Gulfstream III Associates, Inc. v. Gulfstream Aerospace Corp.

• Decision Date: 18 May 1993
• Docket Number: Nos. 91-5932,No. 91-5932,No. 91-5965,91-5965,91-5932,s. 91-5932
• Citation: 995 F.2d 425
• Parties: 1993-1 Trade Cases P 70,228 GULFSTREAM III ASSOCIATES, INC., Gulfstream IV Associates, Inc. v. GULFSTREAM AEROSPACE CORPORATION, a Delaware Corp.; Gulfstream Aerospace Corporation, a Georgia Corp.; Gulfstream American Corporation; Atlantic Aviation Corporation; Cessna Aircraft Company; Gates Learjet Corporation; British Aerospace, Inc.; Canadair Challenger, Inc.; Mitsubishi Aircraft International Inc. Cessna Aircraft Company Appellant inGulfstream III Associates Inc., Gulfstream IV Associates, Inc., Appellants in
• Court: U.S. Court of Appeals — Third Circuit

Page 425

995 F.2d 425

1993-1 Trade Cases P 70,228

GULFSTREAM III ASSOCIATES, INC., Gulfstream IV Associates, Inc. v. GULFSTREAM AEROSPACE CORPORATION, a Delaware Corp. Gulfstream Aerospace Corporation, a Georgia Corp. Gulfstream American Corporation; Atlantic Aviation Corporation; Cessna Aircraft Company; Gates Learjet Corporation; British Aerospace, Inc.; Canadair Challenger Inc.; Mitsubishi Aircraft International Inc Cessna Aircraft Company Appellant in No. 91-5932. Gulfstream III Associates Inc., Gulfstream IV Associates, Inc., Appellants in No. 91-5965.

Nos. 91-5932, 91-5965.

United States Court of Appeals, Third Circuit.

Argued Dec. 3, 1992.

Decided May 18, 1993.

Arthur R. Schmauder (argued), Raymond M. Tierney, Jr., Francis B. Sheehan, Sheila G. Gruber, Shanley & Fisher, P.C., Morristown, NJ, for Cessna Aircraft Co., appellant in No. 91-5932, appellee in No. 91-5965.

Joanne Zack (argued), Harold E. Kohn, Robert J. LaRocca, Deborah A. Sottosanti, Kohn, Nast & Graf, P.C., Philadelphia, PA, Michael S. Waters, Carpenter, Bennett & Morrissey, Newark, NJ, for Gulfstream III

Associates, and Gulfstream IV Associates, appellants in No. 91-5965, appellees in No. 91-5932.

Before: SLOVITER, Chief Judge, GREENBERG and SEITZ, Circuit Judges.

OPINION OF THE COURT Except as to Part II(A)(1)(c)

SEITZ, Circuit Judge.

Gulfstream III Associates, Inc. ("plaintiff"), instituted this antitrust action against seven manufacturers of business jet aircraft. It charged a horizontal price-fixing conspiracy among these manufacturers to fix, raise and stabilize the prices of new business jets in the United States, including those plaintiff agreed to purchase.

Six of the manufacturers settled. The seventh, Cessna Aircraft Company ("defendant") resisted the three claims asserted against it. The district court granted summary judgment to defendant on two of the three claims arising out of agreements to purchase aircraft. One of these claims, that of Gulfstream IV Associates, Inc., was abandoned on appeal. The judgments of the district court on plaintiff's two claims form the bases for these appeals. In resolving these issues, with one exception later addressed, neither party raises any objection to the fact that the district court decided all issues on a paper record.

I. BACKGROUND

Plaintiff's first claim against defendant arose out of an agreement made on March 25, 1983, under which plaintiff agreed to purchase a Gulfstream Model IV aircraft ("G-IV") from a settling codefendant, Gulfstream Aerospace Corporation ("GAC"), for $13,470,000. Subsequently, plaintiff settled its antitrust claims against GAC. Under the terms of the settlement with GAC, plaintiff transferred all of its rights in the G-IV Purchase Agreement back to GAC. The district court granted summary judgment for defendant after concluding that "plaintiff[ ] could have suffered no overcharge or consequential damages on a contract which was canceled." (J.A. at 35).

Plaintiff's second claim against defendant arose out of an agreement made in September 1981, under which plaintiff agreed to purchase a Gulfstream Model III aircraft ("G-III") from GAC for $9,975,000, subject to a price escalation clause. After the district court denied defendant's motion for summary judgment on the second claim, the claim went to trial and the jury returned a verdict for plaintiff which, when trebled, amounted to $2,992,500.

Thereafter, defendant moved for a judgment dismissing the second claim or, in the alternative, for a declaration that plaintiff was entitled to no damages. The district court found that plaintiff had received from pretrial settlements with codefendants an aggregate sum greater than treble the amount awarded by the jury in this action. As a result, although it did not dismiss the complaint, it reduced the verdict to zero and entered final judgment for defendant. However, it subsequently granted plaintiff attorneys' fees.

