In re Airport Car Rental Antitrust Litigation

• Decision Date: 25 June 1979
• Docket Number: MDL No. 338.
• Citation: 474 F. Supp. 1072
• Parties: In re AIRPORT CAR RENTAL ANTITRUST LITIGATION.
• Court: U.S. District Court — Northern District of California

474 F. Supp. 1072

In re AIRPORT CAR RENTAL ANTITRUST LITIGATION.

MDL No. 338.

United States District Court, N. D. California.

June 25, 1979.

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Robert R. Salman, Martin Stein, Phillips, Nizer, Benjamin, Krim & Ballon, New York City, Richard J. Lucas, Norman C. Hile, Orrick, Herrington, Rowley & Sutcliffe, San Francisco, Cal., James B. Lockhart, Vice President & General Counsel, Budget Rent A Car Corp., Chicago, Ill., for Budget Rent A Car Corp. & Budget Rent A Car Systems.

James S. Ramsey, Jr., Timothy A. Duffy, Crutcher, Hull, Ramsey & Jordan, Dallas, Tex., for Hayes Leasing Co., Inc.

John N. Hauser, James L. Hunt, Gary H. Moore, McCutchen, Doyle, Brown & Enersen, San Francisco, Cal., Maxwell M. Blecher, Daphne M. Stegman, Blecher, Collins & Hoecker, Los Angeles, Cal., David I. Schaffer, Senior Vice-President, etc., Avis Rent A Car System, Inc., New York City, David J. Reber, Goodsell, Anderson & Quinn, Honolulu, Hawaii, for Avis Rent A Car System.

Daniel R. Shulman, Michael P. Sullivan, Gray, Plant, Mooty, Mooty & Bennett, Minneapolis, Minn., James J. Walsh, Pillsbury, Madison & Sutro, San Francisco, Cal., George D. Reycraft, Cadwalader, Wickersham & Taft, New York City, Vernon F. L. Char, Damon, Key, Char & Bocken, Honolulu, Hawaii, for National Car Rental System.

James J. Kenny, Kenny, Nachwalter & Seymour, Miami, Fla., for Budget-Florida.

Joseph M. Alioto, Steven J. Cannata, Alioto & Alioto, San Francisco, Cal., Theodore F. Schwartz, Clayton, Mo., for Dollar Rent A Car.

James V. Hammett, Jr., Stubbeman, McRae, Sealy, Laughlin & Browder, Austin, Tex., for Texas Auto Services.

John R. Dwyer, Jr., Ronald S. Adelman, Carlsmith & Dwyer, Honolulu, Hawaii, for Pacific Auto Rental Corp.

Robert D. Raven, Morrison & Foerster, San Francisco, Cal., Jerome J. Shestack, Arthur H. Kahn, Schnader, Harrison, Segal & Lewis, Philadelphia, Pa., William M. Swope, Cades Schutte Fleming & Wright, Honolulu, Hawaii, for the Hertz Corp.

James F. Ventura, Libkuman, Ventura, Moon & Ayabe, Honolulu, Hawaii, for Budget Rent-A-Car Systems.

Robert Kimura, Honolulu, Hawaii, for Taylor Transportation-National Car Rental.

Jacob K. Stein, Paxton & Seasongood, Cincinnati, Ohio, for Byrnic, Inc.

Michael D. Donahue, Jonas, Fern & Simpson, Los Angeles, Cal., F. Douglas Ruud, Lycette, Diamond & Sylvester, Seattle, Wash., for Budget of Washington-Oregon.

John F. Triggs, Greenberg, Irsin, Pellman & Slade, New York City, for DRC Industries, Inc.

Francis O. Scarpulla, James M. Garlock, David A. Sherman, Scarpulla & Garlock, San Francisco, Cal., for Trans Rent-A-Car.

MEMORANDUM OF OPINION

RENFREW, District Judge.

This consolidated multidistrict litigation involves eight actions brought pursuant to Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15, 26, by Dollar Rent-A-Car System ("Dollar") and various licensees of Dollar and Budget Rent-A-Car Corporation ("Budget").¹ Defendants include The Hertz Corporation ("Hertz"), Avis Rent-A-Car System ("Avis"), and National Rent-A-Car System, Inc. ("National"). Plaintiffs allege a conspiracy to restrain trade in and to monopolize the on-airport car rental market in violation of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2.²

There are three motions presently before the Court.³ The first, brought jointly by defendants Hertz, Avis, National, and an Avis licensee, seeks summary judgment in the actions affecting airports in Austin, Texas; Denver, Colorado; and Miami, Florida. This motion is based on two separate contentions: First, that the Noerr-Pennington doctrine immunizes defendants' conduct from the reach of the antitrust laws; and second, that that there is no causal connection linking defendants' actions with plaintiffs' alleged injury.

The second motion is directed primarily against plaintiff Dollar. See infra, at 1103 n.32. Defendants contend that Dollar has no standing under Section 4 of the Clayton Act to sue for damages with respect to airports from which its licensees were excluded. Defendants argue that the damage suffered by plaintiff as a result of the exclusion of its licensees is too remote or incidental to serve as a basis for standing.

