Columbia Broadcasting System v. Amana Refrigeration

• Decision Date: 24 November 1959
• Docket Number: No. 12669.,12669.
• Citation: 271 F.2d 257
• Parties: COLUMBIA BROADCASTING SYSTEM, INC., Plaintiff-Appellee, v. AMANA REFRIGERATION, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

271 F.2d 257 (1959)

COLUMBIA BROADCASTING SYSTEM, INC., Plaintiff-Appellee, v. AMANA REFRIGERATION, INC., Defendant-Appellant.

No. 12669.

United States Court of Appeals Seventh Circuit.

October 20, 1959.

Rehearing Denied November 24, 1959.

John P. Ryan, Jr., L. M. McBride, McBride, Baker, Wienke & Schlosser, Chicago, Ill., for Amana Refrigeration, Inc., defendant-appellant.

Hammond E. Chaffetz, Howard Ellis, Thomas M. Thomas, David Parson, Chicago, Ill., for plaintiff-appellee, Kirkland, Ellis, Hodson, Chaffetz & Masters, Chicago, Ill., Cravath, Swaine & Moore, Bruce Bromley, Ralph L. McAfee, Charles G. Moerdler, New York City, Thomas D. Barr, New York City, of counsel.

Before HASTINGS, Chief Judge, and PARKINSON and CASTLE, Circuit Judges.

CASTLE, Circuit Judge.

Columbia Broadcasting System, Inc., plaintiff-appellee (CBS) brought a diversity action against Amana Refrigeration, Inc., (Amana) for $284,545.21 alleged to be due under agreements for the production and broadcasting of a television program by CBS under Amana's sponsorship over certain broadcasting stations affiliated with the CBS television network. Amana's answer contained a counterclaim setting forth three alleged anti-trust law violations by CBS in connection with the transactions upon which the action brought by CBS was predicated. The counterclaim charged that Amana was damaged by alleged action of CBS (1) granting greater discounts to favored advertisers, competitors of Amana, in violation of 15 U.S.C.A. § 13(a), (2) requiring as a condition of the broadcasts that Amana agree to sponsor the program over a specific group of television stations designated by CBS in violation of 15 U.S.C.A. § 1 and § 14, and (3) requiring as a condition of the broadcasts that Amana agree to sponsor a program in which CBS had a financial interest in violation 15 U.S.C.A. § 1 and § 14. Treble damages were sought.

CBS moved to dismiss the first of the three parts of the counterclaim on the ground that 15 U.S.C.A. § 13(a) was inapplicable. It filed a reply to the balance of the counterclaim. The District Court found for CBS on its motion to dismiss and entered an order of dismissal as to the "first cause of action of the counterclaim". Thereafter, Amana applied to the District Court for a certification pursuant to Rule 54(b) of the Federal Rules of Civil Procedure, 28 U.S.C.A., declaring that there is "no just reason for delay" and moving the court to direct the entry of "final judgment". The District Court granted Amana's application for certification over the objection of CBS. Amana filed its notice of appeal from the order of dismissal. CBS filed a motion to dismiss the appeal on the grounds that the order below was not a final order and that the requirement of Rule 54(b) that there be no just reason for delay is not satisfied. The motion to dismiss the appeal was taken with the case.

The District Court's determination does not preclude review by us, Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 76 S.Ct. 895, 100 L.Ed. 1297. Apart from consideration of the question of whether the part of the counterclaim dismissed constituted a "claim for relief" within the meaning of Rule 54(b), it is our opinion that the District Court's determination that there was no just reason for delay was an abuse of discretion.

The question of whether there was a basis for the determination by the District Court that there is no just reason for delaying review of the dismissal of the portion of the counterclaim until after final judgment had been rendered on the claim of CBS and the other parts of Amana's counterclaim must be determined in the light of the traditional, deeply-rooted and wisely sanctioned principle against piecemeal appeals. Rule 54(b) is designed to make an accommodation between that policy and the problems of the timing of review which have arisen under the liberalized joinder of claims, counterclaims, crossclaims and third party claims in one suit permitted by modern procedural rules. In this connection the following observations made in Panichella v. Pennsylvania Railroad Co., 3 Cir., 252 F.2d 452, 455, are pertinent:

"Thus, the procedure contemplated by Rule 54(b) is usually more than a formality. Perhaps it can properly be viewed as mere formality, albeit an essential prerequisite of immediate appeal, in those cases where it is clear that the disposition of a portion of the litigation has been such as would clearly have constituted an appealable final judgment under Section 1291 of Title 28 before the adoption of the Rules of Civil Procedure. But otherwise and ordinarily an application for a 54 (b) order requires the trial judge to exercise considered discretion, weighing the overall policy against piecemeal appeals against whatever exigencies the case at hand may present. Indeed, the draftsmen of this Rule have made explicit their thought that it would serve only to authorize `the exercise of a discretionary power to afford a remedy in the infrequent harsh case * * *.\' 28 U.S.C.A., Federal Rules of Civil Procedure, 118-119 note. It follows that 54(b) orders should not be entered routinely or as a courtesy or accommodation to counsel. The power which this Rule confers upon the trial judge should be used only `in the infrequent harsh case\' as an instrument for the improved administration of justice and the more satisfactory disposition of litigation in the light of the public policy indicated by statute and rule. See 6 Moore, Federal Practice, 1953, 264-65."

Evaluated by the above standard the instant case was clearly not an appropriate one for entering a special order under Rule 54(b). The prosecution of an appeal from the order dismissing the portion of the counterclaim serves to delay the trial of the principal claim and remaining portions of the counterclaim without in any way either simplifying or facilitating the conduct of the future litigation. The instant case presents no hardship or unfairness which would justify discretionary departure from the normal rule as to the time of the appeal.

We conclude that the order entered under Rule 54(b) did not constitute a proper exercise of discretion. It should be vacated so that the order dismissing the portion of the counterclaim may be restored to an interlocutory status which would permit a later appeal if occasion should arise upon final disposition of the cause.

This appeal is dismissed and the cause remanded to the District Court with directions to vacate the order entered under Rule 54(b).

HASTINGS, Chief Judge (dissenting).

In the action below, Amana filed an answer to the complaint of CBS by way of a counterclaim alleging therein three separate causes of action, designated, respectively, as the First, Second and Third "Cause of Action." The First Cause of Action alleges a violation of Section 2(a) of the Robinson-Patman Act, 15 U.S.C.A. § 13(a), predicated on an alleged price discrimination by CBS. The Second and Third Causes of Action allege a violation of both Section 3 of the Clayton Act and Section 1 of the Sherman Act, 15 U.S.C.A. § 14 and § 1, predicated, respectively, on two "tying" practices engaged in by CBS: (1) The "must buy" policy, whereby each sponsor, as a condition of purchasing any television time over the CBS network, must agree to purchase such time over a specified group of television stations and is thereby denied the opportunity of choosing those stations which he deems best suited to his marketing objectives; and (2) the policy of refusing to sell network time to a prospective sponsor unless such sponsor agrees to purchase a program in which CBS has a financial interest instead of an independently-owned program of the sponsor's own choice.

The district court sustained the motion of CBS to dismiss the First Cause of Action of the...