Chisholm Bros. Farm Equip. Co. v. International Harv. Co.

• Decision Date: 09 July 1974
• Docket Number: No. 71-3012.,71-3012.
• Citation: 498 F.2d 1137
• Parties: CHISHOLM BROTHERS FARM EQUIPMENT CO., Plaintiff-Appellant, v. INTERNATIONAL HARVESTER COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

498 F.2d 1137 (1974)

CHISHOLM BROTHERS FARM EQUIPMENT CO., Plaintiff-Appellant, v. INTERNATIONAL HARVESTER COMPANY, Defendant-Appellee.

No. 71-3012.

United States Court of Appeals, Ninth Circuit.

May 17, 1974.

Rehearing Denied July 9, 1974.

Joseph M. Alioto (argued), Maxwell M. Blecher, Peter J. Donnici, Joseph L. Alioto, Brian O'Dea, Lawrence E. Alioto, San Francisco, Cal., Howard D. Humphrey, of Cosho & Humphrey, Boise, Idaho, for plaintiff-appellant.

Noble K. Gregory (argued), John A. Sutro, Allan N. Littman, Dennis K. Bromley, of Pillsbury, Madison & Sutro, San Francisco, Cal., Willis C. Moffatt, of Moffatt, Thomas, Barrett & Blanton, Boise, Idaho, for defendant-appellee.

Before ELY, TRASK and WALLACE, Circuit Judges.

TRASK, Circuit Judge:

Chisholm Brothers Farm Equipment Co. (Chisholm) appeals the District Court's directed verdict in favor of International Harvester Co. (Harvester). Jurisdiction in the trial court for this civil antitrust action for treble damages was predicated upon Section 4 of the Clayton Act, 15 U.S.C. § 15. Appellate jurisdiction lies pursuant to 28 U.S.C. § 1291. We agree with the District Court that Chisholm presented insufficient evidence to submit to a jury in support of its claims of violations under Sections 1 and 2 of the Sherman Antitrust Act, 15 U.S.C. §§ 1, 2, and affirm the judgment below.

Until the business was sold in 1968, appellant was an independent dealer, located in Cassia County, Idaho, engaged in selling and servicing trucks and farm equipment manufactured by appellee. Chisholm had operated as a franchisee of Harvester since 1940, and, in 1944, had opened a second dealership in Minidoka County, Idaho.¹ This second dealership was subsequently sold to one Cameron who, in turn, eventually entered into an arrangement with Harvester that converted his business into a "co-dealership." Under this arrangement, 75 percent of the stock of Cameron Sales, Inc., (Cameron Sales) was owned by Harvester, while Cameron received 25 percent of the stock. The stock controlled by Harvester constituted all of the voting stock of Cameron Sales. Cameron served as president of the corporation and, with several employees of Harvester, was a member of its board of directors. The board established policy. As the executive officer, Cameron hired and fired and set the sale prices for specific items.

Chisholm alleges that, beginning in 1961, representatives of Harvester instituted a series of practices designed to coerce Chisholm to lower its retail prices and, thereby, increase profits for Harvester at the wholesale level through a larger volume of sales. Appellant maintains that upon its refusal to comply, Harvester conspired with its subsidiary, Cameron Sales, and used its control of the latter to fix its prices at a level below that charged by Chisholm, with a resultant loss of business by appellant. Appellant contends, further, that a third participant in this conspiracy was Smith Brothers Implement Co. (Smith Brothers), another independent dealer selling and servicing Harvester's farm equipment in Cassia County, Idaho. Chisholm alleges that Harvester allowed Smith Brothers to operate at an overhead lower than that incurred by appellant, and that Smith Brothers was permitted to maintain, in violation of its franchise agreement, inadequate service facilities. Harvester is also said to have "oversold" Smith Brothers so as to cause that dealership to reduce sharply its retail prices in order to move its inventory.

In 1968, the Chisholm dealership, by then a losing enterprise, was sold to GEM International (GEM), a corporation owned by two individuals² and Harvester in accordance with appellee's co-dealership program. Shortly thereafter, appellant filed this suit against Harvester, and charged appellee with vertical price fixing (resale price maintenance), conspiracy to monopolize, and attempt to monopolize — violations of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2.³ After the presentation of Chisholm's case-in-chief, the District Court concluded that Chisholm's evidence was insufficient to support any reasonable inferences of liability under the antitrust laws, and granted Harvester's motion for a directed verdict.⁴

