Arthur Murray, Inc. v. Oliver

• Decision Date: 11 July 1966
• Docket Number: 18265.,No. 18264,18264
• Parties: ARTHUR MURRAY, INC., Petitioner, v. The Hon. John W. OLIVER, United States District Judge for the Western District of Missouri, Respondent. EDUCATIONAL CREDIT BUREAU, INC., and Tuition Plan, Inc., Petitioners, v. The Hon. John W. OLIVER, United States District Judge for the Western District of Missouri, Respondent.
• Court: U.S. Court of Appeals — Eighth Circuit

364 F.2d 28 (1966)

ARTHUR MURRAY, INC., Petitioner, v. The Hon. John W. OLIVER, United States District Judge for the Western District of Missouri, Respondent.

EDUCATIONAL CREDIT BUREAU, INC., and Tuition Plan, Inc., Petitioners, v. The Hon. John W. OLIVER, United States District Judge for the Western District of Missouri, Respondent.

Nos. 18264, 18265.

United States Court of Appeals Eighth Circuit.

July 11, 1966.

Allan L. Bioff, of Watson, Ess, Marshall & Enggas, and Wm. H. Curtis, of Morrison, Hecker, Cozad & Morrison, Kansas City, Mo., for petitioners.

Elton L. Marshall and Landon H. Rowland, of Watson, Ess, Marshall & Enggas, Kansas City, Mo., Allan L. Bioff, Kansas City, Mo., on motion for leave to file petition for writs of mandamus, etc. in case No. 18264.

J. Philip Kirk, Jr., of Morrison, Hecker, Cozad & Morrison, Kansas City, Mo., William H. Curtis, Kansas City, Mo., on petition for leave to file petition for writ of mandamus, etc. in case No. 18265.

Ralph M. Jones, of Swanson, Midgley, Jones, Blackmar & Eager, Kansas City, Mo., for respondent.

Before JOHNSEN, Senior Circuit Judge, BLACKMUN, Circuit Judge, and YOUNG, District Judge.

JOHNSEN, Senior Circuit Judge.

A writ of mandamus or prohibition is sought from us in respect to an order appointing a special master and referring some special functions to him in a suit for treble damages under the antitrust statutes, 15 U.S.C.A. §§ 1, 2, and 15. The petitioners here (three in number) consist of the defendants in the suit, and the respondent is Judge Oliver, of the District Court for the Western District of Missouri.

The order involved was entered by Judge Oliver on his own motion a year and a half after the case had been the subject of a jury-waived trial and been submitted to him on the merits by the parties. Before the trial was held, processes of discovery, taking of depositions and pretrial conferences had been engaged in, as generally incident to the preparation and progression of such a protracted case toward disposition. And in taking submission, the Court had consideredly ruled that both on the issue of liability and on the question of damages the evidence was sufficient "to send the case to the trier of the fact". As Judge Oliver further expressed it at the time, "In other words, if I had a jury in the case, and * * * I had to pass on the question of whether * * * the case should be submitted to the jury, I would submit it to the jury."

The intention to appoint a special master and make a reference was first made known in a Memorandum Opinion (reported in Reserve Plan, Inc. v. Arthur Murray, Inc., D.C., 38 F.R.D. 23), filed after a deliberation as noted above, in which the Court determined the issue of antitrust violation against the defendants; held that plaintiff was shown to have been damaged by the defendants' illegal acts; confirmed its previous ruling that the record contained such evidence of damages as could afford the basis for the rendering of a substantial verdict in plaintiff's favor; but declared that the task of analyzing the books, records, accounting data, and audit reports which were in evidence, for purposes of satisfactorily arriving at the profits lost by plaintiff from the business of which defendants had caused it to be illegally deprived, was one in which the Court did not feel capable or called upon to engage without the assistance of an expert accountant as a special master.

