INTERN. DISTRIBUTION CENTERS v. Walsh Trucking Co.
| Citation | 618 F. Supp. 98 |
| Decision Date | 19 June 1985 |
| Docket Number | No. 82 Civ. 8709 (JFK).,82 Civ. 8709 (JFK). |
| Parties | INTERNATIONAL DISTRIBUTION CENTERS, INC., Plaintiff, v. WALSH TRUCKING CO., INC., Coastal Freight Lines, Inc., Hempstead Delivery Co., Inc., National Retail Transportation, Inc., Francis J. Walsh, Jr., Kenneth B. Henning, Mark S. Tice, Raymond Weiss, Carmine Sabatini, and Chuck Hannon, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Malcolm A. Hoffmann, Craig Schiller, Peter L. Altieri, Law Firm of Malcolm A. Hoffmann, New York City, for plaintiff.
Milton Handler, Gerald Sobel, Alan F. Goott, Kaye, Scholer, Fierman, Hays & Handler, Marc Zoldessy, Simon, Uncyk & Borenkind, New York City, for defendants.
STATEMENT
Plaintiff has prevailed after a trial of more than six weeks on three Sherman Act ("Act") antitrust claims. The Court heard 30 days of testimony from 30 witnesses and received hundreds of exhibits in evidence. The jury has awarded to plaintiff antitrust damages in the amount of $13,208,697.00 which are to be trebled under the Clayton Act for a total award of $39,626,091.
Plaintiff International Distribution Centers, Inc. ("IDC") is a trucking company which transports Garments on Hanger (GOH) in Less Than Truckload (LTL) quantities along the traffic lane running between Pennsylvania and New York City.
Plaintiff alleged that (1) Frank Walsh and the corporate defendants attempted to monopolize the LTL transportation of GOH among garment manufacturers, suppliers, contractors and retailers along the so-called Pennsylvania "corridor," or traffic lane, i.e., the New York, New Jersey, Pennsylvania route, thereby causing antitrust injury to IDC; (2) defendants conspired with one or more other persons to unreasonably restrain trade in connection with LTL transportation of GOH among garment manufacturers, suppliers, contractors and retailers along the so-called Pennsylvania "corridor," thereby proximately causing antitrust injury to IDC; and (3) defendants conspired with one or more other persons to monopolize the LTL transportation of GOH among garment manufacturers, suppliers, contractors and retailers along the so-called Pennsylvania "corridor," thereby proximately causing antitrust injury to IDC. On these three counts, the jury found for plaintiff after three days of deliberations.
Plaintiff also urged that one or more of the defendants induced key IDC employees to leave IDC's employ in order to obtain plaintiff's trade secrets for defendants' use, thereby causing injury to IDC. Finally, plaintiff alleged that the defendants solicited plaintiff's customers by utilizing IDC trade secrets, thereby causing injury to IDC. The jury found that plaintiff had failed to meet its burden with regard to its possession of trade secrets and dismissed the plaintiff's two trade secrets contentions.
Having found for the plaintiff on the three antitrust claims, the jury did not consider defendants' counterclaim for unfair competition.
The jury was charged on the elements of attempted monopolization under Section 2 of the Sherman Act, the elements of conspiracy to monopolize under Section 2 of the Act and the elements of conspiracy to unreasonably restrain trade under Section 1 of the Act. Further, the jury was charged at length on antitrust damages and was specifically told that "the plaintiff is not entitled to speculative damages and you should not engage in guesswork." (Transcript ("Tr.") 4704).
Prior to summations, defense counsel requested that the members of the jury be specifically told that they could make notes of exhibit numbers as the exhibits were referred to by counsel during summations so that the jury could request the exhibits during its deliberations. The Court granted this application and the jury made notations and did request many of the exhibits referred to and relied on by counsel in their closing arguments.
It is in this context that defendants move for judgment n.o.v., or for a new trial, pursuant to Rule 50 of the Federal Rules of Civil Procedure. The Court has carefully reviewed the trial transcript of over 4,700 pages and studied the excellent submissions by counsel on both sides.
Defendants have moved for judgment n.o.v. or a new trial under Rule 50 of the F.R.Civ.P.. These motions are denied for the reasons set forth below. However, remittitur is ordered and the amount of the award is reduced for the reasons set forth on p. 102 et seq. infra.
In Tennant v. Peoria & Pekin Union R.R. Co. 321 U.S. 29, 35, 64 S.Ct. 409, 412, 88 L.Ed. 520 (1944), the Supreme Court set forth the function of the trial court in reviewing a jury verdict:
Courts are not free to reweigh the evidence and set aside the jury verdict merely because the jury could have drawn different inferences or conclusions or because judges feel that other results are more reasonable.
