681 F.2d 1203 (9th Cir. 1982), 80-3490, Betaseed, Inc. v. U and I Inc.

Docket Nº:80-3490, 80-3514.
Citation:681 F.2d 1203
Party Name:BETASEED, INC., Plaintiff-Appellant, v. U AND I INCORPORATED, Defendant-Appellee. U AND I INCORPORATED, Counterclaimant, Cross-Appellant, v. BETASEED, INC., Washington Sugar Beet Growers Association, the members andaffiliates of the Washington Sugar Beet Growers Association, Does 1 to 1500, inclusive, Counterclaim-Defendants, Cross-Appellees.
Case Date:July 23, 1982
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

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681 F.2d 1203 (9th Cir. 1982)

BETASEED, INC., Plaintiff-Appellant,


U AND I INCORPORATED, Defendant-Appellee.

U AND I INCORPORATED, Counterclaimant, Cross-Appellant,


BETASEED, INC., Washington Sugar Beet Growers Association,

the members andaffiliates of the Washington Sugar Beet

Growers Association, Does 1 to 1500, inclusive,

Counterclaim-Defendants, Cross-Appellees.

Nos. 80-3490, 80-3514.

United States Court of Appeals, Ninth Circuit

July 23, 1982

Argued and Submitted Jan. 5, 1982.

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Peter S. Hendrixson, Dorsey, Windhorst, Hannaford, Whitney & Halladay, Minneapolis, Minn., for plaintiff-appellant.

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Michael H. Salinsky, Pillsbury, Madison & Sutro, San Francisco, Cal., for U and I Inc.; Parker A. Maddux, San Francisco, Cal., on brief.

Appeal from the United States District Court for the Eastern District of Washington.

Before KILKENNY, ANDERSON and ALARCON, Circuit Judges.

ALARCON, Circuit Judge:

These appeals present, in the context of a private antitrust lawsuit, the familiar issue of whether the district court properly granted the parties' respective motions for summary judgment. In its complaint, Betaseed, Inc., alleges that U & I Inc. violated the Sherman Act's proscription against tying arrangements, reciprocal dealings, and monopolization. 15 U.S.C. §§ 1, 2. Betaseed also charges that U & I committed the common law torts of disparagement and interference with contractual relations. By counterclaim, U & I charges that Betaseed and the Washington Sugar Beet Growers Association (WSBGA) conspired to fix the price of sugar beet seed in the Washington seed market.

Betaseed moved for summary judgment on its tie-in/reciprocal dealing claim and on U & I's price-fixing counterclaim. The WSBGA also moved for summary judgment on U & I's counterclaim. U & I moved for summary judgment on all counts of Betaseed's complaint. The district court denied Betaseed's motion for summary judgment on its tie-in/reciprocal dealing claim and granted Betaseed's motion for summary judgment on U & I's price-fixing counterclaim. The district court also granted U & I's motion for summary judgment on all of Betaseed's antitrust and common law claims. The basis for this ruling was that U & I's actions were justified by legitimate business objectives and that U & I acted in a manner which had the least restrictive impact on competition. The district court also concluded that, since U & I could not prove any antitrust injury or damages and U & I's counterclaim did not state an antitrust complaint, the claim was not sustainable as a matter of law. Both parties appeal the district court's rulings. 1

We affirm the district court's judgment as to U & I's counterclaim for price-fixing. We reverse the judgment on Betaseed's claims because there are disputed facts material to Betaseed's claim for relief and to U & I's asserted business justification defense and we are unable, after viewing the record in a light most favorable to Betaseed, to conclude that U & I is entitled to judgment as a matter of law.


As a general rule summary judgment is disfavored in complex antitrust litigation, particularly where extensive factual determinations must be made with respect to the issues of intent and motive. Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962); Beltz Travel Service, Inc. v. International Air Transport Ass'n., 620 F.2d 1360, 1364-65 (9th Cir. 1980).

It is clear, however, that this general reluctance does not preclude the use of summary judgment in antitrust litigation. Ron Tonkin Gran Turismo, Inc. v. Fiat Distributors, Inc., 637 F.2d 1376, 1381 (9th Cir. 1981), cert. denied, --- U.S. ----, 102 S.Ct. 128, 70 L.Ed.2d 109 (1981). Summary judgment is appropriate in the following instances: (1) "In the absence of 'any significant probative evidence tending to support the complaint' ", First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 290, 88 S.Ct. 1575, 1593, 20 L.Ed.2d 569 (1968) and; (2) when the moving party has shown that there is no genuine issue of material fact and, upon viewing the evidence and factual inferences drawn therefrom in a light most favorable to the non-moving party, it is evident that the moving

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party is entitled to judgment as a matter of law. Program Engineering, Inc. v. Triangle Publications, Inc., 634 F.2d 1188, 1192-1193 (9th Cir. 1980).


