Source: http://openjurist.org/585/f2d/381
Timestamp: 2015-07-03 22:07:56
Document Index: 484029463

Matched Legal Cases: ['§ 1', '§ 1', '§ 1', '§ 2', '§ 1', '§ 2', '§ 4', '§ 15', '§ 1', '§ 2', '§ 1', '§ 2']

585 F2d 381 Gough v. Rossmoor Corporation | OpenJurist
585 F. 2d 381 - Gough v. Rossmoor Corporation	Home585 f2d 381 gough v. rossmoor corporation
585 F2d 381 Gough v. Rossmoor Corporation 585 F.2d 381
1978-2 Trade Cases 62,202
Kerry M. GOUGH, Trustee in Bankruptcy of Louis Rosen, d/b/aWalnut Creek Furniture, Plaintiffs-Appellees,v.ROSSMOOR CORPORATION, and Crestmark Carpet and DraperyCompany, Defendants-Appellants.
No. 77-2047.
Aug. 9, 1978.Rehearing and Rehearing En Banc Denied Oct. 27, 1978.
James E. Harrington (argued), of Pettit, Evers & Martin, San Francisco, Cal., for defendants-appellants.
Maxell Keith (argued), San Francisco, Cal., for plaintiffs-appellees.
Before MERRILL, KILKENNY and CHOY, Circuit Judges.
The question on appeal is whether, absent a definition of the relevant market, the record supports a judgment that appellants violated §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2. We hold that it did not and reverse judgment of the district court.
Rossmoor Leisure World (Leisure World) is a co-operative housing development for retired adults, located in Walnut Creek, California.
Rossmoor Corporation (Rossmoor) is the builder and developer of leisure world.
Leisure World Foundation (the Foundation) is a nonprofit corporation established to perform administrative services for the residents of Leisure World and also to perform organizational, promotional and sales functions for Rossmoor. In order to meet the requirements for securing FHA financing for construction of the housing, the Foundation is formally independent of Rossmoor.1 (Title to the community recreational facilities is held in trust by another independent foundation that appears less frequently in the case: the Golden Rain Foundation.)
Crestmark Carpet and Drapery Company (Crestmark) is a wholly owned subsidiary of Rossmoor, formed for the purpose of selling carpets and draperies to the Leisure World residents. The Foundation has leased space in its administration building to Crestmark giving it the exclusive right to sell carpets and draperies from a site within Leisure World.
The Leisure World News (the News) is a community newspaper owned and published by the Foundation. It is primarily concerned with Leisure World events and is used as a promotional device for prospective purchasers of housing.
Louis Rosen was the owner of a furniture and carpet store in Walnut Creek; appellee Gough is his trustee in bankruptcy.
In April, 1965, the Foundation began publishing the Leisure World News. Rosen was solicited by the advertising manager and placed seven carpet, drapery and furniture advertisements in various issues of the News. In July, 1965, under a new policy, the News refused to accept further advertisements from carpet retailers other than Crestmark, and no further advertisements from Rosen were accepted.
Rosen then commenced this action, alleging violations of § 1 and § 2 of the Sherman Act, 15 U.S.C. § 1 and § 2. He alleged that Rossmoor, the Foundation, Golden Rain Foundation and Crestmark had conspired to restrain competition by refusing to allow him to advertise in the News, and that the conspiracy was with the intent of enabling Crestmark to monopolize the market for carpets in Leisure World. He sought treble damages under § 4 of the Clayton Act, 15 U.S.C. § 15, for injuries suffered by him by reason of the Sherman Act violations.
The case has been before this court on two prior occasions.
The Foundation and Golden Rain Foundation were dismissed from the case prior to trial, although their status as coconspirators was retained. Following trial to a jury the issues were submitted to the jury in the form of interrogatories, which were answered by the jury as follows:
"1. Did the defendants and Leisure World Foundation or Golden Rain Foundation by means of a common plan, scheme or design have the power and intention to exclude plaintiff from the carpet and/or other business in Rossmoor Leisure World?
2. Did defendants enter into a common plan, scheme or design with Leisure World Foundation or Golden Rain Foundation to prevent plaintiff from advertising carpets in the Leisure World News such as to act as a restraint on plaintiff's business of selling carpets or other merchandise at Rossmoor Leisure World?
3. If your answer to either of the preceding questions is in the affirmative, did such restraint have a substantial effect on interstate commerce or the flow of interstate commerce?
