680 F.2d 1263 (9th Cir. 1982), 81-4190, Thomsen v. Western Elec. Co., Inc.

Docket Nº81-4190.
Citation680 F.2d 1263
Party NameJames M. THOMSEN, Travis Gatus, John M. Brennan, Jerald R. Jakl, Larry R. Johnson, Anthony T. Pellegrino, individuals, Appellants, v. WESTERN ELECTRIC CO., INC., The Pacific Telephone and Telegraph Company, American Telephone and Telegraph Company, Appellees.
Case DateJuly 06, 1982
CourtUnited States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 1263

680 F.2d 1263 (9th Cir. 1982)

James M. THOMSEN, Travis Gatus, John M. Brennan, Jerald R.

Jakl, Larry R. Johnson, Anthony T. Pellegrino,

individuals, Appellants,

v.

WESTERN ELECTRIC CO., INC., The Pacific Telephone and

Telegraph Company, American Telephone and

Telegraph Company, Appellees.

No. 81-4190.

United States Court of Appeals, Ninth Circuit

July 6, 1982

Argued and Submitted March 12, 1982.

Page 1264

James Duryea, Jr., San Francisco, Cal., for appellants.

Michael H. Salinsky, Pillsbury, Madison & Sutro, San Francisco, Cal., for appellees.

Appeal from the United States District Court for the Northern District of California.

Page 1265

Before GOODWIN and ANDERSON, Circuit Judges, and JAMESON, [*] district judge.

GOODWIN, Circuit Judge.

Plaintiffs appeal from a summary judgment in favor of Western Electric, Pacific Telephone, and American Telephone and Telegraph Co. 512 F.Supp. 128.

The central issues are: (1) whether the defendants were entitled to judgment as a matter of law on plaintiffs' claims of violations of § 1 of the Sherman Act; and (2) whether the plaintiffs had standing to sue Western for alleged violations of § 2 of the Sherman Act. Six employees filed a private antitrust action in district court claiming that the defendants contracted, combined, and conspired to restrain interstate trade and commerce in violation of § 1 of 15 U.S.C. § 1. Specifically, the employees claimed: (1) that there was an agreement that Pacific would refuse to consider, to negotiate with, or employ any craft person employed by Western, (2) that Pacific agreed with Western not to employ any Western craft employee unless he or she resigned from Western and waited for six months; (3) that Pacific agreed not to employ any craft person from Western without first seeking a release from Western; (4) that Pacific and Western agreed not to compete for craft employees of either company; and (5) these agreements were enforced by blacklists and refusals to deal.

The employees also claimed that Western violated § 2 of the Sherman Act, 15 U.S.C. § 2, by initiating and inducing the alleged contracts, combinations and conspiracies as an unlawful means of maintaining monopoly power in the sale of telecommunication services and telephone equipment. These claims were joined with a variety of pendent state claims asserting various theories of recovery.

In granting summary judgment on the antitrust claims, the court also dismissed the pendent state claims without prejudice 1.

Generally, summary judgment is disfavored in "complex antitrust litigation where motive and intent play leading roles...." Poller v. Columbia Broadcasting, 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962). Accord, Blair Foods, Inc. v. Ranchers Cotton Oil, 610 F.2d 665, 668 (9th Cir. 1980). Harvey v. Fearless Farris Wholesale, Inc., 589 F.2d 451, 454 (9th Cir. 1979).

Poller does not, however, preclude summary disposition of antitrust cases. First Nat. Bank v. Cities Service, 391 U.S. 253, 290, 88 S.Ct. 1575, 1593, 20 L.Ed.2d 569 (1968). This court has said, in connection with applying Fed.R.Civ.P. 56(c) to antitrust cases:

"Once the allegations of conspiracy made in the complaint are rebutted by probative evidence supporting an alternative interpretation of a defendant's conduct, if the plaintiff then fails to come forward with specific factual support of its allegations of conspiracy, summary judgment for the defendant becomes proper." Mutual Funds Investors v. Putnam Management Co., 553 F.2d 620, 624 (9th Cir. 1977) quoting ALW, Inc. v. United Airlines, Inc., 510 F.2d 52, 55 (9th Cir. 1975).

Accord: Harvey v. Fearless Farris Wholesale, Inc., 589 F.2d at 454.

In granting summary judgment on the § 1 2 claims, the district court found the

Page 1266

employment restraints to be protected from antitrust liability because AT& T, Pacific and Western are so closely affiliated within the Bell System as to make employment policy a matter of internal management. AT&T owns 100 percent of the shares of Western and 90 percent of the shares of Pacific.

A conspiracy requires a "plurality of actors concerting their efforts toward a common goal". Mutual Fund Investors, Inc. v. Putnam Management Co., 553 F.2d 620, 625 (9th Cir. 1977). Common ownership and control will not insulate corporations from the impact of antitrust laws if they "hold themselves out as competitors." Kiefer-Stewart Co. v. Seagram & Sons, 340 U.S. 211, 215, 71 S.Ct. 259, 261, 95 L.Ed.2d 219 (1951). Accord: Perma Mufflers v. Int'l Parts Corp., 392 U.S. 134, 141-142, 88 S.Ct. 1981, 1985, 20 L.Ed.2d 982 (1968); United States v. Yellow Cab Co., 332 U.S. 218, 227, 67 S.Ct. 1560, 1565, 91 L.Ed. 2010 (1947); William Inglis v. ITT-Continental Baking Co., 668 F.2d 1014 (9th Cir. 1981); Harvey v. Fearless Farris Wholesale, Inc., 589 F.2d at 456. However, the mere fact of separate incorporation, without more, is not "sufficient to prove the capability for conspiracy."

On the capacity of intra-enterprise entities to conspire, this court has held that there is a single "business unit separated by the technicality of separate incorporation" where the parent and subsidiary corporations are controlled by a single individual. Knutson v. Daily Review Inc., 548 F.2d 795, 802-03 (9th Cir. 1976), cert. denied, 433 U.S. 910, 97 S.Ct. 2977, 53 L.Ed.2d 1094 (1977). Two factors in Knutson arguably made the corporations legally "incapable of conspiracy", (1) common ownership and discretion and (2) lack of intra-enterprise competition. 3 See also Murphy Tugboat v. Shipowners & Merchants Towboat, 467 F.Supp. 841, 858, affirmed sub nom, Murphy Tugboat Co. v. Crowley, 658 F.2d 1256 (9th Cir. 1981). "To determine whether corporate entities are separate enough to be capable of conspiracy, a court must examine the particular facts of the case before it." Las Vegas Sun, Inc. v. Summa Corp, 610 F.2d 614, 617, cert. denied, 447 U.S. 906, 100 S.Ct. 2988, 64 L.Ed.2d 855 (1980).

Even if appellees possessed the capacity to conspire, the personnel agreements in question do not violate § 1 if the corporate entities are sufficiently affiliated for the matter to be one of internal management. See William Inglis v. ITT-Continental Baking Company, 668 F.2d 1014; Murphy Tugboat Co. v. Crowley, 467 F.Supp. at 860. Thus, actions of affiliated corporations which touch only on internal operations and have no anti-competitive consequences cannot violate § 1.

The evidence that AT&T, Western and Pacific constituted a "common enterprise" is...

To continue reading

FREE SIGN UP