As appellant reminds us, the Supreme Court has admonished that summary procedures, including directed verdicts, should be used "sparingly in complex antitrust litigation where motive and intent play leading roles. . . ." Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962); accord, Cornwell Quality Tools Co. v. C. T. S. Co., 446 F.d 825, 832 (9th Cir. 1971), cert. denied, 404 U.S. 1049, 92 S. Ct. 715, 30 L.Ed.2d 740 (1972). Nevertheless, if an antitrust plaintiff, as well as any other plaintiff, does not present enough evidence within his case-in-chief to support a reasonable finding in his favor, a district court has a duty to direct a verdict in favor of the opposing party. Brady v. Southern Ry., 320 U.S. 476, 479-480, 64 S.Ct. 232, 88 L.Ed. 239 (1943); Washington v. United States, 214 F.2d 33, 41 (9th Cir.), cert. denied, 348 U.S. 862, 75 S.Ct. 86, 99 L.Ed. 679 (1954). When considering the propriety of the grant or denial of a motion for directed verdict, the correct standard⁵ is whether or not, viewing the evidence as a whole, there is substantial evidence present that could support a finding, by reasonable jurors, for the nonmoving party. Butte Copper & Zinc Co. v. Amerman, 157 F.2d 457, 458 (9th Cir. 1946). "Substantial evidence is more than a mere scintilla." Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 217, 83 L.Ed. 126 (1938); Butte Copper & Zinc Co., supra. The evidence must be examined in a light most favorable to the nonmovant, Continental Ore v. Union Carbide & Carbon Corp., 370 U.S. 690, 696 & n. 6, 82 S.Ct. 1404, 8 L.Ed.2d 777 (1962), and there can be no weighing of evidence. Tennant v. Peoria & Pekin Union Ry., 321 U.S. 29, 35, 64 S.Ct. 409, 88 L.Ed. 520 (1944). Finally, appellant here is entitled to the benefit of all reasonable inferences that may be drawn from its evidence. Standard Oil Co. v. Moore, 251 F.2d 188, 198 (9th Cir. 1957), cert. denied, 356 U.S. 975, 78 S.Ct. 1139, 2 L. Ed.2d 1148 (1958).

With these considerations in mind, we now review the sufficiency of appellant's case.

Violations of Section 1 of the Sherman Act

Relying heavily upon Albrecht v. Herald Co., 390 U.S. 145, 88 S.Ct. 869, 19 L.Ed.2d 998 (1968), appellant contends that Harvester engaged in resale price maintenance by combining with Cameron Sales and Smith Brothers in an attempt to force Chisholm to lower its retail prices. The argument fails for two reasons. Unlike in Albrecht the evidence does not establish a desire or effort by Harvester to fix the prices to be charged by Chisholm. Nor does the interplay between appellee and its dealers Smith Brothers and Cameron Sales amount to concerted action designed to force compliance by Chisholm.⁶

To support its contention that Harvester had coerced Chisholm to lower its prices, appellant introduced three reports written by a Harvester representative, zone manager Calvin Johnson, which reflected Johnson's opinion that Chisholm's business difficulties were caused, in part, by appellant's failure to price competitively in a buyer's market. The reports were written in 1962, 1966, and 1967, and were solely internal documents directed toward Johnson's superiors; they were from Johnson to Harvester and not to Chisholm. Johnson recommended termination of the Chisholm franchise, as appellant was "not willing to sacrifice profits to move goods" and was not interested in selling except "at or near list price." Appellant also exhibited documentary evidence indicating an interest, by Johnson's superiors, to discuss "seriously" his termination suggestions. Moreover, appellant demonstrated that the Chisholm brothers, after indicating a receptivity to suggestions by Harvester, had been told by Harvester representatives that their problems were caused by a failure to move their inventory and their insistence upon refusing to sell whenever a profit would not be realized. Yet the Chisholm brothers also were advised of several other alternatives that might possibly have improved their financial condition. Thus, Harvester recommended a reduction in excessive expenses, a reduction in excessive used merchandise received in "barter" or trade-in transactions, and even the assumption of a more optimistic and aggressive attitude. The Chisholm brothers themselves testified that they were not told at what prices they were to sell Harvester's products; at best, Harvester representatives only advised them of a need to "meet competition."⁷

This evidence pales in comparison with the proof deemed sufficient to establish coercion in the classic resale price maintenance cases. Thus, for example, in Albrecht v. Herald Co., 390 U. S. 145, 88 S.Ct. 869, 19 L.Ed.2d 998 (1968), the dealer, upon raising his prices above that suggested by the Herald Co., was informed by the latter that the newspaper company was entering into direct competition with Albrecht, its dealer. Moreover, Albrecht was threatened with termination if he continued to overcharge, and was told that he could have his customers back only if he charged the suggested price. 390 U. S. at 147-148. Similarly, in this court's decision in Girardi v. Gates Rubber Co. Sales Division, Inc., 325 F.2d 196 (9th Cir. 1963), there was testimony that the recalcitrant dealer had been expressly threatened with cancellation by a representative of the manufacturer after he had begun to deviate from Gate's suggested resale prices. 325 F.2d at 198. The dealer was cancelled, and, further, there was evidence that the manufacturer pursued a systematic policy of refusing to deal with distributors who did not comply with its suggested price schedule. Id. at 202. Here, appellant's evidence does not directly prove or give rise to reasonable...