Denny's Marina, Inc. v. Renfro Productions, Inc.

• Decision Date: 01 December 1993
• Docket Number: Nos. 93-1168,93-1302,s. 93-1168
• Citation: 8 F.3d 1217
• Parties: , 1993-2 Trade Cases P 70,402 DENNY'S MARINA, INCORPORATED, Plaintiff-Appellant, v. RENFRO PRODUCTIONS, INCORPORATED; Indianapolis Boat, Sport and Travel Show, Incorporated; Maxine J. Renfro, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1217

8 F.3d 1217

62 USLW 2322, 1993-2 Trade Cases P 70,402

DENNY'S MARINA, INCORPORATED, Plaintiff-Appellant, v. RENFRO PRODUCTIONS, INCORPORATED; Indianapolis Boat, Sport and Travel Show, Incorporated; Maxine J. Renfro et al., Defendants-Appellees.

Nos. 93-1168, 93-1302.

United States Court of Appeals Seventh Circuit.

Argued Sept. 9, 1993.

Decided Nov. 4, 1993.

Rehearing and Suggestion for Rehearing

In Banc Denied Dec. 1, 1993.

Michael C. Terrell, William C. Barnard (argued), Gayle A. Reindl, Sommer & Barnard, Indianapolis, IN, Jeffrey S. Zipes, James K. Wheeler, Coots, Henke & Wheeler, Carmel, IN, for Denny's Marina, Inc.

Terrill D. Albright, Robert K. Stanley (argued), Baker & Daniels, James D. Blythe, II, Butler, Brown & Blythe, Daniel B. Altman, Indianapolis, IN, for Renfro Productions, Inc., Indianapolis Boat, Sport and Travel Show, Inc., Maxine J. Renfro and Kevin Renfro.

Timothy L. Wade, Indianapolis, IN, for Central Indiana Marine Dealers Ass'n.

Christopher Kirages, John C. Stark, Stark, Doninger & Smith, Indianapolis, IN, for Brownie's Marine Sales, Inc., and James L. Massey.

Thomas L. Davis, Locke, Reynolds, Boyd & Weisell, Indianapolis, IN, for Indianapolis Boat Co., Inc. and Jack Hummel.

Christopher Kirages, Robert C. Bruner, Stark, Doninger, & Smith, Indianapolis, IN, for G.A. and Group 3, Inc., dba Indianapolis Watersports and Gary A. Story.

James N. Scahill, Schnorr, Good & Scahill, Indianapolis, IN, for Just Add Water Boats, Inc. and Timothy L. Meyer.

Steven A. Holt, Stephen H. Free, Holt, Fleck, & Free, Noblesville, IN, for Lakeview Marina, Inc. and Jeff Lingenfelter.

William P. Wooden (argued), Dale W. Eikenberry, Stephen Akard, Wooden, McLaughlin & Sterner, Indianapolis, IN, for Ted's Aqua Marine, Inc. and Thaddius S. Novicki.

Jeffrey S. Zipes, James K. Wheeler, Coots, Henke & Wheeler, Carmel, IN, William C. Barnard, Sommer & Barnard, Indianapolis, IN, for Fredrick W. Decker and Jerry Brian Ludlow.

Before CUMMINGS, COFFEY and ROVNER, Circuit Judges.

CUMMINGS, Circuit Judge.

This is an appeal from summary judgment granted in favor of the defendants below: The "Renfro Defendants" (Renfro Productions, Inc.; Indianapolis Boat, Sport, and Travel Show, Inc.; Maxine J. Renfro; and Kevin Renfro), "CIMDA" (the Central Indiana Marine Dealers Association), and the "Dealer Defendants" (certain members of CIMDA), in an action brought under the Sherman Antitrust Act, 15 U.S.C. § 1 et seq. and the Clayton Act, 15 U.S.C. §§ 15(a), 26. The Court has jurisdiction over the appeal pursuant to 28 U.S.C. § 1291.

In December 1991 Denny's Marina, Inc. ("Denny's"), a marine dealer in Peru, Indiana, filed this suit, alleging that the defendants had excluded Denny's from two Indianapolis boat shows. (See note 3 infra.) On defendants' motions for summary judgment the district court held that plaintiff could not invoke the per se rule of illegality under Section 1 of the Sherman Act even if it could demonstrate a horizontal conspiracy to exclude it from the boat shows because it regularly undersold its competitors. Before Denny's could invoke the per se presumption of an unreasonable restraint of trade, the court held, it must "make a sufficient showing of a potential market-wide impact" resulting from the defendants' actions. Because Denny's did not make such a showing, the court granted summary judgment in favor of the defendants. ¹ We hold that this was error and therefore reverse and remand for trial.

Facts

Because summary judgment was granted to the defendants, the facts alleged by Denny's and any inferences therefrom must be construed in its favor. Summary judgment will be denied if a reasonable jury could return a verdict for the plaintiff. Valenti v. Qualex, Inc., 970 F.2d 363, 365 (7th Cir.1992).

Denny's is a full-service marine dealer located near Peru, Indiana. It sells fishing boats, motors, trailers and marine accessories in the central Indiana market. ² The Dealer Defendants are marine dealers in the same market area who compete with Denny's to sell boats to Indiana consumers. CIMDA is a trade association of marine dealers in that area. The Renfro Defendants are producers of two boat shows held annually at the Indiana State Fairgrounds (the "Fairgrounds Shows"). ³ The February fairgrounds show (the "Spring Show") originated over 30 years ago. It is one of the top three boat shows in the United States, attracting between 160,000 and 191,000 consumers annually. The October show (the "Fall Show") is smaller and began in 1987. Denny's alleges that the defendants conspired to exclude it from participating in these shows because its policy was to "meet or beat" its competitors' prices at the shows.

