Court Opinion

ID: 9452628
Source: CourtListenerOpinion
Date Created: 2023-08-04 17:46:46.366988+00
Date Added: 2024-06-11T17:33:17.632678
License: Public Domain

ALDRICH, Chief Judge
(dissenting).
Both of the opinions of my brothers discuss the case of Broussard v. Socony Mobil Oil Co., 5 Cir., 1965, 350 F.2d 346, in which the court held that a claim that Mobil — also defendant here — attempted to set maximum prices for its retailers stated a claim of violation of section 1 of the Sherman Act. Judge McEntee finds the case distinguishable, while Judge Coffin finds it possibly in point, but *279wrongly decided. Regretfully, I disagree with both.
I.
In Broussard, as in the present case, Mobil suggested to the plaintiff, who was its lessee and at the same time one of its retailers, a maximum retail price for gasoline. Subsequently, when plaintiff refused to accept this maximum, Mobil exercised its contract right to terminate his lease. It is true that in Broussard there had been a price agreement with which the plaintiff at first complied, and that in the ease at bar there was none. Broussard lost his lease because he refused to continue his undertaking ; Quinn lost his because he refused to enter into one. The injury of which Broussard complained, however, did not arise out of the agreement, but out of the cancellation of his lease. I do not believe that if his cancellation was an act “forbidden in the antitrust laws,” 15 U.S.C. § 15, Quinn’s was not. In other words, I see no difference in substance between pressure to induce the making of an unlawful agreement and pressure to reinstate one that has been broken. To the extent that it be suggested that the rejected agreement in Broussard is what brought the case within the act, this would not only be an unfortunate distinction, since any future “Quinn” could establish rights for himself simply by making the requested agreement one day and breaking it the next, but also, it seems to me, an illogical one.
If, on the other hand, a distinction is to be sought in the fact that in Brous-sard there was an allegation that Mobil was engaging in a “marketing program” covering many dealers,1 then I find myself in accord with Judge Coffin that such a program is not a horizontal conspiracy (as it might be in a minimum price situation) but a series of separate vertical agreements that are not in any collective interest of the retailers. There could be an implied horizontal combination where a manufacturer is enforcing minimum pricing, but no dealer wishes possible competitors to keep their prices down. Consequently I do not find in Mobil’s general marketing program alleged in Broussard 2 any support for the allegation, if such be necessary, of an “agreement or combination.”
II.
Turning to Judge Coffin’s views on Broussard, he asserts, first, that he does not find it to have been dictated by Kie-fer-Stewart Co. v. Joseph E. Seagram & Sons, 1951, 340 U.S. 211, 71 S.Ct. 259, 95 L.Ed. 219. In that case the Court held that a combination of two manufacturers to force a dealer to accept maximum resale prices violated section 1, and that the dealer could recover treble damages. The reasoning that led to this result seems important. The court of appeals had reversed the district court and denied recovery because it viewed section 1 as aimed at promoting competition and concluded, “Competition * * * does not rest upon the ability to charge a higher price than a competitor but upon the ability to meet the price or undersell that fixed by the competitor.” 182 F.2d 228, 235. In reversing, the Supreme Court held that the Sherman Act is concerned not merely with competition in this limited, classical sense, but with the freedom and independence of the individual entrepreneur: “[Maximum price agreements] cripple the freedom of traders and thereby restrain their ability to sell in accordance with their own judgment.” 340 U.S. at 213, 71 S.Ct. at 260.3
*280It is true, as my brethren point out, that in Kiefer-Stewart the Court found a horizontal agreement between manufacturers to compel dealers to accept the stipulated maximum prices, while in the present case only a single manufacturer is involved. Since itiefer-Stewart was decided, however, principles have developed that seem to me to make the presence of only one manufacturer, and the absence of any consummated agreement, irrelevant. In Simpson v. Union Oil Co., 1964, 377 U.S. 13, 84 S.Ct. 1051, plaintiff, a gasoline retailer, alleged that Union cancelled his lease for refusal to abide by an agreement to adhere to prices stipulated by Union. The Court held that he had stated a claim, noting again (see Kiefer-Stewart, supra) that the lease and agreement were allegedly being used “to injure interstate commerce by depriving independent dealers of the exercise of free judgment” in setting prices. Simpson thus seems to me to hold that a co-ercively extracted vertical agreement depriving a retailer of pricing discretion violates the act, and hence that where the requisite coercion to procure the vertical agreement is shown, a horizontal conspiracy such as that alleged in Kiefer-Stewart is unnecessary.
Nor does this result seem offensive. A free and independent dealer, as in United States v. Colgate & Co., 1918, 250 U.S. 300, 39 S.Ct. 465, 63 L.Ed. 992, may not be actionably wronged if a single manufacturer says to him, “Accept my conditions or I will not deal with you.” Such a dealer is free to turn to other manufacturers, and may rely for his protection on competition among those manufacturers for his trade. A retailer who, like Quinn and Simpson, is also a lessee, is in a distinctly different position. The manufacturer’s power as a landowner gives it leverage with which to interfere with the price discretion of others.4
Judge Coffin suggests, in response, a rather different interpretation of Simpson. He points out that Simpson involved the dictation of specific, rather than maximum prices, to numerous dealers rather than to one. He suggests that the unlawful “agreement” in Simpson was therefore not the vertical agreement between plaintiff and defendant but a horizontal combination of retailers with Union acting, apparently, as the hub of an illicit wheel. My difficulty with this is that it seems to run counter to what the opinion says.5 The Court uses the word “agreement” invariably to refer to the vertical agreement between Simpson and Union. It refers to no other agreement, combination, or conspiracy except for similar vertical agreements with other dealers, and these are mentioned only for the purpose of showing that Union is *281in interstate commerce, and in order to refute the contention that the vertical agreements should be treated as lawful consignment agreements rather than unlawful price maintenance.
While I am not 100% certain, I do believe that Kiefer-Stewart and Sim/pson, taken together, proscribe coercively extracted vertical contracts to fix maximum prices, and that no distinction should be drawn between temporarily successful, as in Broussard, and totally unsuccessful coercive measures, as here, and accordingly I dissent.

