Court Opinion

ID: 9443509
Source: CourtListenerOpinion
Date Created: 2023-08-03 19:23:42.143407+00
Date Added: 2024-06-11T17:29:30.891306
License: Public Domain

RIVES, Circuit Judge
(dissenting).
As I understand the amended, complaint, it charges that the defendant, Motorola, Inc., a corporation organized under the laws of Illinois, and its President, Paul V. Calvin, its Sales Manager, ' William H. Kelly, and its other managing officers, employees, representatives 'and agents unlawfully engaged in a conspiracy in restraint of trade and commerce among the several states in the products sold under the name of “Motorola” and in communication equipment. The defendant manufactures and sells more than 50% of the communication equipment manufactured and sold in interstate commerce in the United States. Of the products sold under the name of “Motorola”, the defendant had approximately 80 distributors, including this plaintiff, located throughout the 48 states of the Union. Under threat of termination of their franchise most of these distributors have been wrongfully coerced into an arrangement with the defendant permitting them to sell the products included under the name of ■“Motorola” but prohibiting them from selling communication equipment manufactured by the defendant or communication equipment manufactured- by- others. The plaintiff refused to submit to such an arrangement and his franchise as a distributor was cancelled resulting in the loss of a profitable business built up over a period of years.
Taking the averments to be true, as we must on motion to dismiss, a scheme has been devised by defendant’s agents under which its dealers throughout the country have been coerced into entering into contracts in restraint of trade and in clear violation of Section 3 of the Clayton Act, 15 U.S.C.A. § 14. The plaintiff refused so to be coerced with resulting cancellation of its franchise and destruction of its business. Yet the court now holds that the plaintiff is remediless. Insofar as the scheme was successful, it resulted in contracts between the defendant and its other dealers to which the plaintiff was a stranger and as a result of which he was not affected. When in the plaintiff’s case the plan failed for the reason that he refused to become a party to the violation of the law, the plaintiff cannot recover because the scheme was concocted under the cloak of immunity of a single corporate entity. At long last a method has been found to flout the purposes of the antitrust laws and to deny the victims any recourse to the courts. I cannot agree.
The majority would apparently have no trouble with the case if it involved two corporate entities; for example, if one corporation manufactured the equipment and a subsidiary or separate corporation attended to its sales and distribution. Cf. Timken Roller Bearing Co. v. United States, 341 U.S. 593, 598, 606, 71 S.Ct. 971, 95 L.Ed. 1199, where Government counsel, I think, conceded too much. Certainly it is now well settled that “common ownership and control does not liberate corporations from the impact of the antitrust laws.” Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, 340 U.S. 211, 215, 71 S.Ct. 259, 261, 95 L. Ed. 219; Timken Roller Bearing Co. v. United States, 341 U.S. 593, 598, 71 S.Ct. 971, 95 L.Ed. 1199.
It seems to me that whether the functions are performed by separate corporations or by a single entity is purely a matter of convenience to-be exercised under state law and that the incidence and effect of the federal antitrust laws should be the same no matter what form the transactions take./
It is important, I think; to keep in mind that we are dealing with a law of such breadth as to be comparable to the constitution itself. As said by Chief Justice Hughes speaking for the court in Appalachian Coals, Inc., v. United States, 288 U.S. *917344, 359, 360, 53 S.Ct. 471, 474, 77 L.Ed. 825:
“As a charter of freedom, the act has a generality and adaptability comparable to that found to be desirable in constitutional provisions. It does not go into detailed definitions which might either work injury to legitimate enterprise or through particularization defeat its purposes by providing loopholes for escape.”
