Richfield Oil Corporation v. Karseal Corporation

• Citation: 271 F.2d 709
• Decision Date: 13 October 1959
• Docket Number: No. 15514.,15514.
• Parties: RICHFIELD OIL CORPORATION, Appellant, v. KARSEAL CORPORATION, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

271 F.2d 709 (1959)

RICHFIELD OIL CORPORATION, Appellant, v. KARSEAL CORPORATION, Appellee.

No. 15514.

United States Court of Appeals Ninth Circuit.

October 13, 1959.

O'Melveny & Myers, William W. Alsup; William J. DeMartini, Los Angeles, Cal., for appellant.

Richard I. Roemer, Walter S. Binns, J. J. Brandlin, Thomas G. Baggot, Los Angeles, Cal., for appellee.

Before STEPHENS, and FEE, Circuit Judges, and JAMES M. CARTER, District Judge.

JAMES M. CARTER, District Judge.

This is an appeal from a judgment entered on a jury verdict in a private treble damage action under the anti-trust laws. It presents two questions, (1) the sufficiency of the evidence to support the verdict and judgment, (2) the correctness of instructions given the jury on the effect of a prior decree in a government anti-trust case.

There was originally presented a third question, the reasonableness of an allowance of $7,500 attorney's fee based on the trebled judgment of $23,700. This point was abandoned by appellant Richfield during the oral arguments on the appeal. In any event we do not consider the allowance of such attorney's fee unreasonable.

This case has been here before. In Karseal Corporation v. Richfield Oil Corporation, 9 Cir., 1955, 221 F.2d 358, this same panel of the court held that the amended complaint stated a cause of action and reversed a district court judgment dismissing the action. Reference is made to that decision for the pertinent allegations of the amended complaint.

This action was based upon a prior decree in the government's civil anti-trust action against the Richfield Oil Corporation, United States v. Richfield Oil Corporation, D.C.S.D.Cal.1951, 99 F.Supp. 280, affirmed per curiam in Richfield Oil Corporation v. United States, 1952, 343 U.S. 922, 72 S.Ct. 665, 96 L.Ed. 1334. That case will hereafter be referred to as the Richfield case.

The Richfield case held generally that Richfield's handling of its TBA items, (tires, batteries and accessories) was illegal and in violation of the anti-trust laws because of Richfield requirements by contracts and agreements of exclusive dealing by independent service stations in the TBA items supplied by Richfield. Included within "accessories" under the terms of the Richfield decree, were "automobile waxes and polishes." Karseal's wax and polishes were not expressly named in the Richfield decree. The trial court in the Richfield case concluded and found that the exclusive dealing practices and agreements had "the necessary and intended effect of denying manufacturers and suppliers of * * * automotive accessories, competitive to those manufactured or sponsored by Richfield, access to a substantial number of outlets."¹

Karseal, claiming that it was within the target area of Richfield's violation of the anti-trust laws and was proximately damaged by Richfield's illegal acts, brought the present action, seeking damages in the sum of $135,000 and praying that the damages be trebled. After the reversal of the dismissal of the action in Karseal v. Richfield (supra), the case was transferred to another judge, (Honorable Leon Yankwich) and was tried to a jury. A verdict in the sum of $7,900 was returned. The verdict was trebled and judgment entered for $23,700, attorney's fees and costs. The district court had jurisdiction of the cause, Sec. 4 of the Clayton Act. 15 U.S.C.A. § 15. This court has jurisdiction of the appeal, 28 U.S.C.A. §§ 1291, and 1294. The appeal was timely filed.

I.

The Evidence Is Sufficient To Support the Verdict and the Judgment.

Richfield makes dual contentions —

(a) That there was not substantial evidence of an illegal restraint on Karseal's product, and (b) That there was insufficient evidence of damage.

A. Sufficiency of the evidence as to illegal restraint.

Flintkote Co. v. Lysfjord, 9 Cir., 1957, 246 F.2d 368, certiorari denied 355 U.S. 835, 78 S.Ct. 54, 2 L.Ed.2d 46, states as follows:

"We take it that the controlling rule today in seeking damages for loss of profits in antitrust cases is that the plaintiff is required to establish with reasonable probability the existence of some causal connection between defendant\'s wrongful act and some loss of anticipated revenue. Once that has been accomplished, the jury will be permitted to `make a just and reasonable estimate of the damage based on relevant data, and render its verdict accordingly.\' Bigelow v. RKO Radio Pictures, Inc., 327 U.S. 251, 66 S.Ct. 574, 90 L.Ed. 652, supra, 327 U.S. at page 264, 66 S.Ct. at page 580. The cases have drawn a distinction between the quantum of proof necessary to show the fact as distinguished from the amount of damage; the burden as to the former is the more stringent one. In other words, the fact of injury must first be shown before the jury is allowed to estimate the amount of damage."² 246 F.2d at page 392.