. Cf. Guidry v. Continental Oil Co., 5 Cir., 1965, 350 F.2d 342, 344.

. I agree with my brethern that no such allegation can be found or inferred in Quinn’s complaint, or should be supplied.

. Cf. the language of Learned Hand, writing for the Second Circuit in United States v. Aluminum Co. of America, 1945, 148 F.2d 416, 427. “[In outlawing monopolies, Congress] was not necessarily actuated by economic motives alone. It is possible, because of its indirect social or moral effect, to prefer a system of small producers, each dependent for his success upon his own skill and character, *280to one in which the great mass of those engaged must accept the direction of a few. These considerations, which we have suggested only as possible purposes of the Act, we think the decisions prove to have been in fact its purposes.” Compare Klor’s, Inc. v. Broadway-Hale Stores, 1959, 359 U.S. 207, 79 S.Ct. 705, 3 L.Ed.2d 741.

. An interestingly comparable case is Northern Pacific Ry. v. United States, 1958, 356 U.S. 1, 28 S.Ct. 514, 2 L.Ed.2d 545. There the Court held that a vertical agreement between a railroad-landowner and a shipper-land purchaser, in which the purchaser agreed, in partial consideration for the sale of land, to “prefer” Northern Pacific over other carriers, violated section 1. Northern Pacific could not, the Court said, use one resource it possessed (land) to coerce its own customers in another market (shipping) in order to obtain an advantage over the railroad’s own competitors. Here it is alleged that Mobile is using its land ownership to deprive one of its customers of price discretion, in order to gain an advantage over Mobil’s own competitors through low dealer margins The agreements in Northern Pacific affected discretion to choose shippers rather than discretion to set prices, but the analogous structure of the two arrangements is suggestive.

. See generally Note, “Combinations” in Restraint of Trade: A New Approach to Section 1 of the Sherman Act, 1966 Utah L.Rev. 75, 78-89. The note argues that Simpson does not fit within the traditional definition of conspiracy, and suggests that what happened in Simpson should be described, and proscribed, as a vertical combination (but not conspiracy) in restraint of trade.