The opinion of the court was delivered by: Preska, District Judge.
In 1986, PepsiCo's then-President and CEO, Roger Enrico, made
the following observation in his book, The Other Guy Blinked:
How Pepsi Won The Cola Wars:
By comparison [to the major battles of
history], of course, the battles that Pepsi-Cola
and Coke fight in the Cola Wars are trivial. There
are no final defeats. The ammunition we fire at one
another is often damn silly stuff. But for all
that, our battles are very real.
Tens of billions of dollars are at stake. And
"market share" — the sales performance of a soft
drink compared to others in its category. And
something intangible, but no less important: pride.
That last reason is, in this story, perhaps the
most important ingredient.*fn1
Whatever may be the "most important ingredient" in making cola
and whatever may be the "most important ingredient" in the Cola
Wars, the most important ingredient in opposing summary judgment
is "specific facts showing that there is a genuine issue for
trial." Fed.R.Civ.P. 56(e). By this measure, PepsiCo's brew
Plaintiff PepsiCo, Inc. ("PepsiCo") brought this action
against defendant The Coca-Cola Company ("Coca-Cola") for
monopolization and attempted monopolization of the market for
fountain-dispensed soft drinks distributed through independent
foodservice distributors throughout the United States in
violation of section 2 of the Sherman Act, 15 U.S.C. § 2.
Coca-Cola's motion to dismiss the complaint was denied. PepsiCo
later amended the complaint to add a claim under section 1 of
the Sherman Act, 15 U.S.C. § 1, alleging that Coca-Cola entered
into various agreements with individual foodservice distributors
amounting to concerted action in restraint of trade. Coca-Cola
now moves for summary judgment on all claims pursuant to
Fed.R.Civ.P. 56. For the reasons that follow, Coca-Cola's motion
Restaurant chains, movie theater chains and other foodservice
outlets purchase fountain soda syrup through intermediaries who,
in turn, have supply agreements with the syrup manufacturers.
These intermediaries include distributors and bottlers. Certain
distributors, so-called "independent foodservice distributors,"
provide "one-stop shopping," which allows the customer to obtain
all necessary supplies from one distributor at each of the
customer's locations. (See Adzia Decl. ¶ 11.) The type of
distribution provided by independent foodservice distributors is
referred to as "systems distribution," and these independent
foodservice distributors are sometimes referred to as systems
distributors. Bottlers provide fountain syrup and beverages to
customers but do not provide the "one-stop shopping"
characteristic of foodservice distributors. (See Wilson Dep.
Tr. Ex. 12 at CCND2034082.)
PepsiCo defined the relevant customer base in the amended
complaint as "restaurant chains, movie theater chains and other
`on-premise' accounts across America." (Am.Compl. ¶ 7.) PepsiCo
appears to have narrowed its customer definition in its
submission on this motion to large restaurant chain accounts
that are not "heavily franchised" with low fountain "volume per
outlet." (Pl.'s 56.1 Counterstmt. ¶¶ 30-31, 33, 36(a), (c).)
PepsiCo's amended complaint defines the relevant market
pertinent to the instant antitrust inquiry as "the market for
fountain-dispensed soft drinks distributed through independent
food service distributors throughout the United States." (Am.
Compl. ¶ 6.) The affidavits and exhibits show that customers
have a preference for receiving fountain syrup through
independent foodservice distributors because of the various
one-stop shopping advantages. For example, customers who receive
most or all of their supplies from a single source can minimize
back-door deliveries to each outlet, which in turn minimizes
business interruption. In addition, independent foodservice
distributors can provide consolidated invoicing and minimized
Coca-Cola has been distributing fountain syrup through
independent foodservice distributors for many years. PepsiCo
traditionally distributed its fountain syrup through bottlers
but, in the late 1990s, decided to change that distribution
method to utilize independent foodservice distributors. However,
Coca-Cola began to enforce its loyalty policy. Thus, PepsiCo was
essentially prohibited from distributing its syrup via
then-existing systems distribution. PepsiCo contends that
Coca-Cola's enforcement of the loyalty policy amounts to
unlawful monopolization and attempted monopolization.
