Opinion ID: 385713
Heading Depth: 2
Heading Rank: 1

Heading: I thought the advertising was run.

Text: 21 Q. And you don't know whether your advertising, in fact, ran on WJIT? 22 A. I assume it was run. 23 Q. You assumed it was? 24 A. It was run. 25 Q. You assumed is what you said. 26 A. I never heard it myself. 27 Q. So you don't know. 28 A. For a fact, up until April since Sony 10 approved it and he was with Sony I know it was run. 29 Q. You thought it was run? 30 A. It was run, yes. 31 A. Up until April '77, I knew it was run. 32 Q. How did you know it was run up to April 1977? 33 A. Because Norman King (the agent) told me and Sony gave me an approval. 34 Q. So you assumed it was running? 35 A. Yes. 36 A. I assumed once I got advertising credit I assumed it actually ran. 37 We also observe that Mr. Schwimmer in his earlier deposition testimony believed the advertisements were run not only on the basis of what the advertising agent told him, but also because he assumed Sonam would not otherwise have issued the credit. From this testimony, one would necessarily conclude that, in Schwimmer's mind, neither Supersonic nor Sonam had any intention of disregarding the terms of the 1976 Manual. Since the District Court could properly rely on Schwimmer's earlier deposition testimony, as opposed to his later conflicting hearsay affidavit, Perma Research and Development Co. v. Singer Co., 410 F.2d 572, 577 (2d Cir. 1969), it correctly concluded that there was no genuine issue of fact barring Sonam from recovering the $54,133.50 credited to Supersonic on the basis of fraudulent submissions.II. Supersonic's Robinson-Patman Act Claim Against Sony. 38 Supersonic also appeals from the dismissal of its claim that Sony violated § 2(a) of the Robinson-Patman Act. One issue alone is presented: whether Supersonic has standing under § 4 of the Clayton Act to assert this claim. 39 The District Court concluded that Supersonic lacked standing to assert a claim against Sony because Supersonic was not within the target area of Sony's alleged price discrimination between Sonam and Interocean. In granting Sony's motion for summary judgment, the court below found no evidence (1) that Supersonic was a direct purchaser of Sony, or (2) that Sony's alleged price discrimination between Sonam and Interocean was directed at Supersonic, or (3) that Sony controlled subsequent resale prices by Sonam or others purchasing from Sony. 11 40 Appellant first contends that, as a non-direct purchaser, it has standing to sue Sony because it was within the target area of the alleged price discrimination. See Calderone Enterprises Corp. v. United Artists Theatre Circuit, Inc., 454 F.2d 1292 (2d Cir. 1971), cert. denied, 406 U.S. 930, 92 S.Ct. 1776, 32 L.Ed.2d 132 (1972). Further, appellant takes the position that secondary purchasers have automatic standing to sue any discriminating seller who distributes its products to the secondary market through wholly-owned subsidiaries. 12 We disagree. 41 Section 2(a) of the Robinson-Patman Act prohibits price discrimination between competing purchasers. That section provides, in pertinent part, that 42 It shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchases involved in such discrimination are in commerce . . . and where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them . . . . 43 15 U.S.C. § 13(a). Standing to raise a claim under Section 2(a) is derived from Section 4 of the Clayton Act, 15 U.S.C. § 15, which provides that (a)ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor and recover treble damages and costs and a reasonable attorneys' fee. The language of Section 4 of the Clayton Act is quite broad and could be read to confer standing to assert claims under § 2(a) of the Robinson-Patman Act on purchasers who are only indirectly or incidentally injured by a seller's price discrimination between direct purchasers. However, courts have recognized the need to limit the scope of Section 4 by establishing practical rules of standing . . . (to) exclude remote parties with possibly speculative injuries. Long Island Lighting Co. v. Standard Oil Co. of California, 521 F.2d 1269, 1273 (2d Cir. 1975), cert. denied, 423 U.S. 1073, 96 S.Ct. 855, 47 L.Ed.2d 83 (1976); see also, Calderone Enterprises Corp. v. United