Ferguson v. Greater Pocatello Chamber of Commerce, Inc.

• Decision Date: 06 June 1988
• Docket Number: No. 86-3722,86-3722
• Citation: 848 F.2d 976
• Parties: 1988-1 Trade Cases 68,070, 47 Ed. Law Rep. 109 Gerald R. & Helen FERGUSON, Husband and Wife, both individually and d/b/a; Roveck Productions, Plaintiffs-Appellants, v. GREATER POCATELLO CHAMBER OF COMMERCE, INC.; the Idaho State Journal, Inc.; the Idaho State University, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 976

848 F.2d 976

1988-1 Trade Cases 68,070, 47 Ed. Law Rep. 109

Gerald R. & Helen FERGUSON, Husband and Wife, both individually and d/b/a; Roveck Productions, Plaintiffs-Appellants, v. GREATER POCATELLO CHAMBER OF COMMERCE, INC.; the Idaho

State Journal, Inc.; the Idaho State University,

Defendants-Appellees.

No. 86-3722.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted March 3, 1987.

Decided June 6, 1988.

Jeffrey E. Rolig, Hepworth, Nungester & Felton, Twin Falls, Idaho, for plaintiffs-appellants.

Robert L. Berlin, Eberle, Berlin, Kading, Turnbow & Gillespie, Boise, Idaho, for defendant-appellee Journal.

Lowell N. Hawkes, Hawkes, Esplin & Burnham, Pocatello, Idaho, for defendant-appellee Chamber.

J. Kelley Wiltbank, Idaho State University, Pocatello, Idaho, for defendant-appellee ISU.

Appeal from the United States District Court for the District of Idaho.

Before SNEED and HALL, Circuit Judges, and STEPHENS, ^* District Judge.

CYNTHIA HOLCOMB HALL, Circuit Judge:

Gerald and Helen Ferguson timely appeal from the district court's grant of summary judgment disposing of their claims against The Greater Pocatello Chamber of Commerce, Inc. (Chamber), The Idaho State Journal, Inc. (Journal), and The Idaho State University (ISU) for treble damages and injunctive relief under sections 1 and 2 of the Sherman Act. 15 U.S.C. Secs. 1 & 2 (1982). Ferguson v. Greater Pocatello Chamber of Commerce, Inc., 647 F.Supp. 190 (D.Idaho 1985).

I.

ISU owns and operates the Minidome, a large, covered, multipurpose stadium located on the ISU campus. For over a decade, ISU has leased the Minidome to businesses that wished to hold general interest consumer trade shows during the spring of each year. In 1979, the Fergusons purchased Roveck Productions and produced their first trade show in the Minidome. The Fergusons also produced trade shows during the first week of April for the years 1980 through 1982. In those same years. Chamber and Journal jointly produced a similar trade show in the Minidome, approximately one month after the Fergusons' show.

In 1980, Chamber and Journal determined that the Fergusons' trade show was significantly more profitable than theirs because it was the first trade show of the season. They therefore asked ISU to grant them the first time slot in 1981. ISU refused, stating that the Fergusons already had a lease for that time slot. In 1981, Chamber and Journal requested the first trade show slot for 1982. They also asked ISU if they could alternate on a yearly basis with the Fergusons for the first trade show each spring. Again, ISU refused.

In 1982, ISU asked Chamber and Journal if they intended to produce a trade show in 1983. Chamber and Journal apparently did not inform ISU of their decision in a timely manner. ISU therefore gave the Fergusons the sole contract for the 1983 spring trade show season. However, in September of 1982, ISU met with Chamber and Journal to discuss ISU's policies regarding the spring trade shows. Chamber and Journal apparently expressed continued interest in producing a springtime trade show, provided they could at least alternate with the Fergusons for the first trade show time slot each spring. Sometime after this meeting, ISU changed its policy regarding the spring trade shows. ISU decided that it would lease the Minidome for only one trade show during the spring of the years 1984 through 1989. ISU further decided to allow all interested parties to bid for the exclusive right to produce the 1984-89 spring trade shows.

In 1983, ISU prepared identical "bid packets" for the 1984 spring show. ISU sent these packets to the Fergusons, Chamber and Journal, and another interested promoter, Craig Ellis. The bid packet contained the following terms and conditions: (1) the minimum acceptable bid for each year was $6,000, (2) ISU would also consider the bidder's projected revenue share for the Minidome and its demonstrated ability to produce a trade show as well as its experience, management, and financial solvency, (3) the successful bidder would have the exclusive right to produce the springtime trade show for 1984, and (4) the lease would be renewable upon mutual consent for five additional one-year terms.

The Fergusons bid the minimum amount: $6,000. Craig Ellis bid $12,000. Chamber and Journal bid $20,101 and received the exclusive right to produce the 1984 spring trade show. When awarding the contract, ISU stated that it gave the contract to Chamber and Journal because they had demonstrated the ability to produce profitable trade shows in the past and because their bid was substantially higher than the two other bids. Chamber and Journal have produced the subsequent trade shows and have paid ISU the contract price of $20,101 each year.

