Walker v. U-Haul Co. of Mississippi

• Decision Date: 25 June 1984
• Docket Number: No. 83-4035,U-H,U-HAUL,83-4035
• Citation: 734 F.2d 1068
• Parties: 1984-2 Trade Cases 66,078 Charles L. WALKER, Plaintiff-Appellant, v.CO. OF MISSISSIPPI,aul International, Inc. and Amerco, etc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1068

734 F.2d 1068

1984-2 Trade Cases 66,078

Charles L. WALKER, Plaintiff-Appellant, v. U-HAUL CO. OF MISSISSIPPI, U-Haul International, Inc. and Amerco, etc., Defendants-Appellees.

No. 83-4035.

United States Court of Appeals Fifth Circuit.

June 25, 1984.

Gilbert & Powell, A. Spencer Gilbert, III, Jackson, Miss., for plaintiff-appellant.

Butler, Snow, O'Mara, Stevens & Cannada, Alan W. Perry, Fred Krutz, III, Jackson, Miss., Gary Klinefelter, Phoenix, Ariz., for defendants-appellees.

Appeal from the United States District Court for the Southern District of Mississippi.

Before RUBIN, JOHNSON and DAVIS, Circuit Judges.

ALVIN B. RUBIN, Circuit Judge:

A franchisee of a major do-it-yourself moving company claims that the company and its subsidiaries fraudulently induced him to surrender his service station and enter into a new lease and franchise agreement under which the company raised his rent to a level that made it impossible for him to continue in business. He seeks damages for violations of both federal and state antitrust laws, for violation of Mississippi's franchise statute, and for fraud and breach of fiduciary duty under the common law of Mississippi. The district court entered summary judgment in favor of the defendants on all claims. We affirm as to the antitrust and franchise-statute claims, but, finding that the common law claims turn on disputed material issues of fact, we remand those claims for trial.

I.

In reviewing a summary judgment we evaluate the evidence in the light most favorable to the non-moving party. Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962). Viewed in that light, the affidavits and depositions indicate the following: Charles Walker operated a series of service stations in Jackson, Mississippi over a period of some fourteen years. ¹ He used these service stations as a base of operations to rent trucks and trailers for U-Haul, a company that specializes in local and one-way rentals of such equipment. U-Haul dealers rent company-owned equipment at prices set by U-Haul. U-Haul pays its dealers a commission based on a percentage of gross rental. In 1975, when Walker was operating a Union 76 station, a U-Haul representative proposed that Walker give up the service station and become the operator of a new U-Haul "moving center" to be located nearby on company-owned property. A moving center is devoted exclusively to renting U-Haul equipment and supplies and does not render other services. During the course of negotiations, Walker alleges, U-Haul represented to him that the rent for the moving center would be "reasonable," increasing only as Walker's sales increased.

Walker agreed to this arrangement, and he and his wife opened the moving center in September 1975, operating it rent-free until early 1976. During this time, Walker continued to operate his service station. In March, however, he agreed to give up the station and work at the moving center full time. At this point, U-Haul produced a moving center agreement and lease agreement for him to sign. The lease agreement was for a period of one year. When Walker requested a three-year lease to "evidence [U-Haul's] long-term commitment," he was told that a one-year lease was U-Haul's standard term, but that "there would be no problems in obtaining a renewal." The lease provided for a monthly rent of $400 and terminated on March 31, 1977.

In February, 1977, after some discussion of a possible rent increase, U-Haul raised the rent to $2500 a month, effective April 1. This amount was approximately equal to Walker's net income from the moving center. Walker continued to tender monthly rent checks in the amount of $400, which U-Haul refused to accept. Ultimately, Walker vacated the premises after receiving notice to quit from U-Haul's attorney.

Walker contends that U-Haul's actions violated sections 1 and 2 of the Sherman Act, ² the Mississippi antitrust statute, ³ and the Mississippi franchise statute. ⁴ In addition, he seeks to recover damages in tort for U-Haul's alleged fraudulent representation that rent would be increased only in proportion to Walker's income. U-Haul denies that it made any such representation, but it further argues that, if it did, evidence of such a promise is barred by Mississippi's statute of frauds.

II.

