Quality Discount Tires, Inc. v. Firestone Tire & Rubber Co., 47

• Decision Date: 31 January 1978
• Docket Number: No. 47,47
• Parties: , 1978-1 Trade Cases P 61,848 QUALITY DISCOUNT TIRES, INC. v. The FIRESTONE TIRE & RUBBER COMPANY.
• Court: Maryland Court of Appeals

Page 7

282 Md. 7

382 A.2d 867, 1978-1 Trade Cases P 61,848

QUALITY DISCOUNT TIRES, INC. v. The FIRESTONE TIRE & RUBBER COMPANY.

No. 47.

Court of Appeals of Maryland.

Jan. 31, 1978.

George W. Liebmann, Baltimore (Shale D. Stiller, Baltimore, on the brief), for appellant.

Paul V. Niemeyer, Baltimore (Lewis A. Noonberg, Edward F. Magee and Piper & Marbury, Baltimore, on the brief), for appellee.

Argued before MURPHY, C. J., and SMITH, DIGGES, LEVINE, ELDRIDGE and ORTH, JJ.

ELDRIDGE, Judge.

This is the first case to reach this Court involving the Maryland Antitrust Act, Maryland Code (1975, 1977 Cum.Supp.), §§ 11-201 11-213 of the Commercial Law Article. The plaintiff in a private action under that statute here challenges the granting of the defendant's motion for a directed verdict.

The testimony developed at trial tended to establish that in September 1972, Quality Discount Tires, Inc., the plaintiff, entered into a dealership agreement with the Firestone Tire and Rubber Company, the defendant. ¹ According to the terms of the agreement, Firestone, inter alia, was obligated to sell tires to Quality at the "Company's regular Direct Dealer Prices" and to allow Quality to participate, along with other dealers, in cooperative advertising paid for in part by Firestone. This agreement could be cancelled by either party without cause upon 60 days' written notice.

In March 1973, Quality was excluded from Firestone's advertising program. In April 1973, Quality instituted this action in the Circuit Court for Baltimore County under the Maryland Anti-trust statute, seeking damages for the exclusion from the advertising program. Quality alleged that this exclusion was in furtherance of a price-fixing arrangement and that Firestone, consequently, had violated § 11-204(a)(1) which prohibits a person, by contract, combination, or conspiracy with one or more other persons from unreasonably restraining trade or commerce. Specifically, Quality brought the action pursuant to § 11-209(b) (2), which provides that a "person whose business or property has been injured . . . by a violation of § 11-204 may maintain an action for damages . . . against any person who has committed the violation." In May 1973, Firestone gave formal notice to Quality that it would be terminated as a Firestone dealer, effective July 1973. Quality then amended its declaration, seeking damages for the termination of its dealership as well as for its exclusion from the cooperative advertising.

Thereafter, following extensive discovery, the case came on for trial. At the close of the plaintiff's evidence, the trial court granted Firestone's motion for a directed verdict on the grounds (1) that Quality had failed to establish any violation of § 11-204(a)(1), and (2) that Quality had failed to establish that it had been damaged by Firestone's actions.

Quality took an appeal to the Court of Special Appeals. Before any proceedings in that court, we granted Quality's petition for a writ of certiorari. Quality argues that the motion for directed verdict was improperly granted. In addition, Quality argues that several pre-trial orders relating to discovery and other procedural matters were in error.

(1)

Whether There Was Evidence of a Statutory Violation

In 1972, the General Assembly adopted the Maryland Antitrust Act. ² The purpose of the Act is to "complement the body of federal law governing restraints of trade," and the General Assembly stated its intent that "in construing this subtitle, the courts be guided by the interpretation given by the federal courts to the various federal statutes dealing with the same or similar matters." Section 11-202(a).

In the instant case, Quality alleges that Firestone violated § 11-204(a)(1) of the Act, which provides that "(a) person may not . . . (b)y contract, combination, or conspiracy with one or more other persons, unreasonably restrain trade or commerce . . . ." The federal analogue to this provision is § 1 of the Sherman Antitrust Act of July 2, 1890, 26 Stat. 209, as amended, 15 U.S.C. 1, which states that every "contract, combination . . . or conspiracy, in restraint of trade or commerce . . . is declared to be illegal." Quality maintains that its termination as a Firestone dealer was an act by Firestone in furtherance of a "contract, combination, or conspiracy" among Firestone and several Firestone dealers in the Baltimore metropolitan area; that the purpose and result of this conspiracy or arrangement was "restraint of trade" in the form of resale price maintenance of Firestone products; and that its termination was, as a consequence, in violation of the Maryland Antitrust Act.

The trial judge, in granting Firestone's motion for a directed verdict, stated: "There is no evidence in this case to submit to a jury of 'a conscious commitment to a common scheme' that would in any way show that there was a contract, combination, or any type of conspiracy."

