Court Opinion

ID: 9775886
Source: CourtListenerOpinion
Date Created: 2023-08-29 19:11:57.264718+00
Date Added: 2024-06-11T07:29:51.506634
License: Public Domain

DISSENT ON MOTION FOR REHEARING1
February 26, 1992
DOGGETT, Justice.
I.
“We are going to run you out of ... business. Your days are numbered.”2 In prohibiting juries ever to hear such evidence, the court endeavors to put The Texas Free Enterprise and Antitrust Act out of business; the days of its meaningful enforcement are numbered. This important legislation was designed for enforcement through the actions of both private attorneys general and the Attorney General of Texas. On motion for rehearing, forcefully written pleas for reconsideration from both are rejected. Accordingly, I supplement my previous dissent.
Seven members of this court ignore the substance of Respondent’s motion for rehearing.3 Their action confirms their objective of undermining the Texas Free Enterprise and Antitrust Act, thereby strengthening monopolies at the expense of small businesses and consumers. As the Attorney General concludes, the court’s endorsement of this one large newspaper “will make it difficult, if not impossible, to punish ... anticompetitive behavior by [any] monopolist.”4
Most significantly, barring all intent evidence makes demonstrating a violation of the Act highly improbable. The court’s test “establishes an inflexible, unworkable standard” which is “virtually impossible to meet.” State of Texas Br. at 2, 6.5 Because as an economic reality small businesses can rarely afford to set prices at a predatory level, it is monopolists, not small businesses, who benefit from the new rule. Id. at 5-6.6 The court expresses only disinterest for the ease with which such mono*604polies can “crush out small men, all small capitalists, all small enterprises.”7
The confusing nature of the test will, by itself, pose a continuing barrier to invoking the Act. While the court claims that its goal is certainty, op. at 582, “[t]he only certainty created by the Court’s test is the certainty that businesses with monopoly power can engage in anticompetitive pricing practices in Texas without fear of liability for their wrongdoing.” State of Texas Br. at 6. Additional uncertainty stems from the unanswered question of how evidence of intent can be introduced in order to meet the statutory treble damage requirement of showing willful or flagrant behavior by the wrongdoer. Tex.Bus. & Com.Code § 15.21(a)(1).8
Confusion will certainly make itself known in jury instructions.9 For instance, the court appears to contemplate that a jury will be asked whether a business acted with rational economic motive, yet instructed that it is irrelevant whether the seller acted irrationally. Op. at 581 n. 6. (“The fact finder can determine whether there was an objective rational economic motive even if the seller acted irrationally.”). The extreme difficulty in framing such questions in an intelligible fashion is designed to discourage those seeking vindication of their rights under the Texas Free Enterprise and Antitrust Act.
Another obstacle to justice erected by the majority’s opinion is the increased difficulty of obtaining informed legal counsel. Despite the court’s assertion of predictability, an attorney will be unable to advise a party claiming injury from predatory pricing concerning the validity of its potential claim. With the necessary cost data available only from the prospective defendant, counsel must follow a strategy of sue first, determine the legal merits later. What attorney will accept the unknowable case when the gamble of discovering later that the numbers do not justify a predatory pricing action risks exposure to being improperly sanctioned by an over-zealous judge for filing a purportedly frivolous suit? See Tex.R.Civ.P. 13. Discouraging legal representation is but another way the court accomplishes its objective of retarding implementation of our antitrust law.
For the many reasons stated above, “[t]his Court’s decision will undoubtedly have a chilling effect on the willingness of small business to bring antitrust lawsuits against large monopolists and near monopolists, contrary to legislative intent and sound public policy.” State of Texas Br. at 12. Triad, one small business which, now closed down, will never again initiate an antitrust action, asks “[d]oes the Court realize that its opinion will eliminate almost all private enforcement of the monopolization/attempted monopolization provisions of the Act ... ?” Triad Br. at 3. The sad answer, evidenced by the court’s lack of concern on the motion for rehearing, is apparently “sure, why not?”
