Pinto Trucking Service v. Motor Dispatch, Inc.

• Decision Date: 29 February 1980
• Docket Number: No. 74 C 2675.,74 C 2675.
• Parties: PINTO TRUCKING SERVICE, INC., Plaintiff, v. MOTOR DISPATCH, INC., et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

485 F. Supp. 484

PINTO TRUCKING SERVICE, INC., Plaintiff, v. MOTOR DISPATCH, INC., et al., Defendants.

No. 74 C 2675.

United States District Court, N. D. Illinois, E. D.

February 29, 1980.

McBride, Baker, Wienke & Schlosser, Chicago, Ill., for plaintiff.

B. John Mix, Jr., Chicago, Ill., for defendants.

PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT IN ITS FAVOR AND AGAINST DEFENDANTS MOTOR DISPATCH, INC. AND HARRY NEWBERGER

MORAN, District Judge.

I. Factual Background.

Pinto Trucking Service ("PTS") filed this lawsuit in September, 1974, alleging that two corporations and four individuals illegally conspired to destroy PTS as a business competitor. The plaintiff is an interstate motor carrier authorized by the Interstate Commerce Commission to transport air freight, i. e., freight moved between specified airports immediately before or after having been moved by air. The complaint charged: (1) that Defendant Davie breached his employment agreement and fiduciary duties owed to PTS; (2) that the other five defendants unlawfully solicited Davie's breach of these duties; (3) that all defendants intentionally interfered with PTS' business relationships with its customers; (4) that each of these illegal acts was in furtherance of a conspiracy to cripple or destroy PTS as a business competitor of Defendants Motor Dispatch and Appaloosa and (5) that these acts violated Section 1 of the Sherman Act, 15 U.S.C. § 1, and also constituted torts under state law.¹

This case was tried once before. At the first trial the plaintiff presented evidence that in February, 1973, Davie became PTS' Midwest Regional Manager, a new position created because PTS began to expand from the East Coast to the Midwest, starting with service between Chicago and Detroit. Defendant Marston was the Chicago District Manager of an air freight forwarding company that used PTS' services. During the summer of 1973, Marston introduced Davie to defendant Meyers, who subsequently suggested that these three men form a new company to transport air freight between Chicago and Detroit. Defendant Appaloosa Air Cargo is the corporation formed by Davie, Marston and Meyers.

In September, 1973, Davie, Marston and Meyers met with defendant Newberger, the president of defendant Motor Dispatch. At that meeting, Appaloosa and Motor Dispatch entered into an agreement which resulted in Appaloosa obtaining the legal authority needed to operate between Chicago and Detroit. Appaloosa also leased the equipment it needed from Dependable Truck Leasing, a corporation owned and controlled by Newberger.

This entire sequence of events occurred while Davie was employed by PTS. Evidence presented at the trial also indicated that, before Davie stopped working for PTS, he failed to solicit new business for the company or to hire new employees; he terminated PTS' less-than-carload shipping service without permission from or notice to PTS; he solicited PTS' employees to leave the company and work for Appaloosa; and he apparently solicited PTS' customers for Appaloosa. As a result of these actions, PTS suffered a severe loss of business.²

The first trial began on July 19, 1977. On August 4, at the conclusion of PTS' case, the district court granted motions by Motor Dispatch and Newberger for directed verdicts on all counts of the Complaint. On August 11, the jury found for PTS against Davie, Marston and Appaloosa on the antitrust claims;³ against Marston, Meyers and Appaloosa on the charge of inducing Davie to breach his employment duties; against all four Appaloosa defendants (Appaloosa, Davie, Marston and Meyers) on the charge of interfering with PTS' business relationships with customers; against Davie on the charge of soliciting and inducing owner/operators to terminate their contracts and business relationships with PTS;⁴ and against Davie on the charge of breaching employment duties to PTS.

The defendants moved to vacate all judgments entered against them on the ground that the judgments were contrary to law and unsupported by the evidence. The district court granted the defendants' motions with respect to some of the jury verdicts and denied them with respect to others.⁵ However, the Seventh Circuit Court of Appeals reversed each district court order granting the defendants' motions for judgment notwithstanding the verdict. The appellate court also reversed the district court decision that defendants Newberger and Motor Dispatch were entitled to directed verdicts. After considering several evidentiary issues and questions involving crossclaims and counterclaims, the court of appeals remanded the case "for a new trial with respect to defendants Motor Dispatch and Newberger and for a new trial on the issue of damages with respect to defendants Appaloosa, Davie, Marston and Meyers."