Artists Theatre Circuit, Inc., 454 F.2d 1292, 1295 (2d Cir. 1971), cert. denied, 406 U.S. 930, 92 S.Ct. 1776, 32 L.Ed.2d 132 (1972). Thus, it is recognized that treble damage actions, effective and attractive as they are in deterring violations of the federal antitrust laws, must have some boundaries. Consequently, the standing requirement is designed, in essence, to limit access to treble recovery to a target of the anticompetitive conduct. Thus, the standing rules exclude a non-target whose damages are more difficult to prove and, in all likelihood, highly speculative. Where, as here, the substantive law provides few bright lines separating permissible from impermissible conduct, it is especially important to have clear standing rules in order to avoid abuses of the Clayton Act's private enforcement remedy. 44 Calderone Enterprises Corp. v. United Artists Theatre Circuit, Inc. enunciates the following rule: 45 . . . in order to have standing to sue for treble damages under § 4 of the Clayton Act, a person must be within the target area of the alleged antitrust conspiracy, i. e., a person against whom the conspiracy was aimed, such as a competitor of the persons sued. Accordingly we have drawn a line excluding those who have suffered economic damage by virtue of their relationships with targets or with participants in an alleged antitrust conspiracy, rather than by being targets themselves. 46 Id. at 1295 (emphasis added). 13 Courts have examined whether the plaintiff suffered a direct injury as opposed to an incidental, indirect or remote injury. See, e. g., Productive Inventions, Inc. v. Trico Products Corp., 224 F.2d 678, 680 (2d Cir. 1955), cert. denied, 350 U.S. 936, 76 S.Ct. 301, 100 L.Ed. 818 (1956); Long Island Lighting Co. v. Standard Oil Co., supra, at 1274. 14 While courts frequently focus on the purpose of the antitrust conspiracy, specifically whether it was aimed at the one claiming injury, we do not conclude that a requirement of specific intent should be read into the target area test. 15 As the Ninth Circuit stated in Twentieth Century Fox Film Corp. v. Goldwyn, 328 F.2d 190, 220 (9th Cir.), cert. denied, 379 U.S. 880, 85 S.Ct. 143, 13 L.Ed.2d 87 (1964): 47 (I)n using the words aimed at this court did not mean to imply that it must have been a purpose of the conspirators to injure the particular individual claiming damages. Rather, it was intended to express the view that the plaintiff must show that, whether or not then known to the conspirators, plaintiff's affected operation was actually in the area which it could reasonably be foreseen would be affected by the conspiracy. This is made clear by our quotation, in Karseal, of this excerpt from the opinion in Conference of Studio Unions v. Loew's Inc., 9 Cir., 193 F.2d 51, 54-55: 48 A conspiracy may have many purposes and objects; the conspirators may perform an almost infinite variety of acts in furtherance of the conspiracy; but, in order to state a cause of action under the anti-trust laws a plaintiff must show more than that one purpose of the conspiracy was a restraint of trade and that an act has been committed which harms him. He must show that he is within that area of the economy which is endangered by a breakdown of competitive conditions in a particular industry. Otherwise he is not injured 'by reason' of anything forbidden in the anti-trust laws. 49 Further, the aimed at language of the target area test has also been discussed in terms of causation. Contreras v. Grower Shipper Assn. of Central California, 1971 Trade Cas. P 73,592 (N.D.Cal.1971), aff'd per curiam, 484 F.2d 1346 (9th Cir. 1973), cert. denied, 415 U.S. 932, 94 S.Ct. 1445, 39 L.Ed.2d 490 (1974); see also Twentieth Century Fox Film Corp. v. Goldwyn, 328 F.2d 190, 220 (9th Cir.), cert. denied, 379 U.S. 880, 85 S.Ct. 143, 13 L.Ed.2d 87 (1964), discussing, Karseal Corp. v. Richfield Oil Corp., 221 F.2d 358, 362 (9th Cir. 1955). In Contreras, farm workers engaged in growing, harvesting and processing lettuce alleged that certain growers and shippers of iceberg lettuce and their trade association violated §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2 by conspiring to raise the price of iceberg lettuce by limiting its production and dividing the market, thereby reducing the amount of work available to the plaintiffs. The plaintiffs sought damages for lost job opportunities caused by the defendants' cutbacks in lettuce production. The court, in denying the plaintiffs standing to sue, properly observed that the standing requirement of § 4 of the Clayton Act excludes suits by persons whose injury was not necessary to achieve the purposes of the conspiracy, even though it may have followed as a logical result of the other acts (in furtherance of the conspiracy). Id. at 90,453. 