Opinion ID: 381022
Heading Depth: 2
Heading Rank: 2

Heading: Complete Involvement

Text: 19 The district court was correct in concluding that no genuine issue of material fact existed, given the failure of THI to controvert any of the factual assertions contained in the defendants' affidavits. Its only task, therefore, was to determine whether the defendants were entitled to judgment as a matter of law. The district court concluded that defendants were so entitled on the alternative grounds that the lease rendered no substantial anticompetitive effect and that THI's complete involvement in the allegedly illegal scheme barred it from recovering. We affirm on the latter ground, and express no opinion on the competitive impact of the lease. 20 The Supreme Court has determined that the common law defense of in pari delicto has no place in federal antitrust litigation. See Perma Life Mufflers v. International Parts Co., 392 U.S. 134, 88 S.Ct. 1981, 20 L.Ed.2d 982 (1968). The rationale for the Perma Life holding rests on policy considerations of encouraging enforcement of the antitrust laws, even where the plaintiff is perhaps partly to blame for an allegedly anticompetitive scheme. The Court in Perma Life, however, left open the question whether truly complete involvement and participation in a monopolistic scheme could ever be a basis, wholly apart from the idea of in pari delicto, for barring a plaintiff's cause of action, . . .  392 U.S. at 140, 88 S.Ct. at 1985. The Court left the issue open because the facts of Perma Life did not indicate complete involvement on the part of the plaintiffs there. 21 Several circuits, including our own, have determined that complete involvement does constitute a defense to a treble damages claim in an antitrust action. See, Memorex Corp. v. IBM, 555 F.2d 1379 (9th Cir. 1977); Javelin Corp. v. Uniroyal, Inc., 546 F.2d 276 (9th Cir. 1976), cert. denied, 431 U.S. 938, 97 S.Ct. 2651, 53 L.Ed.2d 256 (1977); see also, e. g., Columbia Nitrogen Corporation v. Royster Company, 451 F.2d 3 (4th Cir. 1971); Premier Electric Construction Co. v. Miller-Davis Co., 422 F.2d 1132 (7th Cir.), cert. denied, 400 U.S. 828, 91 S.Ct. 56, 27 L.Ed.2d 58 (1970). The formulation of the complete involvement defense reflects a somewhat uneasy balance between the compelling policy of enforcement of the antitrust laws and the natural desire of any court to recognize the equities as between the parties. In this circuit, a defendant espousing the complete involvement defense must meet the burden of the but for test. A plaintiff's recovery is not barred unless the illegal conspiracy would not have been formed but for its participation. See Javelin Corp. v. Uniroyal, supra, at 279. As the court in Javelin Corp. noted: 22 The 'but for' standard places a high burden of proof upon any defendant seeking to bar the plaintiff's suit on the basis of joint participation. But the plaintiff is suing not only in its own behalf, but as a 'private attorney general' representing the public interest. . . . Congress established the private remedy to enlist the public as enforcers of the antitrust laws. The courts should encourage this function. 23 Id. at 279, 180. 24 The district court was correct in holding that the defendants have met this high burden of proof. There are no other parties to the lease besides THI on the one hand and the defendants on the other. THI argues that it entered into its lease and accepted the exclusive provision only under compulsion of the specific performance decree. The record reflects otherwise. According to the original Mui affidavit, the final lease was the result of a compromise over the decree. Substantial concessions were given, and substantial gains were made by both sides in arriving at the compromise version of the original lease agreement. In view of the modification of such basic terms as the rental payment and the use to which the premises shall be put, we believe that the final lease agreement can properly be classified as a separate transaction independent of the original agreement entered into by AITS and Rothbard. We also note Rothbard's uncontroverted assertion that THI made no mention of any possible antitrust problem with the exclusive during negotiations for the modified lease agreement. Consequently, this is not a case of a party who has vigorously protested the inclusion of an illegal provision only to be overwhelmed by a party in a superior bargaining position. THI raised no objection to the exclusive until FCFC and Ellaric began insisting upon its observance, and until it began formulating plans to construct an addition to the hotel which would include a major department store. In short, the record reflects an arm's length bargaining process which produced a lease from which THI continues to enjoy a substantial gain. Under these circumstances, the district court was justified in finding that THI was completely involved in the formation of the allegedly illegal agreement. 25 While it is clear that THI's involvement bars any treble damage recovery, it is somewhat less clear that the defense also bars it from seeking injunctive and declaratory relief. The equitable consideration of preventing a windfall gain from the plaintiff's own wrongdoing justifies application of the complete involvement defense to an action for treble damages; the strong policy favoring enforcement of the antitrust laws may stay its application where the plaintiff seeks only to disentangle itself from an agreement which has a substantial anti-competitive effect on commerce. See P. AREEDA and D. TURNER, ANTITRUST LAWS, supra, at P 348a; cf. Florists' Nationwide Telephone Delivery Network v. Florists' Telephone Delivery Association, 371 F.2d 263 (7th Cir.), cert. denied, 387 U.S. 909, 87 S.Ct. 1686, 18 L.Ed.2d 627 (1967). We believe, however, that under the unique facts of this appeal, THI should similarly be barred from receiving either equitable or declaratory relief. THI seeks not to rescind the entire bargain, but rather to have one offending provision red-penciled out of the lease. To so allow THI to escape a single aspect of the total lease agreement would result in a windfall here. THI would, in essence, retain the benefit of the lease with its substantial rental payment, while leaving FCFC and Ellaric without the benefit of the exclusive. THI would also receive the presently incalculable benefit of leasing commercial space to other tenants unhampered by the exclusive. We cannot with good conscience leave THI in so favorable a position. We emphasize that our holding here is based upon a unique and limited set of facts. We continue to adhere to the sound policy of encouraging private enforcement of the antitrust laws.