White Industries, Inc. v. Cessna Aircraft Co., 20245-B.

• Citation: 657 F. Supp. 687
• Decision Date: 10 March 1987
• Docket Number: No. 20245-B.,20245-B.
• Parties: WHITE INDUSTRIES, INC., et al., Plaintiffs, v. The CESSNA AIRCRAFT COMPANY, et al., Defendants.
• Court: U.S. District Court — Western District of Missouri

657 F. Supp. 687

WHITE INDUSTRIES, INC., et al., Plaintiffs, v. The CESSNA AIRCRAFT COMPANY, et al., Defendants.

No. 20245-B.

United States District Court, W.D. Missouri, W.D.

October 2, 1986.

As Amended October 14, 1986.

As Amended March 10, 1987.

COPYRIGHT MATERIAL OMITTED

Edward A. McConwell, Overland Park, Kan., John A. Cochrane, Stewart C. Loper, St. Paul, Minn., for plaintiffs.

Thomas E. Deacy, Jr., Dale Beckerman, Kansas City, Mo., E. Houston Harsha, Kirkland & Ellis, Chicago, Ill., for defendants.

ORDER ON DEFENDANTS' MOTIONS FOR INVOLUNTARY DISMISSAL AND TO DECERTIFY CLASS (AS AMENDED BY THE COURT'S ORDERS OF OCTOBER 14, 1986 AND MARCH 10, 1987)

ROSS T. ROBERTS, District Judge.

White Industries, Inc. ("White Industries") and Carthage Airways, Inc. ("Carthage Airways")¹ seek, for themselves and for the members of a nationwide class composed of all "zone dealers" of Cessna aircraft who operated as such during the years between April 14, 1968 and June 5, 1974,² treble damages for alleged violations of § 2(a) of the Robinson-Patman Act, 15 U.S.C. § 13(a), and § 1 of the Sherman Act, 15 U.S.C. § 1.³ Still present as defendants are The Cessna Aircraft Company ("Cessna"), and Cessna Finance Corporation ("CFC").

Following assignment to this division, the case proceeded to trial before the court sitting without a jury. During the course of trial, it was determined: (a) that presentation of the individual claims asserted by White Industries and Carthage Airways would be bifurcated between liability and damages; (b) that upon completion of the liability phase of those individual claims the court would recess the case, issue its rulings on evidentiary questions which had been reserved, and thereafter rule defendants' anticipated motion for involuntary dismissal of those claims; and (c), that in tandem with its liability rulings on the individual claims the court would rule defendants' motion — made during trial — to decertify the class. The court's evidentiary rulings having been made, see White Industries v. Cessna Aircraft Co., 611 F.Supp. 1049 (W.D.Mo.1985), I now turn to the substantive matters mentioned.

I. DEFINITIONS

Given the scope and complexity of this litigation, I commence with a definition of certain terms which recur throughout. The exercise, however, is not purely advisory; the definitions which follow also incorporate findings of fact and conclusions of law.

(a) General Aviation: As described by Cessna itself, "general aviation" includes

all flying except for commercial airlines and military, encompassing everything from the single-seat aerial application aircraft to a planeload of commuters traveling to major airports for airline connections. It includes air taxi trips, busy executives visiting outlying plants, an injured child being airlifted to medical facilities, pipeline patrol, aerial examination of forests for fires, the shipment of high priority cargo, rushing spare parts to equipment requiring immediate service, aerobatics, reseeding strip-mined areas, restocking lakes with fish and floatplane hunting and fishing trips into the North Woods. It includes almost every conceivable business and recreational use.

Plt. Ex. # 2 (Cessna brochure, circa 1969).

(b) Fixed Base Operator ("FBO"): A generic term signifying a business (individually owned, corporate, or otherwise) which occupied physical space at an airport and which carried on some or all of a variety of general aviation related activities, including flight training, aircraft rental, aircraft chartering, aircraft maintenance, servicing and repair, aircraft hangaring or tie-down, and the sale of aircraft, avionics, accessories and parts. As would be expected, some FBOs were larger and more aggressive in their operations than others, and some did not engage in all the activities mentioned above. It appears, however, that many were at least occasionally involved in the resale of both new and used aircraft to most kinds of "end consumers" (see "end consumer," infra), and a number were active in that line of business. Both "contracted dealers" of Cessna aircraft (see "Contracted Dealer," infra) and "zone dealers" of Cessna aircraft (see "Zone Dealer," infra) were ordinarily FBOs, although many other FBOs were never formally associated with the Cessna distribution system.⁴

(c) Cessna Distributor:⁵ As used in this opinion, a business operating under a franchise contract with Cessna, performing — at least in theory — a more or less traditional wholesale function in the distribution of Cessna aircraft, accessories and parts: viz, the purchase and maintenance of an inventory of Cessna aircraft, accessories and parts; the development of "contracted dealers" (see "Contracted Dealer," infra) within the distributor's assigned geographic "area of responsibility;" and the sale of Cessna aircraft, parts and accessories to those contracted dealers.

