972 F.2d 1483 (8th Cir. 1992), 91-2099, Amerinet, Inc. v. Xerox Corp.

Docket Nº:91-2099, 91-2110.
Citation:972 F.2d 1483
Party Name:AMERINET, INC., a Minnesota corporation, doing business as Amerinet/Genesis; Kaibab National Group, Inc., a Minnesota corporation, doing business as Genesis Systems Corporation, Appellants, v. XEROX CORPORATION, a New York corporation, Appellee.
Case Date:August 26, 1992
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
 
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972 F.2d 1483 (8th Cir. 1992)

AMERINET, INC., a Minnesota corporation, doing business as

Amerinet/Genesis; Kaibab National Group, Inc., a

Minnesota corporation, doing business as

Genesis Systems Corporation, Appellants,

v.

XEROX CORPORATION, a New York corporation, Appellee.

Nos. 91-2099, 91-2110.

United States Court of Appeals, Eighth Circuit

August 26, 1992

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

Submitted Dec. 11, 1991.

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A.H. Hoddinott, Jr., Stamford, Conn., argued (Peter Dorsey, Steven J. Wells and Sri K. Sankaran, Minneapolis, Minn., on the brief), for appellants.

Leonard W. Schulz, Big Bend, Wis., argued, for appellee.

Before BEAM, Circuit Judge, LOKEN, Circuit Judge, and KAUFMAN, [*] Senior District Judge.

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FRANK A. KAUFMAN, Senior District Judge.

On May 13, 1987, plaintiffs below and appellees/cross-appellants herein, Amerinet, Inc. and Kaibab National Group, Inc. (hereinafter, collectively Amerinet), 1 seeking equitable relief and compensatory and punitive damages, sued defendant below and appellant/cross-appellee herein, Xerox Corporation (hereinafter Xerox), for monopolization, attempted monopolization, and maintenance of an illegal tying arrangement, 2 in violation of Sections 1 and 2 of the Sherman Act, 3 and for unfair competition, business disparagement, defamation and tortious interference with prospective contractual relations. In connection with its federal antitrust claims, Amerinet sought treble damages pursuant to Section 4 of the Clayton Act, 15 U.S.C. § 15 (1980). Jurisdiction is present with regard to each and all of Amerinet's claims pursuant to one or both of 28 U.S.C. §§ 1332 and 1337. Diversity jurisdiction exists because all of plaintiffs/appellees are incorporated and have their principal places of business in Minnesota, and defendant/appellant, Xerox, is incorporated in the State of New York and has its principal place of business in a state other than Minnesota.

Amerinet's federal and state claims are based upon certain maintenance policies utilized by Xerox and upon certain behavior by Xerox towards customers or potential customers of Amerinet which allegedly, in 1987, prevented plaintiffs from selling certain used Xerox laser printers and certain other non-Xerox products. In a written unpublished Memorandum Opinion and Order dated July 11, 1989, the court below granted summary judgment in favor of Xerox with regard to all of Amerinet's antitrust claims and its business disparagement claim and dismissed Amerinet's request for punitive damages. 4 The district court, however, denied summary judgment as to Amerinet's claims for defamation and tortious interference with prospective business relations. 5 On October 4, 1989, the district court denied Amerinet's motion for a redetermination of its July 11, 1989 Order. A jury trial commenced in November, 1989 with respect to Amerinet's defamation and tortious interference claims. 6 Because of the trial court's decision granting summary judgment on Amerinet's antitrust claims, it ruled that evidence of Xerox's maintenance policies was admissible at trial only on the issue of Xerox's intent. The jury was accordingly so instructed. During trial, the district court denied Xerox's motions for a directed verdict. On February 15, 1991, the jury returned a $1,000,000 verdict for Amerinet on its tortious interference with prospective business claim, 7 and final judgment was entered on February 25, 1991. Thereafter, on April 15, 1991, the trial court in a written Order denied Xerox's motions for a new trial, for judgment notwithstanding the verdict, and/or for remittitur.

In this appeal, Xerox asserts that (1) the district court's denial of its motions for a directed verdict and for judgment notwithstanding

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the verdict constituted error, (2) the failure of Amerinet to produce any evidence concerning the issues of causation and damages requires reversal of the trial court judgment, and (3) the district court's failure properly to instruct the jury with regard to Amerinet's burden of proof concerning the competitor's privilege and damages warrants a new trial. Amerinet, cross-appealing, claims that the district court erred by granting Xerox summary judgment on Amerinet's antitrust and business disparagement claims and by refusing to allow Amerinet to seek punitive damages.

