ALW, Inc. v. United Air Lines, Inc.
| Decision Date | 20 January 1975 |
| Docket Number | No. 73--1499,73--1499 |
| Citation | 510 F.2d 52 |
| Parties | 1975-1 Trade Cases 60,138 ALW, INC., a Nevada Corporation, d/b/a Kings Castle Hotel and Casino, Plaintiff-Appellant, v. UNITED AIR LINES, INC. and UAL, Inc., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Richard C. Leonard (argued), Los Angeles, Cal., for plaintiff-appellant.
Alvin J. Rockwell (argued), of Brobeck, Phleger & Harrison, San Francisco, Cal., for defendants-appellees.
Before CHOY and SNEED, Circuit Judges, and BEEKS, * District Judge.
This is an appeal from an order of the district court granting summary judgment of dismissal. The complaint alleges violations of the federal antitrust laws and also contains allegations sounding in common law tort, breach of contract, or both. The court below accorded adequate treatment to the antitrust issues, but, finding the action to be 'expressly predicated' on the antitrust laws, declined to discuss the common law claims.
Viewing the evidence adduced in the light most favorable to appellant, as we must, the facts may be summarized as follows. Appellant, ALW, Inc. d/b/a Kings Castle Hotel and Casino (hereinafter 'K.C.') operates a resort hotel in the Reno-Lake Tahoe, Nevada (hereinafter 'United'), is one of several (hereinafter '8united'), is one of several common carriers furnishing air service to Reno, but is the only scheduled airline operating a one-carrier service between Reno and the Eastern portion of the United States. 2
In early 1970 K.C. and United engaged in discussions concerning the development of a joint promotional campaign, the purpose of which was to advertise K.C. and thereby increase travel (via United) to Reno-Lake Tahoe and the appellant hotel. In mid-1970 K.C. was approached by United with a request for information about the hotel and its facilities. This information was to be included in a special March, 1971 issue of United's 'Mainliner' magazine 3 that was to feature promotional material on the State of Nevada. In cooperating with United, K.C. entertained, as its guests, the free lance writer and photographer assigned by United to prepare the article. K.C. was advised by various employees of United on several occasions that it could expect to receive favorable editorial comment in the feature issue. K.C. consequently reduced its advertising expenditures and entertainment schedule for the months during which it expected to reap the promotional benefits accruing from publication of the feature. K.C. specifically declined to purchase advertising space in the March, 1971 edition of Mainliner.
In the course of preparing the Nevada issue of Mainliner, several employees of United received information adverse to K.C. and its reputation in the Reno-Lake Tahoe community.
In any event, although the original draft of the article contained considerable praise of the K.C. hotel facility, the final version, as edited by United and published in the March, 1971 edition of Mainliner contained no mention of K.C. It did contain photographs of the facilities and personnel of K.C. that were not identified in text or caption as such. The text referred to the availability in the Reno-Lake Tahoe area of facilities and entertainment that actually are found only at K.C., but no credit was given to appellant. An inference might thus be drawn by one reading the article that these facilities and entertainment are found at other hotels mentioned by name in the feature.
On the basis of these events, K.C. brought this action on April 12, 1971, alleging jurisdiction based upon Section 4 of the Clayton Act, 4 and upon diversity of citizenship. The complaint alleged violations of Sections 1 and 2 of the Sherman Act, 5 and Section 3 of the Clayton Act. 6 The complaint also contained certain allegations that are apparently unrelated to the antitrust counts, and which might be construed as allegations of breach of contract, fraudulent misrepresentation, or both.
