Appendix — Juneau Square Corp. v. First Wisconsin National Bank of Milwaukee
Supreme Court brief1980
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Supreme Yours, uv. o.
FILED
oct 1 1980
30-517
No.
miinatRODAK, JR., CLERK
In the
Supreme Cowt of the United States
OctoserR Term, 1980
JUNEAU SQUARE CORP.,, et al.,
Petitioners,
vB.
FIRST WISCONSIN NATIONAL BANK OF MILWAUKEE,
et al,
Respondents.
APPENDIX TO
PETITION FOR WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
GEORGE P. KERSTEN
E. CAMPION KERSTEN
231 West Wisconsin Avenue
Milwaukee, Wisconsin 53203
(414) 271-0054
Attorneys for Petitioners
Of counsel:
KERSTEN & McKINNON
231 West Wisconsin Avenue
Milwaukee, WI 53203
eae
UNITED STATES LAW PRINTING CO., CHICAGO, ILLINOIS 60618 (312) 525-6581
i
cs tase tl Be ett sean ow
INDEX
PAGE
July 3, 1980 decision of the United States Court of
Appeals for the Seventh Cireuit 2.00220... App. 1
September 30, 1976 District Court memorandum and
order granting and denying defendants’ motion for
directed verdict (first trial) 2.2.2... eeeseeee App. 31
July 29, 1977 decision of District granting defen-
BE I I ietetacectisthicesiaceisatiencisneeecnenecdntatepleivatonaninndclons App. 51
September 18, 1977 District Court memorandum and
order denying certification for interlocutory ap-
IES | ccisclca Mle orconiehsnelandapnionenniienliciecststadnsdiniannaipsbiinatipenaaudaiens App. 97
February 22, 1978 District Court order granting and
denying defendants’ motions to dismiss for lack
IE Sichanacenithsiieiniasestinsinialienmecionanaitenbiea App. 107
March 30, 1978 District Court’s bench order dismiss-
ing plaintiff Wil-Ten for lack of standing (second
SI sisacs-chsedbaieanenictncaleltesnaehanbinnicatianttlacniatiaeunenpeanidinanisinontelnenisins App. 135
March 22, 1978 District Court order denying plain-
tiffs permission to litigate certain issues or to
a celesitestaesdeiicentanianiitapienbin App. 136
July 31, 1979 decision of District Court denying
plaintiffs motion for a new trial (following second
I ° aicictinidiasvtretcinronnieennsttniensbensincidabinineindnialinnaiannten App. 138
July 3, 1980 judgment of the United States Court of
Appeals for the Seventh Circuit, affirming trial
ROR ae Se ae ee a nr App. 168
PX 303 and 304—handwritten covering note and
memo from Attorney David Shute to Attorney
I TID <ancsecicetudcconeshtercsnicbstendeencicnnivahiinesinesien App. 169
il
PX 383—June 17, 1971 NYL memorandum describ-
PAGE
ing why Juneau Square loan was declined ........ App. 180
PX 404—Duncan copy of May 11, 1971 credit report
to NYL, showing source to be Little of the First
NWiSCOMSIN ...........-..-ceesceececeseseceesensteneenssnnanecsnneseneeneees App.
PX 413—Lutz copy of May 11, 1971 credit report to
NYL (showing Lutz’ receipt and without identifi-
Cation Of SOUTCE) .............-sececeeeeeeeeeeeeeeneneseeeeeseeetees App.
PX 408—Lutz to Duncan memorandum of May 21,
BIE csc cssnvsenmenacsndenninbuaesitioieeanesieanemcienaaataannene .... App.
BACCO ...nneneenecnsssesessnscnseesensenesnesnesnseneensenenssssesnnaneracensenses App.
PX 499—First Wisconsin memorandum setting rent
rates (Cover MeMO ONLY) ...-..----------eeseeeeereteesetetee App.
PX 554—May 6, 1971 Holscher to Kasten memo, with
attached copy of Bradley-Holscher letter of May 4,
1971 and Huber-Bradley memorandum of May 3,
1971, with indication of copies sent to Kasten and
Tattle ........ccccscccsceseccccessossccsseesoreecesscseneocscscnsnenseseneesscoses App.
PX 472—additional copy of Bradley/Holscher May
4, 1971 letter with enclosed Huber/Bradley memo-
randum of May 3, 1971, showing copies sent to
Kasten and Little May 6, 1971 ........-.--------+----+00++ App.
PX 589, page 22—chart of Milwaukee Central Busi-
MESS District .........-..-c-ceceececeeceeeeeseseeeeeeseeseeseemenmennenees App.
PX 125—chart of eastern area of CBD ...-.......... App.
PX 1—chart of parcels in Juneau Square block ....App.
183
196
PAGE
PX 143—chart of Juneau Square block showing
coverage of Aetna and Marshall-Michigan mort-
ROB naccncecsesesnvnsvsccseceenesecsveestonnseesoeensssenenessessaccsesessees App. 201
Excerpts from Jury Instructions, First Trial ........ App. 202
Defendants Requested Instruction No. 25, First
FN acc cckctittnisectrsisssesenanegvedetnerendnuateishnibaviansbsntenenesiivn App. 203
Jury Verdict, First Trial ...............sessssssesssessenseenees App. 204
Judgment, First Trial ...................ccccscssesessssenessesenes App. 209
Excerpts from Court Instructions, Second Trial ..App. 213
Excerpts from Plaintiffs’ Requested Instructions,
i TG wcestcentseccsvennsccisenevonsrneresnicenatitinessitacoannion App. 217
Defendants Requested Instruction 18-A, Second
TI os sssiccnstinvesnessaveneeacsntinasessinnnins semmbnewnensivensttmniannesees App. 247
Verdict, Second Trial ...........-........ccsresecssemssssssenevenees App. 248
Judgment, Second Tria] ................sssceceescssessseeees App. 252
Excerpt from brief of plaintiffs-appellants filed in
their appeal to the United States Court of Ap-
peals for the Seventh Circuit ...........2-:::-:-s App. 253
Inu the
Supreme Court of the United States
Ocroser TERM, 1980
No.
JUNEAU SQUARE CORP,., et al.,
Petitioners,
VS.
FIRST WISCONSIN NATIONAL BANK OF MILWAUKEE,
et al., .
Respondents.
ON WRIT OF CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE SEVENTH CIRCUIT
PETITIONERS’ APPENDIX
In the
United States Court of Appeals
For the Seventh Circuit
No. 79-2037
Juneau Square Corp., et al.,
Plaintiffs-Appellants,
v.
First Wisconsin Nationa Banx Or Minwavkesr, et al.,
Defendants-Appellees.
Appeal from the United States District Court for the
Eastern District of Wisconsin.
No. 72-0-533—Robert W. Warren, Judge.
Arcuep Fresruary 25, 1980—Drcipep Juty 3, 1980
Before SprecHER and Woop, Circuit Judges, and Bua,
District Judge."
Woop, Circuit Judge. The civil antitrust action before
us has its origins in the development, or more aptly, non-
development of a portion of the City of Milwaukee’s beau-
tiful lakeshore skyline. Plaintiffs were developers of a
major office building complex, known as Juneau Square,
located on prime lakefront property in that city’s central
business district (CBD). Defendant First Wisconsin Cor-
poration (First Wisconsin), a national bank holding com-
pany, is the parent of defendants First Wisconsin National
bank of Milwaukee (First Wisconsin National Bank), First
* The Honorable Nicholas J. Bua, United States District Judge
for the Northern District of Illinois, is sitting by designation.
App. 2
Wisconsin Development Corporation (a corporation formed
to develop First Wisconsin Center, the CBD’s largest of-
fice building), and Marshall-Wisconsin Company (Mar-
shall-Wisconsin) (a corporation formed to acquire and
operate Juneau Square). Defendant Marshall-Michigan
Company (Marshall-Michigan) is a Netherlands Antilles
corporation formed as a vehicle for foreign national in-
vestment in Juneau Square. Defendant Aetna Life In-
surance Company (Aetna) was a long-term mortgage lend-
er for a part of the Juneau Square project.
I.
The factual background of this case is set forth in
extensive detail at 435 F. Supp. 1307 (B.D. Wis. 1977).
We adopt that statement of facts to the extent consistent
with this opinion and summarize below only those facts
necessary for disposition of this appeal.
In the early 1960’s Wil-Ten Company ( Wil-Ten)
purchased property along the Lake Michigan shore in
downtown Milwaukee. In 1962 Wil-Ten conveyed that
property to plaintiff Juneau Square Corporation (the Cor-
poration) its wholly-owned subsidiary. The Corporation
then constructed a three-story office building, Juneau
Square South (South), on the property with construction
financing provided by First Wisconsin National Bank.
Aetna, the building’s major tenant, provided permanent
financing secured by a first mortgage on the property.
In 1964 the Corporation commenced construction of a
nine-story office building, Juneau Square North (North),
on the same property immediately adjacent to South.
Another bank, not a party to this suit, provided construc-
tion financing, and Aetna increased its loan to the Cor-
poration to provide permanent financing. Shortly there-
after, the Corporation encountered financial difficulties,
App. 3
which culminated in 1966 with the sale of part of its in-
terest in the project. Marshall-Michigan purchased an
undivided one-half interest, and a number of individual
investors purchased undivided interests totalling twenty-
five percent. Marshall-Michigan and the individuals im-
mediately leased-back their interests to the Corporation,
which allowed the Corporation to retain operational con-
trol of the project. As security for the obligation to pay
the rent stipulated in the lease-back agreement, Marshall-
Michigan received a second mortgage, subordinate to Aet-
na’s first mortgage, on the entire project. Unfortunately,
the Corporation’s financial difficulties continued despite
these measures.
As North and South neared completion in 1967, the
Corporation began preparing for construction of the final
and most ambitionus phase of the project, Juneau Square
Kast (Hast), a high-rise office tower. The Corporation’s
assets and cash flow, however, were insufficient to com-
plete improvements on North and South that had been
promised to tenants and to begin construction of Hast.
Aetna provided some help by agreeing to a moratorium on
principal payments under its mortgage loan on North and
South. Planning of East then proceeded, but by early 1969,
the Corporation fell into default under the Aetna and Mar-
shall-Michigan mortgages because of its failure to pay
$245,000 in real estate taxes. At this point, the Corpora-
tion began its search for additional financing.
While the Corporation encountered these financial diffi-
culties, First Wisconsin formulated plans to construct a
new corporate headquarters (First Wisconsin Center) ad-
jacent to the Juneau Square site. The First Wisconsin
project contemplated placing approximately one million
square feet of prime new office space on the CBD market.
East was scheduled for completion one vear earlier than
App. 4
First Wisconsin Center and would have added 300,000
square feet of new office space in the CBD. Market stud-
ies indicated that the CBD could absorb only 200,000 square
feet of new office space annually. This obvious competi-
tive pressure is the setting for plaintiffs’ antitrust claims.
In late 1968 Richard Holscher, the officer responsible
for developing First Wisconsin Center, began securing
land upon which to build the office tower. Holscher nego-
tiated an agreement with Northwestern Mutual Life In-
surance Company (NML) to transfer a parcel of land to
First Wisconsin and to act as First Wisconsin’s agent in
the acquisition of additional land for possible later ex-
pansion. NML apparently had been planning to build a
100,000 square foot office building in the CBD to open
about the same time as First Wisconsin Center but, as
part of the agreement, shelved those plans for five years.
This allowed First Wisconsin to lease its Center without
Competition from NML."
A few months later, Holscher met with one of First
Wisconsin’s attorneys, David Shute of the Milwaukee law
firm of Foley & Lardner. At that meeting, Holscher and
Shute apparently discussed plans for the acquisition by
First Wisconsin of the Juneau Square project. After-
1The agreement with NML notwithstanding, First Wisconsin
Center faced significant potential competition from East, which of-
fered earlier occupancy and a more desirable location enhanced by
an unobstructed view of Lake Michigan. In addition, the East site
was attractive as an additional parcel, adjacent to the NML parcel,
tor possible later expansion of First Wisconsin Center. Incident to
his investigation of possible expansion sites, Holscher reviewed the
credit files maintained at First Wisconsin National Bank on the
Corporation and Wil-Ten, both of whom were customers. Plain-
tiffs urged that Holscher’s interest stemmed from a desire to elimi-
nate the potential competition that development of East likely would
bring. Plaintiffs further urged that Holscher’s peek into the con-
fidential credit files was one of many unfair methods of competition
that comprised the unlawful conspiracy.
App. 5
wards, Shute sent a handwritten memorandum to Chicago
attorney Harold Shapiro, which contained confidential in-
formation gleaned from First Wisconsin’s credit files, in-
structing Shapiro to explore with Aetna its interest in
selling its mortgage on North and South.’ Shute also in-
structed Shapiro not to disclose to Aetna that First Wis-
consin was his principal. Shapiro, acting for his blind
principal, met with Aetna representatives on March 18,
1969, but failed to evoke any interest for the proposition.
Almost simultaneously, the Corporation sought to persuade
Aetna to finance East, but on March 11, 1969, one week
before the Shapiro visit, Aetna informed the Corporation
that it would not provide that financing.
2 The Shute-Shapiro memorandum reads in pertinent part:
5. We have reason to believe Aetna might like out of the
situation—
a. low rate
b. shaky financial history project & its developers
We understand developers have been trying to raise funds
for new project from various sources, and they are ap-
parently down to Aetna & will be filing application next
week for loan for “East” project .. .
* * * .
6. Our strategy:
a. As representatives of interested undisclosed prin., con-
tact Aetna for prelim. discussions. We believe best contact
wd. be .--. Swinehart, who once held title of V.P. in
charge of Mgages. Might start with him, see where he
leads you.
. * . .
b. Our client’s int. is to purchase entire block for cash.
Our knowledge of details of deal, as disclosed to Aetna,
shd. be limited to what we might have been able to find
out w/o “insider” info (will leave to your good judg-
ment). We would pay fair cash price equal to market
value.
App. 6
Having lost Aetna, the Corporation found it necessary
to seek financing elsewhere. In the summer of 1969 the
Corporation entered negotiations with Metropolitan Life
Insurance Company of New York (Metropolitan). The
negotiations, however, became snagged when Aetna re-
fused to release from its mortgage some land essential to
the construction of East. The parties reached an accom-
modation, however, when Aetna agreed to provide neces-
sary and appropriate air rights and easements. By the
beginning of November 1969 workups and investigations
incident to the Metropolitan financing package were sub-
stantially complete, and Metropolitan requested that rep-
resentatives of the Corporation travel to New York on
November 5, 1969 to complete the financing package sub-
ject to Aetna’s conveyance of the air rights and easements.
Immediately before that meeting, in a sudden about-face,
Metropolitan informed its Milwaukee representative, War-
ren Stringer, that the deal was dead. Stringer relayed
that information to a representative of the Corporation
who called Metropolitan for an explanation. Metropolitan
remained silent until a week later when it sent a letter to
the Corporation listing its reasons for canceling the deal.
In that letter, Metropolitan informed the Corporation that
a generally unfavorable market and the availability of more
attractive investment opportunities were behind its declina-
tion.
During the negotiations that culminated in its decision
not to finance East, Metropolitan contacted James Liek,
a First Wisconsin National Bank employee, seeking his
opinion of the financial stability of the Juneau Square
project and its developers. Liek testified he told Metro-
politan that the Juneau Square property was prime quality
but that the Corporation had encountered problems de-
veloping North and South and had an overdue loan out-
standing at First Wisconsin National Bank. Further, Liek
App. 7
indicated he was unaware of any interest First Wisconsin
might have had in acquiring the project at that time.’
On November 13, 1969 one week after Metropolitan
bowed out, Aetna began a foreclosure action against the
Corporation based on its failure to pay real estate taxes.
When Marshall-Michigan learned of the foreclosure, its
New York-based representative, John Sann, traveled to
Milwaukee with a $245,000 check payable to Aetna to cure
the default and reinstate the mortgage. Upon arrival in
Milwaukee, Sann met with Marshall-Michigan’s local coun-
sel, Robert Bradley of Foley & Lardner, and Richard Hol-
scher of First Wisconsin. As noted, Foley & Lardner also
served as counsel to First Wisconsin. Consequently, Brad-
ley was aware that First Wisconsin was interested in ac-
quiring Juneau Square and so advised Sann. Sann then
inquired of Holscher whether First Wisconsin would be
interested in acquiring Marshall-Michigan’s interest in the
project, which at that time was subject to Aetna’s fore-
closure action. Holscher declined assertedly because First
Wisconsin was not interested in buying a lawsuit. Holscher,
however, indicated First Wisconsin might be interested
in acquiring the project upon satisfactory resolution of
the foreclosure action.
Amid growing concern about the Corporation’s possible
diversion of funds from North and South revenues for
development of East, Marshall-Michigan sent letters to
each North and South tenant directing that rental pay-
8 Although Liek claimed he first became aware of First Wis-
consin’s desire to acquire Juneau Square in May 1971, the formal
minutes of a meeting of the First Wisconsin executive committee
record Liek as present when the body granted authority to acquire
Juneau Square. Liek appeared at that meeting to report on mat-
ters unrelated to Juneau Square. Apparently, it was not unusual
at such meetings for nonmembers reporting on specific matters to
leave the meeting room at the conclusion of the report.
