Court Opinion

ID: 18100
Source: CourtListenerOpinion
Date Created: 2010-04-25 07:11:04+00
Date Added: 2024-06-11T08:43:41.456826
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS

                          FOR THE FIFTH CIRCUIT

                          _____________________

                               No. 98-11407
                             Summary Calendar
                          _____________________

RONNIE P. STEPHENS,

                                                    Plaintiff-Appellant,
S & H CHEMICAL, INC.,

                                 Plaintiff-Counter Defendant-Appellant,

                                   versus

RHONE-POULENC, INC.,

                                   Defendant-Counter Claimant-Appellee,

JIM HARDWICK; MONTY NEEB,

                                            Defendants-Appellees.
_________________________________________________________________

           Appeal from the United States District Court
                for the Northern District of Texas
                          (4:97-CV-540-Y)
_________________________________________________________________

                                July 8, 1999

Before JOLLY, SMITH, and PARKER, Circuit Judges.

PER CURIAM:*

      This case arises out of a decision by Rhone-Poulenc, Inc.

(“Rhone-Poulenc”), a manufacturer of agricultural products, to

terminate one of its distributors, S&H Chemicals, Inc. (“S&H”).

In the resulting lawsuit, S&H claimed that Rhone-Poulenc violated

the   antitrust    laws   and   Rhone-Poulenc   counterclaimed   that   S&H

      *
      Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
breached their contract by refusing to pay invoices.                  On appeal,

S&H argues that the district court erred by: (1) miscalculating the

period of time under the contract that interest was due on past-due

invoices; (2) awarding attorneys’ fees; and (3) granting summary

judgment for Rhone-Poulenc on S&H’s antitrust claims.                 Because we

find no error on the part of the district court, we affirm.

     According to Rhone-Poulenc, it made a decision to terminate

S&H, along with thirty other distributors, after it decided that it

should terminate dealers with small sales volume.                    S&H, on the

other hand, argues that it was terminated after it refused a

request by Rhone-Poulenc to raise its prices for “Prep”--a product

applied to cotton plants for the purpose of hastening late-season

boll development. The evidence that S&H introduced to support this

claim is testimony regarding a dispute between a representative of

Rhone-Poulenc   and   S&H    regarding    S&H’s    pricing      of   Prep.    In

addition, S&H asserts Rhone-Poulenc controls fifty percent of the

market for Prep.

     S&H sued Rhone-Poulenc in state court alleging breach of

contract, antitrust violations, and tortious interference.                Rhone-

Poulenc removed the case to a federal district court and filed a

counterclaim against S&H for breach of contract (S&H had ceased

paying its invoices after it was terminated).              S&H then paid its

outstanding   invoices      but,   despite   a    clause   in    the    contract

requiring it to do so, did not pay interest for the period that the

amount owed was past due.          After discovery, the court granted

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summary judgment in favor of Rhone-Poulenc and, under the contract,

awarded interest on the invoices and attorneys’ fees to Rhone-

Poulenc.

      The first two issues are both related to a factual allegation

made by S&H and can be dispensed with easily.                    Rhone-Poulenc sent

out a series of fifteen invoices, none of which were paid by S&H.

Under the contract, Rhone-Poulenc was entitled to interest on the

amount past due (i.e., not paid within thirty days of the date of

the   invoice)         and    reasonable    attorneys’      fees    incurred    while

collecting that amount.              In July 1997,        Rhone-Poulenc filed its

counterclaim seeking interest and attorneys’ fees.                   At that time,

fourteen of the fifteen invoices were past due.                  By August 1, 1997,

all fifteen were past due and Rhone-Poulenc sent a summary invoice

to S&H listing the total amount due.                The district court awarded

interest starting on August 1, the day that the last invoice was

past due.1         On appeal, S&H now argues that that summary invoice

should       be   treated     as   an   invoice   under    the   contract.      Thus,

according         to   S&H,   none   of   the   invoices    were   past   due   until

August 31, 1997.

      The first issue S&H raises on appeal is whether the district

court erred in calculating the amount of interest owed based on a

period starting on August 1.                The second issue is whether the

         1
       Although many of the invoices were past due long before
August 1, 1997, Rhone-Poulenc, according to its brief “for purposes
of simplicity,” agreed to forgive S&H the interest due on those
invoices for the period before August 1.

                                            3
district court erred in awarding attorneys’ fees when the costs

associated    with    filing          a    counterclaim     were    incurred       before

August 31, when S&H argues the invoices became past due.                       We find

both arguments to be meritless.                It is clear from the record that

the summary invoice was only that--a summary.                     That Rhone-Poulenc

sent S&H a reminder of past due invoices does not relieve S&H from

paying the original invoices in a timely fashion.                        We therefore

find no error on the part of the district court with respect to

either its award of interest or attorneys’ fees.

