Court Opinion

ID: 8905889
Source: CourtListenerOpinion
Date Created: 2022-11-27 01:51:31.88639+00
Date Added: 2024-06-11T17:08:11.236886
License: Public Domain

GIBBONS, Circuit Judge,
dissenting.
Because my brothers in the majority have, with respect to the contract claim, usurped the proper function of the jury and, with respect to the antitrust claim, misstated the governing law, I respectfully dissent.
I. THE CONTRACT CLAIM
The theory of plaintiff, Sitkin Smelting and Refining Co., Inc., carefully set out in Judge VanArtsdalen’s charge to the jury, was that Charles Kline, acting for FMC Corporation promised in 1972 that, if Sitkin would bid on the FMC plant, FMC (1) would not use Sitkin’s bid to negotiate higher bids from other bidders and (2) would, if it accepted any bid, accept the highest bid. The court expressly charged:
It is only in the event that you find that FMC made the definite promise to Sitkin in respect to the 1972 bidding for the purchase of the entire plant, which promises remained in effect by agreement and assent of the parties in respect to the bidding that took place in 1973. And it could only be on that basis that the plaintiffs could establish any contract between FMC and plaintiffs in regard to the facts of this case.
App. 618. This charge — that in order for Sitkin to recover, the jury must find that the 1972 promises remained in effect in 1973 — was repeated several times. Judge VanArtsdalen reviewed the evidence for the jury and pointed out that the testimony on the intention of the parties was conflicting. Given the conflict, he denied FMC’s motion for a directed verdict, pursuant to Fed.R.Civ.P. 50(a), and left the issue to the jury on special interrogatories. Before it could return a verdict for Sitkin on the contract claim, it had to — and did — answer the following questions in the affirmative:
1. Did FMC Corporation and Sitkin Smelting & Refining Co., Inc., through authorized agents, enter into a contract in 1972 wherein they mutually agreed that if Sitkin Smelting & Refining Co., Inc. made a bid to purchase FMC Corporation’s Lewistown plant in its entirety, including real estate, FMC Corporation
(a) would not disclose such bid to any other bidder?
Yes
(b) would not use such bid to negotiate higher bids from other bidders?
Yes
(c) would, if it accepted any bid, accept the highest and best bid?
Yes
2. If any part of No. l((a), (b) or (c)), is answered Yes, did the same terms and conditions as found to exist in the Answer to Interrogatory No. 1 above apply to the bid submitted by Sitkin Smelting & Refining Co., Inc., on behalf of itself and jointly with Monongahela Iron and Metal Co., Inc., in 1973 for the dismantling of FMC Corporation’s Lewistown plant, in response to the invitations to bid in accordance with specifications prepared by FMC Corporation?
Yes
When, after the verdict, FMC moved for judgment notwithstanding the verdict, pursuant to Fed.R.Civ.P. 50(b), Judge VanArts-dalen denied the motion, saying “[a] careful review of the record . . . convinces me that . . . there was more than sufficient credible evidence upon which the jury could properly base its findings contained in the answers to written interrogatories . . . App. 735.
The majority concedes that there is ample evidence to support the jury’s answer to Interrogatory No. 1. Thus we, as a reviewing court, are bound to accept the fact that FMC made the three promises listed in that question. A contract came into being in 1972. Interrogatory No. 2 is concerned, not with its existence, but with its duration and terms. Both depended on the intention of the parties. The majority says that the evidence on duration “lacked the definiteness that would permit a reasonable inference, as opposed to a guess, that it reflected an intention with respect to the extent of the 1972 high bid assurance.” Supra, p. 445. The difficulty with this position is that a contract of some duration is acknowledged to have come into existence. It is no *450less speculative to accept FMC’s version than Sitkin’s.
The testimony of the two men who negotiated the contract, Lewis Sitkin (for Sitkin) and Charles Kline (for FMC), reveals no express reference to duration. Intention concerning duration must have been determined from the surrounding circumstances. The majority holds as a matter of law that no fact finder could find that the promises listed in Interrogatory No. 1 survived FMC’s rejection of the 1972 bids. Plainly that is not so. If, for example, immediately following the rejection of the 1972 bids FMC had taken Sitkin’s bid to a third party and used it to fix the price for a negotiated sale of the plant, such disclosure would have been a breach of contract. This result is unaffected by the fact, relied on by the majority, that Sitkin’s 1972 bid expired on October 20, 1972. The parties to the contract certainly did not contemplate that on October 21, 1972, FMC could disclose Sit-kin’s bid to a third party and negotiate a private sale. Having found the 1972 contract, a fact finder could — indeed must— conclude that some of its covenants extended beyond October, 1972.
Which covenants extended beyond that date? Clearly not the undertaking to accept the highest bid, says the majority, because the 1973 solicitation explicitly reserved the right to reject all bids. The short answer to that argument is: so did the 1972 solicitation. The covenant on which Sitkin relies bound FMC to accept the highest bid if it accepted any bid. The majority’s observation that “the very documentation which prompted plaintiffs’ 1973 bid is inconsistent with an intent that the 1972 high bid assurance would apply until the scrap was sold,” supra, p. 445, is tortured reasoning in light of the actual covenant. Had no sale taken place, Sitkin would have had no claim. But a bid was accepted, and if, as the jury held, the covenant to accept the highest bid was still binding, then Sitkin did have a claim.
