Baxley-DeLamar Monuments, Inc. v. American Cemetery Ass'n

• Decision Date: 09 July 1991
• Docket Number: No. 90-1393,BAXLEY-D,90-1393
• Citation: 938 F.2d 846
• Parties: 1991-1 Trade Cases 69,486 eLAMAR MONUMENTS, INC., Appellant, v. AMERICAN CEMETERY ASSOCIATION; Arkansas Cemetery Association; Edgewood Memorial Park, Inc.; Griffin Leggett, Inc. a/k/a Forest Hills Memorial Park Inc., d/b/a Rest Hills Memorial Park; Pinecrest Memorial Park & Garden Mausoleum; Sun Realty Co. a/k/a Forest Hills Memorial Park, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 846

938 F.2d 846

1991-1 Trade Cases 69,486

BAXLEY-DeLAMAR MONUMENTS, INC., Appellant, v. AMERICAN CEMETERY ASSOCIATION; Arkansas Cemetery

Association; Edgewood Memorial Park, Inc.; Griffin

Leggett, Inc. a/k/a Forest Hills Memorial Park Inc., d/b/a

Rest Hills Memorial Park; Pinecrest Memorial Park & Garden

Mausoleum; Sun Realty Co. a/k/a Forest Hills Memorial Park,

Appellees.

No. 90-1393.

United States Court of Appeals,

Eighth Circuit.

Submitted Jan. 7, 1991.

Decided July 9, 1991.

Edward Ray Fechtel, Eugene, Or., for appellant.

Stephen W. Armstrong, Philadelphia, Pa., argued, for appellee; Lewis H. Mathis, Morgan E. Welch, and Richard T. Donovan, Little Rock, Ark. and Stephen W. Armstrong and David H. Marion, Philadelphia, Pa., on the brief.

Before JOHN R. GIBSON and BOWMAN, Circuit Judges, and SACHS, ^* District Judge.

JOHN R. GIBSON, Circuit Judge.

Once again we entertain an appeal in this antitrust case, which concerns an alleged practice of tying sales of gravestones and cemetery lots. In Baxley-DeLamar Monuments, Inc. v. American Cemetery Ass'n, 843 F.2d 1154 (8th Cir.1988) (Baxley I ), we held that Baxley, a gravestone dealer, had adequately pleaded violations of Secs. 1 and 2 of the Sherman Act (15 U.S.C. Secs. 1 and 2 (1988 & West Supp.1990)) against the defendant cemeteries and trade organizations. ¹ The case proceeded to a jury trial, and there was a verdict for the defendants. Baxley appeals, arguing that the district court ² should have submitted its claims of individual tying violations to the jury in addition to the claim of tying conspiracy that the court actually submitted. Baxley also argues that the district court erred in making several evidentiary rulings, in not giving a requested instruction, and in not permitting Baxley to file a supplemental complaint. We affirm the district court's judgment.

Baxley is an independent gravestone dealer doing business primarily in Little Rock and Benton, Arkansas (in Pulaski and Saline Counties, respectively). The cemetery defendants are past or present owners of four perpetual care cemeteries in Pulaski and Saline Counties, and the cemetery association defendants are trade groups to which various of the defendant cemeteries belong. Baxley alleged at trial that the defendants conspired to set obstacles that would prevent outside businesses from installing grave memorials ³ in the defendants' cemeteries and thereby force the lot-owners in those cemeteries to hire the cemeteries to install the memorials and discourage customers from buying memorials from Baxley at all. The nature of the alleged obstacles varied over the relevant time period, 1980-86, as the defendants responded to various court decisions, but included outright prohibition of independent installers in the cemetery; fees for permitting outside installers; and requirements that the installer post a bond with the cemetery. Baxley tried to prove that these requirements kept it out of the installation business in the defendant cemeteries and hurt its business as a memorial retailer. In its answer to special interrogatories, the jury found that there was no conspiracy among the defendants either to commit illegal tying (section 1) or to monopolize the installation market (section 2).

I.

Baxley's first argument is that the district court erred in not submitting to the jury an instruction that section 1 liability could be based on individual tying violations by the cemetery defendants, rather than on conspiracy to tie. Baxley proceeded to trial on the Amended Complaint that we had before us in Baxley I. The Amended Complaint's tying count is titled "Plaintiff v. All Defendants--Sherman Act Section 1 Horizontal Conspiracy--Tying Arrangements" and makes numerous references to a tying conspiracy. In Baxley I, an appeal from the dismissal of the Amended Complaint, Baxley defended the Amended Complaint as one that stated a cause of action for conspiracy. Therefore, in holding the Amended Complaint adequate in Baxley I, we said it adequately stated a cause of action for tying conspiracy. 843 F.2d at 1156.

However, before trial, Baxley informed the district court that it intended to pursue both conspiracy and individual tying claims and argued that language within the tying count could be read to allege individual tying violations. The district court made it clear that it considered Baxley I to have foreclosed the possibility of Baxley proceeding on individual tying claims, because we characterized the tying count as a conspiracy count. Based on this reasoning, the district court refused to submit the individual tying claim to the jury.

