Crawford Transport Company v. Chrysler Corporation

• Decision Date: 17 October 1964
• Docket Number: No. 15307.,15307.
• Citation: 338 F.2d 934
• Parties: CRAWFORD TRANSPORT COMPANY, Incorporated, Plaintiff-Appellant, v. CHRYSLER CORPORATION and Commercial Carriers, Incorporated, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

338 F.2d 934 (1964)

CRAWFORD TRANSPORT COMPANY, Incorporated, Plaintiff-Appellant, v. CHRYSLER CORPORATION and Commercial Carriers, Incorporated, Defendants-Appellees.

No. 15307.

United States Court of Appeals Sixth Circuit.

October 17, 1964.

C. Gibson Downing, Lexington, Ky. (John W. McKenzie, Ashland, Ky., James Park Sr., Lexington, Ky., on the brief; Stoll, Keenon & Park, Lexington, Ky., of counsel), for appellant.

Frederick T. Shea, New York City (Caldwell & Robinson, Ashland, Ky., Kelley, Drye, Newhall, Maginnes & Warren, New York City, on the brief; Keith A. Jenkins, Detroit, Mich., of counsel), for Chrysler Corp.

Ralph C. Menapace, Jr., New York City (J. Woodford Howard, Prestonsburg, Ky., on the brief; Cahill, Gordon, Reindel & Ohl, Corydon B. Dunham, Jr., New York City, of counsel), for Commercial Carriers.

Before WEICK, Chief Judge, CECIL, Circuit Judge, and PECK, District Judge.

CECIL, Circuit Judge.

This appeal involves an alleged violation of Sections 1 and 2 of the Sherman Act. (Sections 1 and 2, Title 15 U.S.C.) The case was tried to the court without a jury. After the plaintiff had completed the presentation of its evidence, the trial judge sustained the defendants' motion, made in accordance with Rule 41(b) of Federal Rules of Civil Procedure, to dismiss the action. The trial judge gave an oral opinion, made findings of fact and conclusions of law in writing 235 F.Supp. 751, and entered judgment for the defendants.

There is no material dispute over the basic facts upon which the litigation is predicated. The plaintiff-appellant, Crawford Transport Company, Incorporated, hereinafter called Crawford, is a corporation organized under the laws of West Virginia with its principal place of business in Ashland, Kentucky. It is a common carrier, by motor vehicle, certificated by the Interstate Commerce Commission, with rights, among others, to transport in interstate commerce new automobiles, and related products in initial movements from points in and near Detroit, Michigan, to points in Ohio, Kentucky, West Virginia and North Carolina. Prior to October, 1958, its principal business was the transportation of Chrysler motor vehicles. Chrysler Corporation, hereinafter called Chrysler, one of the defendants-appellees, and a manufacturer of motor vehicles, is incorporated under the laws of Delaware and has its principal place of business at Detroit, Michigan. Commercial Carriers, Inc., hereinafter called Commercial, the other defendant-appellees, is a corporation organized under the laws of Delaware, with its principal place of business at Romulus, Michigan.

At the time of the commencement of this action and for many years prior thereto Chrysler marketed its products through a system of Direct Dealers, with each of whom it entered into a Direct Dealer Agreement. The agreement¹ between Chrysler and its dealers, in effect in 1952 and thereafter, gave Chrysler the sole power to determine the means and manner of delivering vehicles purchased by the dealer, to prepay the freight and to bill the dealer for a transportation charge in addition to the sale price of the vehicle. Prior to November, 1954, Chrysler sold its vehicles to its dealers f. o. b. at the point of manufacture or assembly. The dealers then paid all shipping costs direct to the carriers on billing from them. During this time the carriers competed for business by soliciting both the dealers and the manufacturers.

In November, 1954, Chrysler changed its policy and began to sell its vehicles to its dealers on a "freight prepaid" basis. Under this system the carriers billed the freight costs to Chrysler and received payment from it. Chrysler then billed the dealer for the price of the vehicle plus the cost of transportation. Chrysler chose or approved the carriers and selected the method of transportation.

In February, 1956, Chrysler again changed its policy and began billing its dealers a "destination charge" for the delivery of its vehicles. This charge varied from area to area and for different model vehicles. In fixing this charge Chrysler took into consideration its transportation costs as well as comparable charges made by Ford and General Motors.

