# Ungar v. Dunkin' Donuts of America, Inc.

> District Court, E.D. Pennsylvania · March 12, 1975 · 68 F.R.D. 65

URL: https://www.frixlaw.com/law-library/cases/8788971

## Case

- **Full name:** David UNGAR v. DUNKIN' DONUTS OF AMERICA, INC. and Quincy Adams Donuts, Inc. John RADER v. DUNKIN' DONUTS, INC. and Dunkin' Donuts of America, Inc.
- **Court:** District Court, E.D. Pennsylvania
- **Decided:** March 12, 1975
- **Citations:** 68 F.R.D. 65
- **Precedential status:** Published
- **Opinion:** Opinion of the court by Becker
- **Judges:** Becker
- **Cited by:** 43 later opinions in the Frix Law Library

## Citator (automated)

- **Red flag:** Reversed on other grounds by Ungar v. Dunkin' Donuts of America, Inc., 531 F.2d 1211 (1976).
- Negative treatments: 1
- Distinguished by: 0
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/8788971

## How later opinions describe it (automated extraction)

- holding that individual issues regarding tolling did not defeat certification because such issues were “routinely” dealt with during separate damages determinations

## Opinion text

OPINION AND ORDER
EDWARD R. BECKER, District Judge.
INDEX
I. Preliminary Statement 77
II. The Plaintiffs’ Class Action Claims 80
A. The Equipment Tie-In Claim 80
B. The Supplier Tie-In Claim 81
C. The Sign Tie-In Claim 82
D. The Real Estate Tie-In Claim 82
E. The Advertising Claims 82
F. The Real Estate Tax Escrow Claim 83
G. The Restrictive Covenant Claims 83
H. Common Law Fraud Allegations 84
III. The Law of Tying — Economic Policy & Basic Principles 84
A. The Economic Policy of the Law; The Per Se Rule 84
B. Formal Requisites of a Tie 89
1. The Tying and the Tied Products 89
2. Sufficient Economic Power to Appreciably Restrain Competition in the Tied Product 90
a. Quantum of the Power 90
b. Proof of Existence of Economic Power 91
3. The Requisite That a “Not Insubstantial” Amount of Commerce be Affected 94
C. Does the Traditional Law of Tying Apply Where There is Split Ownership of the Tying and the Tied Products(?): The “TBA” Cases and the Franchise Cases 95
IV. The Law of Tying Continued: The Requirement of Proof of Use of Economic Power; The Individual Coercion Doctrine and the “Use-Coercion Dialogue” 97
A. The Requirement That Economic Power be Used: A Statement of the “Use-Coercion Dialogue” 97
B. A Statement of the Individual Coercion Doctrine; Incipient Flaws in the Doctrine 98
C. The Cases Positing the Individual Coercion Doctrine: Comment on Their Viability 99
*76 D. Texaco and Perma Life Mufflers; Their Adverse Impact Upon the Individual Coercion Doctrine 107
1. Texaco 107
2. Perma Life Mufflers 110
E. Can There be a “Voluntary” Tie( ?); Further Defects in the Individual Coercion Doctrine 111
F. The Role of Company Policy in Proving Use of Economic Power 113
G. The Use-Coercion Dialogue Synthesized 114
V. Defenses to a Claim of Tying 116
A. The Marketing Identity or Quality Control Defense 116
B. Other Defenses 117
VI. Antitrust Law and Restrictive Covenants 118
VII. A Survey of the Class Action Discovery 122
A. Introduction; Overview of Defendant’s Position 122
B. The Equipment Tie-In Claim 123
C. The Supplier Tie-In Claim 127
D. The Sign Tie-In Claim 130
E. The Real Estate Tie-In Claim 132
VIII. The Class Action Discussion 135
A. Formal Requisites of Rule 23; The Applicability of Rule 23(b)(3) Rather than Rule 23(b)(2) 135
B. Numerosity 136
C. Typicality of Claims 136
D. Adequacy of Representation 136
E. Predominance of Common Questions of Fact and Law over Individual Questions 139
1. Introduction; The Matters of Damages and the Statute of Limitations 139
2. The Antitrust Tying Claims 140
a. The Formal Requisites of a Tie 141
b. Proof of Use of Economic Power 141
(1) General Conclusions 141
(2) The Equipment and Sign Ties 142
(3) The Real Estate Tie 142
(4) The Supplier Tie-In Claim — The Quality Control Defense 143
3. The Advertising Claims 143
4. The Real Estate Tax Escrow Claim 143
5. The Common Law Fraud Claims 144
6. The Restrictive Covenant Claims 145
F. Superiority 147
IX. Conclusion 150
*77 I. Preliminary Statement
Before us are motions for class action determination under F.R.Civ.P 23(b)(2) and (3) in consolidated franchise antitrust suits brought against Dunkin’ Donuts, Inc. and its wholly owned subsidiary, Dunkin’ Donuts of America, Inc. (hereinafter collectively Dunkin Donuts), by 14 of its present and former franchisees. Dunkin Donuts is the nation’s largest coffee and doughnut franchise system. The plaintiffs, by virtue of their motions, seek to represent over 400 present Dunkin Donuts franchisees and approximately 200 former franchisees in claims for damages as well as declaratory and injunctive relief. 1 Plaintiffs’ claims are bottomed principally upon alleged violations of § 1 of the Sherman Anti-Trust Act, 15 U.S.C. § 1 (1958), although they have also asserted counts based upon breaches of contract and fiduciary duty.
The claims presented by the plaintiffs in their complaints and class action papers are voluminous. In sum, they are a chronicle of the contemporary franchisee’s recriminations against the franchise system in which he is enmeshed; indeed, they constitute a veritable jeremiad. These accusations and lamentations, couched of course in legal terms, span much of the range of the antitrust laws and consume 18 pages in the Rader complaint. Not all of the allegations are pressed, and for purposes of the present motions we are concerned principally with the allegations of anticompetitive ties of real estate, equipment and supplies, “oppressive” restrictive covenants, and misappropriation of the franchisees’ advertising and real estate tax escrow funds.
As the reader will note from the caption, there are two actions before us. While their allegations are for the most part woven into a common skein, there is an important distinction between them. The Ungar case, unlike the Rader case, stems from a franchise agreement signed before November 1, 1970. On that date Dunkin Donuts altered its basic form franchise agreement in response to the decision of the United States Court of Appeals for the Ninth Circuit in Siegel v. Chicken Delight, Inc., reported at 271 F.Supp. 722 (N.D. Cal.1967), modified sub nom. Chicken Delight, Inc. v. Harris, 412 F.2d 830 (9th Cir. 1969) [hereinafter Siegel 1]. The fantastic growth of the franchising industry over the past decade has spawned a multitude of franchise antitrust actions, so that the matter before us is but another on a burgeoning roll. However, the Siegel litigation, which culminated in Siegel II, 448 F.2d 43 (9th Cir. 1971), cert. denied, 405 U.S. 955 , 92 S.Ct. 1172 , 31 L.Ed.2d 232 (1972), is a benchmark and a point of demarcation as well. Therefore, a brief discussion of its import is necessary at the outset of this opinion.
In Siegel, which also involved a fast food franchise operation, franchisees of Chicken Delight sought treble damages for injuries allegedly resulting from illegal restraints imposed by Chicken Delight’s standard form franchise agreement. That agreement required that franchisees purchase certain essential cooking equipment, dry mix food items and trademark-bearing packaging exclusively from Chicken Delight as a condition of obtaining its trademark license to operate home delivery and food pickup stores.. In Siegel I the court certified a class consisting of all Chicken Delight franchisees. In Siegel II the holding of the district court that the contractual requirements constituted a tying arrangement in violation of the *78 Sherman Act was affirmed by the court of appeals. Siegel II also held: (1) that the Chicken Delight trademark, logo and method of operations constituted a tying item separate and distinct from the packaging, mixes and equipment; (2) that the unique registered trademark, in combination with its demonstrated power to impose a tie-in, established as a matter of law the existence of sufficient market power to bring the case within the Sherman Act; and (3) that the tie could not be justified as a reasonable device for measuring and collecting revenue, as a device to protect a new business in accordance with the doctrine of United States v. Jerrold Electronics Corp., 187 F.Supp. 545 (E.D.Pa.1960), aff’d per curiam, 365 U.S. 567 , 81 S.Ct. 755 , 5 L.Ed.2d 806 (1961), or as a means of preserving market identity or quality of the franchisor’s product.
A tie is classically defined as “an agreement by a party to sell one product but only on the condition that the buyer also purchases a different (or tied) product, or at least agrees that he will not purchase that product from any other supplier.” Northern Pacific Railway Co. v. United States, 356 U.S. 1, 5-6 , 78 S.Ct. 514, 518 , 2 L.Ed.2d 545 (1958) (footnote omitted). In the wake of Sie-gel II, many (and probably most) firms engaged in the franchising business eliminated overt tying provisions from agreements with their franchisees. Dunkin Donuts’ November 1, 1970 modification of its standard form contract, for instance, was made to eliminate a provision which required a franchisee to purchase from Dunkin Donuts the equipment package necessary to operate the franchised business. In plaintiffs’ view, however, Siegel did not mark the end of unlawful tying practices in the franchise industry, but rather signalled the beginning of a new era in which unlawful ties and other anticompetitive practices would be effected by more subtle and sophisticated means. Plaintiffs include Dunkin Donuts’ practices in their opprobrium.
Almost all of the post-SiepeZ franchise antitrust cases are founded upon claims of unlawful ties. In each of those cases in which class certification was sought, the defendant has, as here, interposed the contention that in the absence of an overt contractual tie an unlawful tying arrangement cannot be established without proof of what is usual- ' ly described as “individual coercion.” Although the individual coercion doctrine has nowhere been explicated in detail, it appears to require proof by the plaintiff of such events and circumstances surrounding the relationship between the franchisor and each franchisee as will demonstrate that the franchisee was coerced into agreeing to an anticompetitive tie, usually of equipment or supplies. In suits of this type, the franchisor generally asserts that the alleged tie was either sought or voluntarily acquiesced in by the franchisee. Proof of individual coercion by each proposed class member is then said by the franchisor to be the only way to counter the doctrine. The result of the individual coercion doctrine, as it affects a class certification motion, is to escalate the predominance of individual questions over common questions of fact and law, and hence to militate against class action determination under F.R. Civ.P. 23(b)(3).
Plaintiffs concede that they must establish not only that the franchisor possesses the economic power requisite to a tie, but also that the economic power was in fact used. However, they vigorously assert that there is no individual coercion requirement in the law of tying and, alternatively, that even if such requirement exists in either pure or hybrid form, common questions still predominate for purposes of the class certification motion because of the pervasive effect of company policies in franchise dealings. These alternative assertions frame the initial undertakings of this *79 opinion: (1) an in-depth analysis of the law of tying, with attention to whether the individual coercion doctrine is a part of the law; and (2) a discussion of how the required use of economic power may be proved. 2
These are initial or threshold undertakings because we cannot determine whether individual or common questions of fact or law predominate for purposes of Rule 23(b)(3) class certification unless we first survey the law of tying arrangements and determine the nature of proof required to establish an antitrust violation. This type of analysis has often been made at class action determination stages of franchise antitrust eases. See, e. g., Bogosian v. Gulf Oil Corp., 62 F.R.D. 124 (E.D.Pa.1973); Abercrombie v. Lum’s, Inc., 345 F.Supp. 387, 390 (S. D.Fla.1972). While such an analysis is not appropriate as a preliminary determination of the merits, see Eisen v. Carlisle & Jacquelin, 417 U.S. 156 , 94 S.Ct. 2140 , 40 L.Ed.2d 732 (1974), it is proper and necessary in order to determine whether the requisites of Rule 23(b)(3) are satisfied.
An analysis of the law of tying arrangements, as it affects the franchising industry, is not a simple undertaking; in the lower federal courts (see discussion infra) the individual coercion doctrine is plainly in the ascendency. Since most tying cases that have reached the United States Supreme Court were brought by the government, that Court has not yet addressed the question of the necessity of proving individual coercion in a private injunctive or treble damage class suit where unlawful ties in the franchise industry are at issue. Nevertheless, it is necessary that we survey the Supreme Court’s pronouncements in the tying area, and together with an analysis of the lower court cases, do our best to arrive at a synthesis in this enigmatic area of the law.
The issue of predominance of common questions in the tying area is not, however, the sole question of substance before us. Difficult problems are also posed by the plaintiffs’ allegations that the various restrictive covenant provisions of the Dunkin Donuts franchise agreement constitute an unreasonable restraint in violation of the antitrust laws. In terms of federal antitrust scrutiny, such allegations force us to enter a relatively nascent area of the law. Moreover, in view of the disparity between present and former franchisees in terms of the relief sought, we must face the problem of whether the representative parties will adequately represent the interests of the class. Finally, in view of the gargantuan nature of the litigation which will confront us if we make a class certification, there is also a difficult question of superiority of the class action form.
