Cornwell Quality Tools Co. v. CTS COMPANY
| Decision Date | 31 August 1971 |
| Docket Number | 24969.,No. 24914,24914 |
| Citation | 446 F.2d 825 |
| Parties | CORNWELL QUALITY TOOLS CO., Plaintiff-Appellant, v. C. T. S. COMPANY, Inc., Defendant-Appellee. CORNWELL QUALITY TOOLS CO., Plaintiff-Appellee, v. C. T. S. COMPANY, Inc., Defendant-Appellant. |
| Court | U.S. Court of Appeals — Ninth Circuit |
COPYRIGHT MATERIAL OMITTED
Les J. Weinstein (argued), Aaron M. Peck, Brian R. Silver, of McKenna & Fitting, Los Angeles, Cal., Milton Davis, Beverly Hills, Cal., for C.T.S. Co., Inc.
John M. Glenn (argued), Richard A. Chenoweth, of Buckingham, Doolittle & Burroughs, Akron, Ohio, Dean C. Dunlavey, of Gibson, Dunn & Crutcher, Los Angeles, Cal., for Cornwell Quality Tools.
Before MERRILL, ELY and HUFSTEDLER, Circuit Judges.
Rehearing and Rehearing In Banc Denied August 31, 1971.
Cornwell Quality Tools Co. ("Cornwell") and C.T.S. Company, Inc. ("CTS") filed cross-appeals from the adverse portions of the district court's judgment entered after each party had moved successfully against the other for directed verdicts.
The case breaks into four parts: (1) Cornwell's claim against CTS to recover the purchase price of merchandise it sold to CTS, its former distributor, and CTS's set-off and counterclaim against Cornwell charging breach of a claimed oral contract to repurchase the inventory upon termination of CTS's distributorship; (2) CTS's counterclaims against Cornwell for treble damages based on alleged violations of the federal antitrust laws; (3) Cornwell's counterclaim against CTS charging a violation of the federal antitrust laws; and (4) Cornwell's contention that the district court erred in taxing costs.
Cornwell, an Ohio manufacturer of mechanics' hand tools, entered an agreement with CTS in 1956 whereby CTS became Cornwell's sole distributor in California and Nevada. CTS entered contracts with dealers to whom were assigned specified territories. The dealers, sometimes called "wagon men," made sales from trucks to the ultimate consumers, usually mechanics. That mode of distribution was used by three manufacturers operating in California and Nevada: Cornwell, Snap-On Tools Corporation of Kenosha, Wisconsin ("Snap-On"), and Mac Tools Corporation of Sabina, Ohio ("Mac").
In 1964, differences arose between CTS and Cornwell, the responsibility for which was hotly contested. According to Cornwell, the relationship deteriorated because CTS made a distribution deal with its competitor Mac, intending to obtain all of Mac's and Cornwell's dealers and to restrict competition in Nevada and California to itself and Snap-On. CTS entered a course of conduct whereby Cornwell would lose its distribution system in CTS's territory unless Cornwell acquiesced in CTS's selling both Cornwell's tools and Mac's. Cornwell refused to yield and, instead, set up its own warehouse in California and began selling directly to dealers. CTS's version is very different. CTS claims that Cornwell had decided in 1963 to eliminate distributors and to undertake direct sales to dealers. Cornwell pursued its plan to squeeze out CTS. To protect itself from Cornwell's machinations, CTS made the agreement with Mac to have at least one line to sell.
In July 1964, CTS took on the Mac line. Cornwell immediately terminated CTS's distributorship, and shortly thereafter Cornwell opened its branch in California. After CTS switched allegiance and before Cornwell filed suit, both parties vigorously sought to secure the dealers and customers of the other. The antitrust claims stem from the contentions of each that the other's efforts exceeded the bounds of lawful competition.
Cornwell started the litigation by filing a complaint to recover $12,110.72, the unpaid balance of the account for merchandise sold to CTS. The action expanded with the cross-filing of counterclaims. After more than four years of discovery and pretrial proceedings, the cause came to trial before a jury.
CTS stipulated to the amount of Cornwell's claim for the price of merchandise, but it contended that it was entitled to $22,361.29 damages for Cornwell's breach of an alleged oral contract to repurchase the inventory in the event of termination of the distributorship. Cornwell admitted that it did not repurchase CTS's inventory when the distributorship was terminated, but it contended that there had been no agreement to repurchase it.