(d) Contracted Dealer: As used in this opinion, a business — ordinarily if not without exception an FBO — operating under a contract (ordinarily of one year duration) with a Cessna distributor. A "contracted dealer" was in theory to perform a more or less traditional retail function in the distribution of Cessna aircraft, accessories and parts: viz, purchase Cessna aircraft, accessories and parts and resell the same to the buying public. In practice, a "contracted dealer" usually acquired its Cessna aircraft from the Cessna distributor with whom it had a contract, although nothing in any of the contracts shown in evidence required the same or restricted either the distributor or its dealers in buying from or selling to any person either might choose.

(e) Zone Dealer: A business — again, ordinarily if not without exception an FBO — operating under a direct contract (ordinarily of one year duration) with Cessna, in theory performing a retail function in the distribution of Cessna aircraft, accessories and parts; a function parallel to that performed by a contracted dealer. As with contracted dealers, nothing in any of the "zone dealer" contracts shown in evidence restricted either Cessna or its zone dealers in buying from or selling to any person either might choose.

(f) Independent Dealer: As used in this opinion, a business — usually an FBO — which was not under contract with Cessna or a Cessna distributor, but which engaged (even if occasionally) in purchasing new or used Cessna aircraft for the immediate principal purpose of resale.

(g) Used Aircraft: As used in this opinion, any aircraft which at the time of the sale in question carried 100 hours or more of flight time. My present selection of 100 hours of use is based upon the testimony of two of plaintiffs' witnesses (Love and Desciose), but of course is made without prejudice to defendants' ability to show that some lesser number of hours would be appropriate.

(h) New Aircraft: As used in this opinion, any aircraft which at the time of the sale in question carried less than 100 hours of flight time, unless materially damaged.

(i) Current and Non-Current Aircraft: Cessna marketed each of its models of aircraft on a "model year" basis. Although there were differences from model to model, a "model year" generally commenced in the fall or early winter of each year, and terminated upon the introduction of the new model the following year. The term "current aircraft" refers to an aircraft which, at the time in question, was still within its "model year." By the same token, a non-current aircraft would be any aircraft, even if "new," which at the time in question had been succeeded by the next year's model.

(j) End Consumer: One who acquired an aircraft for the immediate principal purpose of using it (whether for business or for pleasure), as opposed to reselling it. Thus a commuter airline which purchased a plane for use in that business was an end consumer; so too was an individual who purchased a plane to fly for pleasure, or a company which acquired a plane for executive use. In theory at least, the definition would also include an FBO — even a contracted dealer, zone dealer or independent dealer — which purchased an aircraft, as some did, for the immediate principal purpose of using it in a flight school, air charter service or similar activity.⁶

II. GENERAL BACKGROUND

Cessna was incorporated in 1927. It has been engaged, since that time and insofar as pertinent here, in the manufacture and distribution of aircraft for use in general aviation.

During the period in question (April 14, 1968 to June 5, 1974), Cessna manufactured a variety of models of single and multi-engine aircraft for such use. Those planes were assembled by Cessna at plants in or near Wichita, Kansas — also the location of Cessna's corporate headquarters — and reached the "consuming" public through one of two general distribution systems then utilized by Cessna: (a) the Cessna distributor system; and (b), the zone dealer system. It is the functioning and interrelationship of these two systems which form the core of plaintiffs' claims.

Historically, in the period before and immediately after World War II the Cessna distribution system — like that of other general aviation aircraft manufacturers at the time — was essentially single-tiered, made up of "distributors" who purchased aircraft and parts from Cessna and resold to "operators." The latter were at that time the predominant end consumers of general aviation aircraft, who used the planes they purchased for flight school training, rentals, charter service and special use work. The "distributors," although called such, generally performed little in the way of traditional "wholesale" functions, and in fact operated in a capacity which would ordinarily be thought of as that of a "dealer" or "retailer."

In the 1950's, Cessna undertook to broaden the market for its aircraft to include more of the general public — those who would purchase for what might be called "personal use" (whether business or pleasure,...