Court Opinion

ID: 9468922
Source: CourtListenerOpinion
Date Created: 2023-08-05 02:26:47.908925+00
Date Added: 2024-06-11T17:41:06.976526
License: Public Domain

KENNEDY, Circuit Judge,
dissenting:
Where policy arguments are bounced about in the freewheeling manner of the majority opinion, it is a sign that either no precedent exists to guide us, or that existing precedent is being ignored. In this case, it is the latter, but in any event the rule announced here is a departure from sound antitrust principles. I state my respectful dissent.
An appropriate starting point for the case is the Supreme Court’s decision in Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977). I submit Brunswick stands for the proposition that antitrust laws are aimed at protecting competition, and that antitrust actions under section 4 of the Clayton Act are limited to persons injured as competitors in a defined market or in a discrete area of the economy. Brunswick does not mandate this construction in so many words, but it is the fair and logical interpretation of the case; and I had thought, at least until today, this interpretation of Brunswick was established doctrine in this circuit. See Solinger v. A & M Records, Inc., 586 F.2d 1304, 1310, 1311 (citing Brunswick for propositions that “injury caused by the violation must be one the antitrust laws were designed to protect against”; and plaintiff must be within area of economy the antitrust laws were designed to protect); John Lenore & Co. v. Olympia Brewing Co., 550 F.2d 495, 498-500 (9th Cir. 1977) (discussing and applying Brunswick analysis).1
In In re Multidistrict Vehicle Air Pollution M. D. L. No. 31, 481 F.2d 122 (9th Cir.), cert. denied, 414 U.S. 1045, 94 S.Ct. 551, 38 L.Ed.2d 336 (1973), we emphatically re-embraced the target area theory for antitrust standing first set out in Conference of Studio Unions v. Loew’s Inc., 193 F.2d 51, 54-55 (9th Cir. 1951), cert. denied, 342 U.S. 919, 72 S.Ct. 367, 96 L.Ed. 687 (1952), and we held that the plaintiff must allege injury *1390“in the area of the economy in which the elimination of competition occurred.” 481 F.2d at 128. We have continually reaffirmed the rule in this circuit. See, e.g., Solinger v. A & M Records, Inc., 586 F.2d at 1310; Bosse v. Crowell, Collier & MacMil-lan, 565 F.2d 602, 606 (9th Cir. 1977); John Lenore & Co. v. Olympia Brewing Co., 550 F.2d at 499; Blankenship v. Hearst Co., 519 F.2d 418, 425-26 (9th Cir. 1975). Although dicta in a footnote in our recent opinion in California State Council of Carpenters v. Associated General Contractors of California, Inc., 648 F.2d 527 (9th Cir. 1980), cert. granted, - U.S. -, 102 S.Ct. 998, 71 L.Ed.2d 292 (1982), indicated some discomfort with the doctrine, we again acknowledged that “[i]n this circuit, legal causation has traditionally been judged under the so-called ‘target area’ test.” 2 Id. at 537.
The target area test is not restricted to resolving only clear cases, as the majority suggests, supra, at 1382-83, but rather was adopted carefully as a “logical and flexible tool” far superior to the crude direct injury test, which engaged in a “mere search for labels,” and relied on “certain talismanic rubrics” to determine standing. In re Multidistrict Vehicle Air Pollution M. D. L. No. 31, 481 F.2d at 127-28. The target area test embodies this circuit’s balancing of competing policy interests to determine whether a particular claimant falls within the class of persons intended to be protected by the antitrust- laws. The test implicitly enforces Brunswick’s requirement that a plaintiff must allege injury “that flows from that which makes defendants’ acts unlawful.” 429 U.S. at 489, 97 S.Ct. at 697.
This circuit’s line of precedent is sound, yet the majority simply and erroneously ignores it. Here, the main conspiracy alleged as the premise of liability was not one to harm employees. It was one to fix prices and allocate customers in the nationwide market for paper labels. Appellant was not in the area of the economy endangered by the breakdown of competitive conditions; that is, he was not injured by the labels industry breakdown “the antitrust laws were intended to prevent,” Brunswick, 429 U.S. at 489, 97 S.Ct. at 697. It may be true, under appellant’s theory, that in a strict causation sense the employee’s termination resulted from the conspiracy, but collateral damages to persons outside the competitive area aggrandized by antitrust defendants are inconsistent with the orderly administration of the antitrust laws. See Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977). The congressional concern underlying the substantive provisions of the antitrust laws was competition, not employee coercion or discharge. Appellant’s intimate relation with the scheme is not sufficient; he must be intimately related to its anticompetitive effect.