K.C.'s claim under Section 1 of the Sherman Act rests upon its allegation that United conspired with unidentified parties to delete mention of K.C. in the March, 1971 Mainliner feature and thereby destroy the commercial value of the hotel. It has alleged the elements essential to maintenance of a cause of action under Section 1 of the Sherman Act: It has alleged (1) the existence of a contract, combination or conspiracy, (2) for the purpose of restraining a significant line of interstate commerce and (3) damage to its business or property arising from the antitrust violation. Yet the mere allegation of these elements, once they are rebutted is not sufficient to withstand a motion for summary judgment. 7
We are mindful that summary judgment is not typically a favored course in antitrust litigation. 8 Yet, even within this specialized realm that so frequently presents issues of law and of fact that are inextricably entwined, the procedures set forth in Fed.R.Civ.P. 56 retain their utility under circumstances such as those present here. Once the allegations of conspiracy made in the complaint are rebutted by probative evidence supporting an alternative interpretation of a defendant's conduct, if the plaintiff then fails to come forward with specific factual support of its allegations of conspiracy, summary judgment for the defendant becomes proper. 9
United has, in response to interrogatories, denied any conspiratorial conduct. United maintains that it exercised its discretion as the publisher of Mainliner in making a unilateral decision, albeit based on information received from others, to delete references to K.C. from Mainliner's coverage of the Reno-Lake Tahoe area. K.C., although having made full use of the discovery process, is nonetheless unable to specify the names of, or otherwise identify, the parties to any conspiracy, 10 the substance of any conspiratorial agreement or the motive therefor.
Fed.R.Civ.P. 56(e) requires opposing affidavits that 'set forth such facts as would be admissible in evidence, and . . . (that) show affirmatively that the affiant is competent to testify to the matters stated therein.' First Nat. Bank v. Cities Service Co., 11 expressly rejected the contention that
'. . . Rule 56(e) should, in effect, be read out of antitrust cases . . . (permitting) plaintiffs to get to a jury on the basis of the allegations in their complaints, coupled with the hope that something can be developed at trial in the way of evidence to support those allegations . . . While we recognize the importance of preserving litigants' rights to a trial on their claims, we are not prepared to extend those rights to the point of requiring that anyone who files an antitrust complaint setting forth a valid cause of action be entitled to a full-dress trial notwithstanding the absence of any significant probative evidence tending to support the complaint.' 12
This holding is apposite here. The district court was correct in summarily dismissing the alleged violation of Section 1 of the Sherman Act.
Appellant's cause of action under Section 2 of the Sherman Act also suffers from deficiencies of factual support that ultimately, and properly proved fatal when subjected to the test of the motion for summary judgment. K.C.'s theory under Section 2 is that United used its CAB-authorized monopoly on air travel to Reno-Lake Tahoe from the Eastern United States for the improper purpose of gaining a concurrent monopoly on tourist display advertising available to all United passengers and to persons traveling by air to Reno-Lake Tahoe from the Eastern United States.
To sustain a cause of action for monopolization under Section 2 an injury resulting from an acquisition of monopoly power must be shown. Monopoly power has been defined as the power to control prices or exclude competition in the relevant market. 13
K.C. is inconsistent in its attempts to define the relevant market within which United's alleged monopoly power has been acquired. At one point it is claimed that United 'monopolized . . . interstate and foreign commerce in printed display advertising and editorial material distributed to persons who travel by air from the Eastern portion of the United States to the Reno-Lake Tahoe area, and all of defendant UNITED'S passengers.' Elsewhere in the complaint it is alleged that United's route structure creates a monopoly 'in the market for public relations and advertising addressed to air travelers and potential air travelers from the Eastern portion of the United States to the Reno-Lake Tahoe area . . ..' The first statement of the relevant market would seemingly limit that market to the peculiar niche occupied by Mainliner. The second statement is apparently of broader scope since there is a considerable volume of public relations and advertising material addressed to residents of the Eastern United States who potentially might travel by air at some time to the Reno-Lake Tahoe area.
We reject K.C.'s contention taht the relevant market consists of and is limited to printed display advertising and editorial material that has the specific circulation of Mainliner magazine. In considering what is the relevant market for determining the control of price and competition, the Supreme Court has observed that 'no more definite rule can be declared than that commodities reasonably interchangeable by consumers for the same purposes make up that 'part of the trade or commerce,' monopolization of which may be illegal.' 14 In Bushie v. Stenocord Corporation, 15 this court noted that
'(a) single manufacturer's products might be found to comprise, by themselves, a relevant market for the purposes of a monopolization claim, if they are so unique or so dominant in the market in which they compete that any action by the manufacturer to increase his control over his product virtually assures that competition in the market will be destroyed.'
As did the plaintiff in Bushie, K.C. here seeks to define the relevant...
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