810 F.2d 1289 (4th Cir. 1987), 85-2337, Chuck's Feed & Seed Co., Inc. v. Ralston Purina Co.

Docket Nº:85-2337.
Citation:810 F.2d 1289
Party Name:CHUCK'S FEED & SEED CO., INC., a corporation, Appellee, v. RALSTON PURINA COMPANY, a corporation, Appellant. South Carolina Defense Trial Attorneys' Association, Amicus Curiae.
Case Date:February 09, 1987
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit

Page 1289

810 F.2d 1289 (4th Cir. 1987)

CHUCK'S FEED & SEED CO., INC., a corporation, Appellee,


RALSTON PURINA COMPANY, a corporation, Appellant.

South Carolina Defense Trial Attorneys' Association, Amicus Curiae.

No. 85-2337.

United States Court of Appeals, Fourth Circuit

February 9, 1987

Argued May 8, 1986.

Rehearing and Rehearing En Banc Denied March 11, 1987.

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Timothy W. Bouch and Brad J. Waring (Young, Clement, Rivers & Tisdale, Charleston, S.C., on brief), for appellant.

Richard S. Rosen (Susan C. Rosen, Rosen, Rosen & Hagood, Charleston, S.C., on brief), for appellee.

J. Brantley Phillips, Jr., Natalma M. McKnew, Leatherwood, Walker, Todd & Mann, Greenville, S.C., L. Sidney Connor IV, Nelson, Mullins, Grier & Scarborough, Myrtle Beach, S.C., William H. Davidson, II, Nauful & Ellis, Columbia, S.C., on brief, for amicus curiae.

Before MURNAGHAN and SPROUSE, Circuit Judges, and HAYNSWORTH, Senior Circuit Judge.

MURNAGHAN, Circuit Judge:

Ralston Purina Company appeals from the judgment of the United States District Court for the District of South Carolina, based on a jury verdict, that it violated the South Carolina Unfair Trade Practices Act by terminating its dealership relationship with Chuck's Feed & Seed Co. The case raises important questions concerning the scope of the South Carolina statute.

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Chuck's Feed and Seed Co., Inc., under the direction of Charles (Chuck) Lambert, opened a retail feed store in 1972 in Summerville, South Carolina, a suburban area near Charleston. Lambert's store catered to pet owners and small farmers, selling livestock and pet feeds in bags or containers, rather than in bulk. From 1975 until February, 1982, Lambert carried products manufactured by Ralston Purina Company. Although no written dealership agreement was signed, Lambert was regarded as a dealer in Purina's distribution system. As such, he purchased products directly from Purina, and was entitled to resell these products to other retailers who were known as "sub-dealers." Lambert was also authorized to use Purina signs and displays in his store. Purina's District Manager informed Lambert that as long as Lambert continued to sell Purina feed, Purina would not authorize another Purina dealership within ten miles of his store. Purina adhered to that policy during Lambert's tenure as a dealer. Lambert was a successful Purina dealer with a high volume of Purina feed sales.

In the summer of 1981, the District Sales Manager for ConAgra Feed asked Lambert if he would be interested in carrying the ConAgra brand. ConAgra is a direct competitor of Purina because the two brands of feed are similar in quality and price. Lambert had previously carried many other brands of feed, but the other brands were less expensive and inferior in quality to Ralston Purina's feed, and Lambert testified that these brands did not compete with Purina. When Lambert informed Purina's District Sales Manager, Michael Munn, that he was considering ConAgra's proposal, Munn initially told Lambert that if Lambert started to carry ConAgra feed, Lambert's Purina dealership would be terminated. Later, Munn returned to Lambert's store and apologized for his earlier remarks. Munn told Lambert that his Purina dealership would not be cut off if he chose to sell ConAgra feed, but that Munn doubted that Lambert could sell both feeds successfully. Lambert thereafter began to sell ConAgra feed as well as Purina feed in his store. On several occasions, Munn expressed concern to Lambert about Lambert's sales of ConAgra. In February, 1982, Purina terminated Lambert's dealership. Purina's stated reason for the termination was "failure to obtain market penetration."

Lambert made several attempts to have his dealership reinstated, but was refused. He also attempted to obtain Purina products as a "sub-dealer," but was unable to secure the products at wholesale prices. To offset his declining feed sales, Lambert began to carry pet supplies and exotic birds. Lambert's gross sales, which had remained relatively static during the period of his Purina dealership, increased significantly following his termination, rising from $387,562 in 1981 to $559,167 in 1982 and $717,768 in 1983.

Lambert and Chuck's Feed & Seed Co., Inc. filed the present action on January 25, 1983. The complaint sought recovery from Ralston Purina on four causes of action: (1) violation of Sec. 1 of the Sherman Act, 15 U.S.C. Sec. 1; (2) violation of Sec. 3 of the Clayton Act, 15 U.S.C. Sec. 14; (3) violation of the South Carolina Unfair Trade Practices Act, S.C.Code Ann. Sec. 39-5-20; and (4) common-law wrongful termination. Ralston Purina moved for partial summary judgment as to the Unfair Trade Practices Act claim, arguing that the Act is unconstitutionally vague. The district court denied the motion. Trial began on March 5, 1985. Following the close of the plaintiffs' case, the district court denied Ralston Purina's motion for a directed verdict on the federal antitrust claims. However, the court granted Purina's motion to direct a verdict for the defendant on the claim for common-law wrongful termination.

At the close of all the evidence, the jury was asked to identify its verdict as to each of the remaining causes of action. No other special interrogatories were submitted to the jury. The jury returned a verdict for Ralston Purina on the Sherman Act and Clayton Act claims. However, the

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jury returned a verdict for the plaintiffs on the South Carolina Unfair Trade Practices Act claim, assessing actual damages at $78,750. The district judge subsequently ruled that Purina's violation of the South Carolina Act was "willful." Pursuant to S.C.Code Ann. Sec. 39-5-140, which prescribes the trebling of damages and the award of attorneys' fees to plaintiffs in cases of "willful" violations, the district judge trebled the damages award to $236,250 and awarded $86,879.75 in attorney's fees and costs, for a total award of $323,129.75. On October 28, 1985, the district court denied Ralston Purina's motion for judgment notwithstanding the verdict. Purina makes four arguments on appeal: (1) that the district court erred in denying its...

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