Chrysler organized Chrysler Motors Corporation, referred to herein as Motors, in September, 1956. This was a wholly-owned sales subsidiary incorporated under Delaware law. In November, 1956, Chrysler entered into an agreement with Motors by which it assigned to Motors all its direct sales agreements with dealers throughout the United States and agreed to sell to Motors' dealers all vehicles manufactured and assembled by Chrysler for domestic retail sale. Chrysler retained the right to prepay freight and to choose the means of transportation and the carrier to be used on all vehicles sold to Motors and shipped to its dealers. (We attach no significance to the organization of Motors, so far as this action is concerned. It took no independent action in any of the transactions which give rise to Crawford's complaint.)

In 1955, Howard J. Connelly, Director of Traffic for Chrysler, began a study of Chrysler's transportation practices with a view to adopting a more efficient and economical system of distribution of the Company's products. This study ultimately led to the adoption of the plan which is the subject of this litigation. The plan as adopted on January 9, 1957, provided for the reduction from approximately eighty to sixteen carriers whose services Chrysler would retain. The retained carriers were to be selected on the basis of past performance, growth potential, financial stability, freedom from competitive alliances and adequacy of certificate rights. The major advantage claimed by Chrysler for the plan was insuring "* * * the timely, economical delivery of the vehicular products of this corporation to the dealer and customer through the efficient employment of transportation facilities."

On May 17, 1957, Chrysler held a meeting in Detroit attended by representatives of all the carriers then transporting Chrysler vehicles from Detroit. The new plan was announced at this meeting and the changes in traffic policy were explained in detail. The representatives were advised as to the five criteria upon which each carrier would be evaluated to determine whether it would be selected as a retained carrier. It was also announced at this meeting that individual discussions would be held with representatives of each carrier at which time each carrier would be advised whether it would be a retained carrier for the shipment of 1958 model automobiles in September, 1957.

Crawford was notified about June 20, 1957, that Chrysler would not tender traffic to it commencing with the shipment of 1958 model vehicles. Approximately fifty other carriers were so notified between May 17th and July 17, 1957. Chrysler notified Commercial about June 27, 1957, that it would be a retained carrier. Chrysler gave similar notices to approximately fifteen other carriers.

Subsequently Crawford, Dixie Transport Company, Inc. and several other non-retained common carriers with Interstate Commerce Commission rights into the southeastern part of the United States formed a new corporation under the name of Southern Transport, Inc., referred to herein as Southern, to which Chrysler agreed to tender traffic. In the summer of 1957, consummating negotiations dating back to 1954, Commercial acquired all of the stock of Auto Express, Inc., a small (nonretained) carrier which held direct line operating rights from Detroit, Michigan, to the State of Florida.

Chrysler held a meeting in Detroit, Michigan, on July 17, 1957, with the representatives of all the retained carriers to announce its traffic policies for the 1958 model vehicle shipments. Mr. Sam Crawford, Vice President of Crawford, attended the meeting as a representative of the proposed Southern. At this meeting Chrysler announced that it would no longer honor dealer requests as to carrier selection and that retained carriers would be expected to solicit Chrysler business from Chrysler. It distributed maps of the country showing the areas into which Chrysler planned to tender traffic to particular carriers, including Southern, based on each carrier's destination territories as fixed by the Interstate Commerce Commission. It was also announced that Chrysler would, from time to time, make such changes in its traffic policies as it might deem appropriate. During this meeting, Chrysler expressed the hope and expectation that the retained carriers would not increase their rates, would use Dodge trucks and would not enter into interchange agreements with non-retained carriers without Chrysler's written approval. It was suggested by Chrysler that the retained carriers had an obligation to review the facilities of the non-retained carriers, meet with their executives and where applicable reach agreement as to possible absorption, merger, consolidation or purchase of equipment. The retained carriers were urged to conduct such negotiations on a fair and equitable basis.

At the July 17th meeting, Commercial was notified that Chrysler intended to tender to it all of the traffic for the state of Kentucky. In 1957 and prior years, Crawford had been given a portion of the traffic to Eastern Kentucky, and Commercial had been given the traffic to Western Kentucky. The organization of Southern was completed in August, 1957, and Chrysler thereupon tendered to it traffic for the shipment of 1958 model vehicles to destination points in the states of Florida, Georgia, North Carolina and South Carolina.

Crawford transferred operating rights to Southern and in exchange therefor received 19% of all of Southern's outstanding voting stock. Southern leased from Crawford and the other participating carriers operating equipment under terms of payment approved by the Interstate Commerce Commission. Southern went out of business in August, 1958.

It was estimated by Chrysler that its new plan...