50 From the foregoing analysis, we turn to the issue before us: at what point in a distribution chain does the injury from price discrimination become too remote to permit an indirect purchaser to sue under § 4 of the Clayton Act? Clearly, the first level purchaser has standing to sue by virtue of the direct injury inflicted upon it. See, e. g., Klein v. Lionel Corp., 237 F.2d 13 (3d Cir. 1956); see also, Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481, 488-90, 88 S.Ct. 2224, 2228-2229, 20 L.Ed.2d 1231 (1968). However, the impact of price discrimination on an indirect purchaser at a subsequent level is more difficult to assess. Courts are not permitted to assume that the original seller's overcharge is automatically passed on to successive customers. See Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977). 16 Nevertheless, a court must guard against a situation in which a seller interposes a middleman as a shield against antitrust liability, 17 especially where the middleman is a subsidiary of the seller. 18 Thus, an indirect purchaser is considered a target of a seller's price discrimination if there is evidence that the discrimination was aimed at the indirect purchaser by virtue of the nature and foreseeable effect of the antitrust conspiracy. Relevant factors to consider in this connection are the anticompetitive purpose or object of the seller's price discrimination, see, e. g., FLM Collision Parts, Inc. v. Ford Motor Co., 406 F.Supp. 224 (S.D.N.Y.1975), aff'd in part on other grounds, rev'd in part on other grounds, 543 F.2d 1019 (2d Cir. 1976), cert. denied, 429 U.S. 1097, 97 S.Ct. 1116, 51 L.Ed.2d 545 (1977), and the seller's control over the resale price to the indirect purchaser. See American News Co. v. FTC, 300 F.2d 104 (2d Cir.), cert. denied, 371 U.S. 824, 83 S.Ct. 44, 9 L.Ed.2d 64 (1962). 51 We conclude that the District Court was correct in its determination that Supersonic has no standing to pursue this action against Sony since the uncontradicted record amply supports its conclusion that Supersonic was not in the target area of Sony's alleged price discrimination. 52 Appellant argues, in the alternative, that Supersonic should be considered a direct purchaser from Sony under the single-entity doctrine. See F. Rowe, Price Discrimination Under the Robinson-Patman Act, 53-57 (1962), and Supp. nn.35-42 (1964). Supersonic contends that the court below failed to consider the issue of whether Sony and its wholly-owned subsidiary, Sonam, constitute a single sales entity for purposes of the Robinson-Patman Act. Compare, Bain & Blank, Inc. v. Philco Corp., 148 F.Supp. 541 (E.D.N.Y.1957), with Reines Distributors, Inc. v. Admiral Corp., 256 F.Supp. 581 (S.D.N.Y.1966). Supersonic, however, did not raise this issue in its pleadings or motion papers, and therefore is precluded from raising it for the first time on appeal. Grace Towers Tenants Ass'n v. Grace Housing Development Fund Co., 538 F.2d 491, 495 (2d Cir. 1976); Capps v. Humble Oil & Refining Co., 536 F.2d 80, 82 (5th Cir. 1976); National Equipment Rental, Ltd. v. Stanley, 283 F.2d 600, 603 (2d Cir. 1960); Parenzan v. Iino Kaiun Kabushiki Kaisya, 251 F.2d 928, 930 (2d Cir.), cert. denied sub nom., International Terminal Operating Co. v. Iino Kaiun Kaisha, Ltd., 356 U.S. 939, 78 S.Ct. 781, 2 L.Ed.2d 814 (1958). Further, we note that the single-entity theory was not raised implicitly by any evidence adduced by Supersonic. As noted above, the record contains no proof that Sony controlled the resale prices of Sonam, or exercised dominion and control over its subsidiary. Absent such evidence, there was nothing for the District Court to consider. See Reins Distributors, Inc. v. Admiral Corp., supra, at 585-86. 53 The orders appealed from are affirmed.