Accord Sentilles v. Inter-Caribbean Shipping Corp., 361 U.S. 107, 80 S.Ct. 173, 4 L.Ed.2d 142 (1959). Judgment n.o.v. is to be granted only when:
Mattivi v. South African Marine Corp., 618 F.2d 163, 167-68 (2d Cir.1980).
It is in this framework that the Court approaches this motion.
Defendants maintain that plaintiff failed to establish that defendants violated Section 2 of the Sherman Act by attempting to monopolize the relevant market.
The defense urges in this motion that there was no "dangerous probability of success" and that therefore plaintiff's claim must fail since such must be shown to establish an attempt to monopolize under Section 2 of the Sherman Act. FLM Collision Parts, Inc. v. Ford Motor Co., 543 F.2d 1019, 1030 (2d Cir.1976), cert. denied, 429 U.S. 1097, 97 S.Ct. 1116, 51 L.Ed.2d 545 (1977). In this regard the Court charged the jury as follows:
A dangerous probability means more than a mere possibility. It means a reasonable likelihood that by resorting to unlawful acts Walsh and/or NRT have come dangerously close to achieving a monopoly position. Tr. 4689.
Plaintiff argues with some force that there was overwhelming evidence that the defendant Frank Walsh had a specific intent to monopolize. There was an abundance of proof to that effect before the jury. In his treatise, Professor Sullivan writes at p. 138 in "The Law of Anti-Trust," Section 51 (1977):
Neither is there reason to hesitate to condemn conduct short of close probability of success on the ground that such a rule would unduly discourage effective, though aggressive, competitive conduct. By requiring (under the intent test) that the conduct be of a kind plainly threatening competitive conditions, the rule already filters out any serious risk that desirable conduct will be inhibited. Conduct which constitutes an attempt is predatory, coercive, or calculated to heighten entry barriers; there is nothing which should make us hesitate to condemn it if the evidence leaves no doubt that the conduct has been properly characterized.
The Second Circuit in Northeastern Telephone Co. v. American Telephone & Telegraph Co., 651 F.2d 76, 85 (2d Cir.1981) (citation omitted), cert. denied, 455 U.S. 943, 102 S.Ct. 1438, 71 L.Ed.2d 654 (1982), pointed out that "because section 2's prohibition of attempts to monopolize encompasses conduct by firms lacking monopoly power ... its potential reach is broader than the proscription against monopolization."
At trial plaintiff produced witnesses in the garment industry who testified to the limited number of trucking companies which transported GOH in LTL quantities in the Pennsylvania traffic lane. Given this limited number of competitors and the significant amount of business which IDC established it lost to the Walsh interests, the jury could reasonably have inferred that defendants possessed, in the words of the Court's charge (Tr. 4690), "sufficient market power to render their conduct likely to succeed." The Walsh companies possessed real economic clout compared to competitors in the market. (Tr. 1336, DTX 717). Three months after entering the market, defendants had procured seven of plaintiff's customers with annual sales of over $1 million. In addition, Walsh interests had recently purchased three companies doing business in the relevant market and had conferred with principals of other competitors regarding possible acquisition by the Walsh interests. Testimony of Walsh's power in the industry was received at several points in the proceeding. (Tr. 804, 1897-1901, 2141-42, 2283-89, 2293).
Further, there was ample evidence, if believed, of barriers to entry into the market (Tr. 474-75, 2937 and 2929) and of the existence of both a relevant product market (Tr. 1468, 1515-16, 2813, 2825-26, 4341, DTX 233) and geographic market (Tr. 476-77, 1466-68, 2120, 4338). It should be noted that the defense was the source of some of the evidence just cited.
Based on the proof presented at trial, this Court cannot conclude that "there is ... a complete absence of evidence supporting the verdict.... or.... an overwhelming amount of evidence in favor of the movant," South African Marine Corp., 618 F.2d at 167-68, on the issue of dangerous probability of success.
In support of its motion, the defense seems to concede that the Court properly instructed the jury on this issue of anticompetitive conduct (Defendants' Brief at 35, 37), but argues that plaintiff failed to meet its burden in this regard and that the verdict was "in blatant disregard of the Court's instructions." (Defendants' Brief at 38). Plaintiff, of course, argues that "the...
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International Distribution Centers, Inc. v. Walsh Trucking Co., Inc., 1280
...of sections 1 and 2 of the Sherman Act. 15 U.S.C. Secs. 1, 2 (1982). Treble damages in the amount of $38,261,967 were awarded to IDC, 618 F.Supp. 98. The principal issue on appeal is whether there can be a dangerous probability that a market will be monopolized where one firm in the market ......