## Facts

- E & L Consulting, Ltd. and an affiliated company (collectively, “E & L”) distributed green hem–fir lumber in several northeastern states for Doman Industries Limited and its subsidiary Eacom Timber Sales Ltd. from about 1990 to 2004.
- Under the arrangement, E & L took delivery of lumber at a Brooklyn port facility but did not take ownership; it sold the lumber on Doman’s behalf for a commission.
- Doman and Eacom allegedly supplied about 95% of the green hem–fir lumber sold in New York, New Jersey, Connecticut, Rhode Island, Maryland, Delaware, and Pennsylvania.
- Sherwood Lumber Corp. purchased Doman lumber and resold it as a conventional wholesaler; Doman restricted E & L from selling into Sherwood’s service area.
- Doman terminated E & L’s distributorship and announced Sherwood as its exclusive distributor of green hem–fir lumber in the region.
- E & L sued, alleging federal antitrust violations: unreasonable restraint of trade under Sherman Act § 1 (including exclusive dealing), monopolization/attempted monopolization under § 2, unlawful tying, and a group boycott theory; it also pleaded state-law claims.
- The district court dismissed the federal antitrust claims under Rule 12(b)(6) and declined supplemental jurisdiction over the state-law claims.

## Issues

1. Whether allegations of termination and an exclusive distributorship stated a plausible § 1 claim under the rule of reason by pleading harm to competition in a properly defined market.
2. Whether Doman’s alleged market share plus the exclusive distributorship and termination plausibly stated monopolization or attempted monopolization under § 2.
3. Whether the complaint plausibly alleged an unlawful tying arrangement, including distinct products, coercion, and anticompetitive effects in a separate tied market.
4. Whether the alleged conduct plausibly constituted an actionable group boycott or concerted refusal to deal.

## Decision

- The Second Circuit affirmed dismissal of all federal antitrust claims.
- The court held the complaint failed to plead facts showing harm to competition (e.g., higher prices, reduced output, diminished quality, or exclusion of rivals), alleging at most harm to E & L as a displaced distributor.
- The court treated the challenged conduct as a vertical exclusive distributorship analyzed under the rule of reason and found no plausible allegations of substantial foreclosure or marketwide anticompetitive effects.
- The court held that a high market share, without plausible allegations of exclusionary conduct harming the competitive process, did not state § 2 monopolization or attempted monopolization.
- The tying claim was dismissed for failure to identify distinct tying and tied products and to plead coercion or a substantial effect on a separate tied-product market.
- The group-boycott theory failed because the allegations described a vertical choice of distributor rather than a per se unlawful horizontal boycott, and the complaint still lacked pleaded harm to competition.

## Legal Principles

- Antitrust laws protect competition, not individual competitors; a plaintiff must plead antitrust injury—injury of the type antitrust law seeks to prevent and flowing from what makes the conduct unlawful.
- Vertical nonprice restraints, including exclusive distributorships, are generally evaluated under the rule of reason and require plausible allegations of anticompetitive effects in a relevant market.
- Market share alone does not establish § 2 liability; the plaintiff must plead exclusionary conduct and a competitive harm beyond a change in distribution strategy.
- An unlawful tying claim requires distinct products, conditioning/coercion, and a plausible anticompetitive effect in a separate tied-product market.
- A boycott theory is not per se unlawful when it reflects a vertical supplier–distributor decision; absent pleaded harm to competition, it fails under rule-of-reason analysis.

## Conclusion

The Second Circuit affirmed dismissal because the complaint recast a distributorship termination and exclusive-dealing decision as antitrust misconduct without plausibly alleging marketwide competitive harm or cognizable antitrust injury, and it failed to plead the required elements of § 1, § 2, tying, or boycott theories.


E & L Consulting, Ltd. v. Doman Indus. Ltd., 472 F.3d 23 (2d Cir. 2006)