Fischer v. NWA, Inc.
| Decision Date | 18 October 1989 |
| Docket Number | No. 88-5258,88-5258 |
| Citation | 883 F.2d 594 |
| Parties | 1989-2 Trade Cases 68,806 William R. FISCHER, The Estate of Betty L. Fischer, Montford R. Fischer and Bonita G. Fischer, Appellants, v. NWA, INC.; Northwest Airlines, Inc.; and Simmons Airlines, Inc., Appellees. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Daniel R. Shulman, Minneapolis, Minn., for appellants.
Frank J. Costello, Washington, D.C., for NWA.
Robert G. Foster, Chicago, Ill., for Simmons Airlines.
Before WOLLMAN and MAGILL, Circuit Judges, and LARSON, * Senior District Judge.
Appellants William R. Fischer, et al., are former stockholders in Fischer Bros. Aviation (Fischer), an airline that provided regional connecting flight service for Northwest Airlines, Inc. (Northwest) at Detroit. In the district court, 1 Fischer asserted antitrust and common-law claims against Northwest and Simmons Airlines, Inc. (Simmons). The allegedly unlawful conduct by Northwest and Simmons stemmed from Northwest's 1987 acquisition of Republic Airlines, Inc. (Republic). Under a contract much like the Northwest/Fischer agreement, Simmons had provided connecting flight service for Republic at Detroit. Northwest and Simmons moved for, and the district court granted, summary judgment on all issues. On appeal, Fischer argues that the court erred in concluding that:
(1) Fischer could not challenge the Northwest/Republic combination because the U.S. Department of Transportation, by approving the acquisition, immunized it against future antitrust challenges;
(2) Fischer failed to present sufficient evidence of a Northwest/Simmons conspiracy to terminate Fischer; and
(3) because Fischer failed to seek redress under the mandatory arbitration clause in the Northwest/Fischer contract, all of Fischer's common-law claims are time-barred.
Having considered the district court's summary judgment order and the record on appeal, we affirm.
On December 23, 1985, one month before the Northwest/Republic merger, Northwest and Fischer signed a regional airline service agreement. 2 The agreement provided that:
(1) Beginning February 1, 1986, Fischer would provide regional connecting flights from Detroit as a Northwest airlink. In other words, Northwest, a national airline, would provide flights between Detroit and other major cities. Then, Fischer, under the Northwest name, logo, etc., would provide connecting flights to smaller cities surrounding the Detroit metropolitan area.
(2) Fischer would act as Northwest's exclusive regional airline for all flights originating in Detroit unless Fischer declined to serve a particular route.
(3) Northwest would partially subsidize Fischer's operation, in accordance with a prorated formula.
(4) Either party could terminate the agreement unilaterally, with or without cause, after providing six months notice.
(5) The sole mechanism for resolving disputes arising from the agreement would be arbitration.
The Northwest/Fischer agreement remained in effect for only thirteen months (February 1986-March 1987). It was terminated because of ramifications of Northwest's acquisition of Republic.
Northwest began to consider acquiring Republic in 1985. On January 23, 1986, one month after the Northwest/Fischer agreement was signed, Northwest and Republic announced publicly that Northwest intended to acquire Republic, if the transaction were approved by the U.S. Department of Transportation.
The planned acquisition created considerable friction in the Northwest/Fischer relationship because Republic also had an ongoing exclusive regional airline service contract for flights originating in Detroit. Republic and Simmons had an agreement, executed on December 26, 1984, similar to that between Northwest and Fischer. Inter alia, it provided that Simmons would be Republic's exclusive regional airline at Detroit unless Simmons declined to serve a particular route. Unlike the Northwest/Fischer agreement, however, the Republic/Simmons agreement had no subsidization arrangement and was not terminable at will with six months notice; rather, it stipulated that neither party could terminate it until October 1988. The two regional service contracts gave rise to a dilemma for the newly-created Northwest/Republic combination. The combination was saddled with two unequivocal, ongoing regional service contracts granting overlapping "exclusive" status to Fischer and Simmons for the Detroit regional market. 3
On August 12, 1986, the Department of Transportation approved Northwest's acquisition of Republic. Although the acquisition patently created a conflict between the Fischer and Simmons regional service agreements, Northwest confidently predicted that a compromise would be reached, accommodating the contractual rights of both regional carriers and permitting them to share the Detroit market. However, shortly after the acquisition received government approval, both of the regional airlines wrote to Northwest, indicating that they intended to enforce the exclusive rights provisions in their contracts.