App. 8
ments be deposited in a special escrow account.* At shout
the same time, Sann also persuaded Aetna to delay its
foreclosure action for a time sufficient to permit Marshall-
Michigan to gain control of the project. Marshall-Michi-
gan then commenced a foreclosure action on its second
mortgage, but the Circuit Court of Milwaukee County re-
fused to appoint a receiver. Aetna then declared void its
promise to delay foreclosure and proceeded.°
Upon the collapse of the Aetna/Marshall-Michigan
agreement, the Corporation began negotiations in both
foreclosure actions, which culminated in Aetna’s and Mar-
4Since Marshall-Michigan held interests in North and South
only, diversion of revenues to East was at its expense.
5 Plaintiffs argue that the foregoing supports the inference that
Marshall-Michigan joined the conspiracy at this point. The district
court explains:
This inference was based on the following circumstances. Prior
to the commencement of the Aetna foreclosure action,
Marshall-Michigan had cooperated with the plaintiffs in the
development of the project. When Sann and Clark came
to Milwaukee their intention was to cure the tax default
and reinstate the mortgage. After conferring with local
counsel, a meeting was arranged with the First Wisconsin
defendants. As a result of this meeting and the subsequent
attempts of Marshall-Michigan to acquire control of the
project set forth above, the jury was asked to infer that
Marshall-Michigan joined the conspiracy in order to sal-
vage its investment interest in the project. Knowledge of the
conspiracy in restraint of trade is imputed to Marshall-
Michigan because of the fact that both Marshall-Michigan
and the First Wisconsin defendants were represented by the
same law firm; they presumably were both fully advised of
the situation before reaching agreement and Marshall-Michigan
was in any event presumably aware of the competitive position
of the plaintiffs and the First Wisconsin defendants.
435 F. Supp. at 1314.
App. 9
shall-Michigan’s stipulations that they would grant air
rights and easements necessary for construction of Kast
and reinstate Aetna’s mortgage on North and South pro-
vided the Corporation secured financing by September 30,
1970. In exchange, the Corporation waived its foreclosure
defenses and right of redemption and agreed that Aetna
and Marshall-Michigan could enter judgment against the
Corporation if the deadline passed without the acquisition
of financing. When the Corporation failed to meet the
deadline, Aetna sought entry of judgment pursuant to the
stipulation. However, when Aetna met resistance from the
presiding county judge, Aetna and the Corporation entered
into a second stipulation, which set December 31, 1971 as
the new deadline for securing financing.
The next avenue of exploration for the Corporation in
its quest for financing was the New York Life Insurance
Company (New York Life). In due course, New York
Life’s Chicago office forwarded the Corporation’s appli-
cation for financing with a favorable recommendation to
its New York headquarters. On May 5, 1971, New York
Life’s Real Estate and Mortgage Loan Committee con-
sidered whether to grant initial approval for the loan.
Some question arose at the meeting regarding one of the
banks involved in the financing, Midland National Bank
(Midland). The committee, therefore, took no action, in-
stead directing Frederick Duncan, New York Life’s treas-
urer, to investigate Midland’s financial strength. Duncan
contacted Albert Little of First Wisconsin National Bank
and requested that he do a credit check on Midland. Little
examined First Wisconsin National Bank’s credit files on
Midland and informed Duncan’s office of his findings a
few days later. The New York Life employee who spoke
with Little memorialized the substance of that conversa-
tion in a contemporaneous memorandum that indicated
App. 10
Little had told him that Juneau Square was underfinanced
and that Midland was a reasonably stable but small bank
that might be biting off more than it could chew.° On
May 19, 1971, the committee once again considered and,
on a vote of five to one, rejected the application."
6 The memorandum reads in pertinent part:
We were told that the property has been developed in in-
stallments 2nd was “bootstrapped all the way.” They have a
high debt. It was believed that the mortgage held by .. .
Aetna was in trouble and the lender has agreed to defer
foreclosure. Our source bank had a part in the construction
lending and found proceeds were not being used as indicated.
There appeared to be several recent judgments and liens
against the property.
It was our source’s opinion that the entire project was not
adequately financed. Recent high interest rates gave them
real problems.
The Midland National Bank was described as a retail
oriented institution that has made reasonable progress. They
took over a bank a short while ago and this accounts for a
jump in deposits from $60 million to $100 million. The
bank’s President, Mr. Kelly, was described as a very ag-
gressive banker who was not well liked in the local financial
community. He had been with the Marine Bank where he
led a proxy fight to get control of the corporation that was
largely owned by interests close to the bank for which he
was working.
7The minutes of the meeting indicate that the reason for the
rejection was the concern that Midland was unqualified to coordi-
nate such a large, complex financial transaction. There was some
evidence, namely a subsequent New Ycrk Life memorandum, that
the integrity of the Corporation was a factor. That memorandum
reads in pertinent part:
Mr. Lutz [chairman of the loan committee] indicated:
1. Sponsors had mis-handled funds and were being fore-
closed.
2. Bank was not sufficiently capitalized to handle gap funds.
App. 11
At this point, the Corporation sought financing from a
new source, the Baird & Warner Real Estate Investment
Trust (Baird & Warner). By mid-December 1971 Baird
& Warner tentatively agreed to make an equity investment
in the project. On December 20, less than two weeks before
the stipulated deadline, representatives of Aetna, Baird
& Warner, and the Corporation met to discuss the new fi-
nancing arrangement. Aetna apparently expressed a will-
ingness to accommodate the arrangement by withholding
entry of the foreclosure judgment provided Marshall-
Michigan also did so. Marshall-Michigan initially agreed
but then reneged and entered judgment on January 3, 1972.
Aetna followed suit on January 4. The entry of those
judgments marked the extinguishment of any hope the
Corporation had that Baird & Warner would finance Kast.
Marshall-Michigan, on February 28, 1972, purchased the
project for a nominal amount, subject to Aetna’s mort-
gage, at a sheriff’s sale. Shortly thereafter, Marshall-
Michigan sold its interest to Marshall-Wisconsin, a First
Wisconsin subsidiary. Marshall-Wisconsin then reached
agreement with Aetna, establishing a new mortgagor-
mortgagee relationship and leaving First Wisconsin in
control of Juneau Square. Later that year, plaintiffs filed
a civil antitrust action seeking treble damages under sec-
tion four of the Clayton Act, 15 U.S.C. § 15, on their claims
that defendants violated sections one and two of the Sher-
man Act, 15 U.S.C. §§$1, 2, and section seven of the Clayton
Act, 15 U.S.C. § 18.° Trial began on May 3, 1976 before
Judge Warren, who has presided over this case through-
out its long life. At the close of plaintiffs’ case, the court,
on motion of defendants, entered a directed verdict against
plaintiffs on their claims under section two of the Sher-
man Act. On October 1, 1976, the jury returned a verdict
on the remaining claims, finding that all defendants except
Aetna had conspired to restrain trade unreasonably in the
8 Plaintiffs did not appeal the pretrial dismissal of their §7 claim.
App. 12
leasing, development, construction, and financing of rental
office space in the Milwaukee CBD in violation of section
one of the Sherman Act, and awarding damages of $6
million. After trebling and set-off, the court entered judg-
ment in the amount of $16.5 million. Defendants, except
Aetna, then moved for judgment notwithstanding the ver-
dict or, alternatively, a new trial on all claims. By Mem-
orandum and Order dated July 29, 1977, the court granted
judgment notwithstanding the verdict on the interstate
financing portion of plaintiffs’ Sherman Act claims, 435
F. Supp. at 1321, and ordered a new trial on the other
claims against each defendant, id. at 1321-26, except Aet-
na.” The court refused plaintiffs’ request for certification
of an interlocutory appeal of the new trial order pursuant
to 28 U.S.C. § 1292(b). This court by unpublished order
dated February 17, 1978 then dismissed for lack of juris-
diction plaintiffs’ appeal of the new trial order.
Late in 1977, before the second trial, First Wisconsin
and Marshall-Michigan filed a motion for summary judg-
ment and a renewed motion for judgment notwithstanding
the verdict based upon the then-recent decisions of the
United States Supreme Court in Illinois Brick Co. v. Ilh-
nois, 431 U.S. 720 (1977), and Brunswick Corp. v. Pueblo
Bowl-O-Mat, Inc., 429 U.S. 477 (1977). A part of this mo-
tion contained a challenge to the standing of certain
plaintiffs to sue under section four of the Clayton Act.
The court denied the principal portions of the motions
but dismissed a subsidiary of the Corporation and a num-
ber of its principal officials.’? The court, however, stayed
the motion to dismiss Wil-Ten pending plaintiffs’ presen-
tation of their damage theories at the second trial. After
that presentation, the court dismissed Wil-Ten for lack of
standing.
® The court denied plaintiffs’ motion for a new trial on its claims
against Aetna. 435 F. Supp. at 1326-27.
App. 13
The second trial concluded on June 19, 1978 with a jury
verdict for defendants on all issues. Shortly thereafter,
plaintiffs moved for a new trial, which the district court
denied. This appeal followed.
Il.
An orzer granting a new trial is not a final order
within the meaning of 28 U.S.C. § 1291 and is therefore
generally not appealable. Eady v. Foerder, 381 F.2d 980
(7th Cir. 1967). Nevertheless, after a new trial and entry
of final judgment an appellate court entertaining an ap-
peal from the final judgment may review the new trial
order and, where appropriate, reinstate the original ver-
dict. See Ajax Hardware Manufacturing Corp. v. Indus-
trial Plants Corp., 569 F.2d 181 (2d Cir. 1977); Dassinger
v. South Central Bell Telephone Co., 537 F.2d 1345 (5th Cir.
1976) ; 11 C. Wright & A. Miller, Federal Practice and Pro-
cedure § 2818 (1973 & Supp. 1979). Appellate review of a
new trial order, however, is exceedingly limited because of
the broad discretion that trial judges possess in this area.
Durant v. Surety Homes Corp., 582 F.2d 1081, 1088 (7th
Cir. 1978). Only upon a clear showing that a trial judge
abused this broad discretion may an appellate court over-
turn a new trial order. Hahn v. Becker, 588 F.2d 768, 771
(7th Cir. 1979) ; Stinebower v. Scala, 331 F.2d 366, 367 (7th
Cir, 1964). In reviewing the new trial order entered by
10 The court dismissed plaintiffs Juneau Square Services, Inc.,
Harold C. Smith, III, Jack D. Moertl, and John F. Spoden be-
cause any injury they may have suffered was derivative. Plaintiffs
conceded Moertl and Spoden lacked standing. However, their
dismissal and the dismissal of Juneau Square Services, Inc., and
Smith is one of the items set forth in plaintiffs’ notice of appeal.
Nevertheless, since plaintiffs did not pursue the matter in their
briefs or at oral argument, we shall not address it.
a —
App. 14
Judge Warren we do not seek to substitute our judgment
for his judgment that a new trial was appropriate. We
seek only to determine whether he abused his discretion.
The court granted a new trial on the basis of four prin-
cipal factors: (1) prejudicial effect of admission of certain
hearsay testimony and evidence, (2) the weight of the
evidence did not establish the conspiracy requisite under
the Sherman Act, (3) an unfair imbalance between the
time allotted to plaintiffs and defendants for presenta-
tion of their respective cases, (4) jury confusion over the
nature of the antitrust claims and the appropriate dam-
ages. In sum, the court concluded, these factors resulted
in a ‘‘miscarriage of justice.’? 435 F.Supp. at 1326."
11 Plaintiffs’ threshold claim is that the court’s grant of a new
trial “in the interest of justice,” a ground not specifically asserted
in defendants’ motion, was effectively a sua sponte grant of a new
trial. They argue that under Fed. R. Civ. P. 59(d), the court
acted without jurisdiction since the order was entered more than
ten days after entry of judgment. Rule 59(d) provides:
On Initiative of Court. Not later than 10 days after entry
of judgment the court of its own initiative may order a new
trial for any reason for which it might have granted a new
trial on motion of a party. After giving the parties notice
and an opportunity to be heard on the matter, the court may
grant a motion for a new trial, timely served, for a reason
not stated in the motion. In either case, the court shall specify
in the order the grounds therefor.
In so arguing, plaintiffs misread the relevant portion of the court’s
order. The court did not grant a new trial for reasons not stated
in defendants’ motion. The court’s statement to the effect that
a new trial is in the interest of justice merely represents its con-
clusion drawn from consideration of the reasons asserted in de-
fendants’ motion. As Professor Wright notes, “Rule 59 gives the
trial judge ample power to prevent what he considers to be a
miscarriage of justice. It is his right, and indeed his duty, to order
a new trial if he deems it in the interest of justice to do so.” 11
C. Wright & A. Miller, Federal Practice and Procedure § 2803
(1973 & Supp. 1979).
App. 15
Plaintiffs separately attack the propriety of Judge
Warren’s consideration of each of the foregoing factors.
In so doing, they rely upon Fed. R. Civ. P. 61, which pro-
vides in pertinent part that harmless trial errors, that is
those that ‘‘do[] not affect the substantial rights of the
parties,’’ are not proper grounds upon which to grant a
new trial. That is an accurate statement of black letter
law, and one with which Judge Warren is undoubtedly
well aware. His conclusion that the trial resulted in a mis-
carriage of justice indicates he did not believe the errors,
in light of the trial setting, the character of the evidence,
and the complexity of the legal issues, were harmless. We
shall consider his findings on that basis only to the extent
necessary to determine whether that conclusion was an
abuse of discretion.
Critical to plaintiffs’ antitrust claims is the establish-
ment of a nexus between First Wisconsin and the sources
of financing that the Corporation pursued. Plaintiffs
sought to establish that nexus by showing that First Wis-
consin deliberately interfered with plaintiffs’ attempts
to secure financing from Metropolitan and New York
Life.2 The core of that interference was, assertedly, the
credit report that Albert Little of First Wisconsin National
Bank orally gave to New York Life upon the latter’s re-
quest at the time the Hast financing proposal was before
the loan committee. Plaintiffs asked the jury to infer that
similar interference blocked their efforts to secure Metro-
politan as a source of financing. At trial, Jack Moertl, one
of the individual plaintiffs and an officer of the Corpora-
12 As the district court noted, 435 F. Supp. at 1321-22, “[w]ith-
out these overt acts, the conspiracy makes little sense in light
ot the fact that both Aetna and Marshall-Michigan granted two
extensions to the plaintiffs in order to permit them to salvage the
project.”
App. 16
tion, testified about a conversation that occurred between
him and a Baird & Warner employee, Jack Cisco, on the
day the New York Life financing plan collapsed. Moertl
testified that Cisco told him that the financing package
fell through because of a credit report from First Wiscon-
sin National Bank that painted a very unfavorable picture
of the integrity of the Corporation’s principals. The
court admitted the testimony on the ground that it was not
offered for the truth of the matters asserted therein and
therefore was not hearsay. Nevertheless, plaintiffs’ coun-
sel in cross-examining Little and Holscher and during clos-
ing arguments repeatedly characterized this testimony as
being indicative of the contents of the credit report.* The
18 Moertl testified that Cisco told him the following:
Your New York Life financing is dead. It has been shot
down. ... Someone has given a credit report to New York
Life Insurance Company that typifies you as crooks. We are
told that we could have just as well sent Al Capone for a
loan to New York Life. * * * * [Y]ou and Mr. Spoden have
been painted as crooks and . . . the financing is dead.
As to the source of this information, Moertl further testified Cisco
told him in that same conversation:
You should know full well where it came from. It came from
the outfit that is building a building next door to you, the
First Wisconsin Bank of Milwaukee.
14 For example, plaintiffs’ counsel tendered the following ques-
tions to Holscher:
Q. That’s a sophisticated way of a sophisticated banker
telling a lender off in New York these people are crooks,
isn’t it?
* * * *
Q. Isn't it a fact, Mr. Holscher, that it takes quite a bit of
thought to draft a report that can kill a project by killing
the developers in the eyes of the lender and still hope to
avoid libels and slanders... ?
Plaintiffs’ counsel added to the prejudicial impact of Moertl’s
testimony :
Q. That is a very sophisticated way of killing a loan, isn’t
it, Mr. Little, isn’t it?
App. 17
jury was thus left with the clear, but highly prejudicial,
impression that Cisco was reporting on behalf of New
York Life the reasons for declining to provide financing.
Plaintiffs’ assertion that Cisco was an agent of New
York Life because his employer, Baird & Warner, was
a New York Life correspondent,“ has no support in
the record. Baird & Warner was acting on behalf of
plaintiffs in these negotiations. In any event, even if
Baird & Warner was acting as New York Life’s agent,
Moertl’s testimony should have been excluded because
there is no suggestion of the source of Cisco’s statements
or whether he was acting within the scope of his agency.
For that reason, plaintiffs’ reliance on Lawlor v. Lowe,
235 U.S. 522 (1915), is misplaced. In a cryptic sentence
in that antitrust case, Justice Holmes wrote that ‘‘[t]he
reason[s] given by customers [to plaintiffs’ salesmen] for
ceasing to deal with sellers . . . were admissible.’’ Id. at
536. Concededly, the customers in Lawlor had first-hand
knowledge of their reasons for refusing to deal. There is
no suggestion that Cisco had any such knowledge. Lawlor
does not support the proposition that a witness may testify
to what a nonwitness said when there is no showing that
the non-witness’ knowledge of the facts is direct or stems
from a reliable source.
We cannot say that the trial court abused its discre-
tion when it concluded that admission of this testimony
at the first trial was not harmless error. All witnesses
connected with New York Life testified that doubts about
Midland National Bank’s capabilities caused the rejec-
tion. Nevertheless, Moertl’s testimony attributed the re-
15 An official of New York Life testified that its correspondents
are under contract to bring investment opportunities to New York
Life’s attention and to service loans that they have instigated.
App. 18
jection to the Little credit report and described the con-
tents of that report in the most inflammatory of terms.
