Carlson Mach. Tools, Inc. v. American Tool, Inc.

• Decision Date: 23 June 1982
• Docket Number: No. 81-2462,81-2462
• Citation: 678 F.2d 1253
• Parties: 1982-2 Trade Cases 64,806 CARLSON MACHINE TOOLS, INC., Plaintiff-Appellant, v. AMERICAN TOOL, INC., Subsidiary of Fischer Industries, Inc., Fischer Industries, Inc. and John D. Hendrick, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1253

678 F.2d 1253

1982-2 Trade Cases 64,806

CARLSON MACHINE TOOLS, INC., Plaintiff-Appellant, v. AMERICAN TOOL, INC., Subsidiary of Fischer Industries, Inc. Fischer Industries, Inc. and John D. Hendrick Defendants-Appellees.

No. 81-2462.

United States Court of Appeals Fifth Circuit.

June 23, 1982.

Schleider, Ewing & Francis, Ben H. Schleider, Jr., Paul S. Francis, Houston, Tex., for plaintiff-appellant.

William A. Huddleson, Cincinnati, Ohio, Lapin, Totz & Mayer, Larry Huelbig, Houston, Tex., for defendants-appellees.

Appeal from the United States District Court for the Southern District of Texas.

Before BROWN, RANDALL and TATE, Circuit Judges.

TATE, Circuit Judge:

Carlson Machine Tools, Inc. ("Carlson"), a distributor of machine tool lathes, sued American Tool, Inc. ("American"), a manufacturer of machine tool lathes, claiming that American violated the antitrust laws through a boycott, resale price maintenance, and unreasonable territorial distribution restrictions. Carlson also claimed that American breached its distribution contract and various purchase agreements with Carlson, and that an American corporate officer tortiously interfered with Carlson's business relationships. The district court, 523 F.Supp. 1349, granted summary judgment in favor of American on all counts. Carlson appeals, contending that it raised material issues of fact on each claim, and that the trial court erred in granting summary judgment. We agree with Carlson that the trial court erred in granting summary judgment on Carlson's claim concerning breach of the distributorship agreement and breach of one purchase agreement. However, we affirm the summary judgment on all remaining counts.

I. Facts

This case involves an appeal by Carlson from a grant of summary judgment in favor of American. Facts asserted by Carlson " 'if supported by affidavits or other evidentiary material, are regarded as true.' " Coke v. General Adjustment Bureau, Inc., 640 F.2d 584, 595 (5th Cir. 1981) (quoting Wright & Miller, Federal Practice and Procedure: Civil § 2727 at 530 (1973)).

American manufactures machine tool lathes, and under the distribution system used during the time relevant to this appeal, marketed its lathes through independent distributors who received exclusive territories to sell American lathes. American furnished suggested retail price lists to its distributors, who quoted specifications and prices to customers. After a purchase order was placed with the distributor, and approved by American, American invoiced the distributor who resold the lathes to the customer.

Carlson began as an American distributor in 1962. Its exclusive territory consisted of south Texas, exclusive of Travis and Williamson counties. Carlson requested American to include Travis and Williamson counties in its territory, but American refused, citing Carlson's lack of sales personnel to serve the area for which it was responsible.

In 1979, American and Carlson entered into a new distributorship agreement, which had a duration of one year and was thereafter automatically renewable from year to year. Either party could terminate the agreement during its first year for "just cause" on thirty days' prior written notice (no cause was required for termination thereafter), and American had the right to act as "sole judge" in determining if Carlson's performance warranted continued affiliation. American claims that it entered into an identical agreement (save for differences in territory) with all of its distributors "as part of an effort to update existing contracts." American br. at 3. Carlson's new contract was sent to Carlson in April 1979 and was dated April 15, 1979. Carlson did not sign and return the contract to American until mid-May 1979.

American notified Carlson by a letter dated June 1, 1979, that Carlson's distributorship was terminated as of that date, and Carlson argues that American did not provide Carlson with the required thirty-days' notice. ¹ American claimed that it terminated Carlson for breaching its distributorship agreement in that: (1) Carlson refused to maintain enough sales personnel to serve its area; (2) a Carlson salesman abused a potential customer by leaving a sales meeting; (3) Carlson canceled a stocking order for American "Eagle" lathes; and (4) Carlson maintained a poor sales record in relation to the industry sales averages in the Texas market.

American replaced Carlson with Selby-Horan, a competitor of Carlson's whose supplying manufacturer decided to enter the south Texas market directly. According to Carlson, American's negotiations with Selby-Horan commenced about the same time that American was encouraging Carlson to sign the new distributorship agreement that American sent to it in April 1979.

