Moore v. Boating Industry Associations, s. 83-2148

Decision Date11 February 1985
Docket Number83-2201,Nos. 83-2148,s. 83-2148
Parties, 1985-1 Trade Cases 66,394 Dennis G. MOORE and George R. Moore, Plaintiffs-Appellees, Cross-Appellants, v. BOATING INDUSTRY ASSOCIATIONS, Trailer Manufacturers Associations, and Donald I. Reed, Defendants-Appellants, Cross-Appellees.
CourtU.S. Court of Appeals — Seventh Circuit

August E. Roehrig, Jr., Fitzgibbon, Roehrig, Greenawalt & Stone, Chicago, Ill., for plaintiffs-appellees, cross-appellants.

Stanley M. Lipnick, Arnstein, Gluck & Lehr, Chicago, Ill., for defendants-appellants, cross-appellees.

Before CUMMINGS, Chief Judge, COFFEY, Circuit Judge, and WYATT, Senior District Judge. *

COFFEY, Circuit Judge.

This is an appeal from a jury verdict in favor of the plaintiffs, Dennis and George Moore, against two affiliated Marine industry trade associations and one of their employees, Donald I. Reed. The jury found that the defendants violated section 1 of the Sherman Act, 15 U.S.C. Sec. 1, 1 disparaged the plaintiffs' product and violated the Illinois Consumer Fraud and Deceptive Business Practices Act, Ill.Rev.Stat. ch. 121 1/2, Sec. 261 et seq. It returned a verdict on all the claims in the amount of $200,000. On post-verdict motions, the trial court denied the defendants' motions for judgment n.o.v. or a new trial on the issue of the Sherman Act violation, but ordered a remittitur of damages from $200,000 to $167,201. The district court, however, overturned the jury verdict finding that the defendants had committed the common law tort of product disparagement and had violated the Illinois Consumer Fraud and Deceptive Business Practices Act. Judgment was entered in the amount of $501,603 after trebling the $167,201 in damages. The defendants, Boating Industry Associations ("BIA"), Trailer Manufacturers Associations ("TMA"), and Donald I. Reed ("Reed"), appeal the jury verdict contending: (1) that there was insufficient evidence to establish any Sec. 1 Sherman Act violation; (2) that the jury was erroneously instructed as to the law establishing such liability; and (3) that they were "ambushed" by the plaintiffs in their presentation of their damage evidence, or in the alternative, that the evidence presented was legally insufficient. The plaintiffs cross-appeal claiming that the district court erred in granting judgment n.o.v. on its common law product disparagement and Illinois statutory claims. We affirm.

I.

Before describing the evidence presented in this case, it would be helpful to detail the federal and state regulations which govern the manufacture of boat trailer lights. The Federal Motor Vehicle Safety Standards, 49 C.F.R. Part 571, promulgated by the National Highway Traffic Safety Administration ("NHTSA") of the Department of Transportation ("DOT"), pursuant to the National Traffic and Motor Vehicle Safety Act, 15 U.S.C. Sec. 1391, provide for the regulation of boat trailer lights. One of those standards, Standard 108, regulates the production requirements of tail lights and their associated equipment by requiring not only that boat trailers be equipped with a tail lamp, stop lamp, rear and side reflectors, side-mark lamps, turn signal lamps, and clearance lamps, but also that those lights conform to the photometric or brightness levels promulgated by the Society of Automotive Engineers. See 49 C.F.R. Sec. 571.108 S4.1.1.

The DOT does not require the submission of a laboratory test report proving that the light complies with Standard 108, but instead permits self-certification by the manufacturer of the light who may indicate compliance by placing a "DOT" symbol on their lamps. Compliance with DOT's Standard 108 is accomplished either through self-initiated testing by the NHTSA or through a petition to commence a proceeding filed with the NHTSA by "any interested person" (including a manufacturer) who believes that the lighting equipment does not comply with the regulatory standards. 15 U.S.C. Sec. 1412; 49 C.F.R. Sec. 552. If such a petition is filed, NHTSA, within 120 days from the time of filing, must either grant the petition and commence a proceeding by investigation, or deny the petition and publish the reasons for its denial. 15 U.S.C. Sec. 1410a(d). If in a proceeding commenced by NHTSA it is determined that the tail lights marked with the DOT symbols do not conform to Standard 108, the vehicle or trailer manufacturer using the lights will not be subject to civil penalty or recall if such manufacturer can establish that it did not have reason to know in the exercise of due care that the equipment did not conform with federal safety standards. 15 U.S.C. section 1397(b)(2).