The Memorandum Opinion, however, did not stop here. The Court deemed it insufficient to have the reference limited to an accounting process and result on the materials which the parties had chosen to place in evidence and made the basis of their submission of the case. It went on to state that it was not sure that the record had been made to contain all of the pertinent data and material which was capable of being produced and might be of assistance in arriving at a fair determination of the damages involved, and particularly "as to what profits were actually made or ultimately resulted from the business illegally taken from the plaintiff". It therefore desired to have the master further engage in a scrutiny of other indicated material, which was not in evidence but which it directed the defendants by a supplemental order to deposit with the Clerk for the master's use, consisting of "all accounting records, income tax returns, balance sheets, contract documents, business and accounting correspondence and the like", which could be reflective of the profits derived by defendants Educational Credit Bureau, Inc., and Tuition Plan, Inc., from the business which plaintiff had been deprived of, involving some 45 accounts.

Plaintiff was engaged in the finance business, with a substantial part of its operations consisting in the handling of paper given for dancing lessons from studios which were licensees of defendant Arthur Murray, Inc. Defendants Educational Credit Bureau, Inc., and Tuition Plan, Inc., like plaintiff, were finance companies, but handled only paper of Arthur Murray, Inc. licensees, and were owned in part by stockholders and officers of Arthur Murray, Inc., or relatives of them. Arthur Murray, Inc. had sent out a letter to all its licensees directing them to channel their paper thereafter through the two defendant finance companies, with the consequence, as found by the Court, that plaintiff lost the business which it had previously had from such licensee customers. Concerted action on the part of the defendants was alleged and held by the Court to have existed in relation to the effecting of this result.

The Court's order directed the master to file a preliminary report on (a) whether it was possible from the books and records of plaintiff in evidence to make a reasonable estimate and approximation of the profits which plaintiff had realized on the licensee business involved prior to the sending out of the letter by Arthur Murray, Inc.; (b) whether it was possible from other material not in evidence, but directed to be made available by the defendants to the master, as referred to above, to make a reasonable estimate and approximation of the profits realized by the two defendant finance companies on the business of which plaintiff had been deprived; and (c) also whether on the basis of the material referred to in (b) a purchase which had been made of the capital stock of a previous licensee-finance corporation could fairly be said to help indicate the value of the licensee business of which the two defendant finance companies had become improperly possessed as against plaintiff.

If the master should be of the opinion that additional factual data was necessary to enable him to reach any of these results, he was directed to indicate what he regarded as being thus required. The order also was left with an open-end provision that "The Special Master shall perform other particular acts and shall report on other particular issues that the Court may from time to time direct and order". And to this the Court added the declaration that "We are fully convinced that everyone concerned will know much more about the probable future course of this litigation after we shall have received the preliminary report of the Special Master".

The immediately operative aspect of the order in its direction to the master to engage in an initial scrutiny and report could perhaps be regarded as not being of such substance or of such certainty as to any further consequence from the order, so that we would be warranted in refusing to engage in any present extraordinary-writ consideration. But the parties all accept as a reality that the order is designed and will in fact operate to produce some form of determination by the master of the profits of the plaintiff and of the profits of the defendants on the business involved; that it therefore will result in the trial being reopened for the receipt of such evidence; and that it will necessitate further the Court's affording opportunity for rebuttal or other proper attack by a party demanding it in relation to the master's auditing result and testimony on both of the classes of material covered by the order.

The situation thus is presented to us as one in which after a five-years pendency, after an 18-months submission, and with a record held by the Court to contain such probative substance as to establish certainty of substantial injury and to afford basis for making a substantial damage award, the parties now are being subjected to a reference of analysis and appraisal on the part of a master, not merely as to evidence contained in the record, but also as to materials outside the record, and with the probable substantial expense and conventional delay normally incident to any reference procedure.

In this connection it is entitled to be noted that the plaintiff had introduced evidence by an expert accountant as to what plaintiff's profits had been generally upon its business, and evidence by one of its officers as to what he regarded its profits on the particular business as having been in relation to the handling of its other accounts. The audit reports which had been made of plaintiff's business during all of the years involved had been placed in the record. All of this evidence was received by the Court as being probatively competent with the weight which would be accorded it in arriving at a damage result being left, of course, to the Court's subsequent overall consideration.

It further may be noted that the record shows that the plaintiff had deliberately chosen not to place in evidence the defendants' books and records or the audit reports thereon or otherwise to attempt to show what the defendants' profits had been on the business involved. It should be added, however, that the plaintiff has, since the filing of the Memorandum Opinion, given acquiescence to the Court's expressed desire and intention to include this aspect in the reference, and that it is here seeking to sustain the Court's...