Comfort Trane Air Conditioning Co. v. Trane Co.
| Decision Date | 16 April 1979 |
| Docket Number | No. 78-1427,78-1427 |
| Citation | 592 F.2d 1373 |
| Parties | 1979-1 Trade Cases 62,578, 26 UCC Rep.Serv. 581 COMFORT TRANE AIR CONDITIONING COMPANY et al., Plaintiffs-Appellants, v. The TRANE COMPANY et al., Defendants-Appellees. The TRANE COMPANY, Defendant-Third-Party Plaintiff-Cross-Appellant, v. COMFORT TRANE AIR CONDITIONING COMPANY, Comfort Trane Service Company, Inc., Haswell Enterprises, Ltd. and Home Center Corporation, Third-Party Defendants-Cross-Appellees. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Warren O. Wheeler, Atlanta, Ga., for Comfort Trane Air Conditioning Co., Comfort Trane Service Co., Inc. & Haswell Enterprises, Ltd.
Trammell Newton, Trammell E. Vickery, Atlanta, Ga., for The Trane Co. & Peachtree Trane Air Conditioning Co.
Robert D. Feagin, Atlanta, Ga., for Howell Adams & Associates, Inc.
Hansell, Post, Brandon & Dorsey, Herbert P. Schlanger, Atlanta, Ga., for defendants-appellees.
Appeals from the United States District Court for the Northern District of Georgia.
Before GOLDBERG, SIMPSON and CLARK, Circuit Judges.
The district court below directed a verdict against plaintiffs on their § 1 Sherman Act antitrust claim and directed a verdict against defendant The Trane Company on its counterclaim for a deficiency judgment. Previously it had granted partial summary judgment against plaintiffs on their several state law tort claims.
Three major issues are raised on this appeal. First, as to the antitrust claim, the question is whether plaintiffs adduced substantial evidence in opposition to the directed verdict motion from which reasonable and fair-minded jurors might have concluded that in retaliation for plaintiffs' refusal to fix prices, divide the market geographically, and limit competition, defendants conspired to terminate plaintiffs' businesses by: (a) causing a bank to set off against plaintiffs' checking account; (b) attempting to have plaintiffs' landlord padlock their business premises; (c) trying to hire plaintiffs' employees; and (d) foreclosing on a security interest while a competitor enjoyed different credit terms. Second, as to the counterclaim, the issue is whether the district court properly directed a verdict against defendant The Trane Company on its counterclaim even though it improperly found that the question of commercial reasonableness of Trane's liquidation sale was one of law for the court, and not a question of fact for the jury. Finally, as to plaintiffs' state law tort claims, we must determine whether plaintiffs satisfied the burden imposed upon them by Fed.R.Civ.P. 56(e).
Plaintiffs in this action are three business enterprises owned and controlled by Michael William Haswell. Comfort Trane Air Conditioning Company and Comfort Trane Service Company, Incorporated are wholly owned subsidiaries of Haswell Enterprises, Limited. In turn, Michael Haswell owns all the outstanding shares of Haswell Enterprises, Limited. In this opinion, these plaintiffs will be referred to collectively as "Comfort" or "Haswell" unless the context indicates otherwise.
Defendant The Trane Company ("Trane") is a national manufacturer of air conditioning equipment. During the relevant time period, 1971 through 1974, Trane operated through and was organized into several divisions. The Consumer Products Division ("CPD") is one such division.
These divisions have a national distribution network consisting of sales agents and independent dealer-franchisees. Sales agents consult with and assist dealers, earning commissions on sale of Trane equipment. Defendant, Howell Adams and Associates, Incorporated, is a Trane sales agent with the responsibility for virtually the entire state of Georgia. Defendant Peachtree Trane Air Conditioning Company ("Peachtree") is now an independent Trane dealer, also referred to as a Trane Comfort Corps dealer. 1 For most of the relevant time period, however, it was a wholly owned subsidiary of Trane. Comfort was also a member of the Trane Comfort Corps. Both Peachtree and Comfort sold, installed, and serviced air conditioning systems.