Plaintiffs also introduced a memorandum drafted by
William Lutz, chairman of the New York Life loan com-
mittee. In that memorandum Lutz wrote that Joe Wilford,
a New York Life midwest regional officer, told him that
a source at Baird & Warner informed him that First Wis-
consin had contacted Baird & ‘Warner to inquire whether
the Corporation had any ‘‘clout’’ with New York Life.
The memorandum continued:
[First Wisconsin] apparently made it clear to Baird
& Warner that they didn’t want this building built—
apparently because it would interfere with the timing
of the leasing in their proposed building. Our cor-
respondent [Baird & Warner] conveyed to Joe Wil-
ford the feeling that there were veiled intimidations
[sic] along the lines that First Wisconsin would use
their best efforts to delay or interfere with the con-
struction of this building.
After drafting the foregoing memorandum, Lutz con-
cluded that because of the nature of the statements at-
tributed to First Wisconsin, he should investigate further.
In a subsequent memorandum, he reported that the source
at Baird & Warner ‘‘said there was a misunderstanding—
that the two officers of First Wisconsin Bank were sim-
ply interested in knowing whether the applicants were ac-
tually seeking a loan... .’? Furthermore, Lutz concluded
after speaking with the source’s former employer, the
source ‘‘is considered capable of doing anything to make
a deal.’’
The court admitted the first Lutz memorandum under
the umbrella of the business records exception to the hear-
say rule. Fed. R. Evid. 803(6). Rule 803(6) contains the
proviso that business records are admissible ‘‘unless the
tot ax ~ <2
App. 19
source of information or the method or circumstances of
preparation indicate lack of trustworthiness.’’ One of
the factors the trial court considered in granting a new
trial was the apparent unreliability of the initial Lutz
memorandum. The statements in that memorandum crossed
at least three levels of hearsay. Furthermore, when ques-
tioned directly, the Baird & Warner ‘‘source’’ testified
he had received only general inquiries from First Wiscon-
sin. These considerations coupled with Lutz’ subsequent
disavowment after his personal investigation of the in-
formation contained in the initial memorandum show just
how unreliable that memorandum was in fact. The preju-
dicial nature of the initial memorandum is apparent on
its face. Lutz implicitly charged First Wisconsin with
attempting to block any accord that plaintiffs and New
York Life might have reached on a financing package. We
find no fault and in fact are impressed with Judge War-
ren’s candor in recognizing after the trial that the mem-
orandum should not have been admitted.
Standing alone, the admission of the Moertl testimony
and the Lutz memorandum hardly seems sufficient to war-
rant a new trial. However, as the trial progressed it be-
came more and more apparent that the critical cog in
plaintiffs’ conspiracy theory was First Wisconsin’s alleg-
ed interference with the Metropolitan and New York life
financing packages. Judge Warren examined the evi-
dence regarding the First Wisconsin-Metropolitan contact
and concluded, as was his prerogative, Durant v. Surety
Homes Corp., 582 F.2d at 1087, that Metropolitan had
substantial business reasons for declining to provide fi-
nancing. In addition, there was no evidence that anything
Liek of First Wisconsin National Bank told Metropolitan
was inaccurate. Plaintiffs’ theory therefore reduced itself
to reliance upon the alleged impropriety of the credit re-
App. 20
port that Albert Little conveyed to New York Life and
New York Life’s subsequent decision not to finance Kast.
Plaintiffs asked the jury to infer that similar ‘‘interfer-
ence’’ occurred at Metropolitan. The Moertl testimony and
the Lutz memorandum were the only evidence of the causal
relationship between the credit report and New York Life’s
declination of financing. Its admission therefore was most
certainly not harmless.
The trial judge, sitting at a much better vantage than
this court, relied on the foregoing and a number of other
factors to conclude that the verdict in the first trial rep-
resented a miscarriage of justice. Some of the other
factors he pointed to were a gross imbalance in the time
allotted to the parties, jury confusion about the legal
theories upon which plaintiffs offered certain items of
evidence and about the nature of proof required to
award damages, and confusing and erroneous instruc-
tions. We need not consider each factor separately to
determine whether we would have granted, were we sit-
ting as trial judges, a new trial on the basis of each. As
we said before, our review is limited to the question
whether the trial judge’s conclusion that a miscarriage
of justice occurred was an abuse of discretion. If a single
ground supports the new trial order, it is not reversible.
Hanson v. Shell Oil Co., 541 F.2d 1352, 1359 (9th Cir.
1976), cert. denied, 429 U.S. 1074 (1977); Nuttall v.
Reading Co., 235 F.2d 546, 548 (3d Cir. 1956). We are
convineed that Judge Warren did not abuse his discre-
tion in granting a new trial solely on the basis of the
factors we have discussed. We have examined the
remaining factors upon which Judge Warren relied and
they indicate that he was remarkably thoughtful and
candid in evaluating the prejudice that certain of his
actions may have caused defendants.
App. 21
Il.
Following entry of the order granting defendant’s mo-
tion for a new trial, the parties participated in a second
trial before the same court. This time the jury found for
defendants. Asserting that numerous errors occurred at
that trial, plaintiffs appeal to this court to order a third
trial.
A. Restraint of Trade
During the second trial, the court informed the parties
of its intention to instruct the jury that ‘‘proof of spe-
cific public injury is not required.’’ It is sufficient, the
planned instruction read, for plaintiffs to show that the
restraint ‘‘tends or is reasonably calculated to prejudice
the public interest.’’ On the morning of the final day of
argument, the court informed the parties that it was
{aking under advisement one of defendants’ proposed in-
structions that it had earlier rejected. That proposed in-
struction reads:
Congress did not intend the antitrust laws to pro-
vide a remedy in damages for all injuries that might
conceivably be traced to an antitrust violation. In
order to recover under Section 4 of the Clayton Act
the plaintiffs must demonstrate that there was injury
to competition, not merely injury to a competitor,
and that the injury resulted not simply from the
violation alleged but reflects the anticompetitive effect
either of the violation or of anticompetitive acts made
possible by the violation. I instruct you that the
antitrust laws were enacted for the protection of
competition, not competitors. Therefore, you must
find in favor of the defendants unless plaintiffs have
proven that defendants’ acts injured not only Juneau
Square Corp. and/or the other plaintiffs, but com-
petition in the Milwaukee office rental real estate
market as well.
App. 22
As a threshold matter, plaintiffs assert that they did
not have a reasonable opportunity to argue the inappro-
priateness of the proposed instruction or an opportunity
to argue the evidence to the jury in terms of the revised
instruction. The record indicates, however, that Judge
Warren offered plaintiffs ample opportunity to object to
any of the instructions. Plaintiffs took advantage of
that opportunity to object to the substantive law stated
in the instruction but did not object to the timing of the
change. That latter failure precludes plaintiffs from ob-
jecting now to Judge Warren’s timing. Plaintiffs, how-
ever, did interpose timely objection to the substantive
accuracy of the proposed instruction; the question of
the substantive accuracy of the instruction that was ac-
tually given is therefore properly before us.
There is some merit to plaintiffs’ assertion that the
proposed instruction is not an accurate statement of the
law. Although it clearly states plaintiffs’ burden of
showing public injury, it does not mention that that
burden may be met by evidence that defendants’ conduct
tended to or was reasonably calculated to prejudice the
public interest. Were the proposed instruction actually
given, we might be constrained to reverse. But contrary
to plaintiffs’ contention, the instruction given did not
make the same omission. Apparently to avoid the precise
problem plaintiffs find in the proposed instruction, the
court trimmed its language and clarified the method by
which plaintiffs could meet their burden. The court
read the following instruction:
The term ‘‘restraint of trade,’’ which must be the
objective or effect of any contract, combination or
conspiracy condemned by the anti-trust laws con-
templates only an unreasonable restraint of trade.
The law recognizes that it may be impossible to
App. 23
conduct a business without in some degree restrain-
ing trade. The antitrust laws were enacted for
the protection of competition, not competitors. The
plaintiffs must, therefore, establish that the de-
fendants’ acts injured not only the plaintiffs them-
selves, but competition in the leasing of office rental
space in the central business district of the City
of Milwaukee.
The plaintiff is not entitled to recover in this case
by showing concerted activities of the defendants
restrained interstate commerce to some degree, they
must show that there was an unreasonable restraint.
A restraint is unreasonable if it tends or is rea-
sonably calculated to prejudice the public interest... .
[T]he plaintiff may not recover unless you find an
unreasonable restraint by a preponderance of the evi-
dence as defined in these instructions. (emphasis
added)
The italicized portion of the instruction correctly states
plaintiffs’ burden of showing that defendants’ actions
tended or were reasonably calculated to prejudice the public
interest, which, as the first subparagraph of the instruc-
tion correctly states, lies in free and open competition
in the CBD office rental market.
In another instruction, the court, over defendants’ ob-
jection, instructed the jury that the purpose of the Sher-
man Act is ‘‘to preserve and advance our system of free
competitive enterprise and to encourage to the fullest
extent practicable free and open competition in the
marketplace.’’ An adverse effect upon competition,
however small, is the distinguishing characteristic of a
restraint of trade in contrast to a business tort. We have
little trouble imagining the possible confusion of a juror
struggling with the distinction between these two un-
lawful acts. ‘Without the instruction given, the court’s in-
struction on the purpose of the Sherman Act likely
App. 24
would have misled the jury into believing that it could
find for plaintiffs upon a showing that nothing more
than a business tort occurred. The Sherman Act re-
quires more than mere injury to a competitor. Plaintiffs
must show also that the ‘‘effect upon competition in the
marketplace is substantially adverse.’’ United States v.
Arnold, Schwinn & Co., 388 U.S. 360, 375 (1967); see
Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36
(1977) ; Magnus Petroleum Co. v. Skelly Oil Co., 599 F.2d
196, 204 (7th Cir.), cert. denied, ...... US. ...... (1979) ; Lee
Klinger Volkswagen, Inc. v. Chrysler Corp., 583 F.2d
910, 914-15 & n.6 (7th Cir.), cert. denied, 439 US. 1004
(1978). The instruction is thus a fair statement of the
law phrased in language fair to both parties. Absent the
instruction, the jury might have been led to believe by
the other instruction that it could award damages for in-
juries arising from conduct that had no impact on the
relevant market merely because plaintiffs and defen-
dants were competitors in that market.
Gas Light & Coke Co., 364 U.S. 656 (1961), and Klor’s
Plaintiffs’ reliance on Radiant Burners, Inc. v. Peoples
Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207 (1959),
for the proposition that it need not show actual injury to
competition is misplaced. Those cases involved group
boycotts, a per se antitrust violation. Wnlike the present
case, which was properly analyzed using the rule of rea-
son, see pp. 24-25 infra, per se violations are by nature
presumed to have a ‘‘pernicious effect on competition.”’
Northern Pacific Railway v. United States, 356 U.S. 1, 5
(1958). Absent that presumption, the instruction given in
this case properly apprised the jury of plaintiff’s burden.
B. Aetna
Plaintiffs next challenge as error the court’s instruc-
tion to the jury that ‘‘you may not find that Aetna Life
Insurance Company was a member of the alleged con-
App. 25
spiracy.’’ At the core of plaintiffs’ chailenge is its asser-
tion that when Judge Warren ordered a new trial, he
should have included all parties. (The jury in the first
trial found in favor of Aetna.) As we have noted else-
where in this opinion, see p. 12 supra, appellate review
of the grant of a new trial motion is exceedingly limited.
That same standard—abuse of discretion—defines our re-
view of the denial of a new trial motion. Vizzini v. Ford
Motor Co., 569 F.2d 754, 759 (3d Cir. 1977).
The grant of a new trial to a party who has received an
adverse verdict does not require the grant of a new trial
to a party who has received a favorable verdict. Somer-
ville v. Capital Transit Co., 192 F.2d 413 (D.C. Cir. 1951),
cert. denied, 342 U.S. 941 (1952). The factors that the
trial court relied upon in granting a new trial to the other
defendants were prejudicial to all defendants, including
Aetna, and therefore tended to reinforce the verdict in
favor of Aetna. Under these circumstances, plaintiffs are
hardpressed to contend that Judge Warren abused his dis-
cretion by not ordering Aetna to stand trial again. The
instruction here challenged was therefore not in error.
Were plaintiffs’ theory to prevail in the kind of case pre-
sented here, Fed. R. Civ. P. 59(a), which specifies that a
trial court may order a new trial as to ‘‘all or any of the
parties and on all or part of the issues,’’ would be emascu-
lated.*®
Plaintiffs further argue that even if the trial court did
not err in precluding the jury from finding that Aetna
was a conspirator, it did err in forbidding plaintiffs from
16 The question of the participation by any one party in an al-
leged conspiracy is a separable issue that is not intertwined with
the question of participation by other parties in such a way to
require a new trial for all where a new trial is granted to some.
United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 247
(1940).
App. 26
arguing or the jury from finding that Aetna was controlled
and manipulated by the other defendants. Although plain-
tiffs had not previously relied upon this theory, they con-
tend the tria! judge should have read their third amended
cumplaint with greater breadth. We have examined that
complaint and find nothing there supportive of plaintiffs’
argument. Their theory throughout the case was that
Aetna was a conspirator, not the unwilling dupe of other
defendants. The trial judge correctly recognized that such
an assertion would require further amendment of the com-
plaint. We see no error in the decision to deny the motion
for leave to amend after commencement of the second
trial and five years since the filing of the original com-
plaint. Plaintiffs’ attempt to do so is little more than an
attempt to undercut the verdict in favor of Aetna in the
first trial. In any event, plaintiffs are unable to point to
any prejudice they suffered as a result of the foreclosure
of their ‘‘control and manipulate’’ argument. Plaintiffs
remained free to, and in fact did, present evidence that
First Wisconsin interfered with plaintiffs’ attempt to se-
cure financing from Aetna. Short of permitting relitiga-
tion of Aetna’s complicity in the alleged conspiracy, the
court allowed plaintiffs substantial room both in argument
and in the introduction of evidence.
Plaintiffs contend also that the court erred in instruct-
ing the jury that insufficient evidence was presented upon
which to find that Aetna’s declination of financing for East
was due to the alleged conspiracy. We disagree. There
was no evidence that either Aetna or Shapiro knew that
First Wisconsin was Shapiro’s principal. Even more tell-
ing is the fact that Aetna rejected plaintiffs’ financing ap-
plication one week before the Shapiro contact in 1969. The
1972 contact between Aetna and First Wisconsin occurred
after foreclosure of plaintiffs’ interest in the project.
Plaintiffs contend that notwithstanding the foregoing,
the instruction foreclosed jury consideration of the pos-
App. 27
sibility that First Wisconsin may have attempted to inter-
fere with the proposed financing. Our reading of the care-
ful language of the instruction is that it foreclosed con-
sideration of the causation question only. There is no
suggestion in the instruction that the jury should not con-
sider whether First Wisconsin attempted to interfere with
the financing package.
C. Per Se Rule
The trial court refused plaintiffs’ request that the jury
be instructed that the use of unfair methods of competi-
tion to further a conspiracy to destroy the business of a
competitor is per se violutive of section one of the Sher-
man Act, Plaintiffs’ theory is rooted in Albert Pick-Barth
Co. v. Mitchell Woodbury Corp., 57 F.2d 96 (1st Cir.),
cert, denied, 286 U.S. 552 (1932). The Pick-Barth rule,
once accepted in the First Circuit, Atlantic Heel Co. v.
Allied Heel Co., 284 F.2d 879 (1st Cir. 1960); but see
George R. Whitten, Jr., Inc. v. Paddock Pool Builders,
Inc., 508 F.2d 547 (1st Cir. 1974), cert. denied, 421 U.S.
1004 (1975), and in the Tenth Circuit, Perryton Wholesale,
Inc. v. Pioneer Distributing Co., 353 F.2d 618 (10th Cir.
1965), cert. denied, 383 U.S. 945 (1966), has never been
accepted by this circuit and we decline to adopt it today.
The definition of ‘‘unfair methods”’ is simply too amor-
phous a basis upon which to predicate a departure from
the rule of reason. See Northwest Power Products, Inc.
v. Omark Industries, Inc., 576 F.2d 83, 88 (5th Cir. 1978),
cert, denied, 439 U.S. 1116 (1979). We follow instead the
mandate of the Supreme Court that such departures ‘‘be
based upon demonstrable economic effect rather than upon
formalistic line drawing.’’ Continental T.V., Inc. v. GTE
Sylvania Inc., 483 U.S. at 59. In view of the variety of
practices—and resulting economic effects—-that conceiva-
bly may be characterized as unfair methods of competi-
App. 28
tion, see Developments in the Law—Competitive Torts,
77 Harv. L. Rev. 888 (1964), the determination whether a
practice or practices challenged solely on this basis is cog-
nizable under the Sherman Act is better left to the more
particularized consideration possible under the rule of
reason,
We fully concur with Judge Roney’s observation in
Northwest Power Producis, 576 F.2d at 90, that ‘‘the line
drawn by the Pick-Barth doctrine is so vague, and the cir-
cumstances in which its application manifests any injury
to competition so dependent on individual facts that it
does not merit the per se characterization some of the
early cases give it.’’ See also Stifel, Nicolaus & Co. v.
Dain, Kalman & Quail, Inc., 578 F.2d 1256, 1260-62 (8th
Cir. 1978). The trial judge properly refused plaintiffs’
tendered instruction.
