T. Harris Young & Associates, Inc. v. Marquette Electronics, Inc.

• Decision Date: 20 May 1991
• Docket Number: 90-3364,Nos. 90-3252,s. 90-3252
• Citation: 931 F.2d 816
• Parties: 1991-1 Trade Cases 69,440, 33 Fed. R. Evid. Serv. 413 T. HARRIS YOUNG & ASSOCIATES, INC., a Florida corporation, Plaintiff-Counter Defendant-Appellant/Cross-Appellee, v. MARQUETTE ELECTRONICS, INC., a Wisconsin corporation, Defendant-Counterclaim - Appellee/Cross - Appellant. T. HARRIS YOUNG & ASSOCIATES, INC., a Florida corporation, Plaintiff-Appellant, Cross-Appellee, v. MARQUETTE ELECTRONICS, INC., a Wisconsin corporation, Defendant-Appellee, Cross-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 816

931 F.2d 816

1991-1 Trade Cases 69,440, 33 Fed. R. Evid. Serv. 413

T. HARRIS YOUNG & ASSOCIATES, INC., a Florida corporation, Plaintiff-Counter Defendant-Appellant/Cross-Appellee, v. MARQUETTE ELECTRONICS, INC., a Wisconsin corporation, Defendant-Counterclaim - Appellee/Cross - Appellant.

T. HARRIS YOUNG & ASSOCIATES, INC., a Florida corporation, Plaintiff-Appellant, Cross-Appellee, v. MARQUETTE ELECTRONICS, INC., a Wisconsin corporation,

Defendant-Appellee, Cross-Appellant.

Nos. 90-3252, 90-3364.

United States Court of Appeals Eleventh Circuit.

May 20, 1991.

Eli H. Subin, John M. Brennan, Subin, Shams, Rosenbluth & Moran, P.A., Orlando, Fla., for T. Harris Young & Associates, Inc.

Paul E. Slater, Christopher J. Murdoch, Sperling, Slater & Spitz, Melvin S. Newman, Schoenberg, Fisher & Newman, Ltd., Mark P. Cohen, Schoenberg, Fisher & Newman, Ltd., Chicago, Ill., for Marquette Electronics, Inc. in 90-3252 and 90-3364.

Davisson F. Dunlap, William D. Palmer, Carlton, Fields, Ward, Emmanuel, Smith & Cutler, Orlando, Fla., for Marquette Electronics, Inc. in 90-3364.

Appeals from the United States District Court for the Middle District of Florida.

Before HATCHETT and DUBINA, Circuit Judges, and HILL, Senior Circuit Judge.

HILL, Senior Circuit Judge.

This appeal concerns an antitrust and tortious interference with business action. Plaintiff T. Harris Young & Associates, Inc. ("THY") sued defendant Marquette Electronics, Inc. ("Marquette"), alleging an illegal tying arrangement, attempted monopolization, and tortious interference with business because of certain alleged false claims. The jury returned a verdict in favor of THY on all three claims. The district court granted a judgment notwithstanding the verdict on the two antitrust claims. Plaintiff appeals this grant, while defendant appeals the failure to grant such a judgment on the tort claim. ¹ We affirm the judgment notwithstanding the verdict on the antitrust claims and reverse the denial of a judgment notwithstanding the verdict on the tort claim.

I. BACKGROUND

A. Factual History

Marquette, a Wisconsin corporation, manufactures electrocardiograph ("EKG") and stress testing machines for sale to medical clinics, doctors' offices, and hospitals. There are approximately nine manufacturers of EKG machines in the United States, and eighteen of stress testing equipment. The equipment utilizes heat sensitive recording paper that displays a graphic line when moved across a heated printhead. Marquette also sells this paper for use in its machines.

THY distributes Marquette recording paper in the southeastern United States, an area including Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, and portions of Virginia and Tennessee. THY has no written distribution agreement with Marquette, and the relationship is terminable at will. Despite the instant lawsuit, the relationship continues to this day. ² Until 1987, THY was the only seller of Marquette paper in the southeast. In 1986, Marquette informed THY of its intention to reduce the discount on supplies it sold THY at wholesale, and THY informed Marquette of its intention to add a competitive generic paper line (Clinical Health Products ("CHP") paper). Marquette then began directly selling its paper in the southeast in 1987. ³

THY attempted to establish at trial, and argues on appeal, that in attempting to sell its own paper Marquette told customers that non-Marquette paper would damage their machines and that the Marquette equipment warranties would be void if the customers used non-Marquette paper. On appeal, Marquette denies its employees made such statements, but admits they told customers that if defective non-Marquette paper damaged a Marquette machine, Marquette would not repair it for free. ⁴ No evidence was presented at trial that Marquette ever voided a warranty or service contract.

