Opposition Brief — Sterling Electric, Inc. v. Parts & Electric Motors, Inc.

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No. 89-20 Jase! *. 30

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MWMVOL, JINX.

OPREE TO a AIT

IN THE

Supreme Court of the United States

OCTOBER TERM, 1989

STERLING ELECTRIC, INC.,

Petitioner.

—

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PARTS AND ELECTRIC MOTORS, INC.,

Respondent.

On Petition For Writ Of Certiorari To The United

States Court Of Appeals For The Seventh Circuit

RESPONDENT'S BRIEF IN OPPOSITION

TO PETITION FOR WRIT OF CERTIORARI

JAMES E. CARROLL *

Davip C. Roston

Gary L. SPECKS

JOHN K. CHatz

Davip H. LATHAM

ALTHEIMER & GRAY

10 South Wacker Drive

Chicago, Illinois 60606

(312) 715-4000

Attorneys for Respondent

Parts AND ELectric Motors, INc.

August 28, 1989 * Counsel of Record

Midwest Law Printing Co., Chicago 60611, (312) 321-0220

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RESTATEMENT OF

QUESTIONS PRESENTED

1. Whether a petitioner who fails to preserve issues

at trial can obtain this Court’s review.

2. Whether the time for applying for a writ of cer-

tiorari runs anew from the disposition of a collateral at-

tack on a final judgment of the Court of Appeals.

i

TABLE OF CONTENTS

RESTATEMENT OF QUESTIONS

FRSA EE 665 ta nanan sete

DESIGNATION OF CORPORATE

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STATUTES AND COURT RULES

Pi eB) | | Pr Ag ee ea

COUNTERSTATEMENT OF THE CASE ....

EO THM i caskass ree eee

The Verdict and Judgment N.O.V. .........

Reversal and Remand—P&E I .............

Petitioner’s First Application to the Supreme

COMME. nc cdeweea ca nck eee

The Second Appeal—P&E II ...............

REASONS FOR DENYING THE PETITION ..

“I. Summary of Argument ................

il. Argument ......0iccs case ee eee

A. THE ISSUES NOW RAISED BY PETI-

TIONER WERE WAIVED AT TRIAL

AND SHOULD NOT BE CONSIDERED

BY ‘THIS CAMIRT |... ikcass a baeeeeas

1. Petitioner Waived the Issue of

Market Power in the Tying Prod-

uct Marhet « 6..0isciae eee

PAGE

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2. Petitioner Failed to Preserve Its

Claim Relating to Market Power in

the Tied Product Market ....... 11

3. Petitioner Fails to Challenge the

Jury’s Rule of Reason Verdict .. 11

B. THE TIME TO PETITION THIS COURT

EXPIRED ON APRIL 2, 1988 ....... 13

EE OS a er ree 17

APPENDICES

1—Special Interrogatories to the Jury ...... App. 1

2—Application for Extension of Time to File

Petition for Writ of Certiorari ........... App. 3

3—Letter Granting Extension of Time ...... App. 7

lV

TABLE OF AUTHORITIES

Cases PAGE

Aspen Highlands Skiing Corp. v. Aspen Skiing

Co., 738 F.2d 1509 (10th Cir. 1984), affd 472

Ri, Se EE cd oo coc icseceseteetuanneas 10, 11

City of Springfield v. Kibbe, 480 U.S. 257 (1987) . 10, 11

Federal Trade Commission v. Minneapolis-Honey-

well Regulator Cempany, 344 U.S. 206 (1952) .

PE OTT TTL ENTER EPR RTT ETE OEE Cee 15, 16, 17

Palmer v. Hoffman, 318 U.S. 107, 119 (1948) ... 10

Statutes

Be Rea rr ere v, 15

yt te OR Re re rrr rr rr v, 9, 11, 12

et Ek rr er Pere rer V, Vi

DESIGNATION OF

CORPORATE RELATIONSHIPS

Parts and Electric Motors Inc. is not owned by any

parent corporation and has no subsidiaries. Complete

Electric Motors, Inc. is an affiliate of Parts and Electric

Motors, Ince.

V

STATUTES AND COURT RULES DISCUSSED

28 U.S.C. § 210i(c) provides:

Any other appeal or any writ of certiorari intended

to bring any judgment or decree in a civil action, suit

or proceeding before the Supreme Court for review

shall be taken or applied for within ninety days after

the entry of such judgment or decree. A justice of

the Supreme Court, for good cause shown, may ex-

tend the time for applying for a writ of certiorari

for a period not exceeding sixty days.

Fed.R.Civ.P. 51 provides:

At the close of the evidence or at such earlier time

during the trial as the court reasonably directs, any

party may file written requests that the court in-

struct the jury on the law as set forth in the re-

quests. The court shall inform counsel of its proposed

action upon the requests prior to their arguments to

the jury. The court at its election, may instruct the

jury before or after argument, or both. No party may

assign as error the giving or the failure to give an

instruction unless that party objects thereto before

the jury retires to consider its verdict, stating dis-

tinctly the matter objected to and the grounds of the

objection. Opportunity shall be given to make the ob-

jection out of the hearing of the jury.

