Yamaha Store of Bend, Oregon, Inc. v. Yamaha Motor Corp., U.S.A.

• Decision Date: 10 April 1990
• Citation: 310 Or. 333,798 P.2d 656
• Parties: , 1990-2 Trade Cases P 69,231 The YAMAHA STORE OF BEND, OREGON, INC., dba "the Yamaha Store," Respondent on Review, v. YAMAHA MOTOR CORPORATION, U.S.A., a California corporation, Petitioner on Review, Benjamin H. Jacques, Jr., and Phillippe D. Jacques, dba Bend Yamaha Snowmobile, Defendants. YAMAHA MOTOR CORPORATION, U.S.A., a California corporation, Counterclaim Plaintiff, v. Robert A. NOSLER and John A. Nosler, Counterclaim Defendants. TC 32901-TM; CA A44218; SC S36613.
• Court: Oregon Supreme Court

Page 656

798 P.2d 656

310 Or. 333, 1990-2 Trade Cases P 69,231

The YAMAHA STORE OF BEND, OREGON, INC., dba "the Yamaha

Store," Respondent on Review, v. YAMAHA MOTOR CORPORATION, U.S.A., a California corporation, Petitioner on Review, Benjamin H. Jacques, Jr., and Phillippe D. Jacques, dba Bend

Yamaha Snowmobile, Defendants.

YAMAHA MOTOR CORPORATION, U.S.A., a California corporation, Counterclaim Plaintiff, v. Robert A. NOSLER and John A. Nosler, Counterclaim Defendants.

TC 32901-TM; CA A44218; SC S36613.

Supreme Court of Oregon.

Argued and Submitted April 10, 1990. ^*

Decided Sept. 20, 1990.

Peter C. Richter, Portland, argued the cause and submitted the petition for petitioner on review. With him on the petition were Jeffrey D. Austin and Miller, Nash, Weiner, Hager & Carlsen, Portland.

Ronald L. Marceau, Bend, argued the cause and filed the response for respondent on review. With him on the response were David F. Berger and Marceau, Karnopp, Petersen, Noteboom & Hubel, Bend.

Before PETERSON, C.J., and CARSON, JONES ^**, GILLETTE, VAN HOOMISSEN, FADELEY and UNIS, JJ.

VAN HOOMISSEN, Justice.

Plaintiff, The Yamaha Store of Bend, Oregon, Inc., sued defendant Yamaha Motor Corporation, U.S.A., (Yamaha) for price discrimination, ORS 646.040(1), ¹ for breach of contract, and in tort for intentional interference with business and economic relationships. ² The jury awarded plaintiff a verdict on its price discrimination and breach of contract claims. Judgment was entered trebling the price discrimination award and awarding plaintiff attorney fees and costs. ³ The Court of Appeals affirmed. Yamaha Store of Bend, Inc. v. Yamaha Motor Corp., 98 Or.App. 290, 779 P.2d 1061 (1989).

We allowed review to consider two issues of first impression under Oregon's Anti-Price Discrimination Law: What kind of evidence is legally sufficient to present a factual issue of competition, and what is the proper measure of damages under the "such further damages" provision of ORS 646.160? ⁴ We conclude that plaintiff presented sufficient evidence to present a factual issue of competition and that the trial court, therefore, did not err in denying Yamaha's motion for a directed verdict on that issue. However, we also conclude that the trial court erred in allowing the jury to consider an improper measure of damages and that the judgment as to those damages cannot stand.

Given the jury's verdict for plaintiff, disputed questions of fact have been resolved in plaintiff's favor. Katter v. Jack's Datsun Sales, Inc., 279 Or. 161, 163, 566 P.2d 509 (1977); Scott v. Mercer Steel/Edwards Realty, 263 Or. 464, 466-67, 503 P.2d 1242 (1972).

Yamaha, the United States distributor for Yamaha motorcycles, published a list of the prices that it charged its dealers for motorcycles. Plaintiff, a retail Yamaha motorcycle dealer from 1978 to 1983, purchased motorcycles, parts, and accessories from Yamaha for resale in Bend, Oregon, and the surrounding area, including Deschutes, Jefferson, and Crook counties.

In June 1982, the largest Portland-area Yamaha dealer went out of business. That dealer had about 550 new 1980, 1981, and 1982 motorcycles in its inventory, which Yamaha repossessed. In July 1982, Yamaha sold those repossessed motorcycles to Beaverton Honda (Beaverton) at prices substantially below Yamaha's regular dealer list prices. Yamaha did not offer to sell any of the repossessed motorcycles at the lower price to plaintiff or to any of its other dealers. Yamaha also provided Beaverton with advantageous credit terms (free "flooring") and advertising support. ⁵ Beaverton then changed its name to Beaverton Honda-Yamaha and became metropolitan Portland's largest Yamaha dealer.

Beaverton then sold the repossessed motorcycles at retail prices close to other dealers' wholesale costs for the same models. Beaverton advertised its low prices extensively in Portland newspapers and on Portland television stations, all of which were readily available to readers and viewers in the Bend area. Plaintiff's customers were aware of Beaverton's lower prices; plaintiff reduced its own prices and, in some cases, sold motorcycles at or below plaintiff's actual cost. Beaverton sold at least two motorcycles to customers with Bend addresses and several others to customers residing in plaintiff's central Oregon market area.

