Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
Appeal from a judgment of the Superior Court of Orange County Super. Ct. No. 05CC07099, Andrew P. Banks, Judge. Reversed and remanded.
Case, Knowlson, Jordan & Wright and Patrick Walsh for Plaintiff and Appellant.
Dorsey & Whitney and Kathlene W. Lowe for Defendant and Respondent.
* * *
FYBEL, J.
INTRODUCTION
Consortium Information Services, Inc. (Consortium), asserted causes of action against Experian Information Solutions, Inc. (Experian), for (1) intentional interference with prospective economic advantage, (2) trade libel, (3) common law unfair competition, (4) unfair competition in violation of the California unfair competition law, Business and Professions Code section 17200 et seq. (UCL), and (5) violation of the Cartwright Act, section 16700 et seq. The trial court sustained without leave to amend Experian’s demurrer to Consortium’s third amended complaint on the grounds that each cause of action was time-barred and that Consortium failed to allege facts sufficient to constitute a cause of action. Consortium appealed from the resulting judgment of dismissal (Consortium does not challenge dismissal of the third cause of action, for common law unfair competition).
Reviewing de novo, and drawing all inferences from the well-pleaded facts, we conclude Consortium’s third amended complaint does allege facts sufficient to constitute causes of action, each of which is timely under the relevant statute of limitations. We therefore reverse and remand. Because we are reviewing a judgment entered after a demurrer was sustained without leave to amend, we are concluding only that the complaint alleges facts sufficient to constitute a cause of action and are not commenting on the merit of Consortium’s claims.
ALLEGATIONS
In determining whether Consortium stated a claim for relief, we treat as true all properly pleaded material facts (Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126), which are described as follows.
Consortium’s business is to sell credit reports, primarily to automobile dealers. These dealers typically agree to purchase credit reports exclusively from Consortium, at a fixed price per report, for a term of one year or more. Consortium sells reports created by Experian.
Experian creates credit reports from information obtained through its data collection systems. It sells the reports directly to end users such as banks, credit unions, and automobile dealers. Experian also sells its credit reports to affiliated service bureaus, which in turn sell the reports to end users or to marketers. Experian, with Equifax and TransUnion, is recognized as one of the “‘Big 3’” companies that dominate the market for credit reports in the United States.
Consortium’s third amended complaint used the terms “affiliated” and “affiliate” without definition. Those terms, liberally construed, refer to any reseller of Experian reports that obtains the reports directly from Experian. As we construe the complaint, the term “affiliate” is not limited to entities owned by or related to Experian.
Consortium does not create credit reports or purchase them directly from Experian. Rather, Consortium purchases Experian credit reports from service bureaus, which purchased the reports from Experian. Because Consortium sells a large volume of credit reports, it can obtain prices from the service bureaus that allow Consortium to compete with Experian in selling credit reports to automobile dealers.
Consortium can lawfully obtain Experian credit reports only from Experian, one of its regional affiliates, or a reseller of Experian reports. Experian owns some of those regional affiliates, while others are independently owned. The affiliates can obtain Experian brand reports from Experian by purchasing them at prices that are typically lower than prices Experian charges end users directly. Agreements between Experian and its affiliates allow Consortium and other marketers to sell Experian brand credit reports to end users for substantially less than the prices that either Experian or its affiliates charge end users directly.
In 1996, Consortium entered into an agreement with an Experian affiliate, Credit Bureau Servicing West Central Texas, allowing Consortium to purchase and resell Experian credit reports. Between 1996 and 1999, when that agreement expired, Consortium achieved sales levels of about $235,000 per month in Experian credit reports. In 1999, another Experian affiliate, Credit Data Services, Inc. of Florida (CDS) agreed to sell Experian credit reports to Consortium. By that time, Consortium was selling Experian credit reports to over 400 automobile dealerships, which were ordering over 100,000 Experian credit reports per month.
Experian pressured CDS into backing out of its agreement with Consortium. This forced Consortium to hand over its Experian credit report business to Experian for no compensation to protect Consortium’s reputation and to make sure Consortium’s clients continued receiving Experian credit reports. Consortium sued CDS and recovered $1.6 million. Experian rewarded CDS by giving it an “unprecedented” 20-year contract extension.