In view of the length of the opinion that follows, it is appropriate that we summarize its principal elements here. They are: (1) a discussion of the nature of plaintiffs’ class action claims as presented in the complaints and class action papers; (2) an exegesis of the law of tying; (3) an explication of the duality between use of economic power and coercion and a resolution of the tension between the use and coercion concepts; (4) a brief look at some potential defenses to allegedly unlawful ties; (5) an analysis of the antitrust principles relating to restrictive covenants; (6) a survey of the voluminous discovery record taken in connection with the class action motions, which makes reference to Dun-kin Donuts’ defenses as well as plain *80 tiffs’ claims and which attempts to expose the individual versus common issues; (7) a review of the requisites of Rule 23(b)(3); and (8) a discussion of whether the requirements of that rule have been met. For the reasons which will at some length appear, and with certain qualifications and limitations, a class action determination under Rule 23(b)(3) will be made.
II. The Plaintiffs’ Class Action Claims
Plaintiffs’ complaints assert myriad claims for relief both under the antitrust laws and the common law. A number of these claims have been abandoned and some are not asserted as class action claims. 3 We will now summarize the principal allegations with respect to which class certification is sought. In this summary we will draw upon the allegations of both the Ungar and Rader complaints and the class action papers and briefs. We refrain, at this juncture, from surveying the class action discovery record, and from reviewing the defendant’s forceful rejoinder to the plaintiffs’ claims, preferring to defer these matters to a succeeding section of the opinion. We recite plaintiffs’ claims at this early stage so that the discussion of the law of tying and of restrictive covenants which follows will be referable to the facts at bar.
A. The Equipment Tie-In Claim
Plaintiffs claim that Dunkin Donuts has made it a condition of purchasing a Dunkin Donuts franchise that the franchisee buy from or through Dunkin Donuts the extensive equipment package necessary to operate the franchisee’s store.
From 1967 until November 1, 1970, Dunkin Donuts’ standard contract made it a “prerequisite” to the franchise agreement that the franchisee enter into an arrangement to buy his equipment package from Dunkin Donuts. This package cost the franchisee a total of approximately $32,000 to $42,000, depending upon the time the equipment was purchased, whereas the actual cost of the equipment was allegedly only $20,000. 4
On November 1, 1970, Dunkin Donuts amended the Equipment Agreement to provide that the franchisee had a 30 day option to purchase the equipment from a source other than Dunkin Donuts. *81 Plaintiffs assert, however, that the thirty day period still resulted in the imposition of an illegal tying arrangement upon the franchisees for two reasons. First, they contend that the revised clause provides insufficient time for the uneducated franchisee to go out into the market and purchase and finance the required items. 5 Second, they submit that, in any event, those individuals who inquired about the thirty-day option were pressured by Dunkin Donuts not to purchase the equipment on their own, a pressure which allegedly was successful because of the dominant role of Dunkin Donuts over the franchisee.
Plaintiffs contend that the pre-No-vember 1, 1970 equipment tie provision of the franchise agreement was resolutely enforced and that the policy which it reflected was nonetheless effectively continued after November 1, 1970, with the result that both before and after November 1, 1970, virtually every franchise operator has purchased the entire equipment package from Dunkin Donuts. It is asserted that over $1 million worth of equipment sales has thereby been foreclosed to competing firms in the restaurant equipment business.
B. The Supplier Tie-In Claim
Prior to 1966, Dunkin Donuts’ franchise agreement required the franchisees, to purchase materials from Dunkin Donuts or from sources approved by it. In 1966, defendant altered. the Franchise Agreement whereby the franchisee could purchase materials from “non-approved vendors” so long as the “non-approved vendors” could meet Dunkin Donuts’ specifications and then become approved suppliers. The five major categories of supplies involved are flour, shortening, fillings, paper products and coffee. According to the complaints, 6 the defendant receives kickbacks and a grand opening contribution from these approved suppliers. Plaintiffs assert that in order to secure the first order in the franchisee’s store, which is placed by Dunkin Donuts, the vendor must contribute anywhere between $50 and $750 to the defendant. In order to reimburse the vendor for this cost, through subsequent dealings with the franchisee, the plaintiffs assert that there is substantial pressure on. the franchisee to retain the original Dunkin Donuts selected vendors and not to purchase supplies from vendors of his own choosing. This pressure, they contend, takes two basic forms: (1) the designation of a particular approved supplier for a new store and threats of disenfranchisement if the franchisee should object and prefer a different approved supplier; and/or (2) dilatory and obfuscatory methods set up by the defendant specifically to deal with problems such as the approval of new suppliers which thereby render the franchisee’s freedom of choice a nullity.
It is plaintiffs’ claim that Dunkin Donuts’ specifications are nothing more than “a vehicle for defendants to receive kick-backs from suppliers, to completely control the operation of the franchisee, to limit the ability of the franchisees to purchase quality supplies from other vendors and to divide or geographically allocate territories to vendors.” 7 Plaintiffs assert that Dunkin Donuts’ specifications are “useless” and that their primary purpose is as a tool to prevent the utilization by the franchisees of sup *82 pliers from whom Dunkin Donuts would not receive “contributions.” In sum, plaintiffs allege that Dunkin Donuts’ company policy, resolutely enforced, is tantamount to tying to the grant and maintenance of the franchise the obligation to purchase the wares of a limited group of vendors. This policy, according to plaintiffs, has resulted in increased cost to the franchisee since the supplier must pass on the cost of his contributions to Dunkin Donuts by means of higher prices to the franchisee.
C. The Sign Tie-In Claim
Dunkin Donuts has always maintained the policy (through the equipment agreements) that each franchisee must have certain signs located at his store. To effectuate this policy, Dunkin Donuts says that it assists the franchisee in acquiring the signs to be sure they meet its specifications, or alternatively, that it permits the franchisee to purchase the signs directly from Dunkin Donuts. Plaintiffs contend that, in reality, the events which occur when a franchisee wants to purchase a sign or signs on his own track those recited previously; i. e., the franchisee is persuaded to purchase the signs either from Dunkin Donuts or from a company from which the defendant is receiving substantial secret kickbacks. The legal effect of this arrangement, plaintiffs assert, is the imposition of an illegal tying scheme upon the franchisee who, if he were free to choose his sign vendor, would be able to save a considerable sum of money. 8
D. The Real Estate Tie-In Claim
Plaintiffs contend that the defendant has conditioned the grant of the franchise upon the franchisees’ agreement to lease or sublease from Dunkin Donuts, under onerous terms, the premises on which the donut shop is to be operated, and that defendant has prevented plaintiffs from acquiring or using their own land and/or buildings for their Dunkin Donuts franchises. 9 The defendant’s alleged practice is to sublease the property to a franchisee at a substantial mark-up over the rent that Dunkin Donuts pays the prime lessor. According to plaintiffs, in most instances where a franchisee is permitted to use his own property, he is required to lease the property to Dunkin Donuts which, in turn, sublets it to the franchisee-owner. The foregoing is alleged to constitute an unlawful tying arrangement.
Related to the tying claims are two further contentions. Plaintiffs contend that all of the franchise lease agreements contain a provision for an extra mark-up in the franchisees' rental payments in the event the construction costs of the building exceed Dunkin Donuts estimates thereof. They also aver that since 1966 Dunkin Donuts has charged a 7% override on the gross income of the franchisees when the gross income reaches a certain figure, normally $150,000 to $165,000. While the excess construction cost markup and the lease override do not fit within the traditional framework of tying law, in plaintiffs’ view they represent additional rental income to the defendant and hence are part of the tied package deal. The common denominator, they allege, is increased income to Dunkin Donuts, in the name of rent, at the expense of the franchisee.
E. The Advertising Claims
Plaintiffs assert various antitrust and common law claims with respect to the arrangements for advertising between Dunkin Donuts and the franchisees. The Dunkin Donuts franchise agreement specifically states that each franchisee must pay to Dunkin Donuts, as administrator of an “Advertising and Sales Pro *83 motion Fund,” 2% of the franchisee’s gross sales. 10 The franchise agreement provides' that one half of the money collected will be used by defendant “for advertising, including production expenses, in the advertising area in which the Dunkin Donuts shop is located.” The other half of the fund is to be used, at the discretion of the defendant, to provide for administration, merchandising materials and distribution costs. Dun-kin Donuts is required to furnish franchisees a statement of receipts and disbursements of the fund, prepared by an independent certified public accountant, for each fiscal year of the fund. As in the case of equipment, supplies and signs, plaintiffs assert that the required advertising contributions are the subject matter of an illegal tying arrangement whereby defendant has tied its advertising program to the franchise name and license.
Plaintiffs’ common law claims regarding defendant’s handling of the advertising funds are grounded upon alleged breaches of contract and/or fiduciary duty. More specifically, plaintiffs allege that defendant has: (1) used the fund to advertise for new franchisees, for the benefit of the company and not the franchisees; (2) used the monies to make movie films for indoctrination of new and prospective franchisees, and upon discontinuing the practice after franchisee complaints, made no effort, despite requests, to replace the bulk of the monies spent upon expensive cameras and photographic equipment which continued in company use; (3) used the fund as a “catchall” for other charges and to publish the Company Newsletter and to pay for “seminars” for operators of franchised outlets, which were more properly company .incurred expenses; (4) refused to render an accurate and/or proper accounting, or any accounting at all, of said Advertising Fund; and (5) compelled franchisees to expend still more monies to receive any benefits.
F. The Real Estate Tax Escrow Claim
Plaintiffs aver that each sublease requires each sublessee. (i. e., each franchisee) to pay to defendant, on a monthly basis, Viztb. of the estimated yearly real estate taxes. 11 Plaintiffs allege that Dunkin Donuts has a concomitant fiduciary obligation to each franchisee which requires it to maintain the funds in an interest-bearing account for the benefit of the franchisee. Moreover, according to plaintiffs, defendant has breached its fiduciary duty to the franchisees: (1) by commingling the tax escrow funds with its own funds; (2) by failing in many instances to pay the taxes when they became due; (3) by failing to account for monies in the fund; and (4) by refusing to return monies not needed to cover real estate taxes.
G. The Restrictive Covenant Claims
Plaintiffs seek certification of their prayer for a declaratory judgment invalidating the restrictive covenant clauses in the Dunkin Donuts form franchise agreements. It is plaintiffs’ position that these covenants are invalid under common law principles and under the antitrust laws as constituting unreasonable restraints of trade.
Plaintiffs note that each Standard Franchise Agreement contains an in-term and post-term covenant restricting the franchisee from engaging in businesses similar to that of Dunkin Donuts, other than-another Dunkin Donuts franchised store. For example, provision 8(A)(2) of the present Standard Franchise Agreement restricts the franchisee in-term, without geographic limit, from owning, engaging in or having any in *84 terest in the operation of any enterprise substantially similar to that of Dunkin Donuts. Provision 8(B)(3) of the same Standard Franchise Agreement states that, during the term of the franchise and for 18 months after the franchise is terminated, licensees may not have interests in similar businesses within 10 miles from an existing Dunkin Donuts shop, “or such other area as arbitrators may decide.” 12
Plaintiffs concede that there are several variants of the restrictive covenant provisions, differing as to geographic and time limits, depending upon the year that the contract was entered into. 13 However, they contend that the restrictive covenant provisions in all of the recent franchise agreements have an overbroad common denominator and that even the most minimal restrictions imposed by Dunkin Donuts are not reasonably necessary to protect it. Moreover, plaintiffs contend that the determination of their illegality under the common law or Sherman I tests is ripe for adjudication.
H. Common Law Fraud Allegations
Plaintiffs also seek class certification of their allegations that defendant is liable at common law for material misrepresentations in its pro formas, its literature and in oral statements made to induce prospective franchisees to enter into franchise agreements. Plaintiffs recite a litany of suspect practices which they contend fulfill the requisites of a common law fraud claim. Inter alia, they aver that defendant has: (1) misrepresented the amount of gross sales reasonably to be expected in connection with the opening of a Dunkin Donuts store in a given location or area; (2) misrepresented the net profit and cash flow which can be derived from the operation of a Dunkin Donuts franchise at given levels of gross sales; (3) failed to reveal the alleged cost advantage to the franchisee of mass purchasing by Dun-kin Donuts; (4) misstated the markup on food supplies or paper goods by defendant; and (5) failed to reveal to plaintiffs that mass purchasing would increase the cost of such products to plaintiffs because of rebates, discounts, commissions, fees and kickbacks, either expressly or as contributions to advertising funds which defendant received from its approved suppliers.
