Service Merchandise Co., Inc. v. Boyd Corp.
| Decision Date | 12 December 1983 |
| Docket Number | Nos. 83-1096,83-1097,s. 83-1096 |
| Citation | 722 F.2d 945 |
| Parties | 1984-1 Trade Cases 65,759 SERVICE MERCHANDISE COMPANY, INC., Plaintiff, Appellee, v. The BOYD CORPORATION, Defendant, Appellant. SERVICE MERCHANDISE COMPANY, INC., Plaintiff, Appellant, v. The BOYD CORPORATION, Defendant, Appellee. |
| Court | U.S. Court of Appeals — First Circuit |
James D. St. Clair, Boston, Mass., with whom Richard J. Innis, and Hale & Dorr, Boston, Mass., were on brief, for The Boyd Corp.
George S. Isaacson, Lewiston, Maine, with whom Robert B. Gregory, Alfred C. Frawley and Brann & Isaacson, Lewiston, Maine, were on brief, for Service Merchandise Company, Inc.
Before CAMPBELL, Chief Judge, BOWNES, Circuit Judge, and PEREZ-GIMENEZ, * District Judge.
This antitrust action was brought originally by Supermarkets General Corporation (SGC) against The Boyd Corporation (Boyd). SGC alleged that Boyd had violated section 1 of the Sherman Act, 15 U.S.C. Sec. 1 1 and sought treble damages pursuant to section 4 of the Clayton Act, 15 U.S.C. Sec. 15. 2 Specifically, SGC claimed that Boyd had conspired with three other distributors of microwave ovens manufactured by Amana Refrigeration, Inc. (Amana) to allocate among themselves market territories for the sale of Amana microwave ovens and to refuse to sell Amana microwave ovens to The Value House, a division of SGC.
Following the initiation of the lawsuit, Service Merchandise Company, Inc. (SMC) purchased certain assets of SGC, including this antitrust action; SMC was duly substituted for SGC as plaintiff.
During the trial, which took place in November 1982, the district court ruled that the plaintiff's damages would be limited to those incurred by it between the date of the alleged conspiracy, November 1977, and January 1, 1978, when Amana limited sales by a distributor to its own territory. Plaintiff appeals this ruling.
Defendant appeals the jury verdict finding it liable and also the refusal of the district court to grant its motions for directed verdict, judgment n.o.v., and new trial. It also claims that the jury instructions were erroneous in content and because of the omission of certain requested instructions.
Our review of the evidence and the inferences to be drawn therefrom must be made in the light most favorable to the plaintiff-appellee, SMC. Hubbard v. Faros Fisheries, Inc., 626 F.2d 196, 199-200 (1st Cir.1980).
At the time this action commenced, Boyd was an authorized distributor of Amana microwave ovens. Its distributorship area comprised the states of Maine, Rhode Island, New Hampshire, and various counties in Massachusetts and Connecticut. Along with other Amana distributors, Boyd participated in a panoply of product service, public relations and customer education programs sponsored by Amana aimed at increasing both the acceptance of microwave ovens by the public and Amana's share of the market.
SGC (original plaintiff) conducted its retail operations through a chain of "catalog showrooms" called The Value House. These stores were located in Maine, New Hampshire, Vermont, Massachusetts, Connecticut, New York, and New Jersey. Thus, while SGC's market area included that of Boyd, it extended beyond Boyd's distributorship territory. Value House's marketing was built around its catalog. It distributed throughout its sales territory between 600,000 and 700,000 annual fall catalogs and a similar number of spring supplements advertising the products it sold.
Early in 1977, Value House became interested in selling Amana microwave ovens, which it considered a "hot" high profit item. It contacted Boyd. There were phone calls and meetings between Donald Ouellette, vice-president for merchandising of Value House, and William Hanna, sales representative of Boyd. Value House's method of retailing was explained and Hanna was told that Value House had twenty-one stores and a potential for opening more, so that thousands of ovens would be needed. Hanna said there would be no problem, that Boyd had between 500 and 600 units in its warehouse. An agreement was reached on pricing and terms in March of 1977 whereby Boyd agreed to supply Value House with Amana microwave ovens. From March through August of 1977, Value House purchased 300 ovens from Boyd.
