the substance of the direct examination, should be
written in a manner that reflects the testimony to be given by
the witness and it must be signed by the witness.” The
district court properly admitted Dr. Sasian’s report because
the parts written by counsel consisted of background
information qualified by statements such as “I am informed
that . . . .” Dr. Sasian also testified that he signed his report
14 OPTRONIC TECH. V. NINGBO SUNNY ELEC.
after reviewing and editing it and determining that it
accurately reflected his analysis and opinion with regard to
the case.
Sunny further contends that Dr. Sasian was not qualified
as an expert because he has made only “a couple of hobby
telescopes.” But the district court reasonably found that
Dr. Sasian is qualified to testify as to whether it is technically
feasible for Sunny and Synta to manufacture certain
telescopes made by the other company. Dr. Sasian holds a
Ph.D. in optical sciences, serves as an astronomy and optical
sciences professor, has published research regarding the
design, fabrication, and testing of various optical devices
including telescopes, and previously worked at AT&T Bell
Laboratories, where he personally oversaw the design and
fabrication of lens systems.
We conclude that the district court properly admitted
Dr. Sasian’s expert report and testimony. See United States
v. Hinkson, 585 F.3d 1247, 1263 (9th Cir. 2009) (en banc)
(holding that a district court abuses its discretion if it
misapplies the law or makes a finding that is illogical,
implausible, or without support in inferences which can be
drawn from the record).
Sunny also disputes the district court’s admission of the
testimony of Dr. Zona, Orion’s damages expert. Sunny
maintains that Dr. Zona’s testimony was insufficiently tied
to the facts of the case because he relied on theoretical
economic models instead of “actual data” and did not
calculate the actual overcharges Sunny inflicted on Orion.
Dr. Zona used two methods—direct and structural—to
calculate damages. For the direct method, Dr. Zona’s
elasticity, margin, and pass-through calculations were based
on data from the telescope manufacturing market, but he
OPTRONIC TECH. V. NINGBO SUNNY ELEC. 15
explained that the overcharges inflicted on Orion are not
directly observable. Dr. Zona estimated these overcharges
by looking to the number of alleged co-conspirators and
considering the market shares of manufacturers in the
relevant market. One method measured cartel overcharges
from other conspiracies with similar market compositions,
though Dr. Zona noted that his estimates could be
conservative because the telescope market had so few
buyers, which would likely magnify the overcharges.
Dr. Zona separately looked to the structural theory of
Cournot Equilibrium, an economic model where competitors
simultaneously choose levels of output to maximize their
profits. He adjusted this analysis to reflect the relevant
market structure, of which two colluders—Sunny and
Synta—controlled more than 70% of the market, based on
data taken directly from this case. This Cournot Equilibrium
model corroborated the results that Dr. Zona derived from
his analysis of cartels operating in markets with
compositions similar to the telescope market. Dr. Zona
separately calculated damages through the structural method
to check his direct method calculations. Dr. Zona’s expert
report and testimony were sufficiently tied to the facts of this
case such that the district court properly admitted this
evidence. See Velazquez, 793 F.3d at 1017; Hinkson,
585 F.3d at 1263.
The final pretrial evidentiary ruling that Sunny contests
is the district court’s exclusion of the testimony of
Mr. Redman, one of Sunny’s rebuttal experts. On appeal,
Sunny argues that, although Mr. Redman is not an
accountant or economist, he is qualified in these areas based
on experience alone, and he should have been admitted
because courts “routinely allow non-economists” to rebut
expert economists such as Dr. Zona.
16 OPTRONIC TECH. V. NINGBO SUNNY ELEC.
Sunny’s arguments are unavailing. Mr. Redman
admitted that he did not grasp the meaning of the term “pass
through” as used by Dr. Zona. He also conceded that he was
unfamiliar with the private cartel data that Dr. Zona used to
estimate Orion’s overcharges. In addition, Mr. Redman had
no experience with antitrust damages and had never
calculated elasticity or overcharges in antitrust contexts.
Mr. Redman stated that the structural model used by
Dr. Zona is “out of [his] area of expertise,” and his
arguments for how to calculate an overcharge violated
antitrust economic principles. As the district court found,
“Mr. Redman does not appear to understand the methods and
models that Dr. Zona used.” We hold that the district court
properly excluded testimony of Mr. Redman as to Dr. Zona.
See Hinkson, 585 F.3d at 1263. There was no abuse of
discretion in this ruling.
B.
Sunny challenges the district court’s mid-trial curative
instruction limiting the scope of Dr. Saravia’s expert witness
testimony, contending that this ruling was an abuse of
discretion.
At trial, Dr. Saravia, who was only a rebuttal expert,
testified regarding her sensitivity analysis of Dr. Zona’s
damages calculations, in which she adjusted the
parameters—i.e., inputs—he used in his damages model by
replacing them with alternative inputs that she deemed
“more consistent with facts in the case.” Dr. Saravia testified
that, after her adjustments, Dr. Zona’s “estimate of damages
. . . goes way down,” as shown by a slide titled “Making
Reasonable Adjustments Dramatically Lowers Dr. Zona’s
Damages.” Orion objected that Dr. Saravia had exceeded
the bounds of rebuttal testimony by giving affirmative
damages testimony.
