Rosebrough Monument Co. v. Memorial Park Cemetery Ass'n

• Citation: 666 F.2d 1130
• Decision Date: 09 December 1981
• Docket Number: No. 80-1963,80-1963
• Parties: 1981-2 Trade Cases 64,392 ROSEBROUGH MONUMENT COMPANY, Appellant, v. MEMORIAL PARK CEMETERY ASSOCIATION, a corporation; Valhalla Cemetery, Crematory and Mausoleum Company, a corporation; Lake Charles Memorial Park, Inc., a corporation; Alexander & Sons, Inc., a corporation, d/b/a Mount Lebanon Cemetery and Mausoleum; Lakewood Park Cemetery, Inc., a corporation; Sunset Burial Park, Inc., a corporation; Stanza & Company, Inc., a corporation, d/b/a Oak Grove Cemetery; Laurel Hill Memorial Gardens, Inc., a corporation; Mason Securities Company, d/b/a Hiram Cemetery; Mount Hope Cemetery and Mausoleum Company, a corporation; Southern Securities Company, a corporation, d/b/a Park Lawn Cemetery, Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

Page 1130

666 F.2d 1130

1981-2 Trade Cases 64,392

ROSEBROUGH MONUMENT COMPANY, Appellant, v. MEMORIAL PARK CEMETERY ASSOCIATION, a corporation; Valhalla Cemetery, Crematory and Mausoleum Company, a corporation Lake Charles Memorial Park, Inc., a corporation; Alexander &amp Sons, Inc., a corporation, d/b/a Mount Lebanon Cemetery and Mausoleum; Lakewood Park Cemetery, Inc., a corporation Sunset Burial Park, Inc., a corporation; Stanza & Company Inc., a corporation, d/b/a Oak Grove Cemetery; Laurel Hill Memorial Gardens, Inc., a corporation; Mason Securities Company, d/b/a Hiram Cemetery; Mount Hope Cemetery and Mausoleum Company, a corporation; Southern Securities Company, a corporation, d/b/a Park Lawn Cemetery, Appellees.

No. 80-1963.

United States Court of Appeals, Eighth Circuit.

Submitted June 16, 1981.

Decided Dec. 9, 1981.

Charles Alan Seigel (argued), Stolar, Heitzmann, Eder, Seigel & Harris, Bernard J. Mellman, James L. Zemelman, St. Louis, Mo., for appellants.

John Ashcroft, Atty. Gen., Mary U. Musacchia, Chief Counsel, Antitrust Division, Steven D. Steinhilber, Asst. Atty. Gen., Jefferson City, Mo., for amicus curiae.

Lewis, Rice, Tucker, Allen & Chubb, Biggs, Casserly, Barnes, Fickie & Wolf, Ward Fickie, St. Louis, Mo., for appellees.

Thomas C. Walsh, Dennis E. O'Connell, St. Louis, Mo., for appellee Memorial Park Cemetery Association; Bryan, Cave, McPheeters & McRoberts, St. Louis, Mo., of counsel.

Before McMILLIAN and ARNOLD, Circuit Judges, and HANSON, ^* Senior District Judge.

McMILLIAN, Circuit Judge.

Appellant Rosebrough Monument Co. appeals from a final judgment entered in the District Court for the Eastern District of Missouri denying its claims for treble damages and injunctive relief for antitrust violations. For reversal appellant contends that the district court erred in (1) finding that the cemeteries did not conspire to monopolize the sale, manufacture, installation and maintenance of grave monuments and markers in the St. Louis metropolitan area; (2) finding that the exclusive foundation preparation policy did not constitute an illegal tying arrangement; and (3) finding that appellant suffered no damages as reflected in a general decline in business and profits. We reverse in part and remand for further proceedings.

Appellant is a privately held Missouri corporation that manufactures and sells burial markers and monuments and performs certain installation services in connection therewith. ¹ Each appellee is a Missouri corporation that owns and operates a cemetery in the St. Louis metropolitan area.

For at least twenty years, virtually all of the nearly fifty cemeteries located in the St. Louis metropolitan area have had an agreement which requires the preparation of the foundation for grave monuments or markers be done exclusively by the cemetery that owns the lot. Under the terms of the exclusive foundation preparation policy, independent memorial dealers such as appellant can sell grave markers or monuments to the general public, but only the cemeteries can prepare the foundations for them. Some of the cemeteries allow appellant to place or position its memorials or markers on cemetery-prepared foundations. The cemeteries charge appellant for foundation preparation and appellant must then pass the charge on to the consumer. The cemeteries, however, do not require that a monument or marker be placed on every grave site.

Each cemetery sells markers (and some sell monuments) for installation on its own grounds. Thus, the cemeteries are in competition with appellant and all other monument dealers in the St. Louis metropolitan area for the sale of grave markers and monuments.

Appellant seeks injunctive relief alleging that the exclusive foundation preparation policy constitutes an illegal tying arrangement which restrains competition and ultimately results in a higher price to consumers.

For a tying arrangement to exist, at least two distinct products or services must be sold or leased. The cemeteries generally deny any illegal tying arrangement, arguing that only one product is being sold. All cemeteries operating in Missouri have a perpetual statutory obligation to maintain the appearance of their property. Ten percent of the purchase price of each grave site is paid into a separately managed irrevocable trust fund for the care and upkeep of each cemetery. (Mo.Rev.Stat. §§ 214.270-410 (1978)). As an affirmative defense, appellees justify their exclusive foundation preparation policy on the ground that, as endowed care cemeteries, they are responsible in perpetuity for all grave memorials and frequently have to reset many that have settled or shifted. Thus, according to appellees, the benefit derived by the public because of the exclusive foundation preparation policy outweighs any alleged anticompetitive effect.