At trial, THY sought to define the relevant market for paper customers. THY defined the geographic market for paper as the aforementioned nine-state area comprising Young's sales territory as a Marquette distributor. The evidence adduced at trial was that paper prices inside and outside this territory were virtually the same. ⁵ Furthermore, all suppliers relied on UPS or a similar common carrier for delivery, and while the delivery costs for outside sellers varied from 36.1% higher to 11.7% higher, delivery costs as a percentage of the total cost of the paper were very small. ⁶ Of the 13 companies supplying Marquette or Marquette-compatible paper to customers in the nine-state area, six were from outside the area, and three of those six sold Marquette brand paper. ⁷ Young testified, however, that a customer preference for regional service existed because of the need for emergency deliveries and because the end user pays for transportation costs.

THY defined the product market for paper as hospitals with 200 or more beds, despite the sale of identical products to smaller customers. The evidence at trial indicated that the 200+ beds customers accounted for approximately 80% of both plaintiff's and defendant's sales, and that in general approximately 80% of the purchases by hospitals are made by those customers.

B. Procedural History

Young brought suit against Marquette, alleging a tying arrangement in violation of Section 1 of the Sherman Act, attempted monopolization in violation of Section 2 of the Sherman Act, and tortious interference with business. ⁸ The jury found for Young on all three counts. Using a special verdict form, the jury specifically found that the relevant market for EKG recording paper consisted of hospitals of 200+ beds in the southeastern area of the United States consisting of Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, and portions of Virginia and Tennessee. The jury awarded $1.4 million on the tying claim, $1.8 million on the monopoly claim, and over $3 million on the tort claim ($1.25 million compensatory damages plus $1.8 million punitive damages). ⁹

Marquette moved for a judgment notwithstanding the verdict and for a new trial on all three counts. The district court gave two reasons for granting the motion on the tying claim: first, THY failed to define the relevant market for the tying product (EKG and stress testing machines); and second, a product market for paper of hospitals with 200+ beds was insufficient as a matter of law. The court granted Marquette's motion on the attempted monopoly claim also because it found the product market to be insufficient as a matter of law. The district court did not grant Marquette's alternative motions for new trial on these two counts.

Regarding the Florida common law tort count, the district court found that there was ample evidence from which the jury could have concluded that Marquette tortiously interfered with THY's business, and that the interference was intentional and had the destruction of THY's business as its purpose. Accordingly, the district court denied Marquette's motions for JNOV and new trial on this count.

II. STANDARD OF REVIEW

A motion for a JNOV tests the sufficiency of evidence supporting a jury verdict. Hessen v. Jaguar Cars, Inc., 915 F.2d 641, 644 (11th Cir.1990). Because sufficiency of the evidence is a question of law subject to de novo review, we review the district court's grant or denial of a JNOV under the same standard as the district court applied. Id.

All of the evidence presented at trial must be considered "in the light and with all reasonable inferences most favorable to the party opposed to the motion." A motion for judgment n.o.v. should be granted only where "reasonable [people] could not arrive at a contrary verdict...." Where substantial conflicting evidence is presented such that reasonable people "in the exercise of impartial judgment might reach different conclusion, [sic]" the motion should be denied.

Castle v. Sangamo Weston, Inc., 837 F.2d 1550, 1558 (11th Cir.1988) (citations omitted).

The district court's evidentiary rulings are discretionary, and we will not disturb them absent a clear showing of an abuse of discretion. Hessen, 915 F.2d at 644.

III. DISCUSSION

A. The Antitrust Claims

1. The Tying Claim: Where there is no Tie, there is no Claim

As an initial matter, defendant argues that plaintiff failed to prove that a tying arrangement existed at all. Defendant contends that, for a tying arrangement to exist, a seller must condition the sale of the tying product on the purchase of the tied product. As plaintiff states in its briefs, the tying product in this case would be "electronic medical equipment," and the tied product would be "electrocardiographic recording paper." Defendant argues that it did not condition the sale of equipment on the purchase of paper, and thus no tie existed. Plaintiff, by contrast, maintains that it must show only coercion by the seller that forced the buyer to purchase the tied product, and that the coercion need not consist of the withholding of the tying product. In other words, plaintiff maintains that if it shows such coercion, then it has shown a tie and that tie is illegal.

This view is not correct. This circuit has clearly stated that "a tying arrangement is 'an agreement by a party to sell one product [the tying product] but only on the condition that the buyer also purchases a different (or tied) product.' " Amey, Inc. v. Gulf Abstract & Title, Inc., 758 F.2d 1486, 1502 (11th Cir.1985) (emphasis added) (quoting Northern Pacific Ry. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 518, 2 L.Ed.2d 545 (1958)), cert. denied, 475 U.S. 1107, 106 S.Ct. 1513, 89 L.Ed.2d 912 (1986). See also Tic-X-Press, Inc. v. Omni Promotions Co., 815 F.2d 1407, 1414 (11th Cir.1987); Midwestern Waffles, Inc. v. Waffle House, Inc., 734 F.2d 705, 711 (11th Cir.1984); Kypta v. McDonald's Corp., 671 F.2d 1282, 1284 (11th Cir.), cert. denied, 459 U.S. 857, 103 S.Ct. 127, 74 L.Ed.2d 109 (1982)....