III. The Law of Tying — -Economic Policy & Basic Principles
A. The Economic Policy of the Law; The Per Se Rule
As we have noted above, a tying arrangement under the antitrust *85 law is an agreement by a party to sell one product but only on condition that the buyer also purchases a different (or tied) product, or at least agrees that he will not purchase that product from another supplier. 14 In describing the general policy of the law against tying arrangements, Mr. Justice Black has said in Northern Pacific Railway Co. v. United States, 356 U.S. 1 , 78 S.Ct, 514 , 2 L. Ed.2d 545 (1958):
Indeed “tying agreements serve hardly any purpose beyond the suppression of competition.” Standard Oil Co. of California and Standard Stations v. United States, 337 U.S. 293, 305-06 , 69 S.Ct. 1051, 1058 , 93 L.Ed. 1371 . They deny competitors free access to the market for the tied product, not because the party imposing the tying requirements has a better product or a lower price but because of his power or leverage in another market. At the same time buyers are forced to forego their free choice between competing products.
Id. at 6, 78 S.Ct. at 518 (footnote omitted).
*86 The commentators and the courts are in general agreement as to the underlying economic policy basis of the law’s disfavor of tying arrangements. Such arrangements can force a buyer to take a product which he does not want, or at least restrict his choice of supply for the tied product. Tie-ins also foreclose competitors of the seller from the market in the tied product and act as a means of extending a monopoly in the tying product to the tied product. They thus have adverse impacts upon the buyer, the seller’s competitors and the public because of the effect on the market for the tied product. 15
In his opinion in the important ease of Fortner Enterprises, Inc. v. United States Steel Corp., 394 U.S. 495 , 89 S.Ct. 1252 , 22 L.Ed.2d 495 (1969), discussed at length infra, Mr. Justice White expounded upon the underlying economic policy basis of the law of tying as follows:
There is general agreement in the cases and "among commentators that the fundamental restraint against which the tying proscription is meant to guard is the use of power over one product to attain power over another, or otherwise to distort freedom' of trade and competition in the second product. This distortion injures the buyers of the second product, who because of their preference for the seller’s brand of the first are artificially forced to make a less than optimal choice in the second. And even if the customer is indifferent among brands of the second product and therefore loses nothing by agreeing to use the seller’s brand of the second in order to get his brand of the first, such tying agreements may work significant restraints on competition in the tied product. The tying seller may be working toward a monopoly position in the tied product and, even if he is not, the practice of tying forecloses other sellers of the tied product and makes it more difficult for new firms to enter that market. They must be prepared not only to match existing sellers of the tied product in price and quality, but to offset the attraction of the tying product itself. Even if this is possible through simultaneous entry into production of the tying product, entry into both markets is significantly more expensive than simple entry into the tied market, and shifting buying habits in the tied product is considerably more cumbersome and less responsive to variations in competitive offers. In addition to these anticompetitive effects in the tied" product, tying arrangements may be used to evade price control in the tying product through clandestine transfer of the profit to the tied product; they may be used as a counting device to effect price discrimination; and they may be used to force a full line of products on the customer so as to extract more easily from him a monopoly return on one unique product in the line.
Id. at 512-514 , 89 S.Ct. at 1264 (footnotes omitted). That the foregoing statement appears in a dissent does not affect the viability of what is perhaps the most comprehensive judicial statement extant of the policy of tying law. 16
*87 As the foregoing discussion suggests, the economic policy underlying the law of tying has several nuclei. One object of the Supreme Court’s concern is the buyer who may be forced to take a product he does not want or whose choice of supply for the tied product is restricted. However, the Court’s principal concern seems to be the foreclosure of competition in the tied product and the adverse impact of tying upon the marketplace. In the words of Professor Turner:
[T]he interest of buyers is not the only legitimate interest at stake. The [Supreme] Court has shown at least equal concern, and in later eases perhaps primary concern, with the interest of competing suppliers of a tied product in free access to the consuming market — a strong desire that competition in the sale of each product should be “on the merits.” 17
Turner, supra note 15, at 60. The Court emphasized this point in the Fortner case where it said:
In any event, a narrow focus on the volume of commerce foreclosed by the particular contract or contracts in suit would not be appropriate in this context. As the special provision awarding treble damages to successful plaintiffs illustrates, Congress has encouraged private antitrust litigation not merely to compensate those who have been directly injured but also to vindicate the important public interest in free competition.
394 U.S. at 502 , 89 S.Ct. at 1258 (emphasis added). The acme of the Court’s policy views in this area may be found, however, in Perma Life Mufflers, Inc. v. International Parts Corp., 392 U.S. 134 , 88 S.Ct. 1981 , 20 L.Ed.2d 982 (1968).
Perma Life was a treble damage suit by dealers who operated Midas Muffler shops under franchises granted by Midas, Inc. The Midas dealers challenged as illegal restraints of trade numerous provisions of the franchise agreement, such as the terms barring them from puchasing from other sources of supply, preventing them from selling outside a designated territory, tying the sale of mufflers to the sale of other products in the Midas line and requiring them to sell at fixed retail prices. The court of appeals held the suit barred because the franchisees were in pari delicto, 376 F. 2d. 692 (7th Cir. 1967), noting that each of the franchisees had enthusiastically sought to acquire a Midas franchise with full knowledge of these provisions and had “solemnly subscribed” to the agreement containing the restrictive terms. The court of appeals also noted that the franchisees had all made enormous profits as Midas dealers, had eagerly sought to acquire additional franchises and had voluntarily entered into additional franchise agreements, all while fully aware of the restrictions they now challenged. The Supreme Court reversed, adverting to “the inappropriateness of invoking broad common-law barriers to relief where a private suit serves important public purposes.” 392 U.S. at 138 , 88 S.Ct. at 1984 . Speaking for the Court, Justice Black noted:
The plaintiff who reaps the reward of treble damages may be no less morally *88 reprehensible than the defendant, but the law encourages his suit to further the overriding public policy in favor of competition. A more fastidious regard for the relative moral worth of the parties would only result in seriously undermining the usefulness of the private action as a bulwark of antitrust enforcement.
392 U.S. at 139 , 88 S.Ct. at 1984 .
The prime lesson to be garnered from these policy statements is that our analysis of the validity of the arrangements alleged to have been imposed by Dunkin Donuts cannot be limited to a focus upon whether the individual plaintiffs have been injured. Our attention must also be heavily concentrated on the economic injury wrought upon competitors in the tied product and, hence, upon the market place and the economy as a whole.
Under the doctrine of Northern Pacific, tying agreements are unreasonable in and of themselves whenever a party has sufficient economic power with respect to the tying product to appreciably restrain free competition in the market and a “not insubstantial” amount of interstate commerce is affected. This per se doctrine was itself explicated by Mr. Justice Black as follows :
Although [Sherman Act § 1] is literally all-encompassing, the courts have construed it as precluding only those contracts or combinations which “unreasonably” restrain competition. However, there are certain agreements or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use. This principle of per se unreasonableness not only makes the type of restraints which, are proscribed by the Sherman Act more certain to the benefit of everyone concerned, but it also avoids the necessity for an incredibly complicated and prolonged economic investigation into the entire history of the industry involved, as well as related industries, in an effort to determine at large whether a particular restraint has been unreasonable — an inquiry so often wholly fruitless when undertaken. Among the practices which the courts have heretofore deemed to be unlawful in and of themselves are price fixing, United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 210 , 60 S.Ct. 811, 838 , 84 L.Ed. 1129 ; division of markets, United States v. Addyston Pipe & Steel Co., 6 Cir., 85 F. 271 , 46 L.R.A. 122 , affirmed 175 U.S. 211 , 20 S. Ct. 96 , 44 L.Ed. 136 ; group boycotts, Fashion Originators’ Guild of America v. Federal Trade Comm., 312 U.S. 457, 668 , 61 S.Ct. 703 , 85 L.Ed. 949 ; and tying arrangements, International Salt Co. v. United States, 332 U.S. 392 , 68 S.Ct. 12 , 92 L.Ed. 20 .
356 U.S. at 5 , 78 S.Ct. at 518 . The per se doctrine is not without its critics. See Turner, supra note 15; Austin, supra note 15; Pearson, supra note 15. However, it remains the law. 18
*89 B. Formal Requisites of a Tie
Under the Supreme Court cases there are three basic requisites to the establishment of an illegal tie: (1) there must be separate tying and tied products; (2) the seller (here the franchisor) must possess sufficient economic power to appreciably restrain competition in the tied product; and (3) the tying arrangement must affect a “not insubstantial” amount of commerce. We will discuss these requisites seriatim.
1. The Tying and the Tied Products
In order for there to be an unlawful tie, there must be two separate products: a tying product which cannot be obtained without the purchase of a tied product. Times-Picayune Publishing Co. v. United States, 345 U.S. 594 , 73 S.Ct. 872 , 97 L.Ed. 1277 (1953). The alleged tying product in this case is the Dunkin’ Donuts trademark, franchise system and logo. The alleged tied products are principally equipment, supplies and real estate. 19 Siegel II, 448 F.2d 43 (9th Cir. 1971), cert. denied, 405 U.S. 955 , 92 S.Ct. 1172 , 31 L.Ed.2d 232 (1972), is sound authority for the proposition that the franchisor’s trademark, system and logo may constitute a separate tying product. The Siegel II court’s approach was as follows:
The historical conception of a trademark as a strict emblem of source of the product to which it attaches has largely been abandoned. The burgeoning business of franchising has made trade-mark licensing a widespread commercial practice and has resulted in the development of a new rationale for trade-marks as representations of product quality. This is particularly true in the case of a franchise system set up not to distribute the trade-marked goods of the franchisor, but, as here, to conduct a certain business under a common trademark or trade name. Under such a type of franchise, the trade-mark simply reflects the goodwill and quality standards of the enterprise which it identifies. As long as the system of operation of the franchisees lives up to those quality standards and remains as represented by the mark so that the public is not misled, neither the protection afforded the trademark by law nor the value of the trade-mark to the licensee depends upon the source of the components.
This being so, it is apparent that the goodwill of the Chicken Delight trade-mark does not attach to the multitude of separate articles used in the operation of the licensed system or in the production of its end product. It is not what is used, but how it is used and what results that have given the system and its end product their entitlement to trade-mark protection. It is to the system and the end product that the public looks with the confi *90 dence that established goodwill has created.
448 F.2d at 48-49 (footnotes omitted). The Siegel II court thus concluded that the sale of a franchise license, with the attendant rights to operate a business in the prescribed manner and to benefit from the goodwill of the trade name, in no way requires the forced sale by the franchisor of some or all of the component articles. Therefore, attempts by tie-ins to extend the trade-mark protection to common articles (which the public does not and has no reason to connect with the trade-mark), simply because they are said to be essential to production of that which is the subject of the trade-mark, cannot escape antitrust scrutiny.
We add here only our disagreement with the contention of the plaintiffs that advertising can be a separable, tied product. Relevant advertising is inextricable from the trademark, franchise system and logo as it is the major vehicle for promoting them. Kugler v. AAMCO Automatic Transmissions, Inc., 460 F.2d 1214 (8th Cir. 1972). Our holding on this point, however, is confined to advertising that arguably promotes the interests of the entire franchise system and not merely the interests of the franchisor alone. On the other hand, the equipment, supplies and real estate may be considered separate (and therefore potentially tied) products since the public does not have any reason to connect them with the trademark itself. But cf. In re 7-Eleven Franchise Antitrust Litigation, 1974-2 Trade Cas. ¶ 75,429 (N.D.Cal.1974).
