Dimidowich v. Bell & Howell

• Court: U.S. Court of Appeals — Ninth Circuit
• Writing for the Court: Before FLETCHER, BOOCHEVER, and NORRIS; FLETCHER
• Citation: Dimidowich v. Bell & Howell, 803 F.2d 1473 (9th Cir. 1987)
• Decision Date: 25 February 1987
• Docket Number: No. 84-1995,84-1995
• Parties: 1986-2 Trade Cases 67,343 John M. DIMIDOWICH, dba Micro Image, Plaintiff-Appellant, v. BELL & HOWELL, Defendant-Appellee.

Page 1473

803 F.2d 1473

1986-2 Trade Cases 67,343

John M. DIMIDOWICH, dba Micro Image, Plaintiff-Appellant, v. BELL & HOWELL, Defendant-Appellee.

No. 84-1995.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Jan. 18, 1985.

Decided Nov. 6, 1986.

As Modified on Denial of Rehearing Feb. 25, 1987. ^*

Robert F. Koehler, Jr., Sacramento, Cal., for plaintiff-appellant.

John R. Reese, McCutchen, Doyle, Brown, & Enersen, San Francisco, Cal., for defendant-appellee.

Appeal from the United States District Court for the Eastern District of California.

Before FLETCHER, BOOCHEVER, and NORRIS, Circuit Judges.

FLETCHER, Circuit Judge:

Dimidowich appeals the district court's summary judgment dismissing his antitrust action, in which he challenged Bell & Howell's ("B & H") policy of refusing to sell replacement parts for its microfilm equipment to independent companies that service B & H equipment. We affirm the dismissal of Dimidowich's claims alleging monopolization, attempted monopolization, unlawful tying, and unilateral refusal to deal. We reverse and remand the court's dismissal of Dimidowich's conspiracy claim.

I. BACKGROUND

B & H is the nation's third largest manufacturer of microimagery (microfilm) products. B & H maintains an extensive service organization for the equipment it manufactures.

Until 1977, Dimidowich was employed by B & H as a service and sales representative. He left to establish his own business, Micro Image, which sells and services microfilm equipment, including B & H equipment, in the Sacramento, California area.

B & H maintains a policy of not selling replacement parts for its equipment except through its own service organization, or directly to owner-users. In other words, B & H does not sell parts for resale or for use by independent companies that service and repair B & H equipment. B & H's policy is unique in the industry.

B & H makes one exception to its policy. The company does not maintain its own service organization in the southwestern United States (Nevada, Arizona, New Mexico, and parts of Colorado and Texas). In that region, B & H sells replacement parts to a single authorized dealer-service representative, Comgraphix. B & H does not service microfilm equipment within this region, and Comgraphix does not service B & H equipment outside of this region.

In 1981, Dimidowich bid for and received contracts with several California state agencies to service and repair their micro-imagery equipment, including B & H equipment. B & H also submitted bids, but was unsuccessful in obtaining the contracts. After entering these contracts, Dimidowich sought to buy an inventory of replacement parts from B & H. B & H refused to fill Dimidowich's orders.

In July 1982, Dimidowich tried to obtain the needed parts from Comgraphix. Comgraphix refused to sell them, on the ground that it was forbidden to do so under its distributorship agreement with B & H. Later, Comgraphix acknowledged that no such contractual prohibition existed, but still refused to sell to Dimidowich on the ground that Comgraphix did not wish to sell parts outside the geographic area in which it does business.

After B & H and Comgraphix refused to sell him the parts he needed, Dimidowich filed suit in state court, claiming that B & H's parts policy constituted an unlawful restraint of trade. B & H removed Dimidowich's state court action to the federal district court on the basis of diversity of citizenship. After several months of discovery, both parties moved for summary judgment. The district court granted B & H's motion and denied Dimidowich's. 590 F.Supp. 45. Dimidowich timely appealed.

II. DISCUSSION

A. Jurisdiction

Dimidowich named twenty fictitious or "Doe" defendants in the complaint he originally filed in California superior court. The presence of these Doe defendants causes us to examine our jurisdiction.

B & H removed this case to federal court on the basis of diversity of citizenship, 28 U.S.C. Sec. 1441 (1982), and contended in its petition for removal that the Does were "mere sham defendants [who] are not identified with sufficient specificity to defeat diversity." The record does not show, however, that the district court ever dismissed the Does.

Although the presence of Doe defendants can destroy diversity and make removal improper in some circumstances, see Hartwell Corp. v. Boeing Co., 678 F.2d 842 (9th Cir.1982), we need not face that issue here. This case falls within the rule of Grubbs v. General Electric Credit Corp., 405 U.S. 699, 92 S.Ct. 1344, 31 L.Ed.2d 612 (1972):

[W]here after removal a case is tried on the merits without objection and the federal court enters judgment, the issue in subsequent proceedings on appeal is not whether the case was properly removed, but whether the federal district court would have had original jurisdiction of the case had it been filed in that court.

