Midwestern Waffles, Inc. v. Waffle House, Inc.
| Citation | 734 F.2d 705 |
| Decision Date | 18 June 1984 |
| Docket Number | No. 83-8424,83-8424 |
| Parties | 1984-2 Trade Cases 66,067 MIDWESTERN WAFFLES, INC., and Rex P. Waldrop, Plaintiffs-Appellants, Cross- Appellees, v. WAFFLE HOUSE, INC., et al., Defendants-Appellees, Cross-Appellants. |
| Court | United States Courts of Appeals. United States Court of Appeals (11th Circuit) |
W. Clark Goodwin, Manning G. Warren, III, J. Michael Rediker, Birmingham, Ala., K. Morgan Varner, III, Atlanta, Ga., for plaintiffs-appellants, cross-appellees.
Earle B. May, Jr., Kevin E. Grady, Atlanta, Ga., for defendants-appellees, cross-appellants.
Appeals from the United States District Court for the Northern District of Georgia.
Before TJOFLAT and JOHNSON, Circuit Judges, and TUTTLE, Senior Circuit Judge.
We AFFIRM the partial summary judgment of the district court, entered pursuant to Fed.R.Civ.P. 54(b), for the reasons set forth in its dispositive orders of March 15, 1982, and December 30, 1982, annexed hereto as Exhibits A and B, respectively.
Before the court in this antitrust action are plaintiffs' motion for reconsideration of their motion for partial summary judgment and defendants' motion for reconsideration of their motion for summary judgment. Although the parties contend they cannot agree on any facts, the court will base this order on facts which appear from the record to be undisputed.
Waffle House, Inc. (hereinafter "Waffle House") is a Georgia corporation with its principal offices in the Atlanta area. Its stock is owned principally by its officers and employees. Midwestern Waffles, Inc. (hereinafter "Midwestern Waffles") is an Waffle House operates a trademark restaurant system with some unique features. It owns and operates some restaurants on the retail level in certain territories, and other territories have been exclusively allocated to franchisees for operation of Waffle House restaurants. Waffle House or Waffle House employees, officers, or shareholders have interests in corporations which own and operate certain of the Waffle House franchises.
Illinois corporation of which Rex Waldrop and Edwin Waldrop are shareholders.
Plaintiffs asked defendants for a Waffle House franchise in Selma, Alabama in late September or early October of 1972. Plaintiffs were told that the area was not available for a franchise because Alabama had already been allocated between the company and other franchisees for operation of Waffle House restaurants. Central Illinois was a territory available for a franchise at the time, and in late 1972 Midwestern Waffles, known at the time as Waldrop-Henry Waffles, Inc., became a Waffle House franchisee for that territory.
Rex Waldrop initially remained in Selma, Alabama while Steve Henry worked as the general manager for Midwestern Waffles in Illinois. After Steve Henry's resignation from Midwestern Waffles and the expansion of the franchise into the St. Louis area, Rex Waldrop moved to St. Louis to become general manager for Midwestern Waffles.
Midwestern Waffles opened two Waffle House restaurants, one in 1974 and one in 1976. Plaintiffs executed a Standard Franchise Agreement prior to the opening of each restaurant, and they also executed Area Development Agreements which controlled where they opened restaurants and whether they built additional ones. Orders were placed for plaintiffs' restaurant equipment with The Hickman Company, in which Waffle House had a financial interest. Metro Distributors, Inc., in which Waffle House also had a financial interest, helped arrange for vending machines for plaintiffs' restaurants. In 1977 Waffle House bought plaintiffs' restaurants from them, and plaintiffs are dissatisfied with the price paid them and the method of arriving at the price.
Plaintiffs have brought this action pursuant to 15 U.S.C. Sec. 15 which provides in pertinent part as follows:
Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee.
Defendants contend Rex Waldrop does not have standing to bring this action in his capacity as an officer, employee or stockholder of Midwestern Waffles, Inc. Mr. Waldrop asserts, however, that he has suffered injuries personal to him, specifically lost opportunities and expenses incurred because he left his job in Alabama and moved to Illinois, and he contends he has standing to seek recovery for those non-derivative injuries.
