Anago, Inc. v. Tecnol Medical Products, Inc., 92-1183

• Citation: 976 F.2d 248
• Decision Date: 30 October 1992
• Docket Number: No. 92-1183,92-1183
• Parties: 1992-2 Trade Cases P 70,024 ANAGO, INC., a Texas Corporation, et al., Plaintiffs, Anago, Inc., a Texas Corporation, Plaintiff-Appellant, v. TECNOL MEDICAL PRODUCTS, INC., a Delaware Corporation, et al., Defendants, Tecnol Medical Products, Inc., a Delaware Corporation, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 248

976 F.2d 248 1992-2 Trade Cases P 70,024 ANAGO, INC., a Texas Corporation, et al., Plaintiffs,
Anago, Inc., a Texas Corporation, Plaintiff-Appellant,
v.
TECNOL MEDICAL PRODUCTS, INC., a Delaware Corporation, et
al., Defendants,
Tecnol Medical Products, Inc., a Delaware Corporation,
Defendant-Appellee. No. 92-1183. United States Court of Appeals,
Fifth Circuit. Oct. 30, 1992.

Page 249

T. Richard Handler, Jenkins & Gilchrist, Charles R. McConachie, Noah Henry Simpson, III, Tobolowsky, Prager & Schlinger, Dallas, Tex., for plaintiff-appellant.

Marvin S. Sloman, Rebecca P. Adams, James A. Ellis, Jr., Carrington, Coleman, Sloman & Blumenthal, L.L.P., Dallas, Tex., for defendant-appellee.

Appeal from the United States District Court for the Northern District of Texas.

Before JOLLY and DUHE, Circuit Judges and PARKER, District Judge. ¹

DUHE, Circuit Judge:

Plaintiff-Appellant Anago, Inc. seeks review of the district court's denial of its request for a preliminary injunction under section 16 of the Clayton Act, 15 U.S.C. § 26, 792 F.Supp. 514. Because we find that Anago has failed to allege an antitrust injury, we affirm.

BACKGROUND

For the purposes of this appeal, the facts are undisputed. Anago and Tecnol both make disposable hospital supplies. Both companies service American hospitals, and, together, share a large percentage of the market for their products. Anago, which is smaller than Tecnol and privately held, is known as a price maverick. Tecnol is publicly held.

In 1991, Tecnol began efforts to buy Anago, and eventually succeeded in purchasing all of Anago's preferred stock. After reaching agreements to purchase the common stock of several Anago shareholders, Tecnol publicly proposed a friendly merger. Anago immediately sued Tecnol for violations of the Williams Act, and moved for a preliminary injunction under the Clayton Act, 15 U.S.C.A. § 26 (Supp.1992). The district court denied both of these claims. Anago now appeals the preliminary injunction ruling.

ANALYSIS

A plaintiff may seek either damages or injunctive relief for violations of the Clayton Act. 15 U.S.C.A. §§ 15, 26. It must, however, prove that it has or will suffer an antitrust injury. Cargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 104, 113, 107 S.Ct. 484, 491, 93 L.Ed.2d 427 (1986) (request for injunctive relief); Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S.Ct. 690, 697, 50 L.Ed.2d 701 (1977) (request for damages). The sole issue we face in this appeal is whether Anago, a target company, has alleged an antitrust injury.

The Supreme Court has defined antitrust injury as an injury " 'of the type the antitrust laws were intended to prevent and that flows from that which makes defendants' acts unlawful.' " Cargill, 479 U.S. at 109, 107 S.Ct. at 489 (quoting Brunswick, 429 U.S. at 489, 97 S.Ct. at 697). As the Court explained in Brunswick, "The injury should reflect the anticompetitive effect either of the violation or of the anticompetitive acts made possible by the violation." Brunswick, 429 U.S. at 489, 97 S.Ct. at 697. Typical anticompetitive effects include increased prices and decreased output. This circuit has narrowly interpreted the meaning of antitrust injury, excluding from it the threat of decreased competition. Phototron Corp. v. Eastman Kodak Co., 842 F.2d 95, 100 (5th Cir.), cert. denied, 486 U.S. 1023, 108 S.Ct. 1996, 100 L.Ed.2d 228 (1988).

Before Cargill was announced, courts often granted target companies injunctions in the face of antitrust violations, assuming that in the absence of an antitrust injury requirement similar to that announced in Brunswick for suits for damages, targets had standing to sue for equitable relief. See Laidlaw Acquisition Corp. v. Mayflower Group, Inc., 636 F.Supp. 1513, 1516-17 (S.D.Ind.1986); Gearhart Indus., Inc. v. Smith Internat'l, Inc., 592 F.Supp.

Page 250

203, 211 n. 1 (N.D.Tex.) aff'd in part, modified in part, and vacated in part, 741 F.2d 707 (5th Cir.1984); cf. Grumman Corp. v. LTV Corp., 665 F.2d 10, 16 (2nd Cir.1981) (no consideration of Brunswick; standing based on target's right to preserve separate existence as a competitor); Whittaker Corp. v. Edgar, 535 F.Supp. 933, 950 (N.D.Ill.1982) (relying on Grumman ). Other courts, requiring a showing of antitrust injury, found that targets lacked standing to sue for injunctive relief. See Central Nat'l Bank v. Rainbolt, 720 F.2d 1183, 1186-87 (10th Cir.1983); ADM Corp. v. Sigma Instruments, Inc., 628 F.2d 753 (1st Cir.1980); Carter Hawley Hale Stores, Inc. v. Limited, Inc., 587 F.Supp. 246, 250 (C.D.Cal.1984); see also, 50 Antitrust Trade & Reg. Rep. (BNA) 318 (Mar. 1986) (discussing the Third Circuit's similar ruling in H.H. Robertson Co. v. Guardian Indus. Corp., 50 Antitrust & Trade Reg. Rep. (BNA) 166 (3rd Cir. Jan. 9, 1986), vacated pending review en banc, 1986-2 Trade Cas. (CCH) p 66, 911 (3rd Cir. Feb. 12, 1986)).

In light of Cargill 's explicit antitrust injury requirement some courts have grown reluctant to grant injunctions to target companies. See Burnup & Sims, Inc. v. Posner, 688 F.Supp. 1532, 1534 (S.D.Fla.1988); Burlington Indus. Inc. v. Edelman, 666 F.Supp. 799, 805-06 (M.D.N.C.1987). The Second Circuit, in contrast, has not changed its position since the Supreme Court's decision. Consolidated Gold Fields P.L.C. v. Minorco, S.A., 871 F.2d 252 (2nd...