546 F.2d 276 (9th Cir. 1976), 75-1481, Javelin Corp. v. Uniroyal, Inc.

Docket Nº:75-1481.
Citation:546 F.2d 276
Party Name:JAVELIN CORPORATION, Plaintiff-Appellant, v. UNIROYAL, INC., et al., Defendants-Appellees.
Case Date:October 12, 1976
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 276

546 F.2d 276 (9th Cir. 1976)

JAVELIN CORPORATION, Plaintiff-Appellant,

v.

UNIROYAL, INC., et al., Defendants-Appellees.

No. 75-1481.

United States Court of Appeals, Ninth Circuit

October 12, 1976

Rehearing and Rehearing En Banc Denied Jan. 13, 1977.

Page 277

C. Q. Britton (argued), of Sullivan, Jones & Archer, San Diego, Cal., for plaintiff-appellant.

John R. Reese and M. Laurence Popofsky (both argued), San Francisco, Cal., for defendants-appellees.

Before CARTER, LAY, [*] and WRIGHT, Circuit Judges.

JAMES M. CARTER, Circuit Judge:

This is a private antitrust action alleging violations of the Sherman Act, 15 U.S.C. § 1. Plaintiff Javelin Corporation appeals from a district court order granting summary judgment to appellees. We reverse in part and affirm in part.

Facts

In 1962, Tire Brands, Inc. 1 was founded by a group of tire distributors for the purpose of pooling their purchasing power. Tire Brands purchased tires primarily from Uniroyal, which participated in the organization of Tire Brands and produced a tire tradenamed "Sonic" for it. Member distributors were obligated to purchase a minimum quota of tires from Uniroyal to ensure continuous volume purchasing. They also were required to limit their sales to the exclusive territories assigned to them under the group agreement. Sanctions were imposed to enforce these arrangements.

Javelin was founded in 1967 as a wholesaler of tires. Shortly thereafter, Javelin contacted Tire Brands with a view toward obtaining membership. Javelin initially was poorly capitalized and could not finance its own private brand, thereby necessitating its membership in some form of purchasing group with an identified brand of tires. Javelin was admitted into Tire Brands in 1968, fully aware of and subject to the quota and territory requirements. It considered the exclusive marketing area an advantage.

Page 278

Unlike its fellow member distributors, Javelin used telephone contact rather than personal sales calls to its customers. This sales method proved extremely successful and Javelin flourished within its exclusive territory. It marketed three brands of its own in 1969 in competition with other members in their territories.

Development of its own brands resulted in a decreasing dependence on the Uniroyal brand. Javelin's annual percent of quota purchased declined continuously. Finally, in 1972, Javelin was expelled from Tire Brands for failure to maintain an acceptable level of quota sales. It is now one of the largest tire distributing companies in the United States.

In 1973, Javelin filed suit in the United States District Court for the Northern District of California in a complaint alleging three counts of violating § 1 of the Sherman Act. Count I alleged a horizontal conspiracy to allocate exclusive territories. Count II alleged a tie-in agreement based on the fact that distributor members had to purchase stock in Tire Brands as a condition of their membership. Count III claimed the defendants had boycotted Javelin by expelling it from the group. Javelin sought treble damages and injunctive relief.

During a preliminary hearing on April 19, 1974, the district court requested the defendants to move for summary judgment based upon Javelin being in pari delicto in the acts alleged. The defendants had not requested summary disposition themselves. After briefs were filed and argument heard, the motion was granted and judgment entered on January 15, 1975.

In Pari Delicto

The equitable defense of in pari delicto or "of equal fault" as applied to private antitrust suits, was severely restricted by the Supreme Court in Perma Life Mufflers, Inc. v. International Parts Corp., 392 U.S. 134...

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