Reserve Plan, Inc. v. Arthur Murray, Inc.

• Decision Date: 25 January 1967
• Docket Number: No. 12701-1.,12701-1.
• Citation: 262 F. Supp. 565
• Parties: RESERVE PLAN, INC., Plaintiff, v. ARTHUR MURRAY, INC., et al., Defendants.
• Court: U.S. District Court — Western District of Missouri

262 F. Supp. 565

RESERVE PLAN, INC., Plaintiff, v. ARTHUR MURRAY, INC., et al., Defendants.

No. 12701-1.

United States District Court W. D. Missouri, W. D.

January 25, 1967.

Ralph M. Jones, Kansas City, Mo., for plaintiff.

William H. Curtis, Elton L. Marshall, Kansas City, Mo., for defendants.

MEMORANDUM OPINION, SUPPLEMENTAL FINDINGS OF FACT AND SUPPLEMENTAL CONCLUSIONS OF LAW

JOHN W. OLIVER, District Judge.

I.

The Court of Appeals' opinion reported in 8 Cir., 364 F.2d 28, directed that particular portions of our original order of reference reported in D.C., 38 F.R.D. 23 at 37 be vacated. In addition, that opinion established the guidelines for the final disposition of this case. After receipt of the mandate we modified the order of reference to comply with the directions of the Court of Appeals.

The fact that the Special Master gave a negative answer to the precise question referred to him under the modified reference order does not mean that plaintiff is only entitled to nominal damages. That fact does mean that defendants' objections to the particular portions of the Special Master's report identified in those objections are well taken in the sense that the explanatory comments in the report of the Special Master, as distinguished from his answer to the specific question posed in the modified order, are not and have not been considered as a part of the evidence or the record upon which this Court's additional findings of fact must be based.

The Court of Appeals based its restriction of our original order of reference on its finding that "the record contained an adequate probative basis for legally arriving at an award" (364 F.2d at 35). In so doing the Court of Appeals cited and directed significant attention to the following Supreme Court cases:

It should be sufficiently clear, we think, from Eastman Kodak Co. of New York v. Southern Photo Materials Co., 273 U.S. 359, 377-379, 47 S.Ct. 400, 71 L.Ed. 684 (1927), and Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 562-566, 51 S.Ct. 248, 75 L.Ed. 544 (1931), that the task and responsibility involved in arriving at the amount of damages in an antitrust case are not as formidable and precarious as the wrongdoer ordinarily in last line of defense, seeks to make them out to be. When the fact is certain that antitrust injury has been inflicted on a party, it is sufficient as a basis for arriving at the damages that the evidence contains probative elements from which on reasonable inference their extent can with judgment be estimated. Cf. Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 688, 66 S.Ct. 1187, 1193, 90 L.Ed. 1515 (1946); Palmer v. Connecticut Railway & Lighting Co., 311 U.S. 544, 560-561, 61 S.Ct. 379, 384-385, 85 L.Ed. 336 (1941). 364 F.2d at 35

It is obvious that the Court of Appeals did not believe that a miscarriage of justice would occur if this case is determined solely on the evidence introduced by the plaintiff at trial. Power to require additions of evidence in a submitted jury waived case on the trial judge's own motion was recognized in the exceptional circumstance in which such an addition would in fact be necessary to "prevent a miscarriage of justice from occurring" (364 F.2d at 34). The Court of Appeals held that exercise of such power was warranted when, but only when, the facts of a particular case required such exercise in order "to have some element of necessary and available proof added to the record to avoid having to do an injustice in the situation" (364 F.2d at 35).

It is clear that the Court of Appeals did not believe that this case, on its facts, could be said to fall within the recognized exception to the general rule that the trial judge, as the trier of the facts in a jury waived case, must decide the case solely on the evidence adduced by the parties before submission.

The citation by the Court of Appeals of Stoll v. Gottlieb, 305 U.S. 165 at 172, 59 S.Ct. 134, 83 L.Ed. 104, with an emphasis different from that which we originally placed on that case, see 38 F.R.D. at 25, negates any notion that in a jury waived case the trial judge has power to order a new trial in the event he is dissatisfied with the state of the record; there is, in other words, no legal possibility for a hung jury in a jury waived case. We have endeavored to comply with the directions and admonitions of our Court of Appeals in the manner we now state. The findings of fact and conclusions of law stated in this memorandum opinion are supplemental to those stated in 38 F.R.D. 23, which are incorporated herein by this reference, and all shall be so considered pursuant to Rule 52(a) of the Rules of Civil Procedure.