A. Undisputed Facts

Betaseed, a Minnesota corporation, and U & I, a Utah corporation, sell sugar beet seeds to growers, including Washington farmers. Betaseed sells only sugar beet seeds; U & I sells seeds and buys sugar beets for processing sugar. U & I is the only processor of sugar beets in the relevant geographic area due to freight barriers rendering impractical the shipment of Washington beets outside this area. Each year, U & I enters into contracts with individual Washington sugar beet growers for the purchase of sugar beets. The terms of these contracts are annually negotiated and agreed to by U & I and the Washington Sugar Beet Growers Association (WSBGA), whose membership comprises eighty to ninety percent of Washington sugar beet growers. Prior to 1972, U & I was the sole supplier of sugar beet seed; the WSBGA-approved sugar beet purchase contracts provided that sugar beet growers could use only U & I seed. The 1972, 1973, and 1974 contracts did not contain any seed restriction. These contracts contained a skewed scale of payment in which U & I over paid growers whose sugar beets "had a below average sugar content and under paid growers whose beets had an above average sugar content." 2 It was described as a type of insurance for growers who had bad years. 3

In 1972, Betaseed introduced its HH7 and HH22 sugar beet seeds into the Washington sugar beet seed market. According to Kent Nielsen, U & I's geneticist, this was the "first time (the industry was) faced with an apparently bonifide (sic) attempt by an independent seed company, (independent of a sugar beet processing company) to sell sugar beet seed to sugar beet growers throughout the United States on a continuing basis." 4

From 1972 to 1976, Betaseed's sugar beet seed sales steadily increased. 5 In 1973, U & I fieldmen began monitoring the amount of acreage planted with Betaseed's seeds and reporting their findings to U & I's agricultural superintendents. 6 In 1975, U & I's sugar beet purchase contracts contained the following restriction:

The grower shall grow, during the year 1975, -- acres of sugar beets and shall sell the entire crop therefrom to the COMPANY, and the COMPANY shall buy and pay for the same upon the terms and conditions hereinafter set forth. It is further agreed that sugar content, disease susceptibility, processability, purity, and ability to retain quality under storage are with other characteristics necessary to qualify the beets which COMPANY is obligated to buy under his contract, COMPANY therefore will only be obligated to buy beets grown from Utah-Idaho Sugar Company seeds number Hybrid 3 and 8 or such other seed as has been established by tests satisfactory to the

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COMPANY to produce beets having substantially the same characteristics as beets produced from said number 3 and 8 seed mentioned above. (emphasis added).

In 1976, U & I offered an "alternate contract" which the WSBGA refused to approve. According to this contract, growers could use other companies' seed but would be paid less for these sugar beets than under the "regular" or WSBGA approved contract. 7

The parties draw different inferences from these facts and refer to additional facts to support their respective positions. We next examine these facts.

1. U & I's Rationale for the Restriction

U & I maintains that the seed restriction clause was necessary because Betaseed's seeds are inferior to U & I's seeds in terms of sugar content. The purchase of these beets under the regular contract would, in U & I's view, lead to financial ruin since U & I would have to pay more for such beets. U & I nevertheless did not enforce the seed restriction in 1975 because, according to Keith Wallentine, Vice President of U & I's corporate relations, Betaseed had not submitted data on its seed, and U & I's tests on Betaseed's seed were "not conclusive." 8 U & I adopted the provision in 1975, according to Wallentine, because "it was becoming apparent that beets grown from Betaseed seed tended to have lower sugar content on (the) average than beets from U & I seed" and because in 1975 the contract was changed so that U & I assumed all the risk of "loss of quality of beets while in storage." 9 Wallentine also asserted that, after the 1975 sugar beet crop had been harvested, two U & I receiving stations in Washington had sugar beets with lower sugar content than at other stations in the same area. Investigation of the situation by U & I employees "uncovered facts indicating that certain growers who had delivered beets to those stations had planted substantial amounts of Betaseed seed." 10

2. The 1976 Documents

Betaseed maintains that the sequence of events as demonstrated by U & I documents indicates that the true purpose of the seed restriction, enforced in 1976, was to eliminate seed competition. A summary of the documents follows.

On February 5, 1976, Wallentine distributed to various U & I officials material from U & I's research department concerning studies of U & I seed and seed of other companies. Wallentine invited them to

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"examine it preliminary to the meeting to be held for development of (U & I) policy on use of seed from sources outside (U & I's) company." The materials contain: (1) a summary of the comparative qualities of U & I hybrid 8 seed and Betaseed HH22 seed; 11 (2) tables...

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