Sup.Ct.R. 17.1(a) provides:

A review on writ of certiorari is not a matter of

right, but of judicial discretion, and will be granted

only when there are special and important reasons

therefor. The following, while neither controlling nor

fully measuring the Court’s discretion, indicate the

character of reasons that will be considered.

vi

(a) When a federal court of appeals has ren-

dered a decision in conflict with the deci-

sion of another federal court of appeals on

the same matter; or has decided a federal

question in a way in conflict with a state

court of last resort; or has so far departed

from the accepted and usual course of judi-

cial proceedings, or so far sanctioned such

a departure by a lower court, as to call for

an exercise of this Court’s power of super-

vision.

No. 89-20

IN THE

Supreme Court of the United States

OCTOBER TERM, 1989

STERLING ELECTRIC, INC.,

Petitioner.

V.

PARTS AND ELECTRIC MOTORS, INC.,

Respondent.

On Petition For Writ Of Certiorari To The United

States Court Of Appeals For The Seventh Circuit

RESPONDENT’S BRIEF IN OPPOSITION

TO PETITION FOR WRIT OF CERTIORARI

COUNTERSTATEMENT OF THE CASE

None of the issues which petitioner Sterling Electric,

Inc. has raised since the jury’s verdict in September 1985

were preserved at trial. Those issues, raised in its post-

trial motions, two separate appeals, two separate motions

for rehearing and for rehearing in banc, and now in its

= =

petition for writ of certiorari, were therefore waived. Peti-

tioner largely ignores its own theories presented at trial,

its own admissions and stipulations and, instead, seeks to

have this Court let it do what the Seventh Circuit has re-

peatedly refused: “wriggle out of a legal theory it argued

unsuccessfully to the jury.” (866 F.2d 228, 234, “P&E II”

Pet. App. 12a.) Hardly a compelling reason for this Court

to grant a writ of certiorari.

While petitioner now argues that respondent failed to

present proof of the likelihood of market power in the

market for electric motors (the tied product), it une-

quivocally waived this issue at trial by failing to object

to the crucia! jury instructions. At trial, petitioner failed

to object to the district court’s instructing the jury that

the relevant market for the tying product was Sterling

replacement parts. Finally, the jury answered a special

interrogatory finding petitioner engaged in an unreason-

able restraint of trade. (App., infra, 2.) Without objec-

tion, the jury was instructed that a “rule of reason”’ ver-

dict was permissible in the absence of proof of market

power in either the tied or tying product market. (Tr.

927-28.)

It should be noted that petitioner is being less than

candid when it implies that the judgment in this case is

the result of business differences between two sraall com-

panies. (Pet., pp. 2-3; moreover, the petition also violates

this Court’s Rule 28.1.) The tying arrangement which is

the subject of this action was the device of an industrial

giant. The events giving rise to this action have their

origin in A.O. Smith Corporation’s 1980 acquisition of

Sterling Electric, Inc. (Tr. 616, 623, 724, 725 and 728.)

In 1984, A.O. Smith’s electrical products sales totaled

$154,100,000, out of $864,144,000 in total sales. (A.O. Smith,

Form 10-K, March 29, 1988 at p. 3.) Actually, Sterling

= =

Electric, Inc. no longer exists. Its assets were sold on

December 31, 1988. Only a corporate shell remains. A.O.

Smith has, in fact, agreed to be responsible for the judg-

ment.

The Trial

At trial, respondent proved every element of both a per

se and “rule of reason”’ tying case. Respondent presented

evidence, including admissions of petitioner, to show that

petitioner had market power in the market for the tying

product, Sterling replacement parts. By judicial admission,

petitioner conceded both its dominance of the market for

Sterling replacement parts and the absence of any market

for electric motor replacement parts generally.

Sterling concedes, so that no question of fact on the

point exists, that the Sterling adjunct parts are unique

... Sterling parts ... are not interchangeable with

parts manufactured by or obtainable from ... other

electric motor manufacturers.

*x* * *

Sterling concedes that it has 100 percent dominance

in the market for Sterling parts. ... Sterling’s com-

petitors [each] likewise enjoy a 100 percent dominance

in the market for parts essential to the proper opera-

tion of products they manufacture.

x* * *

Sterling parts that are essential to the proper opera-

tion of a Sterling motor and are not interchangeable

with those parts manufactured by a competitor and

essential to the proper operation of that competitor’s

motors. (sic)

(Tr. 315-317.)

In addition, respondent’s expert, Dr. Skoog, testified

that petitioner possessed market power under many tests

par

(Tr. 423-39), and that there were effective economic bar-

riers to entry into the market for parts compatible with

Sterling motors. (Tr. 495-504.) Petitioner’s power over

price in the tying product market was reflected by its

ability to achieve significantly higher margins.