Of the many dangers inherent in the court’s decision, the Attorney General has particular expertise in addressing my concern that the opinion will thwart public law enforcement efforts. Op. at 589. The Attorney General warns that the court’s decision:
will clearly hamper enforcement by the Attorney General of predatory pricing and monopolization cases and, because *605the opinion calls into question Texas’ commitment to antitrust law in general, may have an adverse effect on all antitrust enforcement.
State of Texas Br. at 13. The court’s continuing disinterest in the ability to administer the Act underlies its disdain for the objectives of antitrust law.
Certainly there can no longer be any suit for attempted monopoly, for “attempt” cannot be found absent intent evidence.10 As the State concluded, this “dangerous precedent ... tilts the state’s antitrust laws in favor of monopolists and big business to the detriment of small businesses and consumers.” State of Texas Br. at 2.11 In the end, “[t]he real loser is the consumer, who does not reap the benefits of competition and is forced to pay monopoly prices.” Id. at 6. In a case to which it is not a party, the State has rarely expressed such direct and intense disagreement with an opinion of this court. Like Robert Bork,12 the court has taken up the banner of no antitrust laws, but unlike Bork, this court lacks the candor to admit the extreme nature of its position.13
II.
My prior complaint that the court inexcusably refused to afford a new trial initially fell on deaf ears. Only after my dissent in Carrollton-Farmer’s Branch Indep. Sch. Dist. v. Edgewood Indep. Sch. Dist., 826 S.W.2d 489 (Tex.1992) (Edgewood III), pointed out the irreconcilability of the court’s decision in these two cases did the court decide to confront this error. See id. at 537 (Doggett, J., dissenting). In Edge-wood III, the majority announced that an issue of alleged first impression requires prospective rather than retroactive application. Id. at 515 (applying the ruling prospectively in order to refuse a refund of a tax held unconstitutional). Following this rule here, in another case admitted to be of first impression, would mandate a remand. Rather than following its own precedent from Caller-Times a few months later in Edgewood III, however, the court instead applied a new rule. Now Caller-Times is changed to conform with Edgewood III, and a remand is grudgingly allowed. This remand will be of no solace to Triad, which is left to relitigate under a convoluted and unworkable test.
In attempting to resolve one contradiction, however, the court exposes another. What in the original opinion was allegedly well-settled antitrust law has on rehearing been magically transformed, without any explanation, into unsettled law. At the same time, however, the court continues to ignore the sources cited by the dissent, adhering to its prior position that the law of predatory pricing is well-settled and only susceptible to one interpretation. In *606its compendium of selective citations, the court “lookfed] to federal law ... for guidance,” and found such direction from the “[federal courts [which] have addressed the question of predatory pricing on a number of occasions.” Op. at 580. The law was so very clear that the court of appeals was found to have applied the “incorrect standard” for predatory pricing claims, id. at 588, implying the prior existence of one easily discernible and correct standard. This supposedly harmonious and lucid federal law is, of course, the basis for the court’s conclusion that intent evidence is irrelevant to predatory pricing claims.
At the same time, however, the court repeatedly identifies this as a case of “first impression,” id. at 578 & 580, admitting that the United States “Supreme Court has not developed a test for predatory pricing, and the federal circuit courts take different approaches.” Id. at 581 (emphasis added). The court is forced to “draw on the interpretations of several circuits,” id. at 581, while explicitly rejecting that of the Ninth Circuit. Id. at 585. Thus, even though its entire opinion is based on the premise that federal law is settled and uncontroversial, the court must remand because that law is “sufficiently unsettled.” Id. at 589.
