HOUSEHOLD GOODS CARRIERS'BUREAU v. Terrell

• Decision Date: 22 November 1971
• Docket Number: No. 25989.,25989.
• Citation: 452 F.2d 152
• Parties: HOUSEHOLD GOODS CARRIERS' BUREAU, Defendant-Appellant, v. John J. TERRELL, Plaintiff-Appellee. John J. TERRELL, Plaintiff-Appellant, v. AERO MAYFLOWER TRANSIT CO., Inc., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

452 F.2d 152 (1971)

HOUSEHOLD GOODS CARRIERS' BUREAU, Defendant-Appellant, v. John J. TERRELL, Plaintiff-Appellee.

John J. TERRELL, Plaintiff-Appellant, v. AERO MAYFLOWER TRANSIT CO., Inc., et al., Defendants-Appellees.

No. 25989.

United States Court of Appeals, Fifth Circuit.

November 22, 1971.

COPYRIGHT MATERIAL OMITTED

Melville C. Williams, Chicago, Ill., Hugh B. Cox, Washington, D. C., for defendant-appellant, Household Goods Carriers' Bureau.

Jack N. Price, Longview, Tex., Ivan R. Williams, Jr., Fred B. Werkenthin, Austin, Tex., for John J. Terrell.

Jay H. Brown, Austin, Tex., for Allied et al.

James W. Wilson, Austin, Tex., James L. Beattey, Indianapolis, Ind., for Aero Mayflower.

W. E. Cureton, Waco, Tex., F. Neil Aschemeyer, St. Louis, Mo., for United Van Lines.

Before JOHN R. BROWN, Chief Judge, and JONES, WISDOM, GEWIN, BELL, COLEMAN, GOLDBERG, AINSWORTH, GODBOLD, DYER, SIMPSON, MORGAN, CLARK and INGRAHAM, Circuit Judges.^*

GEWIN, Circuit Judge:

Pursuant to Rule 35 of the Federal Rules of Appellate Procedure this private antitrust action was placed en banc by the Court. The original trial resulted in a jury verdict in favor of the plaintiff, John J. Terrell, and against the defendants, Household Goods Carriers' Bureau (hereinafter Household Goods or the Bureau) and ten individual carriers in the amount of $375,000 (trebled to $1,125,000). The trial court entered judgment on the verdict against the Bureau but entered judgment notwithstanding the verdict in favor of the individual carriers. The majority of the panel that originally heard the case on appeal vacated the judgment against the Bureau and remanded the case for a new trial.¹ Upon rehearing en banc, the majority of this court is of the opinion that the judgment entered by the trial court against the Bureau should be affirmed on the issue of liability but reversed and remanded on the issue of damages. Since the intricate and voluminous facts of this case were fully developed in the majority and dissenting opinions of the original panel, we present only a skeletal outline.

I

Plaintiff-appellee Terrell developed and attempted to market a national "mileage guide" for use in quickly computing the highway mileage between over 775 "key points" — cities, towns, and military bases in the United States and Canada. A guide of this nature is commercially marketable for such commonplace but important computations as rates to be charged by freight haulers or movers of household goods; travel allowances to be paid to government, military, or civilian personnel by their respective employers; and moving allowances to be paid military families under orders to transfer. Prior to 1961, when Terrell first attempted to market his guide, all or substantially all, national mileage guides in use had been computed, manufactured and marketed by Rand McNally and Company² under an agreement with the defendant Bureau.

Household Goods Carriers' Bureau is a trade association and tariff bureau that represents some 1700 members, carriers of household goods; it is organized under the authority of the Reed-Bullwinkle Act³ and approved by the Interstate Commerce Commission. Through power of attorney executed by each of its members it has authority to file a joint tariff with the Commission. The legality of this arrangement is not disputed. It is the agreement between the Bureau and Rand McNally that provides the foundation for Terrell's antitrust claim. By that agreement the Bureau obligated itself to purchase from Rand McNally a minimum number of 22,500 mileage guides at a fixed price; all guides in excess of the minimum were to be sold to the Bureau or to its members at a discount. In addition, Rand McNally agreed not to sell its guides to other purchasers at a price below the Bureau's discounted price. Many were sold at a higher price. A further agreement gave the Bureau the right to negotiate personally with certain other agencies and reserved to Rand McNally the right to deal with all others. Finally, the Bureau was accorded controlling influence in determining the scope and content of the Rand McNally guides.

