Viazis v. Amer Orthodontists, et al

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_______________
m 01-41298
_______________
ANTHONY D. VIAZIS, ET AL.,
Plaintiffs,
ANTHONY D. VIAZIS,
Plaintiff-Appellant,
VERSUS
AMERICAN ASSOCIATION OF ORTHODONTISTS, ET AL.,
Defendants,
AMERICAN ASSOCIATION OF ORTHODONTISTS,
SOUTHWESTERN SOCIETY OF ORTHODONTISTS, GAC INTERNATIONAL, INC.,
AND LEO A. DOHN,
Defendants-Appellees.
_________________________
Appeal from the United States District Court
for the Eastern District of Texas
_________________________
December 11, 2002

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2
Before KING, Chief Judge, and SMITH and
EMILIO M. GARZA, Circuit Judges.
JERRY E. SMITH, Circuit Judge:
Anthony Viazis appeals a judgment as a
matter of law (“j.m.l.”) in favor of the Ameri-
can Association of Orthodontists (“AAO”),
the Southwestern Society of Orthodontists
(“SWSO”), GAC International, Inc. (“GAC”),
and Leo A. Dohn. Finding no reversible error,
we affirm.
I.
Viazis, an orthodontist practicing in the
Dallas area, designed and patented a triangular
orthodontic bracket in 1991.1 He contends
that his bracket is more effective than other
designs in that it decreases the amount of time
braces must be worn. In 1992, Viazis entered
into a contract with GAC, a manufacturer of
orthodontic devices, to market and distribute
his bracket.
In April 1996, Viazis sent an advertising
mailer to the parents of school age children in
the Plano, Texas, area near Dallas, claiming
that braces made using the Viazis bracket were
faster, less expensive, and potentially safer
than other products. In May of that year, Via-
zis held a seminar promoting his brackets di-
rectly to these parents. A member of the
Greater Dallas Association of Orthodontists
(“GDAO”) and the AAO forwarded a com-
plaint regarding Viazis’s advertisements to the
AAO, indicating that Viazis’s conduct might
violate provisions of that organization’s Code
of Professional Responsibility.
Viazis alleged that the resulting controversy
surrounding his advertisements resulted in the
termination of the marketing aspect of his
agreement with GAC. There was an adverse
impact on the relationship between Viazis and
GAC, and their arrangement was restructured
in mid-1997. GAC continued to manufacture
the Viazis bracket but ceased all marketing
activities.
In December 1997, the AAO advised Viazis
that he could be subject to disciplinary action
as a result of the claims of faster, safer, and
more effective treatment made in his adver-
tisements. In December 1999, after a hearing
and appeal, the AAO suspended Viazis’s mem-
bership in the organization.
Meanwhile, in August 1998, Viazis filed
this action against the AAO, the SWSO, the
GDAO, and various individuals who are no
longer defendants. Viazis subsequently added
Dohn and GAC as defendants. By the time of
trial, Viazis’s only remaining claim was that
the AAO, SWSO, GAC, and Dohn had con-
spired to exclude his brackets from the market
for orthodontic devices in violation of § 1 of
the Sherman Act. At the conclusion of Via-
zis’s case-in-chief at trial, the court granted
defendants’ motion for j.m.l.
II.
We review a j.m.l. de novo. Casarez v.
Burlington N./Santa Fe Co., 193 F.3d 334,
336 (5th Cir. 1999). To defeat a motion for
j.m.l., the nonmovant must present “substantial
evidence opposed to the motion[].”2 In other
words, the nonmovant must present evidence
1 Brackets are components of braces that are
fixed onto the teeth with an adhesive. Wires are
then passed through the brackets, and forces are
applied to straighten the teeth.
2 Boeing Co. v. Shipman, 411 F.2d 365, 374
(5th Cir. 1969) (en banc), overruled in part on
other grounds by Gautreaux v. Scurlock Marine,
Inc., 107 F.3d 331 (5th Cir. 1997) (en banc).

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3
that is “of such quality and weight that rea-
sonable and fair-minded men in the exercise of
impartial judgment might reach different con-
clusions.” Id.
