Kemp Pontiac-Cadillac, Inc. v. HARTFORD AUTO. D. ASS'N, INC.

• Decision Date: 05 August 1974
• Docket Number: Civ. No. 14010.
• Citation: 380 F. Supp. 1382
• Court: U.S. District Court — District of Connecticut
• Parties: KEMP PONTIAC-CADILLAC, INC. and William G. Kemp v. HARTFORD AUTOMOBILE DEALERS' ASSOCIATION, INC., et al.

380 F. Supp. 1382

KEMP PONTIAC-CADILLAC, INC. and William G. Kemp v. HARTFORD AUTOMOBILE DEALERS' ASSOCIATION, INC., et al.

Civ. No. 14010.

United States District Court, D. Connecticut.

August 5, 1974.

Ira B. Grudberg, New Haven, Conn., for plaintiffs; Sidney Lesser Hofing, Theodore A. Schvimmer, William H. Mild, Trenton, N. J., of counsel.

Everett F. Fink, Edward W. Lincoln, Jr., Valentine J. Sacco, William R. Moller, Wesley W. Horton, Martin A. Gould, W. R. Hartigan, Richard M. Reynolds, Joseph F. Skelley, Jr., Hartford, Conn., J. Daniel Sagarin, Bridgeport, Conn., George C. Hastings, Hartford, Conn., for defendants.

RULING ON MOTIONS FOR SUMMARY JUDGMENT

BLUMENFELD, District Judge.

This is a private antitrust suit based on alleged violations of Sections 1 and 2¹ of the Sherman Antitrust Act (15 U.S.C. §§ 1 and 2) claiming injury to plaintiff's business and property. The plaintiff seeks treble damages in the amount of $15,434,091.00 under § 4 of the Clayton Act (15 U.S.C. § 15) and injunctive relief under § 16 of the Clayton Act (15 U.S.C. § 26). For jurisdiction the plaintiff invokes 28 U.S.C. § 1337.²

This matter is before the Court on motions by the several defendants for summary judgment. The decisions to file these motions apparently were induced by this Court's Pre-Trial Order No. 1 which in part provided that "Since the only basis for federal jurisdiction in this case would seem to be an alleged violation of the Sherman Act, the plaintiff is directed to set out specifically the facts upon which such jurisdiction can be predicated." With respect to this and other issues the plaintiff was ordered to "(1) outline the evidence which it proposes to offer to prove the facts relevant to each issue; (2) list as to each issue the witnesses and the general nature of the testimony each witness will give; and (3) list the exhibits it proposes to offer in support of each issue."³

The Nature of the Case

The complaint alleges that the plaintiff Kemp Pontiac-Cadillac, Inc.⁴ (hereinafter Kemp) was a retail automobile dealer in New Britain, Connecticut, where it operated its business under franchises from General Motors for the sale of Cadillacs and Pontiacs. It alleges that it entered into the automobile business by acquiring a going dealership for Cadillacs and Pontiacs. Within three months it moved from approximately 125th in Pontiac sales in New England to the 9th largest Pontiac dealer, and within five months it was the 7th largest, doubling the employment of the preceding dealership and making millions of dollars more sales. Kemp became the single largest automotive advertiser in the history of the New Britain Herald, the largest newspaper published in New Britain.

Realizing that it could profitably serve a larger market, Kemp made plans to relocate so as to be able to serve both the metropolitan Hartford area and New Britain. Kemp took an option on a 7.56 acre tract of land in Newington, Connecticut, nearer to Hartford, and successfully petitioned General Motors Corporation for permission to relocate the dealership there. Kemp built a larger physical plant on the new location and opened for business on November 10, 1965. Kemp's business continued to grow rapidly until allegedly slowed by the impact of the unlawful combination and conspiracy hereinafter set forth.

Kemp alleges that its phenomenal growth was due primarily to two factors: (a) Kemp's creation of a highly mechanized operation which drastically cut wasted time and created cost savings which were passed on to consumers; and (b) Kemp's creative and aggressive advertising and promotion policies, involving expenditures many times that of most other automobile dealers in the Hartford area, including that of the various automobile dealer conspirators. In contrast to his self-laudatory description of his own business acumen, Kemp alleges that his competitors in the Hartford area were not competing vigorously at the time of Kemp's entry into that market: the defendant automobile dealers had relatively stable sales, low expenditures for advertising and promotion, and enjoyed the easy, profitable mode of business life they had worked out at the consumers' expense.