Plaintiffs raise numerous other objections to sundry
jury instructions, evidentiary rulings, and to the court’s
conduct of the trial. We have given each of those objec-
tions thorough consideration and find none to be meri-
torious. In light of that consideration and the foregoing
discussion, we shall affirm the jury verdict in favor of
defendants in the second trial.
IV.
Upon completion of plaintiffs’ case-in-chief at the first
trial, the court granted defendants’ motions for directed
verdicts on plaintiffs’ claims under section two of the
Sherman Act. In ruling on those motions, the trial court
and now this court on appeal are constrained to view the
evidence in the light most favorable to plaintiffs.
It is well-established that the elements of a Sherman
Act section two monopoly offense are ‘‘(1) the possession
of monopoly power in the relevant market and (2) the
willful acquisition or maintenance of that power as dis-
tinguished from growth or development as a consequence
App. 29
of a superior product, business acumen, or historic acci-
dent.’’ United States v. Grinnell Corp., 384 U.S. 563, 570
(1966); see also Photovest Corp. v. Fotomat Corp., 606
F.2d 704, 711 (7th Cir. 1979), cert. denied, ...... Ses csc
(1980). At trial, plaintiffs asserted that the relevant mar-
ket was the CBD and that the product was readily avail-
able office space. The court accepted these definitions for
purposes of ruling on the motions, as we do for purposes
of reviewing the propriety of granting them. Within this
market, the court found, plaintiffs failed to present any
proof tending to establish that defendants possessed sub-
stantial power in this market, and, therefore, plaintiffs
failed to satisfy their burden on the first Grinnell require-
ment.
Although plaintiffs now seek to place a figure next to
defendants’ market share, they did not seek to do so at
trial. There plaintiffs asserted that establishment of a
specific market share is only one way to determine wheth-
er defendants possess monopoly power, 1#.e., the power to
control prices or to exclude competition. United States v.
E.I. Du Pont De Nemours & Co., 351 U.S. 377 (1956). That
proposition is well-established in the law. See United
States v. Columbia Steel Co., 334 U.S. 495, 527-28 (1948) ;
Kearney & Trecker Corn. v. Giddings & Lewis, Inc., 452
F.2d 579, 597-98 (7th Cir. 1971), cert. denied, 405 U.S.
1066 (1972). Plaintiffs, however, after asserting their
right to establish market power in other ways, failed to
do so, which resulted in the directed verdicts.
Plaintiffs’ evidence of market power took two forms.
First, they presented an expert witness who testified that
he was uncertain of the power held by other lessors of
office space in the CBD. Absent any indication of defen-
dants’ market share and the experts’ uncertainty about
the strength of defendants’ competitors the trial court was
quite clearly correct in preventing this speculative issue
from reaching the jury. Since section two imposes liabil-
ity for a monopolist’s status and not necessarily his con-
App. 30
duct, a much more rigorous showing is required. Second,
plaintiffs offered a market study prepared by an organiza-
tion identified only as ‘‘Urban Investment and Develop-
ment Company’’ and submitted to the ‘‘Milwaukee Devel-
opment Group.’’ Even assuming the relevance of that
1975 study, it provides little support for plaintiffs’ theory.
They argue before this court for the first time that the
study indicates that First Wisconsin holds a seventy per-
cent share of the relevant market. The problem in accept-
ing this or any figure derived from the study is that only
‘‘major’’ office buildings are included. The study, how-
ever, lacks any definition of that term or any indication
of the quality and quantity of office space within the rele-
vant market that is not contained in ‘‘major’’ buildings.
Any market share calculated on such an imprecise base is
simply too speculative to reach the jury."
V.
We have considered and rejected as lacking merit the
remaining assertions of error that plaintiffs raise. For
all of the foregoing reasons, the judgment of the district
court in favor of defendants is affirmed.
AFFIRMED.
17 The trial court also granted directed verdicts against plain-
tiffs under section two of the Sherman Act on their attempt to
monopolize and conspiracy to monopolize claims. As to the
attempt claim, the absence of evidence on First Wisconsin’s market
share also makes consideration of its likelihood of success, see
Photovest Corp. v. Fotomat Corp., 606 F.2d at 711, a highly
speculative venture and one the court properly kept from the
jury. Plaintiffs were not prejudiced by the directed verdict on
the conspiracy to monopolize claim. A conspiracy to monopolize
would necessarily constitute a conspiracy in restraint of trade
under section one of the Sherman Act. Plaintiffs were free in
the second trial to prove 2 conspiracy in restraint of trade and
were not precluded from presenting any evidence as a result of
the directed verdict. Moreover, the jury could not have found a
conspiracy to monopolize while finding, as it did, that there was no
conspiracy in restraint of trade.
App. 31
District Court Memorandum and Order Granting and
Denying Defendants’ Motions for Directed Verdict
(First Trial)
UNITED STATES DISTRICT COURT
EASTERN DIVISION OF WISCONSIN
Case No.72-C-533
JUNEAU SQUARE CORP., et al.,
Plaintiffs,
vs.
FIRST WISCONSIN NATIONAL BANK OF
MILWAUKEE, et al.,
Defendants.
MEMORANDUM AND ORDER
At the conclusion of plaintiffs’ case in chief, defen-
dants moved for directed verdicts pursuant to rule 50
of the Federal Rules of Civil Procedure. Defendants
have set forth various grounds in support of the afore-
stated motions in urging the Court to find that there is
insufficient evidence in the record upon which the jury
could properly find a verdict for plaintiffs. In review-
ing the record, the Court is precluded from weighing the
App. 32
evidence or passing upon the credibility of witnesses or
substituting its judgment for that of the jury. See, Wright
& Miller, Federal Practice and Procedure: Civil § 2524
at 543. The Court must in effect view the evidence in a
manner favorable to the plaintiffs and draw all reason-
able inferences in support of plaintiffs’ case. Continental
Co. v. Union Carbine, 370 U.S. 690 (1962); Valdes v.
Karoll’s, lnc., 277 F.2d 637 (7th Cir. 1960).
Notwithstanding the foregoing, it is clear that more
than a ‘‘scintilla of evidence’’ is required to overcome
a motion for a directed verdict. Gunning v. Cooley, 281
U.S. 90 (1930); Hubert v. May, 292 F.2d 239 (7th Cir.
1961). Defendants therefore need not show that there is
140 evidence supporting plaintiffs’ claims but only that
there is insufficient evidence upon which the jury could
properly find a verdict.
After reviewing relevant portions of the trial tran-
script, the exhibits, and the briefs submitted in support
uf and in opposition to defendants’ motions, and having
been duly advised in the premises thereto, the Court is
of the opinion that the motions must be granted in part
and denied in part accordance with the following
memorandum opinion.
I.
The Aetna Life Insurance Company (Aetna)! bases its
motion for a directed verdict upon, inter alia, the lack of
proof of ‘‘knowing participation’’ or a ‘‘conscious aware-
ness’’ on the part of Aetna in any scheme or conspiracy
either in restraint of trade or of monopolization. Aetna
concedes for the purposes of this motion that the other
1 Plaintiffs concede that a directed verdict should be entered in
favor of the other Aetna defendant, the Aetna Casualty & Surety
Company, on the basis of insufficient proof in the record.
App. 33
defendants may have combined or conspired in violation
of the antitrust laws of the United States but urges that
there is a complete absence of any evidence implicating
Aetna in that conspiracy.
In fact, Aetna notes that the record does not contain
evidence of a single communication between Aetna and
the First Wisconsin defendants during the relevant pe-
riod and that it was only after plaintiffs had been fore-
closed that a lawful mortgage agreement was reached
with the alleged conspirators.
Plaintiffs vigorously challenge this assertion and rely
upon the proposition that the prior acts of conspiracy
on the part of the other defendants are attributable to
Aetna because of its subsequent participation in the con-
spiracy even as late as 1972. Cf. United States v. Mar-
tinez, 481 F.2d 214 (5th Cir. 1973); Van Riper v. United
States, 13 F.2d 961 (2nd Cir. 1926). It is clear that plain-
tiffs rely heavily on circumstantial evidence and the in-
ferences drawn therefrom to sustain their claim of con-
spiracy. As there is no direct evider:e of an agreement
cn Aetna’s part to restrain trade or to monopolize with
the named conspirators, the Court must carefully review
the circumstantial evidence in the record.
Plaintiffs first rely upon Aetna’s refusal to finance the
third phase of the Juneau Square Project referred to as
Juneau Square Kast by its promoters. The record clear-
ly indicates that Aetna expressed an interest in the entire
project and as late as early 1969 contemplated the financ-
ing of Juneau Square Hast. Aetna financed the first two
phases of the project and agreed to a moratorium on
principal payments under the existing mortgage in 1967.
The moratorium was designed to pay for the renovation
of portions of the existing project and provide additional
App. 34
funds for the acquisition and development of phase III.
Plaintiffs subsequently expended in excess of $600,000.00
in preparation for the anticipated development of phase
Iil. From the foregoing, the jury could readily infer
that Aetna had expressed an interest in Juneau Square
East and had represented to plaintiffs that it had every
intention of financing Juneau Square Kast.
The evidence also indicates that by early 1969 plain-
tiffs were in default under the existing mortgage by vir-
tue of unpaid taxes in the amount of $245,000.00. The
acknowledged undercapitalization of the entire project
of which Aetna was clearly aware because of the mora-
torium on principal payments made in 1967 and this now
rather substantial default under the existing mortgage
are evidence from which the jury could readily infer that
Aetna had substantial business justifications for refusing
to finance the third phase of the Juneau Square project.
Whether Aetna desired to remain in the project if new
owners were found is another question. The jury could
reasonably infer a continuing interest in the existing
project by Aetna’s refusal of the Shapiro offer discussed
below.
At the same time that Aetna was reaching its decision
to deny financing, the First Wisconsin defendants had
decided to acquire the Juneau Square Project. Pursuant
to this plan, a Chicago attorney (Shapiro) was instructed
to contact Aetna to seek their assistance in the contem-
plated acquisition or at the very least to acquire the exist-
ing mortgage on the project.* Although there is a factual
2 There is a factual dispute in the record as to the instructions
given to Shapiro and his interpretation of those instructions. The
written memorandum suggests that ownership of the project was
sought through Aetna’s assistance. Shapiro testified that he merely
inquired as to Aetna’s interest in selling the mortgage.
App. 35
dispute as to the nature of the plan as construed by the
various agents of the First Wisconsin defendants, there
is little dispute as to what occurred at that meeting.
Aetna expressed no interest in the Shapiro overture. As
it is undisputed that Shapiro was unaware that he repre-
sented the First Wisconsin defendants, there is no evi-
dence in the record from which the jury could properly
find that Aetna had knowledge of First Wisconsin’s in-
terest in the project at this time. The Court, therefore,
is of the opinion that the Shapiro contact failed to establish
knowledge or agreement on the part of Aetna to join the
alleged conspiracy.
Plaintiffs next argue that even if Aetna did not join
the conspiracy as a result of the Shapiro contact, Aetna’s
subsequent conduct provides ample evidence that Aetna
had joined the conspiracy at some point after that initial
contact. Critical to this claim is the fact that Aetna’s
mortgage covered a portion of the property necessary for
the development of phase III. In order to obtain financ-
ing, plaintiffs required the cooperation of Aetna in order
to obtain a release or ‘‘air rights’’ agreement. With
Aetna’s denial of financing, plaintiffs set out to obtain
alternate financing and simultaneously offered $250,000
in exchange for a release and later agreed in principal
to an offer of $295,000. Aetna rejected this offer and
suggested in lieu thereof an ‘‘air rights’’ agreement.
Aetna’s conduct in refusing to grant a release is in-
consistent with the prior course of dealings between the
parties over the previous eight years. Moreover, it ag-
gravated the already serious financial situation of the
Juneau Square promoters. Aetna may have had suff€cient
business justifications for refusing to finance Juneau
Square Hast in light of the economic instability of the ex-
isting project, but this Court is unable to find any justifi-
App. 36
cation for the almost predatory attitude of Aetna in re-
fasing to grant a release at this crucial time. There is
evidence in the record upon which the jury could prop-
erly find that Aetna, which had encouraged the promoters
from the outset, was now becoming uncooperative.
There is again no direct evidence that Aetna had knowl-
cdge of First Wisconsin’s interest in the project. The
jury could nonetheless reasonably infer that a change of
attitude had occurred at Aetna; Aetna was not only not
cooperating, but was in fact frustrating the efforts of the
Juneau Square promoters. The critical question here is
why the chenge in attitude? Did Aetna in fact have
knowledge of the conspiracy and reach some understand-
ing with the »ther named conspirators?
The timing of events is of critical significance. Aetna
was aware that plaintiffs were in the process of arranging
financing with the Metropolitan Life Insurance Company
in New York at this time. On September 30, 1969, Metro-
politan agreed that an air rights agreement would suffice.
The following day plaintiffs met with Aetna to work out
an air rights agreement. Instead of proceeding ahead,
Aetna requested a ‘‘parking analysis’’ prior to the for-
mulation of any agreement. With knowledge of the im-
pending financial arrangement with Metropolitan, Aetna
had to be aware of the consequences of further delay and
the jury could so infer. Under the circumstances, a park-
ing analysis may have been justified, but Aetna insisted
that preparation for the air rights agreement be delayed.
In this regard, plaintiffs were subsequently advised by
Walsh who was an Aetna official that ‘‘we [Aetna] never
intended to give you an air rights agreement.’’ [T. 1433-
1435, 1441, 1443] This is yet another indication of Aetna’s
frustration of the financing of phase ITI.
App. 37
Again, the crucial question here is what is the motiva-
tion behind the lack of cooperation on the part of Aetna?
There is no direct evidence that Aetna had joined in the
plan of the First Wisconsin defendants to obtain the
Juneau Square Project, but the circumstantial evidence
tv that effect cannot be discounted. 'There is evidence
that First Wisconsin had publicly announced its inten-
tion to acquire some of the parcels of land adjacent to
the Project. The public announcement does not of course
reveal First Wisconsin’s plan to acquire the Juneau
Square project and, therefore, is of little probative value
on the issue of whether Aetna had knowledge of the ex-
istence of the alleged conspiracy.
Plaintiffs next point to the fact that Aetna sent its fore-
closure papers in October 1969 to the law firm of Foley
& Lardner in Milwaukee. Foley & Lardner represented
both Marshall-Michigan and the First Wisconsin defend-
ants. Aetna’s agent testified that the foreclosure papers
were sent in the ‘‘blind,’’ i.e. sent without prior contact by
merely selecting one of the law firms in the area from
Martindale-Hubbell. Plaintiffs argue that in light of the
other circumstantial evidence in the record, the jury could
find that this constituted a conspiratorial act.
Standing alone, the improvident selection of Foley &
Lardner could be construed as merely coincidental although
the size of the loan and the apparent concern of Aetna
over the default raise serious questions about the selec-
tion procedure. Coupled with the less than cooperative at-
titude of Aetna towards the Juneau Square promotors, the
act takes on added significance. Is this additional evidence
from which the jury could find that by this point in time
Aetna had reached a tacit understanding with the other
named conspirators?
App. 38
The next event which occurred was the loss of the Metro-
politan financing. There is evidence of a communication
from a First Wisconsin official but there is again no direct
evidence linking Aetna with that communication. Again,
however, the timing of the loss of the Metropolitan financ-
ing is of critical importance. Aetna’s refusal to grant a
release or air rights agreement parallels the conduct of
the other conspirators who were in a position to interfere
with the financing efforts of plaintiffs. The timing of
events is highly circumstantial, but the weight to be ac-
corded such evidence is a question for the trier of fact.
After Aetna commenced its foreclosure action, Marshall-
Michigan prepared a check for $245,000 payable to Aetna
to cure the default on the Aetna mortgage. New York
counsel for Marshall-Michigan came to Milwaukee with the
check and conferred with a member of the law firm of
Foley & Lardner. At that time, they were advised of the
interest of the First Wisconsin defendants in acquiring
the Juneau Square Project. The dual role of the attorneys
from Foley & Lardner in representing both Marshall-Mich-
igan and the First Wisconsin defendants is highly proba-
tive of the issue of knowledge on the part of Marshall-
Michigan.
The subsequent tender of the check was conditional and
in effect provided for a security priority senior to the Aet-
na mortgage. The tender was rejected and a series of
meetings between Aetna and Marshall-Michigan were ar-
ranged to work out an agreement as to the course of ac-
tion to be followed in light of the pending foreclosure ac-
tion. Marshall-Michigan’s mortgage which was in a high
risk position in light of the substantial senior Aetna mort-
gage, provided substantial motivation on the part of Mar-
shall-Michigan to cooperate with the First Wisconsin de-
fendants, and the jury could so infer. In fact, Marshall-
*
App. 39
Michigan eventually managed to salvage a substantial por-
tion of its initial investment.
The agreement provided as follows (Ex. 318 B):
We agreed that Marshall-Michigan and Aetna would
enter into an informal agreement whereby Marshall-
Michigan would pay the 1968 delinquent taxes as well
as all penalties accrued, make monthly deposits for
real estate taxes for 1969 and subsequent years, and
agree to pay Aetna the regular monthly installments
of interest and principal. In its turn, Aetna would
agree to maintain its foreclosure action until such time
as Marshall-Michigan obtains judgment. At this point,
we would drop our action assuming that we were as-
sured that there was no possibility that Juneau Square
Corp. could seek protection through the bankruptcy
court in the unlikely event that Marshall-Michigan
was subsequently to drop its foreclosure action.
