Granddad Bread, Inc. v. Continental Baking Co., 78-3698

Citation612 F.2d 1105
Decision Date23 November 1979
Docket NumberNo. 78-3698,78-3698
Parties102 L.R.R.M. (BNA) 3069, 88 Lab.Cas. P 11,885, 1980-1 Trade Cases 63,017 GRANDDAD BREAD, INC., a corporation, Plaintiff-Appellant, v. CONTINENTAL BAKING CO., a corporation, Defendant-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

Charles R. Lonergan, Jr., Seattle, Wash., argued for plaintiff-appellant; Raymond H. Siderius, Siderius, Lonergan & Crowley, Seattle, Wash., on the brief.

E. Edward Bruce, Washington, D. C., argued for defendant-appellee; Nancy P. Gibbs, Seattle, Wash., on the brief.

Appeal from the United States District Court Western District of Washington.

Before HUFSTEDLER and ANDERSON, Circuit Judges, and GRANT, * District Judge.

J. BLAINE ANDERSON, Circuit Judge:

This antitrust case involves an appeal by Granddad Bread, Inc., (Granddad) from judgment n. o. v. in favor of Continental Baking Company (Continental). The court below found that Continental's activities were, in part, protected by the labor exemption to the antitrust laws, and that there was insufficient evidence to support liability under the other conspiracy theories. We agree and affirm the judgment of the district court.

I. PROCEEDINGS BELOW

Granddad, the plaintiff, originally brought this action against Continental and five other defendants, alleging conspiracy, monopolization, attempted monopolization, and price discrimination in the Seattle wholesale bread market. The other named defendants were Teamsters International Union of Bakery Salesmen, Local 227 (Local 227); Ashbrook Bakeries Corporation of Seattle (Ashbrook); Safeway Stores, Incorporated; American Bakeries Company; and Hansen Baking Company, Inc. All of the other defendants, except for Continental, settled with Granddad prior to trial.

After a nine-day trial, on February 19, 1975, a jury returned a special verdict against Continental. The jury found that Continental had not monopolized or attempted to monopolize any part of interstate trade in violation of Section 2 of the Sherman Act. But the jury did find that Continental had engaged in a conspiracy with the original defendants in an unreasonable restraint of, and in an attempt to monopolize, interstate trade (Sherman Act Sections One and Two). The jury also found that Continental had engaged in price discrimination in violation of the Robinson-Patman Act.

After the adverse verdict, Continental moved for judgment n. o. v. and the district court granted it on the Robinson-Patman claim, but denied it on the Sherman Act conspiracy claims. Continental then took an appeal from the denial of its motion. Granddad never appealed from the Robinson-Patman ruling.

On December 14, 1977, a panel of this court entered an order remanding the case to the district court for reconsideration in view of the recent decisions involving the scope of the labor exemption to the antitrust laws. On remand, the court below entered an order granting Continental's motion for judgment n. o. v. based on Connell Construction Co. v. Plumbers & Steamfitters, 421 U.S. 616, 95 S.Ct. 1830, 44 L.Ed.2d 418 (1975), and California Dump Truck v. Associated General Contractors, 562 F.2d 607 (9th Cir. 1977). The district court concluded that the jury should not have been allowed to consider the labor-related aspects of the case, and, aside from the matters protected by the labor exemption, there was insufficient evidence to support antitrust liability. Granddad then brought this appeal. 1

II. BACKGROUND

Traditionally, the bread produced by the major Seattle wholesale bakers was delivered by driver salesmen who were members of Local 227, and employees of the respective bakers. They were paid a salary plus a commission for the bread sold. They picked up the bread from the wholesale bakers and provided rack service 2 at the retail stores.

In 1960, one of the Seattle wholesale bakers, Ashbrook, began to sell its bread to a retail outlet pursuant to an agreement where the retail outlet had its own drivers (as opposed to members of Local 227) pick up and deliver the bread.

This incident became the focal point of negotiations when the collective bargaining agreement between Local 227 and the bakers came up for renegotiation in 1962. Local 227 insisted upon obtaining a provision which would prohibit any of the signatory bakers from using a delivery method which did not utilize Local 227 driver salesmen servicing the racks at the retail stores.

The bakers eventually agreed to the demands of Local 227. Article IV of the collective bargaining agreement prohibited the signatory bakers from having anyone else pick up and deliver their products to retailers, except for members of Local 227 who were to continue providing rack service at the retail outlets. 3

Granddad's predecessor came into existence in 1963. Granddad was never a party to the collective bargaining agreement with Local 227. Granddad was not a baker, but was instead only a distributor which had to purchase its products from the wholesale bakers.

