Moore v. Jas. H. Matthews & Co.

• Decision Date: 24 January 1973
• Docket Number: No. 71-2186.,71-2186.
• Citation: 473 F.2d 328
• Parties: Arie Mack MOORE et al., Plaintiffs-Appellants, v. JAS. H. MATTHEWS & CO., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

473 F.2d 328 (1973)

Arie Mack MOORE et al., Plaintiffs-Appellants, v. JAS. H. MATTHEWS & CO., et al., Defendants-Appellees.

No. 71-2186.

United States Court of Appeals, Ninth Circuit.

November 29, 1972.

As Amended January 24, 1973.

Roger Tilbury (argued), Henry Kane, of Tilbury & Kane, Portland, Or., Edward Ray Fechtel, of Husband, Johnson & Frye, Eugene, Or., for appellants.

John Gordon Gearin (argued), of Gearin, Hollister & Landis, Portland, Or., Norman Wiener (argued), of Miller, Anderson, Nash, Yerke & Wiener, Portland, Or., Michael Walsh (argued), of Shuler, Rankin, Myers, Walsh & Ragen, Portland, Or., James C. Dezendorf, George L. Wagner, of McColloch, Dezendorf, Spears & Lubersky, Portland, Or., Robert W. Hill, of Hill & Schultz, Eugene, Or., Windsor Calkins, John Luvaas, Paul Clayton, Eugene, Or., for appellees.

Before HUFSTEDLER and CHOY, Circuit Judges, and SCHNACKE,^* District Judge.

HUFSTEDLER, Circuit Judge.

Appellants ("Moore"), who are cemetery monument dealers in Eugene, Oregon, brought an antitrust action seeking an injunction and damages against eight Oregon cemeteries ("Cemeteries") and Jas. H. Matthews & Co. ("Matthews"), a manufacturer of bronze grave markers. Moore alleged a conspiracy among Cemeteries and Matthews to restrain trade, monopolization, and attempts to monopolize the grave marker business in the Eugene Area, and illegal tying arrangements in the marketing of grave markers in violation of sections 1 and 2 of the Sherman Act (15 U.S.C. §§ 1, 2).¹

After Moore's opening statement and before his first witness had completed his testimony and after appellees, over protest, had presented a fragment of their case, the court invited appellees to move for directed verdicts and summary judgment. The court granted the motions, and Moore appeals from the resulting judgment.

Although the district court variously referred to directed verdicts,² dismissal under Rule 41(b),³ and summary judgment, the foundation of the disposition was the court's conclusion that there was no triable issue of fact and that the allegations of the pleadings, the evidence before the court, and the promises of evidence recited in appellants' opening statement were insufficient as a matter of law to warrant any relief.

Summary judgment is available only where no material issue of fact remains for the jury and where the moving party is entitled to judgment as a matter of law. Industrial Building Materials, Inc. v. Interchemical Corp. (9th Cir. 1970) 437 F.2d 1336. (See also Fed.R.Civ.P. 50.) The Supreme Court has cautioned specifically and repeatedly against the use of summary procedures in antitrust litigation. Norfolk Monument Co., Inc. v. Woodlawn Memorial Gardens, Inc. (1969) 394 U.S. 700, 89 S.Ct. 1391, 22 L.Ed.2d 658; Poller v. Columbia Broadcasting System (1962) 368 U.S. 464, 82 S.Ct. 486, 7 L. Ed.2d 458. In Poller, the Court closely considered the standard for granting summary judgment in antitrust cases and said that "summary procedures should be used sparingly in complex antitrust litigation where motive and intent play leading roles, the proof is largely in the hands of the alleged conspirators, and hostile witnesses thicken the plot. It is only when the witnesses are present and subject to cross-examination that their credibility and the weight to be given their testimony can be appraised." 368 U.S. at 473, 82 S.Ct. at 491.

The complaint contained allegations that were sufficient to state claims for relief based on violations of the Sherman Act, sections 1 and 2 (15 U.S.C. §§ 1, 2).

Concerted action involves an agreement between the parties, but the agreement can be tacit as well as express. (Theatre Enterprises v. Paramount Film Distributing Corp. (1954) 346 U.S. 537, 74 S.Ct. 257, 98 L.Ed. 273.) Mere parallelism or fraternization does not establish an agreement (Cement Manufacturers Protective Ass'n v. United States (1925) 268 U.S. 588, 45 S.Ct. 586, 69 L.Ed. 1104), but an agreement may be implied from conformity to a contemplated pattern of conduct. (United States v. General Motors Corp. (1966) 384 U.S. 127, 86 S.Ct. 1321, 16 L.Ed.2d 415; Interstate Circuit, Inc. v. United States (1939) 306 U.S. 208, 59 S.Ct. 467, 83 L.Ed. 610; see also United States v. Twentieth Century-Fox Film Corp. (S.D.Cal.1956) 137 F.Supp. 78.) In Interstate Circuit, the Court held that "acceptance by competitors, without previous agreement, of an invitation to participate in a plan, the necessary consequence of which, if carried out, is restraint of interstate commerce, is sufficient to establish an unlawful conspiracy under the Sherman Act." 306 U.S. at 227, 59 S.Ct. at 474.

