Seabury Management, Inc. v. Professional Golfers' Ass'n of America, Inc.

• Decision Date: 08 March 1995
• Docket Number: 94-1688,Nos. 94-1814,s. 94-1814
• Citation: 52 F.3d 322,1995 WL 241379
• Parties: 1995-1 Trade Cases P 70,991 NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit. SEABURY MANAGEMENT, INCORPORATED, Plaintiff-Appellant, v. PROFESSIONAL GOLFERS' ASSOCIATION OF AMERICA, INCORPORATED; Middle Atlantic Section of Professional Golfers' Association of America, Incorporated, Defendants-Appellees, and Dick Smith; Philadelphia Section of Professional Golfers' Association, Incorporated, Defendants. SEABURY MANAGEMENT, INCORPORATED, Plaintiff-Appellant, v. PROFESSIONAL GOLFERS' ASSOCIATION OF AMERICA, INCORPORATED; Middle Atlantic Section of Professional Golfers' Association of America, Incorporated, Defendants-Appellees, and Dick Smith; Philadelphia Section of Professional Golfers' Association, Incorporated, Defendants. . Argued:
• Court: U.S. Court of Appeals — Fourth Circuit

Page 322

52 F.3d 322

1995-1 Trade Cases P 70,991

NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit.

SEABURY MANAGEMENT, INCORPORATED, Plaintiff-Appellant, v. PROFESSIONAL GOLFERS' ASSOCIATION OF AMERICA, INCORPORATED;

Middle Atlantic Section of Professional Golfers'

Association of America, Incorporated,

Defendants-Appellees,

and

Dick Smith; Philadelphia Section of Professional Golfers'

Association, Incorporated, Defendants.

SEABURY MANAGEMENT, INCORPORATED, Plaintiff-Appellant, v. PROFESSIONAL GOLFERS' ASSOCIATION OF AMERICA, INCORPORATED;

Middle Atlantic Section of Professional Golfers'

Association of America, Incorporated,

Defendants-Appellees,

and

Dick Smith; Philadelphia Section of Professional Golfers'

Association, Incorporated, Defendants.

Nos. 94-1814, 94-1688.

United States Court of Appeals, Fourth Circuit.

Argued: March 8, 1995.

Decided: April 26, 1995.

ARGUED: William Bradford Reynolds, Sr., COLLIER, SHANNON, RILL & SCOTT, Washington, DC, for Appellant. Stephen M. Sacks, ARNOLD & PORTER, Washington, DC, for Appellees. ON BRIEF: John B. Williams, COLLIER, SHANNON, RILL & SCOTT, Washington, DC, for Appellant. David S. Eggert, Charles W. Scarborough, Lawrence R. Miller, ARNOLD & PORTER, Washington, DC; John H. Lewin, VENABLE, BAETJER & HOWARD, Baltimore, MD, for Appellees.

Before WILKINS and HAMILTON, Circuit Judges, and PHILLIPS, Senior Circuit Judge.

Affirmed in part and reversed and remanded in part by unpublished opinion. Judge WILKINS wrote the majority opinion, in which Senior Judge PHILLIPS joined. Judge HAMILTON wrote an opinion dissenting in part.

OPINION

WILKINS, Circuit Judge:

Seabury Management, Incorporated (Seabury) appeals a decision of the district court granting judgment as a matter of law to the Professional Golfers' Association of America, Incorporated (PGA) and the Middle Atlantic Section of Professional Golfers' Association of America, Incorporated (MAPGA) ¹ on Seabury's claims under Secs. 1 and 2 of the Sherman Act, 15 U.S.C.A. Secs. 1, 2 (West Supp.1995), and the Maryland Antitrust Act, Md. Com. Law II Code Ann. Sec. 11-204(a)(1), (2) (Michie 1990). Seabury also challenges the decision of the district court granting judgment as a matter of law with respect to a jury award of compensatory damages on Seabury's breach of contract claim and punitive damages on its claims for tortious interference with contract and prospective business relations. We affirm in part and reverse and remand in part.

I.

In 1989, Seabury entered a five-year contract with the MAPGA that allowed Seabury to produce and promote a golf trade show (the "East Coast Show")--an exhibition of golf equipment and apparel offered for the benefit of buyers for golf pro shops--under MAPGA sponsorship. The East Coast Show was intended to compete on a national level with two other golf trade shows: the "West Coast Show," sponsored by the Southern California Section of the PGA; and the "PGA Orlando Show," sponsored by the PGA.

The first East Coast Show took place in 1990 in Baltimore, Maryland. Because Seabury was unable to lease sufficient exhibit space within the boundaries of the MAPGA, it arranged to produce the 1991 East Coast Show in Atlantic City, New Jersey--within the geographic boundaries of the Philadelphia Section of the PGA. After the PGA objected to a section-sponsored activity occurring outside of section boundaries, a compromise was reached in which Seabury was allowed to continue with its plans for the 1991 Show in Atlantic City but was required to conduct subsequent East Coast Shows at a location within the boundaries of the MAPGA. Nevertheless, in 1992 Seabury again planned to produce the East Coast Show in Atlantic City, once more because of an inability to find adequate exhibit space within the boundaries of the MAPGA. After the PGA refused to allow the 1992 Show to proceed, Seabury cancelled its plans. Ultimately, the PGA ordered the MAPGA to withdraw its sponsorship of the East Coast Show, even though it recognized that this action would be a breach of the contract with Seabury. Indeed, with its direction that the MAPGA breach its contract came the PGA's assurance that it would indemnify the MAPGA for costs and damages resulting from any lawsuit brought by Seabury.

