Calnetics Corp. v. Volkswagen of America, Inc.

Decision Date24 February 1976
Docket Number73-1953,73-1955,Nos. 73-1954,s. 73-1954
Citation532 F.2d 674
Parties1976-1 Trade Cases 60,757 CALNETICS CORPORATION and Meier-Line, Inc., Appellants, v. VOLKSWAGEN OF AMERICA, INC., et al., Appellees. CALNETICS CORPORATION, Appellee, v. VOLKSWAGEN OF AMERICA, INC., Appellant (five cases). to 73-1958.
CourtU.S. Court of Appeals — Ninth Circuit
OPINION

Before BARNES, CHOY and GOODWIN, Circuit Judges.

PER CURIAM: *

Volkswagen of America, Inc. (VW), and its wholly owned subsidiary, Volkswagen Products Corporation (Subsidiary), defendants in a private antitrust action brought by Calnetics Corporation, 1 appeal a district court judgment ordering VW's divestiture of Subsidiary and other equitable relief. VW and Subsidiary also appeal a summary judgment dismissing their counterclaims against Calnetics, and an award of attorneys' fees and costs to Calnetics.

Calnetics cross-appeals from summary judgments and a directed verdict dismissing its claims for damages against VW, Subsidiary, and Volkswagen Pacific, Inc. (Distributor), an independently owned corporation which until 1973 2 distributed VW-imported automobiles and accessories in southern California, southern Nevada, Arizona, and Hawaii.

Distributor appeals from the district court's denial of its motion to amend its answer to add a counterclaim under § 2(c) of the Robinson-Patman Act, 15 U.S.C. § 13(c).

The summary judgment in favor of Calnetics on each of VW's counterclaims is affirmed, as is the summary judgment in favor of Calnetics on Subsidiary's counterclaim based on the Sherman Act, 15 U.S.C. § 1 et seq. All other judgments challenged on appeal are reversed. The district court's denial of Distributor's motion to add a counterclaim under 15 U.S.C. § 13(c) is also reversed. The district court's award of attorneys' fees and deposition copy costs to Calnetics is set aside. A legend of the parties and claims appears in the margin. 3

                                                TABLE CONTINUED
                                        Disposition
                -----------------------------------------------------------  Location of
                  District                               9th                 Discussion
                  Court                                Circuit               in Opinion
                -------------------------------------------------------------------------------
                Directed verdict                      Reversed               I. B
                for VW &amp
                Subsidiary
                Divestiture                           Reversed               III.  C. 1
                Import ban                            Questioned             III.  C. 3
                Other remedies                        Questioned             III.  C.
                Sum. judg. *                          Reversed               I. D.
                for VW &
                Subsidiary
                Sum. judg. *                          Reversed               I. D.
                for VW &
                Subsidiary
                Sum.  Judg. for                        Reversed               I. A.
                Distributor
                Sum. judg. for                        Affirmed **            I. C.
                Calnetics
                Denied leave                          Reversed               V.
                to amend answer
                so as to assert
                cause of action
                Attorney fee                          Reversed               IV.  A.
                for Calnetics
                Costs for                             Reversed               IV.  B.
                Calentics
                -------------------------------------------------------------------------------
                

* After vacating an earlier denial of summary judgment for VW and Subsidiary.

** Summary judgment for Calnetics on Subsidiary's non-Sherman Act

counterclaims was vacated and remanded.

VW, a wholly owned subsidiary of the German automobile manufacturer (Volkswagenwerk A.G.), imports Volkswagen, Porsche, and Audi automobiles into the United States. On September 26, 1969, VW acquired a manufacturer of automobile air conditioning equipment, and changed its name to Volkswagen Products Corporation (Subsidiary). Approximately one year later, Calnetics, an independent manufacturer of automobile air conditioning equipment which previously sold to Distributor, brought suit alleging that VW's acquisition of Subsidiary violated § 7 of the Clayton Act, 15 U.S.C. § 18.

The allegation of a § 7 violation was premised mainly on a theory of vertical restraint 4 that VW would be able to coerce both its wholly owned and indirectly controlled distributors and dealers to satisfy their demand for automobile air conditioning equipment from Subsidiary's supply, thus foreclosing sales opportunities of Calnetics and other independent air conditioning manufacturers (hereinafter referred to generically as "Delta"). Calnetics also alleged that VW, Distributor, and Subsidiary 5 had conspired and combined to restrain competition in the manufacture, distribution, and sale of air conditioning systems for Volkswagen, Karmann Ghia, and Porsche automobiles in violation of § 1 of the Sherman Act, 15 U.S.C. § 1, and had actually monopolized and attempted to monopolize the distribution, manufacture, and sale of air conditioning systems in violation of § 2 of the Sherman Act, 15 U.S.C. § 2.

