Musick v. Burke, 89-55310

• Decision Date: 07 September 1990
• Docket Number: No. 89-55310,89-55310
• Citation: 913 F.2d 1390
• Parties: 1990-2 Trade Cases 69,176, RICO Bus.Disp.Guide 7561 Lowell MUSICK and Sharlene Musick, et al., Plaintiffs-Appellants, v. Gene BURKE, Burke Vending and Catering Corporation, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1390

913 F.2d 1390

1990-2 Trade Cases 69,176, RICO Bus.Disp.Guide 7561

Lowell MUSICK and Sharlene Musick, et al., Plaintiffs-Appellants, v. Gene BURKE, Burke Vending and Catering Corporation, et al Defendants-Appellees.

No. 89-55310.

United States Court of Appeals Ninth Circuit.

Argued and Submitted May 10, 1990.

Decided Sept. 7, 1990.

Michael G. Portner, Los Angeles, Cal., for plaintiffs-appellants.

James L. Seal, Rosenfeld, Meyer & Susman, Beverly Hills, Cal., for defendants-appellees.

Appeal from the United States District Court for the Central District of California.

Before HUG and TROTT, Circuit Judges, and JENSEN, ^* District Judge.

JENSEN, District Judge:

In this action alleging federal antitrust and racketeering law violations and pendent state law tort claims, the individual plaintiffs ¹ appeal the grant of summary judgment in favor of defendants ² (collectively referred to as "Burke Vending") and dismissal of the pendent state law claims for lack of jurisdiction in the district court. The issues are (1) whether plaintiffs have demonstrated that Burke Vending's activities have an effect upon interstate commerce sufficient to come within the scope of either federal antitrust laws or the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. Sec. 1961 et seq. ("RICO"); (2) whether even if such effect were demonstrated, defendants possess sufficient market power to render their activities unlawful under the antitrust rule of reason; and (3) whether the district court erred in finding that defendants had committed no acts of extortion or intimidation against plaintiffs as competitors or prospective witnesses. We affirm the judgment.

I. FACTS AND PROCEDURAL HISTORY

A. The Complaint

This dispute concerns alleged antitrust and racketeering law violations in claimed acts of violence and extortion by Burke Vending against its competitors, plaintiffs/appellants, in the mobile catering service industry in the Santa Clarita Valley area of Los Angeles, California. Plaintiffs allege that during the period from 1985 to 1988 each of them was threatened and harassed by employees or agents of Burke Vending while attempting to serve customers at various business locations throughout the Santa Clarita Valley area, and that Burke Vending engaged in price discrimination and entered into agreements to sell goods on the basis of refusal to use goods of its competitors.

The Complaint alleges that the purpose of this harassment, unlawful price discrimination, and agreement not to use goods of competitors was to restrain competition in the market area and obtain a monopoly, all in violation of the Sherman Act, 15 U.S.C. Secs. 1, 2; the Wilson Tariff Act, 15 U.S.C. Sec. 8 et seq.; the Clayton Act, 15 U.S.C. Secs. 14, 15; and the Robinson-Patman Price Discrimination Act, 15 U.S.C. Sec. 13 et seq. The threats and harassment were further alleged to have amounted to a pattern of racketeering activity conducted for the benefit of defendant Gene Burke's mobile catering business, ³ in violation of Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. Sec. 1961 ("RICO"). Pendent state law tort claims were also asserted for interference with business advantage, assault and battery, and intentional infliction of emotional distress.

B. Disposition in the District Court

In the district court, defendants brought motions for summary judgment against each of the federal claims asserting lack of jurisdiction, in that defendants' activities were neither in commerce nor had an effect on interstate commerce as required under the statutes. Defendants also moved for dismissal of the state law claims for lack of pendent jurisdiction, should summary judgment be granted.

The district court granted the motions for summary judgment on the federal law claims and adopted defendants' proposed findings of fact as uncontroverted facts of the action. The district court found that defendants' activities were wholly local, without effect on interstate commerce; and that even if federal jurisdiction existed, defendants did not have sufficient market power to render their conduct unlawful under the rule of reason.

