372 U.S. 253 (1963), 54, White Motor Co. v. United States

Docket Nº:No. 54
Citation:372 U.S. 253, 83 S.Ct. 696, 9 L.Ed.2d 738
Party Name:White Motor Co. v. United States
Case Date:March 04, 1963
Court:United States Supreme Court
 
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Page 253

372 U.S. 253 (1963)

83 S.Ct. 696, 9 L.Ed.2d 738

White Motor Co.

v.

United States

No. 54

United States Supreme Court

March 4, 1963

Argued January 14-15, 1963

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF OHIO

Syllabus

The United States brought this civil suit to restrain alleged violations of the Sherman Act by appellant, a manufacturer of trucks, and moved for a summary judgment, contending that appellant's franchise contracts constituted per se violations of §§1 and 3. Such contracts restricted the geographic areas within which distributors and dealers were permitted to sell trucks and parts, restricted the persons to whom distributors and dealers were permitted to sell trucks for resale, precluded distributors and dealers from selling trucks to any federal or state government or subdivision thereof and other large customers without permission of appellant, fixed the resale price for trucks and parts sold by distributors to dealers for retail sale, and fixed the retail price of parts and accessories sold by distributors and dealers to certain designated customers. Appellant did not file any affidavit denying the Government's allegations; but it did file a brief containing allegations of fact, denying that its agreements were illegal, and contending that it should be allowed to present, at trial, evidence of the reasonableness of its contracts when considered in their own unique business and economic context. The District Court granted summary judgment for the Government. Appellant appealed directly to this Court from all but the price-fixing aspects of the judgment.

Held: Apart from the price-fixing aspects of the case, summary judgment was improperly granted, and the legality of the territorial and customer limitations of appellant's franchise contracts should be determined only after a trial. Pp. 254-264.

(a) Summary judgments have a place in the antitrust field, but they are not appropriate "where motive and intent play leading roles." Poller v. Columbia Broadcasting System, 368 U.S. 464. Pp. 259-261.

(b) This is the first case involving a territorial restriction in a vertical arrangement; and this Court knows too little of the actual impact of that restriction and the one respecting customers to reach a conclusion on the bare bones of the documentary evidence before it. Pp. 261-264.

194 F.Supp. 562, reversed.

Page 254

DOUGLAS, J., lead opinion

MR. JUSTICE DOUGLAS delivered the opinion of the Court.

This is a civil suit under the antitrust laws that was decided below on a motion for summary judgment. Rule 56 of the Rules of Civil Procedure at the time of the hearing below permitted summary judgment to be entered

if the pleadings, depositions, 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.

Since that time, an amendment to Rule 56, which is included in proposed changes submitted to Congress pursuant to 28 U.S.C. § 2072, would add the following requirement:

When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered against him.

But no such requirement was present when the present case was decided, and appellant, though strenuously opposing summary judgment and demanding a trial, submitted no such affidavits. It did, however, in its brief in

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opposition to the motion for summary judgment, make allegations concerning factual matters which the District Court thought were properly raised and which we think were relevant to a decision on the merits.

Appellant manufactures trucks and sells them (and parts) to distributors,1 to dealers, and to various large users. Both the distributors and dealers sell trucks (and parts) to users. Moreover, some distributors resell trucks (and parts) to dealers, selected with appellant's consent. All of the dealers sell trucks (and parts) only to users. The principal practices charged as violations of §§ 1 and 3 of the Sherman Act, 26 Stat. 209, 15 U.S.C. §§ 1, 3, concern limitations or restrictions on the territories within which distributors or dealers may sell and limitations or restrictions on [83 S.Ct. 698] the persons or classes of persons to whom they may sell. Typical of the territorial clause is the following:

Distributor is hereby granted the exclusive right, except as hereinafter provided, to sell during the life of this agreement, in the territory described below, White and Autocar trucks purchased from Company hereunder.

STATE OF CALIFORNIA: Territory to consist of all of Sonoma County, south of a line starting at the western boundary, or Pacific Coast, passing through the City of Bodega, and extending due east to the east boundary line of Sonoma County, with the exception of the sale of fire truck chassis to the State of California and all political subdivisions thereof.

Distributor agrees to develop the aforementioned territory to the satisfaction of Company, and not to

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sell any trucks purchased hereunder except in accordance with this agreement, and not to sell such trucks except to individuals, firms, or corporations having a place of business and/or purchasing headquarters in said territory.

Typical of the customer clause is the following:

Distributor further agrees not to sell nor to authorize his dealers to sell such trucks to any Federal or State government or any department or political subdivision thereof, unless the right to do so is specifically granted by Company in writing.

These provisions, applicable to distributors and dealers alike, are claimed by appellee to be per se violations of the Sherman Act.2 The District Court adopted that view, and granted summary judgment accordingly. 194 F.Supp. 562. We noted probable jurisdiction. 369 U.S. 858.

Appellant, in arguing for a trial of the case on the merits, made the following representations to the District Court: the territorial clauses are necessary in order for appellant to compete with those who make other competitory kinds of trucks; appellant could theoretically have its own retail outlets throughout the country and sell to users directly; that method, however, is not feasible, as it entails a costly and extensive sales organization; the only feasible method is the distributor or dealer system; for that system to be effective against the existing competition of the larger companies, a distributor or dealer must make vigorous and intensive efforts in a restricted territory, and if he is to be held responsible for energetic performance, it is fair, reasonable, and necessary that appellant protect him against invasions of his territory by other distributors or dealers of appellant; that appellant in order to obtain

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maximum sales in a given area must insist that its distributors and dealers concentrate on trying to take sales away from other competing truck manufacturers, rather than from each other. Appellant went on to say:

The plain fact is, as we expect to be able to show to the satisfaction of the Court at a trial of this case on the merits, that the outlawing of exclusive distributorships and dealerships in specified territories would reduce competition in the sale of motor trucks, and not foster such competition.

As to the customer clauses, appellant represented to the District Court that one of their purposes was to assure appellant

that "national accounts," "fleet accounts" and Federal and State governments and departments and political subdivisions thereof, which are classes of customers with respect to which the defendant [83 S.Ct. 699] is in especially severe competition with the manufacturers of other makes of trucks and which are likely to have a continuing volume of orders to place, shall not be deprived of their appropriate discounts on their purchases of repair parts and accessories from any distributor or dealer, with the result of becoming discontented with The White Motor Company and the treatment they receive with reference to the prices of repair parts and accessories for White trucks.

The agreements fixing prices of parts and accessories to these customers3 were, according to appellant, only an adjunct to the customer restriction clauses, and amounted merely to an agreement to give these classes of customers their proper discounts.

In a way, this affects the prices which these classes of customers have to pay for such parts and accessories, but it affects, as a practical matter, only spare and repair parts and accessories, and it affects only the discounts to be given to these particular classes of customers. The provisions are necessary if the defendant's

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future sales to "National Accounts," "Fleet Accounts" and Federal and State governments and departments and political subdivisions thereof, in competition with other truck manufacturers, are not to be seriously jeopardized.

White also argued below:

On principle, there is no reason whatsoever why a manufacturer should not have one distributor who is limited to selling to one class of customers and another distributor who is limited to selling to another class of customers, or why a distributor should not be limited to one class of customers and the manufacturer reserve the right to sell to another class of customers. There are many circumstances under which there could be no possible objection to limiting the class of customers to which distributors or dealers resell goods, and there are many reasons why it would be reasonable and for the public interest that distributors or dealers...

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