The contract issues were tried first, excluding the damages issue. Evidence adduced on both sides indicated that the parties had entered an oral agreement that Cornwell would repurchase the inventory upon termination, but there were conflicting versions of the terms of the agreement. Cornwell's motion for a directed verdict was based on the grounds that no oral agreement was enforceable because: (1) California's Commercial Code § 2201 requires that a contract for the sale of goods for the price of $500 or more cannot be enforced unless there is a writing complying with the statute, and (2) California's Commercial Code § 2202 excluded proof of the oral agreement because it contradicted the terms of written purchase orders for the tools. The district court did not direct the verdict on either of those grounds. The court decided to take the contract issues from the jury when, shortly before the jury was to be instructed, the court learned that one of the jurors was sick, and Cornwell refused to stipulate to have the questions resolved by eleven jurors. The court explained that it was directing the verdict because it appeared to be the most expeditious way to bring the entire case before the Court of Appeals.
Cornwell recognizes that the direction of the verdict on the contract issues cannot be upheld unless we can say, as a matter of law, that recovery on the claimed oral contract was foreclosed by the statute of frauds or by the parol evidence rule. The statements of those rules in the Commercial Code are irrelevant because the transactions occurred before the Commercial Code became effective, and the Code does not have retrospective application. (Cal.Com.Code § 10101.)
The parol evidence rule did not foreclose proof of the oral agreement because there was no evidence that the written purchase orders were intended to be final embodiments of the parties' agreements. The rule is inapplicable to unintegrated writings. (Royal Industries v. St. Regis Paper Co. (9th Cir. 1969) 420 F.2d 449; Masterson v. Sine (1968) 68 Cal.2d 222, 65 Cal.Rptr. 545, 436 P.2d 561.)
The statute of frauds did not, as a matter of law, bar enforcement of the oral agreement. The evidence is susceptible to the interpretation that part performance of the oral agreement took the agreement out of the statute. (Cal.Civ. Code § 1724; Monarco v. LoGreco (1950) 35 Cal.2d 621, 220 P.2d 737.)
After the contract issues had been presented, CTS commenced trial of its antitrust counterclaims in accordance with the order of proof adopted in pretrial proceedings. After a week of trial on CTS's counterclaims, the district court halted further proof, and, over the objections of both parties, ordered CTS to suspend its case and directed Cornwell to begin its case-in-chief on its antitrust claims against CTS. Following the conclusion of Cornwell's testimony, the court directed the parties to finish their respective cases on offers of proof. Both parties made written and oral offers of proof. CTS never rested its antitrust case, and rebuttal was not made by either party. At the conclusion of the respective offers of proof, following argument, the court directed verdicts against both parties.
The offers of proof are lengthy. They are a curious compound of documents, depositions, narrations, legal argument, and conclusions. We do not view these offers hypertechnically, however, because we recognize that much of their disorderliness is attributable to the unusual procedural directions that caused them to be produced.
We turn to CTS's antitrust claims against Cornwell.
CTS made five separable antitrust claims against Cornwell, alleging that Cornwell had violated: (1) section 2(a) of the Robinson-Patman Act (15 U.S.C. § 13(a)) by offering discounts in California and Nevada in an attempt to drive CTS out of business; (2) section 2(c) of the Robinson-Patman Act (15 U.S.C. § 13(c)) by paying unearned commissions to dealers in California and Nevada; (3) section 3 of the Clayton Act (15 U.S.C. § 14) and section 1 of the Sherman Act (15 U.S.C. § 1) by forcing its dealers to enter into exclusive dealing contracts; (4) section 1 of the Sherman Act by terminating CTS for refusing to enter into an illegal exclusive dealing arrangement with it; (5) section 2 of the Sherman Act (15 U.S.C. § 2) by attempting to monopolize the sale of tools to mechanics in the California and Nevada area.
CTS's threshold problem in proving a prima facie case for any of its antitrust claims was proof of a well-defined relevant market upon which the challenged anticompetitive actions would have had a substantial impact.
Cornwell argues vigorously that CTS's evidence and its offers of proof were inadequate to sustain CTS's prima facie burden on this issue. But it argues almost as vigorously the opposite side of the same issue when it seeks to overturn the directed verdict against it on its own antitrust claim against CTS. We conclude that there was enough evidence presented and promised by both sides on the issue to foreclose the direction of the verdict on the relevant market score.