As to the RICO claim, the district court found that Burke Vending's activities were local and had only an incidental effect on interstate commerce. The district court further found that even if the jurisdictional effect on interstate commerce existed, plaintiffs had failed to show evidence of any predicate acts for purposes of establishing RICO liability. Although it was not a necessary basis of summary judgment, the district court found that no employee or lessee of Burke Vending had engaged in extortion, intimidation or retaliation against plaintiffs or their witnesses. Finally, having granted summary judgment for defendants on the federal claims, the district court dismissed the state law claims for lack of pendent jurisdiction, without prejudice to bringing these claims in state court.

For the reasons set forth below, the panel affirms the grant of summary judgment and dismissal of the pendent state law claims for lack of jurisdiction.

C. Facts

The parties to this action are each engaged in the business of commercial mobile catering in the Santa Clarita Valley area of Los Angeles County. Their operations include driving catering trucks to businesses and construction locations throughout the area to sell a variety of prepared food or food products, snacks, drinks, and other products to employees at those business or construction sites. The products are purchased wholesale from local distributors who obtain many products from out-of-state manufacturers and suppliers, and are then resold at retail prices to the employee-consumers. The catering trucks the businesses use are assembled and customized from standard parts, some of which are manufactured outside of California.

Defendant Burke Vending owns 18 catering trucks, 3 of which are driven by employees and 15 of which are leased to independent operators who also purchase their products from Burke Vending for resale. Plaintiff Lowell Musick operates four to five catering trucks in the Santa Clarita Valley area, with a total annual business volume of approximately $800,000. Musick asserts that $500,000 of his annual sales volume is derived from sales of products imported from out-of-state. Burke Vending asserts that all of its products are purchased from local distributors. No figures are available for the volume of business Burke Vending does per year, nor the amount of that business that is derived from products shipped in interstate commerce. Plaintiffs also offer no figures for the number of catering trucks or volume of business operated by the other individual plaintiffs.

While the Santa Clarita market area is approximately 25 miles from the nearest sizeable city, there are no geographic barriers to competition from outside the area. Within the market area there are in addition to catering trucks, fast food restaurants and convenience stores which offer substantially the same products as are offered by the parties' mobile catering services. The only difference among these businesses is that the mobile catering services deliver the products directly to the customers' worksites, while employees would have to leave their worksites to reach the fixed distribution outlets. Plaintiffs assert that it is impossible for these employees to leave their worksites during the day but offer no supporting evidence on this point.

In a series of declarations submitted in opposition to the motions for summary judgment, plaintiffs allege that certain Burke Vending agents, defendants Lafayette Smith, David Smith and Don Wheeler, would follow them to worksites and forcibly interfere with their attempts to serve customers. This forcible interference included verbal threats and orders to leave, blocking customer access to plaintiffs' trucks with their own vehicles, throwing nails and other debris in the paths of plaintiffs' trucks, and at least one incident of physical assault. Non-forcible interference was also described, in the form of following plaintiffs to worksites and giving food and other products away to undercut plaintiffs' sales at those sites. Plaintiffs allege that they and their customers were placed in fear by the nature and manner of defendants' activities. Their declarations also support an inference that defendants suggested this harassment would cease if plaintiffs abandoned their attempts to service the locations at which the incidents occurred. At least three of the plaintiffs state in their declarations that they abandoned one or more service locations as a result of the harassment activities.

Defendant Gene Burke stated in his declaration in support of the motions for summary judgment that he had no knowledge of acts of violence or intimidation by his employees, and that such acts would be contrary to Burke Vending policies.

II. JURISDICTION OF ANTITRUST CLAIMS

A. Standard for Summary Judgment

Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment may be granted when "the pleadings, depositions, answers 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 party is entitled to a judgment as a matter of law."

In a motion for summary judgment, "[i]f the party moving for summary judgment meets its initial burden of identifying for the court those portions of the materials on file that it believes demonstrates the absence of any genuine issues of material fact," then "the nonmoving party must set forth, by affidavit or as otherwise provided in Rule 56, 'specific facts showing that there is a genuine issue for trial.' " T.W. Electric Service, Inc. v. Pacific Elec. Contractors, 809 F.2d 626, 630 (9th Cir.1987) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1983); Kaiser Cement Corp. v. Fischbach &...