Court Opinion

ID: 9472471
Source: CourtListenerOpinion
Date Created: 2023-08-05 04:00:46.603286+00
Date Added: 2024-06-11T17:42:56.991110
License: Public Domain

KENNEDY, Circuit Judge,
dissenting:
Although the majority has labored to give its opinion a new cast, the briefest glance reveals that its logic and its reasoning are unchanged. The essence of it is a restatement of Ostrofe I, 670 F.2d 1378 (9th Cir.1982), vacated for reconsideration in light of Associated General Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983). See 460 U.S. 1007, 103 S.Ct. 1244, 75 L.Ed.2d 475 (1983). Cf. Sumner v. Mata, 611 F.2d 754 (9th Cir.1979), vacated, 449 U.S. 539, 101 S.Ct. 764, 66 L.Ed.2d 722 (1981), on remand, 649 F.2d 713 (9th Cir.1981), vacated, 455 U.S. 591, 102 S.Ct. 1303, 71 L.Ed.2d 480 (1982), on remand, 696 F.2d 1244 (9th Cir. 1983), vacated as moot, — U.S.-, 104 S.Ct. 386, 78 L.Ed.2d 332 (1983). For the second time, I dissent. I incorporate my previous remarks here and add the following.
We agree that Ostrofe has standing to challenge a conspiracy among label manufacturers to boycott his services. Radovich v. National Football League, 352 U.S. 445, 77 S.Ct. 390, 1 L.Ed.2d 456 (1957); Anderson v. Shipowners Association of the Pacific Coast, 272 U.S. 359, 47 S.Ct. 125, 71 L.Ed. 298 (1926); Quinonez v. National Association of Securities Dealers, Inc., 540 F.2d 824 (5th Cir.1976); Nichols v. *749Spencer International Press, Inc., 371 F.2d 332 (7th Cir.1967). For the reasons stated in my first dissent, I think summary judgment was properly entered against Ostrofe on this claim. See Ostrofe I, 670 F.2d at 1391. Those reasons need not be restated or expanded since, as the majority correctly notes, this aspect of Ostrofe I was not called into question by Associated General.
The issue I should have thought we were to reconsider is whether Ostrofe may seek treble damages based on his yearly salary as compensation for injuries resulting from Crocker’s participation in a price-fixing conspiracy in the labels market. Associated General requires a holding that Ostrofe’s injury does not give rise to the treble-damage remedy.
In Associated General, the Supreme Court agreed the complaint stated a claim as to an injured firm, but denied the unions had standing for redress under the antitrust laws. The Court characterized the facts as follows: (1) the complaint alleged a causal connection between the antitrust violation and the injury; (2) the defendants intended to injure the plaintiffs; (3) since the unions were neither consumers nor competitors in the construction market, their injury was not of the type that the antitrust laws were intended to forestall; (4) the injury was indirect; (5) damages were speculative; and (6) there was a risk of duplicative recoveries or complex damage apportionment. Associated General, 459 U.S. at 537-46, 103 S.Ct. at 908-13; Chelson v. Oregonian Publishing Co., 715 F.2d 1368, 1370-71 (9th Cir.1983).
Associated General settled the law of antitrust standing in several respects. The Court made it explicit that Blue Shield of Virginia v. McCready, 457 U.S. 465, 102 S.Ct. 2540, 73 L.Ed.2d 149 (1982), did not establish a new dimension of liability, but was simply a traditional recognition that one who is the direct object of a conspiracy may recover for it. Associated General, 459 U.S. at 529 n. 19, 103 S.Ct. at 904 n. 19. See also Blue Shield, 457 U.S. at 484 n. 21, 102 S.Ct. at 2551 n. 21. The Court further affirmed that Blue Shield did not alter the concept of antitrust injury. Associated General, 459 U.S. at 538-40, 103 S.Ct. at 909-10; Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977). In the case before us, the majority’s reliance on the broad language of Blue Shield to extend liability to Crocker is thus misplaced. See Majority Opinion at 745-746. By raising Blue Shield to support standing, without recognition of the necessary limitations of Associated General and Brunswick, the majority violates the terms of the Supreme Court’s remand and contravenes the elemental rule that cases not be read in isolation. Indeed, by stating that Ostrofe has “standing under Associated General Contractors read in light of Blue Shield," Majority Opinion at 746, the majority has it altogether backwards. We should instead read Blue Shield in light of the limitations placed on it by Associated General, the case we were instructed to consult.