In early 2001, Experian decided that competition from Consortium was “unacceptable” and decided to put Consortium out of business. In May 2001, in pursuance of its plan to put Consortium out of business, Experian placed Consortium and its principal, Robert Esquinas, on a “customer alert list” circulated to Experian’s service bureaus. “This meant that [Experian] would cease doing business with anyone doing business with either [Consortium] or Mr. Esquinas. Such action constituted a threat to all business entities with whom [sic] [Experian] did business that [Experian] would refuse to do business with them if they did any business with [Consortium] or Mr. Esquinas.”
Experian concealed its actions from Consortium and restricted access to the customer alert list in a way that prevented Consortium from learning of Experian’s actions. Late in 2001, a service bureau representative told Consortium the service bureau could not deal with Consortium because it and Esquinas were on Experian’s customer alert list. However, Experian refused to confirm or deny Consortium’s presence on the customer alert list or to explain why Consortium was on the list.
Consortium learned definitively it was on Experian’s customer alert list during the deposition of Experian senior vice-president Terry McComas on November 20, 2002. McComas testified that “[Experian] had placed [Consortium] on the customer alert list to prevent it from obtaining ‘Experian’ credit reports, that neither [Consortium] nor its principal, Robert Esquinas, had actually engaged in any behavior that would warrant their inclusion on the customer alert list, and that Mr. McComas did not think [Experian] should have placed [Consortium] or its principal on the customer alert list.”
Experian’s customer alert list previously had been restricted to persons or companies that had violated credit reporting statutes (such as the Fair Credit Reporting Act) or that had demonstrated financial inability to perform their obligations. “This restriction was explicitly made known by [Experian] to the recipients of the list, and was fully understood by them.” Consortium, however, had not violated any credit reporting statutes and was able to meet its financial obligations.
Experian “maintains and circulates its customer alert list on an ongoing basis.” Once on the list, a person or entity stays on the list until Experian “affirmatively announces its removal.” As a result, Consortium and Esquinas have remained on the customer alert list “on an ongoing basis” to the present day.
PROCEDURAL HISTORY
Consortium filed its complaint against Experian in June 2005. Successive demurrers resulted in the third amended complaint, in which Consortium asserted causes of action for intentional interference with prospective economic advantage, trade libel, common law unfair competition, unfair competition in violation of the UCL, and violation of the Cartwright Act.
The trial court sustained Experian’s demurrer to the third amended complaint without leave to amend, concluding that each cause of action was untimely under the relevant statute of limitations and that the third amended complaint failed to state facts sufficient to constitute a cause of action. A judgment of dismissal was entered on August 16, 2006, and Consortium timely appealed. (Consortium does not challenge dismissal of the third cause of action, for common law unfair competition.)
STANDARD OF REVIEW
We review de novo an order sustaining a demurrer without leave to amend. (Barden v. DaimlerChrysler Corp. (2006) 136 Cal.App.4th 1255, 1264.) “‘“We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed.” [Citation.] Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action. [Citation.]’” (Zelig v. County of Los Angeles, supra, 27 Cal.4th at p. 1126.)
DISCUSSION
I. Are Consortium’s Claims Time-barred?
Experian placed Consortium on its customer alert list in May 2001, and Consortium filed its lawsuit over four years later, in June 2005. The trial court concluded, and Experian argues, all of Consortium’s causes of action are time-barred under the relevant statutes of limitation. We conclude Consortium has alleged facts making its causes of action timely.
Consortium’s first and second causes of action, respectively for interference with prospective economic advantage and trade libel, are subject to a two-year statute of limitations. (Kolani v. Gluska (1998) 64 Cal.App.4th 402, 408; Guess, Inc. v. Superior Court (1986) 176 Cal.App.3d 473, 478.) Consortium’s fourth and fifth causes of action, respectively for violations of the UCL and the Cartwright Act, are subject to a four-year statute of limitations. (Bus. & Prof. Code, §§ 17208, 16750.1.)
The statute of limitations usually commences when a cause of action accrues. (Bernson v. Browning-Ferris Industries (1994) 7 Cal.4th 926, 931.) A cause of action is said to accrue on the date of injury or “‘upon the occurrence of the last element essential to the cause of action.’” (Ibid.)