For the reasons stated in this opinion, the district court's grant of summary judgment in favor of Xerox is affirmed, and that court's denial of Xerox's motion for judgment notwithstanding the verdict is reversed.

I.

Facts 8

Amerinet, a company founded in 1980, was a broker and reseller of new and used computer equipment. Amerinet normally did not carry an inventory of equipment and generally did not purchase any equipment until it had already arranged to sell that equipment to a third party. Amerinet did not manufacture, service, inspect, or upgrade the equipment which it sold. Amerinet first attempted to sell used 9 Xerox laser printers in 1986. In that year, Amerinet, testing the used Xerox laser printer market, sold two such printers, one to Meijer Corporation (hereinafter Meijer) in August, and one to Franklin Mint in December. Those sales yielded gross profits of approximately $65,000 and $45,000, respectively. Although Amerinet, in 1987, increased its efforts to market used Xerox laser printers, Amerinet sold no more of those machines. By May, 1987, Amerinet had ceased soliciting new business for those printers and was marketing them only to a minimal extent, if at all. On November 29, 1988, Amerinet went out of business.

The used Xerox laser printers which Amerinet attempted to market belong to a sophisticated family of expensive Xerox laser printers, known as the 8700 and 9700 models. 10 Amerinet asserts that the 8700 and 9700 series of Xerox laser printers were unique in 1987 in that they could at high speed (1) feed cut sheets with a resolution of 300 X 300 dots per inch, (2) print on both sides of the paper in one pass (duplex), and (3) with an attachment found on approximately 10% of such machines in use, print with ink readable by computers, a feature known as Magnetic Ink Character Recognition (MICR). The operators of the 8700 and 9700 models require a dependable and continuous source of maintenance for those printers because those machines are complex, are used for high volume printing, and often need to be modified before they can perform certain other functions. As a result, almost all users of those Xerox laser printers purchase separately a Full Service Maintenance Agreement (FMSA) from Xerox which generally provides that for a fixed fee Xerox will maintain, repair and/or upgrade the equipment for a specific period of time. Xerox has a nationwide service organization which is equipped to provide prompt service 24 hours a day, 365 days a year. During the relevant time period, Xerox provided such service and maintenance with regard to approximately 98% of the 8700 and 9700 model printers. Few, if any, independent service organizations were able to offer such full service on those printers. It is common practice in the industry for a manufacturer to issue letters of certification stating that its used equipment has

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been under full service maintenance and is certified as eligible for continued maintenance by the manufacturer at a new location. Some manufacturers issue those letters without inspecting the relocated equipment if the equipment was under a maintenance agreement at the original location. Xerox provides letters of certification of maintenance for its equipment and, with regard to all of the printers at issue herein, Xerox never refused or failed to provide a letter of certification.

In January, 1985, Xerox stated, in its Full Service Maintenance Agreement, that it would guarantee maintenance availability for a period of seven years from the date of initial installation of a Xerox machine. Prior to 1985, Xerox had set no limit on the availability of its maintenance services. 11 On January 1, 1987, Xerox adopted a supplement 12 to its FMSA which provided, inter alia, that the seven-year maintenance guarantee was non-transferable, and that if maintenance was sought after a title transfer, Xerox would inspect the machine for a fee at Xerox's published rate, submit a written estimate of charges necessary to maintain full service maintenance for one year, and then, if it so chose, would provide assured availability of maintenance on a year-to-year basis. In addition, Xerox in that January, 1987 supplement reserved the right, upon the expiration of the period of assured availability of maintenance, to assess an annual service surcharge not greater than ten percent of the annual full service maintenance charge. In October, 1987, Xerox made the period of assured availability of its FMSA transferable, subject to inspection and renovation, if needed, by Xerox at its published rates.

II.

SUMMARY JUDGMENT STANDARD

This Court, in reviewing the district court's grant of summary judgment, determines de novo whether summary judgment is properly granted, Lone Ranger Television v. Program Radio Corp., 740 F.2d 718, 720 (9th Cir.1984), and may consider only the claims and evidentiary materials

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before the trial court at the time the summary judgment ruling was made. See 10 Charles A. Wright et al., Fed.Prac. and Proc. § 2716 at 650-654 (1983). 13 Although " 'on summary judgment the inferences to be drawn from the underlying facts ... must be viewed in the light most favorable to the party opposing the motion,' " Matsushita Elec. Industrial Co. v. Zenith Radio, 475 U.S. 574, 587-88, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986) (quoting United States v. Diebold, Inc., 369 U.S....

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