Quinonez v. National Ass'n of Securities Dealers, Inc.

• Citation: 540 F.2d 824
• Decision Date: 15 October 1976
• Docket Number: No. 74-2976,74-2976
• Parties: 1976-2 Trade Cases 61,117 Carlos A. QUINONEZ, Plaintiff-Appellant, v. NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC., et al., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 824

540 F.2d 824

1976-2 Trade Cases 61,117

Carlos A. QUINONEZ, Plaintiff-Appellant, v. NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC., et al.,

Defendants-Appellees.

No. 74-2976.

United States Court of Appeals, Fifth Circuit.

Oct. 15, 1976.

A. Don Crowder, Dallas, Tex., for plaintiff-appellant.

Fletcher L. Yarbrough, John Andrew Martin, Dallas, Tex., for Bache & Co., and others.

W. Randolph Elliott, Dallas, Tex., for Dupont, etc.

D. L. Case, Dallas, Tex., for A. G. Edwards, etc.

Jack Pew, Jr., G. Duffield Smith, Jr., Gordon H. Rowe, Jr., Dallas, Tex., for Institutional Equity Corp.

David R. McAtee, Dallas, Tex., for Natl. Assn. of Sec. Dealers.

D. Marshall Simmons, William D. Sims, Jr., Dallas, Tex., for Shearson, Hammill & Co.

Appeal from the United States District Court for the Northern District of Texas.

Before BROWN, Chief Judge, and WISDOM and COLEMAN, Circuit Judges.

JOHN R. BROWN, Chief Judge:

This is another one in that long list of cases in which the shortest way through is the longest way around. Quinonez, an aspiring securities sales representative, whose competence for the business had been established by being hired by two of the Nation's giants in the security business plus a high passing grade in the industry's uniform quality examinations, claims that he was the victim of prohibited antitrust pressures when, after being successfully hired, then fired, by two large dealers, he was unable to obtain even the chance of employment by others, because of a boycott growing out of the express or tacit agreement that one member firm would not hire a person who had either been rejected or discharged by another member firm. The District Court dismissed the complaint on the ground that it failed to state a claim. F.R.Civ.P. 12(b)(6).

In more traditional terms, Quinonez alleges a violation of Sections 1 and 2 of the Sherman Act, 15 U.S.C.A. §§ 1, 2, by defendants, who allegedly acted in concert with one another to restrain interstate commerce unlawfully, which acts are said to have injured the plaintiff Quinonez. ¹ Plaintiff sought treble damages as provided by § 4 of the Clayton Act, 15 U.S.C.A. § 15 and injunctive relief as provided by 15 U.S.C.A. § 26. Defendants moved to dismiss for failure to state a claim and the District Court granted the defendants' motion and ordered the suit dismissed. We reverse and remand.

Through Conley Glasses And The Plimsoll Line

Central to our problem is the universal rule, so often forgotten or overlooked, announced and repeatedly restated, repeated and reiterated by the Supreme Court ² and by ourselves that "a motion to dismiss for failure to state a claim should not be granted unless it appears to a certainty that the plaintiff would not be entitled to recover under any state of facts which could be proved in support of his claim." Cook & Nichol, Inc. v. The Plimsoll Club, 5 Cir. 1971, 451 F.2d 505, 506; see also Pred v. Board of Public Instruction of Dade County, Florida, 5 Cir., 1969, 415 F.2d 851, 853; Webb v. Standard Oil Co., 5 Cir., 1969, 414 F.2d 320; Barber v. Motor Vessel "Blue Cat", 5 Cir., 1967, 372 F.2d 626; Arthur H. Richland Co. v. Harper, 5 Cir., 1962, 302 F.2d 324; ³ Millet v. Godchaux Sugars, 5 Cir., 1957, 241 F.2d 264. We stressed in Pred the precarious state of a judgment based on the "barebones pleadings," for at this stage the Court may well be pulled into an academic exercise on a case that factually may never be. Pred v. Board of Public Instruction of Dade County, Florida, supra at 852, citing Byers v. Byers, 5 Cir., 1958, 254 F.2d 205.

The Complaint

Read with Conley-Blue Cat glasses the complaint reveals in a nutshell this situation. Plaintiff, after formal application, was carefully interviewed by Merrill Lynch ⁴ and accepted for training to become a registered representative under the New York Stock Exchange (NYSE) and National Association of Securities Dealers, Inc. (NASD) industry-wide standards. He engaged in extensive training and was accepted for employment. Because of his bilingual capacities, he was assigned to Merrill Lynch's office in the Republic of Panama. Everything went well until, after some belated concern as to his candid answers to the NYSE standard employment application about prior involvements with criminal charges, management through the Chairman of the Board decided his employment should be terminated a characterization which plaintiff accepted rather than the more euphonious corporate statement of resigned.