In this Court, petitioner repeatedly characterizes the

tying product market as ‘“‘replacement parts.” (Pet., pp.

11, 13 and 16.) No such claim was made at trial where

petitioner argued that the only relevant market was “elec-

tric motor services.” (Tr. 771 and 891.) This new theory

of the case was first asserted by appellate counsel. Peti-

tioner did not argue to the jury that Sterling replacement

parts were a product in a larger market of electric motor

replacement parts. Instead, petitioner’s defense was that

legally there was no tie-in, rather that the case involved

only one product, “electric motor services.” (Tr. 771 and

891.) At closing, petitioner’s trial counsel argued to the

jury:

And, you know, that’s what [petitioner’s expert] Dr.

Lynk said the relevant market was: electric motor

services. That market is motors, installation, elec-

tricity, replacement parts, and repair services. And

that makes sense.

(Tr. 891.)

Petitioner’s Counsel relied upon the testimony of his ex-

pert, Dr. Lynk:

Q: Do you recall Dr. Skoog testifying that in his

opinion there are two separate products and two

separate product markets in this case?

I believe that is what he said.

Do you have an opinion about that statement?

Yes.

What is that opinion?

2&PropP

alos

A: I don’t believe that in any economically-meaning-

ful sense you can split this into two significant

economic markets. I think its one joint market

provision of the motors and the provision of the

parts that keep them running.

(Tr. 772.)

Petitioner’s theory of the case at trial was that the only

relevant market was “electric motor services” and that was

the only market which it tried to prove existed. (Tr. 891.)

On the other hand, consistent with respondent’s theory of

the case, respondent proved that the tying product market

was Sterling replacement parts. Neither party’s theory at

trial was consistent with the existence of a market for re-

placement parts generally so that neither party argued

such a market to the jury.

The Verdict and Judgment N.O.V.

The jury answered the six special interrogatories on lia-

bility in favor of respondent. (App., infra, 1-2; Tr. 976.)

A damage verdict was returned the following day and

judgment was entered by the district court. (Tr. 1099.)

Petitioner then filed its motion for judgment notwith-

standing the verdict or, in the alternative, for a new trial.

Believing that it had erred in the jury instructions, the

district court granted petitioner’s motion for judgment

n.o.v. and conditionally granted its motion for a new trial.

(Pet. App. 41a.)

Reversal and Remand—P&E I

Respondent appealed the district court’s ruling and the

Seventh Circuit reversed and remanded. (Pet. App. 19a.)

The court of appeals held that petitioner had waived the

legal issues upon which the judgment n.o.v. had been

based (issues it raises here) by failing to make proper ob-

jections to jury instructions or an appropriate directed ver-

om

dict motion. (Pet. App. 40a.) In addition to vacating the

judgment n.o.v., the court of appeals held that the record

evidence was sufficient to sustain the izry’s verdict and

that it perceived no reason for granting a new trial. Never-

theless, out of caution, the court of appeals remanded to

the district court for the single limited purpose of seek-

ing “clarification” as to whether the district court had per-

ceived any substantial and defensible basis for concluding

that the verdict was against the manifest weight of the

evidence under the instructions which were given to the

jury without objection by petitioner. (Pet. App. 39a.) The

court of appeals directed the district court to enter judg-

ment for respondent if the district court’s order rested

solely on the grounds stated in its order granting the

judgment n.o.v. (Pet. App. 39a.) Petitioner unsuccessful-

ly sought rehearing in banc of the decision in P&E I.

Petitioner’s First Application to the Supreme Court

The Seventh Circuit’s decision in P&E I finally deter-

mined all of the issues presented to it by the parties. No

issues remained which petitioner might present to the

Seventh Circuit in a second appeal. Recognizing this fact,

on January 15, 1988 petitioner applied for and was granted

an extension of time to April 2, 1988 to file a petition

for writ of certiorari from P&E I. (App., infra, 3.)

The District Court’s Order on Remand

On February 29, 1988, after complying with the man-

date of the court of appeals in P&E I, the district court

entered judgment in favor of respondent. Petitioner chose

not to file a petition for writ of certiorari from P&E I,

abandoning its right to seek review of P&E I in this

Court. Instead, it filed a second appeal to the Seventh

Circuit (“P&E II’) raising the same issues argued and

decided adversely to it in P&E I.

ee

The Second Appeal—P&E II

In P&E II, petitioner reargued the same issues that

were rejected in P&E I: Insufficient proof of market

power in the tying product market and market power in

the tied product market. The court of appeals in P&E

II held that petitioner’s reargument of these issues was

foreclosed by the doctrine of law of the case. (Pet. App.

12a.) Petitioner sought rehearing or rehearing in banc of

the law of the case holding in P&E II. That request was

denied by the Seventh Circuit.

