Vogel v. American Soc. of Appraisers

• Decision Date: 20 September 1984
• Docket Number: No. 83-3218,83-3218
• Citation: 744 F.2d 598
• Parties: 1984-2 Trade Cases 66,209 Harold VOGEL, Plaintiff-Appellant, v. AMERICAN SOCIETY OF APPRAISERS, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 598

744 F.2d 598

1984-2 Trade Cases 66,209

Harold VOGEL, Plaintiff-Appellant, v. AMERICAN SOCIETY OF APPRAISERS, et al., Defendants-Appellees.

No. 83-3218.

United States Court of Appeals, Seventh Circuit.

Argued May 31, 1984.

Decided Sept. 20, 1984.

Daniel Galatzer, Lamet, Galatzer & Assoc., Chicago, Ill., for plaintiff-appellant.

Robert Marc Chemers, Pretzel & Stouffer, Chicago, Ill., for defendants-appellees.

Before POSNER and FLAUM, Circuit Judges, and GORDON, Senior District Judge. ^*

POSNER, Circuit Judge.

This is an antitrust case of Doric simplicity--yet some difficulty. Harold Vogel, an experienced gem appraiser, charges a flat one percent fee, subject to a minimum fee of $10. He was a member of the principal (and to simplify this opinion we shall pretend the only) defendant, the American Society of Appraisers, until it expelled him pursuant to a bylaw of the Society which states "that it is unprofessional and unethical for the appraiser to do work for a fixed percentage of the amount of value ... which he determines at the conclusion of his work." His expulsion, published in the Society's newsletter on March 1, 1983, caused Vogel to lose referrals from members of the Society and from other appraisers. (Appraisers specialize--Vogel, for example, in gems--and therefore an appraiser will sometimes refer a customer to another appraiser.) Vogel brought this suit under section 1 of the Sherman Act, 15 U.S.C. Sec. 1, alleging that the bylaw constituted a price-fixing agreement among the members of the Society and that his expulsion from the Society constituted a boycott of him by the members. He moved for a preliminary injunction that would have required his reinstatement pending the decision of the case on the merits. This was denied, and he appeals the denial under 28 U.S.C. Sec. 1292(a)(1).

The Society argues that Vogel has not shown irreparable harm and therefore is not entitled to an injunction, regardless of the merits of his suit. Although irreparable harm is (with minor and irrelevant exceptions) one of the prerequisites to obtaining a preliminary injunction, all it means is that the plaintiff is unlikely to be made whole by an award of damages or other relief at the end of the trial. See Semmes Motors, Inc. v. Ford Motor Co., 429 F.2d 1197, 1205 (2d Cir.1970) (Friendly, J.). This Vogel has shown. The consequences of his public expulsion from the appraisers' society will be hard to monetize for purposes of admeasuring damages but cannot be assumed to be trivial. True, there are methods of estimating a business loss due to an exclusionary act--for example by comparing the plaintiff's profits before and after the act occurred--but the methods often are unreliable because of the difficulty of correcting for other things happening at the same time that may have affected those profits. See Note, Private Treble Damage Antitrust Suits: Measure of Damages for Destruction of All or Part of a Business, 80 Harv.L.Rev. 1566, 1577-86 (1967). And true, Vogel will be reinstated if he wins his case on the merits. But the losses he will suffer in the meantime are irreparable harm--less harm than in some other preliminary-injunction cases, no doubt, but it could still be much greater than the harm to the defendant if the injunction were granted; and in that event the net harm from denial would clearly exceed the net harm from grant. In fact, the Society does not contend that reinstating Vogel temporarily would harm it in the slightest.

So Vogel has some equity in his application for a preliminary injunction--but maybe not much. He argues that his right to permanent relief probably will appear as soon as he moves for summary judgment. This implies that when the district judge ruled on the application for a preliminary injunction the period of irreparable harm was expected to be brief and the amount of that harm therefore quite limited. There was no long-dragged-out trial in the offing during which the plaintiff's losses would be mounting up. Where the imbalance of harms is very great, the plaintiff is entitled to a preliminary injunction upon a showing just of a modest prospect of success on the merits. But if the balance is closer, whether because each party, or neither party, can show substantial harm if the ruling on the application for preliminary injunction goes against him, the plaintiff must show a greater likelihood of success in order to get the injunction. See Omega Satellite Products Co. v. City of Indianapolis, 694 F.2d 119, 123 (7th Cir.1982); American Hospital Ass'n v. Harris, 625 F.2d 1328, 1331 (7th Cir.1980); Charlie's Girls, Inc. v. Revlon, Inc., 483 F.2d 953, 954 (2d Cir.1973) (per curiam). So it becomes important to inquire whether Vogel has a good chance, not just some chance, of winning this suit.

