673 F.2d 984 (8th Cir. 1982), 81-1585, Battle v. Lubrizol Corp.

Docket Nº81-1585.
Citation673 F.2d 984
Party NameJeffrey B. BATTLE; Karen Battle; d/b/a Bayview Service and Supply Co.; and Anchor Supply Co., Inc., Appellants, Gordon Watson and Thomas Watson, v. The LUBRIZOL CORPORATION; Jenkin-Guerin, Inc.; and Jack K. Krause, Appellees.
Case DateMarch 04, 1982
CourtUnited States Courts of Appeals, Court of Appeals for the Eighth Circuit

Page 984

673 F.2d 984 (8th Cir. 1982)

Jeffrey B. BATTLE; Karen Battle; d/b/a Bayview Service and

Supply Co.; and Anchor Supply Co., Inc., Appellants,

Gordon Watson and Thomas Watson,

v.

The LUBRIZOL CORPORATION; Jenkin-Guerin, Inc.; and Jack K.

Krause, Appellees.

No. 81-1585.

United States Court of Appeals, Eighth Circuit

March 4, 1982

Submitted Nov. 10, 1981.

Page 985

Paul H. Schramm, M. Harvey Pines (argued), Schramm, Newman, Pines & Freyman, Clayton, Mo., for appellants.

C. William Portell, Jr. (argued), Harry G. Neill, Jr., Richard Wolff, St. Louis, Mo., for appellees Jenkin-Guerin, Inc. and Jack K. Krause.

Robert H. Rawson, Jr. (argued), A. Theodore Gardiner, III, Jones, Day, Reavis & Pogue, Cleveland, Ohio, Walter M. Clark, Thomas E. Wack, Armstrong, Teasdale, Kramer & Vaughan, St. Louis, Mo., for appellee The Lubrizol Corp.

Before HEANEY and McMILLIAN, Circuit Judges, and BENSON, [*] Senior District Judge.

McMILLIAN, Circuit Judge.

Jeffrey B. Battle, Karen Battle and two businesses which they control, Anchor Supply Co. (Anchor) and Bayview Service & Supply Co. (Bayview), appeal the district court's order of summary judgment and dismissal of their private antitrust action alleging that appellees, the Lubrizol Corporation,

Page 986

Jenkin-Guerin, Inc., and Jack K. Krause, president of Jenkin-Guerin, violated inter alia § 1 of the Sherman Act, 15 U.S.C. § 1. In that complaint, appellants charged that Lubrizol, a manufacturer of rustproofing compounds, conspired with one of its distributors, Jenkin-Guerin, to terminate appellants' distributorship for the purpose of restraining price competition. Appellants do not offer evidence to prove an anticompetitive effect on the market and rely solely on the principle enunciated in Cernuto, Inc. v. United Cabinet Corp., 595 F.2d 164 (3d Cir. 1979) (Cernuto), that the concerted action alleged here, aimed at limiting price competition, has a per se anticompetitive impact on the market. The district court followed the per se analysis in Cernuto, but found the evidence insufficient to support a reasonable inference that appellants' termination by Lubrizol was motivated by a desire to protect Jenkin-Guerin from price competition and granted summary judgment against appellants. Battle v. Lubrizol Corp., 513 F.Supp. 995 (E.D.Mo.1981).

For reversal appellants argue that the evidence was sufficient to support an inference that Lubrizol stopped selling directly to appellants in order to protect appellants' competitor, Jenkin-Guerin, from price competition. For the reasons discussed below, we reverse and remand for further proceedings.

Facts

Lubrizol manufactures and sells Lubrizol 2085A, a rustproofing compound. Jenkin-Guerin is a wholesale distributor of chemical compounds, one of which is Lubrizol 2085A. Jenkin-Guerin packages and sells Lubrizol 2085A under the trademark "Anchor Tuflex." For a period of several months in late 1978 and 1979, Anchor Supply Co., controlled by Battle, purchased Lubrizol 2085A from Jenkin-Guerin and unsuccessfully attempted to compete for a share of the automobile rustproofing market. In July of 1979, appellants approached Lubrizol with a proposal to distribute Lubrizol 2085A for marine vessel and industrial rustproofing uses as well as limited automotive uses. Because of the competitive pricing aspects of the marine market, appellants requested a direct supply from Lubrizol at a lower price than they could obtain from Jenkin-Guerin. Interested in expanding into the marine market, Lubrizol agreed to supply Lubrizol 2085A directly to Bayview Service & Supply Co., another company controlled by Battle.