Now, for a third time, petitioner seeks to argue the

same legal issues which the Seventh Circuit has twice held

it waived at trial. Petitioner does not challenge the waiver

holding of P&E I or the law of the case holding of P&E

II. Indeed, petitioner ignores both holdings.

REASONS FOR DENYING THE PETITION

I. Summary of Argument

This case presents no issue of substantive antitrust law.

Therefore, the petition for certiorari is wrong and mislead-

ing, and respondent does not concede anything contained

therein. The decision from which review is now sought

was grounded on law of the case. The earlier decision,

for which petitioner consciously declined to seek review

in this Court, was grounded upon waivers made at trial

and other consequences of petitioner’s now discarded trial

strategy. Neither decision decided any issue of antitrust

law.

In P&E I, the Seventh Circuit found that the antitrust

issues raised on appeal were waived at trial, and that the

a

evidence in the record supported the jury’s verdict that

petitioner had violated the antitrust laws by tying the sale

of its motors to the sale of petitioner’s replacement parts.

Moreover, the judgment below is independently supported

by the jury’s finding that petitioner engaged in an un-

reasonable restraint of trade in violation of the “rule of

reason.”

Finally, this petition comes too late. In P&E I, the

Seventh Circuit finally determined all the issues litigated

in the Court of Appeals. In January 1988 petitioner recog-

nized that it was required to petition for certiorari, if at

all, within ninety days after the decision. Petitioner failed

to do so. It took the calculated risk that it could do better

by attempting to find another more sympathetic panel of

the Seventh Circuit which would reconsider P&E I than

it could by a timely petition to this Court. Having made

that choice, petitioner is bound by it.

II. Argument

A. THE iSSUES NOW RAISED BY PETITIONER WERE

WAIVED AT TRIAL AND SHOULD NOT BE CONSID-

ERED BY THIS COURT.

1. Petitioner Waived the Issue of Market Power in the

Tying Product Market

The first argument raised by petitioner relates to

market power in the tying product market. In neither the

jury instruction conference nor anywhere else during the

trial did petitioner specifically inform the court that it con-

tended either that the tying product market was replace-

ment parts generally or that respondent was required to

prove market power in a market for replacement parts

generally. Petitioner did~not object to the aspect of the

district court’s instruction 28a, which defined the tying

product market as Sterling replacement parts or that as-

= we

.pect of the district court’s instruction concerning indicia

of market power. Jury instruction 28a provides, in its en-

tirety:

For its second element, plaintiff must prove that

Sterling possessed what is called ‘‘market power”

with respect to the tying product which is Sterling

replacement parts. Market power with respect to the

tied product, which is electric motors, is not relevant.

Market power is the ability to use dominance over

the supply of a product to force others to buy or

refrain from buying other products, or to do or

refrain from performing other actions. Market power

may be inferred from the tying product’s desirabil-

ity to consumers or from uniqueness' in its attributes.

If you find that Sterling had market power as I have

defined it, then Plaintiff has proven the second ele-

ment of its case.

(Tr. 955) (emphasis added).

Petitioner did not object to the definition of the tying

product market, ner did it specifically object to any of

the language the court used to describe market power.

Instead, petitioner made only the following, cryptic ob-

jection:

Defendant objects to Court’s 28a in that it’s an im-

proper definition of market power since it contains

no consideration of profit.

(Tr. 925.) Under Fed.R.Civ.P. 51, it is essential that an

objection to an instruction specifically point out how the

instruction is defective. Petitioner did not explain to the

district court how instruction 28a should be corrected to

obviate its objection regarding “‘profit.”’ This objection cer-

tainly did not preserve petitioner’s current theory in ac-

cordance with Rule 51. Petitioner does not claim to have

stated ‘distinctly the matter objected to and the grounds

of the objection.” Fed.R.Civ.P. 51.

—10—

It is well-settled in this Court that, having not objected

at trial, petitioner cannot now redefine the relevant mar-

ket for the tying product. In Palmer v. Hoffman, 318 U.S.

109, 119 (1943), this Court held that failure to object to

a jury instruction at trial precluded a new trial:

Where a party might have obtained the correct charge

by specifically calling the attention of the trial court

to the error and where part of the charge was cor-

rect, he may not through a general exception obtain

a new trial. In fairness to the irial court and to the

parties, objections to a charge must be sufficiently

specific to bring into focus the precise nature of the

alleged error.

318 U.S. at 119; accord Aspen Highlands, Skiing Corp.

v. Aspen Skiing Co., 738 F.2d 1509, 1514 (10th Cir. 1984),

affd on other grounds, 472 U.S. 585 (1985).