Denny's participated in the Fall Show in 1988, 1989, and 1990; it participated in the Spring Show in 1989 and 1990. At all of these shows Denny's was very successful, apparently because it encouraged its customers to shop the other dealers and then come to Denny's for a lower price. During and after the 1989 Spring Show some of the Dealer Defendants began to complain to the Renfro Defendants about Denny's sales methods. After the 1990 Spring Show these Dealer Defendants apparently spent a good part of one CIMDA meeting "vent[ing] their ... frustration" (App. at 15) about Denny's. The complaints to the Renfro Defendants also escalated. As a result, the Renfro Defendants informed Denny's that after the 1990 Fall Show (in which Denny's was contractually entitled to participate) it could no longer participate in the Fairgrounds Shows. This litigation ensued. Denny's seeks compensatory damages to be assessed by a jury, as well as injunctive relief.

Discussion

A successful claim under Section 1 of the Sherman Act requires proof of three elements: (1) a contract, combination, or conspiracy; (2) a resultant unreasonable restraint of trade in the relevant market; and (3) an accompanying injury. Dillard v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 961 F.2d 1148, 1158 (5th Cir.1992), certiorari denied sub nom. Dillard v. Security Pacific Corp., --- U.S. ----, 113 S.Ct. 1046, 122 L.Ed.2d 355; Wilder Enterprises, Inc. v. Allied Artists Pictures Corp., 632 F.2d 1135, 1139 n. 1 (4th Cir.1980); Ernest W. Hahn, Inc. v. Codding, 615 F.2d 830, 844 (9th Cir.1980); cf. Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). The district court noted that defendants do not dispute the first and third elements of proof. ⁴ Hence the parties' only argument is whether Denny's has made a sufficient showing of the second element, unreasonable restraint of trade, to withstand defendants' motions for summary judgment.

There are two standards for evaluating whether an alleged restraint of trade is unreasonable: the rule of reason and the per se rule. See, e.g., Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 342, 110 S.Ct. 1884, 1893, 109 L.Ed.2d 333; Federal Trade Commission v. Indiana Federation of Dentists, 476 U.S. 447, 458, 106 S.Ct. 2009, 2018, 90 L.Ed.2d 445. The nature of the restraint determines which rule will be applied. Atlantic Richfield Co., 495 U.S. at 342, 110 S.Ct. at 1893. Because the restraint alleged by Denny's constitutes a horizontal price-fixing conspiracy, it is per se an unreasonable restraint of trade. See, e.g., Arizona v. Maricopa County Medical Society, 457 U.S. 332, 348, 102 S.Ct. 2466, 2475, 73 L.Ed.2d 48; United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 218, 60 S.Ct. 811, 842, 84 L.Ed. 1129, cf. Federal Trade Commission v. Superior Court Trial Lawyers Ass'n, 493 U.S. 411, 423-424, 110 S.Ct. 768, 775-76, 107 L.Ed.2d 851.

The conspiracy in this case was horizontal because it was "the product of a horizontal agreement." Business Electronics Corp. v. Sharp Electronics Corp., 485 U.S. 717, 730 n. 4, 108 S.Ct. 1515, 1523 n. 4, 99 L.Ed.2d 808; accord United States v. General Motors Corp., 384 U.S. 127, 140, 86 S.Ct. 1321, 1328, 16 L.Ed.2d 415 passim. It consisted of Denny's competitors and their association. That the conspiracy was joined by the operators of the Fairgrounds boat shows does not transform it into a vertical agreement. See, e.g., Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 767-768, 104 S.Ct. 1464, 1472-1473, 79 L.Ed.2d 775; General Motors, 384 U.S. at 140, 86 S.Ct. at 1328; Premier Electrical Construction Co. v. National Electrical Contractors Ass'n, 814 F.2d 358, 369 (7th Cir.1987); Valley Liquors, Inc. v. Renfield Importers, Ltd., 678 F.2d 742, 743-744 (7th Cir.1982).

Likewise, the conspiracy was to fix prices. Price-fixing agreements need not include "explicit agreement on prices to be charged or that one party have the right to be consulted about the other's prices." Palmer v. BRG of Georgia, Inc., 498 U.S. 46, 48, 111 S.Ct. 401, 402, 112 L.Ed.2d 349; accord United States v. Capitol Service, Inc., 756 F.2d 502, 506 (7th Cir.1985), certiorari denied sub nom. United Artists Communications, Inc. v. United States, 474 U.S. 945, 106 S.Ct. 311, 88 L.Ed.2d 288; Premier Electrical, 814 F.2d at 368. "Under the Sherman Act a combination formed for the purpose and with the effect of raising, depressing, fixing, pegging, or stabilizing the price of a commodity in interstate or foreign commerce is illegal per se." Socony-Vacuum Oil, 310 U.S. at 223, 60 S.Ct. at 844. Concerted action by dealers to protect themselves from price competition by discounters constitutes horizontal price-fixing. General Motors, 384 U.S. at 147, 86 S.Ct. at 1332; Valley Liquors, 678 F.2d at 743-744. Hence the actions of the Dealer Defendants and CIMDA, joined by the Renfro Defendants, to prevent Denny's from participating in the Boat Shows constitutes a horizontal price-fixing conspiracy notwithstanding the apparent lack of an explicit agreement to set prices. ⁵

So far, the position of this Court is similar to that of the court below. Nevertheless, having essentially found that plaintiff had adduced...