To have standing to bring an antitrust action a plaintiff must have suffered antitrust injury, which is injury of the type the antitrust laws were intended to prevent and which flows from that which makes a defendant's acts unlawful. The injury must reflect the anticompetitive effect of either the violation of antitrust law or of the anticompetitive acts made possible by the violation, and it should be the type of loss which a violation of antitrust law would be likely to cause. Brunswick Corporation v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 [97 S.Ct. 690, 50 L.Ed.2d 701] (1977). To have standing a person must be one against whom anticompetitive activity is directed, and not one who has merely suffered indirect, secondary, or remote injury. Jeffrey v. Southwestern Bell, 518 F.2d 1129 (5th Cir.1975). Incidental or consequential injury or injury remotely caused The court finds that the personal damages which Rex Waldrop seeks to recover are, at best, incidental to activity forbidden by antitrust law and not the type injury the antitrust laws were intended to prevent. Markas [Martens] v. Barrett, 245 F.2d 844 (5th Cir.1957). Accordingly, the court finds that Rex Waldrop does not have standing to bring this action.
by an antitrust violation does not give a plaintiff standing to complain that he has been injured by reason of anything forbidden in the antitrust laws. Id.
Plaintiffs contend that Waffle House and certain of its franchisees conspired to violate Sec. 1 of the Sherman Act, 15 U.S.C. Sec. 1, by horizontally dividing, allocating, and imposing restrictions regarding territories in which they and third parties could operate. If a horizontal restriction is proved a per se violation would be established. Red Diamond Supply, Inc. v. Liquid Carbonic Corp., 637 F.2d 1001 (5th Cir.1981).
Defendants contend their allocation of territories is a vertical restriction. The prevailing standard of analysis under Sec. 1 of the Sherman Act for non-price vertical restrictions is the rule of reason. Under this rule the finder of fact weighs all circumstances of a case to determine whether a restrictive practice imposes an unreasonable restraint on competition and should therefore be prohibited. Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36 [97 S.Ct. 2549, 53 L.Ed.2d 568] (1977). If so, it is per se illegal. Red Diamond Supply, Inc. v. Liquid Carbonic Corporation, 637 F.2d 1001 (5th Cir.1981).
In order to prove that Waffle House's allocation of territories, each of which is an exclusive territory, is a horizontal restriction, plaintiffs will have to show that Waffle House and those of its franchisees alleged to be part of the combination or conspiracy agreed among themselves as to the division of territories. If Waffle House alone allocated the territories there is no per se violation of antitrust law because exclusive dealing arrangements are to be analyzed under the rule of reason. Aladdin Oil Company v. Texaco, Inc., 603 F.2d 1107 (5th Cir.1979). That Waffle House itself operates restaurants in certain territories does not, alone, change the standard of analysis. Red Diamond Supply, Inc. v. Liquid Carbonic Corporation, supra; H & B Equipment Company, Inc. v. International Harvester Company, 577 F.2d 239 (5th Cir.1978).
Whether or not Waffle House's territorial allocation is a vertical restriction or a horizontal restriction cannot be decided on motions for summary judgment because there is a question of fact as to who actually makes the decisions about division and allocation of territories. Plaintiffs have described in detail their evidence that certain franchisees which are affiliated with Waffle House participate in the decisions regarding allocation of territories. Defendants, however, have shown the existence of evidence that the decision is made by Waffle House alone without participation by any of the Waffle House employees, officers, or stockholders who own or are affiliated with franchises. Plaintiffs ask the court to look at the realities of the process of territorial allocation, citing authority for the proposition that a restriction which appears on paper to be vertical may nevertheless be horizontal in practice and that such a restriction is illegal per se. It is as to the realities of how allocation of territories are made that questions of fact exist. Accordingly, summary judgment on the issue of territorial allocation cannot be granted.
