Jack Walters & Sons Corp. v. Morton Bldg., Inc.

• Decision Date: 22 June 1984
• Docket Number: No. 83-2300,83-2300
• Citation: 737 F.2d 698
• Parties: , 1984-2 Trade Cases 66,080 JACK WALTERS & SONS CORP., Plaintiff-Appellant, v. MORTON BUILDING, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 698

737 F.2d 698

39 Fed.R.Serv.2d 504, 1984-2 Trade Cases 66,080

JACK WALTERS & SONS CORP., Plaintiff-Appellant, v. MORTON BUILDING, INC., Defendant-Appellee.

No. 83-2300.

United States Court of Appeals Seventh Circuit.

Argued March 30, 1984.

Decided June 22, 1984.

John S. Skilton, Foley & Lardner, Milwaukee, Wis., for plaintiff-appellant.

Richard T. O'Neill, Michael, Best & Friedrich, Milwaukee, Wis., for defendant-appellee.

Before ESCHBACH and POSNER, Circuit Judges, and SWYGERT, Senior Circuit Judge.

POSNER, Circuit Judge.

This antitrust suit under section 1 et seq. of the Sherman Act, 15 U.S.C. Sec. 1 et seq., pits a building-materials dealer, Walters, against a manufacturer of prefabricated farm buildings, Morton. The complaint, filed in 1978, alleges that Morton tied building components to its trademark, assigned its franchised dealers (one of whom was Walters) exclusive sales territories, limited the prices the dealers could charge consumers, and eventually took over the dealership function, terminating Walters in the process. There also is a pendent claim for breach of a duty of fair dealing under Wisconsin law. In 1981, shortly before trial was to begin, Morton moved for summary judgment. The district judge referred the motion to a special master, a member of the Milwaukee bar. After considering for 17 months the voluminous materials that the parties had submitted in connection with the motion, the special master submitted his report, which recommended granting the motion except with respect to the claim regarding exclusive territories. In a brief order the district judge adopted the master's recommendations in their entirety and therefore dismissed all but the exclusive-territories claim, which he retained for trial. He then directed entry of final judgment for Morton on the dismissed claims upon an express determination that there was no just reason for delay, and Walters has appealed under Rule 54(b) of the Federal Rules of Civil Procedure.

We consider first, on our own initiative as we must, whether the dismissed and retained claims are separate claims within the meaning of Rule 54(b); if they are not, the judgment of dismissal cannot be appealed as a final judgment and Walters must wait to take its appeal until the exclusive-territories claim is tried. Our recent decisions emphasize that trial judges do not have carte blanche to certify partial dispositions for immediate appeal under Rule 54(b). See A/S Apothekernes Laboratorium v. I.M.C. Chem. Group, Inc., 725 F.2d 1140 (7th Cir.1984); Minority Police Officers Ass'n v. City of South Bend, 721 F.2d 197 (7th Cir.1983). The rule itself makes clear that a district judge may enter an appealable judgment only if it disposes of a "claim for relief" that is "separate" from the claims not disposed of. But unfortunately the meaning that the draftsmen intended "claim for relief" to bear is not clear, see Local P-171, Amalgamated Meat Cutters v. Thompson Farms Co., 642 F.2d 1065, 1069-71 (7th Cir.1981); 10 Wright, Miller & Kane, Federal Practice and Procedure Sec. 2657 (2d ed. 1983), and the Supreme Court has not yet attempted a compendious definition. See Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 76 S.Ct. 895, 100 L.Ed. 1297 (1956); Cold Metal Process Co. v. United Engineering & Foundry Co., 351 U.S. 445, 76 S.Ct. 904, 100 L.Ed. 1311 (1956); Liberty Mutual Ins. Co. v. Wetzel, 424 U.S. 737, 743 n. 4, 96 S.Ct. 1202, 1206 n. 4, 47 L.Ed.2d 435 (1976). The recent decisions of this court have experimented with a practical approach based on what we conceive to be the most important purpose behind Rule 54(b)'s limitations--to spare the court of appeals from having to keep relearning the facts of a case on successive appeals. The approach is: if the facts underlying different claims are different, the claims are separate for Rule 54(b) purposes. For if there are different facts (and of course different issues) consideration of the appeals piecemeal rather than all at once will not involve a duplication in the efforts required of the judges to prepare for argument in, and to decide, each appeal. The gains from forcing the consolidation of appeals will therefore be small and will be outweighed by the benefits of an immediate appeal in resolving the parties' rights with respect to a part of the controversy between them. By the same token, if there is a great deal of factual overlap between the decided and the retained claims they are not separate, and appeal must be deferred till the latter are resolved.

