Swisher International, Inc. v. Trendsettah USA, Inc., et al.

Plaintiffs Trendsettah USA, Inc. and Trendsettah Inc. (together, “TSI”) entered into contracts with Swisher International, Inc., under which Swisher would produce untipped cigarillos for sale by TSI. After the contracts expired, TSI sued Swisher for failing to fulfill some of TSI’s orders, alleging breach of contract and violation of Section 2 of the Sherman Act. The jury returned a verdict in favor of TSI, but the district court ordered a new trial because the jury had not been instructed regarding the standards for refusal-to-deal liability under the Sherman Act. The Ninth Circuit reversed, holding that a duty-to-deal instruction was not required because the jury had received instruction on a “legitimate business purpose” defense. It then held that TSI had carried its burden of proving harm to competition by showing only that its own output was diminished—even though marketwide output increased robustly. The questions presented are:

1. Whether a jury verdict finding a defendant liable under Section 2 of the Sherman Act for refusing to deal or cooperate with a competitor may be upheld when the jury was not instructed (a) that a monopolist has no general duty to deal with its business rivals or (b) that the plaintiff must prove that the refusal was contrary to the defendant’s short-run interests.

2. Whether an impact on a single firm’s output can give rise to a presumption of injury to competition under Section 2 of the Sherman Act, even when marketwide output is increasing.