Plaintiffs contend that Waffle House's requirements that its franchisees purchase equipment from approved sources constitute per se illegal ties in violation of Sec. 1 of the Sherman Act, 15 U.S.C. Sec. 1. A tie is an arrangement under which a seller agrees to sell one product, the tying product, only on the condition that the buyer also purchase a second product, the tied product. A tie is a per se violation of antitrust law, however, only if the seller Plaintiffs contend the Waffle House franchise is the tying product in this case and that equipment and vending services, which franchisees were required to obtain from an approved source, are the tied products. The Hickman Company was the only approved source for certain equipment, and Metro Distributors, Inc. was the only approved source for...
To continue reading
Request your trial
-
Disenos Artisticos E Industriales, SA v. Work
...alleged injury and that the defendant's activities had the effect of stifling competition. See, e.g., Midwestern Waffles, Inc. v. Waffle House, Inc., 734 F.2d 705, 722-23 (11th Cir.1984). In this case, Karen-Leslie asserts that it has been injured by a vertical resale price maintenance sche......
-
Consol. Gas Co. of Fla. v. City Gas Co. of Fla.
...whose injuries are not "the type of loss which a violation of antitrust law would be likely to cause." Midwestern Waffles, Inc. v. Waffle House, Inc., 734 F.2d 705, 710 (11th Cir. 1984); Construction Aggregate Transport, 710 F.2d at 764, 765. See Associated General, 459 U.S. at 540, 103 S.C......
-
Todorov v. DCH Healthcare Authority
...See Austin, 903 F.2d at 1389 ("antitrust injury [i]s the touchstone for antitrust standing"); Midwestern Waffles, Inc. v. Waffle House, Inc., 734 F.2d 705, 710 (11th Cir.1984) (per curiam); Jeffrey v. Southwestern Bell, 518 F.2d 1129, 1131 (5th Cir.1975); see also Bell v. Dow Chem. Co., 847......
-
Kellam Energy, Inc. v. Duncan
...a relevant product market for the purposes of an attempted monopolization claim is widely recognized. In Midwestern Waffles, Inc. v. Waffle House, Inc., 734 F.2d 705 (11th Cir. 1984), the court defined a market in terms of consumer preference. "This court finds that the relevant product mar......
-
Tying and bundled discounts
...franchise and gasoline products were not separate products for tying purposes). 160. See, e.g. , Midwestern Waffles, Inc. v. Waffle House, 734 F.2d 705, 712 (11th Cir. 1984) (per curiam) (concluding that vending services and equipment were separate products from the Waffle House franchise);......
-
Sourcing Restrictions and Vendor Rebates
...to restrain competition in 34. 631 F.2d 303 (4th Cir. 1980). 35. Id. at 311. 36. See, e.g. , Midwestern Waffles v. Waffle House, Inc., 734 F.2d 705, 712 (11th Cir. 1984) (Waffle House franchise was separate product for tying purposes); Little Caesar Enters. v. Smith, 34 F. Supp. 2d 459, 469......
-
Table of Cases
...Cir. 1993), 78, 81 Metro Ford Truck Sales v. Ford Motor Co., 145 F.3d 320 (5th Cir. 1998), 76 Midwestern Waffles v. Waffle House, Inc., 734 F.2d 705 (11th Cir. 1984), 104, 109, 133, 141, 146 Miles Distribs. v. Specialty Constr. Brands, 476 F.3d 442 (7th Cir. 2007), 105 Minn. Mining & Mfg. C......
-
Customer and territorial restraints
...1517 (9th Cir. 1987); Jayco Sys. v. Savin Bus. Machs. Corp., 777 F.2d 306, 317 (5th Cir. 1985); Midwestern Waffles, Inc. v. Waffle House, 734 F.2d 705, 720 (11th Cir. 1984); Copy-Data , 663 F.2d at 409; Red Diamond Supply v. Liquid Carbonic Corp., 637 F.2d 1001, 1004 (5th Cir. 1981) (action......