Petition for Writ of Certiorari — RWM Enterprises, Inc. v. ES Development, Inc.

a

|

® I = ] 05 5 | Supreme Court, U.S.

FILED

DEC 2

1991

| OFFICE OF THE CLERK

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No.

IN THE

Supreme Court of the Anited States

OcroBeER TERM, 1991

RWM ENTERPRISES, INC. and

Moore AUTOMOTIVE GROUP, INC.,

Petitioners,

VS.

ES DEVELOPMENT, INc. and Epwin G. Saport,

Respondents.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

Davip O. DANnIs

Attorney for Petitioners

Danis & BOYCE

100 South Brentwood Blvd.

Suite 125

St. Louis, Missouri 63105

(314) 721-0900

St. Louis Law Printing, Inc. 13307ManchesterRd. St. Louis, MO 63131 314-231-4477

QUESTION PRESENTED

When automobile dealers combine to form a group, hire an

attorney and an expert as a group and then individually send

a standardized letter pursuant to their Franchise Contract to

their respective manufacturers opposing the granting of a

new franchise in their geographic area, have they engaged

in activity which violates the Sherman Anti-Trust Act?

— ili—

TABLE OF CONTENTS

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No.

IN THE

Supreme Court of the United States

OcTOBER TERM, 1991

RWM ENTERPRISES, INC. and

Moore AUTOMOTIVE GROUP, INC.,

Petitioners,

VS.

ES DEVELOPMENT, INC. and Epwin G. Sapor,

Respondents.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

The petitioners, RWM Enterprises, Inc. and Moore Automo-

tive Group, Inc., respectfully pray that a writ of certiorari issue

to review the judgment and opinion of the United States Court of

Appeals for the Eighth Circuit entered in the above proceedings

on July 18, 199i.

OPINIONS BELOW

The opinion of the Court of Appeals for the Eighth Circuit is

reported at 939 F.2d 547 (8th Cir. 1991) and is reproduced in the

Appendix, page A-1, infra.

The memorandum decision of the United States District Court

for the Eastern District of Missouri (Limbaugh, J.) has not been

reported. It is reproduced in the Appendix, page A-26, infra.

JURISDICTION

The judgment of the United States Court of Appeals for the

Eighth Circuit was rendered on July 18, 1991, affirming injunc-

tive and other relief entered against the Petitioners, issued

pursuant to 15 U.S.C. § 26 (1988). Jurisdiction was conferred

upon the court of appeals generally by 28 U.S.C. § 1291

authorizing appeals in all civil cases. The jurisdiction of this

Court is invoked under 28 U.S.C. § 1254(1) and Rule 20.1 of the

Rules of the Supreme Court of the United States.

STATUTE INVOLVED

15 U.S.C. § 1 provides in relevant part:

“Every contract, combination . . ., or conspiracy, in

restraint of trade or commerce among the several states or

with foreign nations, is declared to be illegal... .”

STATEMENT OF THE CASE

On October 3, 1989, the Respondents filed a multi-count

complaint seeking injunctive and other relief pursuant to the

Sherman and Clayton Anti-Trust Acts. On October 6, 1989,

Respondents’ Motion for a Temporary Restraining Order was

submitted to the trial court and denied. Thereafter, on that same

date, a preliminary hearing was set for October 23, 1989. On that

date evidence was submitted to the trial court and the case was

submitted upon Respondents’ request for preliminary and per-

manent injunctive relief. Prior to the hearing on October 23,

1989 the Respondents settled with a number of the Defendants

and the case was submitted against the Petitioners only. On

December 27, 1989 the court entered its injunctive relief which

was timely appealed and ultimately denied in substantial part by

the Eighth Circuit Court of Appeals.

ET

a eo

Petitioners filed a request for rehearing before the panel and

a rehearing en banc which was denied by the court of appeals.

Petitioner seeks Supreme Court review of the decision of the

Court of Appeals.

REASONS FOR GRANTING THE WRIT

Introduction

Congress enacted the Sherman Anti-Trust Act to prohibit

illegal group or concerted activity. The District Court and the

Eighth Circuit Court of Appeals in their decision have now made

group activity all of which is admittedly legal and proper to be

violative of the Sherman Anti-Trust Act.

If the Eighth Circuit’s decision is allowed to stand then no

group or association of individuals can meet together with a

legitimate purpose and through legitimate means attempt to

protect their contractual franchise rights.

