Car Carriers, Inc. v. Ford Motor Co.
| Citation | 745 F.2d 1101 |
| Decision Date | 30 October 1984 |
| Docket Number | No. 83-1825,83-1825 |
| Parties | , 1984-2 Trade Cases 66,220 CAR CARRIERS, INC., et al., Plaintiffs-Appellants, v. FORD MOTOR COMPANY and Nu-Car Carriers, Inc., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Francis J. McConnell, McConnell, Ruberry & Beckley, Chicago, Ill., for plaintiffs-appellants.
Robert M. Gault, Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, Boston, Mass., Michael K. Murtaugh, Baker & McKenzie, Chicago, Ill., for defendants-appellees.
Before ESCHBACH and FLAUM, Circuit Judges, and JAMESON, Senior District Judge. *
Essentially two questions are presented by this appeal: (1) whether the district court erred in dismissing the plaintiffs' antitrust complaint for failure to state a claim upon which relief could be granted and (2) whether the district court erred in refusing to allow the plaintiffs leave to amend. For the reasons stated below, we affirm the judgment of the district court on both issues.
The factual allegations of the complaint, which we must assume are true in considering the propriety of a dismissal for failure to state a claim, are as follows:
Car Carriers, Inc. ("Car Carriers"), its affiliate Clark Transport Co., Inc. ("Clark"), JPB Corp. (the parent of Car Carriers and Clark), James P. Byrne (the controlling shareholder of JPB Corp.), and three other related enterprises 1 initiated this action against Ford Motor Company ("Ford") and Nu-Car Carriers, Inc. ("Nu-Car"). Count I of the six-count complaint alleged a conspiracy in violation of Sec. 1 of the Sherman Act, 15 U.S.C. Sec. 1, and sought recovery under Secs. 4 and 16 of the Clayton Act, 15 U.S.C. Secs. 15, 26; the remaining five counts asserted pendent state-law claims.
From 1968 until October 1981, both Car Carriers and Clark transported new Ford vehicles from Ford's plants and railheads in the Chicago area. Car Carriers, but apparently not Clark, served only Ford. Both transport companies were regulated by the Interstate, as well as the Illinois, Commerce Commissions; thus, their rates were subject to approval by these regulatory agencies. Ford had the power to "dictate[ ] and control[ ]" the rates either by formally opposing any rate increase sought before the agencies or by unilaterally terminating the carrier. Complaint p 19(d)-(g).
As early as 1975, "defendants and their co-conspirators entered into contracts and engaged in a continuing combinations [sic] and conspiracies to restrain trade in the business of providing haulaway motor transportation for new Ford automobiles and to injure or destroy the businesses of plaintiffs and certain other similarly situated Ford carriers." Complaint p 19. The defendants employed the following methods in implementing their common goal. First, the carrier selected for elimination (the so-called "target carrier") would be required to make substantial investments in new tractor-trailer equipment, real estate, and new terminal facilities. In return, Ford would promise additional transportation traffic and "complete agreement with increased tariff rates necessary to pay for these acquisitions." Complaint p 19(b), (c) (emphasis added). After the "target" carriers had made these investments, however, Ford would then prevent them from obtaining the rate increases necessary for profitable operations. Complaint p 19(d), (e).
Second, Ford, with support of other carriers, "[i]nterfered with and prevented [the] target haulaway carriers and their affiliates from selling their businesses and assets as going business concerns or prevented [the] target haulaway carriers from consolidation or merger with other carriers." Complaint p 19(h). Finally, Ford would apparently terminate its relationship with the target carrier at this point, thereby allowing the favored carriers to "acquire the businesses and assets of [the target carriers] at distress prices or for less than fair market value as going business concerns." Complaint p 19(i).
The "destruction" of Car Carriers generally followed the pattern described above, as the complaint relates in detail. 2 In 1975, Ford directed Byrne and Car Carriers to sell the assets and business to a second Ford carrier. After Car Carriers had entered into negotiations for a sale with the E & L Transport Co. ("E & L"), however, Ford "unreasonably interfered with and prevented" the consummation of the agreement by inducing the corporate parent of E & L to repudiate an executed letter of intent. Complaint p 20(a). In 1977 and 1978, Ford induced Car Carriers to purchase over $6,000,000 worth of new tractor-trailer equipment with the promise that Car Carriers "would be able to recover the cost of such equipment with additional transport business and higher tariff rates." Complaint p 20(b) (emphasis added). However, during the entire period of 1975 to 1981, Ford caused Car Carriers's operations in Chicago to be unprofitable through its "refusal to allow adequate published tariff rates or other compensation" for Car Carriers and by "refusing to allow adequate temporary rate adjustments." Complaint p 20(g).