Baxley argues that the district court's ruling was based on an erroneous conception of the effect of Baxley I. In the Baxley I appeal we were not asked to decide whether the Amended Complaint could be read as stating individual tying claims, and we had no need to rule on any such question in order to hold that the pleading adequately stated a cause of action. On remand, the district court may well have looked at the Amended Complaint and decided that individual claims were not adequately pleaded and, additionally, that the court would exercise its discretion not to permit Baxley to amend to state individual tying claims. Fed.R.Civ.P. 15(a). However, it was not proper for the district court to prevent Baxley from proceeding on individual tying claims on the basis of our disposition of an appeal in which the question was never raised. But although the district court's ruling may have been based on a misapprehension of the procedural posture of Baxley I, we hold that it was not erroneous for two reasons. First, Baxley points to no evidence that was excluded because of the district court's ruling (and in fact contends that it proved its case on individual claims). Second, Baxley did not prove the elements of an individual tying claim, and so the district court had no obligation to submit this theory to the jury.

There are two categories of tying claims under section I of the Sherman Act: a plaintiff must prove either that the tying arrangement in fact constitutes an unreasonable restraint of trade, Jefferson Parish Hospital Dist. No. 2 v. Hyde, 466 U.S. 2, 29, 104 S.Ct. 1551, 1567, 80 L.Ed.2d 2 (1984), or that the tying is of a type considered so inimical to competition that it is per se illegal without analysis of its actual effect on any particular market. Id. at 9, 104 S.Ct. at 1556. Baxley's proposed instruction was a per se instruction and, therefore, we test Baxley's proof against the elements of a per se tying claim.

The essence of a per se claim is that the defendant has such market power in the market for the tying product (here, cemetery lots) that it can force consumers to buy the tied product from it, though they might have preferred to buy the product elsewhere or not at all. Jefferson Parish, 466 U.S. at 12, 104 S.Ct. at 1558. On this element of market power, or ability to force, Baxley failed to make a submissible case, and therefore it was not entitled to submit its individual tying claims to the jury.

Market power can result from the fact that defendant enjoys a large share of the relevant market or the fact that the defendant offers a unique product that gives him an advantage over competitors, id. at 17, 104 S.Ct. at 1560-61, or some combination of these two factors, See Rosebrough Monument Co. v. Memorial Park Cemetery Ass'n, 666 F.2d 1130, 1143 (8th Cir.1981) (Rosebrough I ), cert. denied, 457 U.S. 1111, 102 S.Ct. 2915, 73 L.Ed.2d 1321 (1982); Ringtown Wilbert Vault Works v. Schuylkill Memorial Park, Inc., 650 F.Supp. 823, 825 (E.D.Pa.1986). In this case, Baxley pleaded that the defendants as a group held 57% of the market and that the cemeteries benefitted from their unique locations and from the fact that in some cases consumers had no freedom of choice in selecting a cemetery lot because their families were already buried in the defendant cemeteries. We held this pleading to be sufficient to allege market power in Baxley I.

Now Baxley has been put to its proof. Baxley argues that it established market power to prove individual tying claims; this would require it to show that each defendant cemetery's share of the relevant market was sufficient to endow that defendant with enough market power to establish per se illegality. Analysis of market share must focus on a relevant market, defined in terms of product market (here, cemetery lots) and geographic market, which is the geographic area in which the defendant faces competition and to which consumers can practically turn for alternative sources of the product. See Tampa Elec. Co. v. Nashville Coal Co., 365 U.S. 320, 327, 332, 81 S.Ct. 623, 628, 630, 5 L.Ed.2d 580 (1961) (Clayton Act Section 3); Morton Bldgs. of Nebraska, Inc. v. Morton Bldgs., Inc., 531 F.2d 910, 918 (8th Cir.1976) (discussing Sherman Act section 2).

Baxley simply did not introduce any evidence of what the relevant geographic market was. The testimony of Baxley's expert, Dr. Ralph D. Scott, Jr., shows that he did not have information on which to base an opinion as to the geographic market. ⁴ Scott merely assumed the relevant market was Pulaski and Saline Counties, which Mrs. Baxley had earlier testified was the primary area in which Baxley did business, and which was the only area he had any market data for.

This testimony provides no evidentiary basis for defining the geographic area. The fact that a party does all its business in a certain geographic area does not necessarily mean that that area constitutes the relevant geographic market. United States v. Empire Gas Corp., 537 F.2d 296, 304 (8th Cir.1976), cert. denied, 429 U.S. 1122, 97 S.Ct. 1158, 51 L.Ed.2d 572 (1977); Morgan, Strand, Wheeler & Biggs v. Radiology, Ltd., 924 F.2d 1484, 1490 (9th Cir.1991); L.A. Draper & Son v. Wheelabrator-Frye, Inc., 735 F.2d 414, 424-25 & n. 15 (11th Cir.1984). Baxley presented no other evidence to support its assumption...