In August 1986, Northwest convened Fischer and Simmons for a meeting in Minneapolis. Northwest encouraged them to carve out a mutually acceptable division of the Detroit market, stressing that although it wished to encourage negotiations leading to an acceptable compromise, it would limit itself to indirect involvement, leaving substantive negotiations to the two regional carriers.
The meeting was a failure. No agreement concerning division of the market was reached. Simmons then insisted that Northwest "write a check" for any routes Simmons was forced to surrender to Fischer. When Northwest refused to make such payments, Simmons asked Northwest if it would object if Simmons acquired Fischer. Northwest did not object, but efforts to create a Simmons/Fischer combination also failed.
Pursuant to its December 23, 1985 regional service contract with Fischer, Northwest sent notice of termination to Fischer on September 24, 1986. Prior to that date, numerous efforts to resolve the Fischer/Simmons conflict had failed. After the August meeting in Minneapolis, the parties' principals had several meetings and telephone conversations, and exchanged assorted correspondence. When Northwest sent notice of termination to Fischer, Simmons revoked its offer to purchase Fischer. Northwest then informed Fischer that Simmons was the permanent Northwest regional service airline in Detroit and therefore it would have the right of first refusal for all regional Northwest flights from Detroit. Simmons began to serve as Northwest's regional airlink in Detroit on October 1, 1986. Until February 4, 1987, Northwest continued to negotiate toward a new agreement that would accommodate Fischer. 4 On that date, negotiations ended as Northwest learned that Fischer had retained an attorney and was preparing to sue Northwest for violating their 1985 agreement. On March 24, 1987, six months after Northwest provided Fischer's notice of termination, Fischer was terminated by Northwest. Later that year, Fischer (which, ironically, had enjoyed a 30% increase in passengers since Northwest's acquisition of Republic) was sold to Midway Airlines.
Although the 1985 Northwest/Fischer agreement, see supra, provided for arbitration of all disputes, controversies and claims arising from or related to the agreement, Fischer never sought arbitration of its grievances stemming from Northwest's acquisition of Republic. Instead, Fischer filed a lawsuit in the district court, asserting nine antitrust and common-law claims against Northwest, Simmons, or both. In its antitrust claims under the Sherman Act, Fischer asserted that:
(1) the acquisition of Republic was an unlawful contract or combination restraining trade in violation of Section 1;
(2) the acquisition of Republic attempted to or did create a monopoly in violation of Section 2;
(3) Northwest and Simmons conspired to restrain trade in violation of Section 1; and
(4) Northwest and Simmons conspired to monopolize or attempt to monopolize the Detroit regional connecting service airline market in violation of Section 2.
In its common-law claims, Fischer argued that:
(1) Simmons tortiously interfered with the Fischer/Northwest contract;
(2) Simmons and Northwest conspired to interfere with Fischer's "prospective advantage;"
(3) Northwest fraudulently misrepresented its intention to perform its obligations under the Fischer/Northwest contract;
(4) Northwest breached its contract with Fischer by failing to comply with the exclusivity clause; and
(5) Northwest breached the covenant of good faith and fair dealing implied in the contract.
Northwest and Simmons moved for summary judgment on all claims. The court granted the motion and dismissed the entire action, holding that (1) Fischer's antitrust challenge to the acquisition of Republic was barred by the Department of Transportation's approval of the transaction; (2) Fischer failed to present sufficient evidence of a conspiracy to support allegations of an antitrust violation; and (3) Fischer's common-law claims were subject to the arbitration provision, and since no request for arbitration was made by Fischer within 120 days of the alleged breach of contract, the claims were time-barred.
We affirm the district court's granting of the defendants' motion for summary judgment. However, we find in favor of the defendants on partially different grounds. 5 We hold that:
(1) Summary judgment dismissing Fischer's antitrust claims was properly granted because Fischer failed to establish that it suffered an antitrust injury; and
(2) Summary judgment dismissing Fischer's common-law claims was properly granted because Fischer failed to seek arbitration.
As the district court noted, the Supreme Court has recently "refined [the] application" of the standard for summary judgment under Rule 56 of...
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