2. Sufficient Economic Power to Appreciably Restrain Competition in the Tied Product
a. Quantum of the Power
In order for an illegal tie to exist, the tying product must have sufficient economic power or advantage to appreciably restrain competition in the tied product. Northern Pacific Railway Co. v. United States, 356 U.S. 1 , 78 S.Ct. 514 , 2 L.Ed.2d 545 (1958). The standard of “sufficient economic power” does not require that the defendant have a monopoly or even a dominant position throughout the market for the tying product. Indeed, Fortner Enterprises, Inc. v. United States Steel Corp., 394 U. S. 495 , 89 S.Ct. 1252 , 22 L.Ed.2d 495 (1969), made it clear that the economic power over the tying product can be sufficient even though the power falls far short of dominance and even though the power exists only with respect to some of the buyers in the market. 394 U.S. at 502-03 , 89 S.Ct. 1252 . Mr. Justice Black explained:
These decisions rejecting the need for proof of truly dominant power over the tying product have all been based on a recognition that because tying arrangements generally served no legitimate business purpose that cannot be achieved in some less restrictive way, the presence of any appreciable restraint on competition provides a sufficient reason for invalidating the tie. Such appreciable restraint results whenever the seller can exert some power over some of the buyers in the market, even if his power is not complete over them and over all other buyers in the market. . . . [D]espite the freedom of some' or many buyers from the seller’s power, other buyers — whether few or many, whether scattered throughout the market or part of some group within the market — can be forced to accept the higher price because of their stronger preferences for the product, and the seller could therefore choose instead to force them to accept a tying arrangement that would prevent free competition for their patronage in the market for the tied product. Accordingly, the proper focus of concern is whether the seller has the power to raise prices, or impose other burdensome terms such as a tie-in, with re- *91 sped to any appreciable number of buyers within the market. 20
394 U.S. at 503-04 , 89 S.Ct. at 1258 (emphasis added).
b. Proof of Existence of Economic Power
It was established in Northern Pacific that distinctiveness and the existence of the tying arrangement were themselves sufficient proof of economic power in the tying product to find an illegal tie. In Northern Pacific the tying product was a unique leasehold or ownership of uniquely placed land. The Northern Pacific Railroad had initially been granted large acreages. This land was strategically located in checkered fashion amid private holdings and within economic distance of transportation facilities. Not only the testimony of various witnesses but common sense made it evident to the Court that this particular land was often prized by those who purchased or leased it from Northern Pacific and was frequently essential to their business activities. The defendant entered into contracts of sale or lease covering at least several million acres of land which included “preferential routing” clauses. These clauses compelled the lessee or land purchaser to ship over Northern Pacific’s lines all commodities produced or manufactured on the leased or purchased land (provided that Northern Pacific’s rates were equal to those of competing carriers). Mr. Justice Black thereupon observed: “The very existence of this host of tying arrangements is itself compelling evidence of the defendant’s great power at least where, as here, no other explanation has been offered for the existence of these restraints.” 21
Northern Pacific was followed four years later by United States v. Loew’s Inc., 371 U.S. 38 , 83 S.Ct. 97 , 9 L.Ed.2d 11 (1962). Loew’s was a civil suit brought, by the Justice Department against six major distributors of pre1948 copyrighted motion picture films for television exhibition, claiming that each defendant had engaged in “block booking” in violation of § 1 of the Sherman Act. Defendants allegedly had, in selling to television stations, conditioned the license or sale of one or more feature films upon the acceptance by the station of a package or block containing one or more unwanted or inferior films. According to Mr. Justice Goldberg, the “successful pressure” applied to television station customers to accept inferior films along with desirable pictures was the gravamen of the complaint. He ultimately concluded on the proof of economic power issue:
Even absent a showing of market dominance, the crucial economic power *92 may be inferred from, the tying product’s desirability to consumers or from uniqueness in its attributes.
The requisite economic power is presumed when the tying product' is patented or copyrighted This principle grew out of a long line of patent cases which had eventuated in the doctrine that a patentee who utilized tying arrangements would be denied all relief against infringements of his patent.
371 U.S. at 45-46 , 83 S.Ct. at 102 (emphasis added) (footnote omitted). 22 This quoted language from Loew’s represents a further liberalization of the proof of economic power requirement. In Northern Pacific the requirement evolved from dominance to distinctiveness; the Court in Loew’s permits the drawing of an inference of economic power merely from the tying product’s desirability to the consumer.
Fortner Enterprises, Inc. v. United States Steel Corp., 394 U.S. 495 , 89 S.Ct. 1252 , 22 L.Ed.2d 495 (1969), the Court’s latest pronouncement, does not retrench. The Fortner case allows a jury to infer sufficient economic power over the tying product from varied kinds of evidence. Proof that an appreciable number of buyers may have accepted a burdensome term such as a tie-in may raise an inference of sufficient economic power. Alternatively, a jury may draw such an inference from the fact that buyers were willing to pay a higher than competitive price for the tied product. 23 Refining the language of Loew’s, Fortner explains that uniqueness confers economic power only when other competitors are in some way prevented from offering the distinctive products themselves. Such barriers may be legal, as in the case of patented and copyrighted products (e. g., International Salt Co. v. United States, 332 U.S. 392 , 68 S.Ct. 12 , 92 L.Ed. 20 (1947)), or physical, as where the product is land (e. g., Northern Pacific Railway Co. v. United States, 356 U.S. 1 , 78 S.Ct. 514 , 2 *93 L.Ed.2d 545 (1958)). As the foregoing discussion indicates, the Court’s decisions in this area reflect a clear trend: that of a steady diminution in the strictness of proof required to establish the economic power requisite of an unlawful tie. In the words of a leading commentator :
There is no doubt that the Supreme Court’s attitude towards the use of the tying arrangement has become increasingly harsh. The character of the market control that must be exerted by the producer of the tying product so as to furnish a basis for successful prosecution has shifted dramatically from United Shoe’s almost complete (ninety-five percent) dominance to the minimal “sufficient economic power” of the Northern Pacific decision. Thus, one could argue that there has been a discernible and persistent move towards making the tie-in a per se violation in the accepted sense of the term. Loew’s seems to confirm this trend with express mention that consumer desirability or uniqueness of the tying product satisfies both the marked dominance and “economic power” criteria.
Austin, supra note 15, at 109-10.
The Supreme Court has not yet been called upon to decide whether economic power may be presumed from the uniqueness or distinctiveness or legal exclusivity of a trademark, franchise system or logo. However, the Ninth Circuit Court of Appeals in Siegel II has done so:
Just as the patent or copyright forecloses competitors from offering the distinctive product on the market, so the registered trade-mark presents a legal barrier against competition. It is not the nature of the public interest that has caused the legal barrier to be erected that is the basis for the presumption, but the fact that such a barrier does exist. Accordingly we see no reason why the presumption that exists in the case of the patent and copyright does not equally apply to the trade-mark.
448 F.2d at 50 (footnote omitted). Accord, Warriner Hermetics, Inc. v. Copeland Refrigeration Corp., 463 F.2d 1002 (5th Cir.), cert. denied, 409 U.S. 1086 , 93 S.Ct. 688 , 34 L.Ed.2d 673 (1972); Redd v. Shell Oil Co., 1974-2 Trade Cas. ¶ 75,390 (D.Utah 1974); Falls Church Bratwursthaus v. Bratwursthaus Management Corp., 354 F.Supp. 1237 (E.D. Va.1973). We agree. 24
*94 3. The Requisite That a “Not Insubstantial" Amount of Commerce be Affected
To find an illegal tying agreement one must also determine that the alleged tie affects a “not insubstantial” amount of commerce. International Salt Co. v. United States, 332 U.S. 392 , 68 S. Ct. 12 , 92 L.Ed. 20 (1947). In International Salt the defendant leased dispensing machines — Lixators and Saltomats —only on the condition that the lessees purchase from defendant all their requirements of salt for use in the machines. The Lixator contracts imposed the purchase requirement only if defendant’s price was competitive; the Saltomat contracts guaranteed to the purchasers that they would get International’s own lowest price. The Court unanimously affirmed a summary judgment holding the contracts unlawful not only under Section 3 of the Clayton Act, but also under Section 1 of the Sherman Act. In the Court’s view, it was:
unreasonable, per se, to foreclose competitors from any substantial market. . The volume of business affected by these contracts [$500,000 worth annually] cannot be said to be insignificant or insubstantial and the tendency of the arrangement to accomplishment of monopoly seems obvious.
332 U.S. at 396 , 68 S.Ct. at 15 . International Salt thus made clauses tying un-patented materials to a patented product or process illegal per se, provided that they foreclose a dollar amount of commerce that “cannot be said to be insignificant . . . .” Id.
In Fortner Enterprises, Inc. v. United States Steel Corp., 394 U.S. 495 , 89 S.Ct. 1252 , 22 L.Ed.2d 495 (1969), the Court also had occasion to address this subject and, in effect, liberalized the International Salt criteria. The Fortner Court not only made it clear that the “not insubstantial” requirement makes no reference to the scope of any particular market or to the share of that market foreclosed by the tie, but also added that:
. normally the controlling consideration is simply ■ whether a total amount of business, substantial enough in terms of dollar-volume so as not to be merely de minimus, is foreclosed to competitors by the tie
394 U.S. at 501 , 89 S.Ct. at 1258 . The Court held that the relevant figure is the total volume of sales tied by the policy under challenge, not the portion of this total amount applicable to the particular plaintiff who brings suit. 394 U.S. at 502 , 89 S.Ct. 1252 . It does not appear, in view of the substantial dollar volume involved in the present case with respect to purchases or leases of the alleged tied items, that Dunkin Donuts will refute plaintiffs’ contentions that a “not insubstantial” amount of commerce is involved.
*95 C. Does the Traditional Law of Tying Apply Where There is Split Ownership of the Tying and the Tied Products: The “TBA” Cases and the Franchise Cases
In outlining the nature of the plaintiffs’ supply tie-in claims, we noted that under the terms of the franchise agreement the franchisee is obligated to purchase supplies not from Dunkin Donuts, but from certain approved suppliers, thus rendering Dunkin Donuts the seller of the tying product (the franchise) but not of the tied product. 25 We have also noted that the conventional case law definition of the tying arrangement assumes a single seller using the market power of one product as a means of inducing the purchaser to buy a second product. The question thus arises as to whether the traditional law of tying, which we have already analyzed in part, applies where there is split ownership between the tying and the tied products. 26
Professor Austin has observed that it is inappropriate to focus solely upon the seller’s position, for the relevant factor is the overall impact of the arrangement on the purchaser and the manner in which it affects his decision-making:
If a business must purchase a second “tied” product in order to obtain the use of an item that is necessary to continued market survival, it makes little difference whether there is a single or dual source for the tying and tied products. In either case the deci-sional range is the same — do without the desired item or purchase both the principal and ancillary products.
In view of the above analysis it is suggested that a tie-in exists whenever a vendee is persuaded to purchase one item or avail himself of a service as a condition for obtaining a second item — regardless of the source of either product (or service, as the case may be). This definition would engender a uniformity of treatment— at least as to section 1 of the Sherman Act and section 5 of the Federal Trade Commission Act. Courts would no longer apply tie-in precedent on an “as if” basis, as was done in the Atlantic Refining case. Thus the development of hybrid and quasi-tie-in principles would be precluded.
Austin, supra note 15, at 95. Professor Austin’s analysis is also consistent with the underlying policy of the law of tying upon which we have already discoursed and its emphasis upon purchaser and *96 consumer protection. 27 We find ourselves in accord with it, and also believe it to be consistent with the caselaw.
The most significant of the split ownership eases reported to date are the so-called “TBA” cases in which the courts have dealt with the efforts of various major oil companies to promote the sales of tires, batteries and accessories through their franchised retail service station dealers in return for a commission on the sale. In Atlantic Refining Company v. Federal Trade Commission, 381 U.S. 357 , 85 S.Ct. 1498 , 14 L.Ed.2d 443 (1965), Atlantic had turned over its TBA business to Goodyear and Firestone which became completely responsible for all TBA sales to Atlantic dealers (and handled warehousing and distribution to them as well). Atlantic sales personnel were instructed to take TBA orders and to actively encourage dealers to buy Goodyear and Firestone products. In return, Atlantic was to receive a 10% commission on the net sales of products by Atlantic dealers. According to the record before the FTC, the Atlantic salesmen were zealous and made it clear to dealers that lease and renewal contracts were dependent upon the acceptance of Goodyear and Firestone TBA.
The Federal Trade Commission held this arrangement to be an “unfair method of competition” prohibited by § 5 of the Federal Trade Commission Act and ordered Atlantic to cease and desist from (1) intimidating or coercing dealers to purchase any particular brand of TBA and (2) making any commission arrangement for sponsoring or promoting TBA sales to its dealers. The Commission’s opinion, 58 F.T.C. 309 (1961), is couched in tie-in language and draws heavily from tie-in precedent, including the rationale of Northern Pacific. The Supreme Court affirmed, noting that while the Goodyear-Atlantic contract was not a tying arrangement, its central competitive characteristic was the same — the utilization of economic power in one market to curtail competition in another. The Court described the effect of this TBA plan as being “similar to that of a tie-in.” 381 U.S. at 371 , 85 S.Ct. at 1507 .
In F. T. C. v. Texaco, Inc., 393 U.S. 223 , 89 S.Ct. 429 , 21 L.Ed.2d 394 (1968), the Supreme Court held that it was an unfair method of competition in violation of the F.T.C. Act for Texaco to induce its service station dealers to purchase B. F. Goodrich TBA in return for a commission, where Texaco possessed and exercised dominant economic power over its dealers and where anti-eompeti-tive results flowed therefrom. 28 The Court again noted that the essential anti-competitive vice of the arrangement was the utilization of economic power in one market to curtail competition in another. It held that in order to establish a § 5 violation the Commission is not required to show that a practice it condemns has totally eliminated competition in the relevant market, but only that the practice in question has unfairly burdened competition for a not insignificant volume of commerce. In so holding, the Court cited International Salt and Loew’s, which are, of course, tying cases.
