Ohio-Sealy Mattress Mfg. Co. v. Sealy, Inc.
| Decision Date | 29 January 1982 |
| Docket Number | 81-1615,OHIO-SEALY,Nos. 81-1542,s. 81-1542 |
| Citation | 669 F.2d 490 |
| Parties | 1982-1 Trade Cases 64,507 MATTRESS MANUFACTURING COMPANY, Sealy Mattress Company of Houston, Sealy Mattress Company of Puerto Rico, Inc., and Sealy Mattress Company of Georgia, Inc., Plaintiffs-Appellants, Cross-Appellees, v. SEALY, INCORPORATED, Sealy Spring Corporation-Indiana, Sealy Spring Corporation-East, Sealy Spring Corporation-West, Sealy Mattress Company of Colorado, Inc., Sealy Mattress Company of Northern California, Inc., Sealy Mattress Company of Southern California, Inc., Schnorr Manufacturing Company, Inc., Sealy Mattress Company of Florida, Inc., Sealy Mattress Company of Pittsburgh, Inc., and Sealy Mattress Company of Philadelphia, Inc., Defendants-Appellees, Cross-Appellants. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Frederic F. Brace, Jr., P. C., Brace & North, Chicago, Ill., for plaintiffs-appellants, cross-appellees.
Phil C. Neal, Friedman & Koven, Chicago, Ill., for defendants-appellees, cross-appellants.
Before SPRECHER and BAUER, Circuit Judges, and FAIRCHILD, Senior Circuit Judge.
This is the second appeal in this antitrust suit. Ohio Sealy Mattress Manufacturing Company ("Ohio") filed suit against Sealy, Incorporated ("Sealy") in 1971 alleging that Sealy was engaged in a scheme to allocate markets in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. Ohio sought legal and equitable relief. After a four month trial, the jury returned a $6,814,852 verdict for Ohio. Sealy filed post-trial motions for judgment notwithstanding the verdict and for a new trial. The district court denied both motions, conditioning the denial of Sealy's motion for a new trial on Ohio's acceptance of a fifty percent remittitur. Ohio accepted the remittitur. The court then conducted hearings on Ohio's request for equitable relief and entered final judgment denying all equitable relief and awarding Ohio trebled, remitted damages of $10,222,278.
Both Ohio and Sealy appealed from the judgment of the district court. We affirmed the remitted jury award and reversed the court's denial of equitable relief. We remanded with instructions to the district court to reconsider whether equitable relief should be awarded. Ohio Sealy Mattress Mfg. Co. v. Sealy, Inc., 585 F.2d 821, 844-45 (7th Cir. 1978), cert. denied, 440 U.S. 930, 99 S.Ct. 1267, 59 L.Ed.2d 486 (1979).
On remand, Ohio moved the district court to reinstate the remitted portion of the judgment. Ohio also requested that the court award it supplemental damages. The district court denied both motions. After conducting an evidentiary hearing at which Sealy and Ohio introduced expert testimony concerning whether equitable relief was warranted and, if so, what type of relief would be appropriate, the district court enjoined Sealy from continuing most of the conduct which Ohio claimed were components of Sealy's unlawful market allocation scheme.
Ohio appeals and Sealy has filed a contingent cross-appeal. We affirm the judgment of the district court and dismiss Sealy's cross-appeal.
Defendant Sealy owns trademarks for the "Sealy" brand of bedding products which it licenses independent manufacturers to use. The license agreement assigns each licensee a geographic area of primary responsibility ("APR"). The agreement provides that no other licensee will be permitted to manufacture Sealy products in a licensee's APR. Additionally, the licensee is authorized to manufacture Sealy products only at the location(s) specified in the license agreement and at any additional locations that Sealy might later approve in writing. The licensee is responsible for promoting Sealy sales in its APR, but it is also permitted to sell Sealy products in other licensees' territories. If a licensee sells Sealy products outside its APR, it must pay two types of out-of-APR charges. First, it is required to pay passover payment charges to cover its share of promotional expenses in the APR. This payment is designed to prevent free-rider problems. The licensee is further required to pay a warranty repair service charge designed to cover the cost of repairs the invaded licensee might have to make on the other licensee's Sealy products. The license agreement includes a clause granting Sealy the right of first refusal should a licensee wish to sell its business. The agreement also forbids the licensee from acquiring any interest in a competitive organization.
