Metro Communications v. AMERITECH MOBILE COM.

• Citation: 788 F. Supp. 1424
• Decision Date: 19 February 1992
• Docket Number: No. 90-CV-70184-DT.,90-CV-70184-DT.
• Parties: METRO COMMUNICATIONS COMPANY and Royal Radio Sales & Service, Inc., Plaintiffs, v. AMERITECH MOBILE COMMUNICATIONS, INC., Defendant.
• Court: U.S. District Court — Western District of Michigan

788 F. Supp. 1424

METRO COMMUNICATIONS COMPANY and Royal Radio Sales & Service, Inc., Plaintiffs, v. AMERITECH MOBILE COMMUNICATIONS, INC., Defendant.

No. 90-CV-70184-DT.

United States District Court, E.D. Michigan, S.D.

February 19, 1992.

Irwin M. Alterman, Charles Gerlach, Birmingham, Mich., for plaintiffs.

Kenneth J. McIntyre, Robert W. Powell, Detroit, Mich., for defendant.

OPINION AND ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

ROSEN, District Judge.

INTRODUCTION

This matter is before the Court on Defendant's February 15, 1991 motion for summary judgment. In this motion, Defendant argues, in major part, that an implied covenant of good faith does not limit its right unconditionally to contract with Plaintiffs' competitors. Oral argument was heard on January 30, 1992.

FACTS

The following facts are undisputed.¹ Plaintiffs Metro Communications Company ("Metro"), Royal Radio Sales & Service, Inc. ("Royal"), and Henderson Glass, Inc. ("Henderson") are Michigan corporations engaged in the retail marketing of cellular telephone service and equipment in the Detroit area. Metro is a one store operation located in Redford, Michigan. Peter Siavrakas ("Siavrakas") is Metro's president, and Charles Belchunas ("Belchunas") is secretary-treasurer and 50% shareholder. Metro entered into a three year agency contract with Defendant on April 1, 1985 and a five year contract on November 1, 1988.

Royal is a one store appliance and electronics dealer in Royal Oak, Michigan. The cellular phone section of Royal was managed by Ben Bennett ("Bennett"). Royal entered into an agency contract with Defendant on August 5, 1985, a new agency contract on November 30, 1987, and its current five year agency contract on January 1, 1990.

Henderson is primarily in the business of selling replacement parts and auto glass to insured car owners whose cars were damaged or vandalized. It has 21 locations but no retail walk-in trade. Henderson's president is Carl Ostdiek ("Ostdiek") and its vice president, and the person in charge of the cellular phone business, is Louis Wall ("Wall"). Henderson entered into its first agency contract with Defendant on September 9, 1986. This contract was extended periodically until Henderson entered into a five year contract on January 1, 1990.

Defendant Ameritech Mobile Communications, Inc. ("AMCI") is a provider of cellular telephone service and equipment. AMCI has agency agreements with Plaintiffs and other agents and retailers² of cellular telephone service and equipment.

Pursuant to the terms of the agency agreements, Plaintiffs are required to meet certain annual quotas of new cellular telephone service subscriptions. The agreements also provide a graduated "ramping" payment schedule for payment of commissions to Plaintiffs based upon the number of cellular telephone lines activated each year after a "vesting" period.³ The agreements also provide a formula for "residual" periodic payments for Plaintiffs' customer bases and "co-op" payments by AMCI for a portion of Plaintiffs' advertising fees.

Principals from Metro, Royal, and Henderson stated in their deposition testimony that they had read and understood their contracts. Siavrakas Dep. at 120, 132, 146-48, 150, 154, 349; Bennett Dep. at 62-63, 64, 99, 164-65; Ostdiek Dep. at 64-72, 189-90. Metro in 1988 and Henderson in 1986 and 1990 consulted with counsel who reviewed the contracts. Siavrakas Dep. at 338-39; Ostdiek Dep. at 64-65, 67-71, 358.

Plaintiffs also entered into equipment agreements with AMCI.⁴ Under these agreements, Plaintiffs were required to purchase a minimum number of cellular telephones per year to obtain a favorable distributor price. The equipment agreements required Plaintiffs to maintain the same kind of facility, sales force, and solicitation of AMCI equipment as they were to provide under the agency agreements.