Despite the fact that defendant was the beneficiary of the judgment on the second claim, it filed a notice of appeal from the judgment except to the extent it ordered that plaintiff was entitled to no damages (No. 91-5932). The appeal asserts that its pretrial motion for summary judgment should have been granted. Thus, its appeal is taken to negate the jury verdict and the possible collateral consequence flowing therefrom, viz., the allowance of attorneys' fees. Thereafter, plaintiff filed an appeal attacking the final judgment of the district court as well as the denial of its motion to amend the judgment (No. 91-5965).

Both sides later appealed the award of attorneys' fees (No. 92-5263 and No. 92-5273). Those appeals are decided in a separate opinion filed this day.

The district court had jurisdiction over this action under the federal antitrust laws pursuant to 28 U.S.C. § 1337(a) and 15 U.S.C. § 15(a). This court has jurisdiction over the appeals from the final judgment of the district court pursuant to 28 U.S.C. § 1291.

II. DISCUSSION

A. Defendant's Appeal

We turn first to defendant's limited appeal of the judgment in its favor on the second claim. We do so because the attacks on plaintiff's standing, if cognizable and meritorious, would result in a determination that defendant should have been granted pretrial judgment, thus vitiating the jury's verdict for plaintiff.

Plaintiff does not assert that defendant lacks standing to appeal the judgment because it was entered in defendant's favor. In any event, we conclude that defendant has such standing because it "retains a stake in the appeal satisfying the requirements of Art. III," viz., the allowance of attorneys' fees. Deposit Guar. Nat'l Bank v. Roper, 445 U.S. 326, 334, 100 S.Ct. 1166, 1172, 63 L.Ed.2d 427 (1980). We turn then to defendant's appeal mindful that these threshold issues were decided against defendant pretrial by the district court.

1. Plaintiff's Antitrust Standing

We understand defendant's appeal on these standing-related issues to be limited to the district court's denial of defendant's motion for summary judgment. Our standard of review is plenary. See Schafer v. Board of Pub. Educ. of Sch. Dist. of Pittsburgh, Pa., 903 F.2d 243, 246 (3d Cir.1990) ("Our review of the district court's order ... denying appellant's summary judgment motion is plenary.").

Before addressing defendant's specific attacks on plaintiff's standing, some exposition of the law of antitrust standing is in order. "[T]he focus of the doctrine of 'antitrust standing' is somewhat different from that of standing as a constitutional doctrine. Harm to the antitrust plaintiff is sufficient to satisfy the constitutional standing requirement of injury in fact, but the court must make a further determination whether the plaintiff is a proper party to bring a private antitrust action." Associated Gen. Contractors v. California State Council of Carpenters, 459 U.S. 519, 535 n. 31, 103 S.Ct. 897, 907 n. 31, 74 L.Ed.2d 723 (1983) (emphasis added). Whether a plaintiff is the "proper party" involves considerations of "doctrines such as foreseeability and proximate cause, directness of injury, certainty of damages and privity of contract." Id. at 532-33, 103 S.Ct. at 905 (footnotes omitted).

In Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977), the Supreme Court set forth a two-part test for antitrust standing that has recently been applied by our court. See International Raw Materials, Ltd. v. Stauffer Chem. Co., 978 F.2d 1318, 1327-28 (3d Cir.1992). To establish antitrust standing a plaintiff must show both: 1) harm of the type the antitrust laws were intended to prevent; and 2) an injury to the plaintiff which flows from that which makes defendant's acts unlawful. Id.

Based on the pretrial record, the first requirement is easily satisfied. The "decreased competition" in the business jet market is "the type of harm targeted by the antitrust laws." Id. at 1328. The second requirement is generally met if the plaintiff is a "competitor [ ]or a consumer in the relevant market." Id. Alternatively, this requirement is fulfilled if there exists a "significant causal connection" such that the harm to the plaintiff can be said to be "inextricably intertwined" with the antitrust conspiracy. Id. (quoting Blue Shield v. McCready, 457 U.S. 465, 484, 102 S.Ct. 2540, 2551, 73 L.Ed.2d 149 (1982)).

As to the second requirement, plaintiff was either a consumer or a competitor, or both, in the relevant market. ¹ In addition, the harm to plaintiff through lost profits (or increased losses) on the G-III Purchase Agreement was inextricably intertwined with the horizontal price fixing conspiracy. Thus, unless certain other issues raised by defendant negate plaintiff's standing, defendant was not entitled to summary judgment based on lack of standing. We turn to those issues.

a. Proximate Causation

Antitrust standing requires proximate causation between defendant's conduct and the injury to plaintiff. See Associated Gen. Contractors, 459 U.S. at 535-37, 103 S.Ct. at 907-08. Defendant asserts that plaintiff lacks standing to bring the G-III claim because defendant's antitrust violation was not the proximate cause of the injury to plaintiff. It says that, on the contrary, the proximate cause of plaintiff's injury was its inability to find a lessee for the G-III.

The defendant's argument is without merit even though the record shows that plaintiff contemplated taking title to the G-III only if it could find a lessee. Plaintiff's financing for the G-III Purchase Agreement was conditioned by plaintiff's bank upon plaintiff's doing one of two things when the plane was ready for delivery; either: 1) selling the plane/purchase agreement to a third party; or 2) entering into an agreement to lease the plane to a third party and then taking title to the plane. Under either of these options, the defendant's antitrust violation (which caused an overcharge in purchase price) would have been...