Overseas Motors, Inc. v. Import Motors Ltd., Inc.

• Decision Date: 02 June 1975
• Docket Number: Nos. 72-2198 and 74-1651,s. 72-2198 and 74-1651
• Citation: 519 F.2d 119
• Parties: 1975-1 Trade Cases 60,340 OVERSEAS MOTORS, INC., a Michigan Corporation, Plaintiff-Appellant, v. IMPORT MOTORS LIMITED, INC., a Michigan Corporation, et al., Defendants-Appellees. OVERSEAS MOTORS, INC., a Michigan Corporation, Plaintiff-Appellant, v. IMPORT MOTORS LIMITED, INC., a Michigan Corporation, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 119

519 F.2d 119

1975-1 Trade Cases 60,340

OVERSEAS MOTORS, INC., a Michigan Corporation, Plaintiff-Appellant, v. IMPORT MOTORS LIMITED, INC., a Michigan Corporation, et al.,

Defendants-Appellees.

OVERSEAS MOTORS, INC., a Michigan Corporation, Plaintiff-Appellant, v. IMPORT MOTORS LIMITED, INC., a Michigan Corporation, et al.,

Defendants-Appellees.

Nos. 72-2198 and 74-1651.

United States Court of Appeals, Sixth Circuit.

June 2, 1975.

Wilfrid L. Burke, Burke & Wilson, Detroit, Mich., for plaintiff-appellant in both cases.

Bert Burgoyne, Harry M. Nayer, Travis, Warren, Nayer & Burgoyne, Detroit, Mich., for Volkswagen of America.

John A. Young, Ernest C. Stiefel, New York City, Gordon J. Quist, Miller, Johnson, Snell & Cummiskey, Grand Rapids, Mich., George E. Bushnell, Jr., Gregory L. Curtner, Detroit, Mich., Herbert Rubin, Herzfeld & Rubin, New York City, Miller, Canfield, Paddock & Stone, Detroit, Mich., for defendants-appellees in both cases.

Before LIVELY and ENGEL, Circuit Judges, and O'SULLIVAN, Senior Circuit Judge.

ENGEL, Circuit Judge.

This is an action by Overseas Motors, Inc. (Overseas) against Audi NSU Auto Union Aktiengesellschaft (ANAU), Volkswagenwerk Aktiengesellschaft (Volkswagen), Volkswagen of America (VOA), and Import Motors Limited, Inc. (Import), alleging violations of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2 (Count I), Section 7 of the Clayton Act, 15 U.S.C. § 18 (Count II), and the Automobile Dealers' Day in Court Act, 15 U.S.C. § 1221 et seq. (Count III). The district judge, after five weeks of trial, granted defendants' motion for a directed verdict on all counts. We affirm.

Overseas is a Michigan corporation which was the distributor of NSU automobiles in an eleven state area. ANAU, a German corporation, is the successor to NSU Motorenwerke Aktiengesellschaft which manufactured NSU automobiles, and Auto Union Gmbh, manufacturer of Audi automobiles. The corporations merged in 1969.

Volkswagen, a German corporation, is the manufacturer of Volkswagen and Porsche automobiles. It also controls 99% of the outstanding stock of ANAU. VOA is a wholly owned subsidiary of Volkswagen whose sole function is the importation and distribution of Volkswagen, Porsche and Audi cars in the United States. Import distributes Volkswagen, Porsche and Audi cars in several midwestern states, but unlike VOA, is independently owned and operated.

In 1968 Overseas entered into an importer contract with the predecessor of ANAU for exclusive rights to sell NSU cars in ten (later eleven) states. The significant provisions of the importer contract included an arbitration agreement calling for all disputes arising under the contract to be decided by an arbitration court in Zurich, Switzerland, a provision making the contract terminable by either party at the end of any calendar year upon giving three months' advance notice, and an exclusivity provision requiring that Overseas deal only in NSU products.

Overseas obtained numerous dealers throughout the franchise area in anticipation of the car sales to be generated by the enterprise. It also carried out training programs, advertised extensively, and cooperated with ANAU in helping it qualify NSU autos under American safety and emissions standards. In late 1970, deliveries of NSU autos to Overseas which had previously been insufficient to meet Overseas' orders, ceased entirely.

On July 15, 1970, approximately a year after the merger of NSU and Audi, ANAU notified Overseas by letter that it wished to take up negotiations with its American importers concerning termination of the importer contracts. Its expressed intent was to find a ". . . viable and fair solution in all cases." ANAU proposed that the importers be compensated either through inclusion in the Volkswagen distribution network, or by payment of a remuneration for the giving up of import rights.

