Israel Travel Advisory Service, Inc. v. Israel Identity Tours, Inc.

• Decision Date: 14 August 1995
• Docket Number: 94-1554,Nos. 94-1451,94-1815 and 94-1816,s. 94-1451
• Citation: 61 F.3d 1250
• Parties: 1995-2 Trade Cases P 71,063, RICO Bus.Disp.Guide 8854 ISRAEL TRAVEL ADVISORY SERVICE, INC., Celia Shar, and Marilyn Ziemke, Plaintiffs-Appellants, Cross-Appellees, v. ISRAEL IDENTITY TOURS, INC., Larry Ritter, and Marlene Ritter, Defendants-Appellees, Cross-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1250

61 F.3d 1250

1995-2 Trade Cases P 71,063, RICO Bus.Disp.Guide 8854

ISRAEL TRAVEL ADVISORY SERVICE, INC., Celia Shar, and Marilyn Ziemke, Plaintiffs-Appellants, Cross-Appellees, v. ISRAEL IDENTITY TOURS, INC., Larry Ritter, and Marlene

Ritter, Defendants-Appellees, Cross-Appellants.

Nos. 94-1451, 94-1554, 94-1815 and 94-1816.

United States Court of Appeals, Seventh Circuit.

Argued Jan. 9, 1995.

Decided July 20, 1995.

Rehearing and Suggestion for Rehearing

En Banc Denied

Aug. 14, 1995.

Peter C. Woodford, Daniel J. Voelker (argued), and Christopher V. Langone, Seyfarth, Shaw, Fairweather & Geraldson, Chicago, IL, for plaintiff.

Ronald M. Brown, Mitchell A. Cohen, Dennis M. Sbertoli, Brown & Shinitzky, Chicago, IL, David A. Axelrod (argued), Lori F. Chacos, Schoenberg, Fisher & Newman, Chicago, IL, Donald B. Levine, Corri D. Fetman, Levin & Ginsburg, Chicago, IL, for defendants.

Before FLAUM and EASTERBROOK, Circuit Judges, and PAINE, District Judge. ^*

EASTERBROOK, Circuit Judge.

Bar mitzvah tours of Israel. That is the market defined for the antitrust claim in this case. It is an absurd market definition. For a market is defined to aid in identifying any ability to raise price by curtailing output. Ball Memorial Hospital, Inc. v. Mutual Hospital Insurance, Inc., 784 F.2d 1325 1335-37 (7th Cir.1986). These litigants do not own or control the assets that produce output in a travel market: fleets of airplanes, chains of hotels, Israel and its history. Anyone can buy tickets, rent rooms, and conduct tours. If these firms were to vanish tomorrow production would be unaffected. Their principal assets--skills as marketers and guides--would survive. People rather than firms hold expertise (economists call it "human capital" for good reason), and they can change affiliation. Output often grows in the process as competition intensifies. That is not only an economic theory but also the genesis of this case. Israel Travel Advisory Service (ITAS) specializes in bar and bat mitzvah tours of Israel. Families tour historical sites, with a celebration arranged at a place of religious significance. Israel Identity Tours (IIT), founded by disaffected employees of ITAS, began vigorous competition. ITAS remains the larger firm and has increased its sales consistently--though ITAS accuses IIT of monopolization!--but begrudges IIT even a single customer. The competition, like the litigation, is marred by charges of deception and defamation. We have a spite match, and as in many such contests the parties have raised every imaginable claim and others that exceed the bounds of imagination. To make this opinion tractable, we simplify greatly.

Celia Shar and Marilyn Ziemke founded ITAS in 1970. Parents who want to arrange religious celebrations for their children in Israel as part of a package tour are a select market, and ITAS (like its rivals) is an in-home operation. Shar and Ziemke recruited experienced guides in Israel; they relied on a combination of ads and word-of-mouth to obtain clients in the United States. The best promoters are persons well known and respected in the Jewish community. Ilene Wallerstein represented ITAS in Chicago, and by all accounts she was successful in obtaining business. Eventually she had a falling-out with Shar and Ziemke. Wallerstein quit in 1990 and set up a rival in Illinois; Karen Kaplan, ITAS's sales representative in Boston, also quit. Ami Ben Geller, one of ITAS's former tour leaders in Israel, persuaded his friend Larry Ritter to set up a bar mitzvah travel service in New Jersey. Geller agreed to be the guide; Transglobal Travel, ITAS's former land facilitator in Israel, also switched allegiances. The IIT in the caption of this case is Larry Ritter's operation; Wallerstein's firm, incorporated in Illinois, used the identical name (which to reduce confusion we call IIT-Illinois). Wallerstein, Kaplan, and Ritter cooperated, and their ads implied that the two corporations are a single firm. One of the issues in the case is how close that cooperation became.

