Marnell v. United Parcel Service of America, Inc.

• Citation: 260 F. Supp. 391
• Decision Date: 31 October 1966
• Docket Number: No. 42778.,42778.
• Court: United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
• Parties: Edward J. MARNELL et al., Plaintiffs, v. UNITED PARCEL SERVICE OF AMERICA, INC., a corporation et al., Defendants.

260 F. Supp. 391

Edward J. MARNELL et al., Plaintiffs, v. UNITED PARCEL SERVICE OF AMERICA, INC., a corporation et al., Defendants.

No. 42778.

United States District Court N. D. California.

October 31, 1966.

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Broad, Busterud & Khourie, Michael N. Khourie, J. Stanley Pottinger, San Francisco, Cal., for plaintiffs.

Pillsbury, Madison & Sutro, John B. Bates, Allan N. Littman, John A. Sutro, Jr., San Francisco, Cal., for defendants; Bernard G. Segal, Irving R. Segal, Schnader, Harrison, Segal & Lewis, Philadelphia, Pa., of counsel.

MEMORANDUM OF DECISION

SWEIGERT, District Judge.

This is a private antitrust action brought by plaintiff pursuant to the provisions of the Clayton Act, §§ 4, 16, 38 Stat. 731, 737 (1914), 15 U.S.C. §§ 15, 26 (1964) against United Parcel Service of America, Inc., and United Parcel Service, Inc., (Ohio).

The case is before the Court upon a motion by defendants for (1) an amendment to this Court's order of April 27, 1966, (denying defendants' motion to dismiss) to provide that such order be without prejudice, (2) for a stay of this action until the Interstate Commerce Commission and the California Public Utilities Commission have, in the exercise of their primary jurisdiction, considered and ruled upon certain issues raised by the complaint involving defendants' rates, territory, operations, contracts and various decisions of said commissions, and (3) in the event this Court declines to issue a stay, for a certificate that the denial of defendants' motions to dismiss or for a stay involve controlling questions of law as to which there is a substantial ground for difference of opinion and that an immediate appeal may materially advance the ultimate termination of this litigation, pursuant to the provisions of 28 U.S.C. § 1292(b).

On January 20, 1966, approximately a year and four months after the filing of plaintiff's complaint, defendants had filed a motion to dismiss this antitrust action on the ground that "the Court lacks jurisdiction of the purported charges of antitrust violations involved in this case." That motion to dismiss was denied on April 27, 1966.

Shortly thereafter, May 6, 1966, defendants filed the instant motion for a stay pending referral of six issues raised by the complaint to the regulatory agencies for their determination upon the ground that such agencies have "primary jurisdiction" over these issues.

Because defendants reiterate much of the argument previously urged in support of their earlier motion to dismiss, this memorandum will deal, not only with defendants' motion for a stay, but also with the motion to dismiss.

These motions are directed to the complaint. However, in a memorandum filed on December 20, 1965, by plaintiff (in opposition to an earlier protective discovery motion by defendants) plaintiff sets forth in greater detail than in the complaint the acts constituting its cause of action. Because both parties rely upon this memorandum in their briefs, the Court will decide the pending motions upon the allegations of plaintiff's complaint considered in the light of that memorandum.

The complaint is in substance and effect a charge of monopoly—attempted and achieved. It alleges that in July 1963, plaintiff commenced the business of delivering retail packages from retail department, clothing and specialty stores located in the San Francisco Bay Area to the homes of the customers of such retail stores and is now engaged therein; that defendant United Parcel Service of America, Inc., is the holding company and manager of approximately twenty-five wholly owned subsidiaries which have retail parcel delivery businesses in at least sixteen states and the District of Columbia; that United Parcel Service, Inc., (Ohio)¹ is one of said subsidiaries engaged in the business of delivering retail packages from retail department clothing and specialty stores located in California, including the San Francisco Bay Area, as well as in other states, including Ohio; that beginning in 1907 and continuing uninterrupted up to and including the date of this complaint, defendants and their predecessors have engaged in unlawful contracts, combinations, and conspiracies in restraint of trade and commerce and have monopolized, attempted to monopolize and conspired to monopolize the retail parcel delivery market in violation of the Sherman Act, §§ 1, 2, 26 Stat. 209 (1890), as amended, 15 U.S.C. §§ 1, 2 (1964) and the Clayton Act, §§ 2, 3, 7, 38 Stat. 730, 731 (1914), as amended, 15 U.S.C. §§ 13, 14, 18 (1964). The complaint also alleges violations of the Federal Trade Commission Act, § 5, 38 Stat. 719 (1914), as amended, 15 U.S.C. § 45 (1964).

