Big Apple BMW, Inc. v. BMW of North America, Inc., 91-1339

CourtUnited States Courts of Appeals. United States Court of Appeals (3rd Circuit)
Writing for the CourtMANSMANN; ROTH
Citation974 F.2d 1358
Parties, 1992-2 Trade Cases P 69,918, 36 Fed. R. Evid. Serv. 319 BIG APPLE BMW, INC.; Potamkin BMW and VW, Inc.; Robert Potamkin; Alan Potamkin, Appellants in, v. BMW OF NORTH AMERICA, INC.; and Bayerische Motoren Werks, A.G. BIG APPLE BMW, INC.; Potamkin BMW & VW, Inc.; Robert Potamkin; Alan Potamkin v. BMW OF NORTH AMERICA, INC.; and Bayerische Motoren Werks, A.G. BMW of North America, Inc., Appellant in
Docket NumberNo. 91-1339,No. 91-1458,91-1458,Nos. 91-1339,91-1339,s. 91-1339
Decision Date02 September 1992

Harold E. Kohn (argued), Robert J. LaRocca, Kohn, Savett, Klein & Graf, Charles J. Bloom, Kleinbard, Bell & Brecker, Philadelphia, Pa., for appellants cross appellees.

Henry T. Reath, Lewis R. Olshin, Duane, Morris & Heckscher, Philadelphia, Pa., James W. Quinn (argued), Mindy J. Spector, Weil, Gotshal & Manges, New York City, for appellee cross appellant.

Before: MANSMANN, COWEN and ROTH, Circuit Judges.


MANSMANN, Circuit Judge.

In these cross appeals, we are once again called upon to delineate that quantum of evidence necessary for an antitrust plaintiff to prove in order to withstand a motion for summary judgment. Here the unsuccessful applicants for several BMW franchises brought suit against the United States distributor for BMW automobiles, BMW of North America (BMW NA). The applicants (the Potamkins) assert that BMW NA and its dealers violated the Sherman Act by engaging in concerted action to exclude them from becoming dealers. BMW NA contends that it acted independently of its dealers and tenders business reasons for its refusal to deal with the Potamkins. In response, the Potamkins have countered each business reason with circumstantial evidence of concerted action. Thus faced with equal and competing inferences, we must apply to the standard for summary judgment, in which all inferences must be drawn in favor of the non-moving party, Country Floors, Inc. v. A Partnership Composed of Gepner and Ford, 930 F.2d 1056, 1061 (3d Cir.1991), the holding in Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 768, 104 S.Ct. 1464, 1473, 79 L.Ed.2d 775 (1984), that in an antitrust action "there must be evidence that tends to exclude the possibility of independent action by the manufacturer and distributor."

The plaintiffs are brothers Robert and Alan Potamkin, and their corporate entities, Big Apple BMW, Inc. and Potamkin BMW and VW, Inc., who, in 1985, sought BMW franchises in Manhattan, New York and Philadelphia, Pennsylvania. The Potamkin family, which for our purposes includes Robert, Alan, and their father Victor, owns approximately 45 automobile franchises located in Manhattan, Philadelphia, Atlanta, and Miami. According to Victor, these franchises collectively amassed a sales volume of between $800 and $900 million in 1987 alone. A657.

The Potamkins asserted in their complaint that BMW NA and certain of its dealers engaged in a "group boycott to exclude plaintiffs and pursuant to a contract, combination or conspiracy with certain BMW dealers to fix, raise, maintain and stabilize prices of BMW automobiles in the United States." Complt. at p 34. Briefly, BMW NA contends that it unilaterally rejected the Potamkins because their high volume price-discounter image is incompatible with the image of BMW NA and because the Potamkins did not meet other required standards.

We conclude that, for purposes of summary judgment, the Potamkins have set forth sufficient evidence of concerted action between BMW NA and its dealership body to exclude the Potamkins and further produced evidence that tends to show that BMW NA's alleged reasons for rejecting the Potamkins were pretextual. Thus, we will vacate the judgment with respect to the antitrust claims and the closely related pendent state law antitrust and tortious interference claims and remand them for further proceedings. These counts will then be joined with the Pennsylvania Board of Vehicles Act claim, the sole claim that the district court had excepted from summary judgment, for further proceedings.


The factual underpinnings for the Potamkins' claims arose from three distinct, but allegedly related, incidents in which the Potamkins negotiated with BMW NA and BMW dealers for franchises in the Philadelphia and New York City metropolitan areas. The first incident involved Victor Potamkin's negotiations for a Great Neck, New York franchise in 1981. It admittedly falls outside the statute of limitations but is included for the purpose of demonstrating a pattern of conduct. The latter two incidents comprise the Potamkins' basis for liability. We provide only a cursory sketch of these incidents here because the evidence will be later reviewed in detail.

