Farley Transp. Co., Inc. v. Santa Fe Trail Transp. Co.

• Decision Date: 14 April 1986
• Docket Number: No. 84-6269,84-6269
• Citation: 786 F.2d 1342
• Parties: 1985-2 Trade Cases 66,860, 4 Fed.R.Serv.3d 1134 FARLEY TRANSPORTATION CO., INC., Systems Terminal, Inc. and Piggyback Trailermate, Inc., Plaintiffs-Appellees, v. SANTA FE TRAIL TRANSPORTATION COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1342

786 F.2d 1342

1985-2 Trade Cases 66,860, 4 Fed.R.Serv.3d 1134

FARLEY TRANSPORTATION CO., INC., Systems Terminal, Inc. and Piggyback Trailermate, Inc., Plaintiffs-Appellees, v. SANTA FE TRAIL TRANSPORTATION COMPANY, Defendant-Appellant.

No. 84-6269.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Sept. 6, 1985.

Decided Nov. 26, 1985.

As Amended On Denial of Rehearing

April 14, 1986.

Maxwell M. Blecher, Donald R. Pepperman, Blecher, Collins & Weinstein, Los Angeles, Cal., for plaintiffs-appellees.

Cummins & White, Joseph H. Cummins, Barry L. Van Sickle, James P. Clark, Thomas E. Holliday, Jeffrey C. Briggs, Gibson, Dunn & Crutcher, Los Angeles, Cal., for defendant-appellant.

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

Before WALLACE, CANBY and BEEZER, Circuit Judges.

BEEZER, Circuit Judge:

Farley Transportation Co., Systems Terminal, Inc., and Piggyback Trailermate, Inc. (collectively "Farley") brought this action against Santa Fe Trail Transportation Co. ("Santa Fe"), alleging an antitrust conspiracy in violation of sections 1 and 2 of the Sherman Act (15 U.S.C. Secs. 1, 2). Pursuant to a jury verdict, the district court entered judgment in favor of Farley. We affirm in part, reverse in part, and remand for a new trial on the issue of damages.

I BACKGROUND

This case involves a common transportation arrangement referred to as "piggybacking." Under this arrangement, truck trailers are loaded onto flat railroad cars and shipped to their destination. If, for example, a company wanted to send a shipment of goods from a specific location in Los Angeles to a specific location in Chicago, the goods would be loaded into a truck trailer and driven to a railroad yard in Los Angeles. The trailer would be loaded onto a flat railroad car and shipped to Chicago. The trailer would then be removed from the railroad car and driven to its destination. This arrangement combines the convenience of trucking with the cost efficiency of railroads.

Prior to 1981, the transportation industry was heavily regulated. Published tariff schedules specified the rate that a carrier could charge, taking into account the distance, the mode of transportation, and the weight and composition of the goods. For a service charge, "shippers' agents" would help customers obtain the best possible transportation arrangement. Some shipping business was contracted through "shippers' associations," which offered the same service to their members, but on a non-profit basis.

The Interstate Commerce Commission, acting through various regional agencies, published tariff schedules for several types of "piggybacking" arrangements. Under "Plan IV," for example, the customer was responsible for driving the trailer to and from the railroad yards, while the carrier provided only rail service. The arrangement at issue in the instant case was "Plan V." Under Plan V, the carrier provided both truck service and railroad service.

Santa Fe and the Atchison, Topeka & Santa Fe Railway Company ("ATSF") are subsidiaries of the same parent corporation. Santa Fe is a trucking company; ATSF is a railroad company. In the late 1970s, Santa Fe and ATSF offered Plan V service out of Los Angeles. Although the Santa Fe Plan V was available to all shipping customers, approximately seventy-five percent of the business was provided by four shippers' agents and shippers' associations: Diversified Shippers, Streamline Shippers, Rapid Traffic Service, and Vanguard Freight Service.

Contrary to Farley's assertions, the Santa Fe Plan V, on its face, was a legitimate piggyback arrangement. But like any other piggyback arrangement, the Santa Fe Plan V was subject to a tariff schedule approved by the ICC, in this case through the regional Rocky Mountain Motor Tariff Bureau ("RMMTB"). Under the Interstate Commerce Act, it was unlawful to charge a rate not authorized by the tariff schedule.

Farley claims that Santa Fe, ATSF, and several shipper's agents and associations combined and conspired to evade the rates in the RMMTB schedule. Farley argues that the shippers' agents and associations, with the encouragement of Santa Fe, understated the weight and misstated the composition of the cargo shipped under the Santa Fe Plan V. As a result of those understatements and misstatements, the customers of the Santa Fe Plan V received a lower rate. The lower rate gave the Santa Fe Plan V a competitive advantage. Farley asserts that Santa Fe's actions violated the Sherman Act.