Moore's first witness testified to facts which, if credited, would support a finding by the jury that Cemeteries had visited upon Moore the requisite competitive injury.⁴

In his opening statement Moore said that he would prove that Matthews distributed its handbook ("Modern Cemeteries") to Cemeteries promising, in effect, that Cemeteries could eliminate competition and thereby gain monopolistic profits by following the suggestions contained in the booklet.⁵ "Modern Cemeteries," admitted as an exhibit, contains numerous suggestions for exclusionary rules and rules subject to exclusionary application.⁶ He said that the evidence would show that, in response to the circulation of "Modern Cemeteries," every one of the Cemeteries enacted rules and developed practices designed to exclude Moore. He said he would introduce evidence to prove that Matthews supports this object and that various meetings and consultations with representatives of Matthews took place in furtherance of the conspiracy.⁷

Moore's pretrial discovery indicates that certain of the Cemeteries adopted a rule or practice of absolute exclusion of outside markers (others require written approval of outside markers) and that some of the Cemeteries have established specific alloy content rules for markers set on their grounds that are identical or very similar to Matthews' formula as specified in "Modern Cemeteries."⁸

Moore stated that he would prove that some of the Cemeteries adopted a pricing formula recommended by Matthews' salesmen.⁹ He promised to prove that all Cemeteries prohibit installation of markers except by their own personnel, even though it is a routine, unskilled task. Moore's first witness testified to several specific occasions when particular cemeteries refused to accept Moore's markers where they were sold directly to lot owners.

He said that he could prove that the motivation for the individual and joint actions of Cemeteries was monopolization and elimination of Moore as a competitor. Direct proof of such subjective intent is rarely possible. Findings must be largely based on inferences that the jury may appropriately draw from the direct evidence.

The facts disclosed by discovery, the partial testimony of Moore's first witness, and the proof promised in the opening statement, fragmentary though it be, is enough to prevent summary judgment.

Of course, Moore must fulfill his promises of proof if he is to prevail. If proof is thus adduced, the jury could infer that appellees conspired to fix prices and to subject Moore to a group boycott, both of which are per se violations of the Sherman Act. (United States v. Socony-Vacuum Oil Co. (1940) 310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129; Fashion Originators' Guild of America, Inc. v. Federal Trade Commission (1941) 312 U.S. 457, 61 S.Ct. 703, 85 L.Ed. 949.) The jury might find a tacit conspiracy in response to Matthews' "invitation" or an overt conspiracy. In either case, no formal agreement is necessary and the jury may infer agreement from business behavior. (See Norfolk Monument, supra, 394 U.S. at 704, 89 S.Ct. 1391, 22 L.Ed.2d 658, and cases cited therein.)

Moore has also alleged monopolization and attempts to monopolize. Monopolization, proscribed by section 2 of the Sherman Act, occurs when an individual or group uses market power to control prices or to control or to exclude competitors. United States v. E. I. DuPont De Nemours & Co. (1956) 351 U.S. 377, 76 S.Ct. 994, 100 L.Ed. 1264. The conduct supporting a cause of action for conspiracy under section 1 may also support a claim under section 2.

Although evidence submitted under a section 1 claim is also relevant to a section 2 claim, there are important distinctions between them.

First, section 2 is not limited to concerted activity. A jury, therefore, could find that individual actions undertaken by one or more of the Cemeteries or by Matthews constituted monopolization or attempted monopolization violating section 2, even if it found no concerted activity.

Second, Moore must prove that one or more of the appellees possessed the necessary market power to produce the unlawful result. Moore's assertions, if true, that Cemeteries are the eight primary cemeteries in the Eugene area and that they together account for 72 percent of the burials in Lane County and that Matthews is the largest manufacturer of bronze cemetery markers in the United States, producing 65 to 70 percent of such markers, are adequate to raise a genuine issue of fact about market power of these appellees.

Finally, this court has ruled that an attempt to monopolize under section 2 does not require proof of monopoly power. Proof that there is a "dangerous probability of success" is certainly enough. Lessig v. Tidewater Oil Co. (9th Cir. 1964) 327 F.2d 459. Evidence of market power is relevant, but not indispensable to a Lessig claim.

Moore also claimed that defendants have engaged in illegal tying policies. Tying arrangements, whereby a seller agrees to the sale of his product only on the condition that the buyer purchases a second product (or service) from the seller, are illegal under section 1 of the Sherman Act. International Salt Co. v. United States (1947) 332 U. S. 392, 68 S.Ct. 12, 92 L.Ed. 20, appeal dismissed, 332 U.S. 747, 68 S.Ct. 26, 92 L.Ed. 335. Taken as true, Moore's...