Plaintiffs instituted this action on October 10, 1974. Several causes of action were alleged: violations of the Sherman and Robinson-Patman Acts as well as numerous state law tort claims. Plaintiffs sought damages for an alleged conspiracy among the defendants to restrain plaintiffs' marketing of air conditioning equipment and services, and to terminate plaintiffs' businesses, for anticompetitive motives, through a foreclosure action. Defendant Trane counterclaimed for the debt allegedly owed by Comfort under the terms of a security agreement in default. 2
In response to defendants' motions for summary judgment, the district court entered an order granting partial summary judgment. The court denied defendants' summary judgment motions with respect to plaintiffs' § 1 Sherman Act claim, but granted summary judgment against plaintiffs on their claims under section 2 of the Sherman Act, the Robinson-Patman Act and state tort law. Plaintiffs appeal the summary judgment entered on the state law tort claim.
Shortly before trial defendants moved to strike certain components of plaintiffs' damage claim. 3 Plaintiffs appeal the district court's granting of defendants' motion. Following a two weeks' trial before a jury, the court directed a verdict against plaintiffs on their § 1 Sherman Act claim, after both sides rested. Because we find the district court correctly directed a verdict against plaintiffs on the antitrust liability issue, 4 we need not and do not address the granting of the defendant's pre-trial motion, nor do we express any opinion as to the merits of plaintiffs' contentions. Further, we need not consider defendants' argument that plaintiffs failed to introduce sufficient evidence from which a jury could have determined the extent of damages which plaintiffs allegedly suffered.
On October 20, 1977, the court directed a verdict against plaintiffs on their Sherman Act claim and against defendant Trane on its counterclaim for the deficiency remaining after foreclosure and liquidation. Cross appeals have been timely filed from these directed verdicts.
Inasmuch as we review the district court's directed verdicts under the teachings of Boeing Co. v. Shipman, 411 F.2d 365, 374-76 (5th Cir. 1969) (en banc), the evidence produced at trial must be scrutinized closely. We do so below in light of the parties' respective contentions on appeal.
Plaintiffs maintain that the evidence adduced was sufficient to raise a reasonable inference that plaintiffs' businesses were impaired and then terminated: (a) to retaliate against plaintiffs for excessive competition; (b) to convey a message to other Trane dealers; and (c) to protect Trane's then subsidiary, Peachtree. Defendants maintain that the district court properly directed a verdict against plaintiffs because there was no substantial evidence showing that anticompetitive considerations materially contributed to plaintiffs' business failures and because defendants produced overwhelming evidence that whatever decisions any of them made were prompted solely by legitimate business considerations.
As to defendants' alleged anticompetitive motive, plaintiffs argue that defendant successfully sought to terminate Comfort's businesses because Comfort: (1) refused to engage in a price-fixing scheme; (2) refused to divide the Atlanta market geographically and participate in a common telephone solicitation plan; and (3) continued to engage in excessive competition in both the residential add-on and commercial air conditioning markets. 5
It is undisputed that a meeting occurred in March 1973 at Peachtree. This meeting was called by McCready, then CPD manager for Howell Adams & Associates. Franke, then President of Peachtree and now its owner, testified that the purpose of this meeting was to "go over" price sheet formats McCready received from Trane's California operations. These price sheets were to be used "to recreate a consistence in the salesmen offering to the customer the same list of goods and services." Record, Vol. 14, at 33. Franke further testified that only a format for prices, and not specific prices, was discussed. The parties did agree to formulate prices and furnish them to McCready. Franke gave McCready a written list of prices the day after the meeting, but never received nor saw a Comfort price list until the trial of this case.
Haswell testified that, at McCready's suggestion, the parties discussed and agreed upon specific prices to be used by both companies. Rutherford, formerly residential add-on sales manager for Peachtree, testified on deposition that this meeting involved specific discussions to eliminate price competition. In Rutherford's words, Rutherford Deposition, at 21. Rutherford thought that an agreement had been reached insuring uniform prices for add-on units. All of Rutherford's testimony is suspect since he was fired by Franke. Furthermore, Haswell contradicted Rutherford's testimony: Rutherford claims he attended this meeting, whereas Haswell recalled Rutherford being present for only five or ten minutes.
Without dispute, no officer or employee of Trane was present at this meeting.
In the Spring of 1973, Roth, Vice-President of Trane's CPD, visited Haswell. According to Haswell, Roth "suggested" that Peachtree and Comfort coordinate efforts so they "would not bump heads." More specifically, Haswell testified that Roth suggested coordination of telephone solicitation and a geographical split of the Atlanta market in which Peachtree and Comfort...
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