Source: https://openjurist.org/623/f2d/1255/international-travel-arrangers-inc-v-western-airlines-inc
Timestamp: 2020-01-19 07:20:14
Document Index: 149290211

Matched Legal Cases: ['§ 1', '§ 15', '§ 15', '§ 15', '§ 15', '§ 15']

623 F2d 1255 International Travel Arrangers Inc v. Western Airlines Inc | OpenJurist
623 F. 2d 1255 - International Travel Arrangers Inc v. Western Airlines Inc
623 F2d 1255 International Travel Arrangers Inc v. Western Airlines Inc
The CAB has both exclusive jurisdiction and primary jurisdiction over a variety of disputes within the air transportation system. The district court3 addressed the issue of jurisdiction with respect to the instant case, International Travel Arrangers v. Western Air Lines, Inc., 408 F.Supp. 431 (D.Minn.1975), and found that the federal district court had jurisdiction of the dispute and denied Western's motions to dismiss or to refer the matter to the CAB.
Ricci v. Chicago Mercantile Exchange, 409 U.S. 289, 93 S.Ct. 573, 34 L.Ed.2d 525 (1973) provides us with the primary considerations relevant to the doctrine of primary jurisdiction. The regulatory agency involved in Ricci was the Commodity Exchange Commission. The plaintiff alleged that he was excluded from trading on the Chicago Mercantile Exchange pursuant to an unlawful conspiracy in violation of section 1 of the Sherman Act, 15 U.S.C. § 1. While acknowledging that the Commission could not immunize conduct from the antitrust laws, the Supreme Court determined that the Commission had primary jurisdiction because (1) a factual determination of whether or not the action taken by the Commission was pursuant to a valid rule would clarify what question was necessary for the Court to decide i. e., (a) if the action was pursuant to a valid rule, the question would be whether the rule is insulated from the antitrust laws, see Board of Trade v. United States, 246 U.S. 231, 238, 38 S.Ct. 242, 243, 62 L.Ed. 683 (1918) (reasonable restraint of trade); (b) if the action in question was contrary to the rules, the antitrust action would presumably "take its normal course," Ricci v. Chicago Mercantile Exchange, supra, 409 U.S. at 304, 93 S.Ct. at 581; (2) that there was statutory authority for the Commission to settle the dispute; and (3) the adjudication of the dispute by the Commission would materially aid the Court "in arriving at the essential accommodation between the antitrust and the regulatory regimes." Id. at 307, 93 S.Ct. at 583.
The purpose of these considerations is to provide focus upon the controlling principle involved in the conflict of regulatory and judicial activity, which is that the courts "must refrain from imposing antitrust sanctions for activities of debatable legality * * * in order to avoid the possibility of conflict between the courts and (agencies)." Carnation Co. v. Pacific Westbound Conference, 383 U.S. 213, 220, 86 S.Ct. 781, 786, 15 L.Ed. 709 (1966).
This differs from the factual situation in Ricci v. Chicago Mercantile Exchange, supra, inasmuch as in Ricci, as is apparent by the Court's observation, the Commodity Exchange Act "contemplates that the Exchange and its members will 'engage in restraints of trade which might well be unreasonable absent sanction ' by the Act." Id., 409 U.S. at 304, 93 S.Ct. at 581, quoting Silver v. New York Exchange, 373 U.S. 341, 360, 83 S.Ct. 1246, 1258, 10 L.Ed.2d 389 (1963) (emphasis added). If the action in Ricci was determined by the Commission to be within the Exchange rules, there would be an affirmative sanction by the Exchange of the activities in question. In the instant case, even if the CAB would determine that there was no violation by Western of the CAB prohibitions against unfair competition, this would not be an affirmative sanction of the activities by the CAB. Thus a finding of an antitrust violation by this court would not create a substantial conflict. Carnation Co. v. Pacific Westbound Conference, supra.