OPTRONIC TECH. V. NINGBO SUNNY ELEC. 17
The parties agreed that the district court had properly
prohibited Dr. Saravia from presenting alternative damages
estimates or models as part of her rebuttal testimony. The
district court gave a curative instruction, in which it advised
the jury that it was striking Dr. Saravia’s testimony to the
extent that she had presented a lower measure of damages
than the one calculated by Dr. Zona. In issuing this curative
instruction, the district court further explained to the jury that
Dr. Saravia’s criticisms of the methods used by Dr. Zona, as
shown by her sensitivity analysis, were properly before the
jury and could be considered, but that she was not permitted
to provide an alternative estimate of her own. The district
court did not, as Sunny claims, tell the jury to ignore
Dr. Saravia’s testimony altogether. Indeed, Sunny’s counsel
continued his direct examination of Dr. Saravia after the
district court’s curative instruction and clarified that she was
only testifying as to her sensitivity analysis and not to an
alternative measure of damages. We therefore conclude that
the district court did not abuse its discretion in giving its
curative instruction on Dr. Saravia’s damages testimony.
See United States v. Rodriguez, 971 F.3d 1005, 1016 (9th
Cir. 2020) (stating that “[t]he district court has substantial
latitude in formulating jury instructions” (cleaned up)).
C.
Sunny seeks reversal on the basis that Orion presented
insufficient evidence to support three parts of the jury’s
verdict in Orion’s favor on its Sherman Act § 1 (“Section 1”)
claims. We reject these contentions.
By its terms, Section 1 bans every “contract,
combination . . . , or conspiracy, in restraint of trade or
commerce among the several States, or with foreign
nations.” 15 U.S.C. § 1. The elements of a Section 1 claim
are: (1) a contract, combination, or conspiracy; (2) “that
18 OPTRONIC TECH. V. NINGBO SUNNY ELEC.
unreasonably restrained trade under either a per se rule of
illegality or a rule of reason analysis; and (3) that the restraint
affected interstate commerce.” Tanaka v. Univ. of S. Cal.,
252 F.3d 1059, 1062 (9th Cir. 2001). To establish a
conspiracy, the available evidence must tend “‘to exclude
the possibility’ that the alleged conspirators acted
independently.” Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 588 (1986). Horizontal price fixing
and market allocation are per se Section 1 violations. See
Palmer, 498 U.S. at 49; Knevelbaard Diaries, 232 F.3d at
986.
Sunny first contends that substantial evidence does not
support the jury’s verdict that Sunny conspired with
horizontal competitor Synta to ensure that Sunny acquired
Meade to protect their market share and guarantee that
competitor JOC would not buy Meade. If proven, that would
be a per se Section 1 violation. See Helix Milling Co. v.
Terminal Flour Mills Co., 523 F.2d 1317, 1322 (9th Cir.
1975).
At trial Orion offered evidence from which the jury
could conclude that Peter Ni, David Shen, and other Synta
executives discussed, before Sunny submitted its bid for
Meade, arranging a transaction in which Sunny would
acquire Meade. An email between Ni, Shen, and other Synta
executives states that Sunny bought Meade “to prevent JOC
to buy Meade,” and Synta executives agreed that
Celestron—which was owned by Synta—and Synta would
“provide[] the financial support to Sunny” for its purchase
of Meade. Orion also presented evidence that Synta did in
fact provide such financial support. Specifically, Celestron
made $7.2 million in “prepayments” to Sunny for unshipped
telescopes, and gave Sunny $10 million in interest-free loans
to fund Meade’s operations, Indeed, Orion offered evidence
OPTRONIC TECH. V. NINGBO SUNNY ELEC. 19
that Sunny’s purchase of Meade was financed by funds
provided by Sky Rainbow, an entity jointly owned by Ni and
Shen. Orion further pointed out that Celestron and Synta
received interests in Meade equivalent to the funds they
provided for Sunny’s acquisition of Meade, which signaled
that Sunny rewarded Celestron and Synta for this financial
support. The jury also viewed evidence that Celestron
executives ran Sunny’s acquisition of Meade. In 2013,
Celestron’s CEO resigned to consult Sunny on the Meade
deal then became the CEO of Meade. Sunny also instructed
the lawyers who represented it in the Meade deal to take
advice from Shen.
Orion also offered evidence from which the jury could
infer that Sunny’s acquisition of Meade was part of a larger
scheme in which Sunny and Synta aimed to jointly control
the telescope market notwithstanding that federal regulators
had already prohibited such a combination. After former
Celestron CEO Joe Lupica became the CEO of Meade, he
sent an email indicating that the owners of Sunny and
Synta—Peter Ni and David Shen—had a “vision of how the
four companies are to cooperate for the benefit of the entire
group of companies.” Lupica later sent another email stating
that “[i]f we take advantage of the strong relationships
among Sunny, Synta, Celestron and Meade (under Peter’s
ownership), we can quickly turn the company around and the
four companies can dominate the telescope industry.” To
this end, Lupica insisted that “we need to have one senior
management team managing Meade and Celestron.” And
the evidence was such that the jury could infer that Lupica
was aware that the FTC had blocked two prior attempts to
merge Celestron and Meade because the combined entity
would be “a virtual monopolist in the manufacture and sale
of [certain telescopes].”
20 OPTRONIC TECH. V. NINGBO SUNNY ELEC.
We thus hold that substantial evidence supports the
jury’s verdict that Sunny and Synta conspired to acquire
Meade to protect their market share and stop a competitor
from buying Meade. See Castro, 833 F.3d at 1066.
