AlliedSignal v. BF Goodrich, 99-2098

Citation183 F.3d 568
Decision Date23 June 1999
Docket NumberNo. 99-2098,99-2098
Parties(7th Cir. 1999) AlliedSignal, Inc., Crane Co., Eldec Corp., and Hydro-Aire, Inc., Plaintiffs-Appellees, v. B.F. Goodrich Co., Coltec Industries, Inc., and Menasco Aerospace, Ltd., Defendants-Appellants
CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)

Appeal from the United States District Court for the Northern District of Indiana, South Bend Division. No. 3:99 CV 0116 AS--Allen Sharp, Judge. [Copyrighted Material Omitted]

Before Bauer, Flaum and Kanne, Circuit Judges.

Flaum, Circuit Judge.

Plaintiffs AlliedSignal, Crane Co., Eldec Corp. and Hydro-Aire, Inc. filed suit in federal district court alleging that the proposed merger between defendants B.F. Goodrich, Coltec Industries, and Menasco Aerospace, Ltd. violated Section 7 of the Clayton Act, 15 U.S.C. sec. 18. AlliedSignal separately alleged that the proposed merger would violate a joint agreement between it and Coltec. The district court granted a preliminary injunction for a stay of the merger pending arbitration of the contract claim and pending a bench trial on the antitrust claim scheduled for July 12, 1999. B.F. Goodrich, Coltec, and Menasco took an interlocutory appeal which we have considered on an expedited basis. We now affirm.

Background

An aircraft landing system is composed of three component parts: the landing gear, the wheels and brakes (sold together as a package), and the brake control system. The industry is currently dominated by a few large firms. AlliedSignal manufactures wheels and brakes. B.F. Goodrich manufactures landing gear and wheels and brakes. Coltec manufactures landing gear through its subsidiary Menasco Aerospace, Ltd. The only other major player in this industry is a French company which manufactures landing gear under the name Messier-Dowty, and wheels and brakes under the name Messier-Bugatti.

AlliedSignal and Coltec currently operate under a Strategic Alliance Agreement ("SAA") which provides for cooperation between AlliedSignal and Coltec in the preparation of joint bids on landing systems. Their principal competitor in these bids is B.F. Goodrich, which generally pairs its wheels and brakes with its own landing gear. The proposed merger between B.F. Goodrich and Coltec would bring Coltec's aircraft landing gear division under the control of B.F. Goodrich and result in a single large domestic manufacturer of aircraft landing gear. If the merger were to proceed, B.F. Goodrich-Coltec would control approximately 64% of the worldwide market for landing gear for wide-body jets, 44% of the worldwide market for landing gear for narrow-body jets, and 59% of the worldwide market for landing gear for U.S. military jets.

AlliedSignal alleges several harms resulting from the proposed merger. First, in preparing joint bids and the integrated landing systems which result, AlliedSignal and Coltec have shared confidential proprietary information. AlliedSignal is concerned that B.F. Goodrich would have access to this information once Coltec is under B.F. Goodrich's control. In its capacity as a landing gear purchaser, AlliedSignal alleges that B.F. Goodrich could use its market power to charge it uncompetitive prices for landing gear. Last, AlliedSignal fears that B.F. Goodrich could leverage its dominant post-merger position in domestic landing gear production to favor B.F. Goodrich's own wheels and brakes over those of AlliedSignal in the formation of integrated landing systems.

Crane Co., Eldec Corp. and Hydro-Aire, Inc. ("the Crane Plaintiffs") are sellers of component parts for landing gear systems to both Coltec and B.F. Goodrich. They join AlliedSignal's Clayton Act claim out of a concern that the merger will allow B.F. Goodrich monopoly buying power (monopsony) for their goods.

Neither the Federal Trade Commission nor the Department of Defense (which reviewed the merger because of the parties' status as defense contractors) has objected to the merger. As noted above, the district judge granted a preliminary injunction for a stay of the merger pending arbitration of the contract claim and pending a bench trial on the antitrust claim scheduled for July 12, 1999.

Discussion
I. Arbitration Issues

B.F. Goodrich first raises a set of arguments predicated on the arbitration clause in the AlliedSignal-Coltec SAA. It asserts that the antitrust claim should be arbitrated with the contract claim and that the preliminary injunction should therefore last only as long as it takes to convene an arbitral panel. Assuming that the antitrust claim is not subject to arbitration, B.F. Goodrich argues that the district court improperly failed to stay consideration of the antitrust claim pending the results of the AlliedSignal-Coltec contract arbitration. Before we may consider the merits of B.F. Goodrich's argument, however, we must first consider two related jurisdictional obstacles to these aspects of the appeal.

