Trixler Brokerage Co. v. Ralston Purina Co.

• Decision Date: 05 November 1974
• Docket Number: No. 73-1197,73-1197
• Citation: 505 F.2d 1045
• Parties: 1974-2 Trade Cases 75,357 TRIXLER BROKERAGE COMPANY, a California corporation, Appellant, v. RALSTON PURINA COMPANY, a corporation, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1045

505 F.2d 1045

1974-2 Trade Cases 75,357

TRIXLER BROKERAGE COMPANY, a California corporation, Appellant, v. RALSTON PURINA COMPANY, a corporation, Appellee.

No. 73-1197.

United States Court of Appeals, Ninth Circuit.

Nov. 5, 1974.

Stuart R. Pollak (argued), Howard, Prim, Rice, Nemerovski, Canady & Pollak, San Francisco, Cal., for appellant.

Noble K. Gregory (argued), Pillsbury, Madison & Sutro, San Francisco, Cal., for appellee.

Before MERRILL and KILKENNY, Circuit Judges, and CRARY, ^* District judge.

OPINION

KILKENNY, Circuit Judge:

Appellant appeals from an adverse judgment in a non-jury trial, in an action against appellee for alleged violations of Sections 1 and 2 of the Sherman Act (15 U.S.C. 1 and 2), bad faith, breach of contract and misrepresentation. Appellant is a corporation engaged in the food brokerage business, acting as an independent sales agent in northern California for various food processors and manufacturers. Appellee, among other things, is a corporation engaged in processing and manufacturing food.

FACTUAL BACKGROUND

A summary of the facts, stated favorably for appellee, is as follows: In 1952 when Van Camp Sea Food Company, a predecessor of appellant, decided to change its marketing scheme from direct sales to brokerage, J. Thomas Trixler, president of appellant, resigned as an employee of Van Camp and became its broker and a broker for other food processors. Trixler then incorporated his business, and his company was orally appointed by Van Camp as broker for northern California. Later, the appellant company was formed and took over the California operations of its predecessor. Since that time it has been managed by Trixler, its president and principal shareholder.

In 1963, appellee acquired Van Camp, the latter continuing as an administrative division of the former. Trixler continued as broker for the Van Camp tuna products under an arrangement which was not formally expressed, either orally or in writing. From 1953, appellee, in accordance with accepted business practice, conducted regular studies to determine the relative economics of marketing its products through brokers as opposed to direct sales. In the early fifties, it marketed all of its consumer products through a direct sales force. Later, in the mid-fifties, it changed courses and by 1960 all of its consumer products were marketed by brokers. By the use of brokers, appellee was unable to give its jumior management personnel sufficient sales experience to enable them effectively to supervise and work with food brokers. Consequently, in 1965, appellee established a direct sales force in St. Louis to provide a training ground for sales management personnel. This force failed to provide a sufficient number of trained personnel, and in 1966 another force for training purposes was established in Los Angeles.

In 1965, and subsequently, appellant inquired from time to time as to appelee's overall policy concerning brokers and was told that appellee was 'broker minded' or 'broker oriented' and that there were no plans to terminated appellant. To this date, no national sales force has been established by appellee, none is planned, and most of its tuna products are still marketed through brokers. Even after the establishment of the direct sales force in Los Angeles in 1966, there was no decision or plan to extend the direct sales training force until February, 1968. In the so-called 'Operation February' report, San Francisco, Philadelphia and Baltimore-Washington were selected as feasible markets for the institution of a direct sales training area. The recommendation that San Francisco be selected was dated April 23, 1968, and approval for its was given on April 24th. Appellant was notified on May 6, 1968, of its termination as broker for Chicken of the Sea tuna, but was asked to continue as broker through July 31, 1968.

From at least 1968 until the time appellant ceased representing appellee, appellant was aware of the fact that appellee might consider returning to direct sales in northern California. When the termination decision was made, appellant was offered two months equivalent brokerage. ¹ The offer of equivalent brokerage was extended to retain the good will of appellant during the change-over period and to provide payment to appellant during the transition. On May 28, 1968, appellant notified appellee that it was ceasing to represent appellee as of June 30, 1968. On July 1, 1968, appellant began representing Carnation, a competitive brand of tuna. Appellant received brokerage through June 30th.

PLEADINGS

On December 24, 1968, appellant filed a complaint charging breach of contract, bad faith and violations of the antitrust laws previously noted. Ralston answered and counter-claimed for brokerage paid by mistake. No jury was requested by either party. On September 8, 1969, appellant moved for a jury trial. The motion was denied as untimely. Then appellant filed a motion for leave to amend the complaint, stating two additional causes of action. The amended complaint was filed, and appellant then filed a demand for a jury trial on its two additional causes. A motion to strike the jury demand was granted. Subsequently, the court denied appellant's motion to reconsider the demand for a jury trial, and the case proceeded to trial before the court. After trial, the court rendered its memorandum of decision against appellant and in favor of appellee. The court later signed and filed detailed findings of fact and conclusions of law on which judgment was entered against appellant on its claims and in favor of appellee on its counterclaim for $1,558.78.

CONTENTIONS

Briefly stated, appellant's contentions are:

(I) that it was entitled to a jury trial on its sixth and seventh claims; ²

(II) that appellee's conduct constituted an unreasonable restraint of trade which proximately caused damage to appellant in violation of Section 1 of the Sherman Act;

(III) that the trial court applied an erroneous rule of law in requiring direct evidence of intent to monopolize on a claim of attempted monopoly under Section 2 of the Sherman Act.

JURY REQUEST

Appellant concedes that it failed to file a timely motion for a jury trial on its first five claims. It asserts, however, that a timely demand was made for a jury trial on the issues created by the sixth and seventh claims set forth in the amended complaint. The answer lies in whether the sixth and seventh claims created new issues within the meaning of Rule 38(b), F.R.Civ.P. ³

In addition to incorporating by reference all of the allegations in the previous four claims charging Sherman Act violations, the fifth claim of appellant's original complaint-- on which appellant failed to ask for a jury trial-- alleged that in May, 1968, the appellee and another surreptitiously attempted to induce salesmen and other employees of appellant to breach and terminate their employment contracts with appellant and to accept employment with appellee. The claim then went on to charge that this conduct and '. . . the termination of Trixler's brokerage agreements, . . . were performed (by appellee) in bad faith and in violatiol of (allellee's) obligation to act in good faith and to deal fairly with . . .' appellant.

The appellee, not surprisingly, sought additional information with reference to the charges of bad faith and unfair dealings set forth in the fifth claim. On discovery, in answer to an interrogatory as to the facts on which it based its bad faith charges in that claim, the appellant's response was vague and indefinite. Being dissatisfied with this response, appellee sought additional details on the nature of the bad faith charges. In answer to this request for clarification, the appellant expanded on its previous statement of the bad faith charges in the fifth claim and stated:

'Over a period of several years, commencing in or about 1965 and continuing through April 1968, Ralston Purina represented to Trixler that there was no possibility in the foreseeable future of Ralston Purina substituting a direct sales force for brokers in Northern California, or in any area other than in St. Louis (in April 1965) and in Los Angeles (in August 1966), and that such a substitution was not the subject of consideration or study by Ralston Purina. Said representations were made by Ralston Purina to Trixler on at least the following occasions, by and to the following named individuals:

(a) In or about August 1965, R. H. Dean so represented to J. Thomas Trixler;

(b) In or about January 1966, R. H. Dean so represented to J. Thomas Trixler;

(c) In or about May 1966, Glenn Copeland so represented to J. Thomas Trixler;

(d) In or about November 1967, R. L. Siler, Guy Dougherty and Bob McMath so represented to J. Thomas Trixler and John T. O'Leary.'

It will be observed that each allegation in the supplemental response amounts to a charge of bad faith and a violation of 'appellee's obligation to act in good faith and to deal fairly with' the appellant, as alleged in the fifth claim.

Particularly significant is the fact that appellant's alleged sixth and seventh claims use substantially the same language employed by appellant in its supplemental response to appellee's inquiry into the basis of the bad faith charges in the fifth claim. Clearly, the allegations of bad faith in the fifth claim are sufficiently broad to permit evidence of the acts charged in the sixth and seventh ⁴ claims.

Although designated as the sixth and seventh causes of action, they are in fact neither causes of action nor claims. At most, they clarily the charges already made in the fifth claim. The sixth and seventh claims, by elaborating on the charges of bad faith in the fifth claim, did not create new issues. By any reasonable analysis, the identical issue of bad faith is charged in each one of the claims. We need not further clutter the legal publications by citing authority to support the statement that...