The rationale of Palmer was followed in City of Spring-

field v. Kibbe, 480 U.S. 257 (1987). In Kibbe, this Court

granted certiorari. Upon learning of the petitioner’s failure

to object to jury instructions presenting the same legal

issues upon which the writ was granted, this Court dis-

missed the writ as improvidently granted:

We ordinarily will not decide questions not raised or

litigated in the lower courts. . . . That rule has special

force where the party seeking to argue the issue has

failed to object to a jury instruction.

480 U.S. at 259. This Court in Kibbe found that petitioner

had informed it of no special circumstances explaining its

failure. Petitioner has never argued any special circum-

stances in this case—and there are none.

=;

2. Petitioner Failed to Preserve its Claim Relating to

Market Power in the Tied Product Market

Petitioner’s claim that there was insufficient proof of a

substantial threat of its obtaining market power in the tied-

product market was also not preserved. Petitioner chose

not to object to the portion of jury instruction 28a, supra,

that “Market power with respect to the tied product,

which is electric motors, is not relevant.” (Tr. 955.) As

noted above, petitioner’s sole objection to 28a was that

the definition of market power “contains no consideration

of profit.” (Tr. 925.) By failing to object to the portion

of the instruction stating that market power in the “tied

product market ... is not relevant’’ petitioner waived

that issue. As noted above, Rule 51 requires that an ob-

jection to an instruction specifically point out how the in-

struction is defective. Aspen Highlands Skiing Corp. v.

Aspen Skiing Co., 738 F.2d 1509, 1514 (10th Cir. 1984),

affd on other grounds, 472 U.S. 585 (1985). Petitioner

failed to do so. As also noted above, Kibbe, supra, at 10,

holds that this Court will not reverse ‘a judgment be-

cause of instructions that the petitioner accepted and in-

deed itself requested.” 480 U.S. at 259.

Petitioner’s decision not to object to this instruction was

a calculated concession that proof of power in the market

for the tied product was not an element of respondent’s

case. As a result, two Seventh Circuit panels have found

that no issu’ concerning market power in the market for

electric mot.rs was preserved for appeal.

3. Petitioner Fails to Challenge the Jury’s Rule of

Reason Verdict

There is a further answer to the entire petition, simple

and irrefutable: The jury found for respondent on the

“rule of reason” which, under the instructions given, re-

_

quired no proof of either of the elements that petitioner

now argues were not proven. Petitioner cannot now com-

plain about those instructions, instructions 32a and 33a,!

because at trial petitioner did not preserve an objection

as required by Rule 51. (Tr. 926.) The jury found that

petitioner unreasonably restrained trade in violation of the

“rule of reason.” (App., infra, 2.)

Petitioner had ample opportunity to raise the arguments

set forth in its petition as part of its case at trial. In-

stead, petitioner chose to wait and see if the outcome at

trial was favorable. When petitioner found itself faced

with an unfavorable verdict, it began raising arguments

1 The relevant portion of Jury Instruction 32a and Jury Instruc-

tion 33a provided:

If you find that Plaintiff has failed to prove either of the fol-

lowing elements: the second element of market power or the

fourth element of forcing, but has proven the other elements

of separate products, linking of sales, and some injury to Plain-

tiffs business, you must then evaluate the reasonableness of

defendant’s conduct.

* * * *

In determining whether Defendant’s conduct was reasonable

or unreasonable, you should consider, one, whether plaintiff

has shown an actual adverse effect on competition; two, the

nature of the particular industry involved; three, the nature

or character of the conduct and practices of Defendant which

Plaintiff contends unreasonably restrained trade; and, four, the

history of the restraint; and, five, the purpose or end sought

to be achieved by Defendant.

If you find that the conduct of Defendant as alleged by the

Plaintiff had the effect of unreasonably restraining trade, then

the antitrust laws have been violated and you should return

a verdict for the Plaintiff regardless of whether it proved

market power or forcing.

(Tr. 957-58) (emphasis added).

=<

' which it unequivocally failed to preserve at trial. As

»

summed up by Chief Judge Bauer: ‘‘And like the panel

in P&E I, we do not believe it is unfair to require Sterl-

ing to live with the theory it presented at trial.’ (Pet.

App. 12a.)

B. THE TIME TO PETITION THIS COURT EXPIRED

ON APRIL 2, 1988.

The plain implication of the arguments asserted in

its petition, considered in the light of those it failed to

assert, is that petitioner is really asking this Court to

review P&E |. Indeed, petitioner makes merely a pass-

ing reference to the law of the case holding in P&E II

(Pet., p. 7), the only holding of law in that decision. In

P&E I, the Seventh Circuit held that, given petitioner’s

waivers at trial, the district court’s decision granting peti-

tioner’s post-trial motion for judgment n.o.v. was wrong.

It concluded that the jury instructions given were proper.

(Pet. App. 28a.) Furthermore, the Seventh Circuit stated

that it reviewed the record to determine whether there

was any basis for a new trial and concluded there was

not. (Pet. App. 36a.) The verdict was not against the mani-

fest weight of the evidence. (Pet. App. 39a.)