Section 1 of the Sherman Act does not pro-
scribe independent conduct. Monsanto Co. v.
Spray-Rite Serv. Corp., 465 U.S. 752, 761
(1984). So, to establish a § 1 violation, a
plaintiff must demonstrate concerted action.
Id. Further, although in ruling on a motion for
j.m.l. the court must consider all the evidence
offered by either party “in the light and with all
reasonable inferences in favor of” the party
opposed to the motion, Giles v. Gen. Elec.
Co., 245 F.3d 474, 481 (5th Cir. 2001) (inter-
nal quotation marks omitted), in this case the
range of permissible inferences is limited by
particular principles of antitrust law,
Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 588 (1986). Ac-
cordingly, evidence of conduct that is “as con-
sistent with permissible competition as with il-
legal conspiracy” cannot support an inference
of conspiracy. Id. In essence, an antitrust
plaintiff who is unable to present direct
evidence of a conspiracy must introduce cir-
cumstantial evidence that “tends to exclude the
possibility of independent action.” Monsanto,
465 U.S. at 768.
Viazis contends that he introduced suffi-
cient evidence of concerted action to avoid
j.m.l. He alleges that GAC terminated the
marketing agreement in response to threats
made by AAO and its regional affiliates. He
also contends that the decision of an AAO dis-
ciplinary committee to suspend him for one
year was the result of unlawful concerted ac-
tion. Viazis failed to introduce sufficient evi-
dence to prove either allegation.
A.
Direct evidence of a conspiracy is that
which “explicitly refer[s] to an understanding”
between the alleged conspirators. See South-
way Theatres, Inc. v. Ga. Theatre Co., 672
F.2d 485, 493 n.8 (5th Cir. 1982). The letter
written by Leo Dohn, then-CEO of GAC,
which constitutes Viazis’s primary evidence
bearing on the existence of a conspiracy be-
tween the AAO and GAC, contains no explicit
reference to an agreement between GAC and
any party. Each of the statements from the
letter offered by Viazis as evidence of a con-
spiracy depends on additional inferences.3
Therefore, the letter is, at most, circumstantial
evidence of a conspiracy.4
3 Viazis asserts that Dohn’s statements to the
effect that GAC might experience national
repercussions are “inconsistent with localized
complaints,” and he claims that Dohn’s prediction
that Viazis would suffer adverse professional
consequences as a result of his seminar are
“consistent with ongoing communications.”
Neither these statements nor any other of the
passages cited by Viazis contain explicit reference
to an agreement between GAC and any other party.
4 Viazis contends that he introduced evidence of
a conspiracy through testimony that the district
court improperly disregarded. The testimony at is-
sue related to whether GAC had a policy against
advertising directly to consumers before the events
at issue. Dohn testified that GAC had a policy
against advertising directly to the public, although
Barry Mervine, GAC’s representative in Dallas,
testified that he was unaware of any such policy.
In addition, Viazis testified that GAC had
foreknowledge of, and input into, a mailer through
which he advertised to the public but failed to
object to its contents.
Although, in ruling on a motion for j.m.l., a
district court should refrain from making credibility
determinations, see Conkling v. Turner, 18 F.3d
(continued...)

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4
As discussed above, in the absence of direct
evidence of a conspiracy, an antitrust plaintiff
must present evidence tending to exclude the
possibility of independent conduct. Monsanto,
465 U.S. at 768. To do so, Viazis was
required to demonstrate that GAC and AAO
“had a conscious commitment to a common
scheme designed to achieve an unlawful
objective.” Id. Although the Dohn letter
contains evidence of complaints received by
GAC from accounts in the Dallas area, such
complaints are insufficient evidence of
concerted action, because “[d]ealer-initiated
contact fails to establish that a manufacturer
has imposed restrictions collusively, not based
on its independent business judgment.”5 In
Culberson, this court specifically held that a
manufacturer’s action in the face of customer
complaints is not a sufficient basis for a finding
of conspiracy.6
4(...continued)
1285, 1300 (5th Cir. 1994), the court did not nec-
essarily do so here. Mervine’s testimony does not
establish that GAC advertised directly to
consumers, nor even that GAC lacked a policy
prohibiting such advertising. All Mervine’s tes-
timony establishes is that if such a policy existed or
such advertisement took place, he was unaware of
it. His testimony, therefore, does not directly
contradict Dohn’s. Viazis’s testimony has a great-
er tendency to undercut the existence of a
longstanding policy against direct advertisement
but does not contradict GAC’s contention that it
had not engaged in direct advertisement in the
preceding decade.
