[MCLE Self-Assessment Test]

MCLE Self-Assessment Test

Answer the following questions after reading the article on attorneys' fees. Use the answer form provided to send the test, along with a $20 processing fee, to the State Bar. Please allow at least eight weeks for MCLE certificates to reach you in the mail.

1. A is monopolist in market for lobster traps in Friendship Inc. Mr. Lobsterman approaches A to buy traps and A refuses, stating that A is known to intend to use the traps as a model to start a competing business. Mr. L is unable to obtain another trap for the purpose and A succeeds in eliminating this incipient corporation. Does A have a Cartwright Act claim?

2. A is considering raising its prices for its entire line of hiking boots but is worried that its main competitor B will not follow. A's marketing manager calls B's to discuss the general future of hiking boot prices and A learns that B would raise prices if A did. A and B do not sign any agreement or even orally agree that either would actually raise prices. Violation?

3. Loan Shark Inc. specializes in extending excessive credit to elderly customers, and has a very high rate of success in taking over their meager estates in hardball foreclosure proceedings. The Fair Lenders Trade Association meets to discuss how to stop Loan Shark. Loan Shark's ads from a local TV station are pulled by the broadcaster in response to notification of the resolution. Can Loan Shark collect treble damages?

4. California Happy Hotels, which owns and operates all of the hotels at several remote destination resort areas in California, enters the long distance telephone market by acquiring American Total Telephone. Guests in Happy Hotels soon find they are unable to use calling credit cards from American Total's rivals -- all calls out of the hotels go through and are billed by Total. Which antitrust rule is violated?

5. Garbage Hauling Inc. and Junk Removal Inc. own and operate residential waste hauling trucks and provide related services. The two companies both operate in Homefront, an unincorporated rural area in Alpine county. The owners meet for lunch and agree that their trucks, operating simultaneously over the same narrow winding mountain roads, pose a safety threat to their drivers and others. To streamline things and eliminate this hazard, they split the territory in half and agree Garbage Hauling will haul only over north county roads and Junk Removal only over south county roads. The two also agree that their purpose is not to increase profits. The state attorney general, hearing of the arrangement, will probably:

6. Garbage Hauling and Junk Removal also had experienced a 25 per cent increase in fuel prices for trucks and 40 per cent labor cost increases under collective bargaining, and had not increased their prices. Garbage Hauling at the lunch suggests that the companies should not take these cost increases as an excuse to gouge but that it would be fair to raise prices 20 per cent to recoup the increased costs. Junk Removal says he can't discuss that because it might be price fixing. Within a month, both companies increased prices 20 per cent. Are the two guilty or liable for price fixing?

7. Manufacturer maintains an independent distribution network. One of its more successful distributors, A, approaches Manufacturer and asks for a bigger territory. Manufacturer considers the request and several weeks later announces that distributor B is terminated, and A is to serve B's former territory. B sues Manufacturer and A for antitrust violations. Result:

8. Same as 7, except two carpeting distributors, A and C, jointly approach Manufacturer and each ask for half of B's territory, to which Manufacturer agrees. Same result?

9. Five years ago, Fall Line Ski Area and Basin Mountain Ski Area, both in Lake Clinton Basin, Calif., were rapidly failing. They met in mid-season and agreed to raise prices by $2 per ticket immediately. However, even at this new price, Fall Line went out of business before the next season, issuing a press release admitting to its failed effort to fix prices. Five years later, the attorney general brings price-fixing charges. Can the suit proceed?

10. Dirty Cleaners sells its extensive cleaning services business to its arch-rival, Like Totally Clean Dude Cleaners. In the sale agreement, Like Totally insists on a provision that prohibits Dirty from competing after the acquisition closes. Dirty ignores the provision and reopens in exactly its former locations under the new name "Like Dirty Cleaners." In the ensuing contract dispute, "Like Dirty" would prevail, because the agreement not to compete was a per se illegal market allocation between the two companies.

11. Matching Hats manufactures and sells the latest head wear fashions through retail outlets. The concept is to sell hats in pairs, so that couples will walk around in identical hats, no two pairs of which are alike. Men's hats are sold for an average price to dealers of $85, while women's hats go for $125. Women's groups mount a very successful boycott against all stores that carry Matching Hats, crippling their sales. A retailing group sues Matching Hats for price discrimination under the Unfair Practices Act. They will:

12. Lurethemin Stored runs an ad campaign touting alarm clocks for "one penny" to its customers, in ads that present a different clock than the one actually available at most stores, and at some stores there are no clocks other than by redeeming "rain checks." On the day of the promotion, Lurethemin decides to cancel the offer because it is worried that these sales might be loss leaders, but many disappointed customers respond to the ads. The district attorney charges Lurethemin with unlawful use of loss leaders. The district attorney will:

13. CBA manufactures and sells ski boots directly to retailers, such as Molehill Ski Shops, CBA's biggest customer. Molehill switches shelf space seasonally between winter and summer sports and is demanding that CBA agree to accept back all unsold ski boots tendered by Molehill before May 1 of each year, refunding the full price plus stocking and unstocking costs. Molehill demonstrates that the costs involved are substantial and documented, so CBA agrees. Mompop Ski Shops, Molehill's rival, becomes unable to compete with Molehill's ski boot prices, and goes out of this line of business. Mompop later learns of the special Molehill inventory chargeback arrangement and sues Molehill and CBA for unlawful secret rebating under California Business & Professions Code §17045. On demurrer, Mompop's complaint will:

14. Vendor Inc. manufactures and sells juice made from California grapes. This is a low-margin business and often the fluctuations in grape prices are more rapid than Vendor can achieve in its sales prices of juices. Vendor sees an opportunity in this situation and offers to customers over specified volumes long-term contracts to provide juices at fixed prices, knowing that competitors will be unable to meet those prices at times, depending on the grape price movements. Overall, Vendor expects these contracts to be profitable, but also intends that they will lose money for periods of time. Rival Juice Inc. sues. On what theory might Rival prevail?

15. Vendor consults with you as its antitrust counsel and expresses a preference for state court over federal court proceedings. Vendor is particularly concerned because he has heard that antitrust plaintiffs in federal court get treble damages and attorneys' fees. Agree or disagree?

16. Your client proposes to advertise on children's television for its products, which are cigarettes designed for children between the ages of 14 and 18 years old. You should be concerned that the client might violate:

17. Your client ignores your advice and proceeds to advertise and market "Tiny Tot Cigarettes" on children's television and in other media. A retired school teacher forms an association to raise money to challenge the advertising and brings an Unfair Competition Act suit in the name of A Bunch of People, or "ABOP." Your motion to dismiss for ABOP's lack of standing, on the ground that ABOP itself does not even consume cigarettes, and also has no members who are either children or cigarette smokers, will:

18. A group of teenagers hospitalized around the state for various health problems generally attributable to smoking tobacco join the suit and seek punitive damages under the Unfair Competition Act based upon the outrageous and wanton conduct alleged. The minors:

19. A major beer wholesaler adopts a discounting policy that violates the Unfair Practices Act as a form of prohibited secret discounting. An association of small bars and restaurants brings an action for injunctive relief seeking to stop the practice. The motion to dismiss on the ground that the trade association lacks standing under the Unfair Practices Act will:

20. Which of the following categories of conduct are per se illegal under the Cartwright Act:


This activity has been approved for Minimum Continuing Legal Education credit by the State Bar of California in the amount of 1 hour.

The State Bar of California certifies that this activity conforms to the standards for approved education activities prescribed by the rules and regulations of the State Bar of California governing minimum continuing legal education.