4. Has plaintiff suffered any monetary damage by reason of its inability to advertise in Leisure World News?
5. If so, please indicate the amount opposite the appropriate type of damage you find to have been suffered.
Net Profits $18,143.00
Good Will 22,738.00"
Because of the jury answer to interrogatory No. 3, relating to interstate commerce, the trial court entered judgment for the defendants on the ground that the court lacked jurisdiction under the Sherman Act. The first appeal to this court was then taken. During the pendency of that appeal Rosen was adjudicated bankrupt and appellee Gough, as trustee in bankruptcy, was substituted as plaintiff-appellant. On Gough's appeal this court held that a substantial effect on interstate commerce appeared as matter of law and that it had been error to put the jurisdictional question to the jury. Gough v. Rossmoor Corp., 487 F.2d 373, 377 (9th Cir. 1973). This court originally directed that the case be remanded with instructions that judgment be entered for the plaintiff in accordance with the jury's findings. Appellants sought rehearing and asked this court to enter judgment notwithstanding the verdict on the ground that the record did not support the jury's findings and that the findings did not support judgment in that no finding had been made defining the relevant market, and that there was nothing in the record upon which such a finding could have been made. This court declined to rule upon appellants' motion for judgment but amended its original opinion and remanded the case to the trial court for further proceedings consistent with the opinion. 487 F.2d at 378. On remand Rossmoor renewed its motions for judgment n. o. v. and new trial.
The trial court ruled that it was foreclosed by this court's opinion from entertaining the post trial motions and the second appeal to this court was taken, this time by the defendants. We held that the trial court was not foreclosed from entertaining the motions on their merits and remanded with instructions that appellants' motions be entertained. Gough v. Rossmoor Corp., 533 F.2d 453 (9th Cir. 1975), Cert. denied, 429 U.S. 857, 97 S.Ct. 155, 50 L.Ed.2d 134 (1976).
On the second remand the trial court denied the motions, ruling that the evidence was sufficient to permit the jury to find that there was a common plan between Rossmoor, Crestmark and the Foundation, under which the Foundation would cause the News to refuse to allow Rosen to advertise his carpets in the News, which plan was intended to lessen competition. Judgment was entered for Rosen in treble the damages found by the jury, with interest, costs and counsel fees. This appeal followed.
Appellants assign error in a number of respects,2 with only two of which we shall concern ourselves. We find merit in appellants' contentions that appellee has failed to show violation either of § 1 or § 2 of the Sherman Act through failure to present evidence defining the relevant market and establishing that competition was unreasonably restrained in that market and that monopolization of the market was attempted.
Before reaching the merits of these issues we must dispose of two preliminary contentions of appellee.
Appellee first contends that these issues were not raised before the district court and, that by the interrogatories to the jury, appellants conceded that Leisure World is the relevant market. We disagree.
Unless the alleged anticompetitive conduct is Per se unreasonable, the fact that the conduct restrained trade in a relevant market is an essential part of a plaintiff's case (as we shall discuss later), and the burden of establishing it lies on him: Mutual Fund Investors v. Putnam Management Co.,553 F.2d 620, 627 (9th Cir. 1977); Knutson v. Daily Review, Inc., 548 F.2d 795, 803 (9th Cir. 1976), Cert. denied, 433 U.S. 910, 97 S.Ct. 2977, 56 L.Ed.2d 1094 (1977); Cataphote Corp. v. DeSoto Chem. Coatings, Inc., 450 F.2d 769, 773 (9th Cir. 1971), Cert. denied, 408 U.S. 929, 92 S.Ct. 2497, 33 L.Ed.2d 341 (1972). Lack of market definition is not a matter of affirmative defense that must be specifically pleaded.
Rosen, in his complaint, alleged that the market within which defendants' "monopolistic position" could be assessed was Leisure World; this allegation was denied. Rosen, in his pretrial brief, made reference to the evidence by which he proposed to establish that Leisure World was the relevant market. Following trial, in his argument to the jury, counsel for Rosen stated that the contested issue of relevant market pertained to Rosen's claims under both § 1 and § 2. An instruction submitted by Rosen and objected to by appellants was given to the jury, reading in part:
"The test here is whether the combination affects a definable marketing or trade area, and whether it unnaturally diverts the transportation of goods to or from that area."