Victorian House, Inc. v. Fisher Camuto Corp., s. 84-1955

• Decision Date: 22 August 1985
• Docket Number: 84-2066,Nos. 84-1955,s. 84-1955
• Citation: 769 F.2d 466
• Parties: 1985-2 Trade Cases 66,706 The VICTORIAN HOUSE, INC., Appellee, v. FISHER CAMUTO CORPORATION, Appellant. The VICTORIAN HOUSE, INC., Appellant, v. FISHER CAMUTO CORPORATION, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 466

769 F.2d 466

1985-2 Trade Cases 66,706

The VICTORIAN HOUSE, INC., Appellee, v. FISHER CAMUTO CORPORATION, Appellant.

The VICTORIAN HOUSE, INC., Appellant, v. FISHER CAMUTO CORPORATION, Appellee.

Nos. 84-1955, 84-2066.

United States Court of Appeals Eighth Circuit.

Submitted April 8, 1985.

Decided July 18, 1985.

Rehearing Denied Aug. 22, 1985.

Edwin M. Zimmerman, Washington, D.C., for appellant.

Alan C. Kohn, St. Louis, Mo., for appellee.

Before ARNOLD, Circuit Judge, BRIGHT, Senior Circuit Judge, and FAGG, Circuit Judge.

BRIGHT, Senior Circuit Judge.

Fisher Camuto Corporation (Fisher) appeals from a judgment entered against it in a suit brought by The Victorian House, Inc. (Victorian House) alleging a conspiracy in violation of Section 1 of the Sherman Act. For reversal, Fisher contends that Victorian House failed to present sufficient evidence of a conspiracy and that the district court ¹ committed reversible error in the conduct of the trial. Victorian House filed a "protective" cross-appeal alleging error in the district court's failure to grant injunctive relief and its granting of Fisher's motion for a directed verdict on count II of the complaint (alleging breach of contract). We affirm the judgment of the district court and dismiss the cross-appeal.

I. BACKGROUND.

Fisher imports women's shoes and distributes them to retailers under the brand name "9 West." Fisher distributes the shoes nationwide through twenty-seven salespersons, called "distributors," who are described as independent contractors; they are paid on a commission basis. Prior to the spring of 1983, Fisher's distributors had the authority to sign up new retail sellers. However, in January 1983, Fisher developed a program to license the 9 West brand name to manufacturers of products other than shoes. As part of this program, Fisher decided that it would be necessary to stop distributing 9 West shoes to retailers who conveyed a "discount" or "bargain basement" image.

Fisher's president, Wayne Weaver, announced the new policy to Fisher's distributors at a sales meeting in April 1983. Weaver instructed the distributors to identify any retailers in their territories who might be classified as discounters. He provided certain criteria to be applied in making this determination, including whether the store maintained a "quality image," whether it operated on a self-service basis, and whether it operated in an off-price or bargain value mode.

Victorian House operates three retail clothing stores in St. Louis County, Missouri. It has a policy of selling well-known fashion lines of clothing at prices below those of its competitors. Prices are set by actual comparison with other stores' prices and by applying a markup rate approximately forty percent below that used by other retailers. Victorian House advertises its lower prices and places a "comparison price" on the price tags for its merchandise.

In late 1981, Victorian House decided to begin selling women's dress shoes. It researched the market and decided that it would sell the 9 West brand exclusively. A.W. Baum, the owner of Victorian House, met with Fisher's St. Louis distributor, David Thomas, in March 1982 and placed an order for 9 West shoes. At that meeting, Baum informed Thomas that Victorian House was a "super value" store and Thomas stated that he liked Victorian House's selection and prices.

Thomas is Fisher's distributor for the States of Missouri, Nebraska, and Kansas. In addition to working for Fisher, he also operates three retail shoe stores, two of which sold 9 West shoes in the same market as Victorian House. Fisher knew of Thomas's activities as a retailer when it hired him as a distributor. Thomas attended the April 1983 sales meeting at which Fisher announced its new policy regarding discounters. As directed, he prepared a list of his retail customers that did not meet Fisher's "fashion image" criteria. Thomas listed three retailers in his territory: Wilkerson's, TOPS, and Victorian House. Of these three, Wilkerson's was a national chain that did not sell 9 West in the St. Louis market and TOPS did not buy 9 West from Fisher but obtained them from other sources. ²

Thomas testified that he considered Victorian House a "close call" because it did not satisfy all of the criteria established by Fisher. In particular, he admitted that Victorian House did maintain a quality image and that it was not a self-service store. However, he felt that its pricing policy, in which everything in the store was offered "off-price," satisfied the third criteria, so he placed it on his list. Thomas testified that, because of his doubts about terminating Victorian House, he called Wayne Weaver to confirm the decision. Weaver came to St. Louis and inspected Victorian House for himself. After the inspection, Weaver told Thomas he had made the "right decision" about termination. Approximately one month later, Fisher sent a form letter to Victorian House and over 200 other retailers, informing them that, under Fisher's new marketing policy, they would no longer be able to purchase 9 West shoes.

