Richards v. Neilsen Freight Lines

Citation810 F.2d 898
Decision Date17 February 1987
Docket NumberC,No. 85-1744,No. 150,150,85-1744
Parties124 L.R.R.M. (BNA) 2788, 106 Lab.Cas. P 12,245, 1987-1 Trade Cases 67,468 Dick G. RICHARDS, as Trustee, and Capitol Bank as Assignee, Plaintiffs-Appellants, v. NEILSEN FREIGHT LINES, DiSalvo Trucking Company, Delta Lines, Inc., Peters Truck Lines, Localhauffeurs, Teamsters and Helpers, Defendants-Appellees.
CourtU.S. Court of Appeals — Ninth Circuit

James Duryea, Jr., San Francisco, Cal., and William D. Taylor, San Francisco, Cal., for plaintiffs-appellants.

Richard C. Brautigam, San Francisco, Cal., and Michael S. Rubin, San Francisco, Cal., for defendants-appellees.

Appeal from the United States District Court for the Eastern District of California.

Before SNEED, KENNEDY and BOOCHEVER, Circuit Judges.

KENNEDY, Circuit Judge:

Foothills Express sued four major trucking lines, and the union representing their employees, in antitrust. Foothills appeals the summary judgment dismissing the action, a judgment rendered in favor of Neilsen Freight Lines, DiSalvo Trucking Company, Delta Lines, Inc., Peters Truck Lines, and Local 150, Chauffeurs, Teamsters and Helpers Union. On appeal Foothills is represented by its trustees in bankruptcy Dick G. Richards and Capital Bank of Commerce. Foothills alleges that, with the exception of Delta, the trucking company defendants in the action were participants in a conspiracy to restrain trade involving over three hundred trucking companies engaged in the business of shipping freight in less-than-truckload quantities. It also alleges that each corporate defendant conspired with the Union to boycott Foothills to force it to recognize the Union. The district court found that the allegations of conspiracy to restrain trade presented no triable issue of fact and ruled that any union-led action, even if proven, would be shielded from antitrust liability by labor's exemption to the antitrust laws. We affirm.

All companies, including Foothills, held certificates to transport goods throughout California. Foothills is a nonunion carrier with a primary service area in the foothills region north and east of Sacramento, California. Defendants Neilsen, DiSalvo, Delta, and Peters are major trucking companies, with union contracts. Their employees are represented by Local 150. For deliveries to small communities in the foothills area, the major companies elected to carry freight in their own trucks as far as Sacramento, and then turn the cargo over to Foothills for the final leg of shipment. This practice, by which origin carriers use destination carriers for local deliveries, is known as interlining.

As all of the parties seem to agree, interlining has inherent competitive risks. With respect to certain shipping customers, local carriers are potential competitors with the companies for whom they interline. If a local carrier, such as Foothills, decides to compete with the origin carrier by soliciting its customers for the entire journey, interlining permits it to gain access to the origin carrier's freight bills, which identify the customers, the type of freight, and the charges. If a local company uses this information in direct solicitation of the shipper, thus cutting out the origin carrier from future orders, the local carrier is said to have engaged in "back solicitation" of the customer. It also appears to be conceded that it was an industry practice for origin carriers to terminate business relations with a local carrier if the latter engaged in back solicitation, and the crux of this lawsuit is whether such terminations were made as part of a conspiracy actionable under the antitrust laws.

Foothills' interlining business with each of the defendants was cut off or substantially reduced in the spring of 1981. The defendants assert various reasons for ceasing to deal with Foothills, including dissatisfaction with Foothills' service and its failure to pay bills. For purposes of the appeal, however, we can assume that the terminations were either in response to back solicitations by Foothills, or in response to pressure by the Union on each major carrier not to interline with Foothills until Foothills recognized the Union.

Following its loss of interlining business, Foothills brought this treble damage action alleging that the defendants had terminated it pursuant to an illegal group boycott. Although Foothills alleged three different conspiracies below, only two conspiracy theories are pressed on appeal. First, Foothills claims that Neilsen, DiSalvo, and Peters were parties to a widespread agreement not to place interlining business with potential competitors, such as Foothills, who back solicited orders from customers of an origin carrier. Second, Foothills argues that the Union, in order to gain recognition from Foothills, separately coerced each trucking company to enter into discrete agreements with the Union to cease interlining with Foothills.