There was evidence adduced and offered that professional quality hand tools and related equipment sold by mobile dealers (wagon men) to ultimate consumers constitute a separate product market or line of commerce under the Sherman, Clayton, and Robinson-Patman Acts, that such hand tools are so distinctive that they cannot be compared with other hand tools, and that there are only three manufacturers which market professional quality hand tools in California and Nevada through mobile...
To continue reading
Request your trial
-
American Motor Inns, Inc. v. Holiday Inns, Inc.
...Tidewater Oil Co., 327 F.2d 459 (9th Cir.), Cert. denied 377 U.S. 993, 84 S.Ct. 1920, 12 L.Ed.2d 1046 (1964); Cornwell Quality Tools Co. v. C.T.S. Co., 446 F.2d 825 (9th Cir. 1971), Cert. denied 404 U.S. 1049, 92 S.Ct. 715, 30 L.Ed.2d 740 (1972).79 See United States v. Phillipsburg National......
-
Greyhound Computer Corp., Inc. v. International Business Machines Corp.
...1137, 1140 (9th Cir. 1974); Hallmark Industry v. Reynolds Metals Co., 489 F.2d 8, 13 (9th Cir. 1973); Cornwell Quality Tools Co. v. C. T. S. Co., 446 F.2d 825, 830 (9th Cir. 1971); Juhnke v. EIG Corp., 444 F.2d 1323, 1325 (9th Cir. 1971); Case-Swayne Co. v. Sunkist Growers, Inc., 369 F.2d 4......
-
Consol. Gas Co. of Fla. v. City Gas Co. of Fla.
...F.2d 954, 962 (5th Cir.1978), vacated by stipulation of the parties, 591 F.2d 1206 (5th Cir.1979) (quoting Cornwell Quality Tools Co. v. C.T.S. Co., 446 F.2d 825 (9th Cir.1971), cert denied, 404 U.S. 1049, 92 S.Ct. 715 & 716, 30 L.Ed.2d 740 (1972)) (additional citations omitted); see also L......
-
A. H. Cox & Co. v. Star Machinery Co.
...the courts have sometimes also required a showing of dangerous probability of monopolization, see e. g., Cornwell Quality Tools Co. v. C.T.S. Co., 446 F.2d 825, 832 (9th Cir. 1971), cert. denied, 404 U.S. 1049, 92 S.Ct. 715, 30 L.Ed.2d 740 (1972), that requirement, as demonstrated, infra, w......
-
The Treatment of Specific Licensing Issues
...“may well offend the limitations which the Clayton Act places on exclusive contracts”); Cornwell Quality Tools Co. v. C.T.S. Co., 446 F.2d 825, 831 (9th Cir. 1971) (10 to 15% foreclosure “cannot compel a finding of substantiality,” but is sufficient to present a jury issue). 163. See, e.g.,......
-
Table of Cases
...Co., 210 U.S. 405 (1908), 73 Continental T.V. v. GTE Sylvania Inc., 433 U.S. 36 (1977), 8, 11 Cornwell Quality Tools Co. v. C.T.S. Co., 446 F.2d 825 (9th Cir. 1971), 106 County Materials Corp. v. Allan Block Corp., 502 F.3d 730 (7th Cir. 2007), 105 Crucible, Inc. v. Stora Kopparbergs Bergsl......
-
Chapter 22 - § 22.2 TAXED COSTS
...own costs. Barber v. T.D. Williamson, Inc., 254 F.3d 1223, 1235 (10th Cir. 2001) (citing cases); Cornwell Quality Tools Co. v. C.T.S. Co., 446 F.2d 825, 833 (9th Cir. 1971). ➢ Procedure. The federal rules do not provide a specific procedure for the taxation of costs. Under the Local Rules f......
-
Chapter 22 - § 22.2 • TAXED COSTS
...own costs. Barber v. T.D. Williamson, Inc., 254 F.3d 1223, 1235 (10th Cir. 2001) (citing cases); Cornwell Quality Tools Co. v. C.T.S. Co., 446 F.2d 825, 833 (9th Cir. 1971). ➢ Procedure. The federal rules do not provide a specific procedure for the taxation of costs. Under the Local Rules f......