Damages are a necessary element of each of Consortium’s causes of action. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1153 [interference with prospective economic advantage]; Guess, Inc. v. Superior Court, supra, 176 Cal.App.3d at p. 479 [trade libel]; Bus. & Prof. Code, § 17204 [requiring injury in fact and loss of money or property for private action under unfair competition law]; Bus. & Prof. Code, § 16750, subd. (a) [requiring injury to business or property for private action under the Cartwright Act].) “When damages are an element of a cause of action, the cause of action does not accrue until the damages have been sustained.” (City of Vista v. Robert Thomas Securities, Inc. (2000) 84 Cal.App.4th 882, 886.)
The third amended complaint alleged Experian placed Consortium on the customer alert list in May 2001. The complaint did not allege when Consortium first suffered damages; rather, as to damages, the complaint alleged: “[Experian]’s actions have been successful in preventing [Consortium] from entering into any relationships with any service bureaus, and in turn from entering into or continuing its relationships with end user customers. Thus, such actions have interfered with [Consortium]’s relationships with both groups and continue to do so on an ongoing basis. [Consortium] has been damaged as a result in an amount currently unknown.”
It is possible that Consortium’s claims are time-barred. However, “[i]n order for the bar of the statute of limitations to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows that the action may be barred.” (Marshall v. Gibson, Dunn & Crutcher (1995) 37 Cal.App.4th 1397, 1403.) On its face, Consortium’s complaint alleges damages incurred within the limitations period.
Based on Civil Code section 3425.3, the trial court concluded Consortium’s causes of action are time-barred because those claims could only arise out of the issuance of the customer alert list in May 2001. Under the single-publication rule of Civil Code section 3425.3, “publication generally is said to occur on the ‘first general distribution of the publication to the public.’” (Shively v. Bozanich (2003) 31 Cal.4th 1230, 1245.) Experian does not argue the single-publication rule in this appeal. Indeed, the single-publication rule is inapplicable to Consortium’s trade libel cause of action. Although a cause of action for libel accrues when the defamatory matter is published (Bernson v. Browning-Ferris Industries, supra, 7 Cal.4th at p. 931), a cause of action for trade libel accrues when the plaintiff suffers “special damages in the form of pecuniary loss” because damages are an element of the cause of action (Guess, Inc. v. Superior Court, supra, 176 Cal.App.3d at p. 479; see City of Vista v. Robert Thomas Securities, Inc., supra, 84 Cal.App.4th at p. 886). Accordingly, Consortium’s causes of action accrued when Consortium suffered damages, not necessarily when the customer alert list was published.
II. Did Consortium Allege Facts Sufficient to Constitute a Cause of Action?
A. Trade Libel
Experian contends Consortium’s trade libel cause of action fails to state a claim because Consortium did not allege that placing it on the customer alert list conveyed a defamatory meaning. We disagree.
The tort of trade libel “encompasses ‘all false statements concerning the quality of services or product of a business which are intended to cause that business financial harm and in fact do so.’” (ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 1010.) A statement must be false to constitute trade libel. (Ibid.) If a statement is ambiguous or susceptible of an innocent meaning, then the plaintiff must plead facts showing its defamatory meaning. (Id. at p. 1011.)
Consortium satisfied that pleading requirement. Consortium alleged that Experian previously had restricted the customer alert list “exclusively to the listing of individuals or companies who had violated applicable statutes governing credit reporting companies . . ., or who had demonstrated financial inability to perform their obligations. This restriction was explicitly made known by [Experian] to the recipients of the list, and was fully understood by them.” Consortium alleged that “[i]n placing [Consortium] on the customer alert list, [Experian] effectively made the statement that [Consortium] was either financially unsound or was a violator of the law governing the distribution and use of credit reports.” Those allegations adequately alleged that publication of the customer alert list conveyed a defamatory meaning.
