Opinion ID: 471004
Heading Depth: 2
Heading Rank: 1

Heading: The Raiders' Antitrust Damages

Text: 82 A. The Majority Misapplies Hanover Shoe by Omitting a Crucial Element of the Damages Formula Upheld by the Supreme Court 83 In purporting to apply Hanover Shoe to the calculation of the Raiders' damages, the majority concludes that it is necessary and sufficient to treble the difference between the Raiders' lost profits between 1980 and 1982 on the one hand, and the 1980 value of the Los Angeles opportunity minus the 1980 value of the Oakland opportunity on the other. I disagree. It is my view that damages resulting from the unlawful restraint include all lost financial advantages, including profits and the accrued value of the business. 84 In Hanover Shoe, United's insistence upon renting rather than selling its machines was deemed a violation of the antitrust laws. Absent the violation, Hanover would have incurred no rental costs, but would have expended money in purchasing and servicing its own machines. Yet, in calculating pre-trebled damages, the district court did not simply deduct from Hanover's rental costs the purchase price and maintenance costs of the machines. Instead, it deducted the difference between the purchase price and maintenance costs on the one hand, and the residual value of the machines at the end of the damage period on the other. 245 F.Supp. 258, 287 (M.D.Pa.1965). That is, in order to arrive at a proper assessment of damages, the court deducted from Hanover's rental costs the net outlay the company would have had to make in securing the financial advantages of purchased machines. The district court's pre-trebled assessment of damages may be reflected algebraically, by the formula D = R-(a-b), where: 85 D = pre-trebled damages; 86 R = total rents and royalties paid by Hanover during the complaint period; 87 a = the purchase price to Hanover of the machines it would have bought in 1939 (the beginning of the complaint period) or in any subsequent year when additional machines or replacement machines would have been acquired, plus the expenses Hanover would have incurred in servicing those machines; 2 and 88 b = the residual value of (1) machines deemed to have been disposed of at the end of an assumed life expectancy, and (2) machines on hand in September, 1955 (the date of the commencement of the action). 89 245 F.Supp. at 287-89. The Supreme Court affirmed this assessment. 392 U.S. 481, 88 S.Ct. 2224, 20 L.Ed.2d 1231 (1968). 90 The majority opinion on damages ignores component b. If, as the majority effectively concludes, a is the 1980 difference in worth between the Los Angeles and Oakland opportunities, then b must be the 1982 (i.e., residual) value of the difference in worth between the opportunities. Applying the Hanover Shoe rationale here, in order to reflect accurately the net outlay that the Raiders would have had to make in securing the financial advantages of the move to Los Angeles, we should deduct from lost profits not a, but the difference between a and b. That is, rather than trebling [R-a] as the majority does, we should treble [R - (a - b) ] where: 91 R = lost financial advantages between 1980 and 1982; 92 a = the 1980 value of the Los Angeles opportunity minus the 1980 value of the Oakland opportunity; and 93 b = the 1982 value of the Los Angeles opportunity minus the 1982 value of the Oakland opportunity. 94 In failing to account for the 1982 (i.e., residual) value of the difference in worth between the Los Angeles and Oakland opportunities, 3 the majority underestimates the Raiders' damages. 4 95 Beyond its failure to calculate properly the net outlay the Raiders would have been required to make in moving to Los Angeles in 1980 and operating there through 1982, the majority also fails to calculate properly the financial advantages the Raiders lost by virtue of not being able to move in 1980. 5 The antitrust laws provide for the trebled recovery of all financial advantages the plaintiff would have gained absent the unlawful activities of the defendant. See Lehrman v. Gulf Oil Corp., 464 F.2d 26, 47 (5th Cir.), cert. denied, 409 U.S. 1077, 93 S.Ct. 687, 34 L.Ed.2d 665 (1972). Consistent with that principle, the Raiders' pre-trebled recovery should reflect not only the lost profits from 1980 to 1982, but also the extent to which the increase in value of the business during the same period would have been greater in Los Angeles than it actually was in Oakland. 6 96 In Fishman v. Estate of Wirtz, 594 F.Supp. 853 (N.D.Ill.1984), a case strikingly similar to our own, the plaintiff was unlawfully precluded from purchasing a sports franchise. The district court included in pre-trebled damages both lost profits and the increase in the value of the business during the period of the violation. 7 Similarly, in Magnus Petroleum Co. v. Skelly Oil Co., 446 F.Supp. 874 (E.D.Wis.1978), rev'd on other grounds, 599 F.2d 196 (7th Cir.), cert. denied, 444 U.S. 916, 100 S.Ct. 231, 62 L.Ed.2d 191 (1979), the district court allowed a corporation which had been unlawfully prevented from acquiring a business to recover three times the sum of both profits lost from the date of the attempted acquisition to the date of trial, and the increase in the value of the business' good will during that same period. 446 F.Supp. at 882-83. See also Story Parchment Co. v. Paterson Co., 282 U.S. 555, 561, 51 S.Ct. 248, 250, 75 L.Ed. 544 (1931) (antitrust plaintiff's damages include both (1) the difference between the profits actually realized by the injured party and the profits it would have realized but for the unlawful acts complained of; and (2) the diminished value of its business as a result of such acts); Atlas Building Products Co. v. Diamond Block & Gravel Co., 269 F.2d 950, 958-59 (10th Cir.1959) (same), cert. denied, 363 U.S. 843, 80 S.Ct. 1608, 4 L.Ed.2d 1727 (1960); Photovest Corp. v. Fotomat Corp., 1977-1 Trade Cases (CCH) p 61,529 (S.D.Ind.) (assessing pre-trebled damages of profits lost during antitrust violation plus difference between what business would have been worth absent a violation and what it was actually worth at end of damage period), aff'd in relevant part, 606 F.2d 704 (7th Cir.1979), cert. denied, 445 U.S. 917, 100 S.Ct. 1278, 63 L.Ed.2d 601 (1980); Atlantic City Electric Co. v. General Electric Co., 226 F.Supp. 59, 61 (S.D.N.Y.1964) (antitrust plaintiff entitled to recover lost profits and lost value of investment), appeal denied, 337 F.2d 844 (2d Cir.1964). 97 Perhaps the point is best illustrated by supposing that the Raiders had moved to Los Angeles in 1980, and then realized the appreciation in value of their business by selling the franchise in 1982. The financial gain attributable solely to the move would be: (1) the difference between the profits they made in Los Angeles from 1980 to 1982 and those they would have made in Oakland during the same period; and (2) the extent to which the increase in value of the business from 1980 to 1982 was greater than what the increase in value of the business would have been had they remained in Oakland. The majority ignores the second of the two financial advantages the Raiders would have secured by moving to Los Angeles in 1980 and operating there through 1982. B. Perma-Life Does Not Apply To This Case 98 I agree with the majority that Perma-Life Mufflers, Inc. v. International Parts Corp., 392 U.S. 134, 88 S.Ct. 1981, 20 L.Ed.2d 982 (1968), simply does not apply to this case. The majority correctly concludes that the jury found Rule 4.3 illegal only as applied to the Raiders' move. See ante at 1369. Consequently, the Raiders were not a party to the restraint, and the fault-based offset theory of Perma-Life is inapplicable. 8