Bazal v. Belford Trucking Co., Inc.

• Decision Date: 05 December 1977
• Docket Number: No. 77-6272-Civ-JLK.,77-6272-Civ-JLK.
• Parties: John BAZAL, Plaintiff, v. BELFORD TRUCKING CO., INC., a Florida Corporation, and Rentar Trailer and Container Leasing Co., a Florida Corporation, Defendants.
• Court: U.S. District Court — Southern District of Florida

442 F. Supp. 1089

John BAZAL, Plaintiff, v. BELFORD TRUCKING CO., INC., a Florida Corporation, and Rentar Trailer and Container Leasing Co., a Florida Corporation, Defendants.

No. 77-6272-Civ-JLK.

United States District Court, S. D. Florida.

December 5, 1977.

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William S. Isenberg, North Miami, Fla., for plaintiff.

Craig B. Sherman, Bay Harbor Islands, Fla., for defendants.

ORDER

JAMES LAWRENCE KING, District Judge.

This cause came on for consideration upon the motion of defendant to dismiss and, in the alternative, to strike certain portions of the complaint and upon the motion of defendant for a more definite statement. The court, having considered the record and being fully advised in the premises, finds and concludes that the motion to dismiss should be denied and that the motion to strike should be granted in part.

This case presents a novel question in antitrust law. The essence of plaintiff's claim is that the defendant corporations have violated the federal antitrust laws vis-a-vis the agreements entered into by the parties and, in addition, that the defendants are liable for breach of those agreements and for tortious conduct in connection with activities performed pursuant to the agreements.

There are three agreements at issue. The first provides that plaintiff will lease one of defendant Rentar's trucks. The second agreement, executed the same day as the first, allegedly provides that plaintiff "authorized" that he would operate the aforementioned truck exclusively in the service of defendant Belford. The third agreement, executed two days after the others, allegedly provides that plaintiff, as an independent contractor, would furnish defendant Belford, the carrier, the aforementioned truck for a period of thirty days.

The critical allegation for the purposes of this motion to dismiss appears in paragraph ten of the complaint. There, plaintiff alleges,

That prior to the execution of Plaintiff's Exhibits A, B and C herein the three agreements, the Defendant Belford notified the Plaintiff that in order to work for them, the Plaintiff must `rent their truck'. (emphasis added).

The question before this court on this motion to dismiss is whether the complaint, particularly paragraph ten, states a cause of action cognizable under the Sherman Act of the federal antitrust laws, 15 U.S.C. § 1. If this question is answered in the affirmative, then plaintiff's additional claims sounding in contract and tort may be arguably within the realm of pendent jurisdiction. If the question be answered in the negative, the suit, as a whole, cannot be pursued in its present posture in federal court.

I. The Antitrust Claim:

A. Background:

A tie-in arrangement, whereby the purchase of one product or service is mandatorily tied to the purchase of another product or service, is treated quite harshly under the federal antitrust laws. The cases striking down such arrangements are legion in number, stretching back in time over three decades. See International Salt Co. v. United States, 332 U.S. 392, 68 S.Ct. 12, 92 L.Ed. 20 (1947).

Each case arising in this area carefully acknowledges its precedents. The elements which must be proven in order to establish an unlawful tie-in are therefore beyond dispute at this time. These elements have been presented clearly in the recent case of Moore v. Jas. H. Matthews & Co., 550 F.2d 1207 (9th Cir. 1977).

In this case, plaintiff objected to the practice of defendants whereby cemetery lots could not be purchased unless the purchaser agreed to purchase a memorial from or through the cemetery. In addition, lot purchasers were required to utilize the cemetery's installation service.

The Ninth Circuit stated that tie-in arrangements

are presumptively illegal if certain elements exist and, once those are demonstrated, no specific showing of unreasonable anti-competitive effect is needed.

550 F.2d at 1211 (emphasis added).

The elements referred to were then enumerated by the court. First, plaintiff must demonstrate that there is "in fact . . . a tying arrangement between two distinct products or services." 550 F.2d at 1212. Defendants assert that there is no such arrangement in the present case. Instead, defendants claim that plaintiff has not established that two distinct products are involved.

