Zoslaw v. MCA Distributing Corp.

Decision Date01 December 1982
Docket Number80-4429,Nos. 80-4330,s. 80-4330
Citation693 F.2d 870
Parties1982-83 Trade Cases 65,078 Charles ZOSLAW and Jane Zoslaw husband and wife, dba Marin Music Centre, Plaintiff-Appellants, v. MCA DISTRIBUTING CORPORATION, Doug Robertson Advertising, Inc., MTS, Inc., Tower Enterprises, Inc., Warner/Elektra/Atlantic Corporation, ABC Records, Inc., Polygram Distribution, Inc., Capitol Records, Inc. and Capitol Industries-EMI, Defendants-Appellees.
CourtU.S. Court of Appeals — Ninth Circuit

Maxwell Keith, Keith & Duryea, San Francisco, Cal., for Zoslaw.

M. Laurence Popofsky, Melvin R. Goldman, San Francisco, Cal., argued for WEA; Heller, Ehrman, White & McAnuliffe, San Francisco, Cal., on brief.

Melvin R. Goldman, Morrison & Foerster, San Francisco, Cal., for MTS and Tower.

Charles F. Gray, Jr., Gray & Thurn, Sacramento, Cal., for Doug Robertson Advertising.

Alf R. Bandin, Lillickm McHose & Charles, San Francisco, Cal., for ABC Records.

George A. Cumming, Jr., Brobeck, Phleger & Harrison, San Francisco, Cal., for Capitol Records and Capitol Ind. Emi, Inc.

John Curran Ladd, Steinhart, Ladd & Jubelirer, San Francisco, Cal., for Polygram.

William Billick, Rosenfeld, Meyer & Susman, Beverly Hills, Cal., for MCA.

Appeal from the United States District Court for the Northern District of California.

Before BAZELON, * SKOPIL and POOLE, Circuit Judges.

POOLE, Circuit Judge:

This is an appeal by Charles and Jane Zoslaw, the former owners of a retail record store, from a series of orders entered by the district court granting summary judgment in favor of appellee record distributors: Warner/Elektra/Atlantic Corporation (WEA); MCA Distributing Corporation (MCA), Polygram Distribution, Inc. (Polygram) 1, ABC Records, Inc. (ABC) and Capitol Records, Inc. and its parent corporation, Capitol Industries-EMI (jointly, Capitol), appellee retailer, MTS, Inc. (MTS) 2 and appellee Doug Robertson Advertising, Inc. (Doug Robertson). In this appeal the Zoslaws claim that the district court erred in finding that they had failed to satisfy the "in commerce" jurisdictional requirement of the Robinson-Patman Price Discrimination Act, and in concluding that they had failed to raise an issue of material fact concerning their claims under sections 1 and 2 of the Sherman Antitrust Act. We reverse the district court's ruling as to the Robinson-Patman claims except as to Doug Robertson and affirm as to the Sherman Act claims.


Appellants operated Marin Music Centre, a Mill Valley retail store which sold phonograph records and equipment, prerecorded tapes and related merchandise. They experienced startup losses in 1965 and 1966 and then claimed to have operated at a profit for the following two years. After that period, the store encountered financial difficulties from which it never recovered, suffering losses from at least 1971 until it went out of business in 1977.

The district court found that during the time the Zoslaws were in business the Marin County record market "changed dramatically." 533 F.Supp. 540, 546 (N.D.Cal.1980). Several other retail record and tape stores opened in the area and the number of department stores, grocery stores and drug stores with record departments also increased. Charles Zoslaw readily admitted that the store suffered losses because other stores sold records at lower prices.

In January, 1975, appellants filed this action. They subsequently filed three amended complaints adding various defendants and factual contentions. As thus amended the complaint named all of the appellee record distributors: WEA, MCA, Polygram, Capitol and ABC. Several other named distributors, who subsequently settled with appellants, were CBS, Inc., RCA, Inc., Eric-Mainland Distributing Company, United Artists Music and Record Group, Inc. (UAMARGI) and Transamerica Company, the parent corporation of Eric-Mainland and UAMARGI. Appellants alleged that the distributor defendants violated section 2(a) of the Robinson-Patman Act, 15 U.S.C. Sec. 13(a), by selling records and tapes to retail chain stores at lower prices than those offered to single stores, such as Marin Music Centre, and that the distributors violated sections 2(d) and 2(e) of the Act, 15 U.S.C. Secs. 13(d) and 13(e), by discriminating in favor of retail chain stores in granting promotional allowances and furnishing special services. They also alleged that the distributor defendants conspired among themselves and with the retailer defendants to favor the retail chain stores at the expense of individual stores in violation of section 1 of the Sherman Act, 15 U.S.C. Sec. 1.

