Nissan Antitrust Litigation, In re

• Decision Date: 01 August 1978
• Docket Number: Nos. 77-1658,77-2572,s. 77-1658
• Citation: 577 F.2d 910
• Parties: 1978-2 Trade Cases 62,163 In re NISSAN ANTITRUST LITIGATION. P. D. Q., INC. OF MIAMI, Plaintiff-Appellant, v. NISSAN MOTOR CORPORATION IN U. S. A. and Nissan Motor Company, Ltd., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 910

577 F.2d 910

1978-2 Trade Cases 62,163

In re NISSAN ANTITRUST LITIGATION P. D. Q., INC. OF MIAMI, Plaintiff-Appellant, v. NISSAN MOTOR CORPORATION IN U. S. A. and Nissan Motor Company, Ltd., Defendants-Appellees.

Nos. 77-1658, 77-2572.

United States Court of Appeals Fifth Circuit.

Aug. 1, 1978.

Fredric B. Burns, Miami, Fla., Judah I. Labovitz, Philadelphia, Pa., for plaintiff-appellant in both cases.

Wolf, Block, Schorr & Solis-Cohen, Philadelphia, Pa., for plaintiff-appellant in 77-1658.

Morris F. Klein, Miami, Fla., Frank Cicero, Jr., Hammond E. Chaffetz, Jeffrey S. Davidson, Jeffery M. Cross, Chicago, Ill., for defendants-appellees in both cases.

Bobroff, Olonoff & Scharf, New York City, for other interested parties.

Leonard J. Bucki, Seymour Kurland, Philadelphia, Pa., Bert Sager, Miami, Fla., for plaintiff-appellant in 77-2572.

John R. Hoehl, Miami, Fla., James E. Flynn, Chicago, Ill., for defendants-appellees in 77-2572.

Appeals from the United States District Court for the Southern District of Florida.

Before TUTTLE, COLEMAN, and CLARK, Circuit Judges.

COLEMAN, Circuit Judge.

Nissan Motor Company, Ltd. (Nissan-Japan) manufactures Datsun automobiles and trucks.

It ships them to the continental United States and sells them to its totally owned subsidiary, Nissan-U. S. A. (Nissan-USA), which is responsible for the distribution and marketing of Datsuns in this Country.

Nissan-USA sells the vehicles to its franchised local dealers who, in turn, sell to their retail customers.

PDQ, Inc. of Miami (PDQ) is a local cartage company in Miami, Florida, owned by Bert Arkin, who is also its president. In late 1970, in Miami, PDQ (by Arkin) bought a Datsun sports coupe from a Datsun dealer. After a few months the coupe was sold, but its purchase was used as the springboard for this private antitrust class action which charged that in a nationwide conspiracy Nissan-USA and Nissan-Japan conspired or combined to fix prices in violation of the federal antitrust laws. ¹ Relief was sought under § 4 of the Clayton Act, 15 U.S.C. § 15. ² After a five week trial and five hours of deliberation the jury returned its verdict that no nationwide conspiracy had existed. In its brief to this Court, PDQ expressly declines to argue that the verdict was "against the weight of the evidence". For reversal it relies on asserted errors of law which will hereinafter be discussed.

The case comes here in the form of a consolidated appeal.

No. 77-1658 deals with errors claimed to have occurred during the trial on the issue of liability.

No. 77-2572 involves alleged error in the taxation of costs.

On the issue of liability the judgment of the trial court is affirmed. The cost award is affirmed in part and reversed in part. The case is remanded solely for modification of the order awarding costs.

The Lawsuit

PDQ describes its complaint as one which alleged that Nissan-USA "combined and conspired with its Datsun franchised dealers to eliminate or limit dealer discounting in the retail sale of new Datsuns, thereby stabilizing prices at non-competitive levels".

The defendants appraised the complaint as charging "a conspiracy between defendants and Datsun dealers across the country to sell and advertise Datsun motor vehicles at fixed prices in violation of the Sherman Act".

PDQ says that "(T)he keystone of the scheme to stifle dealer discounting was the control of dealer advertising"; that Nissan's co-operative advertising program was a per se violation of the Sherman Act. This per se argument is the only arguably plausible issue left for disposition at the appellate level.

Under the antitrust laws, the United States, in June, 1972, filed an action for injunctive relief against Nissan-USA. The action alleged a conspiracy between Nissan-USA and its dealers throughout the United States to fix prices and to restrict territories and customer selection in the sale of Datsun vehicles. This case was settled by a consent decree in February, 1973.

