Filco v. Amana Refrigeration, Inc.

• Decision Date: 10 June 1983
• Docket Number: No. 81-4604,81-4604
• Citation: 709 F.2d 1257
• Parties: 1983-1 Trade Cases 65,450, 13 Fed. R. Evid. Serv. 693 FILCO, a California partnership, Anton J. Saca, Ilham Saca, Rose M. Karadsheh, and Nahil Altenhofen, Plaintiffs-Appellants, v. AMANA REFRIGERATION, INC., a Delaware corporation; Lamco Appliance, Inc., a California corporation and Boulevard T.V. & Appliance, Inc., a California corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1257

709 F.2d 1257

1983-1 Trade Cases 65,450, 13 Fed. R. Evid. Serv. 693

FILCO, a California partnership, Anton J. Saca, Ilham Saca Rose M. Karadsheh, and Nahil Altenhofen Plaintiffs-Appellants, v. AMANA REFRIGERATION, INC., a Delaware corporation; Lamco Appliance, Inc., a California corporation and Boulevard T.V. & Appliance, Inc., a California corporation Defendants-Appellees.

No. 81-4604.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Sept. 14, 1982.

Decided June 10, 1983.

Joseph E. Burke, Burke & Sharpe, Sacramento, Cal., Mario N. Alioto, Alioto & Alioto, San Francisco, Cal., for plaintiffs-appellants.

Stephen J. Holtman, Simmons, Perrine, Albright & Ellwood, Cedar Rapids, Iowa, Carole Hogan, Hardy, Erick & Brown, Robert H. Johnson, Johnson & Hoffman, Sacramento, Cal., for defendants-appellees.

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

Before MERRILL, WALLACE, and NELSON, Circuit Judges.

WALLACE, Circuit Judge:

Filco sued alleging that Amana Refrigeration, Inc. (Amana), Boulevard T.V. & Appliance, Inc. (Boulevard) and Lamco Appliance, Inc. (Lamco) conspired to fix prices in violation of section 1 of the Sherman Act, 15 U.S.C. Sec. 1, and California's Cartwright Act, Cal.Bus. & Prof.Code Sec. 16720 (West 1964). Filco also asserted five other state law claims against Amana. The district court dismissed these latter claims after granting a motion for summary judgment on the Sherman Act and Cartwright Act claims. Filco appeals only from the summary judgment. We have jurisdiction under 28 U.S.C. Sec. 1291. We affirm.

I

Amana manufactures and sells appliances throughout the United States. Filco is a partnership which owns a discount store in Sacramento, California. In 1974, Karadsheh, a partner and the manager of Filco, began ordering Amana products from Dusa, Amana's field representative. Filco claims, and Amana denies, that Filco became an official Amana dealer in January 1976. A retailer need not be an authorized dealer to receive merchandise from Amana. Regardless of whether it ever became an official dealer, Filco ordered Amana products from Dusa until his death in March 1976. In the following seven months, business between Filco and Amana apparently slowed but Filco continued to order products directly from Amana.

In October 1976, Amana sent Casimir, its new Sacramento representative, to solicit an order from Filco. Although what occurred at this meeting is substantially in conflict, all agree that despite Casimir's irritation with the presence of representatives of rival manufacturers, he initially took an order from Karadsheh for Amana products. When one of the other representatives began to mimic him, however, Casimir allegedly tore up the order and stormed out of the store. Amana's version differs only in that it claims that Casimir canceled the order because he was directed to leave the store by Karadsheh. Filco's Saca later telephoned Casimir's superiors in an effort to ameliorate the dispute, but was informed that Amana would stand by Casimir's refusal to sell products to Filco. Although the argument between Casimir and Karadsheh severed direct relations between Filco and Amana, Filco has continued to order Amana products from a dealer in Southern California.

Filco claims that it was terminated because of complaints made to Amana by two of its competitors, Lamco and Boulevard, concerning Filco's discount pricing policies. The record supports a finding that Coppin, the owner of Lamco, made such a complaint, but no such finding can be made as to Boulevard's owner, Rich. Both Casimir and his supervisor admit that Amana was aware of dealer complaints about Filco's discounting practices.

In his deposition, Karadsheh testified that Casimir told him "I don't want Amana to be discounted. I don't want to make a K-Mart out of Amana, you know, with the low prices." Karadsheh also testified that Casimir stated: "If you want to have Amana, you have to do so and so. You have to maintain the price. You cannot discount it."

II

If no material facts are disputed, we view the record in the light most favorable to the party opposing the motion for summary judgment and determine whether the movant is entitled to prevail as a matter of law. Fristoe v. Reynolds Metals Co., 615 F.2d 1209, 1213 (9th Cir.1980). We consider only alleged facts that would be admissible in evidence. Fed.R.Civ.P. 56(e).

Of course, "summary procedures should be used sparingly in complex antitrust litigation where motive and intent play leading roles ...." Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962); Chisholm Brothers Farm Equipment Co. v. International Harvester Co., 498 F.2d 1137, 1139 (9th Cir.), cert. denied, 419 U.S. 1023, 95 S.Ct. 500, 42 L.Ed.2d 298 (1974) (Chisholm Brothers ). Nevertheless, if there is no genuine issue of material fact, and if the resisting party does not present a record sufficient to support a reasonable finding in his favor, a district court has a duty to grant the motion for summary judgment. Cf. 498 F.2d at 1139-40 (directed verdict).