Experian also argues Consortium did not allege causation and damages. To recover for trade libel, “‘[t]he plaintiff must prove in all cases that the publication has played a material and substantial part in inducing others not to deal with him, and that as a result he has suffered special damages.’” (Erlich v. Etner (1964) 224 Cal.App.2d 69, 73.) Experian argues, “any service bureaus choosing not to do business with Consortium did so because of the threat that they would be cut off from Experian’s credit data, not because of any disparagement of Consortium’s business.” In reviewing a judgment of dismissal following the sustaining of a demurrer without leave to amend, we accept as true the facts alleged in the complaint and facts that may be implied or inferred from those expressly alleged. (Marshall v. Gibson, Dunn & Crutcher, supra, 37 Cal.App.4th at p. 1403.) The third amended complaint alleged that placing Consortium on the customer alert list “tended to injure [Consortium] and Mr. Esquinas in their business or occupation,” and “constituted a threat to all business entities with whom [Experian] did business that [Experian] would refuse to do business with them if they did any business with [Consortium] or Mr. Esquinas.” Consortium alleged it would have entered into relationships with service bureaus, “but for [Consortium]’s inclusion on the customer alert list.” A fair reading of the complaint shows Experian’s acts constituted both a threat and trade disparagement, and that both caused Consortium to be damaged.
Experian argues the trade libel cause of action is inconsistent with the original complaint. Consortium’s original complaint did not include a trade libel claim, but alleged that placing Consortium on the customer alert list “constituted a threat” to entities with which Experian did business. The trade libel cause of action is not inconsistent with that allegation. Fairly read, the third amended complaint alleged Consortium’s inclusion on the customer alert list constituted both a threat and trade disparagement.
B. Intentional Interference with Prospective Economic Advantage
Experian argues the cause of action for interference with prospective economic advantage fails because Consortium does not allege Experian engaged in an act that is wrongful apart from the interference itself. (Korea Supply Co. v. Lockheed Martin Corp., supra, 29 Cal.4th at pp. 1158-1159 [“To establish a claim for interference with prospective economic advantage, . . . a plaintiff must plead that the defendant engaged in an independently wrongful act”].) Consortium’s allegation that Experian committed trade libel satisfies the requirement of an independently wrongful act.
For the same reason, the competition privilege does not protect Experian from liability for intentional interference with prospective economic advantage. “‘California law has long recognized a “competition privilege” which protects one from liability for inducing a third person not to enter into a prospective contractual relation with a business competitor. The privilege applies where “‘(a) the relation [between the competitor and third person] concerns a matter involved in the competition between the actor and the competitor, and (b) the actor does not employ improper means, and (c) the actor does not intend thereby to create or continue an illegal restraint of competition, and (d) the actor’s purpose is at least in part to advance his interest in his competition with the other.’ . . . .” [Citation.] In short, the competition privilege furthers free enterprise by protecting the right to compete fairly in the marketplace. One may compete for an advantageous economic relationship with a third party as long as one does not act improperly or illegally.’” (Gemini Aluminum Corp. v. California Custom Shapes, Inc. (2002) 95 Cal.App.4th 1249, 1256.) In this case, the competition privilege does not apply because Consortium alleged Experian competed through the improper means of trade libel.
Experian argues Consortium failed to allege any existing economic relationships with which Experian interfered. To recover for intentional interference with prospective economic advantage, a plaintiff must plead and prove the existence of an economic relationship between the plaintiff and a third party, with the probability of future economic benefit to the plaintiff. (Korea Supply Co. v. Lockheed Martin Corp., supra, 29 Cal.4th at p. 1153.) “These requirements presuppose the relationship existed at the time of the defendant’s allegedly tortious acts lest liability be imposed for actually and intentionally disrupting a relationship which has yet to arise.” (Westside Center Associates v. Safeway Stores 23, Inc. (1996) 42 Cal.App.4th 507, 526.)
Consortium alleged that it obtained credit reports through agreements with service bureaus and that, as of May 2001 (when Experian placed Consortium on the customer alert list), it “had already established relationships with several service bureaus and was actively negotiating agreements that would have been profitable for [Consortium], with a reasonable expectation that those agreements would be consummated.” Consortium identified several of those service bureaus by name, and alleged that Consortium had reached “substantive agreement on the central business terms of the relationship” with one service bureau and that the parties were “preparing to sign a written contract.” Consortium also alleged it had economic relationships with end users. Consortium alleged that Experian knew of those relationships when it placed Consortium on the customer alert list, and that “[Experian]’s actions have been successful in preventing [Consortium] from entering into any relationships with any service bureaus, and in turn from entering into or continuing its relationships with end user customers.”
It might be true, as Experian asserts, that any claims based on interference with relationships existing as of May 2001 are barred by the two-year statute of limitations. But that is a matter of proof. At the pleading stage, Consortium has satisfied the requirement of alleging the existence of economic relationships between it and third parties at the time of the tortious conduct.