Western does not attempt to distinguish the instant case from Albrecht v. Herald Co., 390 U.S. 145, 88 S.Ct. 869, 19 L.Ed.2d 998 (1968). In Albrecht, the defendant had hired Milne Circulations Sales, Inc. to call or personally solicit newspaper customers to switch to direct delivery of the newspaper instead of continuing delivery by the plaintiff. The Supreme Court ruled that there was a combination within section 1 between the newspaper, Milne and Kroner, the person hired to take over the route in the meantime. The Court noted that the efforts of Milne and Kroner had some effect on the customers, and while undoubtedly Milne was acting to earn a fee, it was aware of the aim of the newspaper. The aim or goal of the paper was to get the plaintiff to lower his prices.
Thus, the fact that BBD&O participated in the anti-TGC campaign and that BBD&O "materially aided the accomplishment of Western's plan"13 with the knowledge of the purpose of such campaign is sufficient to satisfy the Albrecht requirements. Tamaron Distributing Corp. v. Weiner, 418 F.2d 137, 139 (7th Cir. 1969), quoting Albrecht v. Herald Co., supra, 390 U.S. at 150, 88 S.Ct. at 871. But see Tamaron Distributing Corp. v. Weiner, supra, 418 F.2d at 140 (Knoch, J., concurring). See generally Quality Mercury, Inc. v. Ford Motor Co., 542 F.2d 466 (8th Cir. 1976), cert. denied, 433 U.S. 914, 97 S.Ct. 2986, 53 L.Ed.2d 1100 (1977).
Deciding as a matter of law whether or not the anti-TGC campaign was an unreasonable restraint of trade is a difficult question. It is not a conventional "restraint of trade," i. e., a tie-in, price fixing or territorial division.15 It is, in fact, a form of competition and because competition is the object sought to be preserved by the antitrust laws, we must be careful in drawing a line between fair competition, unfair competition and competition that is so unfair as to rise to the level of an unreasonable restraint of trade. See Northwest Power Products, Inc. v. Omark Industries, Inc., 576 F.2d 83, 88-90 (5th Cir. 1978), cert. denied, 439 U.S. 1116, 99 S.Ct. 1021, 59 L.Ed.2d 75 (1979).
The traditional analysis for examining a restraint of trade under the rule of reason was struck in Chicago Board of Trade v. United States, 246 U.S. 231, 238, 38 S.Ct. 242, 243, 62 L.Ed. 683 (1918). The courts must examine the purpose, the market power and the anticompetitive effect of the restraint, and thus arrive at a conclusion as to the reasonableness of the restraint.
The crux of the reasonableness of the restraint in this case is the purpose of the anti-TGC campaign. For the antitrust laws would not be served at all were we to prohibit even a monopolist from competition.17 See Union Leader Corp. v. Newspapers of New England Inc., 284 F.2d 582, 584 (1st Cir. 1960), cert. denied, 365 U.S. 833, 81 S.Ct. 747, 5 L.Ed.2d 744 (1961). On the other hand, improper competition, at some point and under some circumstances, can be a violation of Sherman section 1. Atlantic Heel Co. v. Allied Heel Co., 284 F.2d 879 (1st Cir. 1960). We hold that the anti-TGC campaign was an unreasonable restraint of trade.
Important to our ruling is that the purpose and direction of the anti-TGC campaign was not to compete with ITA's TGCs, but rather was to prevent TGCs from becoming a competitive threat to Western's regularly scheduled air service. Further, the means by which Western sought to achieve this end was not fair competition, but rather an organized full frontal attack which (1) used false, misleading and deceptive advertising and (2) was directed at (a) consumers and (b) travel agents. While it might have been reasonable for a monopolist such as Western to conduct an aggressive anti-TGC campaign against ITA's TGCs, see William Inglis & Sons Baking Co. v. ITT Continental Baking Co., 461 F.Supp. 410, 425 (N.D.Cal.1978), it was not reasonable for a monopolist such as Western to use the means described above with the purpose of preventing any effective competition from ITA's TGCs. See, i. e., George R. Whitten, Jr., Inc. v. Paddock Pool Builders, Inc., 508 F.2d 547, 562 (1st Cir. 1974), cert. denied, 421 U.S. 1004, 95 S.Ct. 2407, 44 L.Ed.2d 673 (1975) wherein the court notes that distinctions exist (although in this case in regard to a per se analysis) between "crippling the organization of a competitor" and "beating it in the market place," or between "going to the jugular and going to one of the lesser arteries." This is the difference we perceive in this case. Western did not choose to compete with ITA's TGCs, but rather chose to prevent TGCs from becoming competition in the market place. Under the rule of reason, Western's anti-TGC campaign is an unreasonable restraint of trade.