Emphasis by the Court.

The prior Richfield decree which was admissible and used in evidence against the appellant, determined that Richfield had violated the anti-trust laws by agreements and understandings, written and oral, directly affecting and unreasonably restraining the course of interstate commerce in TBA automobile accessories, including waxes and polishes. Thus, the Richfield decree itself was prima facie evidence of the restraint of commerce in connection with waxes and polishes. There was substantial evidence that this restraint was not only applied to waxes and polishes generally, but to Karseal's product, "Wax Seal."

Richfield's brief argues the evidence most favorable to its position as if the matter were now before a trial court or jury for decision.

The rule is clear that on appeal from a judgment based upon a jury's verdict, the verdict and judgment based thereon will be sustained if there is substantial evidence in the record in support thereof. We are required to view the evidence in a manner most favorable to the prevailing party, Glasser v. United States, 1942, 315 U.S. 60, 69, 62 S.Ct. 457, 86 L.Ed. 680; Woodard Laboratories v. United States, 9 Cir., 1952, 198 F.2d 995; Las Vegas Merchant Plumber Ass'n v. United States, 9 Cir., 1954, 210 F.2d 732, 742; Flintkote Co. v. Lysfjord, supra, 246 F.2d at page 375. The prevailing party is entitled to rely upon evidence most favorable to its position.

The testimony offered by Karseal consisted of distributors and salesmen for "Wax Seal," a former Richfield service station operator, a former merchandiser for Richfield, a former TBA man for Richfield and an independent service station operator and others. Without enumerating the testimony in detail, the record shows that distributors for "Wax Seal" were generally unsuccessful in their efforts to sell their product to Richfield TBA men and Richfield service stations; that a Richfield representative told the Richfield service station operator to get Wax Seal out of his window or they would both lose their jobs; that salesmen for "Wax Seal" were told not to come in when Richfield men were around; that "Wax Seal" was occasionally sold in Richfield service stations but kept under the counter and not displayed. A former merchandiser for Richfield testified that he would warn and threaten Richfield dealers who carried non-authorized TBA products. A Richfield merchandiser told a Richfield operator he did not want to see "Wax Seal" in the station.

Thus it was apparent to the jury that independent Richfield service station men were threatened and discouraged from purchasing "Wax Seal" and when occasionally they did purchase, were required to conceal this fact from Richfield and hide the product from view. The jury, looking at the evidence most favorable to Karseal, could conclude that there was a general pattern of exclusion of "Wax Seal" from Richfield service stations, for which Richfield was responsible. As the trial judge stated during discussion with counsel Richfield "had no right to tell the operators of stations, independent operators and not Richfield employees, not to buy other products."

In view of the prima facie effect of the prior antitrust decree, all that plaintiff was required to do, as far as proving restraint is concerned, was to show that the general restraint applicable to waxes and polishes referred to in the prior decree was actually applied to the Karseal product, "Wax Seal."

There was sufficient evidence to warrant the jury's conclusion as to restraint.

B. The evidence as to damage was sufficient to sustain the verdict and judgment.

(a) Causal connection between restraint and damage.

Richfield concedes that once Karseal had shown that the defendant had violated the anti-trust laws, and the further fact that Karseal actually suffered damage to its business or property as a result of such violation, the jury was permitted to make a just and reasonable estimate of the amount of plaintiff's damage. But Richfield insists that there must be first, proof not only of an unreasonable restraint of trade by the defendant, but also a causal connection between defendant's act and a loss of anticipated revenue to plaintiff.

Karseal concedes this general statement of the law but asserts that having shown the illegal restraint applied to its product, it had proved the causal connection between the defendant's wrongful act and the loss of revenue. We agree. It seems patent that the restraint applied would result in some loss of business.

Wolfe v. National Lead Co. (supra), is cited by Richfield for its holding that there was no proof that the plaintiffs had suffered damage. Richfield states, "In affirming the court pointed out the important distinction in the quantum of proof required as to the fact as distinguished from the amount of damages." In the case at hand there was clear causal connection between the alleged restraints applied and damage suffered.

Contrast the factual basis in Monticello Tobacco Co., Inc. v. American Tobacco Co., 2 Cir., 1952, 197 F.2d 629, with the factual situation here. In Monticello, plain...