On November 2, 1977, the general manager of Boyd, Jerome Cristaldi, met with Ouellette of Value House and told him that Boyd would no longer sell Amana microwave ovens to Value House. The reason given was that Amana distributors in New York and New Jersey were upset because ovens sold by Boyd to Value House were being sold in Value House stores located in New York and New Jersey. Ouellette remonstrated that an agreement had been made with Boyd through Hanna whereby Amana microwave ovens would be put in all of Value House's stores for sale and they were already listed in the fall catalog. Cristaldi remained adamant. On November 9, 1977, James Boyd, president of Boyd wrote Value House reiterating the refusal-to-sell decision and stating:
Mr. Cristaldi made it clear when we accepted your prior orders for this product that we did not wish this merchandise distributed to Value house locations which were located beyond our distributing territory.
Your people agreed to honor this request. I have discovered that, apparently, little or no attention was paid to the request. I have received calls from friends of ours who are Amana distributors in the New York--New Jersey area indicating that merchandise purchased from our company has appeared in stores in their area of sales and service responsibility.
This is a serious problem in our business and we have consistently refused to contribute to the problem. We do not need the business badly enough to disturb good friends of ours in other markets and create service and other after-sales problems for these fellow distributors.
On the same day that Ouellette was informed by Cristaldi that Boyd would no longer sell ovens to Value House, he ordered 100 ovens from Plymouth Electric, an Amana distributor in Connecticut. The order stated, "Please rush, all above ordered goods to be sold in the area." Plymouth Electric sold Value House twenty-eight ovens, which were delivered directly to a Value House store in West Hartford, Connecticut. The price for each oven was twenty dollars higher than the price originally quoted by Plymouth Electric. When Ouellette asked Plymouth Electric to fill the balance of the order, he was told that there was no more product available for Value House.
After the rejection by Plymouth Electric, Ouellette turned again to Boyd. He called Cristaldi on December 12, 1977, and asked if he would ship units for customers within Boyd's trading area that had already ordered them from the catalog. Cristaldi said he would, but only on the condition that Ouellette give him the name and address of every customer so that the ovens could be shipped direct. Ouellette refused to do this, but on December 16 sent Boyd a purchase order for fifty ovens. The purchase order was returned; no ovens were sold to Value House.
Value House next tried to obtain Amana ovens from a New York distributor, Amana Refrigeration New York. Ouellette was told by the New York distributor that it had no product to sell. A New Jersey distributor, Cooper Distributing, made essentially the same response when it was asked to sell Amana microwave ovens to Value House. Cooper had complained to Boyd at the end of October 1977 that Amana ovens sold by Boyd were showing up in Value House stores in New Jersey.
A few Amana ovens were obtained from a New York diverter, a company that buys merchandise from wherever it can get it and then diverts (sells) it to whoever needs it. When the New York diverter was contacted a second time, Value House was told that "the pipeline had been shut down."
Boyd first contends that the evidence was insufficient as a matter of law to establish a conspiracy under section 1 of the Sherman Act. The requisites for proof of an antitrust conspiracy have been stated as follows:
The essential combination or conspiracy in violation of the Sherman Act may be found in a course of dealing or other circumstances as well as in an exchange of words. United States v. Schrader's Son, 252 U.S. 85 [40 S.Ct. 251, 64 L.Ed. 471]. Where the circumstances are such as to warrant a jury in finding that the conspirators had a unity of purpose or a common design and understanding, or a meeting of minds in an unlawful arrangement, the conclusion that a conspiracy is established is justified. Neither proof of exertion of the power to exclude nor proof of actual exclusion of existing or potential competitors is essential to sustain a charge of monopolization under the Sherman Act.
We think the evidence and the reasonable inferences to be drawn from it were sufficient for a finding of conspiracy. Boyd at first agreed to sell Amana ovens to Value House knowing not only that it had stores outside of Boyd's marketing area, but that Value House was planning to expand. Boyd stopped selling to Value House after distributors in New York and New Jersey had complained that Amana ovens were being sold in Value House stores in their marketing areas. Value House's efforts to purchase ovens from other Amana distributors were rebuffed after Boyd notified Value House that it would no longer sell to it. Finally, Value House was notified by an independent wholesaler located in New York that it could no longer supply Value House with Amana ovens. From this evidence, the jury could reasonably infer that Boyd and at least one of the other named coconspirators, The Plymouth Electric Company, Amana Refrigeration New York, or The Cooper Distributing Company, agreed to allocate exclusive territories among themselves for the sale of Amana microwave ovens...
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