Although appellants apparently made some unsuccessful attempts to enter the marine vessel rustproofing market during the next few months, between October and December of 1979, Anchor was actively marketing Lubrizol 2085A under the name "Armor Shield" for automotive uses and soliciting Jenkin-Guerin's customers with some success by undercutting Jenkin-Guerin's prices. Sometime in January of 1980, Jack Krause, president of Jenkin-Guerin, learned of appellants' actions and made a series of telephone calls to Irwin Ehren, manager of rustproofing products for Lubrizol. It is undisputed that in these telephone calls Krause complained that appellants were selling Lubrizol 2085A to Jenkin-Guerin customers at prices lower than Jenkin-Guerin's. Krause was "upset" and wanted to know whether Lubrizol would continue to sell Lubrizol 2085A to appellants. There is evidence from one of Krause's coworkers that before making one of these calls, Krause had commented to the office staff that he intended to force Lubrizol to stop supplying appellants with Lubrizol 2085A, and that after phoning Lubrizol, Krause boasted that he had done so.

Relying on the information supplied by Krause, Ehren informed George Arkedis, manager of Lubrizol's diversified products division, of the substance of the conversations. Arkedis then told William Bares, president of Lubrizol, that appellants were active in the automotive market rather than marine market and that Krause was concerned about the price competition. On February 26, 1980, Bares ordered that the direct supply of Lubrizol 2085A to Bayview be terminated. Subsequently, Lubrizol put appellants in contact with a Cleveland distributor of the compound, Eaton Oil Co.,

Page 987

but Lubrizol has not reestablished direct supply. Appellants have been able to purchase Lubrizol 2085A through Eaton Oil. Appellants, however, now pay more for Lubrizol 2085A from Eaton Oil than when they bought from Lubrizol directly, although appellants still sell Lubrizol 2085A at a price which is lower than that offered by Jenkin-Guerin. Appellants brought this suit charging, inter alia, that Lubrizol and Jenkin-Guerin conspired to terminate their distributorship for the purpose of protecting Jenkin-Guerin from price competition in violation of § 1 of the Sherman Act. Appellees maintain that the distributorship was terminated because appellants misrepresented their intended marketing plans when applying for a direct supply and because appellants were not honest in the negotiations.

Summary Judgment

This appeal followed the entry of summary judgment. Summary judgments are somewhat disfavored in antitrust cases, especially when motive or intent is at issue. See Poller v. Columbia Broadcasting System, 368 U.S. 464, 491, 82 S.Ct. 486, 495, 7 L.Ed.2d 458 (1962). However, summary judgment is not necessarily precluded in antitrust litigation. As noted by the Supreme Court in First National Bank v. Cities Service Co., 391 U.S. 253, 290, 88 S.Ct. 1575, 1593, 20 L.Ed.2d 569 (1968):

While we recognize the importance of preserving litigants' rights to a trial on their claims, we are not prepared to extend those rights to the point of requiring that anyone who files an anti-trust complaint setting forth a valid cause of action be entitled to a full-dress trial notwithstanding the absence of any significant probative evidence tending to support the complaint.

See also Aladdin Oil Co. v. Texaco, Inc., 603 F.2d 1107, 1110-12 (5th Cir. 1979). Like the district court, we must view the evidence in the light most favorable to the nonmoving party, giving that party the benefit of all reasonable inferences without assessing credibility. Only if the evidence is so one-sided that it leaves no room for any reasonable difference of opinion as to any material fact should the case be decided by the court as a matter of law rather than be submitted to the jury. See, e.g., Admiral Theatre Corp. v. Douglas Theatre Co., 585 F.2d 877, 883 (8th Cir. 1978).

"Vertical" Horizontal Restraint or "Horizontal" Vertical Agreement ?

This case presented the following question of law: after Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 97 S.Ct. 2549, 53 L.Ed.2d 568 (1977) (GTE Sylvania ), is the per se rule or the rule of reason appropriate in determining whether a technically vertical restraint of trade, which smacks of horizontal pricing interference, unduly restrains trade under § 1 of the Sherman Act. If the rule of reason is the appropriate test to prove a violation of § 1, a plaintiff must show that the combination or conspiracy produced actual anticompetitive effects within the relevant market. Appellants in the present case made no attempt to proffer such market evidence but instead argued that the alleged conspiracy constitutes a per se violation of the Act, thus requiring no proof of actual harmful impact on the market.

Per se violations are exceptions to the rule of reason. Northern Pacific R.R. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 518, 2 L.Ed.2d 545 (1958), set forth the standard for a per se violation: "agreements or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal." "Among those business practices that have been treated as per se violations are price fixing, resale price maintenance, group boycotts, tying arrangements, and certain types of reciprocal dealing." Cernuto, supra, 595 F.2d at 166 (footnotes omitted). United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 221, 60 S.Ct. 811, 843, 84 L.Ed. 1129 (1940) (Socony-Vacuum), continues to stand for the principle that conduct with the purpose and effect of restraining price movement and the free play of market forces among competitors is illegal per se: "Any combination which tampers with

Page 988

price structures is engaged in an unlawful activity. Even though the members of the price-fixing group were in no position to control the market, to the extent that they ... stabilized prices they would be directly interfering with the free play of market forces." See also National Society of Professional Engineers v....