The district court entered summary judgment in favor of U-Haul on Walker's Sherman Act claims and pendent state antitrust claim. ⁵ Summary judgment is generally disfavored in antitrust cases, which often hinge on issues of motive, intent, and credibility. ⁶ Nevertheless, we have recognized that a plaintiff may not immunize himself against the entry of summary judgment simply by alleging a violation of the antitrust laws. As in other types of cases, if the pleadings and accompanying evidentiary materials, when viewed in the light most favorable to the non-moving party, raise no "genuine issue as to any material fact," and it appears that the moving party is entitled to judgment as a matter of law, the court may properly enter judgment. ⁷ Moreover, the party opposing summary judgment may not rely merely on the pleadings or even on conflicting testimony, but must introduce "significant evidence demonstrating the existence of a genuine fact issue." ⁸

Treating Walker's complaint as one alleging injury only to intrabrand competition, the district court correctly held that U-Haul was entitled to summary judgment. The district court treated U-Haul's alleged anticompetitive acts as an instance of a vertical rather than a horizontal restraint of trade, thereby subjecting them to a "rule of reason" rather than a "per se" antitrust analysis under section 1 of the Sherman Act. ⁹ See Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 97 S.Ct. 2549, 53 L.Ed.2d 568 (1977). Walker has not challenged this determination on appeal.

Walker seeks to fit this case within the pattern of a vertical refusal-to-deal or dealer termination. See Aladdin Oil Co. v. Texaco, Inc., 603 F.2d 1107 (5th Cir.1979); Industrial Building Materials, Inc. v. Interchemical Corp., 437 F.2d 1336 (9th Cir.1970). Under the Colgate doctrine, ¹⁰ an individual seller may unilaterally select those with whom it will deal. If, however, the seller combines with others to exercise this right of selection to achieve some anticompetitive goal, it runs afoul of section 1. ¹¹ The typical dealer-termination case involves a manufacturer or wholesaler that terminates a business relationship with an independent distributor who has the power to set his own prices. Such action by the manufacturer, conspiring with other distributors or with its own direct customers, may reduce price competition and drive out of business distributors who offer a variety of product lines. ¹² Consumers may be deprived of the benefits of both interbrand and intrabrand competition.

But Walker, as a U-Haul franchisee, was not in a position to set prices; that was done by U-Haul. He was essentially an agent for U-Haul, and the substitution of a salaried agent for one who, like Walker, worked on commission could not possibly have had any effect on intrabrand competition, let alone a significant effect. See Action Towing and Rental v. U-Haul International, 507 F.Supp. 987, 992 (E.D.La.1981), aff'd, 683 F.2d 415 (5th Cir.1982). If U-Haul's conduct had no anticompetitive effect, it does not violate section 1 of the Sherman Act when tested under the rule of reason. Summary judgment in favor of U-Haul was therefore appropriate. ¹³

Walker asserts that the district court overlooked evidence tending to show that U-Haul's actions had the purpose and effect of decreasing competition between the three major companies in the one-way truck and trailer rental market--U-Haul, Ryder, and Hertz. Walker argues that U-Haul's plan was to induce him to relinquish his service station and assume the full-time operation of the Northview Moving Center by falsely promising that he could remain there at a reasonable rent. By subsequently raising the rent to a level that he could not possibly afford, Walker claims, U-Haul not only ensured that Walker would no longer be a U-Haul dealer; it also prevented him from using his former service station as a base of operations for a Ryder or Hertz franchise. Thus, Walker portrays himself as a pawn in the anticompetitive game U-Haul was playing against Ryder and Hertz.

U-Haul counters that the district court overlooked this evidence, if such evidence exists, for a very good reason: Walker never pled this theory of recovery in the district court. His complaint was, as the district court noted, vague. But the apparent thrust of it was that U-Haul sought to eliminate competition between U-Haul franchisees like Walker and company-operated moving centers, not between U-Haul and Ryder and Hertz. In paragraph nineteen of his amended complaint, for example, Walker asserts, "The representations and the actions of defendants were part of a plan and scheme among the defendants by fraudulent misrepresentations and by economic coercion to eliminate Walker as a U-Haul dealer and Moving Center operator in the Jackson, Mississippi area." ¹⁴ (Emphasis added.) Similarly, paragraph eighteen states that U-Haul was implementing a scheme "to insure that company-owned and operated moving centers were the only retail outlets located in profitable urban locations including Jackson, Mississippi." The complaint makes no mention of Ryder, Hertz, or indeed of any effect on interbrand, as opposed to intrabrand, competition.

In response, Walker points to the definition of the relevant markets in his amended complaint as the "trailer and one-way truck [rental] markets" in Jackson. Even under the liberal requirements of notice pleading, it is doubtful that such an incidental reference to the relevant markets suffices to plead a theory of recovery that is markedly different from that sketched out in the rest of the complaint. Walker...