Experian argues Consortium failed to allege a causal link between any independently wrongful conduct and Consortium’s damage. As explained ante, Consortium adequately alleged Experian’s trade libel caused Consortium injury. Those allegations suffice for the interference with prospective economic advantage cause of action as well as the trade libel cause of action.
Experian argues it cannot be liable for interference with prospective economic advantage because it was economically interested in the relationships that were allegedly disrupted. In support of that argument, Experian relies on three cases: Kasparian v. County of Los Angeles (1995) 38 Cal.App.4th 242 (Kasparian); Marin Tug & Barge, Inc. v. Westport Petroleum, Inc. (9th Cir. 2001) 271 F.3d 825 (Marin Tug); and National Rural Telecommunications Co-op. v. DIRECTV, Inc. (C.D.Cal. 2003) 319 F.Supp.2d 1059 (DIRECTV).
In Kasparian, supra, 38 Cal.App.4th 242, a limited partner of a partnership sued the general partnership, two general partners, and a Los Angeles County supervisor for interfering in settlement negotiations of a partnership dispute. The court held neither the general partnership nor the general partners could be liable for interference with prospective economic advantage. (Id. at pp. 262, 266.) Here, unlike Kasparian, the owners of a business entity are not suing the entity for interfering in its own contract.
In Marin Tug, supra, 271 F.3d 825, a barge operator sued Shell Oil based on allegations Shell sold the barge operator contaminated fuel that damaged barge engines. In response to the barge operator’s suit, Shell refused to permit the barge operator to load fuel at Shell’s refinery, and the barge operator no longer could deliver fuel to its customers. (Id. at p. 828.) The barge operator sued Shell for interfering with the barge operator’s contracts with the barge operator’s customers. The Ninth Circuit Court of Appeals affirmed summary judgment for Shell, primarily on the basis its refusal to deal with the barge operator was not independently wrongful. (Id. at pp. 834-835.) As part of a lengthy discussion of the independent wrongfulness issue, the Ninth Circuit stated the economic relationship between the barge operator and its customers purchasing Shell fuel depended on Shell’s cooperation. (Id. at pp. 832-834.) Since Shell and the barge operator “had a mutual economic interest in delivering the oil safely and cleanly, and were dependent upon each other to do so,” Shell was not “a stranger to that relationship.” (Id. at p. 834.)
The court in DIRECTV, supra, 319 F.Supp.2d 1059, relied on Marin Tug to conclude a third party beneficiary of a contract could not be liable for tortious interference with the contractual relationship. In DIRECTV, the defendant entered into a contract with a cooperative to provide satellite television to the plaintiffs, who were the cooperative’s members. (Id. at pp. 1064-1065.) The plaintiffs sued the defendant for tortious interference after the defendant refused to provide them certain premium services. (Id. at p. 1065.) The plaintiffs alleged the defendant’s conduct caused the cooperative to breach its contractual obligations to them. (Id. at p. 1067.) The court concluded the defendant could not be liable for tortious interference because the defendant had a direct interest and involvement in the contractual relationship between the plaintiffs and the cooperative. (Id. at p. 1073.)
Experian contends this case is virtually identical to Marin Tug and DIRECTV because Experian had a direct interest in Consortium’s relationships with service bureaus and end users, and stood to benefit from supplying credit reports to Consortium. We disagree. As the complaint alleged (and Experian concedes), Experian and Consortium were and are competitors in selling Experian credit reports.
Moreover, we conclude Marin Tug and DIRECTV are inconsistent with California law. Both cases relied on Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503 (Applied Equipment), in which the California Supreme Court disapproved decisions holding that a party to a contract can be liable for conspiracy to interfere with the contract. In reaching its conclusion, the Applied Equipment court stated: “California recognizes a cause of action against noncontracting parties who interfere with the performance of a contract. ‘It has long been held that a stranger to a contract may be liable in tort for intentionally interfering with the performance of the contract.’ [Citation.] [¶] However, consistent with its underlying policy of protecting the expectations of contracting parties against frustration by outsiders who have no legitimate social or economic interest in the contractual relationship, the tort cause of action for interference with a contract does not lie against a party to the contract.” (Id. at pp. 513-514, fn. omitted.) From that language, the Marin Tug and DIRECTV courts concluded that nonparties to a contract that have a direct economic interest in the contract are not total “strangers” to it and, therefore, are immune from liability for tortious interference.
