998 F.2d 575 (8th Cir. 1993), 91-2647, Lovett v. General Motors Corp.

Docket Nº:91-2647MN.
Citation:998 F.2d 575
Party Name:Thomas G. LOVETT, Trustee of the Bankruptcy Estate of John Peterson Motors, Inc.; Donald John Peterson, individually, Appellees, v. GENERAL MOTORS CORPORATION, Appellant.
Case Date:July 09, 1993
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit

Page 575

998 F.2d 575 (8th Cir. 1993)

Thomas G. LOVETT, Trustee of the Bankruptcy Estate of John

Peterson Motors, Inc.; Donald John Peterson,

individually, Appellees,



No. 91-2647MN.

United States Court of Appeals, Eighth Circuit

July 9, 1993

Submitted May 15, 1992.

Rehearing and Suggestion for Rehearing En Banc Denied Sept. 9, 1993.

Page 576

William B. Slowey, Detroit, MI, argued (James S. Simonson, Richard G. Braman and Quentin R. Wittrock, Minneapolis, MN, Steven J. Cernak, Detroit, MI, on the brief), for appellant.

John A. Cochrane, St. Paul, MN, argued (Stewart C. Loper and Patrick C. Smith, on the brief), for appellees.

Before FAGG, Circuit Judge, HENLEY, Senior Circuit Judge, and HANSEN, Circuit Judge.

FAGG, Circuit Judge.

Thomas G. Lovett, trustee of the bankruptcy estate of John Peterson Motors, Inc. (JPMI), and Donald John Peterson, JPMI's owner and operator, prevailed at trial in this antitrust action against General Motors Corporation (GM). A jury found that GM violated section one of the Sherman Antitrust Act, 15 U.S.C. § 1 (1988) (prohibiting conspiracies in restraint of trade), and awarded JPMI $986,000 in damages, which the district court automatically trebled to $2,958,000, see id. § 15. The jury also awarded damages to Peterson individually. GM then moved for judgment as a matter of law (JAML). The district court granted the motion with respect to Peterson, but denied the motion with respect to JPMI. Lovett v. General Motors Corp., 769 F.Supp. 1506, 1522 (D.Minn.1991). We have already decided Peterson's appeal, Lovett v. General Motors Corp., 975 F.2d 518 (8th Cir.1992), and now consider GM's appeal.

Page 577

We reverse the denial of JAML to GM.

GM markets Buick, Cadillac, Chevrolet, Oldsmobile, and Pontiac vehicles through more than ten thousand dealers. The dealer network is GM's only means to sell its products and to provide presale, point-of-sale, and postsale services to consumers. GM analyzes its dealer network to ensure it has the correct number of properly located dealers of the appropriate size so that GM can provide customers with a convenient arrangement of dealerships and can successfully compete with other auto makers.

Dealer Sales and Service Agreements govern the relationship between GM and each of its dealers. Under the agreements, GM assigns dealers an area of primary responsibility (APR) for the purpose of evaluating performance. Dealers agree to sell and service the product lines effectively and to promote new vehicle sales in their APR's through their own advertising and sales promotions. Dealers must maintain an adequate sales force and provide presale information to consumers. Dealers can sell to any customer, located anywhere, at any price, but must service GM vehicles regardless of where they were purchased. For its part, GM agrees to distribute vehicles in a fair and equitable manner and to explain its distribution method to dealers. GM has final discretion in accepting orders and distributing vehicles. One factor that affects distribution is sales potential in a dealer's APR.

In late 1980, JPMI entered into five-year Sales and Service Agreements with GM's five divisions. JPMI's dealership was located in Lake City, Minnesota, approximately seventy miles from the Twin Cities. JPMI's APR did not include the Twin Cities. According to GM guidelines, JPMI's facility could support servicing between 200 and 250 new car sales annually. From late October 1980 until late February 1983, JPMI operated as a conventional dealer selling motor vehicles from purchased inventory for individually negotiated selling prices, i.e., the manufacturer's suggested retail price (sticker price) less a particular amount negotiated with each buyer. On February 28, 1983, JPMI began marketing all vehicles at $49 over factory invoice. Under this program, JPMI disclosed the factory invoice amount to any potential customer, then added $49 to that price. JPMI reduced the number of cars kept on the lot at the dealership and began operating primarily on a "sold order" basis, meaning customers would purchase new vehicles that GM had not yet made, then JPMI would order the vehicle. When JPMI implemented the program, JPMI began advertising in Twin Cities newspapers. The advertisements encouraged buyers to order cars over the telephone or by mail.

JPMI's new marketing strategy increased its sales to more than 700 vehicles in 1983 and more than 1000 vehicles in 1984, but JPMI's service business did not grow proportionately. Due to JPMI's lower prices and distant location, GM customers in the Twin Cities area often placed their new car orders with JPMI over the telephone or by mail. Predictably, lost sales bothered Twin Cities dealers, who complained to GM about JPMI's $49 over factory invoice program. Dealer associations and individual dealers complained that JPMI's program was detracting business from the Twin Cities area and reducing their profits by about $300 per vehicle. They asked GM to take strong action to eliminate JPMI's program. GM did not respond to the complaints, solicit the views of...

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