Plaintiffs have claimed that the Dunkin Donuts’ approved supplier system is a sham; that it is a vehicle for the payment of kickbacks and that Dunkin Donuts is unwilling to approve new suppliers, despite ability to meet proper specifications, so as to maintain an anti-competitive (and profitable) tie. Plaintiffs may or may not be able to prove this at trial. 29 In any event, nothing in defendant’s brief dissuades us *97 from holding that plaintiffs are not foreclosed from applying traditional tying law analysis to their claim because of split ownership of the tying and tied products in the supply area. For, if plaintiffs are correct, the split ownership cannot erase the fact that the supply sales owe their origin and existence to Dunkin Donuts’ willingness to use its leverage. 30
IV. The Law of Tying Continued: The Requirement of Proof of Use of Economic Power; The Individual Coercion Doctrine and the “Use-Coercion Dialogue"
A. The Requirement That Economic Power to Used: A Statement of the “Use-Coercion Dialogue"
Although Northern Pacific and Fortner make the possession by the seller (or franchisor) of sufficient economic power to appreciably restrain competition in the tied product the second requisite of an illegal tie, those cases themselves make clear that the plaintiff must prove more than mere possession. For, as Judge Blumenfeld aptly noted in the district court opinion in Capital Temporaries, Inc. v. The Olsten Corp., 365 F. Supp. 888, 892 (D.Conn.1973), aff’d 506 F.2d 658 (2d Cir. 1974): “[t]he economic power must not simply exist; it must be used.” Indeed, the Court’s statement of the facts in Northern Pacific subsumes such a formulation: “the defendant possessed substantial economic power by virtue of its extensive landholdings which it used as leverage . . . .” 356 U.S. at 7 , 78 S.Ct. at 519 (emphasis added). The use notion is, of course, related to the fact that a tie cannot exist unless the availability of the tying product is conditioned on the purchase of the tied product. 31
As will be seen, the ultimate disposition of the class action motions will turn on the determination of whether it is sufficient under the law of tying that the plaintiffs show the use of (the requisite) economic power, or whether the plaintiffs must, as defendant contends, show that the power was used coercively as to each individual in the putative class. We describe the issue framed by these contending positions as the “use-coercion dialogue.” We believe that the dialogue may be illustrated by the following queries. Is it necessary merely that the franchisor use his economic power to achieve the tie, or is it necessary that the franchisor coerce the fran *98 chisee, i. e., compel him, after negotiation, to act against his will? Does a tie exist if the franchisee voluntarily seeks the franchisor out and solicits the purchase of the franchisor’s package “lock, stock and barrel”? Does a tie exist if, notwithstanding mental reservations, the franchisee nonetheless voluntarily accepts the tie? Does it matter that the alleged tie is not reduced to boilerplate contractual form? Is it necessary that the franchisee understand the uneconomic nature of the tie? If there is an individual coercion requirement, is it relevant at the liability stage or only on the issue of damages? At either stage, is it the plaintiffs’ burden to rule it out or the defendant’s burden to prove it?
As we pose these queries, we remain conscious of the fact that the Supreme Court has not set forth a coercion requirement in the tying cases. Indeed, we note that the law comprehends tying suits by foreclosed competitors in which a question of coercion of franchisees seems peripheral at best. See, e. g., Warriner Hermeties, Inc. v. Copeland Refrigeration Corp., 463 F.2d 1002 (5th Cir.), cert. denied, 409 U.S. 1086 , 93 S. Ct. 688 , 34 L.Ed.2d 673 (1972) ; Kelly v. General Motors Corp., C.A. No. 73-51 (E.D.Pa., Huyett, J., Aug. 1, 1974); N. W. Controls, Inc. v. Outboard Marine Corp., 333 F.Supp. 493 (D.Del.1971); Record Club of America, Inc. v. Capitol Records, Inc., 1971 Trade Cas. ¶ 73,694 (S.D.N.Y.1971).
We turn now to a development of the use-coercion dialogue thus framed.
B. A Statement of the Individual Coercion Doctrine; Incipient Flaws in the Doctrine
The individual coercion doctrine as it is pressed by Dunkin Donuts in this case postulates that a tie cannot be established in the absence of proof by the plaintiffs of such events and circumstances surrounding the relationship between Dunkin Donuts and each proposed franchisee class member as will demonstrate that the franchisee, after negotiating on the point, was coerced into agreeing to the equipment, supply or real estate tie. This formulation is consistent with the dictionary definition of coercion, which is compulsion to act against one’s free will. As will be seen when we survey the class action discovery, Dunkin Donuts asserts that the alleged tie was either sought or voluntarily acquiesced in by the named plaintiff-franchisees. Proof of individual coercion by each of the class members is said to be the only way to counter this defense.
At the outset of this opinion, we took note of Siegel v. Chicken Delight, 448 F.2d 43 (9th Cir. 1971), cert. denied, 405 U.S. 955 , 92 S.Ct. 1172 , 31 L.Ed.2d 232 (1972) [Siegel II], wherein there was an express contractual provision requiring that the franchisee purchase all the equipment necessary to operate a Chicken Delight franchise directly from the franchisor. The Siegel II court held that the requisite economic power to bring the case within § 1 of the Sherman Act was established as a matter of law by the unique registered trademark in combination with its demonstrated power to impose a tie-in; indeed, a directed verdict for the plaintiff class was affirmed. 32 The Siegel II court did not discuss the individual coercion doctrine, and neither the defendant here, nor any of the courts upon whose decisions the defendant relies, have suggested that Siegel II was decided erroneously because there was no evidence that each of the 650 franchisees involved were *99 coerced to purchase the equipment. 33 Indeed, the leading cases espousing the individual coercion doctrine concede that a class was properly certified in Siegel I. See, e. g., Abercrombie v. Lum’s, Inc., 345 F.Supp. 387 (S.D.Fla.1972); Smith v. Denny’s Restaurants, Inc., 62 F.R.D. 459 (N.D.Cal.1974).
Given this background, two questions immediately arise. First, might there not have been Chicken Delight franchisees who, like Dunkin Donuts franchisees, either sought or gladly acquiesced in the equipment tie because, as novices in the field, they were happy not to be bothered with having to secure the various items of equipment? Under Dunkin Donuts’ individual coercion theory, was not Siegel II wrongly decided as to such franchisees? Plainly, the answer is yes. On the other hand, if Siegel II was correctly decided, as the leading cases upon which the defendant relies assume, what difference does it make whether the tie is articulated in the contract or can be proved at trial as having been imposed sub silentio through a pervasive and resolutely enforced company policy as is alleged here? Palpably, the answer is none. In this latter regard, Professor Pearson has observed:
Once the product problem has been hurdled, the court must determine whether a tie-in exists, that is, whether a buyer can buy the tying product only on condition that he take the tied product. Of course, where the condition is express, there is no problem. But the substance of the condition may exist even if the form doesn’t, and the problem is to determine if, as a practical matter, the buyer must take both products to get one.
Pearson, supra note 15, at 630 (emphasis added).
The foregoing analysis reveals incipient flaws in the defendant’s position and suggests that the dispute between the parties may well resolve into a dispute not over the requisites of a tie, but over the appropriate means of proving use of economic power. Thus, it may be that evidence indicating (individual) coercion is but one way of proving use of economic power. However, before determining whether there is a requirement of (individual) coercion in the law, we have several threshold tasks. First, we must analyze the individual coercion doctrine in more detail and discuss its etiology. Second, we must review the decisions in F. T. C. v. Texaco, Inc., 393 U.S. 223 , 89 S.Ct. 429 , 21 L.Ed.2d 394 (1968), and Perma Life Mufflers, Inc. v. International Parts Corp., 392 U.S. 134 , 88 S.Ct. 1981 , 20 L.Ed.2d 982 (1968), to assess their impact upon the question of proof of use of economic power. Third, we must address the notion of the “voluntary” tie. Fourth, we must consider the role of company policy. And, in the course of our discussion, we must consider the semantic overtones of the problem, for coercion and use of economic power may be but part of the same syndrome and it is possible that by means of linguistic phenomena alone, “coercion” may have assumed an independent viability in the law.
C. The Cases Positing the Individual Coercion Doctrine: Comment on Their Viability
The individual coercion doctrine appears to have sprung mainly from the opinion of the United States District Court for the Southern District of Florida in Abercrombie v. Lum’s Inc., 345 F. Supp. 387 (S.D.Fla.1972). It is Abercrombie that is cited in each of the succeeding cases in the line of decisions relied upon by defendant (see p. 105 infra).
Abercrombie was a franchise antitrust suit brought by a franchisee against a *100 franchisor engaged in the fast food business. The plaintiff sought to represent approximately 400 past and present Lum’s franchisees in a class action. The plaintiff claimed that the franchisees were unlawfully required: (a) to purchase signs and equipment from defendants and to purchase furniture, fixtures, supplies, foods, and beverages from defendants or their approved suppliers ; (b) to lease their restaurant sites to defendants who would then sublease the sites back to plaintiffs at the same rental paid by defendants plus 5% of their gross sales and, in some cases, other charges; (c) in some cases to secure their sites from persons designated by Lum’s and to deal with building contractors designated by Lum’s; and (d) to permit Lum's, upon termination of the franchise agreement, to repurchase equipment and fixtures from them. The claims thus asserted are strikingly similar to those in the case at bar.
While Lum’s entered into a franchise agreement for the operation of a Lum’s Restaurant with each franchisee, there were. some twelve different types of agreements executed from time to time, none of which contained overt tying arrangements. The large variety of forms might have motivated the court to conclude that proof of the tie-ins would have to come from an examination of each franchisee’s (or a group of franchisees’) dealings with Lum’s. However, the opinion denying class certification sweeps far more broadly. Judge King wrote:
Plaintiffs also urge that the existence of an illegal tying arrangement may be shown not only by evidence of an express agreement but also through conduct extrinsic to an agreement, Advance Business Systems & Supply Co. v. SCM Corp., 415 F.2d 55 (4th Cir. 1969), cert. denied, 397 U.S. 920 , 90 S.Ct. 928 , 25 L.Ed.2d 101 (1970). In order to establish an illegal tying arrangement arising from business conduct, franchisees must prove that they were coerced, not merely persuaded, into purchasing the products at issue here. See Ford Motor Co. v. United States, 335 U.S. 303, 316-320 , 69 S.Ct. 93 , 93 L.Ed. 24 (1948). As the Court stated in American Mfrs. Mutual Ins. Co. v. ABC-Paramount Threatres, 446 F.2d 1131, 1137 (2d Cir. 1971), cert. denied, 404 U.S. 1063 , 92 S.Ct. 737 , 30 L.Ed.2d 752 (1972).
“[T]here can be no illegal tie unless unlawful coercion by the seller influences the buyer’s choice.”
Such proof will necessarily vary from franchisee to franchisee. If the Abercrombies were to establish that they made forced purchases it would not necessarily follow that other franchisees were similarly coerced. Thus, while the Abercrombies may have purchased equipment from Lum’s, it appears that other Lum’s franchisees purchased none. Franchisees may have purchased items from defendants for a variety of reasons ranging from convenience, to attractiveness of the product, to, as the Abercrombies claim, coercion. Determination of the issue requires separate, distinct and individual, not common, proof.
Plaintiffs’ claims concerning leasing arrangements similarly give rise to individual issues. Any claim that lease provisions which permit cancellation for breach of the franchise agreement could be applied so as to coerce franchisees in the operation of their restaurants would necessitate a review of how the provision was administered as to each franchisee who claimed he was coerced thereby. Any claim of a tie-in arising from lease guarantees, which are not mentioned in plaintiffs’ franchise agreements, would also require examination of the particular dealings of each franchisee with the defendants.
345 F.Supp. at 391-92 (emphasis added) (footnotes omitted).
*101 Abercrombie was a forceful as well as influential opinion, which is entitled to much respect. However, the context of the present case and matters apparently not called to the attention of Judge King cause us to disagree with his articulation of the individual coercion doctrine. (We do not suggest that Abercrombie was incorrectly decided on its facts, which differ markedly from those at bar.) Because of the enormous import of Abercrombie on the individual coercion doctrine, it is necessary that we analyze the bases for the opinion in detail and explicate the basis for our disagreement with its salient principles.
As appears from the foregoing text, the first case upon which the individual coercion doctrine of Abercrombie is grounded is Ford Motor Co. v. United States, 335 U.S. 303 , 69 S.Ct. 93 , 93 L. Ed. 24 (1948). But Ford Motor is not a tying case and, in our view, has no relevance to the issue before the Abercrom-bie court. Ford emanated from a consent decree entered into in a previous antitrust suit between Ford and the Government which provided that Ford would be precluded from arranging with specified finance companies that Ford’s and their agents would be present with Ford dealers for the purpose of influencing the dealer to patronize that finance company. The decree further prohibited Ford from recommending, endorsing or advertising those finance companies to its dealers or the public and also from establishing any practice for the financing of autos for the purpose of enabling any finance agency to enjoy a competitive advantage in obtaining a dealer’s patronage. Such prohibitions as were contained in the decree were to be suspended unless by a specified date substantially similar prohibitions were placed upon Ford’s competitor, General Motors Corporation (GMC)'. Negotiations for a consent decree between GMC and the Government failed and criminal charges were thereupon brought against it. In the criminal trial, GMC was found guilty of conduct in violation of Section 1 of the Sherman Act for practices that substantially mirrored those of Ford prior to the entering of the consent decree. Ford appealed and contended that, despite such determination of guilt, the judge’s charge in the prosecution of the case involving GMC fell short of holding illegal the conduct proscribed in its consent decree. If such were the case, according to the terms of the consent decree, Ford contended it would be entitled to a suspension of those restrictions not in pari materia with those imposed by the criminal adjudication upon GMC.