Ilene Wallerstein began to slander ITAS, telling potential customers that it was on the verge of bankruptcy--a serious charge, because travelers do not want to hand over thousands of dollars to a firm that may furnish a chose in action rather than travel. Being stranded with worthless vouchers is no one's idea of a good trip. ITAS sued IIT-Illinois and Wallerstein, who settled. But if IIT was a joint venture or conspirator with IIT-Illinois, then IIT is jointly liable for Wallerstein's words. ITAS has numerous other gripes. Ads for IIT trumpeted 33 years' experience; ITAS says that this is a lie because IIT had just commenced business, while IIT says that the number referred to Geller's long experience as a guide, although one of the ads did not name Geller. IIT implied that Joel Leibowitz was affiliated with the firm, which ITAS says he was not. ITAS also wants to hold IIT liable for disparaging comments Leibowitz made, on the theory that he had apparent if not actual authority to represent IIT. When ITAS began to offer a "free" tour of Israel to the bar or bat mitzvah celebrant, IIT responded by advertising "free" tours of its own; ITAS believes that these ads and corresponding oral statements to potential customers were false, or at least misleading, because IIT offered only "free" land arrangements, while ITAS included air fare too. (We put "free" in quotations because neither firm offered anything for free; money from the sale of travel arrangements to the celebrants' parents and siblings covered the costs.) Then there is a claim that Marlene Ritter, Larry's wife, told one potential customer that ITAS and IIT are "the same thing." All of this, according to ITAS, violated the common law of defamation and unfair competition, consumer protection laws in Illinois and New Jersey, the Sherman Antitrust Act, the Lanham Trademark Act, and the Racketeer Influenced and Corrupt Organizations Act (RICO). For its part, IIT filed a counterclaim seeking relief on nine theories.

The district court carved several claims and parties from the case by partial summary judgment. What was left was tried to a jury--although the judge resolved some additional claims in mid-trial under Fed.R.Civ.P. 50. The jury concluded that IIT (but not Larry Ritter) had slandered ITAS. It awarded $75,000 in compensatory and $102,945 in punitive damages for this tort. The jury rejected every other claim presented to it, and the judge rejected all efforts to upset the verdict. 1994 U.S.Dist. LEXIS 751. Now we have cross-appeals. IIT believes that it should have prevailed on the defamation theory and counterclaims, while ITAS thinks that it is entitled to a larger recovery, and from the Ritters personally as well as from their corporation. We start with IIT's argument that it should be ITAS's judgment creditor rather than its judgment debtor.

Wallerstein made the defamatory remarks that led to this verdict. IIT could be responsible for them only if the two IITs were joint adventurers. Firms do not act by themselves; people are responsible for their deeds, so IIT could be responsible only if Larry or Marlene Ritter made common cause with Wallerstein. The district judge granted summary judgment in Marlene's favor, and the jury ruled in Larry's. Yet if neither Ritter was responsible, how can IIT, whose liability is vicarious, be responsible? How can a corporation be ordered to pay punitive damages when no natural person has committed a tort? Perhaps IIT's liability depends exclusively on Leibowitz's statements, but these would be slender support for a verdict of the size the jury returned. Perhaps the jury's verdicts are simply inconsistent. As it happens, IIT did not point out the inconsistency to the district judge, and it has not argued to us that the jury's absolution of Larry Ritter calls for a new trial--the right way to deal with such problems, for neither of the inconsistent verdicts has priority. American Casualty Co. v. B. Cianciolo, Inc., 987 F.2d 1302, 1305 (7th Cir.1993). We do not invent arguments for the parties in civil litigation and therefore pass to the contentions IIT presses.

What IIT does argue is that it lacked an adequate opportunity to develop its defense. It wanted to take depositions of Shar and Ziemke, ITAS's principals. The district court refused to compel Shar and Ziemke to attend the depositions IIT noticed, a step that IIT believes entitles it to another trial. We don't see why. Harmless errors do not vitiate verdicts, and IIT does not explain how the lack of discovery injured it. It does not say that any surprising evidence came out at trial or that depositions would have assisted in the exploration of a material issue or influenced trial strategy. At all events, the district court did not err. The discovery cutoff was March 15, 1993. Having twice extended this date, the district judge told the parties that she would not do so a third time. On March 3, 1993, IIT mailed four notices of deposition; ITAS received them on March 8. They called for the deposition of Shar and Ziemke in Chicago on March 11 and 12; IIT wanted to take depositions of other witnesses in New Jersey on the same dates. Before mailing these notices, IIT had received ITAS's notices of third-party depositions for upstate New York on March 11 and 12. It cannot have come as much surprise to IIT that the judge refused to compel ITAS's lead counsel to rearrange his schedule--or to be in three places at once--when IIT had waited until the end of discovery to schedule the depositions of its adversaries. ITAS had offered to make Shar and Ziemke available earlier, but IIT was not interested. The district court did not commit clear error; to the contrary, her decision was clearly correct.

Gamesmanship had greater costs for IIT. Throughout discovery IIT was less than forthcoming in producing documents ITAS sought. Three times the district judge granted ITAS's motions...