In ruling on a motion for a directed verdict, a court is required to "assume the truth of all credible evidence in the case tending to sustain the contentions of the party against whom the verdict is directed as well as all inferences of fact reasonably and fairly deducible therefrom." Durante v. Braun, 263 Md. 685, 689, 284 A.2d 241, 243 (1971). These facts and inferences must be viewed in the light most favorable to the party against whom the directed verdict is sought, that is, all conflicts must be resolved in his favor, and if "there is any legally relevant and competent evidence from which a rational mind can infer a fact at issue," the motion for a directed verdict must be denied, Yommer v. McKenzie, 255 Md. 220, 228, 257 A.2d 138, 142 (1969). Accord, Beahm v. Shortall, 279 Md. 321, 341-343, 368 A.2d 1005 (1977); Levine v. Rendler, 272 Md. 1, 12, 320 A.2d 258 (1974).

Quality argues that granting the motion for a directed verdict was error for two reasons. First, Quality maintains that, viewed in the light most favorable to it, evidence was adduced on the basis of which a jury could have reasonably found a "conscious commitment to a common scheme" in violation of the antitrust laws by Firestone and the Firestone dealers. Second, Quality insists that it is not, in any event, necessary to show "a conscious commitment to a common scheme" in order to establish a combination in violation of the antitrust laws, and that sufficient evidence was adduced, under the correct rule of law, to establish a violation.

Firestone, on the other hand, arguing for the legal standard employed by the trial court, insists that "Quality needed to prove that Firestone and its alleged co-conspirators consciously agreed or conspired to fix price and that Firestone terminated Quality pursuant to that conspiracy; it needed to prove a conscious commitment to a common scheme." (Respondent's brief, p. 42.)

In light of the provision of the Maryland Antitrust Act that, in construing this statute, courts be guided (but not bound) by the opinions of the federal courts under the federal antitrust laws, it would be appropriate to briefly review the history of resale price maintenance cases under the Sherman Antitrust Act. In Dr. Miles Medical Co. v. John D. Park & Sons, 220 U.S. 373, 31 S.Ct. 376, 55 L.Ed. 502 (1911), Dr. Miles, a drug manufacturer, had attempted to control the prices at which wholesalers and retailers sold its products by means of "consignment contracts" and "retail agency contracts." Although the prices fixed by these contracts were not excessive, the Court held them unenforceable on the ground that they had the effect of forming a combination destructive of competition and hence were agreements in restraint of trade under § 1 of the Sherman Act. ³ This holding was affirmed in United States v. Schrader's Son, Inc., 252 U.S. 85, 99, 40 S.Ct. 251, 253, 64 L.Ed. 471 (1920), where the Court stated that when one "enters into agreements (to fix resale prices) whether express or implied from a course of dealing or other circumstances, " a basis for a Sherman Act violation exists.

However, the antitrust laws prohibit more than those restraints of trade which arise by the agreements of the participants. As the Court stated in Federal Trade Commission v. Beech-Nut Packing Co., 257 U.S. 441, 455, 42 S.Ct. 150, 155, 66 L.Ed. 307 (1922), a resale price maintenance case, the presence vel non of an agreement is not the touchstone of an illegal combination under the antitrust laws:

"The specific facts found show suppression of the freedom of competition by methods in which the company secures the co-operation of its distributors and customers, which are quite as effectual as agreements express or implied intended to accomplish the same purpose." (Emphasis supplied.)

Recently in Albrecht v. Herald Company, 390 U.S. 145, 149, 88 S.Ct. 869, 871, 19 L.Ed.2d 998 (1968), a case involving the termination of a newspaper carrier for failure to observe pricing policies, the Supreme Court reiterated that § 1 of the Sherman Act "covers combinations in addition to contracts and conspiracies, express or implied." Accord, United States v. Parke, Davis and Company, 362 U.S. 29, 80 S.Ct. 503, 4 L.Ed.2d 505 (1960); United States v. Bausch & Lomb Optical Co., 321 U.S. 707, 64 S.Ct. 805, 88 L.Ed. 1024 (1944); Osborn v. Sinclair Refining Company, 286 F.2d 832 (4th Cir. 1960), cert. denied, 366 U.S. 963, 81 S.Ct. 1924, 6 L.Ed.2d 1255 (1961), 324 F.2d 566 (4th Cir. 1963).

There is one very limited set of circumstances under which a seller, without violating the Sherman Act, may terminate a dealer for failing to adhere to pricing practices. In United States v. Colgate & Co., 250 U.S. 300, 39 S.Ct. 465, 63 L.Ed. 992 (1919), the Court stated that a seller may announce in advance that he will refuse to deal with any retailers who fail to abide by the seller's announced pricing policies. The Court stated that § 1 of the Sherman Act does not restrict the right of a trader or manufacturer "freely to...