First, during 1981, Victor Potamkin met with BMW NA representatives on several occasions to discuss Victor's acquisition of a Great Neck, New York BMW franchise. The Potamkins allege that Victor and BMW NA's Eastern Regional Manager Terry Cronin reached an oral agreement for a BMW franchise; BMW NA insists that their discussions terminated prior to any agreement because Victor allegedly attempted to bribe Cronin. Both parties agree that these discussions ended without a written agreement. By letter dated November 4, 1981, BMW NA conveyed to Victor its desire not to appoint a dealer in Great Neck. A1203.

The second incident occurred in 1985. Gladys Caufield, owner of the Trans-Atlantic BMW dealership in Manhattan, in anticipation of losing her lease, began to negotiate with the Potamkins. A1613-14. In early September, they reached an oral agreement of sale for a price of $800,000 plus an undetermined amount for parts. In the ensuing months, however, BMW NA informed Caufield that it would not award a franchise to the Potamkins, and only days before the expiration of her lease, BMW NA offered her the significantly lower amount of $550,000, plus a repurchase of parts as required by the franchise agreement. A1640. She accepted this offer and BMW NA closed Trans-Atlantic, leaving only one dealer remaining in Manhattan. A1648-49.

The third incident occurred in Philadelphia, contemporaneously with the second, when Robert Potamkin entered into a written agreement to purchase the assets of Irvin Green's BMW dealership in October of 1985. A1720-47. This "buy-sell" agreement was contingent upon Robert's acquisition of a BMW franchise, and included an expiration date of December 23, 1985. A1729-30. Robert sought immediately to obtain a franchise application from BMW NA, and although they vigorously contest the reasons, both parties agree that Robert's application was not taken until October 29, 1985. Thus, as BMW NA recognized, it had 60 days from October 29th in which to act on the application under state law. After the buy-sell agreement expired on December 23rd, BMW NA informed Green that Potamkin was not a suitable candidate for a BMW franchise. A869-70.

The Potamkins filed suit in April of 1987, alleging that BMW NA violated section 1 of the Sherman Act, 15 U.S.C. § 1, sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15, 26 (Count I), and the Pennsylvania Board of Vehicles Act, 63 Pa.Stat.Ann. § 818.1, et seq. (Purdon's Supp.1991) (Count II). In addition, the Potamkins alleged that BMW NA tortiously interfered with their contractual and prospective business advantage (Count III), committed state law civil conspiracy (Count IV), and utilized unfair methods of competition under Pennsylvania law and New York's Donnelly Act (Count V).

After lengthy and acrimonious discovery, in May of 1989, BMW NA moved for summary judgment. Much of the evidence provided in support of its motion involved information that the district court had ruled inadmissible in its April 18, 1989 order limiting discovery. A59-60. In answer to the Potamkins' responsive motion, as well as to amplify its previous order, the district court issued an order on June 2, 1989, which excluded, for purposes of summary judgment, "information concerning plaintiffs' specific customer satisfaction rankings except to the extent that such information was known to and allegedly relied upon by the defendant in 1985, and has been disclosed to plaintiffs in discovery...." 2 A1448-49.

In due course, the district court ruled in favor of BMW NA on each count, except for Count II, the Pennsylvania Board of Vehicles Act claim, which it reserved for trial. The Potamkins sought and received a Rule 54(b) certification from the district court as to those counts on which summary judgment was entered. On the state law claim of Count II, the district court certified a controlling question of law concerning standing to sue under the Board of Vehicles Act, and we subsequently granted BMW NA permission to appeal the denial of summary judgment on that claim pursuant to 28 U.S.C. § 1292(b). This appeal and cross-appeal followed.

The district court exercised federal subject matter jurisdiction over the Sherman Act claim and pendent jurisdiction over the state law claims. Our standard of review is plenary. Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir.1976), cert. denied, 429 U.S. 1038, 97 S.Ct. 732, 50 L.Ed.2d 748 (1977). We review the dismissal of the pendent state claims utilizing an abuse of discretion standard. Cooley v. Pennsylvania Housing Finance Agency, 830 F.2d 469 (3d Cir.1987).


As the district court accurately stated in its unpublished Memorandum Opinion, 1990 WL 182340 "[t]he narrow issue upon which decision turns is whether plaintiffs have enough evidence to get to a jury on the issue of concerted action." Id. at 5. The district court first concluded that the Potamkins had failed to produce direct evidence that BMW dealers opposed the Potamkins as dealers, complained to BMW NA about the Potamkins, or that BMW NA's decisions were responsive to dealer complaints. Id. at 6. The district court then...

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