In fact, the debate over predatory pricing and the role of intent evidence in the federal courts is a “controversy [which] still rages.” See Jessica L. Goldstein, Single Firm Predatory Pricing in Antitrust Law: The Rose Acre Recoupment Test and the Search for an Appropriate Judicial Standard, 91 Colum.L.Rev. 1757, 1758 (1991) (hereinafter Judicial Standard).14 There is actually little direct authority for the court’s complete bar of intent evidence.15 At last, the court seems to confess on motion for rehearing that the manufacture of its contorted test relied only loosely on selective federal law. We will now have the most regressive interpretation of antitrust law in the country not because federal precedent compelled this outcome, but solely as a result of the court’s social policy preference.16
III.
There are additionally several matters in my prior dissent which are deserving of expansion and clarification. First, I concluded that the court’s reliance on Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986), was unjustified. This was in part because “the Supreme Court was concerned only with the context of summary judgment, which is not at issue in the current case.” Op. at 597 n. 40. The Attorney General appropriately emphasizes this concern, concluding that the instant case:
*607was filed in a Texas court under the Texas Antitrust Act. The [majority] nonetheless relied on Matsushita, a federal case construing federal procedural law. By so doing, the Court inappropriately engrafted federal procedural law onto the Texas Act.... The Act does not ... authorize adoption of federal procedural rules....
State of Texas Br. at 7. As this court has recently written, the role of summary judgment is quite different in the federal system than in Texas, where it is fortunately disfavored. Casso v. Brand, 776 S.W.2d 551, 555-56 (Tex.1989). Thus, not only did the court apply a summary judgment standard to a case not involving summary judgment, it applied a summary judgment standard not a part of Texas law.17
Second, my previous characterization of the Texas Free Enterprise and Antitrust Act as turning towards a rule of reason, does not represent a disavowance of all per se rules, but rather a rejection of per se legality of the type established by the court’s test. There remain a number of acts which are per se illegal. See Red Wing Shoe Co. v. Shearer’s, Inc., 769 S.W.2d 339, 341-42 (Tex.App. — Houston [1st Dist.] 1989, no writ) (noting turn towards a federal rule of reason but continued existence of per se illegality). Indeed, the Texas Antitrust Act explicitly mentions “price fixing, or other per se violations.” Tex.Bus. & Com.Code § 15.05(i) (emphasis added). The purpose of retaining some per se rules of illegality is to ease the burden of proof in certain types of cases, “thus encouraging those who have been wronged to bring suit and aiding in antitrust enforcement.” State of Texas Br. at 5 n. 3. Today’s action returns us to the abandoned approach of per se legality,18 since any monopolist who appropriately cooks the books cannot be found liable under the court’s test, regardless of a clearly evidenced intent to break the law. Once again, the result is to discourage the victim of anticompetitive conduct from seeking redress.
Finally, much of my prior disagreement centered on the court’s economic model, or lack thereof. Now the Attorney General of Texas and yet another legal scholar urge that “antitrust was not meant to be solely an economic discipline, and predatory pricing is not solely an economic problem.” Judicial Standard at 1779. To the extent that the field of economics is relevant, the court’s theory remains deeply flawed. Predatory pricing is both an economic reality and a serious problem, id. at 1775-76, unresolved by the type of test announced here because that approach is “not economically sound in terms of either its specific application or its theoretical economic underpinnings.” Id. at 1770.19 A “broad and flexible” test applying a rule of reason and considering many factors, including both cost and intent evidence, is the preferable approach. Id. at 1789-91.
*608IV.
Unfortunately during the Reagan/Bush administrations, “all branches of [the federal] government have become more lenient toward antitrust violations.” Steven W. Heller, Heads I Win, Tails You Lose: A Study of Antitrust Jurisprudence in the Federal Circuit, 1 Fordham Ent.Media & Intell.Prop.L.F. 231 (1991). Now Texas is forced to join in this parade of permissiveness. Despite the best efforts of the Legislature, the Attorney General, the court of appeals, and a Corpus Christi judge and jury, this court is determined to convert a monopoly prevention act into a monopoly protection act. The impact of today’s opinion will be felt far into the future — monopolies have been strengthened, small businesses threatened, and in the end, the consumers pay for it all.
MAUZY, J., joins in this opinion.