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  • 172 Cal.App.3d 1020, A015564, Bert G. Gianelli Distributing Co. v. Beck & Co.
    • United States
    • California California Court of Appeals
    • June 10, 1985
    ...(2d Cir.1978) 579 F.2d 126, 131, emphasis in original.) [8] The parties have also referred to Battle v. Lubrizol Corp. (8th Cir.1982) 673 F.2d 984, 987, in discussing whether the per se rule or the rule of reason is appropriate in determining whether a technically vertical restraint of trad......
  • 768 P.2d 558 (Wyo. 1989), 87-249, Bigelow v. State
    • United States
    • Wyoming Supreme Court of Wyoming
    • January 27, 1989
    ...30 Vill.L.Rev. 1565, 1590-91 (1985). While mere bragging does not satisfy the in furtherance requirement, Battle v. Lubrizol Corp., 673 F.2d 984, 990 (8th Cir.1982), cert. denied 466 U.S. 931, 104 S.Ct. 1718, 80 L.Ed.2d 190 (1984), the boasts can be admissible under F.R.E. 801(d)(2)(E) when......
  • 688 F.2d 853 (1st Cir. 1982), 81-1745, Bruce Drug, Inc. v. Hollister, Inc.
    • United States
    • Federal Cases United States Courts of Appeals Court of Appeals for the First Circuit
    • September 8, 1982
    ...Texaco, Inc., 637 F.2d, ante, at 111 n.2. Plaintiff's solitary authority to the contrary is Battle v. Lubrizol Corp., 8 Cir., 1982, 673 F.2d 984. With respect, the majority opinion there purports to recognize the rule and then, without explanation, reaches the opposite result. The facts, mo......
  • 712 F.2d 1238 (8th Cir. 1983), 81-1585, Battle v. Watson
    • United States
    • Federal Cases United States Courts of Appeals Court of Appeals for the Eighth Circuit
    • July 12, 1983
    ...from price competition. Id. at 999. A panel of this court reversed the district court's judgment on appeal. Battle v. Lubrizol Corp., 673 F.2d 984 (8th Cir.1982). In the course of its decision, the panel decided that Krause's boastful statements were inadmissible as hearsay to Lubrizol. Id.......
  • Request a trial to view additional results
20 cases
  • 172 Cal.App.3d 1020, A015564, Bert G. Gianelli Distributing Co. v. Beck & Co.
    • United States
    • California California Court of Appeals
    • June 10, 1985
    ...(2d Cir.1978) 579 F.2d 126, 131, emphasis in original.) [8] The parties have also referred to Battle v. Lubrizol Corp. (8th Cir.1982) 673 F.2d 984, 987, in discussing whether the per se rule or the rule of reason is appropriate in determining whether a technically vertical restraint of trad......
  • 768 P.2d 558 (Wyo. 1989), 87-249, Bigelow v. State
    • United States
    • Wyoming Supreme Court of Wyoming
    • January 27, 1989
    ...30 Vill.L.Rev. 1565, 1590-91 (1985). While mere bragging does not satisfy the in furtherance requirement, Battle v. Lubrizol Corp., 673 F.2d 984, 990 (8th Cir.1982), cert. denied 466 U.S. 931, 104 S.Ct. 1718, 80 L.Ed.2d 190 (1984), the boasts can be admissible under F.R.E. 801(d)(2)(E) when......
  • 688 F.2d 853 (1st Cir. 1982), 81-1745, Bruce Drug, Inc. v. Hollister, Inc.
    • United States
    • Federal Cases United States Courts of Appeals Court of Appeals for the First Circuit
    • September 8, 1982
    ...Texaco, Inc., 637 F.2d, ante, at 111 n.2. Plaintiff's solitary authority to the contrary is Battle v. Lubrizol Corp., 8 Cir., 1982, 673 F.2d 984. With respect, the majority opinion there purports to recognize the rule and then, without explanation, reaches the opposite result. The facts, mo......
  • 712 F.2d 1238 (8th Cir. 1983), 81-1585, Battle v. Watson
    • United States
    • Federal Cases United States Courts of Appeals Court of Appeals for the Eighth Circuit
    • July 12, 1983
    ...from price competition. Id. at 999. A panel of this court reversed the district court's judgment on appeal. Battle v. Lubrizol Corp., 673 F.2d 984 (8th Cir.1982). In the course of its decision, the panel decided that Krause's boastful statements were inadmissible as hearsay to Lubrizol. Id.......
  • Request a trial to view additional results