The majority opinion argues also that appellant should have been permitted to challenge and establish the context of the conspiracy as a whole in connection with an alleged boycott of his services and his employer’s alleged unilateral refusal to deal with him in furtherance of the conspiracy. The cases cited for the proposition that persons have been permitted to challenge conspiracies as a whole even though their injuries resulted not from the principal ob*1391ject of the conspiracy but from a subsidiary boycott are authorities such as Radovich v. National Football League, 352 U.S. 445, 77 S.Ct. 390, 1 L.Ed.2d 456 (1957), and Kiefer-Stewart Co. v. Seagram & Sons, 340 U.S. 211, 71 S.Ct. 259, 95 L.Ed. 219 (1951). Those cases are quite inappropriate here, for they involved boycotts that were the same type as, and a part of, the larger conspiracy. In Radovich, for example, the plaintiff challenged an alleged boycott of his services by the N.F.L. in connection with the boycott of the league to which he belonged in furtherance of a monopoly of professional football, all of which the antitrust laws were designed to prevent. Here, Ostrofe’s discharge was a matter of employee coercion apart from the main price fixing scheme that the antitrust laws are designed to deter. See Conference of Studio Unions v. Loew’s, 193 F.2d at 54. He cannot challenge the larger conspiracy in the guise of establishing the “context” for the alleged boycott against him.
Similarly, parties injured by unilateral conduct in furtherance of an unlawful restraint of trade have been permitted to challenge the overall scheme only when the unilateral conduct was part of, and created the same type of injury as, the main unlawful restraint conspiracy. See, e.g., Albrecht v. Herald, 390 U.S. 145, 88 S.Ct. 869, 19 L.Ed.2d 998 (1968) (plaintiff claimed his distributorship was cancelled by publisher because he refused to adhere to publisher’s imposed maximum retail price); Engine Specialties, Inc. v. Bombardier Limited, 605 F.2d 1, 15 (1st Cir. 1979) (terminated plaintiff-distributor could challenge his manufacturer’s agreement with another manufacturer to divide territorially market for minicycles because “ineluctable result” of allocation and division of markets was termination, so antitrust injury under Brunswick existed); Lee-Moore Oil Co. v. Union Oil Co., 599 F.2d 1299, 1301-02 (4th Cir. 1979) (jobber terminated by supplier alleged conspiracy among major oil producers to drive out such maverick jobbers and restrain competition); Hoopes v. Union Oil Company of California, 374 F.2d 480 (9th Cir. 1967) (plaintiff service station owner claimed supplier sought to restrain competition by restricting retail outlets, including plaintiff’s, to sale of supplier’s gas). The plaintiff in the instant case was not in the target area of either the price fixing conspiracy or a unilateral discharge in direct furtherance of the elimination of competition, and his motion to amend was properly denied.
Finally, as for the alleged subsidiary boycott aimed at appellant himself, although generally an employee can challenge an alleged boycott of his services in the employment market of an industry, he must put forward evidence to demonstrate the boycott apart from any other conspiracy. An unsupported inference of a boycott is not sufficient. Ostrofe’s boycott claim was based solely upon alleged communications from his superiors to him, during his employment, that the company’s competitors were complaining about Ostrofe’s failure to cooperate. Appellant resigned voluntarily from the company despite their request for him to stay, and he did not attempt to obtain employment with any other industry employer. Appellant failed to offer any evidence whatsoever of ostracism or coercion alleged to have taken place since his resignation from the company. The district court properly granted summary judgment on the boycott claim for failure to come forward with evidence to support the charge. See Blair Foods, Inc. v. Ranchers Cotton Oil, 610 F.2d 665, 670 (9th Cir. 1980); Mutual Fund Investors v. Putnam Management Co., 553 F.2d 620, 624 (9th Cir. 1977).
The majority unsupportedly extends the reach of the antitrust laws beyond established precedent and beyond the intent of Congress. I should suppose that on nearly every occasion when a federal court announces an expansion of federal law to a new and previously unregulated area of conduct, it can invoke deterrence as the *1392rationale. The short answer to the argument here is that Congress did not design the antitrust laws to reach employee-employer relations as an enforcement mechanism. Congress has made participation in anticompetitive conduct a criminal offense, and this is a more direct and proper deterrent than to provide a treble damage windfall to discharged employees.
Even accepting for argument the theory that the necessity for deterrence is a ground for stretching antitrust actions beyond previously recognized boundaries, the deterrence argument is a weak one in this employee discharge case. The employee here already has considerable remedies and causes of action to deter conduct of the sort alleged in the complaint. Since Petermann v. International Brotherhood of Teamsters, 174 Cal.App.2d 184, 344 P.2d 25 (1959), California has recognized the right of an at-will employee discharged for refusal to perform an unlawful act to sue for wrongful discharge on a breach of contract theory. Most recently, in a case involving facts strikingly similar to those presented here, the California Supreme Court held that the employee also has a cause of action based upon the tort of wrongful discharge, subjecting the employer to compensatory damages, damages for emotional distress, and punitive damages. In Tameny v. Atlantic Richfield Company, 27 Cal.3d 167, 610 P.2d 1330, 164 Cal.Rptr. 839 (1980), the California Supreme Court allowed a wrongful discharge tort action to be brought by an employee against his employer where the allegation was that, while a retail sales representative, the employee was discharged for refusing to participate in an illegal scheme to fix the retail gasoline prices of defendant’s franchisees.