The Fergusons have not attempted to conduct their trade show elsewhere during the spring of those years, nor have they asked ISU for a contract to produce a trade show at any other time of the year. The Fergusons maintain that the Minidome is the only suitable location for a trade show in the area. The Fergusons therefore contend that the defendants' conduct and the six-year lease agreement between ISU and Chamber and Journal violates sections 1 and 2 of the Sherman Act.

II.

We review de novo a grant of summary judgment. Richards v. Neilsen Freight Lines, 810 F.2d 898, 902 (9th Cir.1987). Summary judgment is appropriate if the moving party presents evidence that shows that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. Id. Once the moving party has met this initial burden, the nonmoving party has the subsequent burden of presenting significant probative evidence tending to support its claim that material, triable issues of fact remain. Id.

In the context of the case before us, the substantive law is the law of antitrust, and if the claim makes no economic sense, a speculative inference from the jury will not help it. In such an instance, the record on summary judgment must contain further persuasive evidence if it is to support the claim. Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 1356-57, 89 L.Ed.2d 538 (1986).

Richards, 810 F.2d at 902.

III.

The Sherman Act prohibits only restraints or monopolization of "trade or commerce among the several States." The Sherman Act interstate commerce requirement is both a substantive element of a statutory violation and a prerequisite for federal court jurisdiction. The somewhat conclusory allegations of the Fergusons' complaint might not satisfy the commerce requirement, and in its present condition the record fails to indicate whether additional proceedings will reveal that jurisdiction is proper. ¹ Here, we address our authority to pass on the merits of the complaint despite the potential jurisdictional defect.

The Supreme Court in Bell v. Hood, 327 U.S. 678, 66 S.Ct. 773, 90 L.Ed. 939 (1946), created a three-tier approach for assessing motions to dismiss asserting that defects in the substantive allegations of a complaint have jurisdictional consequences. See Yazoo County Indus. Dev. Corp. v. Suthoff, 454 U.S. 1157, 1160, 102 S.Ct. 1032, 1034, 71 L.Ed.2d 316 (1982) (Rehnquist, J., dissenting from denial of cert.). Under this approach, a court may find the claims raised in the complaint (1) "immaterial" or "wholly insubstantial," (2) "not immaterial," or (3) substantial. See Bell, 327 U.S. at 681-83, 66 S.Ct. at 775-76. Dismissal for lack of jurisdiction is proper only if the claim falls into the first category. Id. The second (and perhaps even the third) tier of Bell contemplates judicial proceedings on the merits under circumstances in which the existence of federal subject matter jurisdiction is open to question. See id.; Yazoo County, 454 U.S. at 1160, 102 S.Ct. at 1034 (Rehnquist, J., dissenting from denial of cert.).

The commerce element of the Fergusons' complaint exemplifies the type of allegation courts should address through the three-tier structure of Bell. "[T]he interstate commerce requirement is tied to the merits as well as to the jurisdictional aspects of an antitrust case...." Thornhill Publishing Co. v. General Tel. & Elec. Corp., 594 F.2d 730, 735 (9th Cir.1979); accord Timberlane Lumber Co. v. Bank of America Nat'l Trust & Sav. Ass'n, 549 F.2d 597, 602 (9th Cir.1977). As such, it is distinguishable from "lack of diversity or amount in controversy, or other more traditional jurisdictional defects," with respect to which the Bell approach might speak with less force. See Yazoo County, 454 U.S. at 1161 n. *, 102 S.Ct. at 1034 n. * (Rehnquist, J., dissenting from denial of cert.).

We hold that the commerce allegations in the Fergusons' complaint are neither "immaterial" nor "wholly insubstantial" within the meaning of Bell. Accordingly, Bell authorizes us to conduct further proceedings and, if warranted, to dismiss for failure to state a claim even though we are unable at this point to determine conclusively that subject matter jurisdiction exists.

In following this procedure we act in conformity with our longstanding practice. We sometimes require a trial in the face of uncertain subject matter jurisdiction. See, e.g., Rosales v. United States, 824 F.2d 799, 803 (9th Cir.1987). And where appropriate, we dispose of substantive issues on appeal in the absence of an unequivocal determination that lower court jurisdiction exists. Our recent opinion in Kerr Center Parents Ass'n v. Charles, 842 F.2d 1052 (9th Cir.1988), is an example of such a case.

Among the district court's rulings in Kerr Center was a decision that the eleventh amendment did not bar the plaintiffs' claims. See id. at 1058. After the district court entered judgment, however, we handed down an opinion in a different case contrary to the district court's eleventh amendment ruling. See id. at 1059. Consequently, in Kerr Center we stated that the district court's eleventh amendment determinatio...