In July, 1972, PDQ filed this private class action in the Southern District of Florida on behalf of all non-dealer Datsun purchasers in the United States. The allegations in PDQ's complaint were substantially identical to those in the federal suit. Once PDQ filed its suit, over two dozen other private antitrust actions were filed across the country, seeking similar relief. The Judicial Panel on Multi-district Litigation transferred all actions to the Southern District of Florida. See In Re Nissan Motor Corp. Antitrust Litigation, Jud.Pan.Mult.Lit., 352 F.Supp. 960; 385 F.Supp. 1253.

PDQ was certified as class representative for a class of purchasers of Datsun motor vehicles. PDQ, Inc. of Miami v. Nissan Motor Corporation in U. S. A., S.D.Fla., 1973, 61 F.R.D. 372. The class was certified so that the issues to be resolved were whether a nationwide conspiracy existed, and its effect, if any, upon the vehicle purchasers.

As heretofore stated, the jury, in response to special interrogatories, found that for the period in question there had been no "nationwide contract, combination, or conspiracy between Nissan-USA and its franchised Datsun dealers".

After the verdict, PDQ filed a motion for judgment notwithstanding the verdict or for a new trial. Eighteen grounds were assigned, including the contention that the trial court erred in refusing to instruct the jury that as a matter of law Nissan's cooperative advertising program was a per se violation of § 1 of the Sherman Act. All asserted grounds have been carefully evaluated and, except for the arguments as to the per se violation, are found to be so meritless as to require no discussion in this opinion.

Background

Nissan-Japan was created in 1933, but Datsuns were not marketed in the United States until 1958. In that year, Nissan-Japan hired two independent trading companies, one on each Coast, to import new vehicles into the United States. These trading companies contracted with domestic retail car agencies to distribute the vehicles. This effort met with a notable lack of success.

Several marketing problems hampered the sales of Datsuns. The American public had never heard of the car and was reluctant to buy it. The vehicles were foreign made and selling for a low price; this raised the spectre of low quality. The domestic Datsun dealers were not promoting the product. Nissan-Japan was trying to enter a well established market, controlled primarily by domestic car manufacturers. Of a total of 6,500,000 new motor vehicles domestically sold in 1960, only 1,300 were Datsuns.

In an effort to cope with this situation, in September, 1960, Nissan-Japan created Nissan-U.S.A. as its wholly-owned subsidiary in charge of distribution and marketing of Datsuns in the United States. It replaced the trade companies formerly in charge of distribution and marketing.

Nissan-U.S.A.'s primary goal was to establish a strong network of retail dealers who not only would promote Datsuns but would also provide mechanical services and parts to Datsun customers. It knew that to start and maintain such a dealer network the dealerships had to be profitable. Nissan-USA could not afford a reputation for dealers going broke; buyers would have no confidence in purchasing a car on which they could not obtain service. Nissan-USA began hiring American auto industry executives who would carry out the marketing plans. These executives established a system for distributing the Datsun automobiles. A person is designated as a "franchise dealer" by Nissan-USA after a Datsun Dealer Sales and Service Agreement (franchise contract) is entered into by both parties. In this contract, Nissan-USA agrees to sell Datsuns to the dealers, provide expert advice in service areas, and promote the vehicles nationally. The dealer, separately from and financially independent of Nissan-USA, agrees to buy Datsuns from it, promote the vehicles locally, provide parts and mechanical service facilities, and sell the vehicles. A dealer hires his own personnel and is responsible for providing capital for a showroom, parts, inventory, and other expenses. While Nissan-USA has a legitimate concern with local operations, the local dealer is ultimately responsible for his own success or failure.

To help the local dealers with problems which may arise, Nissan-USA employs district managers to advise dealers. These managers also act as selling agents, keeping the local dealers supplied with new vehicles. During the early years of United States marketing and during the time with which this case is concerned, the district managers would advise the local dealer on promotion, advertising, and selling the new vehicles.

The Alleged Per Se Violation

We now evaluate the operations of the cooperative advertising program which existed between Nissan-USA and its franchised dealers a program which PDQ insists was a per se violation of the antitrust law.

In the franchise contract, the individual local dealer agreed to belong to an advertising cooperative operated by Nissan-USA. The pertinent part of the franchise contract reads:

D. In order to give Dealer the advantage of comprehensive and coordinated dealer advertising consistent with Seller's National advertising program, a cooperative advertising fund may be established by Seller. Such fund shall consist of an amount charged Dealer by Seller for each vehicle sold to Dealer and a like amount contributed by Seller. The amount charged to Dealer and contributed by Seller shall be established by Seller, and may be changed from time to time. Such fund shall be used for advertising or promoting Datsun products in the area wherein Dealer maintains its place of business, by advertisements placed by Seller and/or Dealer and/or, where such groups exist, by or on behalf of dealer's cooperative advertising groups. All payments from such fund shall be for expenditures for advertising or promotions approved by Seller and shall be made only upon receipt by Seller...