Wilcox v. First Interstate Bank of Oregon, N.A.

• Decision Date: 03 June 1987
• Docket Number: 85-3644,Nos. 85-3640,85-3643,s. 85-3640
• Citation: 815 F.2d 522
• Parties: , 1987-1 Trade Cases 67,530, RICO Bus.Disp.Guide 6603 Glen L. WILCOX, Lorraine Wilcox, Wilcox Development Company, Mid-Willamette Village Ore., Ltd., individually and on behalf of all others similarly situated; Michael F. Montgomery and Rosemary Montgomery; Kunkle and Stone, Inc., Plaintiffs-Appellants, v. FIRST INTERSTATE BANK OF OREGON, N.A., a national banking association and First Interstate Bancorp., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 522

815 F.2d 522

55 USLW 2594, 1987-1 Trade Cases 67,530,

RICO Bus.Disp.Guide 6603

Glen L. WILCOX, Lorraine Wilcox, Wilcox Development Company,

Mid-Willamette Village Ore., Ltd., individually and on

behalf of all others similarly situated; Michael F.

Montgomery and Rosemary Montgomery; Kunkle and Stone, Inc., Plaintiffs-Appellants, v. FIRST INTERSTATE BANK OF OREGON, N.A., a national banking

association and First Interstate Bancorp.,

Defendants-Appellees.

Nos. 85-3640, 85-3643, 85-3644.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Jan. 8, 1986.

Decided April 17, 1987.

As Amended June 3, 1987.

Henry A. Carey, Leslie M. Roberts, Phil Goldsmith, and Roger G. Tilbury, Portland, Or., for plaintiffs-appellants.

James H. Clarke, Portland, Or., for defendants-appellees.

Appeal from the United States District Court for the District of Oregon.

Before SKOPIL, NELSON and BOOCHEVER, Circuit Judges.

SKOPIL, Circuit Judge:

These are actions brought by commercial borrowers against their bank, alleging violations of section 1 of the Sherman Act, 15 U.S.C. Sec. 1 (1982), and the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. Secs. 1961-68 (1982). The district court granted the bank's motions for summary judgment on the RICO claims and denied summary judgment on the antitrust claim. A jury returned verdicts in favor of the borrowers in their antitrust action. That verdict was subsequently overturned by the district court when it entered judgment notwithstanding the verdicts (JNOV). We affirm the entry of JNOV and reverse the grant of summary judgment on the RICO claims.

FACTS AND PROCEEDINGS BELOW

Plaintiffs-appellants in these three consolidated actions were commercial borrowers of First Interstate Bank of Oregon Following default or full payment of the loans, the borrowers filed actions alleging that defendants-appellees ² violated section 1 of the Sherman Act by conspiring to fix FIOR's prime rate at a uniform, non-competitive level. The borrowers claim that FIOR conspired with one or more of four First Interstate Bancorp ("Bancorp") subsidiary banks, the Bank of America, and/or the United States National Bank of Oregon. The borrowers also alleged that FIOR violated RICO by using the mail to charge and collect excessive interest based on deceptive overstatements of FIOR's true prime rate.

                ("FIOR"). 1   The borrowers negotiated business loans from FIOR at interest rates based on FIOR's prime rate for ninety-day commercial loans plus an "add on" depending on the risk of each loan.  Thus, the interest rates on the loans were variable and fluctuated with changes in FIOR's prime rate
                

The cases were consolidated for trial. The district court denied class certification, denied the borrowers' motions to amend their RICO "enterprise" allegations, and thereafter granted the bank's summary judgment motion on the RICO claims. A jury returned verdicts for the borrowers on the antitrust claims. The district court awarded attorneys fees pursuant to the jury verdict, but subsequently granted defendants' motions for judgment notwithstanding the verdict and, alternatively, for a new trial.

This timely appeal followed. The borrowers challenge the district court's (1) refusal to certify a plaintiff class, Wilcox Development Co. v. First Interstate Bank, 97 F.R.D. 440 (D.Or.1983); (2) grant of summary judgment on the RICO claim, Wilcox Development Co. v. First Interstate Bank, 590 F.Supp. 445 (D.Or.1984); (3) award of attorneys fees on the Sherman Act claims as insufficient, Wilcox Development Co. v. First Interstate Bank, (D.Or. Oct. 5, 1984) (mem.); and (4) grant of the bank's motion for JNOV or, alternatively, for a new trial on the Sherman Act verdicts, Wilcox Development Co. v. First Interstate Bank, 605 F.Supp. 592 (D.Or.1985). The borrowers also seek attorneys fees on appeal pursuant to 15 U.S.C. Sec. 15 (1982) and 18 U.S.C. Sec. 1964(c).