I.

At trial, Yamaha moved for a directed verdict on plaintiff's price discrimination claim, arguing that as a matter of law plaintiff and Beaverton were not "competitors," a necessary element of an ORS 646.040(1) price discrimination claim. The trial court denied that motion, and the Court of Appeals affirmed that denial. On review, Yamaha contends that the Court of Appeals erred in holding that there was evidence of actual competition between plaintiff and Beaverton.

Yamaha argues that the question of whether Beaverton's competitive market included the Bend area may only be determined by how many actual sales Beaverton made to Bend area residents. Pointing to evidence showing that out of more than 800 sales, Beaverton sold only two motorcycles to Bend residents, Yamaha argues that that evidence establishes as a matter of law plaintiff and Beaverton were not competitors. Yamaha also argues that it was not sufficient for plaintiff to show the effects of Beaverton's advertising campaign on plaintiff's competitive position (e.g., that Bend area residents would shop in the Portland area or that they knew about Beaverton's lower prices and expected plaintiff to meet them). Yamaha relies primarily upon Eastern Auto Distrib. v. Peugeot Motors of America, 795 F.2d 329, 335 (4th Cir.1986) (a few "crossover" sales do not prove actual competition) and other federal cases. ⁶ We find the cited federal cases inapposite, however, because they are concerned with exclusive geographic market areas with defined boundaries. No such clearly defined market areas are involved here.

The rationale behind the requirement for actual competition in the same market area is that if the favored and disfavored buyers, here Beaverton and plaintiff, ⁷ do not in fact compete for the same customers, there cannot be a reasonable probability ⁸ of harm to competition. Lupia v. Stella D'Oro Biscuit Co., Inc., 586 F.2d 1163, 1170-71 (7th Cir.1978), cert. den. 440 U.S. 982, 99 S.Ct. 1791, 60 L.Ed.2d 242 (1979); M.C. Manufacturing Co. v. Texas Foundries, Inc., 517 F.2d 1059, 1066 (5th Cir.1975), cert. den. 424 U.S. 968, 96 S.Ct. 1466, 47 L.Ed.2d 736 (1976); see F. Rowe, Price Discrimination Under the Robinson-Patman Act 179 (1962) (if buyers on different sides of a boundary line do not compete with each other, no adverse competitive effects at the buyer level follow from the supplier's price variations).

There is no dispute that Yamaha sold 1980, 1981, and 1982 motorcycles to Beaverton at prices significantly lower than the prices Yamaha charged plaintiff for the same models. Furthermore, Yamaha also gave Beaverton advantageous credit terms not given to plaintiff. Beaverton then advertised the sale of its lower priced motorcycles extensively in Portland newspapers and on Portland television stations, media which Yamaha acknowledges in its petition for review are "statewide" media. ⁹

The Honda motorcycle dealer in Bend testified that 75 percent of his competition came from Portland area motorcycle dealers, that Bend area customers compared his prices with those of the Portland area dealers, and that his customers came into his store with The Oregonian 's classified advertising in hand. He testified that Portland pricing directly affected his own prices because, in order to make a sale, he often had to match Portland dealers' prices.

A former Oregon Yamaha district manager, who had been the Oregon Kawasaki district manager at the time of Yamaha's sale to Beaverton, testified that the predictable effect of Yamaha's sale to Beaverton was to put all other dealers in Beaverton's market at a competitive disadvantage.

One of plaintiff's owners testified that Beaverton's advertising of its lower prices forced plaintiff to lower its own prices. Plaintiff's general manager testified that it was impossible for plaintiff to compete with Beaverton because of Beaverton's advertising and low prices and that although plaintiff's primary sales area was the Bend area, plaintiff nevertheless had to lower its prices to compete with Beaverton.

A Bend resident testified that he had become aware of Beaverton's lower prices from television advertising seen in Bend and that he had bought a motorcycle from Beaverton because of its advertised lower price.

A former Baker, Oregon, Yamaha dealer testified that he, too, had been damaged by Yamaha's 1982 sale to Beaverton. There also was evidence that of twelve Yamaha dealers in northwestern Oregon before the challenged sale to Beaverton, some started closing up within a few months after the sale, and all twelve were out of business by the time this case came to trial. ¹⁰

Plaintiff's expert witness, an economist, testified that the relevant competitive market is wherever the impacts of a price differential are felt; that Beaverton's extensive advertising of its low prices would have an impact on plaintiff; that competition in the Bend area definitely would be lessened; and that the effect was a foreseeable, natural, and necessary consequence of Beaverton's extensive advertising of its low prices. He further testified that the foreseeable consequences to plaintiff would include diversion of sales, negative customer relations, and the depressed value of plaintiff's new and used motorcycle inventory. He testified, "The Bend area is reasonably in the Portland [market] area."

Yamaha's own records showed that Beaverton made sales in Oregon to customers from Salem, Albany, Hood River, Madras, Bend, Lakeview, Long Creek, Burns, and Pendleton. In addition to sales in Oregon, Beaverton made sales to customers in Montana, California, Alaska, and Washington....