Sunny also challenges the jury’s alternative findings that
Sunny conspired with a competitor to fix prices or credit
terms in violation of Section 1. But the jury could infer from
the evidence that Synta controls an entity called Good
Advance, and that Sunny and Synta conspired to fix the
prices that they charged Orion and Synta’s subsidiary
Celestron using Good Advance. Orion offered evidence that
Good Advance uses the name “Taiwan Synta,” and Sunny
admits that Joyce Huang, Good Advance’s only employee,
works for Synta Tech. Also, the evidence showed that
Huang worked for Synta owner David Shen, who gave
direction to Good Advance, and Good Advance has the same
business address as Synta and Sky Rainbow, the entity that
transferred the funds that Sunny used to purchase Meade.
Orion also offered specific price-fixing evidence at trial.
Synta asked Sunny: “Is Sunny’s AZ GOTO mount the same
as that Suzhou used? If so, please re-check your price.
Suzhou’s 2013 list price of AZ GOTO mount [and] steel
tripod was US $140.” Sunny sent an email to Huang stating
that it was “considering . . . adopting different product prices
to protect Celestron.” Huang, who worked for Synta’s
David Shen, told Sunny to raise the prices it charged Orion
to match the prices that Synta was charging Orion. Sunny
agreed. Price lists showed that Sunny charged Orion fifty
percent more than it charged Synta subsidiary, Celestron, for
identical items. Substantial evidence therefore supports the
jury’s verdict that Sunny and Synta committed a per se
Section 1 violation by conspiring to fix the prices that they
OPTRONIC TECH. V. NINGBO SUNNY ELEC. 21
charged Synta’s subsidiary Celestron and Orion. See Castro,
833 F.3d at 1066; Knevelbaard Diaries, 232 F.3d at 986.
With regard to fixing credit terms, which is a form of
price fixing and a per se Section 1 violation, Catalano, Inc.
v. Target Sales, Inc., 446 U.S. 643, 648 (1980), the jury
could infer from the evidence adduced at trial that Sunny and
Synta engaged in such behavior in retaliation for Orion’s
Hayneedle deal. Orion offered the highest bid to Hayneedle
for the Haystack Assets, including the telescopes.com
website address on which Synta’s subsidiary Celestron
relied, and Orion then signed a letter of intent with
Hayneedle. The Synta Entities then sent an email
terminating Orion’s line of credit. The Synta Entities
forwarded this email to Sunny and asked Sunny to withdraw
Orion’s line of credit. Sunny sent Orion a credit termination
email nearly identical to the one sent by the Synta Entities.
These emails both stated that Sunny and Synta were
revoking Orion’s credit because Orion was buying the
Haystack Assets. These emails also stated that Sunny and
Synta would no longer allow Orion to receive telescope
shipments in advance of payment. Because substantial
evidence supports the jury’s verdict that Sunny and Synta
fixed credit terms in violation of Section 1, we affirm this
finding. See Castro, 833 F.3d at 1066; Catalano, 446 U.S.
at 648.
Sunny argues that there was not substantial evidence to
support the jury’s verdict that Sunny agreed with Synta, a
horizontal competitor, either not to compete with one
another in the market, or to divide customers or potential
customers between them. Such conduct constitutes illegal
market allocation, which is a per se Section 1 violation. See
Palmer, 498 U.S. at 49. We disagree.
22 OPTRONIC TECH. V. NINGBO SUNNY ELEC.
The documentary evidence and expert testimony that
Orion presented during trial—particularly Dr. Sasian’s
testimony regarding overlapping production capabilities—
showed that Sunny had the technical capability to
manufacture the same telescopes as Synta, but chose not to.
Two internal emails mentioned “consider[ing] how to avoid
conflict with Celestron’s products,” and “divid[ing] the
products and sell[ing] them to different markets to reduce
conflicts.” Other emails between Sunny and Synta indicate
that they had agreed to divide customers. For instance, in a
December 2013 email, Synta’s Shen told Sunny that:
Bidding with Costco between May and June
(compete with Celestron for the price). This
is a very important issue. This need Director
Ni to communicate face-to-face with DAVE
when he goes to the United States. Don’t bid.
If you let the thing go by doing this, how
would you deal with everything in the future?
All products are produced by Sunny.
Following a conflict, Celestron would not
trust Sunny any longer.
This is quintessential evidence of a market allocation
conspiracy. We accordingly conclude that substantial
evidence supports the jury’s verdict that Sunny engaged in
per se illegal market allocation with Synta. See Castro,
833 F.3d at 1066; Palmer, 498 U.S. at 49.
D.
Sunny also seeks reversal on the basis that the evidence
does not support the jury’s verdict for Orion on its Sherman
Act § 2 (“Section 2”) claims. We disagree. Section 2 makes
it illegal to “monopolize, or attempt to monopolize, or
combine or conspire with any other person or persons, to
OPTRONIC TECH. V. NINGBO SUNNY ELEC. 23
monopolize any part of the trade or commerce . . . .”
15 U.S.C. § 2. While Section 1 “targets concerted
anticompetitive conduct, [Section 2] targets independent
anticompetitive conduct.” Fed. Trade Comm’n v.
Qualcomm Inc., 969 F.3d 974, 989–90 (9th Cir. 2020).
Monopoly power itself is not unlawful—instead, it must be
“accompanied by an element of anticompetitive conduct” to
trigger Section 2 liability. Id. at 990.