The second element requires plaintiff to demonstrate that the defendant has "sufficient economic power in the tying market to impose significant restrictions in the tied product market." 550 F.2d at 1212. Defendant also challenges plaintiff's complaint as being insufficient with regard to this element. Clearly, this second element need not be considered until the presence of the first element is established.

The third element which plaintiff must establish is that the "amount of commerce in the tied product market must not be insubstantial." 550 F.2d at 1212. This too is the source of another challenge by defendant in its motion to dismiss.

This court will determine the sufficiency of the complaint as to each of these elements in turn below. However, as a preliminary matter, it is important to delineate the framework within which this court must operate in determining a motion to dismiss a claim when that claim is predicated upon the federal antitrust laws.

B. Framework:

The requisite specificity for pleadings in an antitrust suit was a popular subject of discussion in the years subsequent to the adoption of the Federal Rules. Professors Wright & Miller note that there is nothing in the Federal Rules, on their face, to suggest that a greater level of specificity is required with regard to such claims. 5 Wright & Miller Federal Practice and Procedure: Civil § 1228. Yet, initially, several federal courts were inclined to require greater specificity due to concerns over the lengthy pre-trial aspects of antitrust claims; the potential for abuse in such suits; and "the inherent complexity of the issues involved . . ." Wright & Miller at 166.

Today, however,

As far as most federal courts are concerned, it now is reasonably clear that the standard in Rule 8(a) calling for a short and plain statement of the claim for relief is to be applied in the `big case' in the same fashion as it is in any other action.

Wright & Miller, at 167.

See Nagler v. Admiral Corporation, 248 F.2d 319 (2d Cir. 1957).

Thus, because this court must apply the same standard of specificity to the claims in the case sub judice as it does in the other suits which come before it, it is guided herein by the principle delineated by the Supreme Court in Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957). There, with respect to the determination of a motion to dismiss, the Court stated:

in appraising the sufficiency of the complaint we follow, of course, the accepted rule that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.

With this principle in mind, this court turns its attention to a determination of the most complex issue before it — the question of whether plaintiff has sufficiently pleaded element one of a claim predicated upon an unlawful tie-in arrangement. That is, the court must determine whether there are, in fact, two distinct "products" involved herein.

C. Element One: Two Distinct Products

Plaintiff suggests that there is an unlawful tie between his contract of employment and the rental of a truck. The problem this presents is that these two "items" do not match the conventional understanding of two "products" or "services." However, this court finds that both items are cognizable under the tie-in arrangement rubric. More specifically, this court finds that a contract of employment can fall within the category of a "tying product".

While there is no case law which expressly supports this position, prior cases have provided a foundation for it. These cases, arising under the principles of section one of the Sherman Act, free the terms "products" and "services" from their conventional moorings. This is critical because of the aforementioned need to establish that two "products" or "services" are tied together in order to satisfy the first prerequisite of proving a tie-in violation.

As early as 1964, the Second Circuit, in Susser v. Carvel Corporation, 332 F.2d 505 (2d Cir. 1964) was prepared to find that a franchise contract could be considered a tying product in an allegedly unlawful tying arrangement. Although the court did not explain this determination, it was significant for unlike prior tie-in cases, a less tangible item was involved. A franchise agreement is a contract and nothing more tangible than that. It is a "special privilege conferred . . .." Blacks Law Dictionary, 4th Ed.

Before 1964, less tangible items were not considered as potential tying products. In International Salt Co. v. United States, the tying product was a salt dispensing machine and the tied product was salt. In Times-Picayune Pub. Co. v. United States, 345 U.S. 594, 73 S.Ct. 872, 97 L.Ed. 1277 (1953) the products at issue were newspapers. Thus, the concept of a "privilege" as a tying or tied product was more than an inevitable occurrence given the case law preceding its development. See, for a general survey, D. Turner, "The Validity of Tying Arrangements Under the Antitrust Laws," 72 Harv.L.Rev. 50 (1958).

Noticeably, the courts which initiated the evolution twoard less tangible product did not focus on this step as a departure from the norm. In fact, by 1971, such determinations seem to have become a matter beyond controversy. In Siegel v. Chicken Delight, Inc., 448 F.2d 43 (9th Cir. 1971), the Ninth Circuit treated the franchise contract of a restaurant as fully cognizable under the tie-in rubric. The precedent which the Ninth Circuit cited was, significantly, Susser. Time had supplied...