Tundra, Inc. v. Faire Wholesale, Inc.

Background

Tundra brought an antitrust claim under the Sherman Act and two state-law claims against Faire Wholesale, Inc. Faire moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim.

Relevant market

The court explained that accurately defining the relevant market—the area where effective competition occurs—is a threshold requirement in an antitrust case. Tundra proposed a market consisting of “online wholesale marketplaces that connect local” brands with retailers, including new or emerging brands. The court found that Tundra did not define terms such as “local,” “new,” or “emerging.” It concluded that these vague terms artificially narrowed the market in a way that attributed a greater market share to Faire and made the proposed market definition legally implausible.

Tundra argued that Faire’s use of similar terms in public statements supported the market definition. The court rejected that argument, stating that Faire’s statements did not cure the vagueness. Tundra also offered alternative descriptions, including the market for online wholesale marketplaces or online wholesale platforms. The court stated that amending the complaint to use such an alternative definition should be straightforward.

Ruling

The court dismissed Tundra’s first cause of action under the Sherman Act for failure to state a claim, with leave to amend. Because that claim was the one over which the court had original jurisdiction, the court declined to exercise supplemental jurisdiction over the remaining state-law claims and additionally dismissed Tundra’s second and third causes of action. The court did not reach the parties’ remaining arguments about Faire’s allegedly anticompetitive contracts and conduct.

The court allowed Tundra 21 days from the date of the order to amend. It stated that no additional parties or claims could be added to an amended complaint without the court’s permission or Faire’s stipulation. Judge Araceli Martinez-Olguin signed the order.