In any event, even if the court improperly eval-
uated the credibility of these two witnesses in ar-
riving at its conclusions, the legal result would be
the same. Although proof of a preexisting policy
tends to support an inference of independent con-
duct, see Matrix Essentials, Inc. v. Emporium
Drug Mart, Inc., 988 F.2d 587, 594 (5th Cir.
1993); Culberson, Inc. v. Interstate Elec. Co., 821
F.2d 1092, 1094 (5th Cir. 1987), the absence of
such a policy does not necessarily support an in-
ference of conspiracy. As discussed in part I.B.2
infra, GAC was entitled to act in response to cus-
tomer complaints irrespective of whether it had a
preexisting policy.
5 Culberson, 821 F.2d at 1094; see also Matrix
Essentials, 988 F.2d 587.
6 See Culberson, 821 F.2d at 1093. Viazis’s
attempts to distinguish the Monsanto line of cases
are unpersuasive. He accurately notes that the rea-
soning in Monsanto and its progeny reflects some
concern that allowing dealer complaints to serve as
evidence of conspiracy would deter legitimate bus-
iness strategies, such as the adoption of marketing
strategies using nonprice restrictions. Viazis con-
tends that such concerns are not implicated here,
because “conspiracies aimed at stamping out
promising new technology should not be made
unduly difficult to prove.”
Even if manufacturers’ ability to impose le-
gitimate nonprice restrictions were the principal
focus of Monsanto, this conclusional statement
fails to offer any ground for distinguishing the
present case. This case implicates GAC’s ability
to enforce its particular marketing strategy, name-
ly, that of marketing to health professionals rather
than the public, and therefore is not distinguishable
from Monsanto on the ground argued by Viazis.
Further, Viazis ignores the fact that the Mon-
santo Court dealt with the “two important
distinctions that are at the center of [any]
distributor-termination case.” Monsanto, 465 U.S.
at 761 (emphasis added). The distinction between
price and nonprice restrictions was the second of
these; the first was “the basic distinction between
concerted and independent action.” Id. The Court
dealt with this distinction by reaffirming the prin-
ciple that “[a] manufacturer of course generally has
a right to deal, or refuse to deal, with whomever it
likes, as long as it does so independently.” Id.
(continued...)

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5
Viazis argues, however, that GAC was
faced with more than mere dealer complaints.
Instead, he maintains, the AAO itself
threatened a nationwide boycott to coerce
GAC to end its marketing efforts on behalf of
Viazis, and GAC acceded to AAO’s demands.
Such an inference of conspiracy is appropriate
only if Viazis presented evidence tending to
exclude the possibility of independent conduct
on the part of AAO and GAC. To meet this
standard, Viazis needed to show both that the
AAO threatened a boycott and that GAC’s
decision to cease marketing the Viazis bracket
was inconsistent with its independent self-
interest. He failed to do so.
A corporate entity such as the AAO can act
only through its agents. Consequently, in the
absence of evidence of formal decisionmaking,
an antitrust plaintiff must prove an asso-
ciation’s conduct by demonstrating that the ac-
tion was taken by individuals having apparent
authority to act for the association. Am. Soc’y
of Mech. Eng’rs, Inc. v. Hydrolevel Corp.,
456 U.S. 556, 556-67 (1982).
The Dohn letter contains no indication that
any of the referenced complaints was initiated
by individuals having either actual or apparent
authority to speak for the AAO. Viazis intro-
duced no evidence of a membership vote or
other formal decisionmaking process through
which the AAO acted to threaten GAC or
authorized its agents to do so. Nor did he pro-
duce evidence that the unnamed Dallas ac-
counts referred to in the Dohn letter had ap-
parent authority to speak for the AAO on such
a matter. Viazis has introduced no evidence
that the AAO itself, as opposed to some of its
individual members, took action with respect
to GAC.
