Chrysler Credit Corp. v. J. Truett Payne, Inc.

• Decision Date: 07 December 1979
• Docket Number: No. 77-2331,77-2331
• Citation: 607 F.2d 1133
• Parties: 1980-1 Trade Cases 63,067 CHRYSLER CREDIT CORPORATION, a corporation, Plaintiff, v. J. TRUETT PAYNE, INC., etc., et al., Defendants-Third Party Plaintiffs- Appellees, v. CHRYSLER MOTORS CORPORATION, a corporation, Third Party Defendant-Additional Party Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1133

607 F.2d 1133

1980-1 Trade Cases 63,067

CHRYSLER CREDIT CORPORATION, a corporation, Plaintiff, v. J. TRUETT PAYNE, INC., etc., et al., Defendants-Third Party Plaintiffs- Appellees, v. CHRYSLER MOTORS CORPORATION, a corporation, Third Party

Defendant-Additional Party Defendant-Appellant.

No. 77-2331.

United States Court of Appeals Fifth Circuit.

Dec. 7, 1979.

Rehearing and Rehearing En Banc Denied Jan. 18, 1980.

J. Ross Forman, III, J. Fredric Ingram, Birmingham, Ala., for third party defendant-additional party defendant-appellant.

C. Lee Reeves, Birmingham, Ala., for defendants-third party plaintiffs-appellees.

Appeal from the United States District Court for the Northern District of Alabama.

Before GODBOLD, RONEY and FRANK M. JOHNSON, Jr., Circuit Judges.

FRANK M. JOHNSON, Jr., Circuit Judge:

This is an appeal from a treble damages judgment awarded against Chrysler Motors Corporation for price discrimination in violation of section 2(a) of the Clayton Act, as amended by the Robinson-Patman Act. ¹

From January 1970 through August 1974, the period at issue, Chrysler Motors was a wholly owned subsidiary of Chrysler Corporation, engaged in wholesaling Chrysler-Plymouth automobiles to retail dealerships throughout the country. J. Truett Payne, Inc., was one of four such dealerships in the Birmingham, Alabama, area.

Payne went out of business in May 1974. In September 1974, Chrysler Credit Corporation filed suit for the recovery of certain unrepaid loans. Part of Payne's response was the filing of this price discrimination claim against Chrysler Motors.

Payne alleged that as a result of certain discriminatory sales incentive programs conducted by Chrysler Motors among its dealerships in the Birmingham area, Payne had been forced to pay higher prices for Chrysler automobiles than had its competitors. Payne claimed that because of the higher prices it lost sales and profits, and was eventually forced out of business. Payne sought treble damages under section 4 of the Clayton Act. ²

In defense, Chrysler Motors maintained that the sales incentive programs were available on a non-discriminatory basis to all Chrysler dealerships in the Birmingham area, including Payne, and denied that they had had an adverse effect on competition or that they had injured Payne.

The district judge severed trial of this Chrysler Motors issue from trial of the Chrysler Credit issues. Testimony was taken for six days. Chrysler's motions for a directed verdict made at the close of Payne's case and at the close of all the evidence were denied. The jury reached a verdict and award against Chrysler of $111,247.48 (Payne had asked for $180,000), which the court trebled. Chrysler's motion for judgment notwithstanding the verdict or for a new trial was denied, and Chrysler filed this appeal.

It is well established that in order to recover treble damages under section 4 of the Clayton Act, a plaintiff must prove (1) a violation of the antitrust laws, (2) cognizable injury attributable to the violation, and (3) at least the approximate amount of the damage. Larry R. George Sales Co. v. Cool Attic Corp., 587 F.2d 266, 270 (5th Cir. 1979); Kestenbaum v. Falstaff Brewing Corp., 514 F.2d 690, 694 (5th Cir. 1975), Cert. denied, 424 U.S. 943, 96 S.Ct. 1412, 47 L.Ed.2d 349 (1976); Terrell v. Household Goods Carriers' Bureau, 494 F.2d 16, 20 (5th Cir.), Cert. dismissed, 419 U.S. 987, 95 S.Ct. 246, 42 L.Ed.2d 260 (1974).

We find it unnecessary to consider whether Payne proved that the Chrysler incentive programs violated the Robinson-Patman Act. Because Payne failed to introduce substantial evidence of injury attributable to the programs, much less substantial evidence of the amount of such injury, the district court erred in refusing Chrysler's motions for directed verdict and in denying Chrysler's motion for judgment notwithstanding the verdict.

I. Cognizable Injury

To show that Chrysler's incentive programs caused it to lose sales, Payne introduced the unsupported testimony of J. Truett Payne, its owner, that customers and salesmen had told him that the dealership was being undersold, and that some salesmen had quit as a result. Payne also introduced evidence showing that its share of retail Chrysler-Plymouth sales in the Birmingham area was 24% In 1970, 27% In 1971, 23% In 1972, and 25% In 1973. Payne contends that it was proper to infer that the 4% Drop in 1972 was a result of the incentive program. ³

To show lost profits by reason of the programs, Payne introduced only the unsupported testimony of Mr. Payne that he was forced to lower prices in order to meet competition and that for the same reason the dealership had to, or possibly had to, give greater allowances on used-car trade-ins.