Having determined that the district court was mistaken

in its conclusion that its instructions had been erroneous,

but unsure whether it might have had other reasons, not

in the record, for granting a new trial, the Seventh Cir-

cuit directed:

If . . . the district court . . . believed, based upon

some previously unstated but substantial and defen-

sible grounds, that the manifest weight of the evi-

dence favored Sterling when assessed against the in-

structions under which the jury deliberated, then the

court may proceed with the new trial.

(Pet. App. 39a-40a.)

—14—

After the decision in P&E I, all of the issues presented

to the Seventh Circuit had been plainly and properly

settled with finality. If the district court, on remand,

denied a new trial, there would be nothing to appeal

unless it somehow failed to follow the Seventh Circuit’s

mandate. The petitioner knew that the proper way to have

P&E 1 reviewed was by writ of certiorari to this Court;

and, on January 14, 1988 petitioner filed with this Court

an Application For Extension of Time to File Petition for

Writ of Certiorari. (App., infra, 3.) In that application,

petitioner conceded the case was over and ready for this

Court, unless the district court granted a new trial:

Petitioner seeks the extension pursuant to 28 U.S.C.

§ 2101(c) (1982) because intervening action by the dis-

trict court in the next two months may eliminate the

need to seek review by this Court. Specifically, after

ruling against petitioner on the issues that petitioner

would raise in a petition for certiorari, the Court of

Appeals remanded the case for the trial court to de-

termine whether the jury verdict was against the

manifest weight of the evidence. Pursuant to the re-

mand order, the district court set a briefing schedule

on this “manifest weight” issue. Final briefs are due

to be filed on February 3, 1988, one day after the

petition for a writ of certiorari would otherwise be

due.

If the district court grants a new trial on the “mani-

fest weight” issue, it is unlikely that petitioner will

ask this Court to review the decision issued by the

Court of Appeals on November 4, 1987. On the other

hand, if the district court denies the new trial mo-

tion, petitioner does anticipate the need to file a peti-

“tion for certiorari seeking review of the issues de-

cided by the Court of Appeals.

(App., infra, 5) (emphasis added). On January 15, 1988,

Justice Stevens extended the time for filing a petition for

writ of certiorari to April 2, 1988. (App. 7-8.)

The district court proceeded in accordance with the man-

date and held that the jury’s verdict was not against the

manifest weight of the evidence when assessed in the light

of the instructions that guided the jury. (Pet. App. 54a.)

The order, without an opinion, was entered on February

29, 1988. At that point, there was nothing for petitioner

to appeal to the Seventh Circuit since that court had al-

ready determined in P&E I, that the instructions given

were proper and that the jury’s verdict was not against

the manifest weight of the evidence. (Pet. App. 39a.)

Petitioner let its time to petition for certiorari from

P&E | expire. Petitioner chose not to seek a writ of cer-

tworari at the appropriate time. Instead, petitioner launched

a collateral attack on P&E I, hoping that a different panel

of the Seventh Circuit would reconsider P&E I. This col-

lateral attack did not alter the time limit of 28 U.S.C.

§ 2101(c) for the review of P&E I.

Under similar circumstances, this Court has held that

collateral proceedings in a court of appeals do not extend

the time for petitioning for certiorari from an earlier final

decision putting te rest the questions which the parties

had litigated. In Federal Trade Commission v. Minneapolis-

Honeywell Regulator Company, 344 U.S. 206 (1952), a

petitioner sought to invoke this Court’s jurisdiction more

than ninety days after the final judgment, but within

ninety days of a subsequent order. This Court held:

Only when the lower court changes matters of sub-

stance, or resolves a genuine ambiguity in a judg-

ment previously rendered should the period within

which an appeal must be taken or a petition for cer-

tiorari filed begin to run anew. The test is a prac-

tical one. The question is whether the lower court,

in its second order, has disturbed or revised legal

rights and obligations which, by its prior judgment,

had been plainly and properly settled with finality

—16—

... . Indeed, the [original judgment] was for all pur

poses final. It put to rest the questions which the

parties had litigated in the Court of Appeals. It was

neither “tentative, informal nor incomplete.” . .

—— must at some definite point be brought to

an en

344 U.S. at 211-13 (footnotes omitted).

The rationale of Minneapolis-Honeywell, supra, at 15,

is applicable here. The time to petition for certiorari was

after P&E I decided with finality all issues the parties

had litigated. P&E II was petitioner’s futile attempt to

force the Seventh Circuit to appoint a panel to reconsider

issues already decided in P&E I.

After the district court’s order on remand, petitioner

was confronted with a basic strategy decision. It could

either proceed with a petition for certiorari to review

P&E 1, for which there was still plenty of time, or try

appealing from the district court’s order. Filing the notice

of appeal would let the time for filing for certiorari ex-

pire, but would afford the opportunity to present the case

to a new Seventh Circuit panel which might reconsider

P&E |. Timely filing the petition for certiorari would pass

up the opportunity for another crack at the Seventh Cir-

cuit at the risk that the final order in this case would

become one of the thousands which this Court declines

to consider.

