Rosefielde v. Falcon Jet Corp.

• Decision Date: 11 January 1988
• Docket Number: 85-4671.,Civ. A. No. 82-3788
• Citation: 701 F. Supp. 1053
• Parties: Re Alan ROSEFIELDE, et al. v. FALCON JET CORPORATION. GULFSTREAM III ASSOCIATES, INC. v. FALCON JET CORPORATION.
• Court: U.S. District Court — District of New Jersey

701 F. Supp. 1053

Re Alan ROSEFIELDE, et al. v. FALCON JET CORPORATION.

GULFSTREAM III ASSOCIATES, INC. v. FALCON JET CORPORATION.

Civ. A. Nos. 82-3788, 85-4671.

United States District Court, D. New Jersey.

January 11, 1988.

COPYRIGHT MATERIAL OMITTED

Edwin R. Alley, Carpenter, Bennett & Morrissey, Newark, N.J., Stephen M. Hudspeth, Darrell E. Prescott, Coudert Brothers, New York City, Harold C. Kohn and-Joanne Zack, Kohn, Savett, Klein & Graf, P.C., Philadelphia, Pa., for plaintiffs.

Allyn Z. Lite, Goldstein, Till & Lite, Newark, N.J., John J. Reilly and Gary D. Sesser, Haight, Gardner, Poor & Havens, New York City, for defendants.

OPINION AND ORDER

LECHNER, District Judge.

This case is a consolidation of the two above-mentioned cases (the "Rosefielde" and "Gulfstream" cases). The Rosefielde case was filed in the District of New Jersey in November, 1982. It involves a protracted dispute concerning the imposition of a warranty transfer fee by defendant Falcon Jet Corporation ("Falcon Jet") upon plaintiff Alan Rosefielde. In October, 1983 the Rosefielde complaint was amended to add two antitrust claims. Count sixteen of the Rosefielde Amended Complaint charges Falcon Jet and seven other business jet manufacturers conspired to fix the base price of new business jets in the United States. Count seventeen of the Rosefielde Amended Complaint alleges a conspiracy among Falcon Jet and three other business jet manufacturers to limit the contractual terms of sale of new business jets so as to inhibit their resale.

The Gulfstream case was originally filed in the Central District of California in June, 1985, but was consolidated with the Rosefielde case by Judge Barry in April, 1986. The Gulfstream case alleges a price-fixing conspiracy, the operative facts of which are identical to those of count sixteen of the Rosefielde Amended Complaint. The Gulfstream case and count sixteen of the Rosefielde Amended Complaint will be referred to collectively as the "price-fixing claims."

The court is now faced with cross-motions for summary judgment with respect to the price fixing claims, and defendants' motion for summary judgment on count seventeen of the Rosefielde Amended Complaint ("count seventeen").¹ Defendants' motion on the price fixing claims is granted with respect to the existence of an express agreement to fix prices, and is denied in all other respects. Plaintiffs' cross-motion for summary judgment on the price-fixing claims is partially granted and partially denied. Finally, defendants' motion for summary judgment on count seventeen is granted.

Background

Plaintiff Alan Rosefielde is a former practicing tax attorney who is presently engaged in the business of purchasing, selling and leasing business jet aircraft. (Plaintiff's Memorandum in Opposition to Defendants' Motion for Partial Summary Judgment and in Support of Plaintiffs' Cross-Motion for Summary Judgment, dated September 30, 1986 ("Plaintiffs' Mem.") at page "a", Table I.)² Mr. Rosefielde organized each of the other plaintiffs, which are closely held corporations or limited partnerships, for the purpose of purchasing Falcon Jet or Gulfstream³ business jets. (Memorandum in Support of Defendants' Motion for Partial Summary Judgment with Respect to the Sixteenth and Seventeenth Counts of the Rosefielde Amended Complaint and for Summary Judgment in Gulfstream III Associates, dated August 1, 1986, ("Defendants' Mem.") at 7.) Mr. Rosefielde conducts all of the business affairs of each of the plaintiffs. (Plaintiffs' Mem. at page "a", Table I.) Typically, Mr. Rosefielde, through one of his corporations,⁴ purchases new business jets in the United States and then assigns the contract to a subsequent purchaser. (Defendants' Mem. at 9.) During the period between the purchase of the aircraft by the plaintiffs and the assignment to a subsequent purchaser, the planes are managed by Jet Leasing Corporation, of which William F. Handy, a close associate of Mr. Rosefielde, is the president and principal shareholder. (Defendants' Mem. at 8.)

Defendant Falcon Jet Corporation is the United States subsidiary of defendant Avions Marcel Dassault-Breguet Aviation ("AMD-BA"), a French aircraft manufacturer. AMD-BA manufactures military and civilian aircraft, including the "Falcon" series of business jet aircraft. (Defendants' Mem. at 6-7.) Falcon Jet is responsible for marketing and selling Falcon business jets in the western hemisphere. (Defendants' Mem. at 6.) In most instances Falcon Jet purchases "green" aircraft (i.e., aircraft sold without exterior paint, completed interiors, or permanent avionics packages) from AMD-BA and ships them to the United States for completion according to the specifications of Falcon Jet customers. (Defendants' Mem. at 7.)