Carlson claimed that the reasons given by American for its cancellation were pretextual, and it brought suit against American claiming damages caused by American's alleged violation of federal antitrust laws, ² breach of contract with Carlson, and tortious interference with Carlson's business relationships. After extensive discovery, American moved for summary judgment on all counts, and the district court granted the motion. ³

II. Issues

On appeal, Carlson argues that the trial court erred in finding that no genuine fact issues existed with respect to Carlson's claims that: (1) American and Selby-Horan engaged in an illegal boycott of Carlson; (2) American engaged in resale price maintenance; (3) American engaged in unreasonable market division through its distribution system; (4) American breached its agreement by termination with Carlson in bad faith and with fraud; (5) American breached its purchase agreement with Carlson concerning its sale to Carlson of American "Eagle" lathes; and (6) an American employee had tortiously interfered with Carlson's business relationships by terminating Carlson for personal reasons. Carlson also urges that a different standard for determining the propriety of summary judgment is applicable in antitrust cases. We will consider each of these contentions in turn.

III. Prelude: An Antitrust Summary Judgment Standard?

In addition to its specific arguments concerning why summary judgment was inappropriate to resolve its various claims, Carlson contends that as a general matter, summary judgment is "not appropriate where motive and intent" questions are involved. Carlson br. at 21. Carlson relies on White Motor Company v. United States, 372 U.S. 253, 259, 83 S.Ct. 696, 700, 9 L.Ed.2d 738 (1963) and Poller v. Columbia Broadcasting System, 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962).

Although White and Poller certainly do warn against the use of summary judgment where motive and intent issues are involved, this should not be understood as holding antitrust cases to be inherently incapable of resolution by summary judgment. In First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968), the Supreme Court explicitly declined to eliminate summary judgment in antitrust cases:

To the extent that petitioner's burden-of-proof argument can be interpreted to suggest that Rule 56(e) should, in effect, be read out of antitrust cases and permit plaintiffs to get to a jury on the basis of allegations in their complaints, coupled with the hope that something can be developed at trial in the way of evidence to support those allegations, we decline to accept it.

391 U.S. at 289-90, 88 S.Ct. at 1593.

In a recent examination of the use of summary judgment in antitrust cases, we stated that Fed.R.Civ.P. 56 is not suspended just because a case is based on the antitrust laws:

The reason summary judgments may seem less common in antitrust cases is because such cases are ripe with issues of motive, intent and credibility which often must be inferred from the total circumstances. Antitrust cases are not necessarily ill-suited for summary procedures; those antitrust cases and any other types of cases which raise genuine issues of motive, intent and credibility, however, are suited for a full hearing.

Aladdin Oil Company v. Texaco, Inc., 603 F.2d 1107, 1111 (5th Cir. 1979). We recently affirmed this rule: "In an antitrust case .... summary judgment is still appropriate where the plaintiff does not produce 'significant probative evidence demonstrating that a genuine issue of (material) fact exists.' " Joe Regueira, Inc. v. American Distilling Company, Inc., 642 F.2d 826, 829 (5th Cir. 1981) (quoting Pan-Islamic Trade Corporation v. Exxon Corporation, 632 F.2d 539, 554 (5th Cir. 1980), cert. denied, --- U.S. ----, 102 S.Ct. 427, 70 L.Ed.2d 236 (1981)).

In antitrust cases, as well as others, the party that moves for summary judgment has the burden of proof to show that no material issue of fact exists, with all doubts about such existence resolved against the moving party. Kennett-Murray Corp. v. Bone, 622 F.2d 887, 892 (5th Cir. 1980). The party opposing summary judgment "must meet the movant's affidavits with opposing affidavits setting forth specific facts to show why there is an issue for trial, or at the very least stating reasons why he cannot do so." Gossett v. Du-Ra-Kel Corporation, 569 F.2d 869, 872 (5th Cir. 1978). See also Regueira, supra, 642 F.2d at 829.

IV. The Antitrust Issues

A. Substitution of Distributors: A Vertical Boycott?

Carlson's first contention is that the district court erred in granting summary judgment in favor of American on Carlson's claim that American and Selby-Horan combined and conspired to eliminate Carlson from the sale of machine tool lathes in the south Texas market. Carlson's argument, as we understand it, is that a jury could infer the existence of a vertical boycott (a boycott arranged between a manufacturer and a distributor aimed at injuring a third party) on the basis of negotiations between American and Selby-Horan that transpired prior to Carlson's termination. Prior negotiations, according to...