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Calnetics Corporation and Meier-line, Inc., Appellants, v. Volkswagen of America, Inc., et al., Appellees.calnetics Corporation, Appellee, v. Volkswagen of America, Inc., Appellant (five Cases)
United States Court of Appeals, Ninth Circuit. - 532 F.2d 674
Feb. 24, 1976
Maxwell M. Blecher (argued), of Blecher, Collins & Hoecker, Los Angeles, Cal., for Calnetics.
Cecelia H. Goetz (argued), of Herzfeld & Rubin, New York City, Paul S. Ferber (argued), Los Angeles, Cal., for Volkswagen of America, Inc., etc.
G. William Shea (argued), of McCutchen, Black, Verleger & Shea, Los Angeles, Cal., for amicus curiae Porsche.
Before BARNES, CHOY and GOODWIN, Circuit Judges.
PER CURIAM:*
Volkswagen of America, Inc. (VW), and its wholly owned subsidiary, Volkswagen Products Corporation (Subsidiary), defendants in a private antitrust action brought by Calnetics Corporation,1 appeal a district court judgment ordering VW's divestiture of Subsidiary and other equitable relief. VW and Subsidiary also appeal a summary judgment dismissing their counterclaims against Calnetics, and an award of attorneys' fees and costs to Calnetics.
Calnetics cross-appeals from summary judgments and a directed verdict dismissing its claims for damages against VW, Subsidiary, and Volkswagen Pacific, Inc. (Distributor), an independently owned corporation which until 19732 distributed VW-imported automobiles and accessories in southern California, southern Nevada, Arizona, and Hawaii.
Distributor appeals from the district court's denial of its motion to amend its answer to add a counterclaim under § 2(c) of the Robinson-Patman Act, 15 U.S.C. § 13(c).
The summary judgment in favor of Calnetics on each of VW's counterclaims is affirmed, as is the summary judgment in favor of Calnetics on Subsidiary's counterclaim based on the Sherman Act, 15 U.S.C. § 1 et seq. All other judgments challenged on appeal are reversed. The district court's denial of Distributor's motion to add a counterclaim under 15 U.S.C. § 13(c) is also reversed. The district court's award of attorneys' fees and deposition copy costs to Calnetics is set aside. A legend of the parties and claims appears in the margin.3
TABLE CONTINUED
Disposition
----------------------------------------------------------- Location of
District 9th Discussion
Court Circuit in Opinion
-------------------------------------------------------------------------------
Directed verdict Reversed I. B.
for VW &
Subsidiary
Divestiture Reversed III. C. 1
Import ban Questioned III. C. 3
Other remedies Questioned III. C.
Sum. judg. * Reversed I. D.
for VW &
Subsidiary
Sum. judg. * Reversed I. D.
for VW &
Subsidiary
Sum. Judg. for Reversed I. A.
Distributor
Sum. judg. for Affirmed ** I. C.
Calnetics
Denied leave Reversed V.
to amend answer
so as to assert
cause of action
Attorney fee Reversed IV. A.
for Calnetics
Costs for Reversed IV. B.
Calentics
-------------------------------------------------------------------------------
VW and Subsidiary represent in their brief that Distributor abandoned its distribution franchise in 1973 and that VW now sells directly to the dealers in Distributor's former franchise area
15 U.S.C. § 13(c)
Having thus eliminated all federal claims between Distributor and Calnetics, the district court dismissed the pendent state law claims between Distributor and Calnetics
It is well settled that an independent business decision to cease doing business with a particular supplier or distributor is lawful. See, e. g., Scanlan v. Anheuser-Busch, Inc., 388 F.2d 918, 921 (9th Cir.), cert. denied, 391 U.S. 916, 88 S.Ct. 1810, 20 L.Ed.2d 654 (1968)
Distributor, in support of its summary judgment motion, never relied on the lack of voluntariness argument, and in its appellate brief chose to ignore the court's May 31 order and rest its case solely on the ground that no genuine issue of material fact exists
The extent to which Delta and not Subsidiary replaced Calnetics as a supplier to Distributor is also critical to a determination of damages, if any, suffered by plaintiff. See Part B, infra
Summary judgment is proper only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56
As discussed in Part B, infra, another reasonable conspiracy theory that the jury should have an opportunity to consider is that Distributor's initial decision to drop Calnetics was for independent business reasons, but that once Subsidiary was rehabilitated the unlawful foreclosure commenced and Calnetics was prevented by the conspiracy from re-entering the market. If the jury so finds, damages must be calculated from the moment of foreclosure rather than from the date of the acquisition
The fact that the trial court did not grant summary judgment in favor of VW and Subsidiary on Calnetics' § 7 claims tends to indicate that the court also concluded that a genuine issue of fact existed as to the reason for Distributor's dropping of Calnetics as a supplier. In any event, Calnetics' evidence of conspiracy is not so insubstantial as to warrant summary judgment against it
To avoid inconsistent results, the district court should bear in mind that the § 7 damage claims and the Sherman Act claims against Distributor, VW, and Subsidiary are all interrelated. Consequently, a jury finding that Distributor made an independent, long-term business judgment to cease doing business with plaintiffs would defeat each and every one of plaintiff's damage claims.