Ohio claims that Sealy used the aforementioned license provisions to achieve a division of markets. Ohio concedes that these license provisions may be lawful in and of themselves, but argues that they are unlawful if used as part of a scheme to allocate markets. Ohio claims that Sealy unlawfully exercised its right of first refusal in 1972 to prevent Ohio from acquiring the Florida, Philadelphia, and Pittsburgh licensees as part of the illegal market allocation scheme. Ohio contends that the neighboring licensees feared that if Ohio obtained the three licensees it would engage in vigorous intrabrand competition that the neighboring licensees sought to avoid.
The jury was instructed that it could find for Ohio only if it found that Sealy was engaged in an unlawful scheme to allocate markets. The jury did so find and awarded Ohio more than $6 million damages. Although the jury returned a general verdict, the amount of the verdict "makes it a mathematical certainty that the jury found at least one of Sealy's first-refusal acquisitions ... to have violated the antitrust laws." 585 F.2d at 844.
In the first appeal, Sealy claimed that the district court erred in denying its motion for judgment notwithstanding the verdict because Ohio had failed to introduce sufficient evidence from which a reasonable jury could have found an antitrust violation. After carefully reviewing the record, we concluded that there was sufficient evidence to support the jury finding that Sealy had used the challenged license provisions to achieve an unlawful division of markets. We held that the district court did not err in denying Sealy's motion. 1
Sealy also claimed that the court erred in denying its motion for a new trial on the condition that Ohio accept a fifty percent remittitur. The district court held that remittitur was necessary to cure the effects of Ohio's counsels' prejudicial misconduct which led the jury to award excessive damages. Sealy claimed on appeal that the court should have granted a new trial because counsels' misconduct may also have led the jury to err in finding an antitrust violation at all. Sealy argued that the effect of any prejudice could not be said to have been confined solely to the damage award.
In deciding Sealy's claim, we noted that although Ohio was foreclosed "from seeking reinstatement of the 50% remitted now that Sealy attacks the remittitur on appeal," Ohio could argue in defense of its judgment that the district court erred in remitting the verdict. Id. at 840. After reviewing the record, we concluded that there had been no prejudicial misconduct. Id. at 843. Therefore, Sealy was not entitled to a new trial. We held that the court did not err in denying Sealy's motion for a new trial, and we affirmed the remitted jury award.
We reversed the judgment, however, to the extent that the district court had refused to award Ohio equitable relief. In denying equitable relief, the district court had assumed that the jury had found only that at least one of Sealy's right of first refusal acquisitions was unlawful. Given that the jury was instructed that it could find Sealy's use of the right of first refusal unlawful only if it found that the right was used as part of an unlawful scheme to allocate markets, the jury must also have found that Sealy was engaged in an unlawful market allocation scheme. Id. at 844. We remanded with instructions to the district court to reconsider "what total mix of equitable relief, if any, might be just in the circumstances," given that Sealy had been found to have engaged in an unlawful scheme to allocate markets. Id. at 845 n.34.
Ohio appeals the district court's denial of its motion for reinstatement of the remitted portion of the judgment. Ohio claims that the district court was bound on remand to enforce our mandate and opinion, in which we held that there had been no prejudicial misconduct necessitating a new trial or remittitur. Ohio contends that the district court should have corrected its erroneous ruling by restoring the remitted portion of the judgment. We disagree.
Indeed, on remand the district court was required to follow the mandate of this court. Banker's Life & Casualty Co. v. Bellanca Corp., 308 F.2d 757, 759 (7th Cir. 1962). Our opinion set forth the law of the case to be enforced by the district court. Hayes v. Thompson, 637 F.2d 483, 487 (7th Cir. 1980). Accord, SEC v. Advance Growth Capital Corp., 539 F.2d 649, 650-51 (7th Cir. 1976). We held that Ohio was foreclosed "from seeking reinstatement of the 50% remitted." 585 F.2d at 840. We further held that the final judgment, insofar as it awarded Ohio $10,222,278 the remitted amount, was affirmed. We instructed the district court to award post-judgment interest and to reconsider whether equitable relief should be awarded. Id. at 847. Thus, our mandate instructed the district court to enforce satisfaction of the remitted judgment. The court was not empowered to reinstate the jury verdict.
Moreover, even if our mandate had not specifically precluded reinstatement of the remitted portion of the judgment, Ohio is estopped from seeking restoration of the full jury award. A plaintiff who accepts a remittitur rather than risk a new trial may not later challenge the validity of the remittitur order. Donovan v. Penn Shipping Co., Inc., 429 U.S. 648, 97 S.Ct. 835, 51 L.Ed.2d 112 (1977) (per curiam). This estoppel rule applies even where the district court's grant of a new trial would...
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