Winther v. DEC Intern., Inc., Civ. A. No. 85-M-1510.

• Decision Date: 18 September 1985
• Docket Number: Civ. A. No. 85-M-1510.
• Citation: 625 F. Supp. 100
• Parties: Richard H. WINTHER, Plaintiff, v. DEC INTERNATIONAL, INC., a Wisconsin corporation, d/b/a Dairy Equipment Company, Defendant.
• Court: U.S. District Court — District of Colorado

625 F. Supp. 100

Richard H. WINTHER, Plaintiff, v. DEC INTERNATIONAL, INC., a Wisconsin corporation, d/b/a Dairy Equipment Company, Defendant.

Civ. A. No. 85-M-1510.

United States District Court, D. Colorado.

September 18, 1985.

Thomas G. Gillooly, Anthony F. Renzo, Boulder, Colo., for plaintiff.

David J. Richman, Denver, Colo., for defendant.

MEMORANDUM OPINION AND ORDER

MATSCH, District Judge.

This is an action for compensatory and punitive damages brought by the plaintiff Richard Winther against DEC International, Inc. (DEC). DEC, a Wisconsin corporation, manufactures and sells dairy equipment products throughout the United States. Winther, a citizen of Colorado and former salesman for DEC, alleges that he was discharged in 1982 because he refused to enforce an exclusive dealing and full line forcing distribution system in violation of antitrust laws. Winther's claims for relief are based on federal antitrust law, state antitrust law, the tort of wrongful discharge, and breach of contract. Jurisdiction is asserted under 28 U.S.C. § 1337 and 28 U.S.C. § 1332. On July 11, 1985 DEC moved to dismiss for failure to state a claim for relief.

I

The complaint alleges that DEC and its dealers agreed to exclusive dealing contracts in violation of Section 3 of the Clayton Act. See, e.g., Standard Oil Co. of California v. United States, 337 U.S. 293, 69 S.Ct. 1051, 93 L.Ed. 1371 (1949); Tampa Electric Co. v. Nashville Coal Co., 365 U.S. 320, 81 S.Ct. 623, 5 L.Ed.2d 580 (1961). The defendant challenges the plaintiff's standing to seek relief for an injury unrelated to the anticompetitive effects of the defendant's distribution system. Section 4 of the Clayton Act provides that:

Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee.

15 U.S.C. § 15. While language of the statute is broad enough to cover every harm directly or indirectly attributable to the consequences of an antitrust violation, the courts have concluded that Congress intended a more limited application. For Winther to maintain an action based on the federal statute he must allege an antitrust injury, an injury of the type the antitrust laws were intended to prevent and which flows from the unlawful aspect of the defendant's activities. See, Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S.Ct. 690, 697-98, 50 L.Ed.2d 701 (1977). Additionally, his injury must not be too remote from the alleged anticompetitive conduct. See, Illinois Brick Co. v. Illinois, 431 U.S. 720, 726, 97 S.Ct. 2061, 2064-65, 52 L.Ed.2d 707 (1977).

Recent Supreme Court decisions have clarified the standing requirement of § 4. In Blue Shield of Virginia, Inc. v. McCready, 457 U.S. 465, 102 S.Ct. 2540, 73 L.Ed.2d 149 (1982), the plaintiff, a consumer of subsidized psychotherapy services, sued Blue Cross and the Neuropsychiatric Society of Virginia, Inc., for an alleged conspiracy in violation of § 1 of the Sherman Act to refuse payment for the services of psychologists. While noting that Congress did not intend to allow every person tangentially affected by an antitrust violation to maintain an action under § 4, the Court held that the district court erred in granting a motion to dismiss, stating

As a consumer of psychotherapy services entitled to financial benefits under the Blue Shield plan, we think it clear that McCready was "within that area of the economy ... endangered by (that) breakdown of competitive conditions" resulting from Blue Shield's selective refusal to reimburse. In re Multidistrict Vehicle Air Pollution M.D.L. No. 31, 481 F.2d 122, 129 (CA9 1973).

Id. at 480-81, 102 S.Ct. at 2549. Limiting reimbursements to the services of psychiatrists could be expected to increase the price paid by the consumers of psychotherapeutic services.

In contrast, as an employee of DEC, Winther was not within an area of the economy endangered by the breakdown of competitive conditions as a result of the alleged antitrust violations. In fact Winther would probably have benefited from DEC's increased revenue resulting from exclusive dealing and forced sales.