The jury found Sunny liable for attempted
monopolization and conspiracy to monopolize under Section
2. Attempted monopolization requires: “(1) specific intent
to monopolize a relevant market; (2) predatory or
anticompetitive conduct; and (3) a dangerous probability of
success.” Catlin v. Wash. Energy Co., 791 F.2d 1343, 1348
(9th Cir. 1986). Conspiracy to monopolize requires: “(1) an
agreement or understanding between [alleged conspirators];
(2) a specific intent to monopolize; and (3) overt acts in
furtherance of the alleged conspiracy.” Howard Hess Dental
Lab’ys Inc. v. Dentsply Int’l, Inc., 516 F. Supp. 2d 324, 341
(D. Del. 2007), aff’d, 602 F.3d 237 (3d Cir. 2010).
We first reject Sunny’s argument that Orion improperly
pursued a “joint monopoly theory” at trial. The district
court’s jury instruction on conspiracy to monopolize
required Orion to show that “[Sunny or its subsidiaries]
specifically intended that one of the parties to the agreement
would obtain or maintain monopoly power in the telescope
and accessory manufacturing market.” It is true that this jury
instruction does not specify which entity—Sunny or Synta—
the parties to the agreement intended would achieve or
maintain monopoly power, but Sunny agreed to the jury
instructions in advance and did not object to this lack of
clarity. Moreover, there is substantial evidence that Sunny
was dangerously close to acquiring monopoly power, and
24 OPTRONIC TECH. V. NINGBO SUNNY ELEC.
the jury could have found that the parties intended for Sunny
to have a monopoly over the telescope manufacturing
market. We therefore conclude that the jury’s verdict
imposing Section 2 liability does not depend on a joint
monopoly theory.
Sunny’s contentions that Orion could not prevail under
Section 2 for failure to define the relevant market are
similarly unavailing. To define a market, the district court
must determine: (1) “the field in which the plaintiff was
engaged . . . in geographic and distributional terms,” and
(2) “the product (or product line) that competes in that field.”
JBL Enters., Inc. v. Jhirmack Enters., Inc., 698 F.2d 1011,
1016 (9th Cir. 1983). The relevant market is defined as the
“commodities reasonably interchangeable by consumers for
the same purpose.” Id. We review relevant market
definitions as fact findings reversible only if the evidence
compels a conclusion contrary to the jury’s verdict. Id.Orion established the relevant market through expert
testimony by Dr. Zona. Sunny claims this was insufficient
because Dr. Zona did not analyze the cross-elasticity of
demand between the product and substitutes, conduct a
SSNIP 1 analysis, independently analyze whether
1
SSNIP is a common methodology for defining a relevant antitrust
market. To perform a SSNIP analysis, an economist proposes a narrow
geographic and product market definition and then iteratively expands
that definition until a hypothetical monopolist in the proposed market
would be able to profitably make a small but significant non-transitory
increase in price (“SSNIP”). At each step, if consumers would respond
to a SSNIP by making purchases outside the proposed market definition,
thereby rendering the SSNIP unprofitable, then the proposed market
definition is too narrow. At the next step, the economist expands the
proposed geographic or product market definition to include the
substituted products or area. This process is repeated until a SSNIP in
OPTRONIC TECH. V. NINGBO SUNNY ELEC. 25
manufacturers can produce both high-and-low-end
telescopes, explain why the market included accessories, or
evaluate substitutes to the telescope manufacturing market.
These contentions are without merit. Sunny
acknowledges that there is no requirement to use any
specific methodology in defining the relevant market.
Dr. Zona testified that there was no need to perform a SSNIP
analysis because the global telescope and telescope
accessory manufacturing market is so broad—
geographically unbounded and encompassing all products
potentially substituted for or sold with telescopes—that the
key question is whether a new manufacturer, such as an
automaker, could enter the telescope market quickly enough
to offset a SSNIP imposed by a hypothetical monopolist. As
such, Dr. Zona determined reasonably that he could forgo a
SSNIP analysis in favor of his barriers to entry analysis.
Dr. Sasian testified that Sunny and Synta had the technical
capacity to make high-and-low-end telescopes, so Dr. Zona
did not need to independently determine that as part of his
antitrust economic analysis. Dr. Zona further testified that
his market definition included telescope accessories because
buyers purchase them with telescopes and they are often
shipped together to save money. See JBL Enters., 698 F.2d
at 1016 (explaining that the relevant product may also
include “a ‘cluster’ or ‘product line’ of one manufacturer [if
it] is reasonably interchangeable for that of another by the
[distributor] that is making the purchase”). Dr. Zona finally
testified that there is no real substitute for telescope
manufacturing. No basis for reversal on market definition
the proposed market is predicted to be profitable for the hypothetical
monopolist. See St. Alphonsus Med. Ctr.-Nampa Inc. v. St. Luke’s
Health Sys., Ltd., 778 F.3d 775, 784 (9th Cir. 2015).
26 OPTRONIC TECH. V. NINGBO SUNNY ELEC.
therefore exists here. See United States v. E.I. du Pont de
Nemours & Co., 351 U.S. 377, 395 (1956).
Regarding the sufficiency of the evidence, Sunny takes
the position that “no evidence” supports the jury’s finding
that Sunny expressed a specific intent to gain monopoly
power. We disagree.
Courts use the specific intent element to limit “the reach
of an attempt claim to conduct threatening monopolization.”