The Falcon Jet aircraft which plaintiffs purchased from defendants were "completed" aircraft sold with a standard equipment package for a "base" price. (Defendants' Mem. at 15.) The base price is the price of an aircraft equipped to a standard specification set by the manufacturer before the addition of optional equipment or price escalation.⁵ (Plaintiffs' Mem. at 13 n. 25.)

The Rosefielde plaintiffs contracted to purchase eight Falcon jets over a period of two years beginning in 1978. (Defendants' Mem. at 19.) Six of these contracts were assigned to subsequent purchasers who accepted legal title to the aircraft prior to the time of delivery. (Id.) Three of those assignees are not parties in this action. (Defendant's Mem. at 10.) In 1981, the Gulfstream plaintiffs contracted to purchase two Gulfstream Aerospace Jets. One of these contracts was cancelled and the other was assigned to a non-plaintiff. (Defendants' Mem. at 11.) In addition, plaintiffs terminated three options to purchase Gulfstream IV aircraft. (Reply Memorandum in Support of Defendants' Motion for Partial Summary Judgment with Respect to the Sixteenth and Seventeenth Counts of the Rosefielde Amended Complaint and for Summary Judgment in Gulfstream III Associates; Memorandum in Opposition to Plaintiffs' Cross-Motion for Summary Judgment, dated November 12, 1986 ("Defendants' Reply") at 55.)

In July, 1982, a dispute arose between Mr. Rosefielde and Falcon Jet concerning the imposition of a $100,000 assignment fee to transfer the warranty of a Falcon Jet aircraft from Mr. Rosefielde to another customer. (DX-454; Defendant's Mem. at 11.) In November, 1982, the Rosefielde plaintiffs filed a fifteen count complaint in the District of New Jersey.⁶ The first six counts of the complaint, alleging that the defendants attempted to monopolize the business jet market, were dismissed with prejudice in June of 1985. (Defendants' Mem. at 13.) The remaining nine counts are contract and tort claims based on defendants' warranty transfer policy. (Defendants' Mem. at 11.)

In October, 1983, plaintiffs amended their complaint to add two additional counts alleging conspiracies in violation of Section One of the Sherman Act, 15 U.S.C. § 1. Count sixteen alleges a horizontal price-fixing conspiracy among defendants and seven international business jet manufacturers.⁷ (Defendants' Mem. at 11.) Count seventeen alleges a conspiracy among the same manufacturers to fix the contractual terms of sale for the purpose of inhibiting the resale of new business jets. (Defendants Mem. at 11.)

Defendants have filed several previous motions for summary judgment. The first motion, directed at counts one through six, the monopolization counts of plaintiff's original Complaint, was not adjudicated because plaintiffs dropped these counts shortly before their response was due, and agreed to a dismissal with prejudice. (See Defendants' Mem. at 12; Plaintiffs' Mem. at 20, n. 52.) Defendants then filed a motion for partial summary judgment as to plaintiffs' contract and tort claims in June of 1985. (Defendants' Mem. at 13.) Finally, in August, 1985, defendants filed a motion for partial summary judgment with respect to the sixteenth and seventeenth counts of plaintiffs' Amended Complaint. Defendants also filed motions in limine to exclude certain testimony of plaintiffs' expert witnesses.

Ruling on defendants' motions, Judge Lacey denied in part and granted in part summary judgment on the contract and tort claims. He also ruled that plaintiffs' expert witnesses would be precluded from testifying unless they filed supplemental reports and submitted to further depositions. He then denied defendants' motion for summary judgment as to counts sixteen and seventeen without prejudice to renewal after plaintiffs' experts submitted to the supplemental discovery orders.⁸ After plaintiffs' experts complied with Judge Lacey's orders, defendants renewed their summary judgment motion with respect to the price fixing claims and count seventeen of the Rosefielde case. (Defendants' Mem. at 13.) Plaintiffs then filed a cross-motion for summary judgment with respect to liability on the price fixing claims, seeking to leave for trial only the matter of plaintiffs' damages. (Plaintiffs' Mem. at 103.)

Facts

1. The Price Fixing Claims

Since the early 1970's eight business jet manufacturers which sell their product in the United States have engaged in a regular exchange of price and other information on a reciprocal reciprocal basis. (Plaintiff's Mem. at 13, pages "a" and "b", Table II.) This exchange took place primarily during monthly telephone conversations between the sales engineers of the various manufacturers. (Plaintiffs' Mem. at 15; Defendant's Mem. at 18.) The sales engineers exchanged information relating to the "base" price of the aircraft for the next available delivery. (Plaintiff's Mem. at 13; Defendants' Mem. at 18.) This information was recorded in internal Falcon Jet documents called "price list comparisons." (e.g., PX-147, Defendants' Mem. at 18.) These documents listed the base price, the next available delivery, production rate, price of typical options, and escalated and equipped prices of...