The core of Plaintiffs' Amended Complaint⁵ concerns contracts between AMCI and various local agents and retailers.⁶ On June 7, 1985, AMCI entered into a contract with Metrocell, a cellular telephone company. In April 1987, AMCI entered into an agency contract with Celluland of Michigan. Celluland was a franchisee of a California based franchisor unrelated to AMCI. Celluland was purchased by a subsidiary of AMCI in the spring of 1990 and now operates under the name CarFone Communications, Inc.

On December 19, 1984, AMCI entered into a contract with Tandy Corporation. This was AMCI's first retail operation. The contract contains a definition of "retailer" which provides, in part, that a retailer should have "four (4) or more stores ... which stores sell predominantly and directly to the end consumer through employees working in the stores." In late 1987 and early 1988, AMCI enlisted certain multilocation, high volume retailers in the Detroit area to sell AMCI cellular service. ABC Appliance, Inc. was signed November 1, 1987, Fretter, Inc. was signed January 1, 1988, and Highland Superstores, Inc. was signed January 1, 1988.

AMENDED COMPLAINT

Plaintiffs assert four separate claims in their Amended Complaint:

1. that AMCI breached an implied covenant of good faith and fair dealing by:

(a) refusing to pay agents the commission and other fees for corporate accounts⁷,

(b) discriminating among agents in the annual "ramping" requirement and, on information and belief, on other material terms,

(c) entering into agreements with authorized retailers which:

(i) do not require these retailers to maintain installation and maintenance facilities or perform other obligations imposed on agents,

(ii) on information and belief, grant a more favorable commission, vesting, advertising fund, and other economic terms, and

(iii) permit the retailers to sell cellular telephone equipment far below cost;

2. that AMCI modified the agency contract with Metro and thereby agreed that it would treat Metro "substantially equally with its other agents";

3. that AMCI, as principal, unreasonably interfered with Plaintiffs' performance of their duties as AMCI's agents by discriminating against them in the manner described in (1) above⁸;

4. that the alleged discrimination described in (1) above constitutes a violation of Sections 2(a), (d), (e) of the Robinson-Patman Act, 15 U.S.C. 13(a), (d), (e).

MOTION FOR SUMMARY JUDGMENT

In its motion for summary judgment, AMCI sets forth six major arguments:

I. Metro's and Royal's claims with respect to the alleged discrimination in favor of other agents and all Henderson's claims are barred by the contractual two year limitations period;

II. The implied covenant of good faith and fair dealing does not limit AMCI's right unconditionally to deal with other agents and retailers;

III. Metro's claim based on letters outside its contract is barred by the integration and modification clause of its contract.

IV. Plaintiffs' claims do not satisfy the elements of a Robinson-Patman Act violation.

V. Plaintiffs are barred from recovering lost profits and consequential damages.

VI. Metro's claims are barred by the limitations of remedies provisions of its 1988 agency contract.

The Court will first address the standard of review governing motions for summary judgment and will then address the above arguments seriatim.

STANDARDS GOVERNING MOTIONS FOR SUMMARY JUDGMENT

Summary judgment is proper "`if the pleadings, depositions, answer to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.'" Fed. R.Civ.P. 56(c).

Three 1986 Supreme Court cases — Matsushita Electrical Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); and Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) — ushered in a "new era" in the standards of review for a summary judgment motion. These cases, in the aggregate, lower the movant's burden on a summary judgment motion.⁹ According to the Celotex Court:

In our view, the plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof.

Celotex, 106 S.Ct. at 2552.

After reviewing the above trilogy, the Sixth Circuit established a series of principles to be applied to motions for summary judgment. The relevant principles can be summarized as follows:

* The movant must meet the initial burden of showing "the absence of a genuine issue of material fact" as to an essential element of the non-movant's case. This burden may be met by pointing out to the court that the respondent, having had sufficient opportunity for discovery, has no evidence to support an essential element of his or her case.

* The respondent cannot rely on the hope that the trier of fact will disbelieve the movant's denial of a disputed fact, but must "present affirmative evidence in order to defeat a properly supported motion for summary judgment."

* The trial court no longer has the duty to search the entire record to establish that it is bereft of a genuine issue of material fact.

* The trial court has more discretion than in the "old era" in evaluating the respondent's evidence. The respondent must "do more than simply show that there is some metaphysical doubt as to the material facts." Further, "where the record taken as a whole could not lead a rational trier of fact to find" for the respondent, the motion should be granted. The trial court has at least some discretion to determine whether the respondent's claim is plausible.

Street v. J.C. Bradford & Co., 886 F.2d 1472, 1479-80 (6th Cir.1989). The Court will apply the above principles to the following discussion.

DISCUSSION

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