William Inglis & Sons Baking Co. v. ITT Cont’l Baking Co.,
668 F.2d 1014, 1027 (9th Cir. 1981). A plaintiff may
establish specific intent to monopolize through either direct
evidence of “unlawful design” or circumstantial evidence
“principally of illegal conduct.” Id. This “inference may be
drawn from conduct . . . with an unreasonable restraint of
trade in violation of section 1 of the Sherman Act.” Id.
at 1028.
As explained above, substantial direct evidence of
unlawful design supports the jury’s Section 1 finding that
Sunny had a specific intent to seize control of the telescope
and accessory manufacturing market by acquiring Meade.
The email in which Sunny stated that it purchased Meade “to
prevent JOC to buy Meade,” for instance, establishes that
Sunny’s specific intent was to prevent JOC, the third-largest
competitor in the telescope and accessory manufacturing
market, from becoming a stronger competitor. In addition,
and as explained above, the evidence supports the jury’s
conclusion that Sunny unlawfully conspired with Synta to
prevent JOC, a new, smaller competitor, from buying
Meade. Orion also presented evidence that Sunny told the
FTC Shen was not involved in its Meade acquisition, when,
at the very least, Sky Rainbow, which Shen partially owned,
funded Sunny’s acquisition of Meade. This Section 1
violation also supports a finding of specific intent to
OPTRONIC TECH. V. NINGBO SUNNY ELEC. 27
monopolize. See William Inglis & Sons Baking Co.,
668 F.2d at 1028.
Sunny attempts to pre-empt this analysis by suggesting
that Synta would have no motive to help Sunny acquire
monopoly power because that would give Sunny the power
to dictate prices and market economies over Synta. We are
not persuaded. Because Synta is a horizontal competitor of
Sunny, Synta would benefit from Sunny’s ability to raise
prices because Synta could raise its own prices in turn. See
Matsushita Elec. Indus. Co., 475 U.S. at 583(“[C]ompetitors . . . stand to gain from any conspiracy to
raise the market price.”). And the jury could have inferred
that Synta agreed to help Sunny acquire Meade because it
expected to receive favorable wholesale pricing for
Celestron-branded products and to engage in the market
allocation scheme addressed in Orion’s Section 1 claims.
Orion also offered evidence that Celestron was aware that its
conduct was, or could be perceived as anticompetitive.
Celestron provided $7.2 million in “prepayments” to Sunny
for unshipped telescopes to support Sunny’s acquisition of
Meade, and Celestron admitted that it would need to revert
to its usual course of dealing with Sunny to avoid unwanted
suspicion. We therefore hold that substantial evidence
supports the jury’s verdict that Sunny demonstrated the
specific intent to monopolize necessary for Section 2
liability. See id.; Castro, 833 F.3d at 1066; William Inglis,
668 F.2d at 1027.
Sunny finally suggests that the evidence Orion offered at
trial did not establish that Sunny was dangerously close to
attaining monopoly power. This contention is unavailing
and does not warrant reversal.
Monopoly power is the ability to “control prices” or
“exclude competition” in the relevant market. Image Tech.
28 OPTRONIC TECH. V. NINGBO SUNNY ELEC.
Servs., Inc. v. Eastman Kodak Co., 125 F.3d 1195, 1202,
1206 (9th Cir. 1997). It can be proven by direct or
circumstantial evidence. Id. at 1202. The latter approach
requires plaintiffs to “(1) define the relevant market,
(2) show that the defendant owns a dominant share of that
market, and (3) show that there are significant barriers to
entry and show that existing competitors lack the capacity to
increase their output in the short run.” Id. A market share
of sixty-five percent or more usually establishes a prima
facie case of monopoly power in Section 2 contexts. Id.
at 1206 (citation omitted). But “the minimum showing of
market share required in an attempt case is a lower quantum
than the minimum showing required in an actual
monopolization case.” Rebel Oil Co. v. Atl. Richfield Co.,
51 F.3d 1421, 1438 (9th Cir. 1995). We have held that a
market share as low as forty-four percent is sufficient to
support a finding that a party was dangerously close to
monopoly power where barriers to entry were high and
competitors could not expand their short-run output. Id.The evidence Orion presented at trial, including
Dr. Zona’s expert testimony, established that Sunny’s
market share was around fifty percent and reached its peak
of sixty-three percent in 2013. Sunny’s citations to its 2017
market share of about thirty-three-and-a-half percent, are
inapposite because, by 2018, Sunny’s market share was just
over forty-nine percent, above the forty-four percent mark
that we have recognized to be sufficient to establish a
dangerous proximity to market power. See id. Dr. Zona
testified that there are high barriers to entry in the telescope
manufacturing market, and that this market is highly
concentrated. Orion also presented evidence that there had
been no new entrants into the telescope manufacturing
market for ten years, corroborating Dr. Zona’s conclusion
that there are high barriers to entry in the telescope
OPTRONIC TECH. V. NINGBO SUNNY ELEC. 29
manufacturing market. After Sunny bought Meade, Sunny
became the largest telescope manufacturer in the world.
Sunny’s forty-nine percent market share could have risen
more if it had gotten Meade’s telescope manufacturing plant
up to speed. Substantial evidence therefore supports the
jury’s finding that Sunny was dangerously close to
monopoly power such that it could be held liable under
Section 2. See Castro, 833 F.3d at 1066; Rebel Oil, 51 F.3d
at 1438.
None of Sunny’s attacks successfully undermines the
jury’s verdict finding that Sunny unlawfully conspired to
monopolize the global telescope manufacturing market in
violation of Section 2 of the Sherman Act. Accordingly, the
Section 2 verdict stands.