Accepting the viability of Ford’s contention, Mr. Justice Frankfurter, writing for the majority, noted that the trial judge used the word “coercion” to summarize practices which would justify a verdict against GMC. On the other hand, the trial judge used the words “persuasion,” “exposition” and “argument” to describe conduct which would be permissible and not supportive of a guilty verdict. 34 Since the consent decree entered into by Ford Motor had made no such distinction and had proscribed all the above kinds of practices, the Court simply held that Ford was entitled to a modification of its consent decree to accord with the terms imposed upon GMC by the criminal trial. 35
*102 It is relevant in determining the extent to which Ford Motor supports the individual coercion doctrine to note that the Government in that case urged that the Court should refuse to suspend or modify the relevant provisions of Ford’s consent decree on the grounds that they were, in any event, illegal under the Sherman Act. The Court found this argument unappealing not because practices such as “persuasion” and “exposition” were permissible within the framework of the antitrust laws, but rather on the narrower ground that such position had neither been admitted nor proven. Thus, Justice Frankfurter stated:
since ascertainment of illegality under the Sherman Law normally depends on the circumstances of a particular situation and the inferences they yield, the appellants have a right to insist that, so long as interdiction of these practices has not been decreed against General Motors, the Government be put to its proof. The lifting of the restraints imposed by the consent decree does not, of course, affect the liability of Ford for any violations of the Sherman Law that the. Government may establish in court.
335 U.S. at 320 , 69 S.Ct. at 101. The foregoing analysis brings to light the weakness of the Abercrombie court’s reliance upon Ford Motor to stand for the proposition that “[i]n order to establish an illegal tying arrangement franchisees must prove that they were coerced, not merely persuaded, into purchasing the [tied] products . . . .” 345 F.Supp. at 391 . The Court in Ford Motor was concerned purely with a “contract” between the Government and the appellant. The Court’s emphasis upon distinctions between “persuasion” and “coercion” was merely a tool of interpretation rather than a substantive explication of the requirements of the antitrust laws.
The second case upon which Abercrombie relies is American Manufacturers Mutual Insurance Co. v. American Broadcasting-Paramount Theatres, Inc., 446 F.2d 1131 (2d Cir. 1971), cert. denied, 404 U.S. 1063 , 92 S.Ct. 737 , 30 L.Ed.2d 752 (1972). That case is likewise inapposite. In American Manufacturers, plaintiff, Kemper Insurance Companies (Kemper), claimed that the American Broadcasting Company (ABC) exerted unlawful economic pressure by requiring plaintiff to sponsor an evening news program over several local television broadcasting stations affiliated with the ABC network as a condition to being permitted to sponsor programs over other local ABC affiliates whose sponsorship Kemper desired. The district court dismissed the complaint because of its finding that Kemper did not seriously bargain for the elinination of the alleged unwanted sponsorships; indeed, the court found that Kemper had abandoned its initial attempt to exclude the “unwanted” stations merely due to bargaining strategy. Plaintiff appealed and the decision of the district court was affirmed by the court of appeals. In the opinion of the court of appeals affirming the dismissal. Judge Kaufman noted:
Here, ABC exerted no pressure on Kemper, successful or not. We agree that it is not decisive, as Kemper correctly asserts, that Kemper found the August 15 contract economically advantageous given the available alternatives, since that is a necessary characteristic of most contracts, including illegal ones. But there can be no ille *103 gal tie unless unlawful coercion by the seller influences the buyer’s choice.
446 F.2d at 1137 (emphasis added).
The Abercrombie court focused upon Judge Kaufman’s reference to “coercion.” However, as we read the American Manufacturers opinions, the ratio decidendi of both the district and circuit courts stemmed from their concern that an antitrust action could be grounded upon what was in actuality a strategic bargaining ploy. While the circuit court used the word “coercion,” its real concern was whether there had in fact been any use of economic power by the seller. Judge Kaufman continued:
ABC’s initial response was indeed, as might well have been expected, decidedly adverse, but there is no evidence that this reaction ever crystallized into any identifiable or reasonably definitive policy within ABC. . Foreclosure implies actual exertion of economic muscle, not a mere statement of bargaining terms which, if they should be enforced by market power, would then incorporate an illegal tie. . . . It is not apparent, to turn the metaphor, that Kemper ever discovered whether it faced a windmill or a bona fide giant. ABC’s preliminary bargaining position may have influenced Kemper, but Kemper did not persevere long enough with its ideal lineup to feel any economic pressure from ABC, and we cannot know whether ABC would ever have tried to bring any such pressure to bear.
446 F.2d at 1135, 1137 .
That the use of the word “coercion” in Judge Kaufman’s opinion was meant only to refer to utilization of economic power in the tying product is further buttressed by his reliance upon the decision in United States v. Loew’s, Inc., 371 U.S. 38 , 83 S.Ct. 97 , 9 L.Ed.2d 11 (1962). Mr. Justice Goldberg did state in Loew’s that the “gravamen” of the complaint was the “successful pressure applied to television station customers to accept inferior films.” 371 U.S. at 40 , 83 S.Ct. at 99 . However, this aspect of Loew’s, as we read it, is authority only for the proposition that utilization of economic power is essential to the maintenance of an illegal tie. Loew’s does not appear to us to suggest that there is an additional requirement of overcoming the will of a buyer faced by the policy decision of a seller not to deal except on terms imposing an illegal tie under the Sherman Act. Nor does Loew’s seem to imply that where economic pressure is applied, the antitrust result would be any different because the buyer voluntarily accepted the result.
American Manufacturers was also distinguished by Judge McLaren in McMackin v. Schwinn Bicycle Co., 354 F. Supp. 1154 (N.D.Ill.1972), vacated on other grounds, 1974 Trade Cas. ¶ 75,047 (N.D.Ill.1974), a recent franchise antitrust suit:
This Court is persuaded that acceptance of a burdensome tie-in by an appreciable number of buyers within the market permits an inference of coercion and that the decisions in Fortner on remand and in American Mfrs. Mut. Ins. Co. v. American Broadcasting-Paramount Theatres, Inc., 446 F. 2d 1131, 1137 (2d Cir. 1971), cert. denied, 404 U.S. 1063 , 92 S.Ct. 737 , 30 L.Ed.2d 752 (1972) are distinguishable since there was no consideration.of acceptance by an appreciable number of buyers in those cases.
1972 Trade Cas. at 93,020.
The other main decision upon which Abercrombie relies is Lah v. Shell Oil Co., 50 F.R.D. 198 (S.D.Ohio 1970). Lah was a Sherman Act § 1 treble damage action by a Shell Oil dealer against the oil company in which class certification was sought. The plaintiff claimed that Shell conditioned the sale of its gasoline upon the entry by dealers into short term (one year) leases of real estate, i. e., a service station owned by Shell. The plaintiff also claimed that Shell dealers were committed to purchasing further unwanted products such as trad *104 ing stamps and games. Judge Hogan refused to certify a class in an opinion which does not articulate, but has strong overtones of, the individual coercion doctrine. Because Lah is the remaining prop upon which Abercrombie rests (other than its own inherent logic with which we will in due course deal), it is important that we analyze Lah carefully. When we do, it too appears distinguishable and, with respect to its advancement of the individual coercion doctrine, also unpersuasive precedent. 36
Judge Hogan’s rationale for refusing to certify a class consisting of 140 Shell dealers in southwest Ohio was that the predominating fact of whether Shell refused to sell the plaintiff and other dealers Shell gasoline for sale in stations which they or others owned (or compelled each individual to sign a one-year lease) was “not one question, but 140 separate questions of fact’’ requiring individual inquiries. 50 F.R.D. at 200 . Moreover, the court stated, class actions in the antitrust field are (“with the possible exception of Chicken Delight”) maintainable where only a single question of fact, such as a conspiracy to fix prices, furnishes the foundation upon which the individual damage claims rest as a matter of course. In terms of the coercion requirement, Judge Hogan also drew upon Ford Motor Co. v. United States, 335 U.S. 303 , 69 S.Ct. 93 , 93 L. Ed. 24 (1948), and F. T. C. v. Texaco, Inc., 393 U.S. 223 , 89 S.Ct. 429 , 21 L. Ed.2d 394 (1968). He concluded from those cases that while one in a dominant position may not coerce without running afoul of the antitrust laws, nonetheless the dominant may still persuade or argue. The potential role of company policy was not advanced, and Judge Hogan thus concluded that proof of individual coercion was necessary to establish a Sherman Act claim. The court in Lah also found that problems of class action management inherent in the
necessity of trying the damage issues individually militated against class certifi-' cation.
We believe that Lah lacked precedential effect in Abercrombie and that it lacks it here for several reasons. First, Ford is inapposite for reasons noted above. Second, as explained below, Texaco does not hold that a dominant may persuade; rather, it holds that a dominant may not persuade without running afoul of the antitrust laws. While Texaco was a § 5 F.T.C. Act case, its holding is buttressed in the Sherman Act § 1 situation by Perma Life Mufflers, Inc. v. International Parts Corp., 392 U.S. 134 , 88 S.Ct. 1981 , 20 L.Ed.2d 982 (1968), in which the Court held that franchisees who had voluntarily, if not eagerly, participated in a tying scheme to their ultimate financial benefit were not barred from seeking treble damages by virtue of the in pari delicto doctrine. Furthermore, in terms of the law of class actions, for reasons explained at n. 104 infra, we do not agree with the narrow view of their utility in antitrust cases, or that the necessity of individual trial of damage issues inveighs against class action determination.
Abercrombie is not, of course, without its own raison d’ étre aside from its reliance upon Ford, American Manufacturers Mutual and Lah . Judge King found that Lum’s had a number of franchise agreements in effect from time to time, materially varying in important respects, and noted that this fact itself led to a proliferation of issues. He also observed that there were serious individual problems of interpretation of 127 general releases given over the course of the operations of Lum’s when Lum’s bought back franchised stores. Finally, Judge King found that the plaintiffs’ personal claims were dissimilar to those of the class. With these conclusions we cannot disagree. But Abercrombie’s enunciation of the individual coercion doctrine *105 emanates not from these factual phenomena, but rather from reliance upon the cases we believe are inapposite. Furthermore, Abercrombie did not focus on the Supreme Court cases, or upon the above-discussed policies underlying the law of tying which we believe are pivotal. Above all, Abercrombie did not consider the effect of Perma Life Mufflers, which devastates the individual coercion doctrine and which we shall discuss at length below. Hence, we do not elect to follow Abercrombie .
It would unduly prolong this extensive opinion to review each of the franchise antitrust cases which have posited the individual coercion doctrine in the wake of Abercrombie , and upon which the defendant has relied. We believe it sufficient, with three exceptions, simply to enumerate them, for they all draw their sustenance from Abercrombie . The eases include Smith v. Denny’s Restaurants, Inc., 62 F.R.D. 459 (N.D.Cal. 1974); Halverson v. Convenient Food Mart, Inc., No. 70-C-499 (N.D.Ill., Oct. 31, 1974); Thompson v. T.F.I. Companies, Inc., 1974 Trade Cas. ¶ 72,215 (N.D.Ill.1974); E.B.E., Inc .v. Dunkin’ Donuts of America, Inc., 64 F.R.D. 140 (E.D.Mich.1974); Capital Temporaries, Inc. v. The Olsten Corp., 365 F.Supp. 888 (D.Conn.1973), aff’d, 506 F.2d 658 (2d Cir. 1974); Bogosian v. Gulf Oil Corp., 62 F.R.D. 124 (E.D.Pa.1973); and In re 7-Eleven Franchise Antitrust Litigation, 1972 Trade Cas. ¶ 74,156 (N.D.Cal.1972).