The Seventh Circuit recognized that it was being asked

to reconsider P&E I and the court refused to do so

limiting its decision in P&E II to application of the law

of the case. As Chief Judge Bauer stated: “This antitrust

case is before us the second time. In our view, it should

not be.” (Pet. App. la) (citations omitted). The Seventh

Circuit in P&E II did not “disturb or [revise] legal rights

and obligations which, by its prior judgment, had been

-17—

plainly and properly settled with finality,” so that the time

to petition for certiorari did not begin to run anew. Min-

neapolis-Honeywell, 344 U.S. at 212-213. To paraphrase

Chief Judge Bauer, we do not believe it is unfair to re-

quire petitioner to live with its appellate strategy. (See,

Pet. App. 12a.)

CONCLUSION

Neither Seventh Circuit decision in this case creates a

conflict with a decision of this Court or of another federal

court of appeals. Nor does this case depart from any ac-

cepted or usual course of judicial proceeding. This case

does not decide any questions of antitrust law or any

other questions of importance. There are no reasons for

this Court to grant the petition.

For the foregoing reasons, respondent requests that the

petition be denied.

Respectfully submitted,

JAMES E. CARROLL *

Davip C. Roston

GarY L. SPEcKS

JOHN K. CuHatz

Davip H. LaTHAm

ALTHEIMER & GRAY

i0 South Wacker Drive

Chicago, Illinois 60606

(312) 715-4000

Attorneys for Respondent

PARTS AND E.ectric Morors, Inc.

August 28, 1989 * Counsel of Record

APPENDICES

App. 1

APPENDIX 1

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

PARTS AND ELECTRIC MOTORS, )

INC., an Illinois corporation, )

Plaintiff-Counterdefendant

STERLING ELECTRIC, INC.,

a Delaware corporation,

:)

)

v. ) No. 83 C 2349

)

) JUDGE HOLDERMAN

)

)

Defendant-Counterplaintiff. )

SPECIAL INTERROGATORIES TO THE JURY

1. Do you find from a preponderance of the evidence

that parts for electric motors and electric motors are two

separate and distinct products with separate markets?

ANSWER: Yes or No. YES

2. Do you find from a preponderance of the evidence

that Defendant possessed the ability to use dominance

over the supply of Sterling replacement parts to force

others to buy or refrain from buying other products or

to do or refrain from performing other actions?

ANSWER: Yes or No. YES

3. Do you find from a preponderance of the evidence

that Defendant linked its sale of Sterling replacement

parts to its sale of Sterling finished product?

ANSWER: Yes or No. YES

App. 2

4. Do you find from a preponderance of the evidence

that Defendant went beyond persuasion and conditioned

the Plaintiff's purchase of Sterling replacement parts on

its purchase of Sterling finished products?

ANSWER: Yes or No. YES

5. Do you find from a preponderance of the evidence

that Plaintiff suffered some injury as a proximate result

of Defendant’s violations of the Antitrust laws?

ANSWER: Yes or No.- YES

6. Do you find from a preponderance of the evidence

that Defendant’s conduct was an unreasonable restraint

on trade?

ANSWER: Yes or No. YES

SO SAY WE ALL

App. 3

APPENDIX 2

i

In The

SUPREME COURT OF THE UNITED STATES

October Term, 1987

STERLING ELECTRIC, INC.,

Petitioner,

v.

PARTS AND ELECTRIC MOTORS, INC.,

Respondent.

APPLICATION FOR EXTENSION OF TIME TO FILE

PETITION FOR WRIT OF CERTIORARI

To The United States Court of Appeals

For The Seventh Circuit

To the Honorable John Paul Stevens, Associate Justice

of the Supreme Court of the United States and Circuit

Justice for the United States Court of Appeals for the

Seventh Circuit:

Petitioner Sterling Electric, Inc.1 prays that an order

be entered extending the time to file a petition for a writ

1 The parent company of petitioner Sterling Electric, Inc. is A.O.

Smith Corporation. Sterling has no affiliates or subsidiaries other

than wholly owned subsidiaries.

App. 4

of certiorari for sixty (60) days, from February 2, 1988,

to and including April 2, 1988. This application is being

filed more than 10 days before the present deadline for

filing the petition.

1. The judgment of the Court of Appeals for the Seventh

Circuit was entered on November 4, 1987. Appendix A.

The Court of Appeals issued its initial decision on August

18, 1987. The Court subsequently granted rehearing and

issued an amended decision on November 4, 1987. Appen-

dices B, C. A ninety-day period from entry of the Court

of Appeals’ judgment would expire on February 2, 1988.