E.
Orion prevailed on its Clayton Act § 7 (“Section 7”)
claim because the jury found a reasonable likelihood that
Sunny’s acquisition of Meade would substantially reduce
competition in the telescope manufacturing market or create
a monopoly. Sunny seeks a new trial on the basis that Orion
did not prove damages from this violation of Section 7.
Once more, we disagree.
Section 7 prohibits mergers that tend “substantially to
lessen competition” or “create a monopoly.” 15 U.S.C. § 18.
“To establish a prima facie [Section 7] case, [a plaintiff]
must (1) propose the proper relevant market and (2) show
that the effect of the merger in that market is likely to be
anticompetitive.” Fed. Trade Comm’n v. Penn State
Hershey Med. Ctr., 838 F.3d 327, 337–38 (3d Cir. 2016). A
new trial may be granted where there is “no evidence on the
amount of damages attributable only to the antitrust
violation.” Farley Transp. Co. v. Santa Fe Trail Transp.
30 OPTRONIC TECH. V. NINGBO SUNNY ELEC.
Co., 786 F.2d 1342, 1351 (9th Cir. 1985). But “[t]he district
court’s denial of the motion for a new trial is reversible only
if the record contains no evidence in support of the verdict.”
Id. at 1347. Once a plaintiff establishes “the fact of antitrust
injury,” we must uphold the jury’s finding as to the amount
of damages unless that finding is “‘grossly excessive or
monstrous,’ clearly not supported by the evidence, or ‘only
based on speculative guesswork.’” Handgards, Inc. v.
Ethicon, Inc., 743 F.2d 1282, 1287 (9th Cir. 1984) (citation
omitted).
Orion presented evidence of antitrust injury on its
Section 7 claim during trial. The theory that Orion set out to
the jury was that Sunny’s acquisition of Meade reduced the
number of major telescope manufacturers from three to two.
This manufacturer consolidation further concentrated the
already highly concentrated telescope manufacturing market
by causing its Herfindahl-Hirschman Index (“HHI”)—a
widely accepted measure of market concentration—to
increase by over 1,000 points, or five times the amount that
is presumptively anticompetitive. See St. Alphonsus Med.
Ctr., 778 F.3d at 788. By acquiring Meade, Sunny gained
increased control over telescope manufacturing, which
enabled Sunny and its competitors to charge
supracompetitive prices for telescopes. This was a major
factor in the overcharges that Orion experienced in its
business dealings with Sunny, Synta, and Meade. Sunny
tries to counter this analysis by arguing that Orion’s expert
Dr. Zona testified that the overcharges Orion had to pay did
not result from Sunny’s acquisition of Meade. But this
mischaracterizes Dr. Zona’s testimony. Dr. Zona only
confirmed that his damages calculation excluded damages
Orion sustained from its failure to acquire Meade. He did
not state that Orion was undamaged by supracompetitive
prices arising from the merger. Because Orion presented
OPTRONIC TECH. V. NINGBO SUNNY ELEC. 31
evidence of antitrust injury, and because the jury’s finding
as to damages was neither grossly excessive, unsupported,
nor the result of guesswork, Sunny is not entitled to a new
trial on the issue of Section 7 liability. See Handgards,
743 F.2d at 1287.
F.
The district court entered injunctive relief against Sunny
under Clayton Act § 16 (“Section 16”), 15 U.S.C. § 26, and
the UCL. Sunny claims this injunction is overbroad. We
review for abuse of discretion a grant of a permanent
injunction and any decision “underlying the imposition of
the injunction is reviewed by the standard that is appropriate
to that determination.” Bank of Am., 309 F.3d at 557.
Sunny suggests the district court’s injunction does not
flow from conduct that violated the antitrust laws, implying
that whether the banned conduct violates antitrust law is a
legal issue underlying the grant of injunctive relief and
subject to de novo review. That suggestion is incorrect.
Section 16 authorizes injunctive relief against any
“threatened loss or damage by a violation of the antitrust
laws.” 15 U.S.C. § 26. Such relief must be based on a “clear
indication of a significant causal connection between the
conduct enjoined or mandated and the violation found
directed toward the remedial goal intended.” United States
v. Microsoft Corp., 253 F.3d 34, 105 (D.C. Cir. 2001)
(quotation marks omitted). But a district court may order an
injunction “beyond a simple proscription against the precise
conduct previously pursued.” Nat’l Soc’y of Prof’l Eng’rs
v. United States, 435 U.S. 679, 698 (1978). The reviewing
court only asks if “the relief [is] a reasonable method of
eliminating the consequences of the illegal conduct.” Id. If
the jury finds that monopolization or attempted
32 OPTRONIC TECH. V. NINGBO SUNNY ELEC.
monopolization has occurred, the available injunctive relief
is broad, including to “terminate the illegal monopoly, deny
to the defendant the fruits of its statutory violation, and
ensure that there remain no practices likely to result in
monopolization in the future.” Microsoft, 253 F.3d at 103;
accord Ford Motor Co. v. United States, 405 U.S. 562, 573
(1972) (holding that antitrust relief must restore
competition).