In Bogosian a class certification was sought on behalf of a nationwide class consisting of all present and former retail gasoline service station dealers who leased or had leased their respective stations from any of the 15 defendants, the major nationwide oil companies. The plaintiffs complained that the defendants as landowner-lessors had imposed illegal tie-in agreements in the leasing of their respective service stations by requiring the lessees to buy and sell only the gasoline supplied by their respective lessors, thus preventing them from purchasing their wholesale requirements of gasoline (which they claimed to be a fungible product) on a free and open market. In a well-reasoned opinion, our colleague, Judge VanArtsdalen, (properly, we think) denied class certification. While Judge VanArtsdalen cited Aber-crombie and the individual coercion doctrine with approval, we believe that Bo-gosian is plainly distinguishable from this case on its facts. In Bogosian , Judge VanArtsdalen was faced with over 400 contractual forms used by the fifteen oil companies; these facts were sufficient to create a predominance of individual issues. Thus, the individual coercion doctrine is not necessary to the Bogosian decision. Moreover, a problem existed in determining whether all oil company leased service stations throughout the nation were so strategically located as to be able to create leverage. Additionally, the magnitude of the case created enormous potential problems of management and cast grave doubts upon the superiority of a class action. But equally important to the distinction between Bogosian and the present case is the separability of products problem. As Professor McCarthy notes:
the crucial test is to determine the primary product or products of the franchisor being distributed through francised outlets. If this is automobiles for car dealers and gasoline for gas stations, then requiring other products or services to be bought only from designated sources is correctly characterized as tying. Thus, it was held that General Motors could not force its dealers to use only the services of G.M.'s financing company. However, if General Motors required only that its franchised dealerships sell exclusively G.M. autos, this could not be called a tying of autos to the G.M. trademark, but rather an exclusive dealing arrangement. Similarly, a gasoline refiner might properly require its own brand of gas to be *106 pumped from leased pumps and tanks bearing its trademark, but cannot require a dealer to sell only a designated brand of tires, batteries, and accessories without violating the prohibition against tying. 37
McCarthy, supra note 15, at 1108 (footnotes omitted).
In the district court opinion in Capital Temporaries, Judge Blumenfeld adopted the individual coercion doctrine, relying on American Manufacturers, Abercrom-bie and Belliston v. Texaco, Inc., 455 F. 2d 175 (10th Cir. 1972). However, Capital Temporaries is also completely distinguishable on its facts since the practices complained of did not even amount to a tying arrangement. It will be recalled from our earlier discussion (see n. 24) that the Capital Temporaries plaintiff complained that the blue collar Handy Andy franchise was tied to the purchase of the white collar Olsten’s franchise. The evidence showed, however, that neither the contract nor the communications between the parties in any way obligated the franchisee to enter the blue collar business to obtain the white collar franchise; it was purely up to him if he wished to do so. Thus, the court of appeals, in affirming Judge Blumenfeld’s grant of summary judgment for the defendant, referred to the plaintiff’s allegations as, at best, an “ersatz tie.”
Finally, in E. B. E., Inc. v. Dunkin’ Donuts, the court granted summary judgment for Dunkin Donuts, the franchisor involved in the present litigation, because the plaintiff franchisee could not show (individual) coercion. E. B. E., Inc. alleged that an illegal tie-in existed because, as an express condition to obtaining a Dunkin Donuts franchise, E. B. E. was required to purchase all necessary .operating equipment from Dunkin Donuts and to rent the building and land from defendant at excessive rates. In surveying the evidence, the court found that the plaintiff was perfectly willing to rely on defendant’s services in assembling the business package, and that it had never occurred to him to do otherwise. The court further noted that the plaintiff, instead of claiming that it was forced to accept the equipment, the property lease and signs as a condition of obtaining the franchise, merely argued that it was never affirmatively told that it could buy from other sources. Relying upon Abercrombie , the court granted summary judgment for the franchisor because it felt that a plaintiff was required to prove some element of coercion in order to establish an illegal tying agreement. As noted above, we do not follow Abercrombie . The court also relied upon Loew’s, which is inapposite for reasons enumerated above, and upon that portion of Belliston dealing with the TBA claim. We believe the E. B. E. court’s reliance upon Bellis-ton to be misplaced.
The Belliston court rejected the plaintiff’s claim due to the absence from the record of sufficient evidence of coercion. In so doing, the Belliston court relied upon the decision in Atlantic Refining Co. v. F. T. C., 381 U.S. 357 , 85 S.Ct. 1498 , 14 L.Ed.2d 443 (1965), without mentioning that the Atlantic coercion test was virtually abandoned in the ease of F. T. C. v. Texaco, Inc., 393 U.S. 223 , 89 S.Ct. 429 , 21 L.Ed.2d 394 (1968), which followed it. Belliston is thus undermined. In sum, we do not find E. B. E. distinguishable on its facts since it deals with the same franchisor as the case at bar and with similar allegations. However, for the myriad reasons which form the basis of this opinion, we do not agree with its legal rationale and, therefore, elect not to follow it.
We believe that the foregoing discussion exposes the roots of the individual coercion doctrine and shows them to be frail, if not infirm. But if we have cast doubts upon the viability of the individ *107 ual coercion doctrine, we have not yet resolved the use-coercion dialogue. Before doing so, it is necessary that we harvest the teachings of Texaco and Perma Life Mufflers.
D. Texaco and Perma Life Mufflers; Their Adverse Impact Upon the Individual Coercion Doctrine
1. Texaco
Federal Trade Commission v. Texaco, Inc., 393 U.S. 223 , 89 S.Ct. 429 , 21 L.Ed.2d 394 (1968), was a TBA case addressing the question of whether Texaco had engaged in an “unfair method of competition” under § 5 of the Federal Trade Commission Act when it undertook to induce its service station dealers to purchase the tires, batteries and accessories of B. F. Goodrich. After extensive hearings, the F.T.C. concluded that there was a § 5 violation, but the court of appeals reversed and held that the Commission had failed to establish that Texaco had exercised its dominant economic power over its dealers or that the Texaco-Goodrich arrangement had an adverse effect on competition, 127 U.S. App.D.C. 349, 383 F.2d 942 (1967). The result achieved by the court of appeals was factually inconsistent with that reached by the Supreme Court in Atlantic Refining Co. v. F. T. C., discussed above, and by the court in Shell Oil Company v. F. T. C., 360 F.2d 470 (5th Cir. 1966). Accordingly, the Supreme Court granted certiorari.
It was agreed before the Supreme Court that the TBA arrangement would fall under the Atlantic quasi-tying rationale if the Commission was correct in its three ultimate conclusions: (1)1 that Texaco had dominant economic power over its dealers; (2) that Texaco exercised that power over its dealers in fulfilling its agreement to promote and sponsor Goodrich products; and (3) that anticompetitive effects resulted from the exercise of that power. The Supreme Court had no difficulty in concluding that the record showed Texaco’s dominant economic power over its dealers, and that such power was “inherent in the structure and economics of the petroleum distribution system.” 393 U. S. at 226 , 89 S.Ct. at 431. Mr. Justice Black, speaking for the Court, observed:
The average dealer is a man of limited means who has what is for him a sizable investment in his station. He stands to lose much if he incurs the ill will of Texaco. As Judge Wisdom wrote in Shell, “A man operating a gas station is bound to be overawed by the great corporation that is his supplier, his banker, and his landlord.”
393 U.S. at 227 , 89 S.Ct. at 432. Turning to the manner of the exercise of Texaco’s power, Justice Black noted that the evidence before the F.T.C. showed that: (1) Texaco carried out its agreement to promote Goodrich products through constantly reminding its dealers of Texaco’s desire that they stock and sell the sponsored. Goodrich TBA; (2) Texaco emphasized the importance of TBA and the recommended brands as early as its initial interview with a prospective dealer and repeated its recommendation through a steady flow of campaign materials utilizing Goodrich products; (3) Texaco salesmen, the primary link between Texaco and the dealers, promoted Goodrich products in their day-to-day contact with the Texaco dealers; (4) the evaluation of a dealer’s station by the Texaco salesman was often an important factor in determining whether a dealer’s contract or lease with Texaco would be renewed; and (5) Texaco received regular reporting on the amount of sponsored TBA purchased by each dealer. In this regard, the record was palpably weaker than that in Atlantic Refining because of the presence there, and the absence in Texaco, of overt coercive practices designed to force dealers to purchase the sponsored brand of TBA. The Court nonetheless found a § 5 violation:
While the evidence in the present case fails to establish the kind of overt coercive acts shown in Atlantic, we *108 think it clear nonetheless that Texaco’s dominant economic power was used in a manner which tended to foreclose competition in the marketing of TBA. The sales-commission system for marketing TBA is inherently coercive. A service station dealer whose very livelihood depends upon the continuing good favor of a major oil company is constantly aware of the oil company’s desire that he stock and sell the recommended brand of TBA. Through the constant reminder of the Texaco salesman, through demonstration projects and promotional materials, through all of the dealer’s contacts with Texaco, he learns the lesson that Texaco wants him to purchase for his station the brand of TBA which pays Texaco 10% on every retail item the dealer buys. With the dealer’s supply of gasoline, his lease on his station, and his Texaco identification subject to continuing review, we think it flies in the face of common sense to say, as Texaco asserts, that the dealer is “perfectly free” to reject Texaco’s chosen brand of TBA. Equally applicable here is this Court’s judgment in Atlantic that “[i]t is difficult to escape the conclusion that there would have been little point in paying substantial commissions to oil companies were it not for their ability to exert power over their wholesalers and dealers.” 381 U.S., at 376 , 85 S.Ct., at 1509 [ 14 L.Ed.2d 443 ].
393 U.S. at 228-29 , 89 S.Ct. at 433 (emphasis added).
Turning to the effect on competition, and drawing upon the principles familiar in the field of tying law, the Court held that the government did not have to show that a practice which the Commission condemned had totally eliminated competition in the relevant market, but only that the Commission found that the practice in question unfairly burdened competition for a not insubstantial volume of commerce:
Ideally, each service station dealer would stock the brands of TBA that in his judgment were most favored by customers for price and quality. To the extent that dealers are induced to select the sponsored brand in order to maintain the good favor of the oil company upon which they are dependent, the operation of the competitive market is adversely affected. As we noted in Atlantic, the essential anti-competitive vice of such an arrangement is “the utilization of economic power in one market to curtail competition in another.”
393 U.S. at 229-30 , 89 S.Ct. at 433. Accordingly, the Court reversed the decision of the court of appeals and reinstated the Commission’s order.
While Texaco is an F.T.C. Act case and thereby requires a lesser standard than under Sherman Act § 1, we believe that its teaching that dominance in bargaining power may give rise to inherent coercion is applicable here. Texaco does not announce a per se doctrine as such; it came to the Court on a voluminous commission record. However, its quasi-tying analysis tracks the traditional tying cases. Much of what had to be proved in Texaco must be proved under Northern Pacific Railway Co. v. United States, 356 U.S. 1 , 78 S.Ct. 514 , 2 L.Ed. 2d 545 (1958), and Fortner Enterprises, Inc. v. United States Steel Corp., 394 U. S. 495 , 89 S.Ct. 1252 , 22 L.Ed.2d 495 (1969), e. g., the existence of economic power in the tying product, use of that power and foreclosure of a not insubstantial amount of commerce in the tied product. In terms applicable here, Texaco holds that proof of use of economic power in the TBA situation does not require evidence of coercion, but rather that evidence of persuasion or influence will suffice where there is dominance in bargaining power of a franchisor over a franchisee, or, what is essentially the same, where there is evidence of an inherently coercive marketing system. *109 We are satisfied that the same principle applies in the traditional tying sitúation which is involved here. The importance of this conclusion is that it is a further indication of the unsoundness of the individual coercion doctrine, Moreover, the conclusion may also be relevant here because there appears pri-una facie to be a unique bargaining relationship between the contemporary fast food franchisor and his average franchisee which is similar throughout the typical franchise system; as in the case of Texaco and its dealers, “inherent coercion,” if it exists, is thus a system-wide, not an individual, matter. 38
*110 2. Perma Life Mufflers
The claims of the plaintiffs in Perma Live Mufflers, Inc. v. International Parts Corp., 392 U.S. 134 , 88 S.Ct. 1981 , 20 L.Ed.2d 982 (1968), have been detailed at page 109 above. It will be recalled that the plaintiffs complained, inter alia, of a supplier tying arrangement, and that the court of appeals held their claims barred by the in pari delicto doctrine. It will also be recalled that the franchisor there (just as the franchisor here) contended that its Midas Muffler franchisees had voluntarily, if not eagerly, participated in the tying scheme to their ultimate financial benefit. To that contention Mr. Justice Black, speaking for the Court, replied:
Although petitioners may be subject to some criticism for having taken any part in respondents' allegedly illegal scheme and for eagerly seeking more franchises and more profits, their participation was not voluntary in any meaningful sense. They sought the franchises enthusiastically but they did not actively seek each and every clause of the agreement. Rather, many of the clauses were quite clearly detrimental to their interests, and they alleged that they had continually objected to them. Petitioners apparently accepted many of these restraints solely because their acquiescence was necessary to obtain an otherwise attractive business opportunity. .