Id. at 702, 92 S.Ct. at 1347. The Grubbs rule has been applied when the merits are reached and determined on a motion for summary judgment. Stone v. Stone, 632 F.2d 740, 742 (9th Cir.1980), cert. denied, 453 U.S. 922, 101 S.Ct. 3158, 69 L.Ed.2d 1004 (1981).

This case, absent the Does, could have been brought originally under the district court's diversity jurisdiction, or the court could have dismissed the Does. B & H is a Delaware corporation with its principal place of business in Illinois; Dimidowich is a resident of California. The record does not show that Dimidowich ever attempted to amend his complaint to substitute anyone for the Does. Clearly, then, the Does are not indispensable parties, and the district court could have dismissed them. We do so now on appeal. See Othman v. Globe Indemnity Co., 759 F.2d 1458, 1463 (9th Cir.1985).

B. Applicable Law

In his complaint, Dimidowich challenged B & H's policy under a number of different antitrust theories. The complaint alleged that the policy constitutes an unlawful refusal to deal and a tying arrangement; that B & H and Comgraphix have conspired in restraint of trade; and that B & H has maintained or attempted to maintain a monopoly.

Dimidowich brought his claims under California's Cartwright Act. Cal.Bus. & Prof.Code Secs. 16700-16760 (West 1964). The antitrust provisions of the Cartwright Act were patterned after section 1 of the Sherman Act, 15 U.S.C. Sec. 1 (1982). Corwin v. Los Angeles Newspaper Service Bureau, 4 Cal.3d 842, 852, 484 P.2d 953, 94 Cal.Rptr. 785, 791 (1971). The California courts have held that federal cases interpreting the Sherman Act are persuasive authority under the Cartwright Act. Chicago Title Insurance Co. v. Great Western Financial Corp., 69 Cal.2d 305, 315, 444 P.2d 481, 487, 70 Cal.Rptr. 849, 855 (1968).

After removal, the parties entered into a stipulation, providing that "California law governs this action, and California's Cartwright Act is construed in accordance with federal law under the Sherman Act." The parties relied almost exclusively on federal cases in their arguments to the district court and to us, the district court also relied exclusively on federal authority, and on appeal the parties continue to maintain that the Cartwright Act and the Sherman Act do not differ in any respect material to our disposition of this action. We disagree.

The California Supreme Court has said that the Cartwright Act "is similar in spirit and substance" to the Sherman Act. Chicago Title Insurance Co., 69 Cal.2d at 322, 444 P.2d at 492, 70 Cal.Rptr. at 860. "Similar" does not mean identical. California courts have never said that federal authority is binding on them, even when there is California authority to the contrary, and California courts occasionally have rejected federal precedent in construing their act. E.g., People v. City & County of San Francisco, 92 Cal.App.3d 913, 917, 155 Cal.Rptr. 319, 321 (1979); see Bruno v. Superior Court, 127 Cal.App.3d 120, 131, 179 Cal.Rptr. 342, 348 (1981) ("[W]e respectfully exercise our prerogative to disagree with [federal precedents].").

California courts are free to interpret the Cartwright Act in accordance with the state policies embodied in that law. To the extent California courts would follow federal precedents, we, of course, must follow them too. But to the extent the California courts' interpretation of the Cartwright Act is different from federal interpretations of the Sherman Act, we must respect those differences, and follow the California courts' interpretation regardless of what the parties say the law might be. ¹

C. Standard of Review, Applicability of Summary Judgment

We review de novo the district court's grant of summary judgment, viewing the evidence in a light most favorable to the losing party. Compton v. Ide, 732 F.2d 1429, 1434 (9th Cir.1984). We also review de novo the district court's interpretation of state law. In re McLinn, 739 F.2d 1395, 1403 (9th Cir.1984) (en banc).

Although summary judgment generally is disfavored in antitrust litigation, Poller v. Columbia Broadcasting System, 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962); Suburban Mobile Homes, Inc. v. Amfac Communities, Inc., 101 Cal.App.3d 532, 540, 161 Cal.Rptr. 811, 815 (1980), it appropriately may be granted if the nonmoving party does not show any issues of material fact and does not present an adequate record to support a finding in his favor. Filco v. Amana Refrigeration, Inc., 709 F.2d 1257, 1260 (9th Cir.), cert. denied, 464 U.S. 956, 104 S.Ct. 385, 78 L.Ed.2d 331 (1983).

D. Dimidowich's Claims

1. Tying

Dimidowich's counsel made it clear at oral argument that he is no longer asserting a tying claim. Thus, we need not address this claim, and we affirm the district court's dismissal of it.

2. Monopolization and Attempted Monopolization

No California statute deals expressly with monopolization or attempted monopolization. Combinations to monopolize would appear to fall within the general prohibitions of the Cartwright Act, Cal.Bus. & Prof.Code Sec. 16720 (Wes...