Most states generally follow the federal regulatory scheme. However, the states of Virginia and California require affirmative certification by their state officials prior to sale of the lights in their states. The required photometric or brightness levels for tail lights in those states are substantially identical to the federal statutory requirements contained in Standard 108.

One of the plaintiffs, Dennis Moore, testified that he and his father, George Moore, entered the boat trailer light manufacturing business in the early 1970's, their plant being located in Livermore, California. In 1974, they introduced their new "Dry Launch Light Model 701" ("Model 701"). 2 This light was certified as being salesworthy by the states of California and Virginia, and by the American Association of Motor Vehicle Administrators. Subsequently, in 1975, the California Highway Patrol ("CHP") purchased a sample pair of the Model 701 light, tested the sample and found that its sidelights were not in compliance with the photometric requirements of Standard 108. Dennis Moore testified that after he was notified that the lamp had failed the test he traveled to CHP headquarters where he explained to the person in charge of the compliance program, a Mr. Sheppard, that because of the unique design of the Model 701, the California authorities had improperly tested these lights. 3 However, subsequent to this encounter he in fact did make certain other changes in the design of the light and submitted a test report to the CHP from a CHP-approved private laboratory stating that the Model 701 complied with the required photometric output. Thereafter, in September of 1976, the CHP conducted further tests and determined that the lights again failed to meet the Standard 108 photometric output requirements. At trial, Dennis Moore explained this discrepancy by stating that the CHP had not tested the improved version of the Model 701, but had in fact tested an earlier model.

At this time, the BIA and TMA (hereinafter "Association") were holding their yearly meeting, which is scheduled to coincide with the annual industry trade show. The industry show is held to enable the manufacturers, distributors, and dealers to make purchases for the forthcoming boating season. Prior to the 1976 trade show, Donald Reed, Director of Engineering for the BIA and the TMA and administrator of their certification program, received a test report critical of the Model 701 from Wesbar Corporation, a member of the Association which also happened to be the manufacturer of a tail light in direct competition with the Model 701. Wesbar told the Association that a copy of this report had been sent to the DOT and the CHP. Reed called those two agencies and was advised that both the DOT and CHP would purchase the Model 701 on the market and conduct their own separate tests.

The Moores assert that the unlawful conduct commenced at the time of the Association's annual meeting held on September 29, 1976. Reed testified that while addressing members at the Association meeting, he was questioned from the floor by a representative of E-Z Loader about government investigations involving several boat trailer lights. He insisted that only after being pressed did he mention that the Model 701 light was under investigation as were two other manufacturer's tail lights. He further testified that he did not contact the Moores after the meeting since he was advised by his lawyer that the Moores desired that all further communications be made to their attorney.

A Mr. Gromlovitz, a boat trailer manufacturer who testified for the plaintiffs, stated that he was present during the Association's meeting. He testified that at this meeting Mr. Reed stated, in response to a question from the floor, that the 701 light was not DOT approved. Mr. Gromlovitz stated that he was told by an Association official the following day that if his company used the Model 701 on his trailers, the Association would deny his trailers the Association's certification. He attended the trade show and was present at the Association's meeting since he had been advised by others in the industry of the prestige and importance in belonging to the Association and, apparently, he believed that Association membership and participation in its certification program would enhance the sales of his product. 4 He testified that he had designed a trailer specifically for use with the Model 701 light, and that he was pleased, as were others in the industry, with the 701's performance and resistance to water. 5 According to Mr. Gromlovitz, the Model 701 was especially effective for use with his company's "drive-on" trailer, which could be backed into and submerged in the water. These trailers were new to the industry in 1975 and 1976.

On the day after the Association's meeting, Dennis Moore was informed by Mr. Gromlovitz of the Association's statement concerning the lack of DOT approval. He testified that he immediately went to the Association headquarters at the convention to get an explanation of the problem and brought with him copies of the 701's certification of approval from the states of California and Virginia. He further testified that he gave the Association the phone numbers...

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