In a private antitrust suit, the plaintiffs must show the violation and additionally must show "to a reasonable certainty that there has been injury to them by reason of" the violation. Admiral Theatre Corp. v. Douglas Theatre Co., supra 585 F.2d at 893. Additionally, "the damages accruing from the injury must be capable of reasonable ascertainment and must not be speculative or conjectural." Id. Yet, even with this caution in regard to ascertainment of damages "the jury may not render a verdict based on speculation or guesswork," Bigelow v. RKO Radio Pictures, Inc., 327 U.S. 251, 264, 66 S.Ct. 574, 579-580, 90 L.Ed. 652 (1946) the Supreme Court has also stated
Id., quoting Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 564, 51 S.Ct. 248, 251, 75 L.Ed. 544 (1931). See Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 82 S.Ct. 1404, 8 L.Ed.2d 777 (1962).
Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 114 n.9, 89 S.Ct. 1562, 1571, 23 L.Ed.2d 129 (1969).19
As the Fifth Circuit stated in Heatransfer Corp. v. Volkswagenwerk, A. G., 553 F.2d 964, 986-89 n.20 (5th Cir. 1977), cert. denied, 434 U.S. 1087, 98 S.Ct. 1282, 55 L.Ed.2d 792 (1978) and as quoted by our court in TV Signal Co. v. AT& T, 617 F.2d 1302 (8th Cir. 1980):
We begin by examining the Special Master's award of reasonable attorneys' fees pursuant to 15 U.S.C. § 15.20 In Grunin v. International House of Pancakes, 513 F.2d 114 (8th Cir.), cert. denied, 423 U.S. 864, 96 S.Ct. 124, 46 L.Ed.2d 93 (1975), this court agreed that the proper approach in determining an award of attorney's fees in antitrust cases is the approach used in the Second and Third Circuits. The factors to consider are:a) the number of hours spent in various legal activities by the individual attorneys,
Although the above cases involved class actions in antitrust cases, we agree that "the principles of Lindy are applicable to an award of attorney's fees pursuant to 15 U.S.C. § 15," Pitchford v. Pepi, Inc., 531 F.2d 92, 110 (3d Cir.), cert. denied, 426 U.S. 935, 96 S.Ct. 2649, 49 L.Ed.2d 387 (1976).
The purpose of the fees award under 15 U.S.C. § 15 is to insure that a successful plaintiff in an antitrust action does not have its treble damage recovery unduly diminished by the payment of fees to its attorneys. Perkins v. Standard Oil Co., 474 F.2d 549, 553 (9th Cir.), cert. denied, 412 U.S. 940, 93 S.Ct. 2778, 37 L.Ed.2d 400 (1973); Farmington Dowel Products Co. v. Forster Manufacturing Co., 421 F.2d 61, 88 (1st Cir. 1970); Locklin v. Day-Glo Color Corp., 378 F.Supp. 423 (N.D.Ill.1974). Recovery of attorney's fees under 15 U.S.C. § 15 of course accrues to the plaintiff and not its attorneys. First Iowa Hydro Electric Coop. v. Iowa-Illinois Gas & Electric Co., 245 F.2d 630-32 (8th Cir. 1957), cert. denied, 355 U.S. 871, 78 S.Ct. 122, 2 L.Ed.2d 76 (1958).