The plaintiff in Blue Shield was a participant in the market for psychotherapeutic services. Blue Shield, by refusing to reimburse McCready, was attempting to coerce her into consulting a psychiatrist rather than a psychologist. As a participant in the market for subsidized psychotherapy services who suffered direct injury in that market, McCready was allowed standing to sue for the refusal to reimburse her. See Associated General, 459 U.S. at 538, 540 nn. 39, 44, 103 S.Ct. at 909, 910 nn. 39, 44. In essence, McCready alleged that the price to her for services in the subsidized psychotherapy market had been fixed artificially high as a result of the concerted refusal to reimburse her. See Blue Shield, 457 U.S. at 484 n. 21, 102 S.Ct. at 2551 n. 21. In terms of standing to bring suit, McCready was thus like an ordinary consumer who complains about price-fixing in a particular market.
Ostrofe’s position is not comparable to McCready’s since, as the majority notes, Majority Opinion at 746, Ostrofe was not a competitor or consumer in the market affected by the price-fixing conspiracy, and in *750relation to that price-fixing, Ostrofe’s injury was therefore indirect. The predictable holding in Blue Shield does not support the holding here except in the meaningless, post hoc sense that the majority confers standing on the plaintiff.
The majority acknowledges its reading of Blue Shield may be too broad and so retreats to a second position, but one likewise indefensible. It constructs an alternative holding, said to be supported by footnote 44 of Associated General. It argues the footnote raises the issue whether antitrust injury is a necessary element in every antitrust suit. Majority Opinion at 746. Remarkably, the majority announces this issue was resolved in Ostrofe I. Majority Opinion at 746-747. But if the question was resolved in our earlier opinion by this theory, the Supreme Court would not have vacated for reconsideration.
The majority’s confusion comes from its misapplication of footnote 44. The footnote reserves the question “whether the direct victim of a boycott, who suffers a type of injury unrelated to antitrust policy, may recover damages when the ultimate purpose of the boycott is to restrain competition in the relevant economic market.” Associated General, 459 U.S. at 540 n. 44, 103 S.Ct. at 910 n. 44. In applying this language, the first question is whether Ostrofe was a direct victim of a boycott. The majority assumes the answer to this question and, in so doing, misconceives the issue before us. Majority Opinion at 746-747.
We all agree that Ostrofe has standing to assert his direct boycott claim under the Radovich line of cases. That claim was, in my opinion, properly dismissed on a motion for summary judgment. The only issue we are reconsidering is whether Ostrofe has standing to challenge the price-fixing conspiracy as the proximate cause of his discharge injury, an injury the majority recognizes is not dependent on the existence of a direct boycott. Majority Opinion at 744. Without a direct boycott, however, footnote 44 of Associated General is, by its terms, inapplicable.
The precise meaning of footnote 44 is unclear, and the footnote contains no examples of a case that might raise the issue reserved. It is difficult to imagine an anti-competitive group boycott of a plaintiff that does not cause antitrust injury. Whatever its meaning, the footnote by its terms does not apply to Ostrofe's claim, which is premised on injury flowing from a price-fixing conspiracy, not injury resulting from a group boycott.
The majority in effect rewrites the complaint by a merger of the boycott theory of recovery with recovery for damages from the price-fixing conspiracy. This new creation, not found even in Ostrofe I, blurs analysis and seems invented only to justify the result. The two theories of recovery are quite distinct, however, and recovery on the boycott theory does not necessarily lead to a valid claim for recovery for price-fixing. The confusion in analysis is seen especially in the discussion of footnote 21 of McCready, see Majority Opinion at 745, and in the discussion of footnote 44 of Associated General. See Majority Opinion at 746-747. In both discussions, the premise that supports standing is that Ostrofe was the victim of a group boycott. That premise is at odds with the issue presented for reconsideration.