. The court has reluctantly withdrawn its original opinion in order to allow a remand of the antitrust issue, which it had originally denied. Because this belated change affects only the last paragraph of part VII of my dissent issued November 13, 1991, see 35 S.Ct.J. 114, 135 [p. — ante], I do not withdraw that opinion. See infra part II.

. Statement by president of the alleged predator in A.A. Poultry Farms, Inc. v. Rose Acre Farms, Inc., 881 F.2d 1396, 1398 (7th Cir.1989), cert, denied, 494 U.S. 1019, 110 S.Ct. 1326, 108 L.Ed.2d 501 (1990), to president of one of the prey. A jury finding of an antitrust violation in that case was overturned by a judgment notwithstanding the verdict which was then affirmed by the Seventh Circuit under a test barring intent evidence. See infra note 15.

. Likewise, they fail to consider a directly relevant commentary written on the appropriate standard for predatory pricing, published after the court’s opinion issued. See Jessica L. Gold-stein, Single Firm Predatory Pricing in Antitrust Law: The Rose Acre Recoupment Test and the Search for an Appropriate Judicial Standard, 91 Colum.L.Rev. 1757 (1991) (hereinafter Judicial Standard). Rejecting a pure law and economics standard of the type adopted by this court, id. at 1769-82, this recent article supports a test strikingly similar to that adopted by the court of appeals and urged in my prior dissent. Id. at 1782-92.

. The State of Texas’ Brief as Amicus Curiae on Motion for Rehearing at 14 (hereinafter "State of Texas Br.”).

. It is also a test which is extremely expensive to meet — perhaps prohibitively so. As my prior dissent notes, the cost of experts battling over numbers and ill-defined economic and accounting terms will be enormous. ‘The spectre of such a battle, against an adversary with far superior resources, renders the antitrust laws de facto unavailable [to] those who need them most." Triad Communications, Inc.’s Motion for Rehearing at 15 (hereinafter ‘Triad Br.”).

. A test which focuses on the "reasonable expectation of recouping ... losses" and "barriers to market entry,” op. at 582, “is vastly more favorable" to accused monopolists than to those seeking redress under antitrust laws, making "victory under the recoupment test unlikely.” Judicial Standard at 1774.

. 21 Cong.Rec. 2598, 3147 (1890) (statement of Senator George on the goals of the Federal Sherman Act).

. As the small business that sought relief here appropriately inquires:
Will evidence of intent be admitted or not? If not, how can an antitrust plaintiff ever prove ... treble damages ...? Will the evidence come in under a limiting instruction? Does the Court really expect Texas trial judges to instruct their juries that "this evidence about intent that you will hear may be confusing to you, so you should disregard it in answering the basic liability issues, but you may consider it in deciding whether the defendant’s conduct was ‘willful or flagrant'?” Triad Br. at 17.

.While caused primarily by the court’s refusal to draft a coherent test, this confusion also results from adoption of a standard over-reliant on economics. Such an approach is not as well "suited to the capabilities of judges and juries and the requirement of judicial administrability” as are flexible tests considering both cost and intent evidence. Judicial Standard at 1792.

. See Triad Br. at 6 n. 5 ("[T]he Court effectively reads the ‘attempted monopolization’ provisions out of the Act entirely.”). "Attempt” is defined in its common legal meaning as "an intent combined with an act." Black’s Law Dictionary 127 (6th ed. 1990) (emphasis added). See also Judicial Standards at 1759, 1779 n. 150.

. “By focusing only on conduct and removing evidence of intent, the Court’s opinion largely protects monopolists or near monopolists which have the ability through anticompetitive behavior to destroy competitors, and, in so doing, destroy competition." State of Texas Br. at 5. Accord Judicial Standard at 1779-80 (“[I]gnor-ing all evidence of intent[,] no matter how compelling, is inconsistent with the accomplishment of the goal of deterring anticompetitive behavior.").