Granddad initially purchased its bread from Ashbrook. However, in 1964, Ashbrook refused to sell any more bread to Granddad unless Granddad terminated its wholesale selling to retail outlets and confined its sales to residences.

Unable to find another quality wholesale baker who would sell bread to them in the Seattle area for resale to retailers, Granddad found a baker in Canada. Thereafter, Granddad relied upon the Canadian baker as its source of supply.

During the damage period of 1967 to 1971, Granddad continued its distribution of bread to retail outlets. According to Granddad, the various defendants engaged in various predatory practices during this period for the purpose of driving Granddad out of business.

III. QUESTIONS PRESENTED

Granddad raises two principal issues on appeal. The first is whether Continental's participation in the formation or application of Article IV of the collective bargaining agreement came within the labor exemption to the antitrust laws. And the second question, apart from the labor evidence in the case, is whether there was sufficient evidence to support the jury's verdict that Continental had engaged in a combination or a conspiracy, either to monopolize or in restraint of trade.

IV. STANDARD OF REVIEW

There is a general policy disfavoring summary procedures in antitrust litigation because of the important role which motive and intent play in determining liability. Poller v. Columbia Broadcasting, 368 U.S. 464, 473, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962). Nevertheless, this policy only applies to pre-trial motions, not to post-trial motions such as the judgment n. o. v. which is involved in the present case. Cal. Computer Products v. Intern. Business Machines, --- F.2d ----, at ----, slip op. 2172 at 2180 (9th Cir., June 21, 1979).

On appeal from a judgment n. o. v., this court must view the evidence in the light most favorable to the party against whom the motion is made. Wescott v. Impresas Armadoras, 564 F.2d 875 (9th Cir. 1977). A judgment n. o. v. should be granted only when the evidence permits one reasonable conclusion as to the verdict. Fountila v. Carter, 571 F.2d 487, 489-490 (9th Cir. 1978).

In order to benefit from the favorable inferences, the non-moving party must present substantial evidence to support its claim. California Computer, at ----, slip op. at 2180. This is defined as "evidence as a reasonable mind might accept as adequate to support a conclusion." California Computer, at ----, slip op. at 2180.

Our task on this appeal is the same as it was for the district judge, to determine whether there was "substantial evidence" in the record to support Granddad's antitrust claims.

V. THE LABOR EXEMPTION

Generally, organized labor has two types of exemptions from the antitrust laws: statutory and non-statutory. Dump Truck, supra, 562 F.2d at 610. The statutory exemption is derived from the Clayton and the Norris-LaGuardia Acts where "specific union activities, including secondary picketing and boycotts, (are excepted) from the operation of the antitrust laws." Connell Construction, supra, 421 U.S. at 621-622, 95 S.Ct. at 1835. This does not apply to concerted action or agreements between unions and non-labor parties. Id. The non-statutory exemption, which is more limited in scope, then comes into play. Id. The source of the non-statutory exemption is "the strong labor policy favoring the association of employees to eliminate competition over wages and working conditions." 4 Id at 622, 95 S.Ct. at 1835. It is the non-statutory exemption which is involved in the present case.

Granddad argues that Article IV of the collective bargaining agreement was "illegal and void" under the National Labor Relations Act. Therefore, according to Granddad, Continental cannot benefit from the protection of the labor exemption. Moreover, Granddad contends that the jury properly resolved this question and its verdict should not have been questioned.

The court below found that Article IV of the collective bargaining agreement was a valid work preservation clause and that the jury should not have been allowed to consider it as a basis for imposing antitrust liability against Continental. We agree.

Pursuant to Section 8(e) of the National Labor Relations Act, a contract or agreement between any labor organization and any employer under which the employer agrees to refrain from doing business with any other person is an unfair labor practice. 5 29 U.S.C. § 158(e). Despite the sweeping language of Section 8(e), the Supreme Court has held that primary work preservation clauses do not fall within the broad prohibition. Woodwork Manufacturers v. NLRB, 386 U.S. 612, 639, 87 S.Ct. 1250, 18 L.Ed.2d 357 (1967).

The determination as to whether an agreement is Primarily for work preservation depends upon whether it was entered into, or applied, for the purpose of preserving work traditionally performed by the union members or...

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