The standard applied by this court in reviewing a 15 U.S.C. § 15 attorney's fees award is whether the district court's findings were clearly erroneous as to the factual basis for the award, or whether it committed abuse as to the discretional margin involved in its allowance. Armco Steel Corp. v. State of North Dakota, 376 F.2d 206, 212 (8th Cir. 1967). See Grunin v. International House of Pancakes, supra, 513 F.2d at 126. Nevertheless, "it is the duty of appellate courts to protect against 'vicarious generosity' in the matter of attorney fees (in antitrust cases)." Twentieth Century-Fox Film Corp. v. Brookside Theatre Corp., 194 F.2d 846, 859 (8th Cir.), cert. denied, 343 U.S. 942, 72 S.Ct. 1035, 96 L.Ed. 1348 (1952). Cf. Locklin v. Day-Glo Color Corp., supra, 378 F.Supp. at 426. ("Over-generosity, in particular, must be guarded against so as to maintain public respect for and confidence in the organized bar.").
In cases involving substantial actual damages, courts test the reasonableness of the attorney's fees award by examining the ratio of the attorney's fees to the untrebled damage award. Twentieth Century-Fox Film Corp. v. Brookside Theatre Corp., supra, 194 F.2d at 859; Milwaukee Towne Corp. v. Loew's, Inc., 190 F.2d 561, 571 (7th Cir. 1951), cert. denied, 342 U.S. 909, 72 S.Ct. 303, 96 L.Ed. 680 (1952). The attorneys' fees awarded by the district court are $213,390.87, which is approximately 177% of the untrebled damage award of $120,532.00. While we reject a per se rule applied by some courts that the attorney's fees award should be limited to the amount of the untrebled damages,22 the high ratio is a factor to consider and requires a close examination of the fee award.23
Tomin claimed 1699 hours were expended by him, and the Special Master awarded ITA fees based on 1572.85 hours. We conclude the trial court was clearly erroneous in finding Tomin contributed this many hours when time records were kept for only 772.75 hours. While we do not disallow all reconstructed hours, we believe the court in Kane v. Martin Paint Stores, Inc., 439 F.Supp. 1054 (S.D.N.Y.1977), aff'd, 578 F.2d 1368 (2d Cir. 1978) properly held that uncertainties should be resolved against the plaintiff, if arising because of imprecise recordkeeping without adequate justification. The record supports the Special Master's finding that for the period of February 1974 through May 1974 Tomin was associated with a firm that dissolved and the records were unavailable. A similar conclusion is reached for the period from August 1975 through January 1976. We cannot say the Special Master's findings as to the time allowed for these periods are clearly erroneous. Additionally, we will not reduce as excessive the hours for which records were properly kept and introduced at the hearing before the Special Master.
Western asserts, as a defense to ITA's allegations, that ITA's TGC advertisements appearing before Western initiated its anti-TGC campaign were deceptive, illegal and fraudulent, and thus Western should not be held liable for its own challenged conduct. We find the Special Master's reliance on Perma Life Mufflers, Inc. v. International Parts Corp., 392 U.S. 134, 138-40, 88 S.Ct. 1981, 1984-85, 20 L.Ed.2d 982 (1968) to be on point and controlling:
Although in pari delicto literally means "of equal fault," the doctrine has been applied, correctly or incorrectly, in a wide variety of situations in which a plaintiff seeking damages or equitable relief is himself involved in some of the same sort of wrongdoing. We have often indicated the inappropriateness of invoking broad common-law barriers to relief where a private suit serves important public purposes. It was for this reason that we held in Kiefer-Stewart Co. v. Seagram & Sons, 340 U.S. 211, 71 S.Ct. 259, 95 L.Ed. 219 (1951), that a plaintiff in an antitrust suit could not be barred from recovery by proof that he had engaged in an unrelated conspiracy to commit some other antitrust violation. Similarly, in Simpson v. Union Oil Co., 377 U.S. 13, 84 S.Ct. 1051, 12 L.Ed.2d 98 (1964), we held that a dealer whose consignment agreement was canceled for failure to adhere to a fixed resale price could bring suit under the antitrust laws even though by signing the agreement he had to that extent become a participant in the illegal, competition-destroying scheme. Both Simpson and Kiefer-Stewart were premised on a recognition that the purposes of the antitrust laws are best served by insuring that the private action will be an ever-present threat to deter anyone contemplating business behavior in violation of the antitrust laws. The plaintiff who reaps the reward of treble damages may be no less morally reprehensible than the defendant, but the law encourages his suit to further the overriding public policy in favor of competition. A more fastidious regard for the relative moral worth of the parties would only result in seriously undermining the usefulness of the private action as a bulwark of antitrust enforcement. And permitting the plaintiff to recover a windfall gain does not encourage continued violations by those in his position since they remain fully subject to civil and criminal penalties for their own illegal conduct. Kiefer-Stewart, supra.