There was no error. Sunny’s decision to forgo profits by
refusing to supply Meade was proof of its intent to restrain
competition. And the telescope manufacturing market
would become overconcentrated if Sunny eliminated Meade
as a competitor. The district court validly ordered Sunny to
supply Meade on non-discriminatory terms. This injunction
will help ensure that Sunny does not engage in practices
“likely to result in monopolization in the future.” Microsoft,
253 F.3d at 103.
Sunny similarly claims that the district court improperly
granted relief on Orion’s refusal-to-deal claim, which was
dismissed on summary judgment, when it ordered Sunny to
supply Orion on non-discriminatory terms. But the district
court can order conduct to “avoid a recurrence of the
[antitrust] violation and to eliminate its consequences.
Prof’l Eng’rs, 435 U.S. at 698. As explained above, the jury
properly found that Orion had been forced to pay inflated
prices as a result of the market power exerted by Sunny and
Synta following the unlawful Meade acquisition. The
district court thus properly fashioned a “reasonable method
of remedying the harm to [Orion] caused by [Sunny’s]
attempted monopolization and ensuring that [Sunny’s]
violations of antitrust law do not recur” with regard to Orion
by ordering Sunny to supply Orion on non-discriminatory
terms.
OPTRONIC TECH. V. NINGBO SUNNY ELEC. 33
Sunny, citing Kodak, argues that the district court’s order
to supply Orion and Meade on non-discriminatory terms is
inappropriate because it will result in a windfall for Orion
and so may create an oligopoly. See 125 F.3d at 1224–26.
But in Kodak, the defendant challenged various
requirements of an injunction insofar as they required
nondiscriminatory sales of parts to non-party competitors,
and we affirmed that “[i]njunctive relief covering
nonpart[ies] . . . is proper” to prevent future Sherman Act
violations. Id. at 1226. Sunny is now making the opposite
argument: that injunctive relief requiring an antitrust
defendant to deal on a nondiscriminatory basis is only
appropriate if it applies to the defendant’s interactions with
all market participants. Kodak imposes no such requirement.
The district court acted within its discretion in finding that,
under the facts of this case, extending injunctive relief only
to Orion and Meade would enhance, not stifle, competition.
See Ford, 405 U.S. at 573 (explaining that, in antitrust cases
involving injunctive relief, district courts have broad
discretion to “fit the decree to the special needs of the
individual case” (quotation marks omitted)). We decline to
conclude that the district court abused its discretion in
fashioning injunctive relief it deemed appropriate to prevent
a recurrence of the antitrust violations, or to remand this case
based on the scope of the injunction. See Prof’l Eng’rs,
435 U.S. at 698; Ford, 405 U.S. at 573; Microsoft, 253 F.3d
at 103.
G.
In connection with the antitrust claims at issue here,
Orion and Synta entered into the Settlement and Supply
Agreements in 2016, and Synta also agreed to supply Orion
on most favored customer terms. Sunny also stopped
supplying Orion in 2016. Sunny challenges the district
34 OPTRONIC TECH. V. NINGBO SUNNY ELEC.
court’s finding that its conspiracy with Synta could have
continued past 2016 and seeks judgment as a matter of law
on the issue of whether Orion is entitled to post-September
2016 damages.
The parties disagree on who bore the burden of proof on
this issue. Regardless, Orion offered substantial evidence
that the conspiracy between Sunny and Synta continued past
2016 because Synta kept overcharging Orion instead of
giving Orion the most favored customer rate, leading Orion
to pay more for telescopes than it had before its agreements
with Synta. This evidence also showed that Sunny stopped
supplying Orion. These acts to raise Orion’s costs are
suggestive of a continued conspiracy.
But even if the conspiracy between Sunny and Synta to
eliminate Meade as an independent competitor ended in
2016, when Orion and Synta signed the Settlement and
Supply Agreements, Orion could still recover post-2016
damages because it continued to suffer economic harm from
the harm to competition caused by the illegal concerted
activity. See L.A. Mem’l Coliseum Comm’n v. Nat’l
Football League, 791 F.2d 1356, 1366 (9th Cir. 1986) (“[A]
plaintiff need not prove that the antitrust violation was the
only cause of its injury in order to recover damages[;] proof
that the violation was a material cause is sufficient.”). The
purpose of Sunny and Synta’s conspiracy was to prevent
JOC from acquiring Meade and to eliminate Meade as an
independent competitor in the market for telescope and
telescope accessories manufacturing. This conspiracy
achieved its objective: a highly concentrated market with
fewer competitors and higher costs for telescope brands not
yet controlled by the co-conspirators. Orion’s antitrust post-
2016 injuries arose directly from the change in market
structure that resulted from the conspiracy’s successful
OPTRONIC TECH. V. NINGBO SUNNY ELEC. 35
elimination of Meade as an independent competitor. When
Sunny decided to stop supplying Orion, Synta exploited its
market power to charge Orion higher prices. Orion
nonetheless continued buying approximately seventy-five
percent of its telescopes from Synta because it lacked viable
alternate suppliers in the highly concentrated market. This
is consistent with Dr. Zona’s testimony; he explained that
structural changes to the telescope manufacturing market
brought about by the conspiracy continued to impose costs
on Orion after 2016, and he was able to estimate those costs.