It is further alleged that the defendants engaged in the following specific acts for the purpose of destroying competition, attempting and conspiring to monopolize and monopolizing the retail parcel delivery market: (1) That defendants for a period extending over forty years and on a nationwide basis, including the San Francisco Bay Area, have purchased competitors and potential competitors and obtained covenants against competition in the course of some acquisitions, which covenants were not related to the legitimate protection of the business acquired; (2) that defendants have acquired in Northern California and nationally from other motor carriers covenants not to compete in defendants' retail parcel delivery line of business as well as agreements from said motor carriers not to oppose defendants' applications before various regulatory bodies; (3) that defendants have on a nationwide basis, including the San Francisco Bay Area, entered into, maintained and insisted upon as a condition for doing business long-term, exclusive-use contracts with retail stores; (4) that defendants have on a nationwide basis and wherever there was competition from other parcel carriers, induced large retail stores to enter into or renew said contracts with defendants at rates unjustifiably low as compared to rates charged small retail stores and rates charged in areas where it has established a monopoly; (5) that defendants have required retail stores to enter into said long-term exclusive-use contracts as a condition of obtaining defendants' ever-increasing area wide (including interstate) parcel delivery service; (6) that defendants have required retail stores, as a condition of obtaining any delivery service at all, to enter into such contracts covering all its package delivery needs, irrespective of the origin or destination of the package, so long as defendants served such areas; (7) that defendants, whenever they achieved a monopoly position within an area, charged every retailer in that area high and arbitrary rates for delivery service, thereby acquiring great wealth, which wealth was then gathered together by the parent corporation and used as a means to acquire monopolies in other areas as well as to maintain monopolies once achieved; (8) that defendants used its national "deep pocket" financial power to grant interest free loans to operating subsidiaries, to indemnify said subsidiaries against loss, to purchase competitors and to engage competitors in expensive unfounded litigation; (9) that defendants have filed actions against competitors to enforce unlawful covenants and have registered and pursued complaints in various regulatory bodies against competitors for "imaginary, nonexistent or insignificant" violations of the regulatory code or regulations; (10) that defendants have prevented competitors from competing for its customers by conducting investigations and reporting unfavorably to said customers about competitors without accurate knowledge; (11) that defendants have induced and conspired with their driver labor unions to threaten economic sanctions against plaintiff's customers and to urge such customers to use "other parcel delivery companies" than plaintiff's; (12) that defendants have conspired with driver labor unions to refuse to negotiate with plaintiff and other competitors except upon terms contained in defendants' labor contracts; and (13) that in 1953 defendants entered into the wholesale delivery business (as distinguished from its retail parcel delivery service which it had been conducting in Northern California since 1919) between various cities in its Northern California delivery area and between its Northern California delivery area and its Southern California delivery area and operated said wholesale delivery business at a small profit or below cost in order to eliminate competition in the wholesale parcel delivery field and by operating their wholesale and retail parcel delivery services together, defendants have been able to reduce costs in their retail parcel delivery business and increase their area coverage, thereby reinforcing their retail parcel monopoly position.

As a result of these practices, plaintiff alleges, defendants have a virtual 100% monopoly of the department, clothing and speciality retail store delivery service in San Francisco, Oakland, Los Angeles and 18 other major cities. Plaintiff (who advises the Court that he is no longer in the retail parcel delivery business) claims damages in the amount of approximately $500,000.

The questions herein presented are such that it will be necessary for the Court to consider the regulatory schemes of both the Interstate Commerce Act and the California Public Utilities Code as related to and as actually applied to motor carriers like defendants.

Defendants have not supported their motions with any factual showing concerning the nature of their operations or concerning the regulation of their operations by these agencies except that in briefs filed with the Court on August 5, 1966, July 21, 1966, July 8, 1966, May 26, 1966 and May 6, 1966, pertaining to the instant motions, and in briefs filed on March 17, 1966, and January 21, 1966 pertaining to their motion to...