In Woods v. Fox Broadcasting Sub., Inc. (2005) 129 Cal.App.4th 344, 353 (Woods), the court declined to read Applied Equipment so broadly. In Woods, the court concluded a person or entity with an ownership interest in a corporation is automatically immune from liability for interfering with the corporation’s contractual relations. (Id. at p. 355.) The Woods court rejected Experian’s interpretation of Marin Tug, stating: “[The defendant] asks us to conclude that its ‘version’ of Applied Equipment’s holding—an ownership interest in a business entity’s contract confers immunity from tort liability for interfering with the entity’s contracts—can be stretched so far that it now protects a defendant who has no more than an economic interest or connection to the plaintiff’s contract with some other entity. As with Applied Equipment, we believe [the defendant] reads too much into Marin Tug. In Marin Tug, the Ninth Circuit was primarily focused on the ‘independent wrongfulness’ element of a California tort claim for interference with prospective economic advantage . . . . [Citation.] The court observed that whether a defendant’s improper motives satisfied the ‘independent wrongfulness’ test had not been resolved by the California state courts and therefore it entered that area of law with ‘trepidation.’ [Citation.] In this context, it appears that the Ninth Circuit was unsure whether malice might suffice as an element of the prima facie tort, or was instead a component of the qualified privilege defense available to interested persons who act nonmaliciously on behalf of the breaching party. [Citations.] The Ninth Circuit’s focus was therefore on the wrongfulness of Shell’s refusal to deal with the barge operator, and it evaluated the nature of Shell’s relationship with the barge company and the barge company’s customers in that light. There is no mention of Applied Equipment and, as noted above, the three decisions cited by Marin Tug for the immunity of those with a direct interest in someone else’s contractual relationship in fact have no bearing on that issue. As a result, we conclude that Marin Tug did no more than evaluate the wrongfulness of Shell’s conduct in the context of its relationships with Marin Tug and the tug company’s customers and was not extending immunity from contract interference claims to an even broader, more attenuated class of persons.” (Ibid.) The Woods court concluded that DIRECTV “also failed to properly analyze Applied Equipment.” (Id. at p. 356, fn. 11.)
We agree with the Woods court’s analysis. Experian is not immune from liability for tortious interference with prospective economic advantage even if Experian has a direct interest in Consortium’s economic relations with service bureaus and end users.
C. Unfair Competition
In the fourth cause of action, Consortium alleged Experian’s conduct constituted “an unfair business practice” and “a fraudulent business act” in violation of the UCL, Business and Professions Code section 17200 et seq. Consortium’s fourth cause of action is limited to the “unfair” prong of the UCL. Consortium did not allege in its complaint and does not argue in its appellate briefs that Experian violated the UCL through unlawful conduct. Consortium has waived its claim that Experian’s conduct was fraudulent by failing to address that claim on appeal. (Levin v. Ligon (2006) 140 Cal.App.4th 1456, 1486; Founding Members of the Newport Beach Country Club v. Newport Beach Country Club, Inc. (2003) 109 Cal.App.4th 944, 964.)
Because Consortium and Experian are competitors, to state a claim under the unfair prong, Consortium must allege conduct that “threatens an incipient violation of an antitrust law, or violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law, or otherwise significantly threatens or harms competition.” (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 187.) As explained in the next subpart, Consortium has alleged facts sufficient to constitute a cause of action against Experian for violation of the Cartwright Act.
D. Violation of the Cartwright Act
The Cartwright Act prohibits two or more persons from combining to do certain specified anticompetitive acts. Those include creating or carrying out restrictions on trade or commerce, and preventing competition in the sale or purchase of any commodity. (Bus. & Prof. Code, § 16720, subds. (a), (c).) A cause of action for violation of the Cartwright Act must allege: (1) the formation and operation of a conspiracy or combination; (2) wrongful acts done pursuant to this conspiracy; (3) a purpose to unlawfully restrain trade; and (4) injury to the plaintiff’s business or property. (Jones v. H. F. Ahmanson & Co. (1969) 1 Cal.3d 93, 119; G.H.I.I. v. MTS, Inc. (1983) 147 Cal.App.3d 256, 265.)