Section 1 of the Act, 15 U.S.C.A. § 1, declares to be illegal "every * * * conspiracy, in restraint of trade or commerce among the several States”. (Emphasis supplied.) What Chief Justice White said in United States v. American Tobacco Co., 221 U.S. 106, 180, 181, 31 S.Ct. 632, 648, 55 L.Ed. 663, seems pertinent to the present case:
“ * * * all the difficulties suggested by the mere form in which the assailed transactions are clothed become of no moment. This follows because, although it was held in the Standard Oil Case [Standard Oil Co. of New Jersey v. U. S. 221 U.S. 1, 60, 31 S. Ct. 502, 55 L.Ed. 619] that, giving to the statute a reasonable construction, the words ‘restraint of trade’ did not embrace all those normal and usual contracts essential to individual freedom, and the right to make which was necessary in order that the course of trade might be free, yet, as a result of the reasonable construction which was affixed to the statute, it was pointed out that the generic designation of the 1st and 2d sections of the law, when taken together, embraced every conceivable act which could possibly come within the spirit or purpose of the prohibitions of the law, without regard to the garb in which such acts were clothed. That is to say, it was held that, in view of the general language of the statute and the public policy which it manifested, there was no possibility of frustrating that policy by resorting to any disguise or subterfuge of form, since resort to reason rendered it impossible to escape, by any indirection, the prohibitions of the statute.”
It is said, however, that “A manufacturer has the unquestioned right to refuse to deal with anyone for reasons sufficient to himself.” The reason the defendant refused to deal with the plaintiff, as alleged in the complaint, was that the plaintiff refused to agree not to sell and distribute communication equipment manufactured by others in the territory of its franchise, a class of equipment which the defendant also refused to sell to the plaintiff. It seems to me that the defendant’s refusal to deal with the plaintiff for that reason was illegal, so as a necessary consequence of the language of Mr. Justice Burton speaking for the court in the recent case of Lorain Journal Co. v. United States, 342 U.S. 143, 155, 72 S.Ct. 181, 187:
“The publisher claims a right as a private business concern to select its customers and to refuse to accept advertisements from whomever it pleases. We do not dispute that general right. ‘But the word “right” is one of the most deceptive of pitfalls; it so easy to slip from a qualified meaning in the premise to an unqualified one in the conclusion. Most rights are qualified.’ American Bank & Trust Co. v. Federal Bank, 256 U.S. 350, 358, 41 S.Ct. 499, 500, 65 L.Ed. 983. The right claimed by the publisher is neither absolute nor exempt from regulation. Its exercise as a purposeful means of monopolizing interstate commerce is prohibited by the Sherman Act. The operator of the radio station, equally with the publisher of the newspaper, is entitled to the protection of that Act. ‘In the absence of any purpose to create or maintain a monopoly, the act does not restrict the long recognized right of trader or manufacturer engaged in an entirely private business, freely to exercise his own independent discretion as to parties with whom he will deal’. (Emphasis supplied.) United States v. Colgate & Co., 250 U.S. 300, 307, 39 S.Ct. 465, 468, 63 L.Ed. 992. See Associated Press v. United States, 326 U.S. 1, *91815, 65 S.Ct. 1416, 1422, 89 L.Ed. 2013; United States v. Bausch & Lomb Optical Co., 321 U.S. 707, 721-723, 64 S.Ct. 805, 812, 813, 88 L.Ed. 1024.”
My brothers use such strong adjectives as “unique” and “absurd” in referring to the contention of a conspiracy to which only the corporation and its own officers and agents are parties. That thought did not occur to Mr. Justice Burton when he included in the statement of the Lorain Journal Case, supra, the following:
“The complaint alleged that the corporation, together with four of its officials, was engaging in a combination and conspiracy in restraint of interstate commerce in violation of § 1 of the Sherman Antitrust Act, 15 U. S.C.A. § 1, and in a combination and conspiracy' to monopolize ' such commerce in violation of § 2 of.the Act, as well as attempting to monopolize such commerce in violation of § 2.” 342 U.S. 143, 145, 72 S.Ct. 182.
See also Emich Motors Corp. v. General Motors Corp.,.7 Cir., 181 F.2d 70, reversed on another point, 340 U.S. 558, 71 S.Ct. 408, 95 L.Ed. 534; United States v. General Motors Corp., 7 Cir., 121 F.2d 376; Patterson v. United States, 6 Cir., 222 F. 599; White Bear Theatre Corp. v. State Theatre Corp., 8 Cir., 129 F.2d 600.
In short, I think if we apply to the amended complaint the rule of reason rather than the rule of form, it is entirely sufficient. I, therefore, respectfully dissent.