In re Indep. Serv. Organizations Antitrust Lit.
| Decision Date | 16 February 2000 |
| Docket Number | No. CIV.A. MDL-1021.,CIV.A. MDL-1021. |
| Citation | 85 F.Supp.2d 1130 |
| Parties | In re INDEPENDENT SERVICE ORGANIZATIONS ANTITRUST LITIGATION. This Document Applies To: Creative Copier Services v. Xerox Corp. |
| Court | U.S. District Court — District of Kansas |
Creative Copier Services ("CCS") filed suit against Xerox Corporation, alleging that it violated the federal antitrust laws and state competition laws by refusing to sell copier parts to independent service organizations, tying its sale of parts and service, and disparaging CCS. Xerox filed a counterclaim alleging that CCS had infringed Xerox patents for various copier parts, Xerox copyrights for service manuals and Xerox trademarks associated with copying machines. This matter is before the Court on the Xerox Motion For Summary Judgment On Plaintiff's State Law Claims For "Defamation And Trade Disparagement" And Tortious Interference With Contract (Doc. # 740) filed April 19, 1999; Xerox Corporation's Motion For Summary Judgment On Plaintiff's Antitrust Claims (Doc. # 746) filed April 19, 1999; Xerox Corporation's Motion For Summary Judgment On Plaintiff's Antitrust Claims Barred By The Statute Of Limitations (Doc. # 742) filed April 19, 1999; Xerox Corporation's Motion For Summary Judgment On Its Copyright Infringement Counterclaims (Doc. # 744) filed April 19, 1999; Xerox Corporation's Motion For Summary Judgment On Patent Infringement (Doc. # 735) filed March 19, 1999; Cross Motion By Creative Copier Service For Summary Judgment On Xerox's Patent Infringement Counterclaim (Doc. # 756) filed May 3, 1999; Xerox Corporation's Motion To Strike The Declaration Of Donald Gavin (Doc. # 766) filed June 1, 1999; and Motion By Creative Copier Service To Deem Admitted Matters Pursuant To Local Rule 56.1 And The Order Of April 21, 1999, And To Strike Matters From Xerox Reply Memoranda (Doc. # 784) filed June 28, 1999. After carefully considering the parties' briefs and pertinent portions of the record, the Court is prepared to rule.
Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c); accord Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Vitkus v. Beatrice Co., 11 F.3d 1535, 1538-39 (10th Cir.1993). A factual dispute is "material" only if it "might affect the outcome of the suit under the governing law." Anderson, 477 U.S. at 248, 106 S.Ct. 2505. A "genuine" factual dispute requires more than a mere scintilla of evidence. Id. at 252, 106 S.Ct. 2505.
The moving party bears the initial burden of showing the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Hicks v. City of Watonga, 942 F.2d 737, 743 (10th Cir.1991). Once the moving party meets its burden, the burden shifts to the nonmoving party to demonstrate that genuine issues remain for trial "as to those dispositive matters for which it carries the burden of proof." Applied Genetics Int'l, Inc. v. First Affiliated Secs., Inc., 912 F.2d 1238, 1241 (10th Cir.1990); see also Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Bacchus Indus., Inc. v. Arvin Indus., Inc., 939 F.2d 887, 891 (10th Cir.1991). The nonmoving party may not rest on its pleadings but must set forth specific facts. Applied Genetics, 912 F.2d at 1241.
"[W]e must view the record in a light most favorable to the parties opposing the motion for summary judgment." Deepwater Invs., Ltd. v. Jackson Hole Ski Corp., 938 F.2d 1105, 1110 (10th Cir.1991). Summary judgment may be granted if the non-moving party's evidence is merely colorable or is not significantly probative. Anderson, 477 U.S. at 250-51, 106 S.Ct. 2505. "In a response to a motion for summary judgment, a party cannot rely on ignorance of facts, on speculation, or on suspicion, and may not escape summary judgment in the mere hope that something will turn up at trial." Conaway v. Smith, 853 F.2d 789, 794 (10th Cir.1988). Essentially, the inquiry is "whether the evidence presents a sufficient disagreement to require submission to the jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson, 477 U.S. at 251-52, 106 S.Ct. 2505.
For purposes of the Xerox motion for summary judgment on plaintiff's state law claims, the following facts are undisputed, deemed admitted, or where disputed, viewed in the light most favorable to CCS.