On remand, the plaintiffs filed a motion for summary judgment raising two separate questions: first, should this court as a matter of law find defendants Newberger and Motor Dispatch liable for the illegal conspiracy of the other four defendants? Second, if there is to be a new trial on the issue of the liability of Newberger and Motor Dispatch, in the trial of these two defendants does the fact that the other four defendants illegally conspired need to be relitigated, or are Motor Dispatch and Newberger bound by the jury verdicts rendered at the first trial and reinstated by the court of appeals?

II. The Liability of Defendants Newberger and Motor Dispatch.

The court of appeals remanded this case for a "new trial" with respect to Newberger and Motor Dispatch. Given the wording of this mandate, it would be unusual for this court not to order a new trial at least on some issues involving these defendants. As both the plaintiff and the defendants agree, this court is not free to modify a court of appeals decision, and any issues which that court has decided cannot be reconsidered here in the absence of new evidence.

However, the opinion of the court of appeals is only binding as to those issues actually considered by that court. As Professor Moore points out:

Where a case has been decided by an appellate court and remanded, the court to which it is remanded must proceed in accordance with the mandate and such law of the case as was established by the appellate court . . .. The term law of the case `when used to express the duty of a lower court to follow what has been decided by a higher court at an earlier stage of the case, applies to everything decided, either expressly or by necessary implication.' 1B Moore's Federal Practice ¶ 0.40410 (2d ed.), quoting Munro v. Post, 102 F.2d 686, 688 (2d Cir. 1939). See also Kuhn v. Nat'l Ass'n. of Letter Carriers, Branch 5, 570 F.2d 757, 759 & n.3 (8th Cir. 1978).

The question, then, is whether the issues the plaintiff raises in this motion were decided "either expressly or by necessary implication," by the court of appeals. After carefully reviewing the court of appeals opinion, I believe those issues involving the liability of defendants Newberger and Motor Dispatch were considered above, and that the appellate mandate requires this court to hold a new trial as to those issues.

The court of appeals divided its discussion of this question into two parts. The court first considered whether there was sufficient evidence in the record to support a jury verdict "finding Motor Dispatch and Newberger liable as coconspirators." Plaintiff's exhibits at A-11. On this issue, the court clearly held that a new trial was necessary:

". . . Motor Dispatch and Newberger supplied the Appaloosa defendants with everything they needed—the legal authority and the equipment—to implement their plan to destroy Pinto. Whether they did so knowingly is a question of fact which, considering the record, the jury could resolve either way." Id. at A-12.

This and other sections of the court of appeals decision indicate without question that the court believed there were substantial unresolved issues of fact which required a new trial giving the defendants a chance to present any defenses they might have, and giving the trier of fact an opportunity to review the evidence for both sides.

The plaintiff does not dispute the fact that the first trial did not conclusively establish that Newberger and Motor Dispatch participated in the illegal conspiracy. Instead, PTS argues that these two defendants are liable as a matter of law, because undisputed evidence shows the Appaloosa defendants were agents of Motor Dispatch, and the principal in such cases is liable for the torts of his agent.

However, this same issue was considered by the court of appeals in the second part of its discussion, and the court strongly implied that disputed, material issues of fact needed to be resolved before Motor Dispatch and Newberger could be found liable. The court recognized that "a verdict favoring these defendants on the conspiracy issue would not preclude a verdict favoring the plaintiff based on agency." Id. at A-13. The court also recognized that a principal can at times be "liable for the wrongful acts of its agent even though the acts were intentional and without the knowledge of the principal," and that "a principal who knowingly accepts the benefits of an agent's acts affirms and possibly ratifies that act, thus becoming liable where he otherwise would not have been liable." Id.

However, the court of appeals concluded that questions involving the nature and extent of the Appaloosa defendants' agency relationship with Newberger and Motor Dispatch, as well as a possible ratification of the illegal conspiracy, were issues of fact which were substantially in dispute. The court observed that "the evidence, although not uncontradicted, is such that a jury reasonably could infer that such an agency relationship between Motor Dispatch and Appaloosa did exist, and that Motor Dispatch is liable as a result of that relationship." This language, combined with the fact that the case was remanded for...