Following a bench trial, the district court found in favor of the cemeteries. Rosebrough Monument Co. v. Memorial Park Cemetery Ass'n, 505 F.Supp. 525 (E.D.Mo.1980). According to the district court, the transaction involved the sale of just one product as a package deal (cemetery lot, interment, foundation preparation, and installation). The district court held that the exclusive foundation preparation policy was justified by the cemeteries' responsibility to provide perpetual care. The district court failed to find a conspiracy because there was no "conscious parallelism" in price setting for the foundation preparation work. Finally, the district court held that the alleged damages were wholly speculative. This appeal followed.

I. CONSPIRACY

In its complaint appellant alleges that appellees, individually and through their trade association (Cemetery Management Association of Greater St. Louis), conspired to restrain interstate commerce unreasonably in violation of § 1 of the Sherman Act. ² 15 U.S.C. § 1. We agree.

In 1959, the cemetery owners in the St. Louis metropolitan area formed the Cemetery Management Association, a trade association ³ which includes among its membership all appellees except Memorial Park Cemetery. Appellant argues that the trade association was the mechanism by which appellees forestalled competition when it adopted the exclusive foundation preparation policy.

In analyzing whether a trade association agreement restrains competition in the profession, federal courts have most frequently applied the "rule of reason." ⁴ National Society of Professional Engineers v. United States, 435 U.S. 679, 687-92, 98 S.Ct. 1355, 1363-65, 55 L.Ed.2d 637 (1978) (Professional Engineers); Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 50, 97 S.Ct. 2549, 2557, 53 L.Ed.2d 568 (1977) (Continental T.V.); Board of Trade v. United States, 246 U.S. 231, 238, 38 S.Ct. 242, 243, 62 L.Ed. 683 (1918); Standard Oil Co. v. United States, 221 U.S. 1, 50-58, 31 S.Ct. 502, 511-15, 55 L.Ed. 619 (1911) (Standard Oil ); International Travel Arrangers, Inc. v. Western Airlines, Inc., 623 F.2d 1255, 1267 (8th Cir.), cert. denied, 449 U.S. 1063, 101 S.Ct. 787, 66 L.Ed.2d 605 (1980); Sherman v. British Leyland Motors, Ltd., 601 F.2d 429, 449-50 (9th Cir. 1979); Ohio Sealy Mattress Manufacturing Co. v. Sealy, Inc., 585 F.2d 821, 831 (7th Cir. 1978), cert. denied, 440 U.S. 930, 99 S.Ct. 1267, 59 L.Ed.2d 486 (1979); Oreck Corp. v. Whirlpool Corp., 579 F.2d 126 (2d Cir.) (banc), cert. denied, 439 U.S. 946, 99 S.Ct. 340, 58 L.Ed.2d 338 (1978); Reed Bros. v. Monsanto Co., 525 F.2d 486, 499 (8th Cir. 1975), cert. denied, 423 U.S. 1055, 96 S.Ct. 787, 46 L.Ed.2d 645 (1976); Grunin v. International House of Pancakes, 513 F.2d 114 (8th Cir.), cert. denied, 423 U.S. 864, 96 S.Ct. 124, 46 L.Ed.2d 93 (1975); Worthen Bank & Trust Co. v. National BankAmericard, Inc., 485 F.2d 119, 127-28 (8th Cir. 1973), cert. denied, 415 U.S. 918, 94 S.Ct. 1417, 39 L.Ed.2d 473 (1974); Albrecht v. Herald Co., 367 F.2d 517, 525 (8th Cir. 1966), rev'd on other grounds, 390 U.S. 145, 88 S.Ct. 869, 19 L.Ed.2d 998 (1968). See also Note, Trade Association Exclusionary Practices: An Affirmative Role for the Rule of Reason, 66 Colum.L.Rev. 1487, 1502 (1966). The rule, which focuses directly on the challenged restraint's impact on competitive conditions, has been regarded as the standard for testing the enforceability of covenants in restraint of trade which are ancillary to a legitimate transaction. United States v. Addyston Pipe & Steel Co., 85 F. 271, 282-83 (6th Cir. 1898), modified, 175 U.S. 211, 20 S.Ct. 96, 44 L.Ed. 136 (1899). The rule of reason, with its origins in common law, has given shape to the Sherman Act's broad pronouncements against agreements that restrain competition. "It has been used to give the Act both flexibility and definition, and its central principle of antitrust analysis has remained constant." Professional Engineers, supra, 435 U.S. at 688, 98 S.Ct. at 1363.

To be successful in its cause of action alleging a conspiracy to unreasonably restrain trade under the rule of reason, appellant must establish: (1) an agreement among two or more persons or distinct business entities, (2) which is intended to harm or unreasonably restrain competition, and (3) which actually causes injury to competition. See generally Kaplan v. Burroughs Corp., 611 F.2d 286, 290-91 (9th Cir. 1979), cert. denied, 447 U.S. 924, 100 S.Ct. 3016, 65 L.Ed.2d 1116 (1980); Gough v. Rossmoor Corp., 585 F.2d 381, 389 (9th Cir. 1978), cert. denied, 440 U.S. 936, 99 S.Ct. 1280, 59 L.Ed.2d 494 (1979). The primary considerations in determining whether a restraint of trade is unreasonable are whether the intent of the restraint is anticompetitive and whether the restraint itself has significant anticompetitive effects. See Sherman v. British Leyland Motors, Ltd., supra, 601 F.2d at 449.

Simply stated, the inquiry mandated by the rule is whether, on balance, the challenged agreement is one that "merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy...