Unijax, Inc. v. Champion Intern., Inc.
| Decision Date | 21 June 1982 |
| Docket Number | D,No. 258,258 |
| Citation | 683 F.2d 678 |
| Parties | 1982-2 Trade Cases 64,814 UNIJAX, INC., Plaintiff-Appellant, v. CHAMPION INTERNATIONAL, INC., Defendant-Appellee. ocket 81-7433. |
| Court | U.S. Court of Appeals — Second Circuit |
Stuart A. Jackson, New York City (Burns, Jackson, Summit, Rovins & Spitzer, Michael G. Shannon, New York City, of counsel), for plaintiff-appellant.
Stephen M. Hudspeth, New York City (Lord, Day & Lord, Darrell E. Prescott, Douglas F. Broder, New York City, of counsel), for defendant-appellee.
Before MOORE and NEWMAN, Circuit Judges; GRIESA, * District Judge.
Unijax, Inc. ("Unijax") appeals from a judgment of the United States District Court for the Southern District of New York, 516 F.Supp. 941, Honorable Robert L. Carter, Judge, granting Champion International, Inc.'s ("Champion") motion for judgment notwithstanding the verdict ("judgment n. o. v."). Unijax, a wholesale fine paper distributor, 1 charged in its complaint that during 1975, 1976 and 1977, Champion, a manufacturer of fine paper products, violated Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2 (1976), and Section 3 of the Clayton Act, 15 U.S.C. § 14 (1976), by imposing upon certain Unijax branches exclusive dealing agreements and by conditioning the sale of its coated printing paper, known as Kromekote, on the purchase of other Champion commodity uncoated paper. 2
Unijax's complaint also alleged that Champion maliciously interfered with an existing contractual agreement and prospective business relations between Unijax and one of its principal customers, in violation of Tennessee law.
The case was bifurcated for trial on the issues of liability and damages and went to trial before a jury from December, 1979 to January, 1980. After a trial on the issue of liability, the jury found that Champion had coerced Unijax to enter into a tying arrangement, in violation of Section 3 of the Clayton Act, 3 and had tortiously interfered with an existing contractual agreement and prospective business between Unijax and one of its principal customers, Holiday Press. The jury also found that Unijax failed to establish that Champion forced it to participate in exclusive dealership agreements. 4
Champion moved for judgment n. o. v. on the antitrust and common law claims and on the issues of damages. Unijax moved for judgment n. o. v. on the jury's verdict that it failed to demonstrate foreclosure of a not insubstantial amount of commerce in the tied products and on other elements of the jury's liability verdict.
After carefully reviewing the record, which included extensive post-trial briefs in support of, and in opposition to, motions for judgment n. o. v., 5 the district court granted Champion's motion, 6 dismissing with prejudice On appeal, Unijax contends that the evidence was sufficient to permit reasonable jurors to find that Champion had impermissibly tied sales of a grade of fine coated paper, the Kromekote grade, to the purchase of other Champion coated and uncoated paper grades, in violation of Section 3 of the Clayton Act, and that Champion had tortiously interfered with prospective business between Unijax and one of its principal customers, in violation of Tennessee law. We reject Unijax's contentions and hold that Judge Carter correctly concluded that even when the evidence is viewed in the light most favorable to Unijax, a reasonable juror could not find that these allegations had been proved. Accordingly, we find that the district court did not err in granting Champion's motion for judgment n. o. v., and for the reasons set forth below, we affirm.
Unijax's antitrust claim and common law tort claim of interference with prospective business advantage. 7 Judge Carter concluded that there was no evidence that Champion required or coerced Unijax to purchase other grades of Champion paper as a condition to receiving the Kromekote grade of coated papers, 8 or that Champion, motivated by malice, actively sought the business of Holiday Press. Accordingly, Judge Carter set aside the jury's award to Unijax on its antitrust claim and on its claim of tortious interference with prospective business advantage.
In light of the trial court's holding that there was no proof of a tying arrangement, a somewhat brief review of the facts is necessary.
Champion is a manufacturer of fine paper products. The company also distributes paper products through its division Nationwide Papers. Unijax is a wholesale fine paper distributor with branches in seventeen cities located primarily in the southeastern region of the United States. Unijax purchases and resells paper products manufactured by Champion and at least ten other companies.
The two companies have maintained a long-standing business relationship. Unijax has distributed Champion papers for over forty years. From 1971 and 1976, however, the relationship between Champion and the Unijax branches in Florida and Georgia steadily deteriorated. Champion became dissatisfied with Unijax's performance in selling Champion products 9 and believed that Unijax was either unwilling or unable to improve its performance.
Beginning in January, 1972, Earle Bensing, Champion's Sales Manager for the Atlanta District, 10 met with Walter Moore, President and Chief Executive Officer of Unijax, and other Unijax personnel to discuss means of improving Unijax's performance in distributing Champion's products. In April, 1972, executives from the two companies, including Moore and Bensing, met at Champion's offices in Hamilton, Ohio, to discuss the continued deterioration in Unijax's performance and to establish a series of sales goals to assist in increasing Unijax's purchases of Champion products. These goals were never reached.
In September, 1972, an internal memorandum written by John Fox, a Unijax Vice The paper industry experienced a widespread paper shortage in the early months of 1972. Champion found it impossible to keep pace with demand, and was able to sell easily virtually every type of fine paper. In fact, Champion was forced to implement a system of allocations. As a result, its distributors, including Unijax, constantly requested supplemental allotments.
President, indicated that Unijax had not improved its performance. Moore feared that Champion would either appoint additional distributors or terminate some or all of Unijax's branches.
During this period, Sales Manager Bensing, according to Moore, stated that Unijax ought to use its full allotment of the Javelin grade of coated paper which was also manufactured by Champion before it requested an additional allotment of the Kromekote grade of coated paper. At no time, however, did Champion condition its sales of Kromekote on Unijax's purchase of other Champion products. Toward the end of 1974, the paper shortage lessened, and Champion once again submitted critical performance reviews to Unijax. In March, 1975, Bensing sent a series of performance review letters to the distributors of Champion fine paper in his sales area. The letters to the Unijax branches in Florida and Georgia criticized their sales performance on all grades of paper, including the Kromekote grade.
In 1975, Champion began doing business with another Florida distributor in an effort to increase paper sales in the area. During this year, Champion also refused Unijax's request to supply its products to the Unijax branch in Indianapolis. Champion informed Unijax when this decision was made that it would not service the Indianapolis branch because it already had established an adequate distribution system in Indianapolis.
In September, 1975, certain other Unijax branches, including the five branches in Florida, received another set of review letters criticizing Unijax's poor performance in selling Champion products. The letters specifically criticized Unijax's failure to sell adequate amounts of the Kromekote grade. The letters do not suggest that Unijax needed to purchase other Champion paper products in order to obtain the Kromekote grade.
On October 30, 1975, Bensing, in another attempt to encourage Unijax to purchase more Champion products, again met with Moore. Bensing informed him that Champion might cease supplying the Unijax branches in Miami and Tampa because of their poor performance. Bensing did not tell Unijax which grades to buy or attempt in any way to condition sales of the Kromekote grade. Moreover, Moore did not indicate that he wanted to purchase only the Kromekote grade. As Moore testified:
Shortly thereafter, Moore issued a directive to the Unijax branches in Florida to increase their inventories of Champion paper. He did not ask the outlets, however, to buy more of any particular Champion grades. In the directive, Moore expressed concern about the possible loss of the Champion line if increased purchases of the company's products were not made.
Throughout 1975, the performance of the Unijax branches in Florida remained poor. In January, 1976, Moore received a letter, in response to one from Moore, which catalogued Champion's criticisms of Unijax's performance during the previous four years. There is no mention in this letter of conditioning the sale of Kromekote on the sale of other paper grades.
On February 17, 1976, Unijax's senior management officials, including Moore and Julian Humphries, the company's Executive Vice-President, met with officials from...
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