II. DISCUSSION.

A. Sufficiency of the Evidence.

Victorian House sought to prove that Fisher conspired with one or more of its retailers in the St. Louis area to terminate Victorian House for the purpose of restraining price competition. Fisher argues on appeal that the evidence was insufficient to establish an illegal conspiracy in two respects: first, Victorian House failed to prove the existence of an agreement between Fisher and any other entity; second, there was no evidence that the alleged co-conspirators shared a common purpose in violation of the law.

Fisher argues that it acted independently in terminating Victorian House. Independent action is not proscribed by Section 1 of the Sherman Act. Monsanto Corp. v. Spray-Rite Service Corp., 465 U.S. 752, 104 S.Ct. 1464, 1469, 79 L.Ed.2d 775 (1984). Victorian House contends that Fisher conspired with at least one retailer, namely, David Thomas. A conspiracy between a wholesaler and one or more of its retailers to terminate a competing retailer on the basis of price constitutes a per se violation of the Sherman Act. Cernuto Corp. v. United Cabinet Corp., 595 F.2d 164, 170 (3d Cir.1979). See Roesch, Inc. v. Star Cooler Corp., 712 F.2d 1235, 1237 (8th Cir.1983), cert. denied, --- U.S. ----, 104 S.Ct. 1707, 80 L.Ed.2d 180 (1984) and Battle v. Watson, 712 F.2d 1238, 1240 (8th Cir.1983) (McMillian, J., dissenting), cert. denied, --- U.S. ----, 104 S.Ct. 1718, 80 L.Ed.2d 190 (1984). ³

Fisher admits that David Thomas participated in the decision to terminate Victorian House. Fisher argued at trial, however, that Thomas participated as Fisher's agent, not as a retailer in competition with Victorian House. We have held that a corporation cannot engage in an antitrust conspiracy with its agent unless, at the time of the conspiracy, the agent is acting for his own benefit. Green v. Associated Milk Producers, Inc., 692 F.2d 1153, 1156-57 (8th Cir.1982); Morton Buildings of Nebraska, Inc. v. Morton Buildings, Inc., 531 F.2d 910, 917 (8th Cir.1976). Thus, we must determine whether Victorian House presented sufficient evidence that Thomas was acting in furtherance of his personal interests when he recommended termination.

The record indicates that in November 1982, prior to the announcement of Fisher's new marketing policy, Thomas informed Tammy Breeden, a buyer and manager for Victorian House, that he was "getting a lot of heat" about the way Victorian House priced some of its shoes. Thomas threatened to terminate Victorian House or delay its shipments if it did not raise all of its prices to at least twenty percent less than the suggested retail price. This evidence suggests that Thomas had a motive for the termination separate from Fisher's marketing policy, and supports the conclusion that he acted not as Fisher's agent but in furtherance of his personal interests.

In addition, the question of whether Victorian House actually met the termination criteria set by Fisher was sharply contested at the trial. Victorian House presented evidence of its "quality" and "fashion" image, that it did not operate on a self-service basis, and that it would not be regarded by other retailers as a "discounter". The jury could have concluded from this evidence that Thomas just used Fisher's new policy as a pretext for getting rid of Victorian House in order to eliminate price competition.

Finally, Thomas was a retailer in the St. Louis market at the time he recommended the termination. His stores were losing money at the time and he acknowledged his expectation that other 9 West retailers would benefit from the elimination of Victorian House as a competitor. We are satisfied that the above evidence, considered in the light most favorable to the jury's verdict, is sufficient to support the conclusion that Thomas was acting for his own benefit at the time he recommended Victorian House for termination.

Fisher also argues that no conspiracy occurred in this case because it did not share a common purpose with Thomas. Assuming for the sake of argument that Thomas did act in order to eliminate Victorian House as a competitor, Fisher contends that it did not share Thomas' purpose, but instead acted solely to protect the...