Defendants' third motion is for a pre-trial order governing burden of proof. Focusing on plaintiff Dollar's intention to prove "fact of damages" by reference to a representative sampling of airports, defendants seek a pre-trial order pursuant to Rule 16 establishing that Dollar will not be entitled to damages with respect to airports for which no separate evidence has been presented.

The Court will address each of these motions in turn.

I. NOERR-PENNINGTON

In April 1977, before these actions were consolidated, defendants Hertz and Avis moved for partial judgment on the pleadings in No. C-75-2650-CBR, arguing that the Noerr-Pennington doctrine exempted their activities from the reach of the antitrust laws. After considering the parties' arguments and undertaking a preliminary inquiry into the scope of the doctrine, this Court denied defendants' motion. Because there was "so much variation among the 140 airports involved in the action," and because "defendants themselves admitted that `the availability to defendants of * * * Noerr defenses would require proof at trial on an airport-by-airport basis,'" the Court concluded that defendants "failed to sustain their burden of showing that plaintiff can prove no set of facts that would remove its action from the Noerr-Pennington exception." Dollar Rent A Car Systems, Inc. v. Hertz Corp., 434 F.Supp. 513, 517 (N.D.Cal.1977).

Shortly after consolidation of the first seven actions, the Court entered a pre-trial order permitting defendants jointly to file a renewed motion for summary judgment predicated on Noerr-Pennington and authorizing full factual discovery directed at the airports chosen by defendants to be the focus of that motion. Defendants chose the airports in Austin, Texas; Denver, Colorado; and Miami, Florida, and undertook extensive discovery to support their claim. They then brought this motion, supplemented by a lengthy statement of facts and numerous exhibits. After having considered defendants' papers, plaintiffs' memoranda of facts and law in opposition, and the arguments of counsel, the Court concludes that defendants' motion must be denied as to its Noerr-Pennington defense.

A. Background of the Noerr-Pennington —Doctrine

In Eastern Railroads Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961), a group of trucking companies and their trade association sued 24 railroads, a railroad association, and a public relations firm under Sections 1 and 2 of the Sherman Act. They alleged that defendants had entered into a joint conspiracy to influence legislative and executive action for the purpose of destroying competition in the long-haul freight business. The Supreme Court found the railroads' actions to be wholly immune from the antitrust laws, holding that a violation of the Sherman Act could not be predicated on mere attempts to influence the passage or enforcement of laws even if the purpose and effect of such influence was anti-competitive. 365 U.S. at 135-136, 81 S.Ct. 523. This conclusion rested on the necessity of preserving the informed operation of governmental processes and of protecting the right of petition guaranteed by the First Amendment. 365 U.S. at 137-138, 81 S.Ct. 523, see Franchise Realty v. S. F. Joint Exec. Bd., 542 F.2d 1076, 1080 (9 Cir. 1976), cert. denied, 430 U.S. 940, 97 S.Ct. 1571, 51 L.Ed.2d 787 (1977). In addition, the Court found that Congress had not intended to regulate "political activity," pointing to the "essential dissimilarity between an agreement jointly to seek legislation or law enforcement and the agreements traditionally condemned by § 1 of the Act." 365 U.S. at 136-137, 81 S.Ct. at 529, see Kurek v. Pleasure Driveway & Park Dist., 557 F.2d 580, 592 (7 Cir. 1977), vacated and remanded, 435 U.S. 992, 98 S.Ct. 1642, 56 L.Ed.2d 81, on remand, 583 F.2d 378 (7 Cir. 1978), cert. denied, 439 U.S. 1090, 99 S.Ct. 873, 59 L.Ed.2d 57 (1979).

The Supreme Court reaffirmed and extended Noerr four years later in United Mine Workers of America v. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965). In Pennington, a small coal mining company filed a cross claim under Sections 1 and 2 of the Sherman Act against the United Mine Workers, its trustees, and certain large coal operators, alleging a joint conspiracy to influence the Secretary of Labor and other government officials⁴ to establish a high minimum wage for employees of contractors selling coal to the TVA. The intended victims of this conspiracy were the smaller coal companies operating in the TVA term contract market. 381 U.S. at 660, 85 S.Ct. 1585. Despite defendants' anticompetitive intentions, the Court determined that their conduct was protected from the reach of the antitrust laws. "Joint efforts to influence public officials do not violate the antitrust laws even though intended to eliminate competition," and even though the challenged conduct may be "part of a broader scheme itself violative of the Sherman Act." Id. at 670, 85 S.Ct. at 1593.

The most recent pronouncement of the Supreme Court in this area came in California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 92 S.Ct. 609, 30 L.Ed.2d 642 (1972). In California Motor the Court again affirmed the validity of the Noerr-Pennington doctrine and concluded that its protection should extend to joint activity to influence courts and administrative adjudicative bodies.⁵

Defendants rely heavily on California Motor in arguing that they are entitled to antitrust immunity because the airport officials they allegedly sought to influence were representatives of local administrative bodies. In response, plaintiffs make three arguments: First, that Noerr-Pennington does not immunize...