Although the Rand McNally guide was the only one on the market, it was noticeably inadequate for many of the purposes for which it was used. A combination of factors caused the guide to show longer than necessary distances between key points.⁴ There was evidence to the effect that members of the Bureau and other motor carriers accepted and even encouraged these overstatements because their transportation charges were computed from the guide's mileage tables. On the other hand, many agencies that pay employees or carriers for travel on a per mile basis showed a preference for a more current guide that reflected the shortest possible reliable distances. In addition, the close relationship between the Bureau and Rand McNally gave the Bureau a degree of control over other elements of the guide, including the designation of "key points." Agencies that made computations involving non-listed points were thus put to the time and expense of making extra computations. A noticeable omission in this regard was the failure of the Bureau guide to provide a convenient means of calculating distances between military bases.

To fill this marked competitive gap came Mr. Terrell with a guide designed to meet the needs of the Bureau's unsatisfied customers. In computing his guide, Terrell included all major roads accessible by automobile. He planned to recompute a new guide every two years from the most recent maps available. In computing all of his distances, he used the shortest reliable figures available; and his guide included a ready means of including over 400 military bases in the computations.

Plaintiff began selling his product in 1961, and found a willing customer in the Oilfield Haulers' Association, a 500 member trade association and tariff bureau whose members transported oilfield machinery. Continued solicitation yielded substantial interest and a highly favorable report from the Finance Center of the U. S. Department of Defense (Finance Center),⁵ despite efforts by defendants to discredit the guide. Early in 1964, plaintiff convinced Rocky Ford Van Lines (Rocky Ford), a Household Goods affiliate, to withdraw from the Bureau and affiliate with the Oilfield Haulers. By using the different and generally lower mileages reflected in the Oilfield Haulers' guide, Rocky Ford sought to introduce competitive rates among the Household Goods haulers.

Accordingly, Rocky Ford began the transfer procedure by informing Household Goods of its desire. The Bureau responded with the "Wyche letter" — a strongly worded letter questioning the accuracy of Terrell's guide, threatening a complaint to the ICC, and stressing the undesirable competitive effects on the industry that would flow from the adoption of a competitive guide. The contents of the letter were passed on to the Oilfield Haulers' Association. Shortly after becoming aware of this letter, plaintiff filed this suit and a related libel suit. The libel suit, which was settled by consent decree, is the basis of a defense of res judicata raised by the Bureau on this appeal. Despite the letter, Rocky Ford consummated its changeover to the Terrell guide; and the Oilfield Haulers signed a contract for a revised guide early in 1964. Terrell and Rocky Ford then began a joint effort to convince the Defense Traffic Management Service (DTMS), the government agency which controls the shipment of household goods for military personnel,⁶ to accept and act on competitive bids computed from Terrell's guide.

At this stage, Terrell's prospects seemed excellent. He had one tariff bureau as an established customer; the Finance Center had responded favorably to his overtures; and, most importantly, he had an inroad to the influential Household Goods Carriers' Bureau. He was cultivating an ambitious expectation that competitive necessity would require the Bureau's members to accept a guide like his once the impact of Rocky Ford's competition was felt. On the other hand, the Bureau, although nominally only a tariff bureau, had identifiable interests in limiting plaintiff's access to the market. First, as representative and spokesman for its 1700 members, the Bureau was concerned that plaintiff's shorter mileages would bring competition and reduced profits for its members.⁷ Secondly, the Bureau itself derived a substantial income through its arrangement with Rand McNally for distribution of the guides.⁸

Shortly after circulation of the Wyche letter, plaintiff's rosy future began to blacken. The Finance Center, with some prodding from the Bureau, reversed its position and decided not to adopt plaintiff's guide. A large scale battle for influence before the DTMS allegedly resulted in a full blown picture of lack of trust and confidence in Mr. Terrell; ultimately, DTMS, working in connection with the Bureau and the Finance Center, refused to interpret the regulation in Mr. Terrell's favor. The Oilfield Haulers defaulted on their contract and began using the Bureau's guide. Frustrated in its attempts to gain competitive advantage in its services for DTMS, Rocky Ford returned to using the Bureau guide. Mr. Terrell was eliminated from competition. The jury found the elimination unlawful and measured the injury to Mr. Terrell in the amount of $375,000.

II

A. The Wyche Letter

At trial and on the original appeal, appellants took the position that the Wyche letter was inadmissible in its entirety because it had been the subject of litigation in the previously settled libel suit and, therefore, under the doctrine of res judicata, was not a proper subject of litigation in a second suit. We cannot accept this contention. The majority of the original panel concluded that subject to the limitations mentioned in the opinion, the letter was indeed admissible in evidence in the antitrust suit.⁹ Moreover, it is well established that in a proper case...