Three retailers were named defendants: MTS, Integrity Entertainment Corporation (IEC), and CBS, Inc., doing business as Discount Records. The latter two subsequently settled. Also named defendant was Doug Robertson Advertising Agency, with which Tower did business. Appellants alleged that the retailers violated sections 2(d), 2(e), and 2(f) of the Robinson-Patman Act, 15 U.S.C. Secs. 13(d), 13(e), and 13(f), by knowingly inducing and receiving the alleged discriminations in price and other terms, allowances and services. The retailer defendants were also charged with violating section 1 of the Sherman Act by conspiring with the distributors to receive favorable treatment. Finally, appellants accused MTS with monopolizing or attempting to monopolize the retail record market in violation of section 2 of the Sherman Act.

In the two years after appellants instituted the action, four distributor defendants moved for partial summary judgment on the ground that the court lacked jurisdiction under Robinson-Patman because the allegedly discriminatory sales were not "in commerce" as required by that Act. The district court granted each of these motions: in favor of WEA on June 21, 1976, see Zoslaw v. Columbia Broadcasting System, 1977-1 Trade Reg.Rep. (CCH) p 61,756; in favor of Eric-Mainland on July 20, 1976; in favor of CBS on April 18, 1977; and in favor of Polygram (limited to the period 1974 and 1976) on August 17, 1977. 3

In October, 1977, appellants filed a motion for preliminary injunction to prevent the defendant distributors from favoring chain store retailers and to prevent the defendant retailers from accepting such preferences. The motion also sought to prohibit Capitol Records from refusing to sell phonograph records, tapes and cassettes to Marin Music Centre. This claim arose when Capitol, shortly after settling with the appellants, ceased selling merchandise to them. Appellants then amended their complaint to reinstate Capitol as a defendant based on its refusal to deal. The district court denied the motion, finding that appellants had failed to demonstrate a likelihood of success on the merits or a showing of irreparable injury.

In September, 1978, the district court granted Capitol's motion for summary judgment on the refusal to deal claim, finding that Capitol had legitimate business reasons for its action. 4 Three of the four remaining distributor defendants, WEA, MCA, and Polygram, as well as MTS and Doug Robertson, then moved for summary judgment on all of the remaining claims against them. In January, 1980, the court granted all of the defendants' pending motions. In its opinion, the district court, held, first, that appellants failed to produce competent evidence to support their factual allegations. The court noted that the appellants' opposition papers "regularly and systematically" violated Rule 56 of the Federal Rules of Civil Procedure as well as Rule 220-8 of the Local Rules of the Northern District of California. The court observed that most of the documents submitted by appellants with their opposition lacked authentication and that they often failed to support the factual inference for which they had been provided.

The court then ruled that even if appellants had properly supported their factual allegations, summary judgment was still appropriate since they had failed to advance an adequate legal theory of the case. The remaining Robinson-Patman claims were dismissed against two of the distributor defendants, MCA and Polygram, on the finding that appellants had failed to satisfy the "in commerce" requirement of the Act. The court also held that it lacked jurisdiction over appellants' Robinson-Patman claims against MTS and Doug Robertson because the Supreme Court's decision in Great Atlantic & Pacific Tea Co. v. FTC, 440 U.S. 69, 99 S.Ct. 925, 59 L.Ed.2d 153 (1979), precluded jurisdiction under section 2(f) and that there was no private right of action against buyers under sections 2(d) and 2(e).

As for the Sherman Act section 1 claims, the court found no basis in the material submitted by appellants to support any of the claims of conspiracies to restrain trade alleged by appellants, and found no reasonable factual inference in support of appellants' monopolization and attempted monopolization claims against MTS.

In May, 1980, the last remaining defendant, ABC, filed its motion for summary judgment on both the Robinson-Patman and Sherman Act claims. The district court granted this motion and entered judgment in favor of all of the defendants in June, 1980. 5

Appellants challenge the district court's findings that the allegedly discriminatory sales were not "in commerce" as required by Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186, 200, 95 S.Ct. 392, 401, 42 L.Ed.2d 378 (1974), and therefore not within section 2(a) of the Robinson-Patman Act. Alternatively, they contend that even if section 2(a) is inapplicable, the court still had jurisdiction over the distributor defendants under sections 2(d) and 2(e), and over MTS and Doug Robertson under section 2(f). As for the Sherman Act, appellants claim that the district court erred in finding no genuine issue of material fact concerning the existence of a conspiracy among distributors and retailers to favor certain chain retailers. They also contend that ...

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