Next he went to Shearson and Hammill (Shearson) another powerful figure in the trade where once again, after a frank statement as to his experience with Merrill Lynch, he was accepted for employment as a trainee. As before he got to the point where he was to be certified for NYSE-NASD examinations, and he was discharged. ⁵

Thereafter, having committed his economic life to being a registered representative in the nation-wide securities business, he sought out employment with each of the other defendant securities companies. He was rejected by each. ⁶

This was not because of any individual consideration of his own merits or qualifications but rather because of an express or tacit understanding or agreement among member firms that they would not "pirate" the others and would deny employment to applicants who had either been fired or who had been rejected for employment by any other member firm.

To these allegations, Quinonez added the detailed factual charge that in the actual operation of the securities business, the member firms (NASD, NYSE, American Stock Exchange, Chicago Board of Trade, Chicago Mercantile Exchange, and probably others) had a virtual monopoly in the trading of securities in the United States, with the inevitable involvement of interstate commerce. He further charged that this monopolization, combined with the blackball exclusionary practices of these firms caused harm to the public by reducing the number of securities sales representatives and thus artificially reducing competition in the sale and purchase of securities in the United States, and caused harm to Quinonez in his personal business by depriving him of the opportunity to practice in the profession which he had chosen and for which he was trained and qualified.

The Sherman Act

The clear purpose of the Sherman Act is to prohibit combinations which would probably interfere with the free exercise of the rights of those engaged in commerce and it is immaterial that the parties to the tainted agreement were merely trying to regulate employment. Anderson v. Shipowners Association of Pacific Coast, 1926, 272 U.S. 359, 47 S.Ct. 125, 71 L.Ed. 298.

With this salutary Congressional intent Courts should liberally construe the Act to accomplish this purpose and not narrow its application by requiring aggrieved parties to plead with evidentiary specificity the acts complained of. At a minimum all that is required is a complaint alleging what we described as a per se violation but which must comprehend a so-called prima facie case and in a private civil action there is the additional requirement that the plaintiff allege that he was damaged by the violation. ⁷ We stated the rule well in McBeath v. Inter-American Citizens For Decency Committee, 5 Cir., 1967, 374 F.2d 359, 361:

(1) For an aggrieved party to state a claim for relief under the Sherman Act it is necessary to allege only a per se violation of the Act. In a treble damage action, allegations of a per se violation plus resultant damages must be made.

While the language of Plaintiff's complaint might not meet the demands of an antitrust purist as to specific violations, the alleged violations when combined with the rather complete exegesis of the facts relating to the plaintiff's plight gave ample notice of what was complained of and thus rose above the Plimsoll line required of the liberal rules of notice pleading in federal courts. F.R.Civ.P. 8.

In Radovich v. National Football League, 1957, 352 U.S. 445, 453, 77 S.Ct. 390, 395, 1 L.Ed.2d 456, 462, the Supreme Court considered a similar complaint which alleged that the plaintiff had been placed on a "blacklist" because he had signed with another Football Club without obtaining the consent of his old Club. In holding this complaint sufficient to state a cause of action under the Sherman Act the Court rejected the technical objections to the complaint in stating:

Likewise, we find the technical objections to the pleading without merit. The test as to sufficiency laid down by Mr. Justice Holmes in Hart v. B. F. Keith Vaudeville Exchange, 262 U.S. 271, 274 (43 S.Ct. 540, 541, 67 L.Ed. 977) (1923), is whether "the claim is wholly frivolous." While the complaint might have been more precise in its allegations concerning the purpose and effect of the conspiracy, "we are not prepared to say that nothing can be extracted from this bill that falls under the act of Congress . . . ." Id., at 274 (43 S.Ct. (540) at page 541.) See also United States v. Employing Plasterers Assn., 347 U.S. 186 (74 S.Ct. 452, 98 L.Ed. 618) (1954).

We are not prepared to hold that Plaintiff's complaint fails to meet these most liberal standards. As we read the complaint it alleged a blocking of interchange among employees of the securities industry and synergetic threats of business boycott if the blacklist were not honored. Accordingly, we follow the lead of the Seventh Circuit in Nichols v. Spencer International Press, Inc., 7 Cir., 1967, 371 F.2d 332 in holding that such no-switching agreements ⁸ which allegedly impair competition among the defendants and others are sufficient as a matter of law to state a claim under the Sherman Act. ⁹ Cf. Union Circulation Co. v. F.T.C., 2 Cir., 1957, 241 F.2d 652.

Clayton Act

Of course, in order to state a treble damage claim under § 4 of the Clayton Act the plaintiff must allege ¹⁰ that he has been "injured in his business or property" by acts of the defendant which are in violation of the antitrust...