Seabury then filed suit against the PGA and the MAPGA and proceeded to trial on the following claims: ²

Count One:Breach of contract against the MAPGA;

Count Two:Tortious interference with contract against the PGA;

Count Three:Tortious interference with prospective business relations against the PGA;

Count Four:Monopolization in violation of Sec. 2 of the Sherman Act, 15 U.S.C.A. Sec. 2, against the PGA;

Count Five:Attempted monopolization in violation of Sec. 2 of the Sherman Act against the PGA;

Count Six:Conspiracy or combination to monopolize in violation of Sec. 2 of the Sherman Act against the PGA and the MAPGA;

Count Seven:Restraint of trade in violation of Sec. 1 of the Sherman Act, 15 U.S.C.A. Sec. 1, against the MAPGA and the PGA;

Count Nine:Monopolization in violation of the Maryland Antitrust Act, Md. Com. Law II Code Ann. Sec. 11-204(a)(2), against the PGA;

Count Ten:Attempted monopolization in violation of the Maryland Antitrust Act, Md. Com. Law II Code Ann. Sec. 11-204(a)(2), against the PGA;

Count Eleven:Conspiracy or combination to monopolize in violation of the Maryland Antitrust Act, Md. Com. Law II Code Ann. Sec. 11-204(a)(2), against the MAPGA and the PGA;

Count Twelve:Unreasonable restraint of trade in violation of the Maryland Antitrust Act, Md. Com. Law II Code Ann. Sec. 11-204(a)(1), against the MAPGA and the PGA.

The jury returned a special verdict finding in Seabury's favor on all counts and awarding $2.6 million in compensatory damages and $4.8 million in punitive damages.

The district court granted judgment as a matter of law to Appellees on all counts except the breach of contract claim. However, finding that Seabury had failed to offer evidence from which a jury could find actual damages caused by the breach of contract, the court granted judgment as a matter of law on the compensatory damages award. Further, the district court granted judgment as a matter of law on the punitive damages award on the bases that the PGA had a qualified privilege to interfere with the MAPGA's contractual relations and that Seabury had failed to prove actual malice on the part of the PGA. Finally, the district court awarded attorneys' fees to Seabury for costs incurred in litigating the breach of contract claim.

This court reviews the decision of the district court to grant judgment as a matter of law by determining whether, viewing the evidence in the light most favorable to Seabury, a jury could reasonably return a verdict in Seabury's favor. See Brinkley-Obu v. Hughes Training, Inc., 36 F.3d 336, 351 (4th Cir.1994). Judgment as a matter of law may not be granted "[i]f there is evidence of such quality and weight that reasonable and fair-minded [jurors] in the exercise of impartial judgment could reasonably return a verdict for the nonmoving party." Id. (internal quotation marks omitted). We review the decision of the district court to grant judgment as a matter of law de novo. United States v. Vanhorn, 20 F.3d 104, 109 (4th Cir.1994).

II.

A.

Seabury first challenges the grant of judgment as a matter of law as to its claims of restraint of trade (Counts Seven and Twelve), arguing that the district court erred in concluding that the MAPGA and the PGA are a single economic unit, which is legally incapable of conspiring under the Sherman Act. ³ See Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 766-77 (1984) (holding that a corporation and its wholly-owned subsidiary are not capable of conspiring in violation of Sec. 1 of the Sherman Act). Although the Copperweld Court specifically declined to decide whether a parent corporation may conspire "with an affiliated corporation it does not completely own," id. at 767, we have since used the factors articulated in Copperweld to find related entities incapable of conspiring in restraint of trade. See, e.g., Oksanen v. Page Memorial Hosp., 945 F.2d 696, 703-05 (4th Cir.1991) (en banc) (examining "the substance, rather than the form, of the relationship" and the degree of control exercised by hospital's Board of Trustees to find hospital and its medical staff incapable of conspiring), cert. denied, 502 U.S. 1074 (1992); Advanced Health-Care Servs., Inc. v. Radford Community Hosp., 910 F.2d 139, 146 (4th Cir.1990) (holding two wholly-owned subsidiaries of the same parent corporation are legally incapable of conspiring).

After examining the relationship between the PGA and the MAPGA, we are convinced that no reasonable trier of fact could have found them to be separate entities. We therefore affirm on the reasoning of the district court the grant of judgment as a matter of law on Counts Seven and Twelve. ⁴ Seabury Management, Inc. v. Professional Golfers' Ass'n of Am., Inc., No. 92-530, 1994 WL 772873, at * 3-6 (D. Md. Apr. 26, 1994).

B.

Seabury next asserts that the district court erred in granting judgment as a matter of law on its monopolization claims (Counts Four, Five, Six, Nine, Ten, and Eleven). We agree with the district court that Seabury has failed to define a relevant market and that its monopolization claims therefore must fail.

In order to prevail on its monopolization claims, Seabury must prove: (1) that the PGA possessed monopoly power in a relevant market; (2) that the PGA willfully acquired and maintained that power to the exclusion of Seabury; and (3) causal antitrust injury. See Advanced Health-Care Servs., Inc., 910 F.2d at 147. "Proof of a relevant market is a threshold requirement for a Sherman Act Sec. 2 claim." Consul, Ltd. v....