Moreover, evidence that a manufacturer
took certain actions does not tend to exclude
the possibility of independent conduct if the
actions were in the manufacturer’s indepen-
dent self-interest.7 In other words, even if
Viazis proved that the AAO or its regional
affiliates threatened GAC, he must also show
that GAC decided to end its relationship in re-
sponse to those threats. If GAC ignored the
threats but ended the relationship with Viazis
based on an independent evaluation of its best
interests, GAC acted independently, and there
was no conspiracy. See Matrix Essentials,
988 F.2d at 594; Lovett, 998 F.2d at 579-81.
Viazis failed to demonstrate that GAC’s deci-
sion to alter its relationship with Viazis was
contrary to its own interests.
Viazis introduced statements made by GAC
regarding the enormous potential market for
his bracket and argued that GAC could not
have been acting in its own interests when it
abandoned its marketing rights. This argument
fails, because GAC could have determined that
the potential benefits from its marketing agree-
ment with Viazis would be outweighed by the
loss of business that would result from its con-
tinued association with him.8 Therefore,
6(...continued)
(citing United States v. Colgate & Co., 250 U.S.
300, 307 (1919)). GAC’s ability to deal or refuse
to deal with Viazis is implicated by these
proceedings.
7 See Matrix Essentials, 988 F.2d at 594;
Lovett v. Gen. Motors Corp., 998 F.2d 575, 579-
81 (8th Cir. 1993).
8 See Bailey’s, Inc. v. Windsor Am., Inc., 948
F.2d 1018, 1030 (6th Cir. 1991); see also
Garment Dist., Inc. v. Belk Stores Servs., Inc., 799
F.2d 905, 909 (4th Cir. 1986) (“One [legitimate
(continued...)

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6
GAC’s decision to alter its relationship with
Viazis is not evidence tending to exclude the
possibility of independent behavior.
B.
Although there is no evidence that any au-
thorized agent of the AAO threatened GAC,
Viazis does point to one instance of official
conduct by the AAO, namely, his suspension
pursuant to the finding of an AAO ethics com-
mittee that he had violated the organization’s
prohibition of false and misleading advertising.
Because there is no connection between this
proceeding and GAC, it can constitute action
pursuant to a conspiracy only if the members
of AAO were conspiring among themselves.
Viazis failed to present sufficient evidence of
such a conspiracy.
Despite the fact that “[a] trade association
by its nature involves collective action by com-
petitors[,] . . . [it] is not by its nature a
‘walking conspiracy’, its every denial of some
benefit amounting to an unreasonable restraint
of trade.” Consolidated Metal Products, Inc.
v. Am. Petroleum Inst., 846 F.2d 284, 293-94
(5th Cir. 1988). In Consolidated Metal Prod-
ucts, we rejected a claim of conspiracy based
on a trade association’s delay in licensing the
plaintiff’s product, noting that the plaintiff had
failed to offer evidence that the proceedings
were “merely a ploy to obscure a conspiracy
against competing producers.” Id. at 294. Vi-
azis similarly was unable to demonstrate that
the ethics proceedings against him were a
sham or that the standards applied were pre-
textual,9 so he failed to establish the existence
of an unlawful conspiracy. See id. To the ex-
tent that he challenges the promulgation of the
advertising restrictions by the AAO, as
opposed to their enforcement, his failure to
demonstrate any competitive harm, as dis-
cussed below, is fatal to that claim.
III.
Even if Viazis had presented sufficient evi-
dence of concerted action, § 1 of the Sherman
Act prohibits only those agreements that con-
stitute unreasonable restraints of trade.
Northwest Wholesale Stationers, Inc. v. Pac.