Foothills moved for summary judgment on the issue of liability for the alleged back solicitation conspiracy, claiming that admissions on the part of three trucking company defendants established the existence of a conspiracy among them to enforce an industrywide rule against back solicitation. Because this agreement allegedly was enforced, at least against Foothills, through a group boycott among competitors, it was said to be a per se violation of the antitrust laws. Neilsen, Peters, and DiSalvo sought summary judgment on the ground that Foothills failed to present any evidence of a conspiracy among them, and that any inference of conspiracy that might be drawn from their similar responses to Foothills' back solicitation was rebutted by evidence that each company's actions were unilateral, and legitimate, because taken in its own self interest. Finally, the Union moved for summary judgment on the ground that its activities were protected by the statutory and nonstatutory labor exemptions to the antitrust laws. The trucking company defendants claimed that any concerted action between themselves and the Union falls within one or both of these exemptions.

The district court granted the defendants' motion for summary judgment on the back solicitation conspiracy, finding that any understanding regarding back solicitation applied to individual interlining relationships only and reflected "common sense business necessity," making unreasonable any inference of an industrywide agreement governing back solicitation. We agree that a jury, or a court as finder of fact, could not infer reasonably from the proferred allegations that any defendant boycotted Foothills pursuant to an unlawful agreement with any or all of the other defendants.

The district court also granted summary judgment to the Union and corporate defendants on the claim that the Union separately coerced each of the other defendants to boycott Foothills. The trial court found that any concerted activity between the Union and any trucking company defendant fell within the statutory exemption to the antitrust laws provided by the Clayton Act Sec. 20, 29 U.S.C. Sec. 52 (1982), and the Norris-La Guardia Act, 29 U.S.C. Secs. 101-15 (1982). We agree that the conduct in question is protected but we rely on the nonstatutory exemption for our holding.

We first consider the trial court's determination that there was no actionable conspiracy based on termination for back solicitation. The grant of summary judgment is reviewed de novo in this court. O.S.C. Corp. v. Apple Computer, Inc., 792 F.2d 1464, 1466 (9th Cir.1986). The moving party must establish that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. Northrop Corp. v. McDonnell Douglas Corp., 705 F.2d 1030, 1050 (9th Cir.), cert. denied, 464 U.S. 849, 104 S.Ct. 156, 78 L.Ed.2d 144 (1983); Fed.R.Civ.P. 56(c). The moving party bears the initial burden to show the absence of a material and triable issue of fact; the burden then moves to the opposing party, who must present significant probative evidence tending to support its claim or defense. General Business Systems v. North American Philips Corp., 699 F.2d 965, 971 (9th Cir.1983) (quoting First National Bank v. Cities Service Co., 391 U.S. 253, 290, 88 S.Ct. 1575, 1593, 20 L.Ed.2d 569 (1968)). It is the record made on summary judgment that controls, not that record plus speculative inferences a trier of fact might add; and the only inferences permitted from the summary judgment record itself are those that are reasonable given the substantive law which is the foundation for the claim or defense. Where a party asserts there is a genuine issue for trial, Fed.R.Civ.P. 56(e), its argument is measured by the underlying theory of the claim or defense being considered. In the context of the case before us, the substantive law is the law of antitrust, and if the claim makes no economic sense, a speculative inference from the jury will not help it. In such an instance, the record on summary judgment must contain further persuasive evidence if it is to support the claim. Matsushita Electric Industrial Co. v. Zenith Radio Corp., --- U.S. ----, 106 S.Ct. 1348, 1356-57, 89 L.Ed.2d 538 (1986).

In antitrust cases, the analysis above permits a defendant to rebut an allegation of conspiracy by showing a plausible and justifiable reason for its conduct that is consistent with proper business practice. O.S.C. Corp., 792 F.2d at 1467-68; Barnes v. Arden Mayfair, Inc., 759 F.2d 676, 680 (9th Cir.1985). Once a defendant has met this initial burden, a plaintiff must provide specific factual support for its allegations of conspiracy tending to show that the defendant was not acting independently. O.S.C. Corp., 792 F.2d at 1467-68; Barnes, 759 F.2d at 680 (quoting Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 764, 104 S.Ct. 1464, 1470, 79 L.Ed.2d 775 (1984)); Zoslaw v. MCA Distributing Corp., 693 F.2d 870, 884 (9th Cir.1982)....

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