In considering his chances, we need not assess the boycott allegations separately. A boycott is illegal per se under the antitrust laws only if used to enforce a rule or policy or practice that is itself illegal per se. See Wilk v. American Medical Ass'n, 719 F.2d 207, 221 (7th Cir.1983); Bruce Drug, Inc. v. Hollister, Inc., 688 F.2d 853, 859-60 (1st Cir.1982); United States v. Realty Multi-List, Inc., 629 F.2d 1351, 1367-69 (5th Cir.1980). In the Supreme Court's first case holding that a boycott was illegal per se, Eastern States Retail Lumber Dealers' Ass'n v. United States, 234 U.S. 600, 34 S.Ct. 951, 58 L.Ed. 1490 (1914), an association of lumber retailers had blacklisted wholesalers who had the temerity to compete with the members of the association by selling directly to consumers (that is, to the retailers' customers). The boycott was a method of enforcing a patently anticompetitive horizontal conspiracy and therefore was itself illegal per se. But if a rule of a private association is not illegal per se, neither is the enforcement of the rule, see Phil Tolkan Datsun, Inc. v. Greater Milwaukee Datsun Dealers' Advertising Ass'n, Inc., 672 F.2d 1280, 1285-89 (7th Cir.1982), as by expelling a noncomplying member--the normal method by which a private association enforces its rules.

If the bylaw forbidding members of the American Society of Appraisers to charge for appraisal on a fixed-percentage basis is a form of price fixing, it is illegal per se and Vogel, as a victim of illegal price fixing and an illegal boycott, would be entitled to reinstatement. It is not hard to find judicial statements to the effect that any interference with price brought about by an agreement between competitors is illegal price fixing. The best-known example is United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 221, 60 S.Ct. 811, 843, 84 L.Ed. 1129 (1940): "Any combination which tampers with price structures is engaged in an unlawful activity. Even though the members of the price-fixing group were in no position to control the market, to the extent that they raised, lowered, or stabilized prices they would be directly interfering with the free play of market forces." And for a notable application of this formulation of the per se rule see Plymouth Dealers' Ass'n v. United States, 279 F.2d 128 (9th Cir.1960). Although not all of the 4,500 members of the American Society of Appraisers compete with each other, some of the 63 gem appraisers who belong to the Society probably do, though all we really know is that four of the gem appraisers have their places of business in Illinois, as does Vogel. We shall assume for now, but return to the point later, that the bylaw is an agreement among competitors in a sense relevant to this suit; and in a literal sense, at least, the bylaw did "tamper" with a "price structure."

But judicial language about the per se illegality of competitors' tampering with price must, like all legal language, be read with sensitivity to its context. In general, the only types of horizontal price agreements that the antitrust laws have been held to forbid are those that have the purpose or likely effect of raising price above the competitive level. See United States v. United States Gypsum Co., 438 U.S. 422, 441 n. 16, 446 n. 22, 98 S.Ct. 2864, 2875 n. 16, 2878 n. 22, 57 L.Ed.2d 854 (1978). The classic example is the sellers' cartel, or price-fixing conspiracy (a covert cartel), which agrees to raise price above the competitive level or, what has the same competitive effect, to divide the market into exclusive territories, thus preventing the members from competing with each other. Sometimes competitors agree to discontinue particular forms of price competition, such as competition in credit terms; this too is forbidden, as its purpose and likely effect is to force the net price to the buyer above the competitive level. See, e.g., Catalano, Inc. v. Target Sales, Inc., 446 U.S. 643, 648-49, 100 S.Ct. 1925, 1928-29, 64 L.Ed.2d 580 (1980) (per curiam); National Electrical Contractors Ass'n, Inc. v. National Constructors Ass'n, 678 F.2d 492, 501 (4th Cir.1982); United States v. American Radiator & Standard Sanitary Corp., 433 F.2d 174, 185-86 (3d Cir.1970). Sometimes competitors agree to use methods of pricing that do not eliminate price competition but make that competition less profitable and hence less likely--for example, by agreeing that each seller will adhere to his previously announced prices. Such an agreement does not put a floor under prices but it does prevent a seller from offering secret discounts. A secret discount enables a seller to expand his output, and his profits, by selling at a shade below the cartel price without provoking an immediate reaction from his competitors. The effort of cartel members to "cheat" their fellows in this fashion will, by increasing the output of the product, eventually make the cartel (or conspiracy, or oligopoly) price untenable. See Stigler, The Organization of Industry 42 (1968). So an agreement not to "cheat" in this way is forbidden too. See Sugar Institute, Inc. v. United States, 297 U.S. 553, 582-83, 601-02, 56 S.Ct. 629, 635, 643...