. See generally Robert H. Bork, The Antitrust Paradox (1978); and Robert H. Bork, Contrasts in Antitrust Theory: I, 65 Colum.L.Rev. 401 (1965). While the court feigned unfamiliarity with Bork, see op. at 582, he is commonly recognized as a leading spokesman for the type of negative approach to antitrust enforcement demonstrated here. See, e.g., Judicial Standard at 1763 n. 39, 1776 n. 136.

. The court's Borkian approach, derived from the "Chicago School" of law and economics, “does not represent the majority view.” Judicial Standard at 1776-77 n. 136 (emphasis added).

. The unpredictability of the federal law is exemplified by the citation of the same cases in support of opposing positions by both the Seventh Circuit, which increasingly advocates a cost-based "recoupment” test, and the Eleventh Circuit, which prefers an intent-based rule. See Judicial Standard at 1770 n. 93.

. The court cited five federal circuit courts for the proposition that "[t]he subjective intent of a seller should not be a factor in determining whether its prices are predatory.” Op. at 587. The dissent concluded that "[o]nly two federal courts have ever barred all intent evidence.” Id. at 596 n. 37. Apparently, even that was too generous an interpretation of federal law: the Attorney General has clarified that all but one of the federal courts cited "anticipate the receipt of subjective intent evidence.” State of Texas Br. at 7 n. 4. See A.A. Poultry Farms, Inc. v. Rose Acre Farms, Inc., 881 F.2d 1396 (7th Cir.1989), cert, denied, 494 U.S. 1019, 110 S.Ct. 1326, 108 L.Ed.2d 501 (1990). The State is correct that even the court in Barry Wright Corp. v. ITT Grinned Corp., 724 F.2d 227, 236 (1st Cir.1983), considered the lack of evidence of whether a firm "wished” to exclude a potential competitor. See also Judicial Standard at 1764 n. 42 (Barry Wright did not hold that presumptions of legality based on pricing are "absolutely conclusive.”). In addition to those circuits which I previously noted as allowing introduction of intent evidence, a ninth has adopted perhaps the most intent-oriented approach yet. U.S. Philips Corp. v. Windmere Corp., 861 F.2d 695, 704 (Fed.Cir. 1988), cert, denied, 490 U.S. 1068, 109 S.Ct. 2070, 104 L.Ed.2d 635 (1989) (an antitrust violation may be established for a dominant, price-cutting company motivated by eliminating a competitor even if it is pricing above costs); see Judicial Standard at 1765-66.

.The unfortunate result today is that there remains "only [one] show in town" for Corpus Christi consumers seeking to place a classified advertisement. Triad Br. at 13.

. As I have previously emphasized, Matsushita in no way mandates a cost-based test. See Judicial Standard at 1770-71 (distinguishing Matsu-shita as concerning “unique" facts and involving a conspiracy rather than monopoly or attempted monopoly claim, and concluding that the United States Supreme Court "gave no indication that it was limiting [its former] emphasis on intent.”).

. This is precisely how Professors Areeda and Turner, on whom the court relies, describe their approach: "A price at or above reasonably anticipated average variable cost should be conclusively presumed lawful." Phillip Areeda & Don-aid F. Turner, Predatory Pricing and Related Practices under Section 2 of the Sherman Act, 88 Harv.L.Rev. 697, 733 (1975) (emphasis added).

.Among the technical deficiencies in the reasoning underlying the court’s test noted by my dissent and confirmed by the most recent commentary are: the presence of irrational but strategically valid reasons to price predatorily with no expectation of recouping losses, such as deterring new market entries, Judicial Standard at 1775 & n. 128; the difficulty of determining average variable cost, which is not even the best cost measure of predation, id. at 1782, 1784; and the absence of a clear standard for “entry barrier.” Id. at 1781.