II.

After receipt of the negative report of the Special Master, it was apparent that our verdict and supplemental findings of fact on damages must necessarily be based solely on the evidence adduced at trial. Our order of December 1, 1966 therefore directed that plaintiff submit "a specific finding of fact in regard to the amount of damage plaintiff believes is supported by the evidence in this case" and that plaintiff "support his suggested finding by specific references to the record and add appropriate factual and legal arguments." Appropriate leave was also then granted defendants to file additional briefs on the question of damages and to plaintiff to reply.

In response to that order plaintiff resubmitted as its suggested finding No. A its original suggested finding No. 47 altered only by a recalculation of certain interest figures to increase the alleged damage claim from $528,122.00 to a claim for $609,062.00. We reject and refuse to make that suggested finding because there is not and, in our judgment, never has been sufficient evidence in the trial record to support such a finding. The Court of Appeals noted that full development of the factual base upon which any finding in regard to the capital-stock purchase involved "prospecting for further evidential possibilities," a quest expressly prohibited by the Court of Appeals' mandate. But more important, the Court of Appeals added that "even if the quest should prove out, such evidence would be capable of at most only auxiliary and not crucial probativeness in the situation" (364 F.2d at 34). We agree with the clear implication of the Court of Appeals' comment on the state of the evidence adduced by plaintiff in regard to the capital-stock purchase matter. Indeed, if we had ever had any different view of that evidence we would not have issued our original order of reference in the manner and form in which that order treated with the capital-stock purchase problem.

Plaintiff's suggested alternative finding of fact No. A is based upon an application of Eastman Kodak Co. of New York v. Southern Photo Materials Co., 273 U.S. 359, 47 S.Ct. 400. We find and determine that the rule and rationale of Eastman is a proper and available method under which plaintiff's damages may be established. As will be detailed in the next section of this memorandum opinion, we reject the particular figures contained in plaintiff's suggested finding. We also reject plaintiff's suggested finding that its proof established that plaintiff's damage continued beyond the date suit was filed.

We likewise reject plaintiff's suggested finding No. B because plaintiff did not establish that but for the defendants' actions it would not have suffered the capital losses for which claim is made.

We accept plaintiff's suggested finding No. C in regard to the loss of Arthur Murray studio coupon books.

III.

The basic data on which our findings of fact in regard to damages must be based is beyond dispute. Defendants' exhibit 106 is a fair and accurate summation of the auditor's reports introduced as plaintiff's collective Exhibit 53. The undisputed evidence establishes beyond any real doubt that the Arthur Murray business handled by the plaintiff was its most lucrative business and could therefore be handled at less cost than its other business. Estimates of cost based on plaintiff's entire business operation are therefore more favorable to the defendants than to the plaintiff. We are forced to utilize plaintiff's overall business performance because plaintiff failed to adduce any evidence that distinguishes between the expense of its overall business and its separate Arthur Murray business. We so find.

We find and determine that plaintiff introduced sufficient evidence to support the theory of damages approved in Eastman. On the basis of our study of the evidence adduced at trial and the reasonable inferences drawn therefrom, we find that the gross annual income from the Arthur Murray business for the calendar year immediately preceding April 1, 1955 to be $120,000.00. We have rounded figures calculated from the audit reports, keeping in mind the fact that plaintiff's books reflected income only when particular installment contracts were collected in full. We recognize that our figure is somewhat lower than that calculated by the Special Master but, as we have indicated, the Special Master's report is not to be considered as evidence in this case. We so find.

As we have indicated above, we reject that portion of plaintiff's suggested alternative finding No. A that suggests that it would have been necessary to incur only $22,800 additional expense to handle the additional $120,000 of business. We expressly find that such portion of plaintiff's suggested finding is contrary to the experience of plaintiff's established business and to other testimony and evidence in the record.

There was no real dispute in the evidence in regard to the particular items of expense included in plaintiff's exhibit 58. Defendants' expert witness did not suggest that the items there listed were not proper nor was there any evidence that additional items should have been included. The total thrust of defendant Arthur Murray's expert witness testimony was to the effect that it was impossible to arrive at...