The principal defendants are three of the franchised Chevrolet dealers in the metropolitan Hartford area; Capitol Motors in Hartford, Dworin Chevrolet in East Hartford, and Grody Chevrolet in West Hartford. Other defendants are Resolute Insurance Company, two trade associations, The Hartford Automobile Dealers' Association, Inc., The Connecticut Automotive Trades Association, Inc. (CATA), the two daily newspapers in Hartford, The Hartford Times and The Hartford Courant, a local radio station, WPOP, and a number of individuals who are officers or employees of these corporate defendants.

In considering the issues raised by the plaintiff it will be useful to separate the defendants into two groups according to the type of conduct they are alleged to have committed. In the first group are the three named Chevrolet dealers in the Hartford area (Capitol Motors in Hartford, Grody Chevrolet in West Hartford, and Dworin Chevrolet in East Hartford) and the Resolute Insurance Company. These four defendants are alleged to have (1) violated § 1 of the Sherman Act by conspiring to restrain trade by an agreement to fix prices and (2) thereby violated § 2 of the Sherman Act by attempting to monopolize trade in automobiles.

The remaining defendants, together with the dealers, are alleged to have acted in concert to obstruct the plaintiff from advertising his Pontiacs in the defendant newspapers and over the radio, and by publishing "untrue stories and accusations against Kemp Pontiac and Kemp and their advertising practices and business ethics."

Thus two separate types of causes of action are alleged; the first based on illegal price fixing, and the second on allegedly tortious interference with the plaintiff's business operations. These will be separately considered, as if set out in two counts.

I Standing to Raise Price-Fixing Claim

Although the defendant automobile dealers' motions are addressed to the question of whether there is any factual support at all for the claims of the plaintiff and are shaped so as to meet all of the allegations of the complaint head on, the first question to which an answer should be sought is whether the plaintiff has standing to complain of the defendants' alleged violations of the antitrust laws and hence whether this Court has jurisdiction over an antitrust action brought by this particular plaintiff.

The plaintiff has failed to recognize the difference between public wrong and private damage. It is only when a violation of § 1 or § 2 causes direct damage to a specific individual that such a violation becomes a basis for a private cause of action by that individual. Section 4 of the Clayton Act, 15 U. S.C. § 15, provides: "Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States . . . and shall recover treble damages." Thus the plaintiff herein must show that he himself has suffered damages "by reason of" an antitrust violation if he is to have standing to sue under the statute.

The most that this plaintiff has shown that he may be able to prove is that he sustained a loss of profits when the defendants sold a Chevrolet to a buyer who would have bought a Pontiac from him but for the defendants' allegedly wrongful business methods. But such a loss of profits through foreclosure of an opportunity to sell an automobile to a buyer victimized by the defendants' alleged Sherman Act violation is at best only an indirect loss to the plaintiff. Although the phrase "by reason of" in the statute could be read to encompass injuries, however remote, which are causally related to an antitrust violation — opening up almost limitless possibilities — the Court of Appeals for this Circuit has interpreted "by reason of" in light of its statutory setting. In this Circuit it is settled that "those harmed only incidentally by anti-trust violations have no standing to sue for treble damages; only those at whom the violation is directly aimed, or who have been directly harmed may recover." Productive Inventions, Inc. v. Trico Products Corp., 224 F.2d 678, 679 (2d Cir.1955), cert. denied 350 U.S. 936, 76 S.Ct. 301, 100 L.Ed. 818 (1956).⁵ It can hardly be denied that if there was any price-fixing agreement among the defendants concerning the sales of Chevrolets, the targets were the customers who bought them, not the plaintiff who, as a competitor with unhampered ability and unrestricted freedom to compete effectively, lost the sale.⁶ In order to claim treble damages the plaintiff must establish not only that he "was within the target area of the illegal practices," but further that he "was not only hit, but was aimed at . . . ." Karseal Corp. v. Richfield Oil Corp., 221 F.2d 358, 365 (9th Cir.1955). Accord, Calderone Enterprises Corp. v. United Artists Theatre Circuit, Inc., 454 F.2d 1292, 1295 (2d Cir.1971). See also SCM Corp. v. Radio Corp. of Amer., 407 F.2d 166 (2d Cir., cert. denied), 395 U.S. 943, 89 S.Ct. 2014, 23 L.Ed.2d 461 (1969). This the plaintiff has not done.

Merits of Price-Fixing Claim

Even if it is assumed that the plaintiff was directly harmed by reason of what he alleges to be antitrust violations, the defendant automobile dealers are entitled to summary judgment on the merits of the antitrust claim against them. The plaintiff has failed to set forth in response to the dealers' motions for summary judgment any "specific facts showing that there is a genuine issue for trial."⁷

There is evidence that the Resolute Insurance Company from time to time unsurreptitiously contracted with a printer to print up list prices of Chevrolets and made them available to Chevrolet dealers and salesmen, some of whom made use of them. This is the only evidence...