Therefore, where an antitrust plaintiff suffers continuing
antitrust injuries from anticompetitive changes to market
structure that arose from a proven antitrust violation, we hold
that the violation may be a material cause of that injury, and
so recovery of damages is permitted, even after the last
proven date of the violative conduct. This rule accords with
the common-sense principle that “if you break it, you buy
it.” If a defendant has conspired to violate the antitrust laws
and thereby harmed a market’s competitive structure, it
remains liable for the continuing injuries suffered by
plaintiffs from the structural harm to competition that its
unlawful scheme brought about. It is no defense to argue
that the conspiracy has ended, where the conspiracy
achieved its anticompetitive objective. As a result, Orion
could prevail by showing that an overt pre-2016 conspiracy
had residual market effects that resulted in post-2016
damages.
The district court properly found that Sunny was not
entitled to judgment as a matter of law on post-2016
damages. The jury could have found that Sunny and Synta
continued conspiring after 2016 or that Orion’s post-2016
damages were a residual effect of a pre-2016 conspiracy
36 OPTRONIC TECH. V. NINGBO SUNNY ELEC.
between Sunny and Synta. See Castro, 833 F.3d at 1066.
Either would suffice to affirm.
H.
Sunny contends the district court improperly excluded a
declaration by Dr. Saravia in ruling on its post-trial motion
to alter or amend the judgment. In the district court’s view,
this declaration fell within the scope of Federal Rule of
Evidence 702, and was inadmissible as untimely under
Federal Rules of Civil Procedure 26 and 37.
But Rule 26 states that “a party must disclose to the other
parties the identity of any [expert] witness it may use at trial
. . . .” FED. R. CIV. P. 26(a)(2)(A). If a scheduling order is
issued, experts must be disclosed “at the times and in the
sequence that the court orders.” FED. R. CIV. P. 26(a)(2)(D).
Here, the district court entered a pre-trial scheduling order
that set a May 31, 2019 deadline for disclosure of rebuttal
experts. Sunny timely disclosed Mr. Redman and
Dr. Saravia as rebuttal experts. And there is no evidence that
Sunny did not attach written reports to these disclosures.
FED. R. CIV. P. 26(a)(2)(B). Indeed, Orion’s motion to
exclude Dr. Saravia’s testimony takes issue with her written
report. As such, the district court could not apply the rule
that “[i]f a party fails to provide information or identify a
witness as required by Rule 26(a)[,] the party is not allowed
to use that information or witness to supply evidence on a
motion” with regard to Dr. Saravia. FED. R. CIV. P. 37(c)(1).
We hold that the district court abused its discretion by
excluding under Federal Rules of Civil Procedure 26 and 37
the declaration that Dr. Saravia gave in support of Sunny’s
motion to alter or amend the judgment. See Yokoyama v.
Midland Nat’l. Life Ins. Co., 594 F.3d 1087, 1091 (9th Cir.
2010). We express no opinion on whether Dr. Saravia’s
OPTRONIC TECH. V. NINGBO SUNNY ELEC. 37
declaration is admissible under Federal Rule of Evidence
702 because the district court should address that issue in the
first instance. See Singleton v. Wulff, 428 U.S. 106, 120–21
(1976). We remand for further proceedings consistent with
this opinion.
IV. ORION’S CROSS-APPEAL
Orion cross-appeals the district court’s entry of summary
judgment for Sunny on the issue of whether Sunny caused
Orion’s failure to acquire Meade. But Orion must have
antitrust standing, consisting of the “(1) injury of the type the
antitrust laws were intended to prevent that also (2) flows
from that which makes defendants’ acts unlawful.” In re
Online DVD-Rental Antitrust Litig., 779 F.3d 914, 922 (9th
Cir. 2015) (cleaned up). And monetary recovery “will not
be permitted for injuries . . . independently caused by
something other than the antitrust violation.” Nat’l Football
League, 791 F.2d at 1366.
The relevant facts are that, in February 2013, Orion
offered $4.5 million to acquire Meade. Meade chose a
different higher offer from JOC. In April 2013, JOC reduced
its offer from $5 million to $4.5 million, so Meade re-opened
the bidding process. In May 2013, Meade reached out to
Orion and stated that it no longer had an exclusive merger
agreement with JOC. But Orion declined to submit another
offer to buy Meade at that time. JOC later offered
$4.5 million to purchase Meade, and Meade accepted. The
merger between JOC and Meade was announced on May 17,
2013. Sunny later made an unsolicited $5.87 million bid to
acquire Meade, so Meade abandoned its second deal with
JOC to accept Sunny’s offer.
Orion claims that a reasonable jury could have found in
its favor because: (1) JOC’s second bid for $4.5 million was
38 OPTRONIC TECH. V. NINGBO SUNNY ELEC.
the same amount as Orion’s bid; (2) JOC had backed out of
buying Meade once; and (3) Orion had more to gain from
purchasing Meade than JOC did and so it might have
increased its bid to ensure that it acquired Meade. These
arguments are unavailing because they do not properly
account for the timing of bids. Most importantly, when
Orion was informed that Meade’s deal with its prior high
bidder was off, Orion declined to even submit a bid to buy
Meade. Orion’s decision not to submit a new offer to Meade
creates a strong presumption that Orion would not have
acquired Meade even if Sunny had not outbid JOC for
Meade. Orion offered no evidence Meade would have
accepted a higher bid from Orion after announcing its
$4.5 million deal with JOC, or that Meade would have
terminated this deal for reasons other than Sunny’s bid.
There was no genuine dispute of material fact on whether
Sunny prevented Orion from buying Meade. See Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).
VACATED in part only with regard to the valuation
of the settlement set-off, which is REMANDED for
further proceedings consistent with this opinion.
AFFIRMED with regard to all other issues. We
AWARD costs on appeal to Orion.