Ostrofe therefore has alleged facts that, if true, are the basis for a weighty cause of action against his employer on state law grounds for punitive and compensatory tort and contract damages. Such actions will provide the substantial deterrence sought to be achieved by the majority through the device of the antitrust laws. ■ Although the California doctrine has been adopted only in some jurisdictions, the number is increasing, see Phillips v. Goodyear Tire & Rubber Co., 651 F.2d 1051, 1055 (5th Cir. 1981); Note, Protecting At Will Employees Against Wrongful Discharge: The Duty to Terminate Only in Good Faith, 93 Harv.L.Rev. 1816, 1822-24 (1980) (discussing “public policy” exception and its growth), and the substantive rights of recovery for such conduct rightfully should occur in the employee discharge context, rather than under the antitrust laws aimed at product competition. This sensitive development in the law of employer-employee relations should not be pretermitted by heavy-handed interference from the federal courts in the name of enforcing laws designed only for protecting the nation’s competitive economic system.
I do not believe federalism is destined to fail, but neither is its continuance necessarily assured. If it does disappear, it will be primarily because those charged with enforcement of federal laws cannot resist the temptation to expand their jurisdiction to the outermost limits of abstract logic, even where history and common sense tell us the independent processes of our state systems are sufficiently vital to afford all the protection needed against certain evils. The decision of the court here illustrates that failing, and I dissent from the opinion and the judgment.

. Dictum in California State Council of Carpenters v. Associated Gen. Contractors of Cal., Inc., 648 F.2d 527, 538 n.18 (9th Cir. 1980), cert. granted, - U.S. -, 102 S.Ct. 998, 71 L.Ed.2d 292 (1982), referred approvingly to a “zone of interests” test adopted by the Sixth and Third Circuits. Even the Sixth Circuit, however, has modified its views expressed in Malamud v. Sinclair Oil Corp., 521 F.2d 1142 (6th Cir. 1975), which was cited in California State Council of Carpenters. In Chrysler Corp. v. Fedders Corp., 643 F.2d 1229 (6th Cir. 1981), the court held that Brunswick “clearly establishes that a plaintiff must plead an injury of the type § 4 was intended to remedy before his case will be heard,” id. at 1234, and the court imposed the requirement that a plaintiff plead antitrust injury in addition to its zone of interests standing standard, id. at 1234-35.
It should be noted that, as modified in light of Brunswick, the Sixth Circuit’s zone of interests test differs from this circuit’s target area test only in that the former “does not inject an' element of proximate cause into the standing inquiry,” but rather reserves the issue of “directness” as one to be resolved upon a factual showing. 643 F.2d at 1235-36. Under this new “zone of interests” test of the Sixth Circuit, the plaintiff here would not have standing, because he has not alleged “antitrust injury,” but rather improper employee discharge, a tort or contract type of injury.
It should be noted also that the Third Circuit did not adopt a “zone of interests” test, but rather a test applying a number of factors, including direct injury and target area considerations, to each factual matrix. Cromar Co. v. Nuclear Materials & Equipment Corp., 543 F.2d 501, 506 (3d Cir. 1973). That circuit also has included Brunswick’s antitrust injury requirement in the factors to be considered in determining standing. Mid-West Paper Products Co. v. Continental Group, Inc., 596 F.2d 573, 582-83 (3d Cir. 1979).

. In an explicit acknowledgment that precedent points to a conclusion contrary to its own, the majority writes: “Brunswick could be read as limiting section 4 to suits for damages caused by the anticompetitive effect of the particular antitrust violation. Similar language appears in lower court opinions.24” Majority opinion at 1387. Study of the footnote signal reveals a string citation of three cases in which the second and third cases listed are opinions of our own court, squarely contrary to the theory of the majority here. In re Multidistrict Vehicle Air Pollution M. D. L. No. 31, 481 F.2d 122 (9th Cir. 1973); Conference of Studio Unions v. Loew's Inc., 193 F.2d 51 (9th Cir. 1951). At an earlier point, the majority writes that “[t]he courts have devised various ‘tests’ for standing to sue,” majority opinion at 1382. Again, in a string cite in footnote 6, is a case setting forth this circuit’s target area test. I doubt the concept of the law of the circuit properly could be treated in such cavalier fashion even by an advocate, and for a majority on a panel of this court to do so is cause for surprise and dismay.