      The third issue raised by S&H on appeal is whether the

district    court    erred       in       granting     summary    judgment    on   S&H’s

antitrust claims.          The district court held that because S&H had

failed to present evidence of “conspiracy, agreement, or concerted

effort to restrain trade or fix prices,” S&H failed to meet its

burden of producing evidence sufficient to show a violation of the

antitrust laws.       On appeal, S&H argues that the district court

erred by requiring such a showing.

      At the outset, we should note that the district court is

absolutely correct that, under Section 1 of the Sherman Act, 15

U.S.C. § 1, the plaintiff must show the existence of “a contract,

combination . . ., or conspiracy” that restrains trade.                       However,

as   S&H   points    out    on    appeal,         no   evidence    of   an   agreement,

combination or conspiracy is necessary to make out a violation of

Section 2 of the Sherman Act.                 15 U.S.C. § 2 (“Every person who

shall monopolize, or attempt to monopolize, or combine or conspire

                                              4
with any other person or persons, to monopolize any part of the

trade or commerce . . . shall be deemed guilty of a felony”).

     After a review of the plaintiffs’ complaint and summary

judgment pleadings, we cannot tell whether S&H intended to argue

that Rhone-Poulenc’s conduct violated § 2.                The two principal

theories that S&H argued below were that Rhone-Poulenc engaged in

resale price maintenance and a refusal to deal.                Resale price

maintenance   is   a   vertical   agreement   to    fix   prices   and   falls

squarely under Section 1.     So in order to show that Rhone-Poulenc

engaged in resale price maintenance, S&H had to show that Rhone-

Poulenc entered into some form of agreement with its distributors

to set the prices for the resale of Prep.          See Business Elec. Corp.

v. Sharp Elec. Corp., 485 U.S. 717, 726 (1988).           Since S&H does not

challenge the district court’s holding that it failed to produce

evidence of a conspiracy, we need not consider its resale price

maintenance theory.       The other theory espoused by S&H is that

Rhone-Poulenc’s refusal to deal violated the antitrust laws.               In

general, a refusal to deal can run afoul of either § 1--if the

conduct involves an agreement among several parties--or § 2--if the

conduct amounts to monopolization or attempted monopolization.

     Given the confused manner in which S&H pleaded its theories,

it is unlikely that we would find fault in the district court

ruling solely on the § 1 claims.         To give S&H the benefit of the

doubt, however, we will briefly address its § 2 claim.             There are

                                     5
two separate offenses under § 2: monopolization and attempted

monopolization.

     The offense of monopolization requires “two elements: (1) the

possession of monopoly power in the relevant market and (2) the

willful acquisition or maintenance of that power as distinguished

from growth or development as a consequence of a superior product,

business acumen, or historic accident.”           U.S. v. Grinnell Corp.,

384 U.S. 563, 570-71 (1966). In this case, S&H has failed to

present evidence that Rhone-Poulenc had monopoly power.           The only

evidence that S&H presents is its allegation that Rhone-Poulenc

controls 50% of the market and that, standing alone, is simply

insufficient evidence of monopoly power.           See, e.g., Cliff Food

Stores v. Kroger, Inc., 417 F.2d 203, 207 n.2 (5th Cir. 1969) ("It

appears   that    something   more   than   50%    of   the   market    is   a

prerequisite to finding a monopoly").

     The offense of attempted monopolization, on the other hand,

requires two elements: “(1) specific intent to accomplish the

illegal result;    and (2) a dangerous probability that the attempt

to monopolize the relevant market will be successful.”                 Dimmitt

Agri Industries, Inc. v. CPC International, Inc., 679 F.2d 516, 525

(5th Cir. 1982).       In the case at hand, S&H has presented no

evidence that, even if Rhone-Poulenc sought to monopolize the

market, there is a dangerous probability that it would succeed. We

therefore conclude that regardless of whether S&H raised a valid

                                     6
§ 2 claim in its pleadings below, the district court did not err in

granting summary judgment.

      In this case, S&H’s principal argument is that the district

court erred by not considering whether Rhone-Poulenc’s conduct

violated § 2, as well as § 1, of the Sherman Act.         A review of the

pleadings in this case reveals that S&H’s arguments with respect to

a § 2 theory are far from pellucid.    Even if we accept that S&H did

raise this issue below, however, S&H has not presented the kind of

evidence necessary to proceed to trial on a § 2 theory.           S&H also

argues that the district court miscalculated the interest due on

past due invoices and inappropriately awarded attorneys’ fees under

the   contract.    Both   arguments   are   based   on    an   implausible

characterization of a document sent by Rhone-Poulenc to S&H: S&H

argues that the document is an invoice; Rhone-Poulenc argues it is

a summary of all past due invoices.          Because the document is

clearly the latter, we find no error on the part of the district

court.     For the foregoing reasons, the judgment of the district

court is

                                                         A F F I R M E D.

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