As a result of this agreement, Marshall-Michigan com-
menced its own foreclosure action. Plaintiffs claim that
this agreement is plainly conspiratorial and attribute an
ulterior motivation to Aetna. That motive is the exist-
ence of a defense to the Aetna foreclosure based upon a
theory of equitable or promissory estoppel. That defense
was not available to plaintiffs in the Marshall-Michigan
foreclosure action.
As previously noted, Marshall-Michigan had knowledge
of First Wisconsin interest in the project and was in a
position to convey that knowledge to Aetna. While it is true
that the agreement does not refer to the ultimate disposi-
tion of the property or the plan of the First Wisconsin de-
fendants to acquire the existing project, the question is
whether the jury could infer from all the evidence in the
record that some ‘‘understanding”’ to that effect had been
reached. Of particular significance in this regard is the
App. 40
fact that almost immediately after the foreclosure of plain-
tiffs’ interest in the project, Marshall-Michigan salvaged
a substantial portion of its initial investment and Aetna
reached a favorable mortgage agreement with the First
Wisconsin defendants.
Plaintiffs resisted the Aetna foreclosure and ultimately
two agreements were reached. Although Aetna claims
that the settlement agreements were favorable to plain-
tiffs, the fact remains that in exchange Aetna obtained a
waiver of plaintiffs’ equitable defenses and redemption
rights and a financing deadline after which it could enter
a default judgment. During the critical financing periods,
plaintiffs sought an air rights agreement; Aetna failed to
provide the necessary agreement or delayed meeting the
request until the financing had fallen through.
At the same time, there is evidence of knowledge on the
part of the First Wisconsin defendants of the various
financing efforts of the Juneau Square promoters and
communications from these defendants to some of the po-
tential sources of alternate financing. These communica-
tions invariably occurred at the latter stage of the financ-
ing effort and were inexplicably followed by a loss of the
sought after mortgage commitment. The timing of events
is again critical to plaintiffs’ case. As there is no explicit
agreement setting forth the respective roles of the alleged
conspirators, the jury could infer that the parallel conduct
of the defendants was purely coincidental and not pursu-
ant to a common scheme or understanding. Nonetheless,
the jury could also infer to the contrary.
Shortly after the foreclosure of plaintiffs’ interests,
Marshall-Michigan sold its interest to Marshall-Wisconsin,
a subsidiary of the First Wisconsin Corporation. Mar-
shall-Wisconsin then entered into discussions with Aetna
which resulted in a favorable mortgage agreement. This
agreement is the first direct evidence of any agreement or
App. 41
for that matter of any communication between Aetna and
the First Wisconsin defendants. It is plaintiffs’ position
that the jury could infer the existence of and knowing par-
ticipation in a conspiracy on the part of Aetna as a result
of this final agreement and the circumstantial evidence of
conspiratorial conduct which preceded the final agreement.
The final agreement embodies plaintiffs’ theory of the
conspiracy.
Assuming that there is evidence in the record from which
the jury could properly infer the existence of a conspiracy
among the other named defendants, the pivotal question is
whether the conduct as detailed above is sufficient to impli-
cate Aetna in that conspiracy. Although the question is
not free from doubt, the Court is of the opinion that there
is more than the scintilla of evidence necessary to overcome
a motion for a directed verdict.
The evidence is admittedly of a highly circumstantial
nature, but the Court is hesitant to substitute its judgment
for that of the jury. The parallel conduct of the various de-
fendants which is consistent with a common scheme or plan
to eliminate the Juneau Square promoters could be the re-
sult of pure coincidence. On the other hand, it could also
be the result of a conspiracy in restraint of trade. The
fact that there is no evidence of an express agreement be-
tween the parties is not fatal to plaintiffs’ case.
In United States v. General Motors, 384 U.S. 127, 142
(1966), the Court stated:
It is of no consequence, for purposes of determining
whether there has been a combination or conspiracy
under § 1 of the Sherman Act, that each party acted
in its own lawful interest. ... it has long been settled
that explicit agreement is not a necessary part of a
Sherman Act conspiracy—certainly not where, as here,
joint and collaborative action was pervasive in the in-
itiation, execution, and fulfillment of the plan.
App. 42
The jury could infer that at some unknown point in time
the parties reached an understanding or agreement because
of the timing of events and related conduct of the various
defendants. Aetna’s motion for a directed verdict as it
relates to the claims in restraint of trade must therefore
be DENIED.
IL.
After reviewing portions of the transcript, various ex-
hibits and the briefs submitted in support of and in oppo-
sition to the motions of Marshall-Michigan and the First
Wisconsin defendants as they relate to the claims in re-
straint of trade, and having been duly advised in the prem-
ises thereto, the Court is of the opinion that there is suf-
ficient evidence in the record upon which the jury could
properly find a verdict for plaintiffs. Although the issue
is not free from doubt with regard to Marshall-Michigan,
the Court is hesitant to substitute its judgment for that
of the jury. If the Court were the trier of fact, perhaps a
different result would have been reached, but here the
Court’s role is severely limited as noted in part I of this
memorandum opinion.
III.
Defendants’ claim that there is insufficient evidence in
the record from which the jury could properly find the
existence of monopolization or an attempt to monopolize
on the part of the First Wisconsin defendants or a con-
spiracy to monopolize on the part of the other defendants.
Plaintiffs concede that there is insufficient evidence to
support a claim of monopolization or an attempt to monopo-
lize on the part of Aetna or Marshall-Michigan.
Although the First Wisconsin defendants challenge
plaintiffs’ definition of relevant market and defined prod-
App. 43
uct,* they principally rely upon the lack of proof of mon-
opoly power within the relevant market. It is clear that
‘*the offense of monopoly under § 2 of the Sherman Act has
two elements: (1) the possession of monopoly power in the
relevant market and (2) the willful acquisition or mainte-
nance of that power as distinguished from growth .. .’’
United States v. Grinnell Corp., 384 U.S. 563, 570 (1966).
Monopoly power is defined as the power to control prices
or exclude competition. United States v. Dupont & Co.,
351 U.S. 377 (1955).
Monopoly power is assessed by the percentage share of
the relevant market as the existence of a substantial mar-
ket share is highly probative of the alleged monopolist’s
ability to control prices or to exclude competition. Al-
though the Supreme Court has never adopted a set stand-
ard, Judge Hand in United States v. Aluminum Co. of
America, 148 F.2d 416, 424 (2d Cir. 1945), established
guidelines which have been generally accepted as an ac-
curate measure of monopoly power:
[Ninety percent] is enough to constitute a monopoly;
it is doubtful whether sixty or sixty-four percent would
be enough; and certainly thirty-three percent is not.
The Seventh Circuit has adhered to these guidelines.
Kearney & Trecker Corporation v. Giddings & Lewis, Inc.,
452 F.2d 579 (7th Cir. 1971), cert. denied, 405 U.S. 1066
8’ The Court is persuaded that there is sufficient evidence in the
record to support an inference that the relevant market is the
Central Business District and that the product is readily available
office space which is defined as vacant space and that occupied
space which would be readily available within a reasonable time
period. The exact time limitations of the latter category were not
accurately defined by plaintiffs’ expert, but the estimate was any-
where between 2-9 months.
App. 44
(1972); Bendia Corporation v. Bolox, Inc., 471 F.2d 149
(7th Cir. 1972).
Plaintiffs rely upon United States v. Columbia Steel Co.,
334 U.S. 495 (1948) and Kearney & Trecker Corp. v. Gid-
dings & Lewis, Inc., supra, for the proposition that the ex-
istence of monopoly power does not require proof of a
particular percentage share of the relevant market. If by
this, plaintiffs suggest that the Supreme Court has not
articulated a particular percentage figure in the sense
that one selects 60 or 65 or 70 percent as a cutoff, this
Court has no quarrel with the proposition. It is quite
another thing to suggest that the Supreme Court has ob-
viated the need for a showing that defendants control a
substantial share of the relevant market. Neither the au-
thority cited above nor any other authority brought to the
Court’s attention has suggested such a proposition.
Judge Hand indicated that sixty (60) percent would
probably not be a sufficient showing. A review of recent
caselaw indicates that in most cases the percentage figure
is much higher. The Court need not concern itself with
whether plaintiffs have established a sufficient market
share because the record is practically devoid of such evi-
dence. This total absence of proof is revealing in light of
the fact that figures are presumably available and that
plaintiffs represented in their briefs and supporting affi-
davits in opposition to the motions for summary judgment
that such figures were available.
Plaintiffs concede that they have not established the
market share controlled by the First Wisconsin defend-
ants. In lieu thereof, they argue that market share is
merely a means to help determine whether or not a de-
fendant has power to control prices or exclude competi-
tion and that monopoly power may be proven more direct-
ly by other means:
App. 45
Monopoly power can, of course, be proved by evi-
dence of the exercise of actual control over prices or
the actual exclusion of competitors. When such evi-
dence is lacking, the existing monopoly power over
the relevant market may be proved in other ways. In
such cases a full and complete economic evaluation
of the structure of the market and its functioning is
necessary to determine whether, considering all fac-
tors, including the relative size and strength of com-
petitors, freedom of entry, pricing trends and prac-
tices, profits, and consumer demands, the firm’s power
over supply, prices or entry is of such a nature as to
constitute a monopoly. (emphasis added). Antitrust
Law Developments, A.B.A. at 53 (1975).
The difficulty with plaintiffs’ position is that they failed
to make a full and complete economic evaluation of the
structure of the market.
Plaintiffs’ expert testified as to various economic fac-
tors including, inter alia, the existence of inherent barri-
ers to entry in the market, the existence of economic power
on the part of the First Wisconsin defendants because of
its large assets and position as the largest bank in the
State of Wisconsin, the fact that some of the directors of
the first Wisconsin defendants are also directors of other
large corporations, and the fact that First Wisconsin is
able to subsidize its Juneau Square properties at a loss.
Notwithstanding the foregoing, plaintiffs’ expert testi-
fied that he was uncertain as to the power in the market
in the hands of other sellers of the product, and, in effect,
conceded that he had not made a complete economic evalu-
ation of the relevant market. It is quite apparent that plain-
tiffs’ expert relied upon ‘‘bigness’’ in the abstract sense.
Failure to consider the power of the other sellers in the
market is fatal to plaintiffs’ claims of monopolization.
App. 46
There is no evidence indicating that there is an absence
of competitors or of substantial competitive office space
in the relevant market.
The little evidence in the record indicates that the mar-
ket is saturated with sellers and readily available office
space. Plaintiffs’ exhibit 591 is a copy of a market study
prepared by the Urban Investment and Development Co.
for the Milwaukee Development Group, Inc. The study
clearly indicates that although First Wisconsin is the larg-
est seller in the market, it is but one of many. These
figures are admittedly imprecise, but the study indicates
that there is substantial competition from the MGIC
building, the First Federal Plaza, the Marine Plaza, the
Century Building, the Plankinton building, and many
others. The four buildings listed above alone possess as
much vacant space as the First Wisconsin Center.
Moreover, the study reveals that there is a varied price
structure and that competitors do charge less and are in
direct competition with the First Wisconsin defendants.
Plaintiffs have submitted evidence from which the jury
could infer that the First Wisconsin defendants charge
more than any other competitor but that is their peroga-
tive. There is no proof in the record that such prices in
any way effect the prices charged by competitors and ab-
sent a showing that defendants control a substantial share
of the market, there is no evidence in the record to support
the inference that lessees are forced to accept the so-called
monopolistic prices of the First Wisconsin defendants.
Plaintiffs’ expert placed ouch reliance on the fact that
the First Wisconsin defendants set their prices upon the
ground that the only real competition in ‘‘first class’’ of-
fice space was the MGIC building and the First Federal
Plaza. The difficulty with this approach is that plaintiffs
have not defined the product as available first class office
App. 47
space in the Central Business District. It goes without
saying that first class office space is limited to the newer
and more prestigious buildings of Milwaukee. Of these
buildings, the First Wisconsin defendants definitely have
an edge because of the imposing size of the First Wiscon-
sin Center. The fact remains that the more prestigious
buildings logically charge and conceivably are able to re-
ceive more for their office space. But here we are dealing
with all of the available office space in the Central Busi-
ness District which includes first class office buildings as
well as the other office buildings in the relevant market.
In the final analysis, plaintiffs have not met their burden
of proof as to the requirement of a showing of monopoly
power. This Court would be remiss if it permitted the
jury to speculate as to the power of the First Wisconsin
defendants in an isolated manner without a consideration
of the power of the other sellers in the market place.
IV.
Defendants also challenge the claim of attempt to mo-
nopolize principally upon the ground that there is no evi-
dence from which the jury could find that there is a ‘‘dan-
gerous probability’’ of monopolization.
The phrase ‘‘attempt to monopolize’’ means the em-
ployment of methods, means and practices which
would, if successful, accomplish monopolization, and
which, though falling short, nevertheless approach so
close as to create a dangerous probability of it, which
methods, means and practices are so employed by the
members of and pursuant to a combination or conspir-
acy formed for the purpose of such accomplishment.
American Tobacco Co. v. United States, 328 U.S. 781,
785 (1946).
At the outset, it should be noted that plaintiffs have not
established the market share of the defendants as dis-
App. 48
cussed in part III of this opinion. Of course, plaintiffs
need not show that defendants control a substantial share
of the market, but proof of some share of the market is
highly probative of the issue of whether a ‘‘dangerous prob-
ability’? of monopolization exists. The absence of this
critical economic data forces the jury to speculate as to the
existence of any market share.
Regardless of the failure of proof cited above, the Court
must concern itself with the issue of whether defendants’
conduct, if continued, is likely to lead to monopoly power
in the relevant market. Defendants raise two issues in this
regard. First, attention is called to the fact that the First
Wisconsin defendants have already indicated in writing to
the Deputy Controller of the Currency and the Regional
Administrator of National Banks their intention to sell
the former office building and have attempted to sell it
for some time. This sale, if effectuated, would drastically
reduce defendants’ share of the relevant market. This in-
tent, it is argued, is clearly inconsistent with the require-
ment of a showing of specific intent in claims of attempted
monopolization. Plaintiffs assert that defendants have not
seriously attempted to dispose of the building but that in
and of itself does not eliminate the requirement that First
Wisconsin must eventually sell the building thereby reduc-
ing its market share.
Even if First Wisconsin manages to hold onto its former
office building, further expansion into the market is pro-
scribed by federal banking regulations. As such, this sit-
uation is analogous to that found in Bendix Corporation v.
Balaz, Inc., 471 F.2d 149 (7th Cir. 1972). There a finding
of invalidity with regard to certain patents effectively pre-
cluded the consummation of a monopoly. Without the pat-
ents, the alleged monopolization could not succeed.
App. 49
In the case at bar, defendants are effectively precluded
from further expansion in the relevant market by the
following:
A national banking association may purchase, hold,
and convey real estate for the following purposes, and
for no others:
First. Such as shall be necessary for its accommoda-
tion in the transaction of its business.
Second. Such as shall be mortgaged to it in good faith
by way of security for debts previously contracted.
Third. Such as shall be conveyed to it in satisfaction
of debts previously contracted in the course of its
dealings.
Fourth. Such as it shall purchase as sales under
judgments, decrees, or mortgages held by the asso-
ciation, or shall purchase to secure debts due to it.
But no such association shall hold the possession of
any real estate under mortgage, or the title and pos-
session of any real estate purchased to secure any
debts due to it, for a longer period than five years.
(emphasis added) 12 U.S.C. § 29.
Regulation 7.3005 promulgated thereunder provides as
follows:
Real estate necessary to the accommodation of the
bank’s business includes real estate other than that
upon which bank buildings are located. Thus, real
estate use for parking facilities and data processing
centers is necessary in the transaction of business.
Such real estate also includes that held for future
banking use, where the bank in good faith expects to
utilize such property as bank premises. This will per-
mit a prudeat program of property acquisition for
future bank use. Such real estate is to be treated as
bank premises owned and so reported. 12 C.F.R. 7.3005.
App. 50
Defendants cannot avoid these statutory provisions and
regulations. Moreover, the Bank has sufficient space for
expansion purposes for the next several decades. There
is no way that the First Wisconsin defendants can obtain
the substantial market share proscribed by the antitrust
laws of the United States. In fact, the defendants are obli-
gated to sell the former bank building as discussed above.
Under these circumstances, the jury could not properly
find the existence of a dangerous probability of monopoli-
zation.
Without reviewing the evidence of conspiracy to mo-
nopolize against Aetna and Marshall-Michigan, it is clear
that plaintiffs’ claims must fail because of a failure to prove
monopolization or attempt to monopolize as discussed above.
One cannot conspire to monopolize without the existence of
monopoly power or even the existence of a dangerous prob-
ability of monopolization in the one party which is alleged
to be the monopolist. Defendants’ motions for directed ver-
dicts as they relate to the claims of monopolization, attempt
to monopolize, and conspiracy to monopolize must there-
fore be granted.
NOW THEREFORE IT IS ORDERED that the motion
of the Aetna Casualty & Surety Company for a directed
verdict be and is hereby GRANTED;
IT IS FURTHER ORDERED that the motions of the
Aetna Life Insurance Company, Marshall-Michigan Com-
pany, Inc., and the First Wisconsin defendants for directed
verdicts be and are hereby DENIED as they relate to the
claims in restraint of trade and be and are hereby
GRANTED as they relate to the claims of monopolization.
So ordered this 30th day of September, 1976, at Milwau-
kee, Wisconsin.
/s/ Robert W. Warren
United States District Judge
App. 51
District Court Memorandum and Order Granting
Defendants New Trial
JUNEAU SQUARE CORP., Wil-Ten Co., Inc., Juneau
Square Services, Inc., Ralph W. Conway, Hal Bradley
& Associates, Inc., Emil Bartel, Anna Bartel, Vione
Perry, as Administratrix of the Estate of Thomas H.
