Paul Kadair, Inc. v. Sony Corp. of America
| Decision Date | 03 January 1983 |
| Docket Number | No. 80-3972,80-3972 |
| Parties | 1982-83 Trade Cases 65,121 PAUL KADAIR, INC., d/b/a Paul Kadair's Home & Commercial Audio, Plaintiff- Appellant, v. SONY CORPORATION OF AMERICA, et al., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Henry L. Klein, New Orleans, La., for plaintiff-appellant.
Bernus Wm. Fischman, Lackshin & Nathan, Houston, Tex., for L.J. Paul & Associates.
Fenwick, Stone, Davis & West, Edmond C. Gregorian, Richard E. Levine, Palo Alto, Cal., for U.S. Pioneer Electronics.
Michael O'Keefe, Benjamin R. Slater, Jr., New Orleans, La., Hoken S. Seki, Chicago, Ill., for Melco Sales, Inc.
Richard B. Nevils, Baton Rouge, La., for Kadair's Sight & Sounds, Inc.
Chaffe, McCall, Phillips, Toler & Sarpy, Corinne Ann Morrison, New Orleans, La., for Dahlquist, Inc. & Tobias & Co.
Adams & Reese, Sam A. LeBlanc, III, New Orleans, La., for Bang & Olufsen of America.
Rosenmann, Colin, Freund, Lewis & Cohen, Marc Rowin, Asa D. Sokolow, New York City, Wallace A. Hunter, Baton Rouge, La., for Sony of America.
Dyer & Funderburk, Robert C. Funderburk, Baton Rouge, La., for Art Colley's Audio.
Breazeale, Sachse & Wilson, Gordon A. Pugh, Baton Rouge, La., for Marantz, Inc. and Superscope, Inc.
Phelps, Dunbar, Marks, Claverie & Sims, Rutledge C. Clement, Jr., Margaret Ann Brown, New Orleans, La., for U.S. Pioneer Electronics Corp. Taylor, Porter, Brooks & Phillips, Fredrick R. Tulley, Baton Rouge, La., for Dobbs-Stanford & Yamaha Intern. Corp.
Hillis, Phillips, Cairncross, Clark & Martin, Mark S. Clark, Seattle, Wash., for Ogden Park, Phase Linear, Bose Corp.
Sanders, Downing, Kean & Cazedessu, William R. D'Armond, George K. Anding, Jr., Baton Rouge, La., for Mill-Tronics, Miller & Assoc., Inc. and Plessey, Inc.
Stone, Pigman, Walther, Wittmann & Hutchinson, Phillip A. Wittmann, James C. Gulotta, Jr., New Orleans, La., for Kenwood Electronics.
Jack C. Benjamin, New Orleans, La., for McIntosch Laboratory, Inc.
Cooper & Thompson, Baton Rouge, La., Gerald E. Fogerty, New York City, for Thorens Corp., and Elpa Marketing.
McCollister, McCleary, Fazio, Mixon & Holliday, Neil H. Mixon, Jr., Baton Rouge, La., for Crown Intern.
Appeal from the United States District Court for the Middle District of Louisiana.
Before GARZA, TATE and WILLIAMS, Circuit Judges.
The issue presented by this appeal is a narrow, yet difficult one given the peculiar posture and particular facts of the case as developed in the court below. Specifically: did the district court abuse its discretion in denying appellant's request for discovery, pursuant to Fed.R.Civ.P. 56(f) affidavits, on the ground of dilatoriness, followed by the dismissal of appellant's conclusory complaint under Section 1 of the Sherman Act, 15 U.S.C. Sec. 1, alleging an unlawful concerted refusal to deal. Although a partial stay of discovery was in effect for all but one month of the proceedings below, we do not find this fact to signal an abuse of discretion in light of four factors: (1) the limited nature of the stay, (2) the district court's orders concerning discovery during the litigation, (3) appellant's repeated inability to provide both specific facts in its complaint and to frame focused discovery requests in its Rule 56(f) affidavits, and (4) appellant's failure to seek any meaningful discovery for more than a year after filing its complaint.
Appellant Paul Kadair, Inc., a stereo retailer, filed this antitrust action on March 2, 1978 against a total of over forty manufacturers, manufacturers' representatives/distributors and retailers of stereo equipment. 1 Appellant alleged that the above defendants had engaged in a conspiracy, in violation of Section 1 of the Sherman Act, pursuant to which defendant manufacturers refused to sell their products to appellant. 2 15 U.S.C. Sec. 1. After twice amending its complaint, pursuant to district court order, appellant remained unable to plead any specific facts tending to support its conclusion of conspiracy as alleged.