Farley filed the present action on October 11, 1979. Farley's Second Amended Complaint, filed July 22, 1980, alleged violations of sections 1 and 2 of the Sherman Act and section 8 of the Interstate Commerce Act by thirty-three defendants. When the case went to trial, only two defendants remained: Santa Fe and ATSF. On January 31, 1984, the jury returned a verdict in favor of ATSF, but against Santa Fe. On March 28, 1984, the district court entered judgment for Farley in the total sum of $2,770,000. On July 31, 1984, the district court awarded Farley attorneys' fees in the sum of $482,242.00. Santa Fe appeals.

II STANDARD OF REVIEW

Santa Fe moved for a directed verdict after the presentation of Farley's case, but did not renew that request for a directed verdict at the close of all the evidence before the case was submitted to the jury. As a result, the district court ruled that Santa Fe was precluded from seeking judgment notwithstanding the verdict under Federal Rule of Civil Procedure 50(b).

Under Rule 50(b), when the prerequisite of a timely motion for a directed verdict is not satisfied, "a party cannot question the sufficiency of the evidence either before the district court through a motion for judgment notwithstanding the verdict or on appeal." Myers v. Norfolk Livestock Market, Inc., 696 F.2d 555, 558 (8th Cir.1982). We must therefore address the threshold question of whether we may examine the evidence for sufficiency despite Santa Fe's failure to move for a directed verdict at the close of all of the evidence.

Rule 50(b) provides in relevant part:

(b) Motion for Judgment Notwithstanding the Verdict.

Whenever a motion for a directed verdict made at the close of all the evidence is denied or for any reason is not granted, the court is deemed to have submitted the action to the jury subject to a later determination of the legal questions raised by the motion. Not later than 10 days after entry of judgment, a party who has moved for a directed verdict may move to have the verdict and any judgment entered thereon set aside and to have judgment entered in accordance with his motion for a directed verdict....

Santa Fe argues that its motion for a directed verdict after presentation of the plaintiff's evidence was sufficient to preserve its objection to the sufficiency of the evidence. It contends that Rule 50(b), properly interpreted, does not require that a motion for a directed verdict be at the close of all the evidence as a prerequisite for a post-trial motion for judgment notwithstanding the verdict.

It is true that, while the first sentence of Rule 50(b) speaks of a motion for a directed verdict "at the close of all the evidence," the second sentence refers only to "a party who has moved for a directed verdict" as being entitled to move for judgment notwithstanding the verdict. However, it is clear from the structure of Rule 50(b) that the second sentence is dependent upon the first. Rule 50(b) read as a whole plainly provides that only a motion for a directed verdict made "at the close of all the evidence" preserves the legal objection to the sufficiency of the evidence for further consideration by the trial court after the return of the verdict. ¹

This understanding of the rule was expressed in the contemporary Advisory Committee Note on the 1963 amendment adopting the present language of Rule 50(b). Although we have not directly addressed the situation raised in this case, we have previously stated that "a motion for judgment n.o.v. may be entertained only if the movant has made a motion for a directed verdict at the close of all the evidence." Williams v. Fenix & Scisson, Inc., 608 F.2d 1205, 1207 (9th Cir.1979) (emphasis added). This interpretation of Rule 50(b) has also been generally accepted in other circuits and by commentators on federal practice. See, e.g., Firestone Tire & Rubber Co. v. Pearson, 769 F.2d 1471, 1478 (10th Cir.1985); Hubbard v. White, 755 F.2d 692, 695-96 (8th Cir.), cert. denied, --- U.S. ----, 106 S.Ct. 107, 88 L.Ed.2d 87 (1985); Coker v. Amoco Oil Co., 709 F.2d 1433, 1437-38 (11th Cir.1983); Shipman v. Central Gulf Lines, Inc., 709 F.2d 383, 385 (5th Cir.1983) (per curiam); 9 C. Wright & A. Miller, Federal Practice and Procedure Sec. 2537, at 596 & n. 31 (1971 & Supp.1985); 5A Moore's Fedreal Practice p 50.08, at 50-73 to 50-74 (1985).

The requirement that the motion for a directed verdict must be made at the close of all the evidence to be effective under Rule 50(b) is perhaps a "strict one." See 5A Moore's Federal Practice p 50.08, at 50-77. But it serves the important purpose of alerting the opposing party to the alleged insufficiency of the evidence at a point in the trial where that party may still cure the defect by presenting further evidence.

Failure to renew an earlier motion for a directed verdict may lull the opposing party into believing that the moving party has abandoned any challenge to the sufficiency of the evidence once all of the evidence had been presented. If the moving party is then permitted to make a later attack on the evidence through a motion for judgment notwithstanding the verdict or on appeal, the opposing party may be prejudiced by having lost the opportunity to present additional evidence before the case was submitted to the jury. A strict application of Rule 50(b) obviates the necessity for a court to engage in a difficult and subjective case-by-case determination...