The requested 60-day extension would change the date

for filing a petition to Saturday, April 2, 1988.

2. This Court’s jurisdiction to review the Court of Ap-

peals’ decision will be invoked under 28 U.S.C. § 1254(1)

(1982) and 28 U.S.C. § 1651 (1982).

3. The decision to be reviewed arises out of an anti-

trust case brought under Section 1 of the Sherman Act,

15 U.S.C. § 1, and Section 3 of the Clayton Act, 15 U.S.C.

§ 14. Parts & Electric Motors, Inc., a terminated dis-

tributor of petitioner’s products, charged petitioner in this

case with tying the sales of its electric motors to sales

of its replacement parts. The jury returned a verdict for

Parts & Electric Motors on this tying claim. The district

court set aside that verdict, granting a judgment n.o.v.

in favor of petitioner and, alternatively, a new trial.

4. The Court of Appeals reversed the judgment n.o.v.

and remanded the case to the district court to consider

whether a new trial should be granted. The Court of Ap-

peals’ decision held, among other rulings, that a motor

manufacturer with less than one percent (1%) of the

market for motors may be found to have market power

because no other manufacturer chooses to produce replace-

eam

App. 5

ment parts for its motors. Antitrust tying claims have pro-

voked a considerable amount of litigation in recent years,

and as indicated in the Court of Appeals’ decision, much

controversy has developed regarding the interpretation

and application of the Supreme Court’s decisions in this

area. The issues that petitioner would raise in a petition

for certiorari are thus of substantial importance and merit

review by this Court. See Supreme Court Rule 17.2

5. Petitioner seeks this extension pursuant to 28 U.S.C.

§ 210i(c) (1982) because intervening action by the district

court in the next two months may eliminate the need to

seek review by this Court. Specifically, after ruling

against petitioner on the issues that petitioner would raise

in a petition for certiorari, the Court of Appeals remanded

the case for the trial court to determine whether the jury

verdict was against the manifest «veight of the evidence.

Pursuant to the remand order, the district court set a

briefing schedule on this “manifest weight” issue. Final

briefs are due to be filed on February 3, 1988, one day

after the petition for a writ of certiorari would otherwise

be due.

If the district court grants a new trial on the “manifest

weight” issue, it is unlikely that petitioner will ask this

Court to review the decision issued by the Court of Ap-

peals on November 4, 1987. On the other hand, if the dis-

trict court denies the new trial motion, petitioner does

anticipate the need to file a petition for certiorari seek-

ing review of the issues decided by the Court of Appeals.

Due to the importance of the issues and the length of

the briefing schedule, the district court is likely to issue

2 Many of the issues petitioner would raise are independent of

the waiver issue decided by the Court of Appeals.

App. 6

its decision on the new trial motion within approximately

a month after briefing is completed on February 3. An

extension of the deadline for filing a petition for certiorari

until April 2 would leave petitioner a short period to pre-

pare and file a petition if necessary, yet would avoid the

burden on this Court and the parties of preparing and

considering a potentially unnecessary petition. Petitioner

does not believe that the extension it seeks would prej-

udice respondent, either on the merits or in preparing any

brief in opposition to the petition for certiorari.

Wherefore petitioner respectfully requests that an order

be entered extending the time to file a petition for cer-

tiorari to and including April 2, 1988.

Respectfully submitted,

/s/ Davip G. NORRELL

David G. Norrell

KIRKLAND & ELLIS

Suite 1200

655 Fifteenth Street

Washington, D.C. 20005

(202) 879-5070

Stephen C. Neal, P.C.

James D. Sonda

William Dolan

KIRKLAND & ELLIS

200 East Randolph Drive

Chicago, Illinois 60601

(312) 861-2000

Counsel for Petitioner

January 14, 1988 Sterling Electric, Inc.

App. 7

APPENDIX 3

OFFICE OF THE CLERK

SUPREME COURT OF THE UNITED STATES

WASHINGTON, D.C. 20543

January 15, 1988

David G. Norrell, Esquire

Kirkland & Ellis

Suite 1200

655 - 15th Street, N.W.

Washington, DC 20005

Re: Sterling Electric, Inc. v. Parts and Electric

Motors, Inc., No. A-543

Dear Mr. Norrell:

Your application for an extension of time in which to

file a petition for writ of certiorari in the above-entitled

case has been presented to Justice Stevens, who on Jan-

uary 15, 1988, signed an order extending your time to

and including April 2, 1988.

A copy of the Justice’s order is enclosed.

Very truly yours,

JOSEPH F. SPANIOL, JR., Clerk

By

Edward L. Turner, Jr.

Assistant Clerk

App. ~

ee (letter only): John H. Ward, Esq.

Antonow & Fink

111 East Wacker Drive. Suite 3000

Chicago, IL 60601

Clerk, U.S. Court of Appeals for the

Seventh Circuit

(Your No. 8&3 C 2349)