Defendant-appellees on November 30, 1978, renewed previously-made motions and also made new motions to dismiss or for summary judgment pursuant to Fed.R.Civ.P. 56(e) 3 against the Second Amended Complaint. These motions addressed the legal sufficiency of the complaint and alleged that appellant failed to comply with the court's orders to plead specific facts concerning the alleged conspiracy. Some defendant-appellees submitted affidavits denying participation in the alleged conspiracy to boycott: the defendant manufacturers and distributors who were manufacturers' representatives averred that any refusals to deal with appellant were unilateral decisions made for independent business reasons, including the plaintiff's poor credit status, plaintiff's failure to complete or submit required applications, the poor appearance of plaintiff's store, and adequate sales representation of defendant's products by other retailers. Others submitted affidavits pointing out that they had in fact sold products to appellant, 4 while others noted that they had dealt with and then terminated business dealings with the alleged instigator of the boycott, Kadair's, Inc. 5
In opposition to these motions, in January, 1979, appellant submitted a Fed.R.Civ.P. 56(f) affidavit 6 which did not come to the court's attention until an April 27th hearing on appellees' motions. 7 At the April 27th hearing appellant's counsel admitted the lack of specific evidence of conspiracy, 8 and sought a continuance to seek discovery in order to gather such evidence. In response to the court's invitation to submit additional material by May 4, 1978, appellant filed a supplemental Rule 56(f) affidavit claiming the need for discovery since knowledge and control of the facts underlying the conspiracy claim were largely in the hands of defendants, appellant had been unable to obtain information by means of personal interviews, and it had no other means of refuting appellees' allegations as made in their affidavits filed pursuant to Rule 56(e). 9
Thereafter, by order dated July 6, 1979, the court stated that it did "not believe there is sufficient evidence in the record to make a determination of whether the plaintiff should be allowed additional time to take depositions or file affidavits in opposition to defendants' motions." It ordered appellant to submit specific information concerning the discovery requested. 10 In response to the court's order, appellant requested on August 6, 1979, that it be permitted to depose fifteen named individuals, associated with twelve of the defendants, concerning:
a) the nature of the Baton Rouge retail home stereo equipment market; b) the relationships between the manufacturer's representatives and the retailers in the Baton Rouge area; c) the requirements set by the manufacturer's representatives in determining whether or not a retailer is capable of distributing a manufacturer's product; d) the methods utilized by the manufacturer's representatives in evaluating an applicant/retailer's ability to adequately market a manufacturer's product; and e) the nature of communications and contacts between the manufacturer's representative and the manufacturer which it represents and the retailers in the Baton Rouge market.
Appellant also sought permission to serve interrogatories upon the manufacturers and manufacturers' representatives, concerning the nature, type and kind of agreements existing within each manufacturer's distribution scheme and the identity and business qualifications of various members of that scheme. 11 Finally, appellant submitted a document production request for information as to the manufacturers' marketing goals and yearly sales.
Appellant averred that its interrogatory and document requests were
designed to meet the motions by the manufacturers, manufacturer's representatives, and retailers in which they claim that: (i) no non-business discrimination was exercised in their discretionary action; (ii) plaintiff was unqualified to distribute the manufacturer's products; and (iii) that there were other qualified and capable retailers in the area which also met the marketing requirements of a manufacturer.
Appellant explained that these requests were not made earlier as "the Court had ruled out all discovery up until motions for summary judgments were presented." 12
Appellees objected to appellant's proposed discovery. At this time, the court took the matter under advisement. Subsequently, the court granted appellees' motions for summary judgment, simultaneously denying appellant's request for discovery. 13
The district court relied upon the following findings and reasoning in granting appellees' motions: (1) appellees' moving affidavits demonstrated that their decisions not to deal with plaintiff, if made at all, were made unilaterally; 14 (2) appellant's opposing affidavits failed to either controvert appellees' affidavits or present any significant probative evidence of conspiracy; 15 (3) appellant admitted that it had no evidence of a conspiracy; 16 and (4) unilateral refusals to deal were not violative of the Sherman Act, citing United States v. Colgate & Co., 250 U.S. 300, 39 S.Ct. 465, 63 L.Ed. 992 (1919) and its progeny. The court also elaborated upon its refusal to exercise its discretion to grant appellant Rule 56(f) discovery on the grounds that appellant had been dilatory in requesting discovery, had failed to comply with the court's orders, and because the discovery sought amounted to a "fishing expedition":
In exercising the discretion afforded to this Court in denying plaintiff's Rule 56(f) request, the Court concludes that:
(1) the plaintiff has failed to make a timely request for discovery in that he has not, at any point in these proceedings, initiated any means of discovery or requested that the Court allow him to obtain any relevant information or significant probative...
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