There is evidence that Kline informed Attilio Bisio, who was hired by FMC in March, 1973, and assigned the job of disposing of the plant, about the 1972 agreement with Sitkin. Specifically, Kline told Bisio that he had promised Sitkin that the latter’s bid would not be disclosed and that, if any bid was accepted, it would be the highest bid. Kline told Bisio, in other words, the contract terms which the jury found in Interrogatory No. 1. A reasonable man could conclude that Kline was not engaging in idle conversation but was briefing the man now in charge of disposing of the plant on the contractual limitations within which he had to operate. Had Kline understood in 1973 that the 1972 undertakings were no longer binding, he would have had little or no reason to brief Bisio on them — at least a reasonable man could so conclude.
There is also evidence that after the 1973 bidding Kline acknowledged a special responsibility to Sitkin — “a responsibility to be sure that he had been given an absolutely, completely fair shake all the way down the line,” App. 434. This special responsibility toward Sitkin (unlike other bidders) is evidenced by the special treatment accorded Sitkin’s 1973 bid and by the personal visit paid to Lewis Sitkin to inform him that his bid had been rejected.
In addition to the evidence of FMC dealings with Sitkin is the evidence of its secret 1973 contracts with Krentzman, the favored bidder. What need for secrecy if FMC had no contractual obligation to Sitkin? A reasonable man could conclude that it evidenced the continuing effect of the 1972 undertakings. A reasonable jury did so conclude. The majority rejects all this 1973 evidence as not tending to prove the intent of the parties in 1972. By so doing, it substitutes its own evaluation of the evidence for that of the jury. Like the trial judge who heard the testimony and observed the demeanor of Kline, Bisio, and Sitkin, I conclude that the jury was properly asked Interrogatory No. 2 and that its verdict should not be disturbed.
II. THE ANTITRUST CLAIM
A complaint alleging a conspiracy to deprive a competitor of the benefits of a lawful contract in or affecting interstate *451commerce by unlawful means states a valid antitrust claim. As summarized by the majority in this case, Sitkin’s complaint charged a conspiracy “to commit two per se violations of the antitrust laws: an illegal boycott and price fixing.” Supra p. 442. In the first place, this is not a fair characterization of Count II of plaintiffs’ complaint. In fact, that count charges:
COUNT II
17. The foregoing constitutes a contract, combination and conspiracy in restraint of trade, in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. App. 9. The “foregoing” to which it refers is the factual recitation that FMC and Krentzman secretly and fraudulently conspired with each other to obtain and use Sitkin’s bid and to deprive Sitkin of the benefits of the contract which resulted when it submitted the high bid. From the jury’s findings, it is clear that there was just such a conspiracy.
It is true that at trial Sitkin analogized what had transpired to group boycott and price fixing, but its pleadings did not commit it to any precise category of per se violation. The point it made was that the conspiracy, which everyone agreed affected commerce, had no lawful purpose whatsoever and resulted in the destruction of genuine competition. This was not a case in which reliance on a per se rule was required because no reasonable justification could have been tendered for the immoral conduct found by the jury. None was, in fact, tendered; instead, FMC denied the existence of the conspiracy. The jury, however, found otherwise.
My difference with the majority on the antitrust claim is fundamental. The majority starts with a search for a per se category into which the conspiracy might fit; finding none, it proceeds to examine the substantiality of the effect upon competition. I start, as Judge Taft did in United States v. Addyston Pipe & Steel Co., 85 F. 271 (6th Cir. 1898), modified and aff’d, 175 U.S. 211, 20 S.Ct. 96, 44 L.Ed. 136 (1899), by searching for a lawful main purpose. If a lawful main purpose for a combination or agreement, producing a restraint can be identified, I proceed to inquire whether its effect upon competition is such that it can be called reasonable. But if, as here, no one can identify any lawful purpose for the combination or agreement and if, as here, the resulting restraint affects interstate commerce, then a search for per se categories and an inquiry into the substantiality of effect are not required. A conspiracy that would be unlawful at common law— and I have little doubt about the unlawfulness of this one — must, if it affects interstate commerce sufficiently for federal jurisdictional purposes, violate the Sherman Act.
Moreover, even if there were no such contract, as the jury found, there certainly was a solicitation of bids and a conspiracy to deprive bidders not only of the cost of preparing those bids but also of the valuable trade information contained therein. That conspiracy injured every bidder (except Krentzman) in its business or property to the extent of such cost and the value of such information. Being unable to conjure up a lawful purpose for a fake auction and recognizing that this fake auction was conducted in interstate commerce, I would find a Sherman Act violation even without the contract. Without the contract, of course, the amount of damages would be different.
The majority responds that, although manipulation of the bids of businessmen is “clearly reprehensible,” the Sherman Act may not be used “to police the morals of the marketplace.” Supra, p. 448. I had thought, until today, that policing the morals of the interstate marketplace was exactly what Senator Sherman had in mind. A conspiracy to conduct a fake auction in the auction market for securities conducted by our national securities exchanges, for example, was surely within his contemplation.
III. CONCLUSION
The jury found that there was a breach of contract which was the result of a conspiracy. It found damages in the amount *452of $700,000. Under Section 4 of the Clayton Act the recovery is three times actual damages. I would affirm the judgment on the contract claim and reverse the judgment on the antitrust claim.