We decide only the antitrust and RICO issues. Our disposition of those issues makes it unnecessary to reach the class certification, grant of a new trial on the antitrust claims, or the sufficiency of the attorneys fee award below. ³

DISCUSSION

A. Sherman Act.

In reviewing a district court's grant of JNOV, we apply the same standard applied by the district court. See Peterson v. Kennedy, 771 F.2d 1244, 1252 (9th Cir.1985) An action under section 1 of the Sherman Act requires proof of a contract, combination, or conspiracy in restraint of trade. 15 U.S.C. Sec. 1. The essence of a section 1 claim is concerted action. Cooper v. Forsyth County Hospital Authority, Inc., 789 F.2d 278, 280 (4th Cir.1986). "The determinative question presented ... is whether appellants have proffered sufficient evidence of a conspiracy...." Id. The borrowers must present "direct or circumstantial evidence that reasonably tends to prove that the [defendants] 'had a conscious commitment to a common scheme designed to achieve an unlawful objective.' " Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 764, 104 S.Ct. 1464, 1471, 79 L.Ed.2d 775 (1984) (quoting Edward J. Sweeney & Sons, Inc. v. Texaco, Inc., 637 F.2d 105, 111 (3d Cir.1980), cert. denied, 451 U.S. 911, 101 S.Ct. 1981, 68 L.Ed.2d 300 (1981)).

                cert. denied, --- U.S. ----, 106 S.Ct. 1642, 90 L.Ed.2d 187 (1986).  JNOV is proper when the evidence permits only one reasonable conclusion as to the verdict.  Id.  The district court's decision must be affirmed if "without accounting for the credibility of the witnesses, we find that the evidence and its inferences, considered as a whole and viewed in the light most favorable to the nonmoving party, can support only one reasonable conclusion--that the moving party is entitled to judgment notwithstanding the adverse verdict."   William Inglis & Sons Baking Co. v. ITT Continental Baking Co., 668 F.2d 1014, 1026 (9th Cir.1981), cert. denied, 459 U.S. 825, 103 S.Ct. 58, 74 L.Ed.2d 61 (1982).  Neither the district court nor this court is free to weigh the evidence or reach a result it finds more reasonable if the jury's verdict is supported by substantial evidence.  Id.;  see also Transgo, Inc. v. Ajac Transmission Parts Corp., 768 F.2d 1001, 1013-14 (9th Cir.1985) ("standard for reviewing a jury verdict is whether it is supported by substantial evidence"), cert. denied, --- U.S. ----, 106 S.Ct. 802, 88 L.Ed.2d 778 (1986)
                

The borrowers allege that FIOR conspired with other banks to set a noncompetitive prime rate. Horizontal price setting is illegal per se. Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 768, 104 S.Ct. 2731, 2740, 81 L.Ed.2d 628 (1984). The borrowers are not required to prove that defendants entered into an express agreement to fix prices. An agreement may be inferred from circumstantial evidence of "a common design and understanding, or a meeting of minds in an unlawful arrangement...." American Tobacco Co. v. United States, 328 U.S. 781, 810, 66 S.Ct. 1125, 1139, 90 L.Ed. 1575 (1946). Nevertheless, when relying solely on circumstantial evidence, a plaintiff must present evidence from which an inference of conspiracy is more probable than an inference of independent action. First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 280, 88 S.Ct. 1575, 1588, 20 L.Ed.2d 569 (1968). The plaintiff's burden is to produce evidence 'that is capable of sustaining a rational inference of conspiracy and that tends to exclude the possibility that the defendant acted independently of the alleged co-conspirators, and thus lawfully.' T.W. Electric Service v. Pacific Electric Contractors, 809 F.2d 626, 632 (9th Cir. 1987). Thus, antitrust law limits the range of permissible inferences from ambiguous evidence. Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 1357, 89 L.Ed.2d 538 (1986). "[C]onduct as consistent with permissible competition as with illegal conspiracy does not, standing alone, support an inference of antitrust conspiracy." Id. (citing Monsanto, 465 U.S. at 764, 104 S.Ct. at 1471).

The borrowers argue that the record contains substantial evidence to support the jury's conclusion that defendants violated section 1 of the Sherman Act. They rely on circumstantial evidence. In determining whether an agreement can be inferred from circumstantial evidence, a series of "plus factors" have been considered. C-O-Two Fire Equipment Co. v. United States, 197 F.2d 489, 493 (9th Cir.), cert. denied, 344 U.S. 892, 73 S.Ct. 211, 97 L.Ed. 690 (1952). Such factors may include price parallelism, product uniformity, exchange of price information, and opportunity The borrowers cite to evidence of various factors to support an inference of price fixing. First, they rely on the almost absolute parallelism of FIOR's prime rate caused by FIOR's practice of changing its prime rate whenever any four of seven specific banks changed theirs. Second, the borrowers note an exchange of price information through publication by the wire services of their prime rates. Third, they argue that meetings of top officials of Bancorp and its five largest subsidiary banks, including FIOR, facilitated the exchange of information which was used to set non-competitive prime rates ("in-house meetings"). Finally, they contend that other bankers' meetings attended by FIOR and the alleged conspirator banks were convened for the sole purpose of setting non-competitive interest rates ("outside meetings").

                to meet to form anti-competitive policies.  Id. at 493, 497.  We examine the borrowers' evidence of such factors and the bank's explanations of their practices to determine if an "inference of conspiracy is reasonable in light of the competing inferences of independent action...."  Matsushita, 106 S.Ct. at 1357.  In our review we take special caution to give the borrowers "the full benefit of their proof without tightly compartmentalizing the various factual components and wiping the slate clean after scrutiny of each."

...