In April 1971 ANAU sent a second letter to Overseas informing the company that while it was voluntarily extending Overseas' importer contract until December 31, 1973, the franchise would be terminated on that date. Pointing out that the American market for NSU automobiles had not developed ". . . anywhere nearly as well as both you and we had hoped when we made our agreement of July 1, 1968 . . ." ANAU claimed that American safety and exhaust standards had made it increasingly difficult to supply NSU cars at reasonable cost, in consequence of which it had cut its American line back to one model only, the NSU 1200C. In the letter ANAU, which had previously released Overseas from the exclusivity provisions of the franchise agreement, also consented to Overseas' termination of the contract at any time upon giving three months' notice.

ANAU and Overseas entered into negotiations concerning termination of the importer contract in which the possibility of Overseas obtaining a Porsche-Audi dealer's franchise was discussed. Overseas applied through Import to VOA for such a franchise, but final approval of the application was refused. The settlement negotiations failed to produce any other agreement between the parties.

Overseas commenced this suit in April, 1972 and shortly thereafter ANAU gave notice that it intended to submit the termination grievance to arbitration as provided by the importer contract. A motion to stay reference of the grievance to arbitration was denied by Judge Feikens, and on November 24, 1972 ANAU submitted the matter to the Swiss arbitration court. Overseas' separate appeal from the denial of its motion for stay has been consolidated with its appeal from the judgment on the merits.

The principal issue is whether the evidence, with permissible inferences to be drawn therefrom, was sufficient to require submission of any of Overseas' claims to the jury on any of the theories of recovery embodied in the complaint. Subissues are whether the district judge erred in his determination of the extent to which certain findings of the Swiss court were binding upon the plaintiff in the district court action under the doctrine of collateral estoppel, and whether the judge erred in excluding evidence of the negotiations conducted for settlement of the dispute.

The comprehensive opinion of District Judge John Feikens is set forth at 375 F.Supp. 499 (E.D.Mich.1974).

Appellate review of the action of a district court in granting a motion for directed verdict demands the most painstaking review of the evidence to make certain that what is claimed not to be there, in fact, isn't.

"To determine whether a directed verdict is appropriate the governing principle is that a verdict may properly be directed only when, without weighing the credibility of the witnesses, there can be but one reasonable conclusion as to the verdict . . . An appellate court too is bound to view the evidence in the light most favorable to the party against whom the motion for a directed verdict is made and give him the advantage of every fair and reasonable inference that the evidence may justify." Fortner Enterprises, Inc. v. United States Steel Corp., 452 F.2d 1095 (6th Cir. 1971)."

Overseas' principal antitrust claim was that the defendants conspired to restrain trade in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1 ¹ by "pinching off" its supply of cars, thus forcing Overseas out of business as an importer and distributor of NSU automobiles. The district court held that Overseas had failed to prove either element of the Sherman Act offense, namely (1) a contract, combination or conspiracy which resulted in (2) an unreasonable restraint of trade.

Overseas attempted to establish the conspiracy by use of circumstantial evidence which it claimed created a permissible inference of collusion among the defendants. The district judge analyzed this evidence in terms of three categories of acceptable ways to prove conspiracy by circumstantial evidence: motive, opportunity and consistency of overt acts. He determined that the evidence was insufficient to establish an inference of conspiracy and survive the motion for directed verdict. Similarly, Judge Feikens analyzed Overseas' claim of restraint of trade in terms of conduct which would be per se illegal under the Act and conduct which would be unreasonable under the "rule of reason", Standard Oil Co. v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619 (1911). The court found that the proofs offered totally failed to establish the requisite restraint of trade under either of these theories. Count I also alleged a violation of § 2 of the Sherman Act, 15 U.S.C. § 2. ² Judge Feikens ruled that the claims of monopoly and of attempt to monopolize failed for lack of proof of relevant market and proof of specific intent to monopolize. ³

Overseas alleged in Count II that "the merger of Audi and VW in July, 1970, . . . resulted in substantially lessening competition and tended to create a monopoly" in violation of Section 7 of the Clayton Act, 15 U.S.C. § 18. ⁴ The trial judge held that this claim failed altogether for want of any proof as to relevant market. Overseas has not contested this finding on appeal.

A careful review of the record demonstrates that Overseas' antitrust issues were never clearly articulated and we have little to add to the extensive discussion of the evidence made by the district judge in his memorandum opinion. Our examination of the evidence compels us to conclude, as did Judge Feikens, that plaintiff has totally failed in its proofs on the key elements of its antitrust claims:

The overwhelming reality which emerges from the many weeks of testimony and the hundreds of exhibits in this case is the total failure of the plaintiff to even address many of the central questions raised by the law it has invoked, and its complete lack of concrete evidence as to those elements with which it has concerned itself. 375 F.Supp. at 544.

Plaintiff claims it was precluded from effectively presenting evidence in support of his antitrust...