A. Jurisdiction

Fed. R. App. P. 3(c)(1)(B) requires that the notice of appeal "designate the judgment, order or part thereof appealed from." The requirements of Rule 3(c) are jurisdictional and "their satisfaction is a prerequisite to appellate review." Smith v. Barry, 502 U.S. 244, 248 (1992); Torres v. Oakland Scavenger Co., 487 U.S. 312, 317 (1988). Nevertheless, "mere technicalities" should not stand in the way of our consideration of the merits, and we will find a notice of appeal sufficient so long as it "is the functional equivalent of what the rule requires." See Torres, 487 U.S. at 316-17. The rule in this Circuit is that "an error designating the judgment or a part thereof will not result in a loss of appeal if the intent to appeal from the judgment complained of may be inferred from the notice and if the appellee has not been misled by the defect." Cardoza v. Commodity Futures Trading Comm'n, 768 F.2d 1542, 1546 (7th Cir. 1985); see also Ortiz v. John O. Butler Co., 94 F.3d 1121, 1125 (7th Cir. 1996), Badger Pharmacal, Inc. v. Colgate-Palmolive Co., 1 F.3d 621, 625 (7th Cir. 1985); but see Garcia v. City of Chicago, 24 F.3d 966, 969 n.4 (7th Cir. 1994); Brandt v. Schal Assocs., Inc., 854 F.2d 948, 954 (7th Cir. 1988).

B.F. Goodrich's notice of appeal gave notice only of an appeal "from an order entered on April 30, 1999 granting AlliedSignal's motion for preliminary injunction." In an attached docketing statement, B.F. Goodrich alleged jurisdiction over this appeal solely under 28 U.S.C. sec. 1292 (a)(1). Section 1292(a)(1) makes the district court's issuance of a preliminary injunction an immediately appealable interlocutory order, but does not confer jurisdiction over the district court's refusal to refer the antitrust claim to arbitration or its alleged denial of a stay pending arbitration. (Jurisdiction over these latter two claims is conferred by 9 U.S.C. sec. 16(a)(1)(C) and sec. 16(a)(1)(A), respectively.) AlliedSignal therefore contends that B.F. Goodrich failed to adequately indicate its intent to appeal the district court's arbitration rulings.

Before we may consider this question, we must consider another one: whether the district court actually made any rulings regarding arbitration. The record reveals that the parties to the litigation did fully brief the arbitration issues raised by B.F. Goodrich on appeal, though the written order issued by the district judge discussed only the propriety of a preliminary injunction on the antitrust claim. B.F. Goodrich argues that this order, granting a preliminary injunction pending a trial on the merits of the antitrust claim, necessarily encompasses a refusal to refer the antitrust claim to arbitration. We agree. However, an order granting a preliminary injunction and setting a trial date does not necessarily constitute a refusal to stay the antitrust claim pending a resolution of the contract arbitration. Setting a July 12th trial date does not in and of itself indicate that the district judge will refuse to stay the trial if the contract arbitration is not completed by that date. Since we cannot conclude that the district court actually denied B.F. Goodrich a stay of the antitrust proceedings, no appellate jurisdiction lies over this issue.

Consideration of this second jurisdictional question leads us back to our original one, whether B.F. Goodrich gave adequate notice of its intent to appeal the refusal to refer the antitrust claim to arbitration. Since we agree with B.F. Goodrich that the order granting the preliminary injunction necessarily encompassed a denial of a referral to arbitration, we believe that B.F. Goodrich's identification of the "order entered on April 30, 1999 granting AlliedSignal's motion for preliminary injunction" sufficiently noticed its intent to appeal the denial of the referral to arbitration. We therefore have jurisdiction over the district court's refusal to refer the antitrust issue to arbitration.

B. Arbitrability of Antitrust Claim

In the SAA, AllliedSignal and Coltec agreed to cooperate in the production of integrated landing systems through joint projects involving AlliedSignal's brakes and wheels and Coltec's landing gear. B.F. Goodrich claims that the antitrust claims fall within the arbitration clause of the SAA, which provides for arbitration of "any claim or controversy arising out of or relating to [the] Agreement," because any future anticompetitive effects produced by the merger would occur only if B.F. Goodrich-Coltec fails to abide by the terms of the SAA.

A district court must refer a dispute to an arbitrator "unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute." Matthews v. Rollings Hudig Hall Co., 72 F.3d 50, 53 (7th Cir. 1995). We resolve "any doubts concerning the scope of arbitrable issues . . . in favor of arbitration." See Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983). In this case, however, it...

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