Ostrofe v. H.S. Crocker Co., Inc.

• Citation: 740 F.2d 739
• Decision Date: 15 August 1984
• Docket Number: No. 77-3985,77-3985
• Parties: 117 L.R.R.M. (BNA) 2105, 1984-2 Trade Cases 66,148 Frank J. OSTROFE, Plaintiff-Appellant, v. H.S. CROCKER COMPANY, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 739

740 F.2d 739

117 L.R.R.M. (BNA) 2105, 1984-2 Trade Cases 66,148

Frank J. OSTROFE, Plaintiff-Appellant, v. H.S. CROCKER COMPANY, INC., Defendant-Appellee.

No. 77-3985.

United States Court of Appeals Ninth Circuit.

Aug. 15, 1984.

Darrell J. Salomon, Alioto & Alioto, San Francisco, Cal., for plaintiff-appellant.

James T. Fousekis, Steinhart & Falconer, San Francisco, Cal., for defendant-appellee.

On Remand from the Supreme Court of the United States.

Before BROWNING, Chief Judge, KENNEDY and SKOPIL, Circuit Judges.

BROWNING, Chief Judge:

Plaintiff brought this suit under Section 4 of the Clayton Act to recover treble damages for injuries resulting from a violation of the Sherman Antitrust Act. The district court dismissed a part of plaintiff's claim for lack of standing to sue under Section 4, and granted summary judgment as to the remainder. We reversed. Ostrofe I, 670 F.2d 1378 (9th Cir.1982). The Supreme Court vacated our judgment and remanded for further consideration in light of Associated General Contractors v. California State Council of Carpenters, 459 U.S. 519, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983). See 460 U.S. 1007, 103 S.Ct. 1244, 75 L.Ed.2d 475 (1983).

We first summarize the holding in Associated General Contractors, then recount the facts in Ostrofe, and finally consider the three bases on which we held Ostrofe had standing: (1) as a victim of a boycott in the market for personal services; (2) as a victim of a boycott to effectuate a price fixing conspiracy in the labels market; and (3) as a victim of a unilateral discharge by one of the conspirators in furtherance of the price fixing conspiracy. We note that Associated General Contractors did not address the first basis for standing, but conclude that Ostrofe clearly has standing on this basis in light of the determinative factors stated by the Supreme Court. Reexamining our finding of standing on the other two bases in light of Associated General Contractors, we conclude that Ostrofe also has standing both as a direct boycott victim who has sustained antitrust injury from the labels market conspiracy, and in the alternative, if antitrust injury is construed narrowly, as a direct victim of a boycott undertaken as a means to accomplish the purpose of the price fixing conspiracy in the labels market--a case the Court specifically reserved.

I.

Associated General Contractors v. California State Council

of Carpenters

Associated General Contractors deals only with the issue of standing to sue under Section 4. A union of carpenters and other construction workers brought suit under the antitrust laws against a group of building and construction contractors. The complaint alleged the defendants had restrained competition in the market for construction contracting by coercing landowners and others to enter into construction contracts with non-union contractors and subcontractors. This allegedly reduced the business of union contractors and subcontractors which, in turn, diminished the business activities of plaintiff union.

The Court held that not all parties who suffer consequential harm have standing to sue for antitrust damages, even if the harm is intentional. It did not, however, announce a new test for determining whether a party injured by an antitrust violation could recover treble damages. Rather, the principal message of the case is that it is "virtually impossible to announce a black-letter rule that will dictate a result in every case. Instead, previously decided cases identify factors that circumscribe and guide the exercise of judgment in deciding whether the law affords a remedy in specific circumstances." Associated General Contractors, 103 S.Ct. at 907-08. The Court enumerated these factors, drawing largely upon its previous decisions and those of this and other courts of appeals. The factors to be considered, according to the Court, include the nature of the injury in relation to the purpose of the antitrust laws, the directness of the injury, and the potential for duplicative recovery or complex apportionment of damages. Id. at 908-13. The plaintiff union in Associated General Contractors satisfied the causal connection and intentional harm factors set forth by the Supreme Court, but the Court concluded that on balance the other relevant considerations "weigh[ed] heavily against judicial enforcement of the Union's antitrust claim." Id. at 913.

