St. Petersburg Yacht Charters, Inc. v. Morgan Yacht, Inc.

• Decision Date: 04 May 1984
• Docket Number: No. 82-2704,82-2704
• Citation: 457 So.2d 1028
• Parties: 1984-1 Trade Cases P 65,985 ST. PETERSBURG YACHT CHARTERS, INC., a Florida corporation, and St. Petersburg Yacht Charters--Ft. Myers, Inc., a Florida corporation, Appellants, v. MORGAN YACHT, INC., a Nevada corporation, Hirsh Sailing Yachts, Inc., a Florida corporation, and Ronald L. Hirshberg, Appellees.
• Court: Florida District Court of Appeals

Page 1028

457 So.2d 1028

1984-1 Trade Cases P 65,985

ST. PETERSBURG YACHT CHARTERS, INC., a Florida corporation, and St. Petersburg Yacht Charters--Ft. Myers, Inc., a Florida corporation, Appellants, v. MORGAN YACHT, INC., a Nevada corporation, Hirsh Sailing Yachts, Inc., a Florida corporation, and Ronald L. Hirshberg, Appellees.

No. 82-2704.

District Court of Appeal of Florida Second District.

May 4, 1984.

Rehearing Denied June 11, 1984.

F. Wallace Pope, Jr., of Johnson, Blakely, Pope, Bokor & Ruppel, P.A., Clearwater, for appellants.

William F. McGowan, Jr., of Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A., Tampa, for appellee Morgan Yacht.

Arthur D. Vandroff of Lancer, Vandroff & Sudakoff, Sarasota, for appellees Hirsh Sailing Yachts, Inc. and Ronald L. Hirshberg.

LEHAN, Judge.

SUMMARY OF FACTS, ISSUES, AND HOLDING

This suit brought under the Florida Antitrust Act of 1980 involves a dealership termination. The two basic issues may be stated as follows: Is a cause of action stated by a dealer's complaint alleging a manufacturer's termination of the dealership in conspiracy with a competing dealership which requested the termination to eliminate resale price competition? We hold that a cause of action is stated in this case. Is this alleged conduct a per se antitrust violation or must it be tested under the rule of reason? We hold that no per se violation is alleged in this case but that the rule of reason should apply.

An understanding of certain antitrust law terminology is essential to an understanding of this case. "Per se" antitrust violations may be established with relatively little proof. In general, only proof of particular conduct which is considered inherently pernicious is necessary. An unlawful effect of that conduct upon competition is presumed. On the other hand, "rule of reason" antitrust violations require proof relating to anticompetitive effects of the conduct alleged. "Interbrand" competition is among persons or firms dealing in the same generic product, e.g., TV sets. On the other hand, "intrabrand" competition is among persons or firms dealing in the product of one manufacturer, e.g., Sylvania TV sets. "Vertical" restraints upon competition are those imposed by persons or firms on a different level of the distribution system than the level of the persons or firms receiving the impact of the restraints, e.g., resale price fixing may involve a manufacturer dictating the price at which a dealer sells a product. On the other hand, "horizontal" restraints are those imposed within the same distribution level, e.g., by some dealers refusing to sell to other dealers. (In general, horizontal restraints are more susceptible of being labeled per se violations than are vertical restraints.)

Plaintiffs appeal from a dismissal with prejudice of Counts I and II of their amended complaint. We have jurisdiction pursuant to Florida Rule of Appellate Procedure 9.130(a)(3)(B).

St. Petersburg Yacht Charters, Inc. and St. Petersburg Yacht Charters-Ft. Myers, Inc. (both of whom are hereinafter called St. Pete) sued Morgan Yacht, Inc. (hereinafter called Morgan) and Hirsh Sailing Yachts, Inc. and its president, Ronald L. Hirshberg (both of whom are hereinafter called Hirsh). According to the amended complaint, defendant-appellee Morgan, a sailboat manufacturer, orally appointed plaintiffs-appellants St. Pete to be Morgan charter yacht dealers on the Florida west coast. Defendant-appellee Hirsh, a Morgan charter yacht dealer located in Manatee County, Florida, was a competitor of St. Pete in the sale of Morgan boats.

The amended complaint alleges that Hirsh complained to Morgan that St. Pete was underselling Hirsh and demanded that Morgan terminate St. Pete's dealership. It is alleged that Morgan thereafter terminated St. Pete as a Morgan dealer pursuant to an unlawful conspiracy by Morgan and Hirsh "to fix and stabilize the price of Morgan boats at a price higher than otherwise possible by eliminating plaintiffs as price competitors." It is additionally alleged that Morgan and Hirsh "intended for Hirsh ... to gain a competitive advantage over plaintiffs; to require plaintiffs to purchase all of their Morgan boats at a reduced discount through Hirsh ... and effectively remove plaintiffs as competitors in the sale of Morgan boats to third parties." The amended complaint alleges that the foregoing actions were "anti-competitive in intent and effect" and that, as a result, St. Pete was injured in particular alleged ways in its business. Treble damages, attorney's fees and an injunction are requested.