The only exception that Perma Life allows is when the illegal conspiracy "would not have been formed but for the plaintiff's participation." Javelin Corp. v. Uniroyal, Inc., 546 F.2d 276, 279 (9th Cir. 1976), cert. denied, 431 U.S. 938, 97 S.Ct. 2651, 53 L.Ed.2d 256 (1971). This exception is not applicable here.
Western devotes much time and effort to a First Amendment defense, arguing in connection with this defense that the Sherman Act cannot be violated by the publication of an ad. We find no merit in this argument. First, the First Amendment/Sherman Act relationship is embodied in the Noerr-Pennington doctrine, United Mine Workers v. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965) and Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961), and the basis of this doctrine is not an all-encompassing First Amendment protection. While consideration of the First Amendment is an inherent part of the Noerr-Pennington analysis, the basis is that activities done in furtherance of the right to petition are not within the scope of the Sherman Act. State of Missouri v. National Organization for Women, Inc., 620 F.2d 1301 (8th Cir. 1980)
But see Perryton Wholesale, Inc. v. Pioneer Distributing Co., 353 F.2d 618, 621-22 (10th Cir. 1965), cert. denied, 383 U.S. 945, 89 S.Ct. 1202, 16 L.Ed.2d 208 (1966) (conspiracy to suppress competition through the elimination of competition by unfair means is an unreasonable restraint of trade)
General Communications Engineering, Inc. v. Motorola Communications & Electronics, Inc., 421 F.Supp. 274, 290-91 (N.D.Cal.1976).
See also Foremost International Tours, Inc. v. Qantas Airways, Ltd., 478 F.Supp. 589, 595 (D.Hawaii 1979) ("The court assumes that plaintiff, if it could demonstrate the violations alleged, would sustain some form of cognizable antitrust injury as a result of such violations, plaintiff being in direct competition with the defendants in the relevant market.")
Other factors which might be considered appear in Morning Pioneer, Inc. v. Bismarck Tribune Co., 493 F.2d 383, 390 n.15 (8th Cir. 1974). See also Locklin v. Day-Glo Color Corp., 378 F.Supp. 423, 426 (N.D.Ill.1974)
We note that at least one court has approved an award of attorney's fees which far exceeded the substantial untrebled damage figure. Pitchford Scientific Inst. Corp. v. Pepi, Inc., 440 F.Supp. 1175 (W.D.Pa.1977), aff'd, 582 F.2d 1275 (3d Cir. 1978).
Western asks that we disallow time spent on the jury trial before the magistrate, and make further reductions for duplications of effort because two firms were involved in the work. With regard to this latter point, this court will not interfere with the decision of ITA and its two counsel to divide the burdens of a complex trial between the counsel. See Computer Statistics, Inc. v. Blair, 418 F.Supp. 1339, 1351 (S.D.Tex.1976). Concerning the jury trial which was later ruled invalid by the district court, we note both parties stipulated to the jury trial. While we disagree with the contention of ITA that the jury trial did not require more attorney time than would a bench trial, we do agree ITA should not be denied this time simply because a higher court ruled the jury trial invalid. As stated in Pitchford Scientific Inst. Corp. v. Pepi, Inc., supra, 440 F.Supp. at 1178 (footnote omitted)