In 1979, Ford prevented Car Carriers from acquiring the outstanding stock of Automobile Transport, Inc. ("ATI"), which was at that time Ford's carrier in Wayne, Michigan and other areas. This action by Ford "prevented a carrier consolidation which would have generated valuable back-haul business and resulted in significant operating efficiencies and cost reduction benefits" to ATI, Car Carriers, and Ford. Complaint p 20(c). Later that year, Ford terminated ATI and awarded the substantial portion of ATI's business to Nu-Car and E & L on the basis of "sham and knowingly predatory bids." Complaint p 20(e).
In 1981, Ford solicited bid proposals for Chicago haulaway services from Car Carriers and other Ford transporters. In October of that year, Ford terminated Car Carriers and awarded the haulaway contract for the Chicago area to Nu-Car on the basis of the latter's "sham and knowingly predatory bid." Complaint p 20(h). To minimize the losses from the termination, Car Carriers attempted to sell its facilities and other assets to Nu-Car. However, the effort was frustrated when Ford and Nu-Car insisted on "walkaway and other onerous provisions ... as well as unacceptable covenants and releases" of Car Carriers's claims against Ford, Nu-Car, and Associated Transport, Inc.; Nu-Car eventually constructed its own terminal facility near the Ford plant on land provided by Ford. Complaint p 20(i).
In lieu of filing an answer, the defendants moved to dismiss the complaint pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. The district court, finding that the plaintiffs lacked "antitrust standing," granted the defendants' 12(b)(6) motion. Concluding that the "inherent internal flaws" in the antitrust claim were "non-curable," the court dismissed Count I with prejudice and the remaining counts without prejudice. 561 F.Supp. 885 at 889 & n. 12. The final judgment dismissing the entire action was entered on April 7, 1983.
On April 27, 1983, the plaintiffs filed a "Motion for Leave to File an Amended Complaint." The district court denied the motion as untimely under Rule 59(e) and as insufficient under Rule 60; a subsequent motion for reconsideration was denied. The plaintiffs then filed a notice of appeal from the initial order dismissing the complaint, the order denying leave to amend, and the order denying reconsideration. 3
Before discussing Car Carriers's substantive claims, we must first consider the function of 12(b)(6) procedures in the context of antitrust litigation. We acknowledge the Supreme Court's statement in Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957), that a complaint should be dismissed for failure to state a claim only if it appears "beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Id. at 45-46, 78 S.Ct. at 101-102. Nonetheless, as this court has recognized, Conley has never been interpreted literally. Sutliff, Inc. v. Donovan Cos., 727 F.2d 648, 654 (7th Cir.1984). In practice, "a complaint ... must contain either direct or inferential allegations respecting all the material elements necessary to sustain a recovery under some viable legal theory." Id. at 654 (quoting In re Plywood Antitrust Litig., 655 F.2d 627, 641 (5th Cir.1981), cert. dismissed, --- U.S. ----, 103 S.Ct. 3100, 77 L.Ed.2d 1358 (1983)).
We also note that the Supreme Court has stated that "summary procedures should be used sparingly in complex antitrust litigation where motive and intent play leading roles, the proof is largely in the hands of the alleged conspirators, and hostile witnesses thicken the plot." Poller v. Columbia Broadcasting Sys., 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962). However, we have previously concluded that, despite its sweeping language, Poller and its progeny simply stand for the proposition that, if a claim under the antitrust laws has been adequately set forth in the complaint, the highly factual and subjective questions of intent and purpose should be resolved after discovery and trial. Havoco of Am., Ltd. v. Shell Oil Co., 626 F.2d 549, 553 (7th Cir.1980).
Thus, in the context of a 12(b)(6) challenge, the question is whether, if we accept all the allegations--including those relating to purpose and intent--as true, the plaintiffs have successfully pleaded a contract, combination, or conspiracy in restraint of trade within the meaning of the Sherman Act. The pleader may not evade these requirements by merely alleging a bare legal conclusion; if the facts "do not at least outline or adumbrate" a violation of the Sherman Act, the plaintiffs "will get nowhere merely by dressing them up in the language of antitrust." Sutliff, supra, ...
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