St. Pete alleges that its termination as a Morgan dealer under the foregoing circumstances constituted violations of the Florida Antitrust Act of 1980. The violations are alleged to involve section 542.18, Florida Statutes (1981) (the counterpart of section 1 of the Sherman Act, 15 U.S.C. § 1), and section 542.19, Florida Statutes (1981) (the counterpart of section 2 of the Sherman Act, 15 U.S.C. § 2).

Amended Count I alleges a per se violation of the antitrust laws and amended Count II under the same facts alleges an antitrust violation under rule of reason standards. We affirm the dismissal of Count I and reverse the dismissal of Count II. This is primarily a section 542.18, Florida Statutes (and therefore, section 1 of the Sherman Act) case. We do not consider the bare allegations of a violation of section 542.19, Florida Statutes (section 2 of the Sherman Act) to change our holding and therefore direct our attention to case law which principally concerns section 1 of the Sherman Act. Appellant does not argue section 2 of the Sherman Act as a separate cause of action.

The foregoing sections of the Florida Antitrust Act of 1980 are substantially identical to their counterparts in the Sherman Act. Section 542.18 provides:

Restraint of trade or commerce.--Every contract, combination or conspiracy in restraint of trade or commerce in this state is unlawful.

Section 542.19 provides:

Monopolization; attempts, combinations or conspiracies to monopolize.--It is unlawful for any person to monopolize, attempt to monopolize, or combine or conspire with any other person or persons to monopolize any part of trade or commerce in this state.

Section 542.32, Florida Statutes (1981), provides:

Rule of construction and coverage.--It is the intent of the legislature that, in construing this chapter, due consideration and great weight be given to the interpretations of the federal courts relating to comparable antitrust statutes....

Accordingly, the Florida legislature has, in effect, adopted as the law of Florida the body of antitrust law developed by the federal courts under the Sherman Act. Statutory interpretation is of little help in ascertaining Sherman Act violations. Reliance must be upon the case law which over the years has, however broadly and sometimes inconsistently, laid out the parameters of conduct proscribed by those antitrust laws.

The principal difference between the Florida Antitrust Act and the Sherman Act is that under the Florida act there is no jurisdictional requirement that interstate commerce be involved. See Hackett v Metropolitan General Hospital, 422 So.2d 986 (Fla. 2d DCA 1982).

It appears that a vertically imposed restraint upon competition has been alleged. Therefore it is important to consider especially the U.S. Supreme Court's landmark opinion in Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 97 S.Ct. 2549, 53 L.Ed.2d 568 (1977), which, while not involving the precise factual situation alleged here, does deal with the subject of vertical restraints. The Sylvania case represented a significant shift of direction in certain applications of section 1 of the Sherman Act. Federal courts have not been in agreement as to the effect, if any, of Sylvania on fact situations involving dealership terminations of the type alleged here.

The holding of Sylvania is summarized in Antitrust Adviser § 2.21 (C. Hills 2d ed. 1978), as follows (with our bracketed supplements):

In GTE Sylvania, the plaintiff distributor contended that the restricted location provision imposed on it by the defendant manufacturer [an alleged vertical restraint with which plaintiff did not comply and was, by alleged reason of that noncompliance, terminated as a Sylvania distributor] was per se unlawful under [United States v. Schwinn & Co., 388 U.S. 365, 87 S.Ct. 1856, 18 L.Ed.2d 1249 (1967) ]. The trial court instructed the jury that such restrictions are per se unlawful, and a verdict was returned for plaintiff. The Court of Appeals for the Ninth Circuit reversed, holding that ... [the vertical restraint involved] should be judged according to the rule of reason.

On a writ of certiorari, the Supreme Court [affirmed], holding: ... (2) the Schwinn decision, appearing to hold ... [certain vertical restraints] to be per se unlawful, is economically unjustified and doctrinally unsound and is therefore overruled [and the Supreme Court reverted to the rule of reason standards articulated in Northern Pacific Railroad Co. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 518, 2 L.Ed.2d 545 (1958), and reiterated in White Motor Co. v. United States, 372 U.S. 253, 83 S.Ct. 696, 9 L.Ed.2d 738 (1963) ¹; and (3) vertical resale restrictions, except those which involve price maintenance, must be judged in accordance with the rule of reason.

Id. at 119. (emphasis added)

The issues here principally relate to the third part of the Sylvania holding and involve whether St. Pete, by alleging a dealership termination of the type described in its amended complaint, has alleged a per se violation of the antitrust laws, has only alleged matters to be tested under the so-called "rule of reason," or has alleged no antitrust violation at all, as the trial court decided.

The parties have directed their arguments to a substantial extent toward the different interpretations which two federal cases have given, in light...