product comes from the tying product itself or from the tied
product. (Plaintiffs' Surreply, p. 6.) The court in
Robert's Waikiki U-Drive observed that the airlines' economic
interest was mainly in airfare, as opposed to car rental
payments. 491 F. Supp. at 1209. Similarly, in discussing
Rodrigue plaintiffs state that Chrysler "received no economic
benefit from the sale of the tied product." (Plaintiffs'
Surreply, p. 8.) The court doubts the value of any analysis
that can be built on these hints of a theory. In most cases it
probably is impossible to determine whether the economic
benefit flows from sales of the tying product or from sales of
the tied product. To the extent one can make such a
determination in the present case, it would seem that the
developer defendants' alleged economic benefit flows from the
sale of their own product, condominium units, at inflated
prices and with lower repair expense, rather than from the sale
of management services. The distinction proposed by plaintiffs
therefore does not aid their position.
Plaintiffs devote a paragraph to the proposition that the
economic benefit to the developer defendants was "direct."
(Plaintiffs' Surreply, p. 6.) In the Crawford case the Court
did suggest that "direct profits" would be sufficient to
support a tying claim. 338 F.2d at 939. Other courts also have
used the word "direct," but the case law cannot be said to have
assigned any substantive meaning to the term "direct" in this
context; so, "direct" remains nothing more than a conclusory
Another argument is suggested in plaintiffs' discussion of
the Venzie case. Plaintiffs assert that the court in Venzie
undoubtedly would have found illegal tying had the licensed
installation service applied the fireproofing material in a way
that concealed defects in the material. Plaintiffs reason that
"[t]his would give the manufacturer of the fireproofing
material an economic interest in requiring purchasers to use
only that applicator, just as the Developers in the instant
case had an interest in the purchasers of condominiums using
only Rubloff as a management service." (Plaintiffs' Surreply,
p. 7.) This argument is unsatisfactory. To begin with, the
licensor in Venzie apparently did have an interest in having
only the one Philadelphia licensee install its fireproofing
material; that is, "to insure proper application of its
products when purchased by others." 521 F.2d at 1317. Arguably,
plaintiffs' suggested reasoning can be reconciled with Robert's
Waikiki U-Drive, as to which one might say that any car rental
company would have served equally well for purposes of the
airlines' promotional campaign. Or (if this is the thrust of
plaintiffs' argument), the airlines did not fear that
occasional use of other car rental companies would expose some
flaw in the airlines' own product. If plaintiffs had developed
their argument the court would be in a better position to
evaluate it. As it is, the court is unable to see how
plaintiffs' suggested reasoning would be useful.
It appears to the court that the case law draws a clear line
when the tying and the tied products are sold by different,
unaffiliated sellers. In such cases, if the seller of the
tying product receives a commission or rebate on sales of the
tied product, then a claim of illegal tying may be made out.
Other types of economic benefits flowing to the seller of the
tying product are not sufficient to support such a claim. Of
course, in some cases it may be appropriate to analogize
certain economic benefits to commissions or rebates, but the
court is not convinced that such an analogy is appropriate in
this case. The benefit alleged by plaintiffs bears little
resemblance to the payment of a commission. The developer
defendants are not alleged to have participated in the profits
of Arthur Rubloff & Co. or in the market for management
In Johnson v. Nationwide Industries, Inc., 450 F. Supp. 948
(N.D.Ill. 1978), and Jones v. 247 East Chestnut Properties,
 2 Trade Cas. (CCH) ¶ 60,491 (N.D.Ill. 1974), the
question of economic interest in sales of the tied product
apparently was not considered. In Johnson the court did refer
briefly to this issue, but it did not
have to reach any decision. 450 F. Supp. at 950-51. See also
Johnson v. Nationwide Industries, Inc., No. 77 C 1162 (N.D.Ill.
Dec. 6, 1979, Jan. 14, 1981), appeal argued, [715 F.2d 1233]
No. 81-1347 (7th Cir. Sept. 24, 1980). In Jones the question
appears not to have been considered at all. These cases
therefore give no guidance to the court on this question.
For the foregoing reasons the court concludes that
plaintiffs have not stated a claim of illegal tying under
section 1 of the Sherman Act. Accordingly, Count I of the
complaint is dismissed for failure to state a claim. Because
plaintiffs' only federal count is dismissed before trial, the
court declines to exercise pendent jurisdiction over the
remaining counts; Counts II through IX therefore are dismissed
without prejudice, for want of subject-matter jurisdiction.
The case is dismissed.
It is so ordered.
On Motion To Alter or Amend
The court has considered the parties' submissions pursuant
to the court's order of August 4, 1983, and in particular the
court has considered Roberts v. Elaine Powers Figure Salons,
Inc., 708 F.2d 1476 (9th Cir. 1983), and Warner Management
Consultants, Inc. v. Data General Corp., 545 F. Supp. 956
(N.D.Ill. 1982). The court also has reviewed Johnson v.