The Court focused on the nature of plaintiff's injury in relation to the purpose of the Sherman Act: assuring competition and protecting the economic freedom of participants in the relevant market, citing Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977) and Blue Shield of Virginia v. McCready, 457 U.S. 465, 102 S.Ct. 2540, 73 L.Ed.2d 149 (1982); Associated General Contractors, 103 S.Ct. at 908-09.

The union's claims arose from alleged restraints caused by defendant in the market for construction contracting. Id. at 903. The Court noted the union was neither a consumer nor competitor in that market, and it was unclear whether its interests--improving wages and working conditions--would be helped or hurt if competition in that market were enhanced. Id. at 909.

The injury to the union was only indirect, allegedly resulting from the injury to the direct victims of the conspiracy--the union contractors who lost business because of coercion directed against builders to compel them to deal with non-union contractors. Id. at 910. The existence of direct victims of the antitrust violation diminished the justification for affording standing to a more remote party such as the union. Id. at 911. Denying the union standing was unlikely to leave a significant antitrust violation undetected or unremedied. Id. The union's damages were highly speculative, and any attempt to assess them would have involved a danger of duplicative recovery among the several layers of victims. Id. at 911-12.

II. Ostrofe v. H.S. Crocker Company

Frank J. Ostrofe, former marketing director of H.S. Crocker, Inc., filed suit against Crocker for damages for injuries resulting from a violation of the Sherman Act. The complaint alleged that Crocker and other manufacturers of paper lithograph labels conspired to restrain interstate trade and commerce in such labels in violation of Section 1 of the Act, 15 U.S.C. Sec. 1 (1976), and that the conspiracy was effectuated in part by coercing Ostrofe, as Crocker's sales manager, to rig bids, fix prices, and allocate markets. Ostrofe violated the agreement by competing freely for business. Crocker's co-conspirators complained to Crocker's executive officers, who in turn warned Ostrofe to cooperate. Ostrofe refused. He was forced to resign from his job as Crocker's sales manager and alleged he was boycotted from further employment in the industry.

Crocker moved to dismiss for lack of standing under Section 4. The district court granted the motion in part, holding that Ostrofe lacked standing to attack the alleged conspiracy to restrain competition in the sale of labels, of which the agreement to terminate and boycott Ostrofe was allegedly a part. The Court rejected Ostrofe's motion to amend the complaint to allege that his termination was a unilateral act undertaken by Crocker to effectuate the conspiracy. In the Court's view, such an amendment would have allowed Ostrofe to prove the price fixing conspiracy in establishing Crocker's unlawful purpose, contrary to the court's ruling that Ostrofe lacked standing to challenge that conspiracy.

The district court also denied the motion to dismiss in part, holding that Ostrofe had standing to challenge the agreement to bar him from employment. Crocker moved for summary judgment, claiming that as a matter of law Ostrofe is not entitled to prevail because he did not apply for a job with Crocker or any other label manufacturer. Ostrofe countered with an affidavit asserting it would have been futile for him to seek employment with any firm in the industry, reciting in support of this conclusion the dealings he had had with Crocker and the other label manufacturers while they were attempting to effectuate the price fixing scheme and the threats directed against him for not cooperating. The district court granted Crocker's motion for summary judgment without opinion and dismissed the action. See Ostrofe I, 670 F.2d at 1380.

Thus the appeal to this court presented two basic issues: (1) whether summary judgment was properly granted against Ostrofe as to the alleged agreement to deny him employment, and (2) whether Ostrofe had standing to challenge the price fixing conspiracy as the victim either of an alleged boycott or of the unilateral act of a single conspirator to effectuate the conspiracy. We held (1) that summary judgment as to the alleged boycott was improperly granted, and (2) that Ostrofe had standing to challenge the price fixing conspiracy on either factual premise.

III. Restraint of Competition in the Market for Services

We first consider Ostrofe's standing with respect to his suit against Crocker based on an implied agreement among label manufacturers to discharge him and interfere with his opportunity for re-employment in the labels industry.

The Supreme Court expressly distinguished this aspect of the present case from the case presented in Associated General Contractors, pointing out that the injuries suffered by the union in Associated General Contractors arose from alleged restraints in the market for construction contracting and thus were derivative, and that the union did "not allege any restraint on competition in the market for labor union services." 103 S.Ct. at 903 and n. 14.

We conclude that Ostrofe clearly satisfied the standards for standing set forth in Associated General Contractors with respect to this aspect of his claim. His alleged injury was caused by the boycott, it was intentionally inflicted, and it was direct. His injury flowed from a violation of...