Applying this approach to the present case, we find potential but not actual factual overlap between the charges that the district judge dismissed and the single charge, involving exclusive territories, that he retained; therefore we have jurisdiction of the appeal. A charge that limiting the territories in which one's dealers can sell violates section 1 of the Sherman Act is now evaluated under the Rule of Reason. See Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 97 S.Ct. 2549, 53 L.Ed.2d 568 (1977). This means among other things that the plaintiff must show that the defendant has market power, see Valley Liquors, Inc. v. Renfield Importers, Ltd., 678 F.2d 742, 745 (7th Cir.1982), as this is a prerequisite to being able to restrain trade unreasonably. The Supreme Court's most recent tying decision requires the plaintiff to make a similar, maybe identical, showing in order to prove that a tying arrangement is unlawful, even though tying still is referred to as a per se offense. See Jefferson Parish Hospital Dist. No. 2 v. Hyde, --- U.S. ----, 104 S.Ct. 1551, 1559-60, 80 L.Ed.2d 2 (1984). Moreover, where as in the present case the plaintiff tries to show that the whole is greater than the sum of its parts--that an "aggregation of trade restraints" is unlawful even if the constituent restraints taken one by one are not--and one of the parts is territorial exclusivity, the issue of unlawful "aggregation" logically requires consideration of the facts concerning territorial exclusivity.

All these are reasons why in the usual case a challenge to a scheme of restricted distribution states only one claim for Rule 54(b) purposes. But this case is unusual in that the particular grounds on which the special master and the district judge disposed of the charges that are involved in the appeal do not overlap, factually or legally, the charge of territorial exclusivity that he retained for trial. A clue to this is that the parties' briefs in this court tell us nothing about the exclusive territories--how large they were, how exclusivity was enforced, how long exclusive territories were in effect, and for what reasons and with what consequences. Although the voluminous record submitted with the appeal contains much on these questions, that is only because the appeal record is the same record that was before the master and the district judge. The parties have made no reference to the parts of the record that relate to exclusive territories. The district judge dismissed the tying charge not because he found that Morton lacked market power, an issue that as we have said would also be highly relevant to the lawfulness of territorial restrictions, but because he found that the tying and the tied products were not separate products and therefore that there could be no tie-in. He dismissed the resale price maintenance and vertical integration allegations (the latter involving Morton's takeover of the retail distribution of its buildings) on evidentiary grounds unrelated to the lawfulness of exclusive territories. And with all of the specific charges other than the territorial charge dismissed, the "aggregation of trade restraints" charge fell of its own weight, like a conspiracy charge when all but one of the alleged participants have been exonerated.

Since, for these reasons, this appeal is unencumbered by any facts bearing on the retained claim, we are entitled to regard that as a separate claim. Its retention by the district court therefore does not deprive us of jurisdiction over the appeal from the dismissal of the rest of the plaintiff's case. This brings us to the merits. We begin with the tie-in charge.

Almost every product can be viewed as a package of component products: a pair of shoes, for example, as a package consisting of a left shoe and a right shoe; a man's three-piece suit as a package consisting of a jacket, vest, and pants; a belt as a package consisting of a buckle and a strap. As shown by the last of these examples, it is possible to describe a product as a package of components even if the components are physically integrated at the point of sale to the consumer. Indeed, much of what is called "manufacturing" is the assembly, i.e., physical integration, of components, often components manufactured by other companies. The manufacturer of an airplane, for example, does not build the whole thing from scratch. Usually he will build just the airframe consisting of the fuselage, wings, and tail, and he will buy the engine, the wheels, the radar and other electronic equipment and much else besides from other manufacturers and will then assemble the various components to create the finished aircraft. Very few products today are produced like a statue that is made by pouring molten bronze into a cast--the ultimate single product. But to hold therefore that every composite product is a tie-in, subject to the hostile scrutiny to which antitrust law still subjects tie-ins, would place industry under a vast antitrust cloud, and has been rejected. In Johnson v. Nationwide Industries, Inc., 715 F.2d 1233 (7th Cir.1983), for example, we held that a condominium and a contract for the provision of management services to the condominium owner were a single product, so that the owner could not complain, at least under antitrust law, that the developer who had sold him the condominium had forced him as a condition of being allowed to purchase it...