Stationery & Printing Co., 472 U.S. 284, 289
(1985) (citation omitted). The question
whether a particular restraint is unreasonable
frequently turns on whether it is examined un-
der the rule of reason or falls within the
category of practices that are judged to be
unreasonable per se. If application of the per
se rule is appropriate, competitive harm is
presumed, and further analysis is unnecessary.
If, by contrast, the restraint should be judged
according to the rule of reason, its net poten-
tial for competitive harm must be evaluated by
weighing its probable anticompetitive effects
8(...continued)
reason for terminating a relationship with a dealer]
is to avoid losing the business of disgruntled
dealers.”).
9 During the appeal of Viazis’s suspension, Dr.
Hershey, one of the panelists, told Viazis: “It’s not
your work Tony. Next time, play by the rules.”
This comment is certainly suspicious, but it is not
direct evidence of conspiracy, because it does not
explicitly reference any agreement. In addition,
Hershey’s statement is not inconsistent with the
committee’s finding that Viazis violated the AAO’s
prohibition of deceptive advertising. The
committee could have found Viazis’s bracket to be
a good product, while still concluding that Viazis
had used inappropriate methods to promote it. In
any event, in light of the fact that GAC ended its
marketing arrangement with Viazis over a year
before his suspension, the exclusion of which
Viazis complains had long since occurred.

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against any procompetitive benefits.
A.
Viazis contends that the advertising restric-
tions in question should be reviewed according
to the per se rule. Typically, it is the type of
restraints that are “always or almost always”
anticompetitive that are deemed to be unrea-
sonable per se. Broadcast Music, Inc. v. Col-
umbia Broadcasting Sys., Inc., 441 U.S. 1,
19-20 (1979). The Supreme Court has been
reluctant to apply the per se rule to standards
promulgated by professional organizations,
such as the advertising restriction at issue
here.10
In fact, the Court recently concluded that
advertising restrictions i mposed by a
professional association are not subject to a
per se analysis. In Cal. Dental Ass’n v. FTC,
526 U.S. 756 (1999), a case dealing with the
legality of advertising restrictions that are
remarkably similar to those at issue here, the
Court necessarily rejected the application of
the per se rule by holding that even the
truncated rule of reason, or “quick look,”
treatment applied by the Ninth Circuit was
insufficient given the potential procompetitive
effects of such restrictions in a market for
professional services. Id. at 763-81. The per
se rule likewise is inapplicable to the
restrictions at issue in this case.
B.
Although California Dental rejected the
application of per se or even quick-look anal-
ysis to advertising restrictions implemented by
a professional association, it did not hold that
a full market analysis is required in such cases.
Id. at 779. Instead, the Court held that
“[w]hat is required is an enquiry meet for the
case.” Id. at 780. Under this approach, an
analysis is sufficient if it openly addresses the
“circumstances, details, and logic of a re-
straint” in reaching its conclusion. Id. at 781.
In California Dental, the Court recognized
that a restriction on advertising related to qual-
ity has several potential procompetitive justifi-
cations.11 On remand, the Ninth Circuit deter-
mined that the FTC had failed to prove that
the advertising restrictions at issue were a net
harm to competition. Cal. Dental Ass’n v.
FTC, 224 F.3d 942, 957 (9th Cir. 2000). The
court noted that the Federal Trade
Commission had failed to prove actual harm by
presenting relevant data from the precise
market at issue. Id.
Viazis similarly has failed to present data
demonstrating the anticompetitive effects of
the advertising restrictions of which he com-
plains. In the absence of such data, he has not
carried his burden to demonstrate that the re-
strictions have a net anticompetitive effect.
See id.
Viazis claims that competitive harm is dem-
onstrated by the steep decline in sales of his
brackets to orthodontists. There is no evi-
dence, however, that the AAO has influence
over its members’ purchasing decisions or that
it coerced them into rejecting Viazis’s brack-
10 FTC v. Ind. Fed’n of Dentists, 476 U.S. 447,
458 (1986) (“[W]e have been slow to condemn
rules adopted by professional associations as
unreasonable per se.”).