Nationwide Industries, Inc., 715 F.2d 1233 (7th Cir.
1983).*fn1 Upon reconsideration, the court's view of the law
remains the same, and the court amends its previous judgment
only to the extent of correcting a clerical error.
Defendants' memoranda adequately reconcile Roberts and Warner
with the court's order of July 22, 1983. The court wishes to
emphasize that plaintiffs are arguing for an expansion of the
tying doctrine. The economic interest requirement is conceded
to be a necessary element of a tying claim; yet, plaintiffs
rely only on a type of economic incentive which, as far as the
court is informed, has never been held to support a tying
claim. It is worth pointing out that the traditional analysis
of tying arrangements has been called into question, although
new reasons have been suggested for proscribing tying. See R.
Posner, Antitrust Law: An Economic Perspective 171-84 (1976).
See also Baker, The Supreme Court and the Per Se Tying
Rule: Cutting the Gordian Knot, 66 U.Va.L. Rev. 1235 (1980). In
the court's view, no analysis of tying arrangements compels
plaintiffs' proposed extension of the tying doctrine.
The court notes also plaintiffs' belated argument that the
requisite economic interest may be found in an affiliation
between the developer defendants and the Rubloff defendants.
The court cannot agree that plaintiffs' allegations support
the inference that these two sets of defendants were "business
affiliates." (Plaintiffs' memo filed 9/29/83, p. 14.)
It is appropriate for the court to address plaintiffs'
belated and implicit request that their allegations be
considered under the Rule of Reason. Tying, as defined by the
case law, is per se illegal.*fn2 Of course, a plaintiff's
failure to state a per se antitrust violation does not
foreclose resort to a Rule of Reason analysis, and this general
proposition has been noted particularly in connection with
failed per se tying claims. Fortner Enterprises v. United
States Steel Corp., 394 U.S. 495, 499-500, 89 S.Ct. 1252,
1256-1257, 22 L.Ed.2d 495 (1969); Moraine Products v. ICI
Inc., 538 F.2d 134, 146, 148 (7th Cir.), cert. denied,
429 U.S. 941, 97 S.Ct. 357, 50 L.Ed.2d 310 (1976). Plaintiffs do not
argue explicitly for Rule of Reason analysis, but they raise
this issue implicitly, in their discussion of BBD
Transportation Co. v. United States Steel Corp., 1976 Trade
Cas. (CCH) ¶ 61,079 (N.D.Cal. 1976).*fn3 While failure to
state a per se tying claim does not foreclose resort to a Rule
of Reason theory, a failed attempt to state a per se tying
claim does not necessarily survive a motion to dismiss merely
because there has been an oblique invocation of the Rule of
Reason. Per se claims generally do not require a thorough
inquiry into whether the alleged conduct is of the type with
which the antitrust laws are concerned; the purpose of per se
rules is to avoid repeated inquiries of this kind regarding the
same type of behavior. When a per se claim is not made out, the
court cannot simply rely on a perceived resemblance between the
alleged conduct and some similar conduct known to constitute a
per se violation. Instead, the court must refer to the general
standards of the antitrust laws, and must undertake "a more
thorough examination of the purposes and effects of the
practices involved." Id. 394 U.S. at 499-500, 89 S.Ct. at 1257.
Plaintiffs have not argued their case in this way, and they
have not put forward any particular Rule of Reason analysis.
In the court's view, unaided by any real argument from
counsel, no Rule of Reason claim is stated. Plaintiffs'
allegations disclose a scheme to sell condominium units at an
inflated price by engaging a management company which would
conceal substantial flaws in the condominium buildings. Were
the elements of a per se tying claim alleged, the court perhaps
would not ask whether this is the type of scheme the Sherman
Act prohibits.*fn4 Plaintiffs' allegations do not fall within
the per se rule, however, and the court must ask whether the
alleged conduct falls within the Sherman Act. That the alleged
scheme involved both management services and condominium units
creates some resemblance to per se illegal tying, but the court
must conclude that plaintiffs' allegations do not fall within
the Sherman Act. This is not a case in which a developer uses
its market power for the purpose of altering the competitive
structure of the market for management services, nor is this a
case in which a developer uses its power in one market to
squeeze a profit out of a second market. As alleged, the case
is about a scheme to conceal faults from purchasers. This is
not the type of conduct with which the antitrust laws are
concerned. The Court of Appeals recently has stated:
The legislators who passed the Sherman Act did
not make ordinary business torts federal torts
for which treble damages could be recovered; no
such wholesale displacement of state tort law
into the federal courts was contemplated or
desired, however quaint RICO may make these
nineteenth-century legislators' scruples seem.
Sutliff, Inc. v. Donovan Companies,