Perry, Harold C. Smith, III, as Administrator of the
Estate of Harold C. Smith, Jr. and Mildred B. Smith,
Jack D. Moertl and John F’. Spoden, Plaintiffs,
V.
FIRST WISCONSIN NATIONAL BANK OF MILWAU-
KEE, First Wisconsin Development Corporation, First
Wisconsin Corporation, Marshall-Michigan Company,
Inc., Marshall-Wisconsin Company, Inc., Aetna Life In-
surance Company and the Aetna Casualty and Surety
Company, Defendants.
Civ. A. No. 72-C-533.
United States District Court, E. D. Wisconsin.
July 29, 1977.
[435 F.Supp. 1307 (1977) ]
MEMORANDUM AND ORDER
WARREN, District Judge.
The plaintiffs commenced this civil antitrust action for
treble damages under section 4 of the Clayton Act, 15
U.S.C. § 15 (1970), alleging that the defendants violated
(1970).
After four years of extensive discovery, summary judg-
ment was granted in favor of the defendants on the claim
App. 52
arising under section 7 of the Clayton Act.’ On May 3,
1976, a jury was selected and the parties proceeded to trial
on the remaining claims. At the conclusion of plaintiffs’
presentation of the evidence, the Court granted defendants’
motions for directed verdicts on the monopoly claims.? The
only remaining claims—the restraint of trade violations
asserted under section 1 of the Sherman Act—were sub-
mitted to the jury at the close of all of the evidence. On
October 1, 1976, the jury returned a verdict in favor of the
plaintiffs.®
The cause is presently before the Court on a variety of
post-trial motions. The First Wisconsin defendants and
Marshall-Michigan Company, Ine. (‘‘Marshall-Michigan’’)
have moved for judgment notwithstanding the verdict or
in the alternative, for a new trial or to amend the judg-
ment entered on October 26, 1976.4 The Aetna Life Insur-
1 Juneau Square Corp. v. First Wisconsin National Bank of
Milwaukee, Civil No. 72-533 (E.D.Wis., memorandum and order
dated July 14, 1976).
2 The Court also granted the motion for a directed verdict filed
in behalf of the Aetna Casualty and Surety Company. Juneau
Square Corp. v. First Wisconsin National Bank of Milwaukee,
Civil No. 72-533 (E.D.Wis., memorandum and order dated Sep-
tember 30, 1976).
% The jury found that the various First Wisconsin defendants
and Marshall-Michigan Company, Inc., conspired to unreasonably
restrain the trades of (1) the leasing, development, construction
and operation of office rental space and (2) the financing for the
development of office buildings. The Aetna Insurance Company
was the only defendant not found to be a member of the conspiracy
and judgment was duly entered in its favor.
*The First Wisconsin defendants consist of the First Wisconsin
Corporation and its wholly-owned subsidiaries, the First Wisconsin
National Bank of Milwaukee, the First Wisconsin Development
Corporation. and the Marshall-Wisconsin Company, Inc.
App. 53
ance Company (‘‘Aetna’’) and the Aetna Casualty and
Surety Company have moved for the award of attorneys’
fees. The plaintiffs have moved to amend the judgment
and for the award of reasonable attorneys’ fees as autho-
rized under section 4 of the Clayton Act. The plaintiffs
have also moved for a new trial as to Aetna if any relief
is granted to the First Wisconsin defendants or Marshall-
Michigan on their respective motions for judgment not-
withstanding the verdict or for a new trial.®
In order to understand the contentions of the parties,
the Court will endeavor to highlight the various acts and
events which form the basis for the antitrust conspiracy.®
In some respects, this presentation of the evidence empha-
sizes plaintiffs’ theory of the case. For example, infer-
ences which were urged by the plaintiffs will be referred
to from time to time. This approach was adopted because
of the nature of the motions before the Court and the fact
that the jury found in favor of the plaintiffs.
5 The plaintiffs, both individual and corporate, were engaged
either directly or indirectly in the development, promotion, man-
agement, and operation of commercial real estate. The plaintiffs
are the Juneau Square Corporation, Wil-Ten Co., Inc., Juneau
Square Services, Inc., Ralph W. Conway, Hal Bradley & Associ-
ates, Inc., Emil Bartel, Anna Bartel, Vione Perry, as Administratrix
of the Estate of Thomas H. Perry, Harold C. Smith, III, as Ad-
ministrator of the Estate of Harold C. Smith, Jr., and Mildred B.
Smith, Jack D. Moertl and John F. Spoden.
6 The condensation of over twelve thousand pages of transcript
testimony and hundreds of exhibits proved to be a difficult task.
The acts and events which are set forth in this memorandum and
order are considered to be the most significant aspects of the case.
In view of the importance of the motivations of the conspirators,
some detail is provided in this area.
App. 54
FACTS
In 1960, plaintiff Wil-Ten Co., Ine. (‘*Wil-Ten’’) em-
barked upon a building project in the central business dis-
trict in Milwaukee, Wisconsin. The project was initially
conceived as an effort to, in part, supply the office needs
of the Aetna defendants.
The southwest quadrant of the Juneau Square block was
ultimately selected as the location for the project. This
parcel of land was considered to be ideal; the proposed
project would provide prospective tenants with an excel-
lent view of the lakefront and at the same time be within
walking distance of the center of the downtown business
district. The disadvantages were twofold. The present
owner, the Milwaukee Redevelopment Authority, required
the plaintiffs to develop the entire block as a condition of
the purchase—a substantial undertaking relative to the
financial strength of Wil-Ten. In addition to this problem,
there were several decrepit buildings alongside the pro-
posed construction site. Aetna was understandably not
anxious to have its new premises adjacent to these build-
ings.
In order to accommodate the demands of both the Mil-
waukee Redevelopment Authority and Aetna, and the
limited capita! available for the project, Wil-Ten planned
to develop the project in three phases.’ Juneau Square
Corporation was formed as a wholly-owned subsidiary of
Wil-Ten to develop and manage the project. Construction
7 The basic concept called for the development and construction
of three office buildings with an underground parking structure.
The three phases were respectively designated as Juneau Square
South, Juneau Square North, and Juneau Square East.
App. 55
of phase I, which was named Juneau Square South, was
completed in late 1963. As phase I was nearing comple-
tion, work on Juneau Square North began. The perma-
nent financing for both buildings was provided by Aetna.
In 1965 and 1966, additional capital was obtained. Plain-
tiffs Ralph W. Conway, Hal Bradley & Associates, Emil
and Anna Bartel, and Thomas H. Perry each purchased
interests totalling 25 percent of the existing project. De-
fendant Marshall-Michigan purchased another 50 percent
for one million dollars and as part of the agreement, re-
ceived a junior mortgage on the existing project. Sale and
leaseback agreements were negotiated in each instance.
Juneau Square Corporation retained operational control
of the project.
Phases I and II were nearing completion by October,
1967. At this time, the plaintiffs began preparations for
Juneau Square East, the third and final phase of the
project. Further funds were apparently needed to com-
plete tenant space improvements in Juneau Square North
and to begin Juneau Square East. In order to temporarily
accommodate these needs, Aetna agreed to a moratorium
on principal payments under the loan for the permanent
financing for phases I and II.
During the next year and a half, the plaintiffs proceeded
with their plans for the construction of Juneau Square
East. In early 1969, the basic plans and specifications were
completed. By this time, however, the plaintiffs were in
default under the mortgages with Aetna and Marshall-
Michigan on the first two phases of the project. The plain-
tiffs had neglected to pay the real estate taxes on the
project, a sum in the amount of $245,000.00. The cash flow
from the existing project, the infusion of capital in 1965
App. 56
and 1966 and the moratorium on principal payments had
proven to be insufficient io both maintain the project and
to proceed with the third phase.* At this point in time,
the plaintiffs were in a precarious financial position. Un-
Jess a financing package could be arranged to permit the
construction of Juneau Square East and to cure the defi-
ciencies under the mortgages on the existing project, fore-
closure was inevitable.
Meanwhile in late 1968, the First Wisconsin Corpora-
tion had embarked upon a program to develop a new
‘‘Pirst Wisconsin Center’’ adjacent t: the Juneau Square
Project. This project would place approximately one mil-
lion square feet of new office space on the market.’ Market
studies indicated that the demand for new office space in
Milwaukee’s central business district was such that up to
200,000 square feet could be absorbed annually (PX 446,
498, 520-22, 589-91). Juneau Square East with approxi-
mately 300,000 square feet of office space was scheduled
to be completed just prior to the First Wisconsin Center.
It is this competitive pressure which is the underlying
theory of plaintiffs’ case.
The officer in charge of the development of the First
Wisconsin Center was Richard Holscher. He immediately
8 The economic viability of the first two phases of the project
was drawn into question by the defendants. The plaintiffs at-
tributed the insufficiency of the funds to the fact that Juneau Square
North and South were burdened with the development costs for
the proposed construction of Juneau Square East.
® The First Wisconsin defendants planned to occupy half of the
existing office space in the new First Wisconsin Center leaving
approximately one-half million square feet for the public. The
vacation of their existing headquarters placed an additional one-
half million square feet on the market.
App. 57
set out to assemble the land with the assistance of the
Northwestern Mutual Life Insurance Company. During
this period, he also investigated the possibility of acquir-
ing adjacent parcels for expansion purposes. George Kas-
ten, the president of the First Wisconsin Corporation,
testified that he had been warned of the need for addi-
tional property for future expansion by bank presidents
in Chicago and Houston who had underestimated their
space requirements. (Tr. 8510-15).
One of the adjacent parcels was the property on which
Juneau Square East was to be built. Holscher testified
that he reviewed the credit files on Juneau Square Corpo-
ration and Wil-Ten, both customers of the First Wiscon-
sin National Bank of Milwaukee. His stated purpose for
the review was to investigate the status of the project in
order to determine the availability of the property for
expansion purposes. Both Kasten and Holscher denied
that they were motivated to acquire the property because
of the threat of potential competition from Juneau Square
Kast.
Dickens, an employee of the bank, testified that these
files were considered to be confidential and that only se-
lected officers of the bank were permitted access to them.
Holscher was not on the access list. (Tr. 7471-72) The
plaintiffs argued that this deviation from bank policy and
conversion of confidentiai credit information for the bank’s
own use was ‘‘illegal’’ in that it constituted a gross vio-
lation of the bank’s duty to maintain the confidentiality
and privacy of its credit files. The jury was asked to infer
that this was one of the unfair methods of competition
App. 58
utilized by the First Wisconsin defendants as a part of
the conspiracy in restraint of trade.”°
In early March, 1969, Holscher met with David Shute,
an attorney for the First Wisconsin Corporation. During
this series of meetings, plans for the acquisition cf the
Juneau Square Project were discussed. A few days later,
Shute forwarded a handwritten memorandum to an attor-
ney in Chicago named Harold Shapiro (PX 303, 504). This
memorandum directed Shapiro to contact Aetna and reads
in pertinent part as follows:
5. We have reason to believe Aetna might like out
of the situation—
a. low rate
b. shaky financial history of project & its de-
velopers
We understand developers have been trying to raise
funds for new project from various sources, and they
are apparently down to Aetna & will be filing applica-
tion next week for loan for ‘‘East’’ project...
* * ”
6. Our strategy:
a. As representative of interested undisclosed
prin., contact Aetna for prelim. discussions. We
believe best contact wd. be ~ Swinehart, who
10 The plaintiffs rely upon Milohnich v. First National Bank,
224 So.2d 759 (Fla.App.1969), and Peterson v. Idaho First Na-
tional Bank, 83 Idaho 578, 367 P.2d 284 (1961), to support the
view that the bank acted “illegally” in this regard. Aside from
the fact that there is some doubt as to the applicability of these
cases, the Court is not persuaded that there is anything inherently
illegal about the review of credit files by any member of the bank.
However, the careless handling of this information could give
rise to a tort or, as in the case at bar, the improper use of this
information could be construed as an act in furtherance of the con-
spiracy.
App. 59
once held title of V.P. in charge of Mgages. Might
start with him, see where he leads you.
b. Our client’s int. is to purchase entire block
for cash. Our knowledge of details of deal, as dis-
closed to Aetna, shd. be limited to what we might
have been able to find out w/o ‘‘insider’’ info
(will leave to your good judgment) We would pay
fair cash price equal to market value.
The timing of this memorandum is significant. The memo-
randum notes that the plaintiffs were ‘‘down to Aetna &
will be filing application next week for loan on the ‘Kast’
Project.’’ The memorandum implicitly directs Shapiro to
convince Aetna that it was in Aetna’s best interests to
deal with the First Wisconsin defendants rather than pro-
ceed with the financing of Juneau Square Kast.
Shapiro subsequently met with Aetna on March 18, 1969.
Aetna indicated that they were not interested, and the
matter was dropped. Aetna was not informed that the
First Wisconsin Corporation was Shapiro’s principal.
In the interim, the plaintiffs attempted to persuade
Aetna to provide the needed financing for Juneau Square
East. After some preliminary discussions, Aetna advised
the plaintiffs that it would not finance Hast in a letter
dated March 11, 1969. The plaintiffs immediately set out
to obtain alternative financing.
During the next eight months, the plaintiffs attempted
to obtain financing from the Metropolitan Life Insurance
Company of New York (‘‘Metropolitan’’). Some delay in
these negotiations resulted from plaintiffs’ inability to
reach an accommodation with Aetna with respect to the
grant of a release as to that portion of the Aetna mortgage
which covered some of the property or which Juneau
App. 60
Square East was to be built. Aetna subsequently indicated
some willingness to provide air rights and easements, an
accommodation which was apparently acceptable to Metro-
politan, and the negotiations continued.
While these negotiations were proceeding, Metropolitan
contacted James Liek, an employee at the First National
Bank of Milwaukee, for an opinion of the Juneau Square
property and the Juneau Square developers. Liek testi-
fied that he told Metropolitan that ‘‘it was good real
estate and that the only thing [he] knew about the bor-
rowers was that they had had difficulty in making Phase 1
aud 2 work out, and that they had a loan outstanding with
the bank which was overdue and had been extended and
that [he] assumed they were aware of that’’ (Tr. 5040).
Liek also indicated that he was unaware of any interest
on the part of the First Wisconsin defendants in acquir-
ing the project at that time (Tr. 5036-39). There was,
however, documentary evidence that Liek was at the meet-
ing when the First Wisconsin Corporation Executive
Committee granted formal authority to acquire Juneau
Square (PX 458).”"
The Metropolitan negotiations continued into early No-
vember, 1969. Warren Stringer of Dunn & Stringer made
arrangements for a meeting between Metropolitan and
the plaintiffs to work out any remaining difficulties and to
11 Liek was apparently asked to appear at the executive com-
mittee meeting to give a report unrelated to the matters at issue
in the case at bar. An employee of the bank testified that the
uniform practice at such meetings was to have the person appear
for the report and then depart immediately thereafter (Kuehl, Tr.
9294-8). There is therefore some doubt as to whether Liek was
present when the committee actually discussed the acquisition cf
Juneau Square.
App. 61
see if some final agreement could be reached (Tr. 5092-
94). Stringer also testified that he believed that the nego-
tiations were ‘‘moving along’’ at this time (Tr. 5089).
Plaintiff Jack Moertl, who was participating in the nego-
tiations, was of the opinion that agreement had been
reached (Tr. 1297-1322).
Prior to any meeting with Metropolitan, a meeting which
was apparently set for November 5, 1969, the plaintiffs
were notified that the needed financing would not be pro-
vided. Stringer testified that he was surprised by the
decision but could not remember the precise reasons given
for the declination; he indicated that they probably were
‘cash flow, yield, alternative forms of investment, things
of this nature.’’ (Tr. 5095). Moertl stated that no expla-
nation was ever given (Tr. 1324).
The testimony and contemporaneous memoranda of
those responsible for the declination of plaintiffs’ loan
application indicate that there were several reasons for
the rejection.
There were several reasons for it, we were in a very
selective market at that point in time, rates were
high, the mortgagee was being very selective in terms
of the properties that they were underwriting and
mortgaging, and, at that point in time, this property
did not—the projections, our analysis indicated it
was not a satisfactory mortgage or equity situation
for us. (Dolan, Tr. 10,745).
In a letter to Stringer, Lane, also of Metropolitan, stated:
Unfortunately the Metropolitan cannot consider this
project in today’s highly restricted market. It ap-
pears that there are more attractive investments avail-
able to the company. Also, the financial analysis in-
dicated that the investment does not produce a cash
flow and yield of alternative investments. (WX 51).
App. 62
Shortly after Metropolitan declined to provide the financ-
ing for Juneau Square Hast, the plaintiffs received an-
other setback. Aetna commenced a foreclosure action
because of plaintiffs’ failure to pay the real estate taxes
on the project.
After Marshall-Michigan received notice of the Aetna
foreclosure, Sann and Clark, who were general counsel
for the corporation in New York, came to Milwaukee
with a check payable to Aetna to cure the tax default, a
sum in the amount of $245,000.00. Boerema, Marshall-
Michigan’s managing agent for the Juneau Square project,
stated that he was told by either Sann or Clark that the
intention of Marshall-Michigan was to cure the tax de-
fault and reinstate the Aetna mortgage (Tr. 5310). On
arrival, they conferred with Robert Bradley, local counsel
for Marshall-Michigan.