Xerox, a New York corporation with its principal offices in Connecticut, is engaged in the business of inventing, manufacturing, selling and servicing copiers. In 1981, William Dixon, a former Xerox employee, founded Creative Copier Services ("CCS"), a sole proprietorship which has its principal place of business in Middletown, Connecticut. CCS is an independent service organization ("ISO") which services and maintains Xerox copiers. CCS focused its service on the 10 Series of Xerox high volume copiers. These included the 1090 model which makes 90 copies per minute, the 1075 model which makes 75 copies per minute, and the 1065 model which makes 65 copies per minute. See Stat. of Lim. SOF ¶ 25; Antitrust SOF ¶ 3.1 CCS also serviced a small number of model 9900 high volume copiers, and several lower volume Xerox copiers.
On August 18, 1988, Xerox had a national parts verification program. On that date Peggy Murphy, who headed the program, circulated a form letter for Xerox managers to use when former service representatives for Xerox crossed over and joined independent service organizations. See State Claims SOF ¶ 38; Stat. of Lim. SOF ¶ 125. The letter stated in part:
Recently, ______, the Customer Service Engineer who had been servicing your ______ equipment, terminated his (her) employment with Xerox to join an independent service organization.
* * * * * *
[Y]ou may be approached by ______, in his (her) new capacity with a proposal to terminate your Service Contract with Xerox and sign on with the independent service organization he (she) now represents. It is important for you to understand that while ______ is fully trained on the products he (she) once serviced, he (she) no longer has the benefit of the intensive, ongoing training available to a Xerox Customer Service Engineer. In addition, the independent service organization would not be given access by Xerox to the knowledge required to service Xerox equipment introduced with new technology or other know-how developed by Xerox in the future.
State Claims SOF ¶ 38; Stat. of Lim. SOF ¶ 126.
After a national meeting of Xerox employees in November 1988, Joseph Nugent the district service manager for Xerox in Hartford, noted in a memorandum to other employees that CCS and Dixon wanted to service Xerox model 1075/1090 and other low volume copiers. Nugent also noted that Dixon was a minority, got state business and was going after government contracts. See State Claims SOF ¶ 32.
In the "Selling Guide" section of an internal memorandum dated December 9, 1988, Xerox stated that it had a nationwide parts availability program and a "computerized parts inventory process to ensure efficient turnaround on parts replacements." Id. ¶ 39. Xerox also noted that ISOs "may not have the capital" to stock the parts needed to support all service calls. Id. ¶ 41.
In 1989, Xerox published an internal guideline of five items which Xerox employees "[could] not say" to customers or potential customers:
• You cannot disparage the independent service organizations or its employees in any manner.
• While independent service organizations' service engineers may have been trained by Xerox initially, they do not have access to current Xerox technical publications or the knowledge required to service Xerox equipment introduced with new technology.
• Independent service organizations cannot get parts to service Xerox's newest products.
• An independent service organization does not have the ability to obtain an adequate supply of replacement parts to service Xerox equipment.
• Independent service organizations deal or may be dealing in stolen or illegally obtained parts.
On January 26, 1990, at a meeting of regional district managers for Xerox, Xerox discussed CCS and included it in a list of major ISOs in the United States. See State Claims SOF ¶ 33. In a memorandum circulated after the meeting, Xerox noted that Cigna was the primary account of CCS and that CCS leveraged minority ownership. See id.
In September 1994, Xerox provided Nugent a script to use in competing against ISOs. It stated:
• [P]arts [are] at the fingertips of our technicians .... Xerox Parts and Logistics Distribution system makes it possible for Xerox Service technicians to obtain any part within 24 hours .... Our system allows us to locate and deliver any part overnight, so you [w]on't be left out in the cold when you need your equipment most.
• Xerox service technicians would never install a "stripped" or "replica" part to maintain your equipment.
• When considering an alternative service provider for your Xerox equipment, consider the training and skill level of the technicians that will be keeping your equipment up, running and producing for you.
State Claims SOF ¶¶ 40, 42, 44; Stat. of Lim. SOF ¶¶ 37, 82.
CCS claims that Xerox representatives disparaged CCS to several customers, including Cigna Insurance, Aetna Insurance and the State of Connecticut. Martin Klagholtz, who worked for Xerox as an...
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