FILED

NOT FOR PUBLICATION

APR 28 2022

UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

A-WORLD TRADE, INC., No. 21-55262

Plaintiff-Appellant, D.C. No. 2:20-cv-01032-SB-MAA v.

APMEX, INC.; et al., MEMORANDUM*

Defendants-Appellees.

Appeal from the United States District Court for the Central District of California Stanley Blumenfeld, Jr., District Judge, Presiding

Argued and Submitted March 18, 2022 San Francisco, California

Before: CHRISTEN and BRESS, Circuit Judges, and LYNN,** District Judge.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Barbara M. G. Lynn, Chief United States District Judge for the Northern District of Texas, sitting by designation. Plaintiff A-World Trade, Inc. appeals the district court’s dismissal of its

Third Amended Complaint alleging that defendants1 violated § 1 of the Sherman

Act, 15 U.S.C. § 1. We review the district court’s decision de novo, Hicks v. PGA

Tour, Inc., 897 F.3d 1109, 1117 (9th Cir. 2018), and we affirm. Because the

parties are familiar with the facts of this case, we need not recite them here.

1. The district court did not err in dismissing plaintiff’s Sherman Act claim.

“To establish liability under § 1, a plaintiff must prove (1) the existence of an

agreement, and (2) that the agreement was in unreasonable restraint of trade.”

Aerotec Int’l, Inc. v. Honeywell Int’l, Inc., 836 F.3d 1171, 1178 (9th Cir. 2016). In

the absence of direct evidence of an agreement, a plaintiff must plead that the

defendants’ parallel conduct, coupled with “plus factors,” plausibly suggests the

existence of an agreement. See In re Musical Instruments & Equip. Antitrust

Litig., 798 F.3d 1186, 1193 (9th Cir. 2015).

Plaintiff alleges that parallel conduct existed because defendants made

significant sales of precious metal bullion products (“PMBs”) in short periods,

followed by sharp returns to normal sales. Plaintiff alleges four, interrelated “plus

1 The defendants in this case are Apmex, Inc., Bay Precious Metals, Inc., Bullion Exchange, LLC, Bullion Shark, LLC, DBS Coins, LP, JM Bullion, Inc., Liberty Coin, LLC, Moderncoinmart, LLC, Pinehurst Coin Exchange, Inc., Scottsdale Mint, LLLP, SD Bullion, Inc., Silver Towne, Inc., Texas Gold and Silver Exchange, Ltd., and Silver Gold Bull USA, Inc. (collectively, “defendants”). 2 factors”: (1) anomalous pricing behavior whereby one defendant would lower its

prices below cost to sell large quantities of PMBs, and none of the other defendants

followed suit to compete; (2) defendants acted against their own interests by

forfeiting price control to eBay; (3) defendants’ knowledge of each other and the

coordinated plan; and (4) defendants’ “written commitments” with eBay that

marked the material terms defendants promised to abide by in furtherance of their

alleged price-fixing scheme.

These “plus factors” do not plausibly suggest the existence of a horizontal

agreement between defendants because they are explained by defendants’

agreements to participate in eBay’s Daily Deals Program. The Program spans

many categories of products and is not limited to PMBs. The more obvious

alternative explanation is that defendants individually participated in the Daily

Deals Program for rational, economic reasons—to reap the benefits of the

Program’s subsidies and to obtain a higher volume of sales. Like sellers in other

industries, defendants’ decisions to participate in the Daily Deals Program is fully

consistent with unilateral conduct. See In re Musical Instruments, 798 F.3d at

1194. Notably, eBay is not a defendant in this case, and plaintiff does not allege

that the Daily Deals Program agreements between defendants and eBay violate § 1.

3 Plaintiff responds that the Daily Deals Program “does not explain how

[defendants] knew to wait for, and not compete with, the single [defendant]

consuming all of the market demand for the given time period.” But as the district

court correctly noted, it made no apparent economic sense for defendants to

undercut the “Featured Seller” and sell their products at a loss absent the eBay

subsidy.

Plaintiff also alleges that defendants engaged in a predatory pricing scheme

by selling PMBs at below cost. “In a typical predatory-pricing scheme, the

predator reduces the sale price of its product (its output) to below cost, hoping to

drive competitors out of business. Then, with competition vanquished, the

predator raises output prices to a supracompetitive level.” Weyerhaeuser Co. v.

Ross-Simmons Hardwood Lumber Co., Inc., 549 U.S. 312, 318 (2007) (citing

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 584-85 (1986)).

According to plaintiff, defendants’ costs of selling an item on eBay include

the purchase cost of the PMBs, eBay transaction fees, shipping costs of the PMBs,

payment processing fees, and certain additional costs. Plaintiff estimated each of

these costs, compared them to recorded PMB transactions in which defendants sold

PMBs during a two-month period in 2019, and concluded that defendants sold

PMBs at below cost.

4 But the allegation that defendants sold PMBs on eBay at below cost is

implausible. As the district court correctly held, “[b]y failing to account for the

eBay subsidy—a key financial incentive to participate in the Daily Deals

Program—Plaintiff’s calculations and allegations neglect the economic reality of

each eBay sale at issue and miss Defendants’ means of recouping the discounts

offered to consumers.” See also U.S. v. Concentrated Phosphate Exp. Ass’n, 393

U.S. 199, 208 (1968) (“In interpreting the antitrust laws, we . . . . must look at the

economic reality of the relevant transactions.”) (internal citation omitted). It is

necessary to consider both the PMB’s sale price and the subsidy from eBay, and

indeed, plaintiff does not allege that defendants’ sales would be below cost if the

eBay subsidy were included.

2. The district court did not abuse its discretion in declining to exercise

supplemental jurisdiction over plaintiff’s state law claims brought pursuant to §§

17043 and 17045 of the California Business and Professions Code. See Costanich

v. Dep’t of Soc. & Health Servs., 627 F.3d 1101, 1107 (9th Cir. 2010) (stating

standard of review). In declining to exercise supplemental jurisdiction, the district

court considered “judicial economy, convenience, fairness, and comity,” see

United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 726 (1966), and determined

that “[t]hese factors tip in favor of allowing Plaintiff’s state-law claims to proceed

5 in state court.” The court explained that comity interests were especially strong

because “the remaining state claims imply that eBay’s popular Daily Deals

Program may be unlawful under California law,” and expressed concern about the

parties’ cursory briefing of the state law claims. Thus, the district court did not

abuse its discretion in declining to exercise supplemental jurisdiction over

plaintiff’s state law claims. See 28 U.S.C. § 1367(c)(3); Acri v. Varian Associates,

Inc., 114 F.3d 999, 1001 (9th Cir. 1997) (en banc).

AFFIRMED.

6