Coca-Cola argues that PepsiCo has improperly defined the
relevant product market. Specifically, Coca-Cola asserts that
the relevant market cannot be limited to fountain drinks
"distributed through independent foodservice distributors."
According to Coca-Cola, customers of independent foodservice
distributors can obtain fountain drinks through other acceptable
substitutes, such as bottlers.
Coca-Cola also argues that there is no evidence that Coca-Cola
has monopoly power or any dangerous probability of achieving it
and that Coca-Cola's conduct has not caused PepsiCo any injury.
Last, Coca-Cola contends that its distributor agreements do
not restrain trade unreasonably and do not demonstrate a per
se unlawful horizontal conspiracy among the foodservice
"A motion for summary judgment may not be granted unless the
court determines that there is no genuine issue of material fact
to be tried and that the facts as to which there is no such
issue warrant judgment for the moving party as a matter of law."
Chambers v. TRM Copy Centers Corp., 43 F.3d 29, 36 (2d Cir.
1994); see Fed.R.Civ.P. 56(c); see generally Celotex Corp. v.
Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986);
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505,
91 L.Ed.2d 202 (1986); Matsushita Elec. Indus. Co., Ltd. v.
Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d
538 (1986). An issue of fact is genuine when "a reasonable jury
could return a verdict for the nonmoving party," and facts are
material to the outcome of the particular litigation if the
substantive law at issue so renders them. Anderson, 477 U.S.
at 248, 106 S.Ct. 2505.
The burden of establishing that no genuine factual dispute
exists rests on the party seeking summary judgment. Chambers,
43 F.3d at 36. Of particular relevance here is the Supreme
Court's reiteration in Celotex, 477 U.S. at 325, 106 S.Ct.
2548, that "the burden on the moving party may be discharged by
`showing' — that is pointing out to the district court — that
there is an absence of evidence to support the nonmoving party's
case." Accord Goenaga v. March of Dimes Birth Defects Found.,
51 F.3d 14, 18 (2d Cir. 1995) ("In moving for summary judgment
against a party who will bear the ultimate burden of proof at
trial," however, "the movant's burden will be satisfied if he
can point to an absence of evidence to support an essential
element of the nonmoving party's claim."); Gallo v. Prudential
Residential Servs., Ltd. Partnership, 22 F.3d 1219, 1223-24 (2d
Cir. 1994) ("[T]he moving party may obtain summary judgment by
showing that little or no evidence may be found in support of
the nonmoving party's case."). The moving party, in other words,
does not bear the burden of disproving an essential element of
the nonmoving party's claim.
If the moving party meets its burden, the burden shifts to the
nonmoving party to come forward with "specific facts showing
that there is a genuine issue for trial." Fed.R.Civ.P. 56(e);
accord Rexnord Holdings, Inc. v. Bidermann, 21 F.3d 522,
525-26 (2d Cir. 1994). The nonmoving party must "do more than
simply show that there is some metaphysical doubt as to the
material facts." Matsushita, 475 U.S. at 586, 106 S.Ct. 1348.
Instead, the nonmovant must "`come forward with enough evidence
to support a jury verdict in its favor, and the motion will not
be defeated merely . . . on the basis of conjecture or
surmise.'" Trans Sport v. Starter Sportswear, 964 F.2d 186,
188 (2d Cir. 1992) (citation omitted).
In assessing materials such as affidavits, exhibits,
interrogatory answers, and depositions to determine whether the
moving party has satisfied its burden, the court must view the
record "in the light most favorable to the party opposing the
motion" by resolving "all ambiguities and draw[ing] all factual
inferences in favor of the party against whom summary judgment
is sought." Chambers, 43 F.3d at 36. "If, as to the issue on
which summary judgment is sought, there is any evidence in the
record from any source from ...