Calnetics sought both damages and equitable relief, including divestiture of Subsidiary. Its claims for damages under the Sherman and Clayton Acts were premised entirely on its exclusion from competition for the sale of automobile air conditioning equipment to Distributor.

VW and Subsidiary counterclaimed, alleging that a secret agreement between Calnetics and the head of Distributor's service department, R. W. Christiansen, which provided Christiansen and his wholly owned corporation, RWC Sales Corp. with a 3% commission on all sales to Distributor, violated §§ 1 and 2 of the Sherman Act, § 2(c) of the Robinson-Patman Act, 6 and California state law. VW and Subsidiary sought both damages and equitable relief. Distributor filed a counterclaim based on state law, but was not allowed to amend its answer to include a counterclaim under the Robinson-Patman Act.

On February 28, 1972, the trial court granted Distributor's motion for summary judgment on all claims against it, 7 but rejected motions for summary judgment by VW and Subsidiary. The court also granted Calnetics' motion for summary judgment on the counterclaims brought by VW and Subsidiary.

After the February 28 summary judgments, the only claims remaining to be tried were those by Calnetics against VW and Subsidiary under §§ 1 and 2 of the Sherman Act and § 7 of the Clayton Act. The district court had earlier ordered that the § 7 claim be tried separately from, and prior to, the Sherman Act claims. Accordingly, a jury trial commenced April 4, 1972 on the § 7 claim.

Upon the conclusion of Calnetics' case in chief, the district court directed a verdict in favor of VW and Subsidiary on the issue of damages, dismissed the jury, and proceeded to hear further evidence on Calnetics' claim for equitable relief.

On June 30, 1972, the district court held that VW's acquisition of Subsidiary violated § 7 of the Clayton Act. Calnetics Corp. v. Volkswagen of America, Inc., 348 F.Supp. 606 (C.D.Cal.1972). It granted judgment for Calnetics but deferred the execution of the relief until the parties had presented "plans for accomplishing the (equitable) relief granted * * *." 348 F.Supp. at 623.

On July 10, 1972, the district court granted summary judgment in favor of VW and Subsidiary on the postponed Sherman Act claims. Calnetics Corp. v. Volkswagen of America, Inc., 348 F.Supp. 623 (C.D.Cal.1972).

On January 19, 1973, the district court issued a supplemental order which: provided for VW's divestiture of Subsidiary; enjoined VW and its wholly owned subsidiaries for a period of seven years from importing into the United States any Volkswagen, Porsche, or Audi automobiles equipped with factory-installed air conditioning; imposed a 10-year ban on domestic manufacture and assembly of automobile air conditioners by VW; and permanently enjoined VW and its wholly owned distributors from satisfying more than 50% of their need for automobile air conditioners from the output of the divested firm. Calnetics Corp. v. Volkswagen of America, Inc., 353 F.Supp. 1219 (C.D.Cal.1973).

I. DAMAGE CLAIMS AGAINST VW, SUBSIDIARY, AND DISTRIBUTOR; COUNTERCLAIMS OF VW AND SUBSIDIARY.

VW and Subsidiary argue that all the summary dispositions in their favor and in favor of Distributor are correct. VW and Subsidiary also argue that even if only one of the three summary dispositions in favor of them or Distributor is correct VW and Subsidiary are necessarily entitled to summary dismissal of all the plaintiff's damage claims. Finally, VW and Subsidiary argue that if all three summary dispositions in favor of them or Distributor are erroneous then Calnetics' entire § 7 claim, which sought both damages and equitable relief, must be remanded for a jury trial. With respect to their counterclaims, VW and Subsidiary urge that the summary judgment in favor of Calnetics was erroneous.

Calnetics argues that the three summary dispositions in favor of Distributor, VW, and Subsidiary were erroneous. It does not respond directly, however, to VW and Subsidiary's argument that the consequence of that error is that VW and Subsidiary become entitled to a jury trial on the entire § 7 claim. (Calnetics implicitly concedes that the defendants can have a jury trial, because Calnetics asserts error in the summary judgments against Calnetics on the damages claims.)

We consider first Calnetics' challenges to the summary dispositions of its damages claims against VW, Subsidiary, and Distributor. In conjunction with our analysis of these challenges, we will also consider VW's and Subsidiary's challenge to the summary judgment dismissing their counterclaims against Calnetics.

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