“Two forms of conspiracy may be used to establish a violation of the antitrust laws: a horizontal restraint, consisting of a collaboration among competitors; or a vertical restraint, based upon an agreement between business entities occupying different levels of the marketing chain.” (G.H.I.I. v. MTS, Inc., supra, 147 Cal.App.3d at p. 267.) In this case, Consortium alleged a conspiracy among Experian and its affiliates forming both a horizontal restraint and a vertical restraint. As the horizontal restraint, the third amended complaint alleged: “[Experian] and its affiliates enter into written agreements whereby each give the other access to their respective database information at ‘sweetheart’ prices, i.e., prices considerably lower than those charged to marketers like [Consortium] or end users; as part of the agreements, [Experian] and its affiliates protect each other by making it unprofitable for each of them to compete in the other’s ‘home’ market, thereby preserving their respective margins on those sales.”
As the vertical restraint, the third amended complaint alleged that, as part of the conspiracy, “[Experian] and its affiliates also agree that the affiliates will not sell to any person or entity that [Experian] places on the customer alert list, regardless of whether [Experian] has any basis for including such person or entity on the list.” The complaint alleged this conspiracy resulted in a group boycott of Consortium.
As explained ante, Consortium’s Cartwright Act cause of action did not allege an indirect or “secondary” boycott.
Experian contends Consortium cannot allege a violation of the Cartwright Act because (1) Experian had the right to choose not to deal with Consortium, (2) Consortium failed to allege an anticompetitive purpose and injury to competition, and (3) Experian’s alleged conduct affected only intrabrand competition. As to the first contention, it is true that under United States v. Colgate & Co. (1919) 250 U.S. 300, 307, a manufacturer has the right to select with whom to do business and on what terms, and a distributor may agree to the manufacturer’s terms to avoid termination. (See Monsanto Co. v. Spray-Rite Service Corp. (1984) 465 U.S. 752, 761; G.H.I.I. v. MTS, Inc., supra, 147 Cal.App.3d at pp. 267-268 [“antitrust laws do not preclude a trader from unilaterally determining the parties with whom it will deal and the terms on which it will transact business”].) Consortium alleged, however, that Experian conspired with its affiliates to fix prices and to refuse to deal with any entity appearing on the customer alert list. Group boycotts, such as Consortium alleged, are unlawful under the Cartwright Act. (G.H.I.I. v. MTS, Inc., supra, 147 Cal.App.3d at pp. 267-268.)
As to whether Consortium alleged an anticompetitive purpose and injury to competition, the third amended complaint alleged, “the purpose of the conspiracy was to restrain trade and stifle competition for marketers like [Consortium].” Consortium alleged the agreements between Experian and its affiliates “protect each other by making it unprofitable for each of them to compete in the other’s ‘home’ market.” We may infer from those allegations the anticompetitive purpose of eliminating or limiting competition within each affiliate’s home market.
As to the third contention, Experian argues Consortium failed to allege a Cartwright Act violation because “the alleged impact of Experian’s conduct was limited to intrabrand competition, and had no effect on interbrand competition (i.e., competition between resellers of the other credit bureaus).” A single brand of a product can constitute a market in an antitrust claim. (Eastman Kodak Co. v. Image Technical Services, Inc. (1992) 504 U.S. 451, 482, fn. 30.) “The proper market definition in this case can be determined only after a factual inquiry in to the ‘commercial realities’ faced by consumers.” (Id at pp. 481-482.)
E. Whether Consortium Exceeded the Scope of Leave to Amend
Finally, Experian argues dismissal of the fourth and fifth causes of action should be affirmed on the ground that adding those causes of action exceeded the scope of leave granted by the trial court to amend the second amended complaint. (See People ex rel. Dept. Pub. Wks. v. Clausen (1967) 248 Cal.App.2d 770, 785 [plaintiff exceeded scope of leave to amend by adding new defendants].) The trial court did not sustain the demurrer to the third amended complaint on that ground. By addressing the sufficiency of the allegations and the timeliness of the complaint, the trial court implicitly concluded Consortium did not exceed the scope of leave to amend.
DISPOSITION
The judgment is reversed and the matter remanded for further proceedings. Appellant shall recover its costs incurred on appeal.
WE CONCUR: BEDSWORTH, ACTING P. J., ARONSON, J.