Donald B. Rice Tire Co. v. Michelin Tire Corp., 80-1155
| Decision Date | 12 January 1981 |
| Docket Number | No. 80-1155,80-1155 |
| Citation | 638 F.2d 15 |
| Parties | 1980-81 Trade Cases 63,720 DONALD B. RICE TIRE COMPANY, (a corporation), Appellant, v. MICHELIN TIRE CORPORATION, Appellee. |
| Court | U.S. Court of Appeals — Fourth Circuit |
Timothy J. Waters, Washington, D. C. (Robert H. Morse, Glenn R. Reichardt, Peabody, Rivlin, Lambert & Meyers, Washington, D. C., George W. Shaffer, William
N. Rogers, Shaffer & Rogers, Rockville, Md., on brief), for appellant.
Robert P. Knapp, Jr., New York City (Raymond L. Herbert, Bruce N. Morton, William W. Wilbourne, III, Lowe & Knapp, New York City, James J. Bierbower, Edwin S. Rockefeller, W. Richard Haddad, Bierbower & Rockefeller, Washington, D. C., on brief), for appellee.
Before HAYNSWORTH, Chief Judge, BRYAN, Senior Circuit Judge, and PHILLIPS, Circuit Judge.
This is an appeal from a judgment of the United States District Court for the District of Maryland in favor of defendant Michelin Tire Corporation (Michelin) in an action brought by plaintiff Donald B. Rice Tire Company (Rice) for treble damages for alleged violations of § 1 et seq., of the Sherman Act, 15 U.S.C. § 1 et seq., resulting from the termination of Rice's dealer relationship with Michelin. At trial, Rice sought to prove that Michelin chose not to renew its dealer sales agreement with Rice because Rice failed to comply with various restraints that it contended were unlawful. Michelin, on the other hand, sought to demonstrate that its decision to terminate Rice constituted unilateral action not within the scope of § 1, that it did not impose the restraints alleged by Rice, and that, if it did, the restraints were legal.
The district court found the "requisite degree of involvement of other parties" to infer a conspiracy under United States v. Parke Davis & Co., 353 U.S. 29, 80 S.Ct. 503, 4 L.Ed.2d 505 (1960), but concluded that any restraints imposed as a result of a conspiracy between Michelin and some of its dealers must be regarded as vertical ones inasmuch as they were imposed by a manufacturer on its dealers. Donald B. Rice Tire Co. v. Michelin Tire Corp., 483 F.Supp. 750, 754 (D.Md.1980) (relying on United States v. Arnold, Schwinn & Co., 388 U.S. 365, 87 S.Ct. 1856, 18 L.Ed.2d 1249 (1967). Applying a "rule of reason" analysis with emphasis on a "free rider" rationale, the district court then concluded that any detrimental effect on intrabrand competition resulting from Michelin's imposition of certain vertical nonprice restraints was outweighed by the beneficial effect that those restraints had on interbrand competition. Id. at 756-60; see Continental T. V., Inc. v. GTE Sylvania, 433 U.S. 36, 97 S.Ct. 2549, 53 L.Ed.2d 568 (1977). Therefore, the district court held that Michelin had not acted in violation of 15 U.S.C. § 1. Donald B. Rice Tire Co. v. Michelin Tire Corp., 483 F.Supp. at 761-62.
We find the ultimate result reached by the district court to be the correct one. We must reject, however, any implication arising from the district court's discussion of Schwinn that a restraint may always be regarded as vertical if it is imposed by the manufacturer. See id. at 754. Although the Supreme...
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