11 Cal. Dental, 526 U.S. at 778 (noting that a
restriction on quality- related advertisement for
professional services may be justified by the
possibility “that restricting difficult-to-verify
claims about quality or patient comfort would have
a procompetitive effect by preventing misleading or
false claims that distort the market”).

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ets. In Consolidated Metal Products, 846
F.2d at 296, we held that where an associa-
tion’s product recommendations were non-
binding and the association did not coerce its
members to abide by its recommendations, its
refusal to sanction plaintiff’s product did not
show that plaintiff was excluded from the
market. Nor can a plaintiff show competitive
harm merely by demonstrating that the
defendant “refused without justification to
promote, approve, or buy the plaintiff’s
product.” Id. at 297.
Though there is evidence demonstrating a
drastic reduction in the number of orthodon-
tists purchasing Viazis’s brackets, there is
none connecting that decrease to anything
other than the voluntary decisions of indepen-
dent orthodontists. Moreover, GAC has, at
most, a 20% market share in orthodontic
brackets. Therefore, GAC’s refusal to market
on behalf of Viazis could not significantly im-
pede his ability to market the brackets, either
independently or through GAC’s competitors.
Indeed, Viazis has been successful in mar-
keting his brackets to dentists and remains free
to sell them to any orthodontist willing to pur-
chase them. In the absence of proof that the
AAO and its member orthodontists are engag-
ing in a conspiracy, Viazis cannot prove harm
to competition, because he can demonstrate
nothing more than that his product is no longer
selling well, at least not to orthodontists.
IV.
Viazis challenges two evidentiary rulings.
First, he contends that the court erred in
refusing to admit expert testimony to the effect
that “consumers would have been harmed by
the suppression” of the brackets. The
testimony was excluded based on the
determination that the testimony was not
contained in the expert’s report, as required by
Local Rule 26(d)(1). In challenging this
ruling, Viazis cites a passage in the expert’s
report that contains the excluded testimony
almost verbatim. It therefore appears that the
district court may have erred in determining
that the testimony should be excluded under
the local rule.
Nonetheless, we “may not disturb the dis-
trict court’s exclusion of the evidence . . . if
that ruling can be upheld on other grounds, re-
gardless of whether the court relied on those
grounds.” Metallurgical Indus., Inc. v. Four-
tek, Inc., 790 F.2d 1195, 1207 (5th Cir. 1986).
The excluded testimony concerned alleged
harm to the orthodontic services market, ra-
ther than the relevant market for purposes of
Viazis’s claim, which is the market for ortho-
dontic braces. The testimony therefore was
arguably irrelevant, as noted by the district
court, and could have been excluded on that
ground as well. See FED. R. EVID. 401.
Viazis also asserts that the district court
erred in refusing to allow cross-examination
concerning portions of a note written by Dohn
that recognized the possibility that Viazis
could file a § 1 claim against GAC. The ex-
cluded portion was hearsay, but Viazis argues
that it should have been admitted under the ex-
ception for statements made by cocon-
spirators.
Under the coconspirator exception, hearsay
evidence is admissible only if the proponent
proves by a preponderance of the evidence
that (1) a conspiracy existed; (2) the statement
was made in furtherance of that conspiracy;
and (3) the coconspirator and the party op-
posing admission were members of the con-
spiracy. Burton v. United States, 237 F.3d
490, 503 (5th Cir. 2000). Because no con-

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9
spiracy was established here, the coconspirator
exception cannot apply, and the evidence was
not admissible against AAO and the other
association defendants.
Additionally, GAC contends that the pass-
age in question was based on communications
between Dohn and his attorney, and that it is
therefore privileged attorney-client material
and inadmissible. The district court did not
abuse its discretion in excluding testimony
regarding the note on either of these grounds.
In any event, we will not reverse erroneous
evidentiary rulings unless the aggrieved party
can demonstrate “substantial prejudice.” Kona
Tech. Corp. v. S. Pac. Transp. Co., 225 F.3d
595, 602 (5th Cir. 2000). Viazis failed to
demonstrate that the exclusion of either of
these pieces of evidence resulted in substantial
prejudice.
AFFIRMED.

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