The principal standing case is Associated General Contractors v. California State Council of Carpenters, 459 U.S. 519, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983), where the Court held that a labor union had no standing to challenge an alleged conspiracy of certain contractors and landowners to divert business to non-union firms. The Court observed that the Sherman Act was enacted to assure consumers the benefit of price competition and to protect the economic freedom of participants in the relevant market. Id. at 538. Since the Sherman Act was not designed to protect a union in disputes with employers with whom it bargains, the union had not alleged an injury of the type the antitrust statute was intended to prevent.

Similarly, Winther's injury is unrelated either to the degree of price competition, or to the degree of economic freedom of sellers of dairy equipment. His injuries result from the loss of his job; there is nothing in the language or history of the antitrust laws to suggest that Congress intended to protect employees from wrongful coercion or discharge. Winther has therefore not alleged an injury of the type the antitrust laws are intended to prevent.

The second factor noted in Associated General is the directness or indirectness of the asserted injury. Winther alleges that he was fired by DEC because he refused to implement DEC's unlawful scheme — a direct result of DEC's alleged effort to enforce unlawful exclusive dealing contracts. This is unlike the situation in Associated General, where the chain of causation passed from the defendants to the union contractors to the union. The directness of the injury is, however, not enough to overcome the fact that employment is not the area of economic activity sought to be protected.

Results of prior Tenth Circuit cases are entirely consistent with this analysis. In Reibert v. Atlantic Richfield Co., 471 F.2d 727 (10th Cir.) cert. denied, 411 U.S. 938, 93 S.Ct. 1900, 36 L.Ed.2d 399 (1973), the court held that an employee discharged because his job became redundant after a merger of two firms, had no standing to challenge the merger on antitrust grounds. In Associated General terms, the plaintiff did not suffer an antitrust injury because his job loss was not related to price competition or economic freedom of the participants in the oil market.

In Central National Bank v. Rainbolt, 720 F.2d 1183 (10th Cir.1983) the court held that a director of a corporation had no standing under the antitrust laws to challenge a takeover of the corporation. "His ouster is not the result of any anticompetitive act, it is the consequence of his loss of majority control. While Mr. Holton may suffer the loss of his position, that is not cognizable injury under the antitrust laws. It is not the result of any lessening of competition." Id. at 1186. Again, under the Associated General analysis, the plaintiff did not suffer an antitrust injury because he did not suffer an injury of a type the antitrust laws were designed to remedy; his potential discharge was unrelated to competition or economic freedom in the marketplace.

Winther relies principally on the Ninth Circuit's decisions in Ostrofe v. H.S. Crocker Co., Inc., 670 F.2d 1378 (1982), vacated and remanded, 460 U.S. 1007, 103 S.Ct. 1244, 75 L.Ed.2d 475 (1983) (Ostrofe I) and Ostrofe v. H.S. Crocker Co., Inc., 740 F.2d 739 (1984), cert. dismissed, ___ U.S. ___, 105 S.Ct. 1155, 84 L.Ed.2d 309 (1985) (Rule 53) (Ostrofe II). In that case the plaintiff was forced to resign because he refused to participate in an alleged scheme to fix prices. A divided panel held that he had standing to bring an antitrust action under Section 4. Ostrofe I was based largely on the belief that because discharged employees are in a good position to enforce antitrust laws, they should have standing to sue. That view was rejected by the Seventh Circuit in a well reasoned opinion in Bichan v. Chemetron Corp., 681 F.2d 514 (1982), cert. denied, 460 U.S. 1016, 103 S.Ct. 1261, 75 L.Ed.2d 487 (1983).

Ostrofe II, was decided after the first decision was vacated and remanded by the Supreme Court in light of its decision in Associated General. In Ostrofe II the circuit court conceded that the plaintiff there was not injured by reason of a reduction of price competition or a restriction of his freedom to operate in the market for paper lithograph labels, but concluded that the plaintiff suffered an injury so integral to the scheme to eliminate competition that he suffered an antitrust injury. Ostrofe II, 740 F.2d at 746. Nothing in Associated General supports this interpretation of the scope of antitrust law.

Alternatively, in Ostrofe II the court relied upon a footnote in Associated General which reserved the question of "whether the direct victim of a boycott, who suffers a type of injury unrelated to antitrust policy, may...