In an effort to show that the programs forced the dealership out of business, Payne relied on merely conclusory statements to that effect by Mr. Payne and an expert witness. ⁴

Under Boeing Co. v. Shipman, 411 F.2d 365, 373-77 (5th Cir. 1969) (en banc) (standard for directed verdict and judgment notwithstanding the verdict), this showing was clearly not such as to allow the case to go to the jury. In an antitrust action, as noted above, the plaintiff must show that the defendant's conduct materially contributed to his injury. Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 114 n.9, 89 S.Ct. 1562, 23 L.Ed.2d 129 (1969). He must do so "as a matter of fact and with a fair degree of certainty." Terrell v. Household Goods Carriers' Bureau, supra,494 F.2d at 20. Conclusory statements by the plaintiff, without evidentiary support, as to the fact of damage caused by the alleged antitrust violation are not sufficient. Evidence of a slight decrease in market share roughly coincident with the alleged violation is not sufficient either. ⁵ The plaintiff must put forth substantial evidence. If he fails to do so, the defendant is entitled to a directed verdict. See, e. g., Comfort-Trane Air Conditioning Co. v. Trane Co., 592 F.2d 1373, 1383 (5th Cir. 1979); Yoder Brothers, Inc. v. California-Florida Plant Corp., 537 F.2d 1347, 1371 (5th Cir. 1976), Cert. denied, 429 U.S. 1094, 97 S.Ct. 1108, 51 L.Ed.2d 540 (1977); Foremost-McKesson v. Instrumentation Laboratory, 527 F.2d 417, 418-20 (5th Cir. 1976); Shumate & Co. v. National Ass'n of Securities Dealers, Inc., 509 F.2d 147, 153 (5th Cir.), Cert. denied, 423 U.S. 868, 96 S.Ct. 131, 46 L.Ed.2d 97 (1975).

Payne maintains on this appeal that in a section 2(a) case mere proof of the alleged price discrimination is sufficient to establish injury by reason of an antitrust violation entitling the plaintiff to damages. This Robinson-Patman "automatic damages" concept, as it has come to be called, has some precedential support. See Fowler Manufacturing Co. v. Gorlick, 415 F.2d 1248 (9th Cir. 1969), Cert. denied, 396 U.S. 1012, 90 S.Ct. 571, 24 L.Ed.2d 503 (1970); Elizabeth Arden Sales Corp. v. Gus Blass Co., 150 F.2d 988, 996 (8th Cir.), Cert. denied, 326 U.S. 773, 66 S.Ct. 231, 90 L.Ed. 467 (1945). But we decline to follow it. As the Supreme Court ruled in Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977), the antitrust laws do not provide a damages remedy for all losses traceable to conduct violating the antitrust laws, only for losses that are part of the anticompetitive effect of such conduct. When a seller charges different prices to different purchasers, as alleged here, injury to competition does not necessarily result. Both the statute and the courts recognize this. 15 U.S.C. § 13(a). See, e. g., United States v. United States Gypsum Co., 438 U.S. 422, 450, 98 S.Ct. 2864, 57 L.Ed.2d 854 (1978). Competition is harmed only to the extent that the favored purchaser, by use of the discriminatory price difference, actually draws sales or profits from his unfavored competitor. See, e. g., Enterprise Industries, Inc. v. Texas Co.,240 F.2d 457 (2d Cir.), Cert. denied, 353 U.S. 965, 77 S.Ct. 1049, 1 L.Ed.2d 914 (1957); Uniroyal, Inc. v. Jetco Auto Service, Inc., 461 F.Supp. 350, 357-59 (S.D.N.Y.1978); McCaskill v. Texaco, Inc., 351 F.Supp. 1332, 1341 (S.D.Ala.1972), Aff'd sub nom. Harrelson v. Texaco, Inc., 486 F.2d 1400 (5th Cir. 1973); Handler, Changing Trends in Antitrust Doctrines, 77 Colum.L.Rev. 979, 992-93 (1977). See also Perkins v. Standard Oil Co., 395 U.S. 642, 648-49, 89 S.Ct. 1871, 23 L.Ed.2d 599 (1969) (implying that disfavored purchaser must show more than mere price difference to recover damages). As discussed above, there is no evidence, much less substantial evidence, that such was the case here.

Payne's reliance on FTC v. Morton Salt Co., 334 U.S. 37, 68 S.Ct. 822, 92 L.Ed. 1196 (1948), and its progeny is misplaced. In Morton Salt, the Supreme Court held that a violation of Robinson-Patman Act § 2(a) may be inferred from a substantial price difference. 334 U.S. at 46-47, 68 S.Ct. 822. But the showing necessary to establish a section 2(a) violation is not the same as the showing necessary to support a private action for damages. The Robinson-PatmanAct is an incipiency statute. ⁶ Price discrimination which threatens competition but which has not caused any actual competitive injury may be held to violate the statute even though it will not support an action for damages. See Areeda, Antitrust Violations Without Damage Recoveries, 89 Harv.L.Rev. 1127, 1127-28 (1976). See also Gottesman v. General Motors Corp., 436 F.2d 1205, 1210 (2d Cir.), Cert. denied, 403 U.S. 911, 91 S.Ct. 2208, 29 L.Ed.2d 689 (1971) (private injury does not necessarily accompany public injury). What Morton Salt found inferable from a substantial price difference was a threat to competition sufficient to violate the statute. 334 U.S. at 46-47, 68 S.Ct. 822. Even assuming that Morton Salt is still viable, it is of no help to Payne. In order to recover damages, Payne had to show more than just a threat of antitrust injury. As discussed above, it failed to do so.

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