Distributors terminated due to competitor complaints have provided a considerable amount of recent litigation, as well as scholarly commentary. See, e.g., Piraino, Distributor Terminations Pursuant to Conspiracies Among a Supplier and Complaining Distributors: A Suggested Antitrust Analysis, 67 Cornell L.Rev. 297 (1982); Note, Vertical Agreements to Terminate Competing Distributors: Oreck Corp. v. Whirlpool Corp., 92 Harv.L.Rev. 1160 (1979); Note, Vertical Agreement as Horizontal Restraint: Cernuto, Inc. v. United Cabinet Corp., 128 U.Pa.L.Rev. 622 (1980). In the case before us, our focus is relatively narrow. The complaints to Amana concerned Filco's pricing practices and Filco alleges that this was the reason it was terminated. Therefore, the per se rule ¹ is implicated. Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 51 n. 18, 97 S.Ct. 2549, 2558 n. 18, 53 L.Ed.2d 568 (1977) (dictum); United States v. Parke, Davis & Co., 362 U.S. 29, 46-47, 80 S.Ct. 503, 512-513, 4 L.Ed.2d 505 (1960); Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373, 407-08, 31 S.Ct. 376, 384, 55 L.Ed. 502 (1911); see also California Retail Liquor Dealers Association v. Midcal Aluminum, Inc., 445 U.S. 97, 102, 100 S.Ct. 937, 941, 63 L.Ed.2d 233 (1980) (dictum). Before we can apply the per se rule, however, we must first determine whether there is sufficient evidence to establish a combination or conspiracy.

Section 1 of the Sherman Act provides that any "combination ... or conspiracy, in restraint of trade ..." is illegal. 15 U.S.C. Sec. 1. This phrase has been roughly translated to mean that a plaintiff must prove that a defendant engaged in "concerted action." L. Sullivan, Handbook of the Law of Antitrust Sec. 109 (1977). Thus, in a case like the one before us, a plaintiff cannot overcome a motion for summary judgment without alleging sufficient facts to raise a reasonable inference of an illegal combination or conspiracy. Filco advances three theories of concerted action: a vertical conspiracy to fix prices between Lamco, Boulevard and Amana; an Albrecht conspiracy on the part of Amana to fix prices; and a horizontal conspiracy to fix prices between Lamco and Boulevard. We will examine each of these three theories in order.

A.

In United States v. Colgate & Co., 250 U.S. 300, 39 S.Ct. 465, 63 L.Ed. 992 (1919) (Colgate ), the Court held that absent monopolistic purpose, a unilateral decision to refuse to deal with another company in the vertical chain of distribution is not actionable under the Sherman Act. Therefore, a manufacturer may announce legally that it will refuse to deal with anyone who does not adhere to its suggested price schedule. Id. at 307, 39 S.Ct. at 468. Pursuant to the Colgate doctrine, courts have generally required more proof of concerted action to fix prices on the vertical level than on the horizontal level. Sullivan, supra, Sec. 139; see Edward J. Sweeney & Sons, Inc. v. Texaco, Inc., 637 F.2d 105, 111 n. 2 (3d Cir.1980), cert. denied, 451 U.S. 911, 101 S.Ct. 1981, 68 L.Ed.2d 300 (1981) (Edward J. Sweeney & Sons ), citing P. Areeda, Anti-Trust Analysis 560 (2d ed. 1974).

However, an overt act by a manufacturer, in addition to a unilateral refusal to deal, may be actionable. United States v. Bausch & Lomb Optical Co., 321 U.S. 707, 64 S.Ct. 805, 88 L.Ed. 1024 (1944); Federal Trade Commission v. Beech-Nut Packing Co., 257 U.S. 441, 447-53, 42 S.Ct. 150, 152-154, 66 L.Ed. 307 (1922). Filco relies especially on United States v. Parke, Davis & Co. In that case, Parke, Davis advised wholesalers and retailers that they must respect price floors. Wholesalers were used to detect violators at the retail level. Once a violation of its policy was detected, Parke, Davis would summon the noncomplying retailer and induce him to adhere to a price level. It would then use the first retailer's compliance to ensure the compliance of a second retailer. 362 U.S. at 33-36, 80 S.Ct. at 506-507. The Court wrote that a combination exists if "the producer secures adherence to his suggested prices by means which go beyond his mere declination to sell to a customer who will not observe his announced policy." Id. at 43, 80 S.Ct. at 511.

The crucial questions in the case before us are whether a jury may reasonably infer an illegal combination merely from competitors' complaints to a manufacturer and subsequent termination of the discounter, and, if not, what more is needed to overcome a summary judgment motion. The general rule in other circuits is that a jury may not infer a conspiracy from competitor complaints plus termination alone. Battle v. Lubrizol Corp., 673 F.2d 984, 991 (8th Cir.), reh'g and reh'g en banc granted, (May 21, 1982) (Battle ); Roesch, Inc. v. Star Cooler Corp., 671 F.2d 1168, 1172 (8th Cir.), reh'g and reh'g en banc...