See note 12, supra
Delta has not been charged with nor connected in any way with a conspiracy in restraint of trade. Delta has instituted its own antitrust suit against defendants based on an alleged unlawful foreclosure from the air-conditioner market
Plaintiffs may base damages figures on 1969 model-year sales, even assuming arguendo that they were "illegal" sales. See Part I. D., infra
See Part I. A., supra
See Part I. D., infra
See finding No. 14. 348 F.Supp. at 625
This case does not present the question nor do we here decide under what circumstances a claim of commercial bribery tied to claims of other acts tending to restrain trade would state a cause of action under §§ 1 and 2 of the Sherman Act
See FTC v. Henry Broch & Co., 363 U.S. 166, 169-70 n.6, 80 S.Ct. 1158, 1161, 4 L.Ed.2d 1124, 1128 (1960), citing 80 Cong.Rec. 7759-60, 8111-12
Defendants themselves concede that a genuine issue of fact exists as to causation. In arguing that the district court erred in entering summary judgment against them on their counterclaims, VW and Subsidiary note in their briefs that "(o)nly a jury can decide the relationship in time between Christiansen's expectation of a share in plaintiff's revenues from sales to * * * (Distributor) and * * * (Distributor's) decision to distribute plaintiff's units."
Further, the court's inconsistent causation findings in the summary judgment order in favor of VW and Subsidiary on the Sherman Act claims and in the summary judgment order in favor of Calnetics on the counterclaims suggests that the complexity of the evidence precludes use of summary procedures.
As stated by Timberlake:
"This (refusal to consider ill-gotten gains as a basis of damages) is not a pari delicto defense, nor is it a defense that plaintiff was otherwise violating the antitrust laws * * *. It is simply that profits made in the 'before' period, when plaintiff was the beneficiary of the unlawful acts, are not proper evidence upon which to predicate lost profits in the 'after' period." E. Timberlake, Federal Treble Damage Antitrust Action § 21.10, at 326.
However, Timberlake's argument should be read in light of the fact that his treatise was written three years before the Supreme Court's opinion in Perma Life. Further, Victor Talking Machine Co. v. Kemeny, 271 F. 810, 819 (3d Cir. 1921), upon which Timberlake primarily relies, was decided long before the trend against the use of the in pari delicto defense in antitrust suits took hold.
See Waldron v. British Petroleum Co., Ltd., 231 F.Supp. 72, 90-92 (S.D.N.Y.1964)
Calnetics did not offer to waive the collateral estoppel effect of the § 7 equitable determination on remand. But even if it had, we would be inclined to remand for a consolidated trial because of the threat of inconsistent determinations. See Heyman v. Kline, 456 F.2d 123, 131 (2d Cir.), cert. denied, 409 U.S. 847, 93 S.Ct. 53, 34 L.Ed.2d 88 (1972)
This is so because Calnetics' request for equitable relief, as well as its claim for damages, is based on the theory that the acquisition constituted a violation of § 7. Accordingly, the jury's resolution of the violation issue will control both sets of claims
See Brown Shoe Co., Inc. v. United States, 370 U.S. 294, 325 n.42, 82 S.Ct. 1502, 1524, 8 L.Ed.2d 510, 535 (1962); United States v. Columbia Steel Co., 334 U.S. 495, 510-11, 527, 68 S.Ct. 1107, 1115-16, 1124, 92 L.Ed. 1533, 1544-45, 1553-54 (1948)
Twin City Sportservice, Inc. v. Charles O. Finley & Co., Inc., 512 F.2d 1264, 1274 (9th Cir. 1975)
See, e. g., Heatransfer Corp. v. Volkswagenwerk, A.G., 1975-1 CCH Trade Cases P 60,309 at 66,216, 66,219 (S.D.Texas 1975)
See, e. g., Brown Shoe Co. v. United States, 370 U.S. 294, 323-24, 82 S.Ct. 1502, 1522-23, 8 L.Ed.2d 510, 534-35 (1962); United States v. Paramount Pictures, Inc., 334 U.S. 131, 174, 68 S.Ct. 915, 937, 92 L.Ed. 1260, 1301 (1948); United States v. Yellow Cab Co., 332 U.S. 218, 227-28, 67 S.Ct. 1560, 1565, 91 L.Ed. 2010, 2018 (1947)
See also Rondeau v. Mosinee Paper Corp., 422 U.S. 49, 61-62, 95 S.Ct. 2069, 2077-78, 45 L.Ed.2d 12, 22-23 (1975)
7 U.S.T. 1839, 1857, T.I.A.S. No. 3593 (1956). The United States as amicus takes the view that the import ban does not offend the treaty or GATT
61 Stat. Pt. 5, at A-5, A-12 through A-13, A-18 through A-19; T.I.A.S. No. 1700, 55-61 U.N.T.S. (1947)
Article XX(I)(d) of GATT, 61 Stat. Pt. 5, at A-61
Cf., United States v. Philadelphia National Bank, 374 U.S. 321, 370-71, 83 S.Ct. 1715, 1745, 10 L.Ed.2d 915, 948-49 (1963)
The relief granted must, of course, be effective to redress the violation and restore competition. United States v. E. I. du Pont de Nemours & Co., 366 U.S. 316, 326, 81 S.Ct. 1243, 1250, 6 L.Ed.2d 318, 325 (1961)
Brown Shoe Co. v. United States, 370 U.S. 294, 320, 82 S.Ct. 1502, 1521, 8 L.Ed.2d 510, 532 (1962)