Bradley knew that the First Wisconsin defendants were
interested in the project. He advised Sann and Clark
uf this fact and arranged for a meeting between repre-
sentatives of Marshall-Michigan and the First Wiscon-
sin defendants. At this meeting, Sann testified that he
asked whether the ‘‘bank or one of its affiliate companies
might want to buy our position as is, and that is to say,
subject to the foreclosure action.’’ Sann related that ‘¢Mr.
Holscher did not express any interest in buying our posi-
tion as is, but expressed an interest in possibly buying it
after the foreclosure action had been cured.’’ (Tr. 9860).
Holscher stated his reasons for rejecting the overture
from Marshall-Michigan.
I was not interested in getting involved in a fore-
closure and that is the reason that I could not get to-
gether with Marshall-Michigan. They wanted to sell
their interest and go through the legal problems, and
I said I’m not interested in that. I’m not interested
App. 63
in the property. Somebody’s going to have to do
that. I am not going to, and I just said I will see
what happens (‘ix. 7,640-41).
During this period, Marshall-Michigan unsuccessfully
attempted to acquire some control over the project. A
letter was sent to all of the Juneau Square tenants direct-
ing them to pay rentals into a special bank rather than to
Juneau Square Corporation (PX 164). Sann testified
that he and Clark were of the impression that the plain-
tiffs had diverted funds from the existing project to
Juneau Square East (Tr. 9,797-98). Marshall-Michigan,
of course, had no interest in the third phase of the project.
Sann stated that ‘‘the purpose [of the letter] was to ac-
complish what we regarded as our first task, namely to
stop further diversion of rents of the existing project into
new projects.’’ (Tr. 9804). Sann also indicated that by
this time, Marshall-Michigan had decided to foreclose the
plaintiffs (Tr. 9819).
Sann and Clark next met with representatives of Aetna.
Sann and Clark explained their predicament to Aetna.
We expressed concern about our investment, we told
Aetna that we were going to institute second mort-
gage foreclosure proceedings, and that we were go-
ing to request the Court for the appointment of a
receiver in order to make certain that all the rent
monies would be applied to their proper functions...
(Tr. 9876).
Aetna apparently was persuaded to hold its foreclosure
action in abeyance to permit Marshall-Michigan to go
ahead with its plans to attempt to gain control of the
project (Tr. 9877).
Shortly thereafter, Marshall-Michigan commenced its
own foreclosure action against the plaintiffs and imme-
diately moved for the appointment of a receiver. The
App. 64
presiding judge refused to appoint a receiver and ac-
vording to Sann, Aetna adopted the position that the
agreement ‘‘was of no further existence or validity.’’
(Tr. 9878).
The plaintiffs asked the jury to infer that Marshall-
Michigan joined the conspiracy during this period. This
inference was based on the following circumstances. Prior
to the commencement of the Aetna foreclosure action,
Marshall-Michigan had cooperated with the plaintiffs in
the development of the project. When Sann and Clark
came to Milwaukee their intention was to cure the tax
default and reinstate the mortgage. After conferring
with local counsel, a meeting was arranged with the First
Wisconsin defendants. As a result of this meeting and
the subsequent attempts of Marshall-Michigan to acquire
control of the project set forth above, the jury was asked
to infer that Marshall-Michigan joined the conspiracy in
order to salvage its investment interest in the project.
Knowledge of the conspiracy in restraint of trade is im-
puted to Marshall-Michigan because of the fact that both
Marshall-Michigan and the First Wisconsin defendants
were represented by the same law firm; they presumably
were both fully advised of the situation before reaching
agreement and Marshall-Michigan was in any event pre-
sumably aware of the competitive position of the plain-
tiffs and the First Wisconsin defendants.
At this point in time, the parties entered into negoti-
ations in both foreclosure actions. The parties subse-
quently entered into a stipulation which provided the
plaintiffs with a period of time to obtain financing for
Juneau Square East. The defendants also agreed to pro-
vide the necessary air rights and easements over that
portion of the property under the Aetna and Marshall-
Michigan mortgages. In exchange, the defendants ob-
App. 65
tained a waiver of all defenses to the foreclosure actions,
a waiver of plaintiffs’ right of redemption, and the right
{o enter judgment after the financing deadline. That dead-
line was September 30, 1970.
The plaintiffs then attempted to obtain the necessary
financing. Negotiations with both Cooper-Horwitz and
Phillipsborn were unsuccessful."* Near the end of the
deadline, the plaintiffs were making substantial progress
with Diversified Financial Corporation of America and
the Midland National Bank. A commitment was obtained
shortly after the deadline passed. Difficulties, however,
arose with respect to the grant of air rights by Aetna and
the financing fell through.
After the deadline passed, Aetna tried to have judg-
ment entered in accordance with the stipulation. The pre-
siding judge refused to enter judgment and set the matter
on for trial. This decision was precipitated in part
because of Aetna’s failure to reach some accommodation
with the plaintiffs with regard to the necessary air rights.
At this point in time, the parties entered into a second
stipulation with a new deadline of December 31, 1971.
Additional provisions were added to permit Marshall-
Michigan to proceed ahead of Aetna in foreclosing the
plaintiffs.
The plaintiffs now turned to the New York Life In-
surance Company (‘‘New York Life’’) for the necessary
financing. After preliminary negotiations, the financial
12 The plaintiffs asked the jury to infer that the First Wisconsin
defendant probably interfered with these negotiations because of
the evidence of interference with respect to the Metropolitan and
subsequent New York Life loan applications. There was no direct
evidence linking the defendants with the loss of financing with
either Cooper-Horwitz or Phillipsborn.
App. 66
application was forwarded from the Chicago office to
the home office with a favorable recommendation. The
matter was then submitted to New York Life’s Real
Estate and Mortgage Loan Committee on May 5, 1971
fur initial approval. If the loan committee approved
the loan, the loan application would be referred to the
fiaance committee for final approval.
There is little evidence of what occurred at the May 5
meeting. Boone, a member of the committee, stated that
there was some question as to the financial strength of
the Midland National Bank (‘‘Midland’’). Rather than
approve or decline the loan application, the matter was
withdrawn to permit further investigation (Tr. 10,918-19).
Rose, another member of the committee, also indicated
that the financial strength of Midland was a principal
euncern. He further stated that he had already made up
his mind to reject the loan application (Tr. 11,067-68).
At the conclusion of the meeting, Lutz, who was the chair-
man of the loan committee, asked Duncan to make further
inquiries as to the financial strength of Midland (Tr.
11,069).
Duncan was the treasurer of New York Life. After
the May 5 meeting, he contacted Albert Little, a business
acquaintance at the First Wisconsin National Bank of
Milwaukee, and asked him to do a credit check.” Little
checked the credit files at the bank and called Davey a few
days later. Davey, a subordinate of Duncan, had been as-
signed the responsibility of following through on the
credit checks. He incorporated the contents of the con-
18 The plaintiffs emphasized the fact that both George Kasten,
the president of the First Wisconsin Corporation, and Little were
acquainted with Duncan. The jury was asked to infer that Duncan
was motivated to join the conspiracy because of this relationship.
App. 67
versation with Little in a contemporaneous memorandum
which was sent to the members of the committee (PX 404).
Little testified that he had no knowledge that the First
Wisconsin defendants were interested in acquiring the
project. (Tr. 9532-34). There is, however, documentary
evidence that a summary of the status of the Juneau
Square Project was forwarded to Little at this time.
The Davey memorandum reads in pertinent part as
follows:
We were told that the property has been devel-
oped in instalments and was ‘‘bootstrapped all the
way.’’ They have a high debt. It was believed that
the mortgage held by the Aetna was in trouble and
the lender has agreed to defer foreclosure. Our
source bank had a part in the construction lending
and found proceeds were not being used as indicated.
There appeared to be several recent judgments and
liens against the property.
It was our source’s opinion that the entire project
was not adequately financed. Recent high interest
rates gave them real problems.
The Midland National Bank was described as a
retail oriented institution that has made reasonable
progress. They took over a bank a short while ago
and this accounts for a jump in deposits from $60
million to $100 million. The bank’s President, Mr.
Kelly, was described as a very aggressive banker
who was not well liked in the local financial com-
munity. He had been with the Marine Bank where,
he led a proxy fight to get control of the corporation
that was largely owned by interests close to the bank
for which he was working.
The plaintiffs asked the jury to infer that Little had
knowledge of the conspiracy and intentionally falsified
the credit report in order to interfere with plaintiffs’ loan
upplication.
‘
App. 68
The loan application was again submitted to the com-
mittee on May 19, 1971. This time the application was
rejected by a vote of five to 1. The minutes of the meet-
ing indicate that the loan was rejected because Midland
was found to be unqualified (PX 388). Boone (Tr. 10,922-
10,926), Rose (Tr. 11,072-76), and Lutz (Tr. 7217-22)
all confirmed that this was the principal reason for the
declination. Another reason given was the complexity
of the transaction (Tr. 7215-19). Neither Boone nor Rose
could recall whether the integrity of the developers was
even brought up at the meeting. The only evidence which
indicates that this may have been a factor was a sub-
sequent New York Life memorandum which reads in per-
tinent part as follows (PX 383):
Mr. Lutz indicated:
1. Sponsors had mis-handled funds and were being
foreclosed.
2. Bank was not sufficiently capitalized to handle
gap funds.
The loss of the New York Life financing was followed
by still another attempt to obtain financing; this time the
plaintiffs directed their efforts at the Baird & Warner
kKeal Estate Investment Trust (‘‘REIT’’). By late De-
vember, 1971, the parties were nearing agreement. Be-
cause of the approach of the financing deaeline, the plain-
tiffs sought and obtained an extension from Aetna at a
meeting on December 20, 1971. Aetna, however, condi-
tioned its agreement on the acquiescence of Marshall-
Michigan.
Sann testified that during this period, he maintained
the position that no extension would be granted by Mar-
shall-Michigan unless agreement was reached with REIT
App. 69
by the end of the year (Tr. 9886). Krauss of Baird &
Warner, who discussed the matter with Sann indicated
that Sann agreed to postpone the entry of judgment to
permit further negotiations with REIT (Tr. 12,695-96).
Sann denied ever making such an agreement (Tr. 9885-86).
The plaintiffs failed to reach agreement with REIT by
the December 31, 1971 deadline. Marshall-Michigan en-
tered judgment pursuant to the stipulation between the
parties on January 3, 1972. Aetna followed on January
4, 1972, and the REIT financing fell through. Marshall- .
Michigan purchased the property for a nominal sum at a
sheriff’s sale held on February 28, 1972. The property
was, of course, purchased subject to the Aetna mortgage.
Marshall-Michigan subsequently sold its interest in the
project to Marshall-Wisconsin Company, Inc., a subsidi-
ary of the First Wisconsin Corporation. Marshall-Wis-
consin proceeded to reach an agreement with Aetna which,
inter alia, established a new mortgagor-mortgagee rela-
tionship. The First Wisconsin defendants thereby ob-
tained control of the Juneau Square Project.
I.
The gravamen of the complaint is that the defendants,
through the use of unfair methods of competition, con-
spired to eliminate the plaintiffs as competitors in the
rental of office space in downtown Milwaukee. As a re-
sult of the conspiracy, the defendants acquired the exist-
ing Juneau Square Project and thereby prevented the
construction of Juneau Square East. The jury found
that the defendants conspired to unreasonably restrain
competition and the defendants now urge the Court to
set aside that verdict. The Court will first consider de-
fendants’ motions for judgment notwithstanding the
verdict.
App. 70
A motion for judgment notwithstanding the verdict is
in effect a renewal of the motion for a directed verdict
made at the close of the evidence. In each instance, the
Court is obligated to view the evidence and all reasonable
inferences in the light most favorable to the plaintiffs.
Continental Co. v. Union Carbi.2, 370 U.S. 690, 82 S.Ct.
1404, 8 L.Ed.2d 777 (1962); 9 Wright & Miller Fed.Prac.
& Pro. § 2537 at 596 (1971) ; 5A Moore’s Fed.Prac. 150.7 [2 |
at 2356 (1966). Both motions are properly denied
‘‘fwhen] the evidence is such that reasonable men in a
fair and impartial exercise of their judgment may draw
different conclusions therefrom.’’ Hannigan v. Sears,
Roebuck and Co., 410 F.2d 285, 287 (7th Cir. 1969).
Notwithstanding the foregoing, it is clear that more than
a mere ‘‘scintilla of evidence’ is required. Gunning v.
Cooley, 281 U.S. 90, 50 S.Ct. 231, 74 L.Ed. 720 (1930) ;
Hubert v. May, 292 F.2d 239 (7th Cir. 1961). Accord-
ingly, the defendants are not required to show that there
is a total absence of any evidence on the claims at issue
but only that there is insufficient evidence upon which
reasonable men could properly base a verdict.
The sufficiency of the evidence is challenged in two
respects. The defendants first contend that the plaintiffs
failed to establish the existence of a contract, combination,
or conspiracy either to attain an illegal end or to attain
a legal end by the use of illegal means.
The position of the defendants may be summarized as
follows. There is no evidence of anticompetitive motiva-
tion on the part of the defendants. The only evidence in
ihe record on this subject indicates that Marshall-
Michigan and Aetna were concerned with protecting their
investment interests, and the First Wisconsin defendants
were only concerned with acquiring the property for ex-
App. 71
pansion purposes. Accordingly, the legality of the ‘‘end’’
of the conspiracy—the acquisition of Juneau Square—
is beyond dispute. Once this characterization of the evi-
dence is adopted, the defendants proceed to isolate each
of the various acts and agreements between the parties
and demonstrate their legality. The only acts which could
in any way be construed as being illegal are viewed as
being attributable to the First Wisconsin defendants. As-
suming for the sake of argument that the jury found
some of these acts to be illegal, there is no evidence that
Marshall-Michigan or any other non-First Wisconsin de-
fendant acted illegally or took steps to implement a con-
spiracy with knowledge that illegal means were Being
employed.
In reviewing the evidence, the Court has consistently
adopted the position that the plaintiffs need not estab-
lish that each act was illegal. It is only necessary that
the acts whether legal or illegal be in furtherance of a
common plan or conspiracy in restraint of trade. Amert-
can Tobacco Co. v. United States, 147 F.2d 93 (6th Cir.
1944), aff’d, 328 U.S. 781, 66 S.Ct. 1125, 90 L.Ed. 1575
(1946); Schulman v. Burlington Industries, Inc., 255
F.Supp. 847 (S.D.N.Y. 1966). The significant issue in
this respect is whether the defendants were motivated to
restrain competition. That motivation may be inferred
from the character and effect of the conspiracy. The fact
that a particular act or agreement is legal or illegal is of
little consequence unless when viewed in the context of
the conspiracy, it tends to prove that the defendants were
motivated to restrain competition. Accordingly, all of
the circumstances surrounding the conspiracy must be
taken into consideration. Lessig v. Tidewater Oil Co.,
327 F.2d 459 (9th Cir.), cert. denied, 377 U.S. 993, 84
S.Ct. 1920, 12 L.Ed.2d 1046 (1964); Ramsey v. United
Mine Workers of America, 265 F.Supp. 388 (E.D.Tenn.
App. 72
1967), aff’d, 416 F.2d 655 (6th Cir. 1967), reversed on
other grounds, 401 U.S. 302, 91 S.Ct. 658, 28 L.Ed.2d 64
(1971).
With these considerations in mind, the Court has care-
fully weighed the evidence and is of the opinion that
there is sufficient evidence to support the finding of the
jury. Much of the evidence is admittedly of a circum-
stantial nature. Great emphasis has been placed on the
nature, timing, and sequence of the various acts which
form the basis for the anti-trust conspiracy. This has
given rise to considerable disagreement as to the infer-
ences to be drawn from the evidence.
The defendants’ position is premised in large part
upon the assertion that the objective of the conspiracy
was legal. The plaintiffs adopted a contrary position ;
the objective of the conspiracy was the elimination of
competition. While there is evidence that the First Wis-
consin defendants merely desired the property for future
expansion purposes, the surrounding circumstances and
activities of the various conspirators indicate another
possible motivation. The jury was aware of the fact that
Juneau Square East was in a position to assert competi-
tive pressure on the new First Wisconsin Center. The
evidence indicated that the only real competition in the
area for ‘‘first class’’ office space consisted of the MGIC
Plaza and the First Federal Plaza. The size and location
of Juneau Square East would have undoubtedly altered
this situation.
The jury was also confronted with the extensive efforts
made in behalf of the First Wisconsin defendants, in-
cluding, inter alia, the early Shute-Shapiro effort, the
extensive and varied negotiations over the years with
Aetna and Marshall-Michigan, and the Little credit re-
App. 73
port. The timing and nature of these efforts are signif-
icant. For example, the Shute memorandum establishes
the intent of the First Wisconsin defendants to take over
the entire block; and reveals detailed knowledge of plain-
tiffs’ financial situation, the proposed construction of
Juneau Square Kast, and plaintiffs’ need for further fi-
nancing. The memorandum notes that the plaintiffs were
‘down to Aetna & will be filing application next week
for “loan on the ‘Kast’ project’’ and implicitly directs
Shapiro to convince Aetna that it was in Aetna’s best
interests to deal with the First Wisconsin defendants
rather than proceed with the financing of Juneau Square
Kast.
The jury was asked to believe that these extensive
maneuverings were motivated by some unknown expan-
sion need in the distant future. In rejecting this view
of the evidence, the jury obviously weighed the circum-
stantial nature of much of the evidence proffered by the
plaintiffs and found it to be more persuasive than the
explanations of the First Wisconsin defendants. The ap-
parent inconsistencies in the testimony of certain wit-
nesses probably played a key role in this decision.’* In
weighing the evidence in the light most favorable to the
plaintiffs, particularly the credibility of the various wit-
nesses, the Court is unable to say that there is no support
ia the record for the verdict of the jury as to the First
Wisconsin defendants.