* * * * * -X-
Moreover, even if petitioners actually favored and supported some of the other restrictions, they cannot be blamed for seeking to minimize the disadvantages of the agreement once they had been forced to accept its more onerous terms as a condition of doing business. The possible beneficial byproducts of a restriction from a plaintiff's point of view can of course be taken into consideration in computing damages, but once it is shown that the plaintiff did not aggressively support and further the monopolistic scheme as a necessary part and parcel of it, his understandable attempts to make the best of a bad situation should not be a ground for completely denying him the right to recover which the antitrust acts give him. We therefore hold that the doctrine of in pari delicto, with its complex scope, contents, and effects, is not to be recognized as a defense to an antitrust action.
392 U.S. at 139, 140 , 88 S.Ct. at 1984 . The lessons of the foregoing passage for the present case are obvious; Perma Life Mufflers emasculates the individual coercion doctrine.
Also instructive is the concurring opinion of Mr. Justice White, who posed *111 three interesting hypothetical situations. Under the first, a manufacturer (A) sells to a retailer (B) and, over B’s objection, insists on adherence to specified retail prices to which B agrees because A’s product is important to him and he cannot get it elsewhere. When business declines because of inability to compete, B sues A. Under the second hypothetical, when B maintains the suggested prices on A’s product, he simply sells more of C's competing product which he also handles and A sues B. Under the third hypothetical, D and E, competitors, combine to fix higher prices. D’s best customer thereupon sets up his own source of supply to D’s great damage and D then sues E. Addressing the hypotheticals, Mr. Justice White observed:
It is arguable that in each supposed situation recovery should be denied because the plaintiff was a party to the illegality and wrongdoers should be left where they are found. In terms of the deterrent aims of the statute permitting injured plaintiffs to recover treble damages, however, this undiscriminating approach makes little sense. When those with market power and leverage persuade, coerce, or influence others to cooperate in an illegal combination to their damage, allowing recovery to the latter is wholly consistent with the purpose of § h, since it will deter those most likely to be responsible for organizing forbidden schemes. 39
392 U.S. at 145 , 88 S.Ct. at 1987 (emphasis added). It will be noted that Mr. Justice White used the words “persuade,” “coerce” and “influence” in the disjunctive, thereby implying that one may violate the antitrust laws by using persuasion or influence without coercion.
Perma Life Mufflers thus goes far beyond Texaco, for it makes clear that anticompetitive conduct may exist (and hence be enjoined) in the absence of coercion, even where the franchisees voluntarily acquiesce in the practices which constitute antitrust violations. Even if we read Perma Life Mufflers too broadly and conclude that Mr. Justice White’s expression more accurately reflects the views of the Court, Perma Life Mufflers nonetheless expands upon Texaco. This is so because it demonstrates that the use of economic power is inferable in a 'situation where there is a dominant relationship of franchisor over franchisee, 40 and where the franchisor’s conduct rises not to the level of coercion, but only to the level of persuasion or influence.
E. Can There be a “Voluntary” Tie(f); Further Defects in the Individual Coercion Doctrine
The thrust of the individual coercion doctrine is that the plaintiffs must prove that each of them did not take the *112 tied product willingly. The advocates of the doctrine do not explain whether the willingness standard is a subjective one, depending upon the state of mind of each franchisee. Is individual coercion proved if the franchisee took the tied product “willingly” but with strong mental reservations? Or is individual coercion proved only where there were active negotiations over the subject of the tie and the franchisee took it “or else?” Put conversely, is individual coercion negated only if the franchisee truly desired the package of the tied product along with the tying product? And must the buyer have had conscious knowledge of the uneconomic nature of the package before there can be proof that he took the package without being coerced? Dunkin Donuts opts for a construction in the harshest light to plaintiffs, i. e., to bar each plaintiff from a cause of action unless each can show that he- bargained to reject each specific tied product and capitulated by taking each tied product due to improper economic pressure.
We reiterate these queries because they help to frame the critical issue of whether there can be a “voluntary” tie. We conclude that there can be an antitrust violation where the franchisee takes voluntarily and with knowledge of the uneconomic nature of the tie. 41 Moreover, we believe this to be the case whether or not the franchisee possessed mental reservations (although the case for a tie is stronger if he did have reservations). Northern Pacific Railway Co. v. United States, 356 U.S. 1 , 78 S.Ct. 514 , 2 L.Ed.2d 545 (1958) and Fortner Enterprises, Inc. v. United States Steel Corp., 394 U.S. 495 , 89 S.Ct. 1252 , 22 L.Ed.2d 495 (1969), with their emphasis on the free market and the non-foreclosure of competition, point to this conclusion; Perma Life Mufflers, with its rejection of the in pari delicto defense, compels it. An additional basis for rejection of the individual coercion doctrine is the almost metaphysical analysis which would be required if we were to adopt it; courts would be obliged to parse the human personality in the most sophisticated terms in an effort to determine the franchisee’s state of mind vis-a-vis the putative (and ill-defined) coercion standard.
Finally, it should be noted that the Court in Northern Pacific defined a tie as “an agreement by a party to sell one product but • only on the condition that the buyer also purchases a different (or tied) product, or at least agrees that he will not purchase that product from any other supplier.” 356 U.S. at 5-6 , 78 S. Ct. at 518 (footnote omitted) (emphasis added). The use of the word “agreement,” moreover, has been prevalent in other tying cases decided by the Supreme Court. See Fortner Enterprises, Inc. v. United States Steel Corp., 394 U. S. 495 , 89 S.Ct. 1252 , 22 L.Ed.2d 495 (1969); Times-Picayune Publishing Co. v. United States, 345 U.S. 594 , 73 S.Ct. 872 , 97 L.Ed. 1277 (1953). Thus, a further argument against the individual coercion doctrine can be constructed on a linguistic basis.
The dictionary definition of the word “agreement” is “harmony of opinion, action, or character; concord.” Such language, although far from determinative, would seem itself to point to a less strenuous requirement than that of coercion in order to make out a violation of the antitrust laws. Thus, although one could conclude that the use of the word “agreement” is either loose language on the part of the Court or only an indication of the final “forced deal” which is entered into between buyer and seller, one could just as easily conclude that such is not the case. In light of the policy behind the proscription of ties— that they harm both the buyers who *113 may be unwilling to take the tied product as well as competitors of the sellers of the tied product from entering a new market — plus the inadvisability of attributing “loose language” to the Supreme Court, it would seem preferable to take the word “agreement” at face value and dispense with any notions of individual coercion.
F. The Role of Company Policy in Proving TJse of Economic Power
The individual coercion eases have generally held that where there is no Siegel-type standard form franchise agreement that can be the focal point of allegedly illegal acts, proof of tie-ins has to come from an examination of each individual franchisee’s dealings with the franchisor which becomes a matter of individual proof militating against class certification. The analysis in the preceding sections of this opinion explains our disagreement with this view. Moreover, for the reasons outlined in § IV B above (commenting upon incipient flaws in the individual coercion doctrine evident from an analysis of Siegel II), we conclude that proof of a resolutely enforced company policy to dissuade the franchisee from purchasing other than from or through the franchisor is the equivalent of an express contractual tie. It should indeed make no difference whether a tie is articulated in the contract or can be proved at trial as having been imposed sub silentio through a pervasive and resolutely enforced company policy. To hold to the contrary would be to exalt form over substance.
The efficacy of this proposition was recognized by Judge Reynolds in his decision in In re Clark Oil & Refining Corp., 1974-1 Trade Cas. ¶ 74,880 (E. D.Wis.1974). Clark comprised two consolidated actions brought on behalf of 1800 Clark Oil dealers and 1000 former dealers against their branded supplier asserting price fixing, price discrimination and tying claims. While Judge Reynolds’ short opinion does not recite the underlying facts, we have reviewed the briefs from which it appears that the tying complaints were a combination of the claims asserted in Bogosian and in the TBA cases; that is, the Clark dealers objected to dealing exclusively in Clark products and to being required to purchase unwanted products. Clark's brief in opposition to plaintiffs’ motion for determination of a class cited Bogosian v. Gulf Oil Corp., 62 F.R.D. 124 (E.D.Pa.1973); Abercrombie v. Lum’s Inc., 345 F.Supp. 387 (S.D.Fla.1972); Lah v. Shell Oil Co., 50 F.R.D. 198 (S. D.Ohio 1970); and In re 7-Eleven Franchise Antitrust Litigation, 1972 Trade Cas. ¶ 74,156 (N.D.Cal.1972), in support of Clark’s allegation that the individual coercion doctrine insulated it against class certification. Judge Reynolds nonetheless made a (conditional) class certification. Confirming, and to some extent placing a synergistic gloss upon, the point at hand, he stated:
Individual acts of coercion may be just that — isolated incidents with no implications beyond the specific individuals being coerced — or they may be part of an overall pattern which has a coercive impact beyond the particular parties involved. Coercive activities aimed at one dealer for engaging in some specific behavior can, under some circumstances, have the obvious effect of coercing all dealers from engaging in similar behavior.
We agree. 42
*114 G. The Use-Coercion Dialogue Synthesized
The lengthy analysis of the individual coercion doctrine in the preceding pages makes it plain that that doctrine lies within the conceptual framework of the segment of the law of tying which requires proof of the nexus between economic power in the tying product and the restraint of competition in the tied product, or, put differently, the requirement that economic power be used in the tying transaction. We resolve the duality between use and coercion as follows.
Our first conclusion has already been drawn. It is that the individual coercion doctrine is not properly a part of tying law. It is not necessary to prove coercion in order to establish an illegal tie; concomitantly, there can indeed be a “voluntary,” yet illegal, tie. When a franchisee with or without knowledge of the uneconomic nature of the tie, and with or without bargaining or even arguing on the point, takes a tied package voluntarily, he can still seek relief so long as it is shown that the franchisor possessed the requisite economic power or leverage and, in fact, used or exercised it to induce the franchisee to take the tied product. The franchisee has not been coerced in this circumstance; his will has not been overcome. Yet, Perma Life Mufflers compels the conclusions that: (1) the plaintiffs are not barred because they cannot prove coercion; and (2) it does not matter if the franchisee truly desired the package of the tied product along with the tying product because he was new to the fast food business and was willing to pay more for a total deal. This is particularly so in view of the emphasis of Fortner and Perma Life Mufflers on the non-foreclosure of competition. Moreover, even if we read Perma Life Mufflers too broadly, it is plain under Texaco and Mr. Justice White’s views in Perma Life Mufflers that where there is unequal bargaining power, it is not necessary to prove coercion; mere persuasion or influence will suffice.
A contrary result is not compelled by Siegel II . As we have seen, Siegel did not require proof of individual coercion. When the post-Siegel cases arose, the courts often stated that where there was an express contractual tie, coercion was “presumed.” 43 But it was not coercion that was sub silentio presumed in Siegel II ; it was the use of economic power.
The second conclusion that we draw is that the principal significance of the coercion notion in this area is as one mode of proving use of economic power. If a franchisor who possesses the requisite economic power coerces the franchisee in such a manner as to restrain competition in the tied product, a fortiori he has used his economic power. This, then, establishes the necessary nexus between economic power in the tying product and the restraint of competition in the tied product. Since Siegel II , however, there has been a subtle process by which coercion, as a mode of proving use of economic power, has itself been construed to be the required *115 nexus between the economic power and restraint of competition requirements. The metamorphosis has been aided by what we have submitted is a misuse of the Ford Motor, Texaco and Lah precedents, and by what we believe to be an imprecise use of language. The term “coercion” has been used differently in different cases, sometimes in the strict sense posited by defendant, and sometimes to connote mere use of economic power or mere persuasion or influence. In his famous article, Some Fundamental Legal Conceptions as Applied in Judicial Reasoning, 23 Yale L.J. 16 (1913), Professor W. N. Hohfeld observed: “in any closely reasoned problem, whether legal or non-legal, chameleon hued words are a peril both to clear thought and lucid expression.” That observation is in order here.
The second conclusion just recited leads readily to a third, which is that proof of individual coercion is but one of several means of establishing the use of economic power or leverage. We agree with defendant that the individual coercion mode of proof of use is inapplicable in a class context. For purposes of this opinion, we will address only those modes which lend themselves to class treatment. This observation brings us to our final conclusion, relating to how use of economic power may be proved in a class context.
First we find that use of economic power may be established by evidence of a firm and resolutely enforced company policy to influence the franchisees to purchase from the franchisor or its designated sources. As will be seen in our survey of the class action discovery, plaintiffs contend that there is at least prima facie evidence of such a company policy in the areas of the equipment, sign, real estate and supply tie-ins. 44 If such a policy is established, individual exceptions make no difference. It is not necessary, in the wake of Perma Life Mufflers, that the company policy be administered coercively. If, however, we read that case too broadly, Texaco at least establishes that persuasion or influence may be the virtual equivalent of coercion where there is an unequal relationship between the parties, as there is here. Cf. White, J., concurring in Per-ma Life Mufflers.
We also believe that

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/8788971. Public record. Not legal advice.