The difficulty with Ostrofe’s remaining claim for treble damages is that it does not allege an injury related to an antitrust violation; the measure of damages does not reflect or respond to the breakdown in competition caused by the antitrust violation. Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S.Ct. 690, 697, 50 L.Ed.2d 701 (1977). See generally Page, Antitrust Damages and Economic Efficiency: An Approach to Antitrust Injury, 47 Univ.Chi.L.Rev. 467 (1980). A treble damage measure “unrelated to the size of the injury increases the total social cost of antitrust enforcement.” Page, supra, at 497 (footnote omitted). Ostrofe’s damages, by their nature, will be the same regardless of the success of the price-fixing conspiracy. By contrast, the damages sought in a price-fixing suit are proportional to the de*751gree to which the conspiracy is successful in destroying competition and raising prices, and damages in a suit challenging a monopoly are measured by lost profits proportional to the size and power of the monopoly. We have on occasion included consequential damages in an antitrust award, but only when the plaintiff also has other damages that are related to the decrease in competition. See Handgards, Inc. v. Ethicon, Inc., 743 F.2d 1282 at 1296-97 (9th Cir.1984) (awarding costs of defending sham patent infringement suit in addition to lost profits).
Antitrust enforcement becomes divorced from antitrust policy when treble damages bear no relation to the anticompetitive effects of the illegal conduct. Such awards threaten to make every business tort convertible into a treble-damage bonanza. The antitrust laws were not intended as a balm for all wrongdoing in the business community. They were designed to promote free competition. That clear focus is lost when courts allow treble damages to plaintiffs who show no injury related to the breakdown of competitive conditions in the marketplace.
The Supreme Court reaffirmed this principle of limitation in Associated General. The Court held that “allegations of consequential harm resulting from a violation of the antitrust laws, although buttressed by an allegation of intent to harm [the plaintiff], are insufficient as a matter of law.” Associated General, 459 U.S. at 545, 103 S.Ct. at 913. Ostrofe’s claim is within the square of this language and should be dismissed.
In its zeal to compensate Ostrofe for his injury, the majority has given Ostrofe the wrong cause of action. He should be seeking remedies for wrongful discharge, not treble damages for a violation of the antitrust laws. See, e.g., Tameny v. Atlantic Richfield Co., 27 Cal.3d 167, 164 Cal.Rptr. 839, 610 P.2d 1330 (1980) (wrongful discharge action by employee who was fired after refusing to participate in price-fixing scheme). See generally Note, Standing of the Terminated Employee Under Section 1¡. of the Clayton Act, 25 William & Mary L.Rev. 341, 369-71 (1983).
The majority seeks solace in its prediction that this case raises issues peculiar to its facts and that our result involves only a small number of potential antitrust plaintiffs. Majority Opinion at 748. If this is intended to justify an otherwise unwarranted extension of antitrust standing, then I disagree with the implication we are free to ignore prior law when it suits our purposes. In any event, whether or not the opinion can be limited to its facts is a question we are not capable of answering; that determination will be made in subsequent cases. For my part, I believe that the majority enunciates unsound principles of antitrust liability, and that the case will have implications far beyond the employment context.
Finally, by reaffirming Ostrofe I, the majority creates a conflict with the Seventh Circuit in Bichan v. Chemetron Corp., 681 F.2d 514 (7th Cir.1982), cert. denied, 460 U.S. 1016, 103 S.Ct. 1261, 75 L.Ed.2d 487 (1983). To say, as the majority does, that the Supreme Court does not worry about circuit conflict when it comes to antitrust standing, see Majority Opinion at 747-748, is a strange way to interpret the Supreme Court’s order vacating the majority’s first opinion.
Bichan was an explicit consideration and rejection of the majority’s opinion in Ostrofe I, and the Supreme Court chose to deny certiorari in Bichan on the same day Ostrofe I was vacated. It is inappropriate for us to speculate on the reasons for declining the issuance of certiorari. But in answer to the majority, I think it appropriate to say that I doubt the Supreme Court values our reconsideration more than that of the Seventh Circuit, and it is patronizing for the majority to imply otherwise.
The majority has reconsidered this case only by rephrasing the same arguments that were made in Ostrofe I, giving heed neither to the opinion in Associated General nor to the Seventh Circuit. In consequence, a necessary analytic structure is *752absent from the majority opinion, and its holding, I respectfully suggest, is incorrect.