The evidence of Marshall-Michigan’s role in the con-
spiracy is more troublesome. There is no doubt that
Marshall-Michigan was motivated to oust the plaintiffs
14There were varying explanations and apparent inconsistencies
surrounding the Shute memorandum and the Little credit report.
These were probably the two most significant aspects of the case.
App. 74
from the project. The project was in a precarious finan-
cial position and Marshall-Michigan was in a position
to suffer a substantial business loss. The First Wiscon-
sin defendants provided an obvious solution to this dilem-
ma. The evidence clearly indicates that Marshall-Michigan
assisted the First Wisconsin defendants in the acquisi-
tion of the project. The difficult question is whether this
defendant ‘‘knowingly’’ participated in a conspiracy in
restraint of trade.
The evidence indicates that Marshall-Michigan cooper-
ated with the plaintiffs until a series of contacts occurred
with the First Wisconsin defendants. It is significant
that both Marshall-Michigan and the First Wisconsin de-
fendants were represented by attorneys from the same
law firm. These attorneys arranged the meetings and
were instrumental in the various negotiations which ulti-
mately led to the acquisition of the Juneau Square Project.
‘These same attorneys were also intimately aware of the
respective positions of both parties. Both were clients of
the firm and were in a position to gain from the elimina-
tion of the plaintiffs. As the parties were not in an
adversary position but were cooperating in this regard,
it is logical to assume that they were fully advised of
the situation before reaching any agreement, if in fact an
agreement was reached.
The subsequent actions of Marshall-Michigan tend to
support this view. Marshall-Michigan was not only not
cooperating, it was doing its best to eliminate the plain-
tiffs. Those actions included the commencement of a fore-
closure action and an attempt to interfere with the rental
payments of the project. Once the plaintiffs were ousted
{rom the project, Marshall-Michigan promptly sold its
interest to the First Wisconsin defendants.
App. 75
The Court is not unaware of the fact that the various
witnesses for Marshall-Michigan denied that they had
participated in a conspiracy to eliminate competition. The
jury obviously attributed little weight to these denials
and found the circumstantial evidence to be more persua-
sive. The Court is not in a position to say that these
denials were so persuasive as to warrant judgment not-
withstanding the verdict.
The sufficiency of the evidence is challenged in another
respect. The defendants contend that there is little or
no evidence of injury or prejudice to the public interest
and without such proof, it is asserted that the plaintiffs
failed to prove that the conspiracy resulted in an un-
reasonable restraint of trade.
It is well settled that although section 1 of the Sher-
man Act prohibits ‘‘Every contract, combination ... or
conspiracy, in restraint of trade or commerce among
the several States,’’ only those contracts, combinations,
or conspiracies which are found to wnreasonably restrain
competition are prohibited by the Act. Standard Oil Co.
v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619
(1910); United States v. American Tobacco Co., 221 US.
106, 31 S.Ct. 632, 55 L.Ed. 663 (1910). Some proof of
the unreasonableness of the restraint is therefore neces-
sary to distinguish those restraints which are incidental
or ancillary to normal business transactions.
The burden of proof in this regard depends on the na-
ture of the anticompetitive conduct employed by the al-
leged violations of the Act. Certain practices such as
price fixing, United States v. Socony-Vacuum Oil Co., 310
U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129 (1940) ; market alloca-
tion, Timken Roller Bearing Co. v. United States, 341
U.S. 593, 71 S.Ct. 971, 95 L.Ed. 1199 (1951); concerted
App. 76
refusals to deal (group boycotts), Fashion Originators’
Guild v. Federal Trade Comm’n, 312 U.S. 457, 61 S.Ct.
703, 85 L.Ed. 949 (1941); and some tying arrangements,
International Salt Co. v. United States, 332 U.S. 392, 68
S.Ct. 12, 92 L.Ed. 20 (1947); are considered to be so in-
herently anticompetitive that they are deemed to be per
se illegal. No further inquiry into the reasonableness
of the restraint is required. The Court, however, has
never adopted the position that a per se violation oc-
curred in the case at bar.”
In‘cases involving conduct which is not inherently anti-
competitive, proof of the unreasonableness of the re-
straint is required to establish a violation of the Act. The
reasonableness of any restraint invariably involves ques-
tions of relation and degree and an inquiry into, mter
alia, the particular business, the nature of the restraint
and its effect, the reason for the restraint, and the pur-
pose or end to be obtained thereby. Sugar Institute, Inc.
vy, United States, 297 U.S. 553, 56 S.Ct. 629, 80 L.Ed.
859 (1936); Chicago Board of Trade v. United States,
9246 U.S. 231, 38 S.Ct. 242, 62 L.Ed. 683 (1918).
15 Two per se theories were advanced by the plaintiffs. The
plaintiffs first urged the Court to adopt the theory first announced
in Albert Pick-Barth Co. v. Mitchell Woodbury Corp., 57 F.2d 96
(1st Cir. 1932), to the effect that a conspiracy to destroy a com-
petitor through the use of unfair methods of competition is a per se
violation of the Sherman Act. This theory has never been ap-
proved by the Supreme Court, nor has it gained acceptance in
most circuits. In fact, there is some doubt as to whether it is still
good law in the First Circuit. George R. Whitten, Jr., Inc. v.
Paddock Pool Builders, Inc., 508 F.2d 547 (1st Cir. 1974). This
Court is of the opinion that the reasonableness of the restraint
should be submitted to the jury in such circumstances.
The plaintiffs also argued that a per se illegal boycott was in-
volved in the case at bar. There is no evidence in the record to
support this theory.
App. 77
As a part of the proof of the unreasonableness of the
restraint, there is at present some disagreement as to
whether any proof of public injury is required. It is of
course clear that proof of public injury is not required in
cases involving per se violations of the Act. Continental
Co. v. Union Carbide, 370 U.S. 690, 82 S.Ct. 1404, 8 L.Ed.2d
777 (1962); Radiani Burners, Inc. v. Peoples Gas & Coke
Co., 364 U.S. 656, 81 S.Ct. 365, 5 L.Ed.2d 358 (1961) ;
Klor’s, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207,
79 S.Ct. 705, 3 L.Ed.2d 741 (1959). The disagreement
arises with respect to non-per se cases. See, e. g., Syracuse
Broadcasting Corp. v. Newhouse, 295 F.2d 269 (2nd Cir.
1961) (Public injury not required). Contra, Kestenbaum
v. Falstaff Brewing Corp., 514 F.2d 690 (5th Cir. 1975) ;
Lamb Enterprises, Inc. v. Toledo Blade Co., 461 F.2d 506
(6th Cir. 1972).
This disagre¢ment has resulted from certain language
in Radiant Burners and dictum in In Re McConnell, 370
U.S. 230, 231, 82 S\Ct. 1288, 1290, 8 L.Ed.2d 434 (1962), to
the effect that ‘‘the right of recovery of a plaintiff in a
treble damage antitrust case does not depend at all on
proving an economic injury to the public.’’ See, also,
Switzer Brothers, Inc. v. Locklin, 297 F.2d 39, 47 (7th Cir.
1961).-
An analysis of this limited and somewhat unclear au-
/ thority on the subject persuades the Court that in cases
- involving non-per se violations of the Act, the private
litigant must at the very least prove that restraint ‘‘tends
or is reasonably calculated to prejudice the public inter-
est.’ Rogers v. Douglas Tobacco Board of Trade, 266
F.2d 636, 644 (5th Cir. 1959). Both Radiant Burners and
Klor’s, the principal authority relied upon by opponents
to the public injury requirement, involved per se violations.
In both instances, the Court, while not expressly relying
App. 78
upon the per s¢ distinction, emphasized the nature of the
restraint employed in each case.
The Court [in Standard Oil Co. v. United States,
supra] recognized that there were some agreements
whose validity depended on the surrounding circum-
stances. It emphasized, however, that there were
classes of restraints which from their ‘‘nature or
character’? were unduly restrictive, and hence forbid-
den by both the common law and the statute. 221 U.S.
at 58, 65 [31 S.Ct. [502] at 515]. As to these classes
of restraints, the Court noted, Congress had deter-
mined its own criteria of public harm and it was not
for the courts to decide whether in an individual case
injury had actually occurred. Id., at 63-68 [31 8.Ct.
[502] at 517-518-519].
Group boycotts, or concerted refusals by traders to
deal with other traders, have long been held to be in the
forbidden category. (footnotes omitted) Klor’s, supra,
359 U.S. at 211-212, 79 S.Ct. at 709 (emphasis added).
Similar language is found in Radiant Burners, supra, 364
U.S. at 659-660, 81 S.Ct. 365. A reading of both cases in-
dicates that public harm is presumed in those classes of
restraints which are by their nature unduly restrictive. The
Court has typically reserved such language for those
restraints which are considered to be per se unreasonable.
This view is supported by the Court’s subsequent deci-
sion in Continental Co. v. Union Carbide, supra. In that
case, the Court distinguished per se violations of the Act.
An error committed by the trial court, perhaps un-
derstandable because the trial preceded this Court’s
decision in Klor’s, Inc., v. Broudway-Hale Stores, Inc.,
359 U.S. 207 [79 S.Ct. 705, 3 L.Ed.2d 741], was the
‘public injury’’ charge. Although petitioners pleaded
a concerted refusal to deal with them by respondents, a
price-fixing conspiracy, and an allocation of customers,
all per se violations under § 1 of the Sherman Act,
App. 79
the court charged the jury that a conspiracy must be
proved ‘‘which was reasonably calculated to prejudice
the public interest by unduly”’ restraining trade, and
which was intended ‘‘to injure the general public by’’
restraining trade. Under the rule stated in Klor’s
this charge was error. /d., 370 U.S. at 708, 82 S.Ct.
at 1415. (emphasis added)
\
In view of the per se distinction drawn in Continental Co.
and the apparent rationale of both Klor’s and Radiant
Burners, the Court is unable to find any basis for the con-
clusion that proof of public injury is no longer required
in cases involving non-per se violations of the Act.
The Second Circuit Court of Appeals is the only higher
court to expressly eliminate the requirement of proof of
public injury in a non-per se case. That decision relied
upon Radiant Burners without further elaboration. Syra-
cuse Broadcasting Corporation, supra, at 276-277. While
similar language is found in Switzer Brothers, a decision
rendered prior to Continental Co., the Seventh Circuit
Court of Appeals was confronted with per se violations of
the Act, and the applicability of Radiant Burners was clear.
297 F.2d at 47. The Seventh Circuit has not addressed the
issue in a case involving a non-per se violation of the Act.
These decisions to the extent that they hold or indicate
that Radiant Burners should be applied in the non-per se
case are not persuasive.
As the Court understands it, the parties concede that
proof of specific public injury is not required. The plaintiffs
need only show that the restraint ‘‘tends or is reasonably
calculated to prejudice the public interest.’’ Rogers, supra,
at 644. With respect to the trade of office rental space, the
plaintiffs offered evidence to the effect that the defendants
conspired to eliminate them as potential competitors. The
defendants denied that they were so motivated, but the jury
has found to the contrary. The Court, as noted above,
App. 80
has reviewed the evidence and is unable to say that this
finding was erroneous as a matter of law.
The evidence also revealed: that the elimination of the
plaintiffs placed 142,000 square feet of office rental space
in the hands of defendants and prevented the construction
of an additional 300,000 square feet; that because of the
location and quality of the office space possessed by defen-
dants, the only real competition east of the river was the
MGIC Plaza and the First Federal Plaza; that the rates
subsequently set by the defendants were based on the lim-
ited competition in that area; and that Juneau Square Kast
with more available office space than both the MGIC Plaza
and The First Federal Plaza combined and its choice loca-
tion would have been in a position to compete with the
defendants. From this evidence, the jury could have in-
ferred that as a result of the elimination of the plaintiffs
and the interference with free and open competition, the
defendants were able to charge higher rates for the rental
of their office space. Although there is evidence to the con-
trary, there is at least some evidence that the restraint
tended or was reasonably calculated to prejudice the public
interest.
It is doubtful whether the jury actually considered this
matter in arriving at its verdict. While the jury was in-
structed that the plaintiffs must prove that the conspiracy
resulted in an unreasonable restraint of trade, no reference
was made to the requirement that there be some proof
of public injury. In light of the complexity of the instant
case and the importance of this issue, the Court should have
provided further clarification for the jury.”
16 The complexity of the evidence and the legal issues are dis-
cussed in part II of this memorandum and order. The Court's
failure to instruct on the issue of public injury was taken into
consideration in ruling on the motions for a new trial.
App. 81
There is, however, no evidence of public injury with
respect to the trade of ‘‘interstate finance.’’ In fact, there
is no evidence that the defendants even conspired to re-
strain this trade. It is readily apparent that the plaintiffs
confused the means employed by the defendants—the in-
terference with plaintiffs’ efforts to obtain financing—
with the end of the conspiracy which even under plaintiffs’
theory of the case was the elimination of competition in
the rental of office space. Defendants’ motion for judg-
ment notwithstanding the verdict must therefore be granted
as to the claim that the defendants conspired to interfere
with the trade of interstate finance.
I.
The defendants advanced several contentions in support
of the motion for a new trial. It is urged that the verdict
is against the weight of the evidence; that the damages
awarded by the jury are excessive; and that prejudicial
errors were committed by the Court and by plaintiffs’
counsel.
The legal standards applicable to a motion for a new
trial are unlike those for a directed verdict or for judg-
ment notwithstanding the verdict. As explained in Simp-
son v. Skelly Oil Co., 371 F.2d 563, 570 (8th Cir. 1967) :
Thus, the case should be examined, not in the light
most favorable to the plaintiff, but according to the
analysis and appraisal by the trial court of the weight
of all the evidence considering also any other relevant
factors. Williams v. Nichols, 266 F.2d 389, 393 (4th
Cir. 1959).
Aside from the weight of the evidence, other factors to
be considered are the overall setting of the trial, the char-
acter of the evidence, and the complexity or simplicity of
the legal principles. The matter is ultimately within the
sound discretion of the Court and as stated in 6A Moore’s
Fed.Prac. { 59.08[5] at 59-160 (1971):
App. 82
The judge’s duty is essentially to see that there is no
miscarriage of justice. If convinced that there has
been then it is his duty to set the verdict aside; other-
wise not.
A review of the evidence reveals that the existence of
the conspiracy is predicated in large part upon the various
efforts on the part of the First Wisconsin defendants to
somehow interfere with the financing for Juneau Square
East. Without these overt acts, the conspiracy makes lit-
tle sense in light of the fact that both Aetna and Marshall-
Michigan granted two extensions to the plaintiffs in order
to permit them to salvage the project. The theory is pre-
sumably that Marshall-Michigan granted the extensions
with the knowledge that the First Wisconsin defendants
would then interfere with any attempt to obtain the needed
financing.
The circumstances surrounding the various loan trans-
actions were set forth in some detail at the beginning of
this memorandum and order. The only loan transactions
which are in any way linked to the First Wisconsin defen-
dants are those involving Metropolitan and New York Life.
It is significant that in both instances, the contact was
initiated by the prospective lender and not the First Wis-
consin defendants. It is also significant that no witness
from either Metropolitan or New York Life gave any indi-
eation that they were pressured by the First Wisconsin
defendants to decline plaintiffs’ loan application.
With regard to the Metropolitan loan application, the
weight of the evidence including the testimony and con-
temporaneous documents of all of the individuals responsi-
ble for the loan decision, is that the Liek contact had
absolutely no effect on Metropolitan. Moreover, there is
no indication that anything that Liek said was inaccurate
App. 83
and every indication that there were substantial business
reasons for the declination. The plaintiffs in large part re-
lied upon the Little contact and the subsequent loss of
financing with New York Life in asking the jury to infer
that the same thing occurred with Metropolitan.
This leaves the circumstances surrounding the Little
contact as the most significant and the most damaging evi-
dence of the existence of a conspiracy. Those circum-
stances indicate that: (1) the loan application was for-
warded to the home office of New York Life with a favor-
able recommendation; (2) the matter came before the loan
committee on May 5, 1971 but was withdrawn to permit
further investigation into the financial strength of the par-
ticipating bank; (3) Duncan then contacted Albert Little of
the First Wisconsin for a credit check; (4) Little responded
a few days later with a telephone call to Davey; (5) Davey
made contemporaneous notes of the conversation in the
form of a memorandum which was forwarded to all of the
members of the committee; (6) the committee met again
on May 19, 1971 and the loan application was rejected
by a vote of 5-1; and (7) the principal reason for the
declination as testified to by members of the committee
and as documented by the contemporaneous minutes of the
meeting was that the participating bank was found to be
unqualified.
There were two principal areas of contention surround-
ing the loss of financing with New York Life. The first
was the accuracy of the Davey memorandum which pur.
ported to incorporate the substance of a conversation with
Little. The second was the impact of the report on the
loan committee. With respect to the accuracy of the re-
port, there was considerable disagreement as to the con-
tents as well as to whether Davey accurately recorded the
App. 84
conversation. Little, Lett, and Dickens all gave varying
explanations for Little’s reference to the possible diver-
sion of funds by the plaintiffs. These explanations were
confusing and at times inconsistent. There is little or no
evidence that the plaintiffs actually diverted any funds
without the knowledge of the bank. It would appear that
the entire matter was fabricated or that some misunder-
standing or possible failu
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