In this case, ES Development, Inc. (hereinafter “ESD”) is a

Missouri real estate development corporation whose sole pur-

pose was to develop an automobile mall in St. Louis County,

Missouri. Edwin G. Sapot (hereinafter “Sapot’”) was ESD’s

president and sole shareholder. It was the intent of the automo-

bile mall to operate in the manner of a condominium complex

housing multiple automobile dealerships. It was intended th..t

each participating dealer would purchase a space within the

malls and would share common ownership of the service facility

and common expenses such as advertising.

A group of eight individuals representing nine automobile

dealership, including Petitioners, most of whom were located in

close proximity to each other and approximately ten miles from

the proposed automobile site, attended a meeting on March 31,

1989. At this meeting, an attorney met with the group. This

group decided to hire the attorney to represent them in an effort

to lower expenditures, in their opposition to each of their

respective manufacturers locating an additional competing same

line dealer in the mall and to jointly commission a market study.

coy. one

These dealers held a second meeting on April 6, 1989 at which

time a name for their group was selected and they adopted a

group statement of purpose.

At the April 6 meeting the group’s attorney gave each of the

dealers a standardized letter which each dealercould send, if they

desired, to their respective manufacturer opposing the location a

same line franchise to the proposed automobile mall. Most of the

dealers sent the proposed form letter to their respective manufac-

turer.

The Respondents contended that the result of the manufac-

turer receiving the opposition letter by their dealers resulted in

the mall being unable to be successfully pursued. Although the

Petitioners dispute that this was established, assuming arguendo,

that this was established, the Respondents still did not show any

act which rose to the level of a Sherman Act violation.

I.

THE WORDS “CONTRACT, COMBINATION ..., OR

CONSPIRACY IN RESTRAINT OF TRADE” SHOULD

BE CONSTRUED TO EXCLUDE CONSTITUTIONAL

AND CONTRACTUALLY PROTECTED RIGHTS

The Petitioners did nothing more than jointly hire an attorney

and an expert in an effort to lower costs. The attorney then

prepared a standard form letter. The courts below and the

Respondents admitted that al! the steps taken by the Petitioners

were legal. The sole argument was that since the Petitioners

acted with other automobile dealers that this legal activity

somehow became illegai. It has been well established that in

order to prove a violation of the anti-trust laws that the partici-

pants must combine or conspire to “achieve an unlawful objec-

tive”. Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752,

764 (1984).

—

There is no dispute that there was a combination of a group of

automobile dealers. There is also no dispute that the actions

taken by the automobile dealers were legitimate. There is also

no dispute that each automobile dealer objected to an additional

same line dealer being placed in the automobile mall or any other

location within the geographic market of Metropolitan St. Louis.

The group’s purpose was to work together to legitimately oppose

additional franchises being granted without regard to existing

franchises. In fact, the actions taken by Petitioner in writing the

letter to their respective manufacturers were clearly constitu-

tionally protected and within their contractual rights under their

respective franchise agreements. The Respondents even admit

that they expected the dealers to oppose the mall to their

manufacturers. Petitioners contend that this case has broadened

the anti-trust laws to include any combination even though there

is no illegal purpose or no illegal activities.

CONCLUSION

This case presents important anti-trust issues squarely and

clearly. No material facts are in dispute. The Supreme Court can

save lower courts from years of litigation by accepting review

and examining the constitutional and contractual implications of

this decision which greatly expands courts’ anti-trust power.

Dated: December 2, 1991.

Respectfully submitted,

/s/ DAVID O. DANIS

Attorney for Petitioners

100 South Brentwood Blvd.

Suite 125

St. Louis, Missouri 63105

(314) 721-0900

APPENDIX

APPENDIX

Appendix A — United States Court Appeals, Eighth

Circuit, Order Denying Petition for Rehearing .....

Appendix B — Opinion of the United States Court of

Appeals for the Eighth Circuit 0.0.0.0...

Appendix C — Decision and Order of the United States

District Court for the Eastern District of Mis-

O Net RNE EER 2 ACTER. oi rte AOD AT ROLE LRN TS EE

A-1

A-2

APPENDIX A

United States Court of Appeals

for the Eighth Circuit

No. 90-1760/1761/2466/2467EM

ES Development, Inc., and Edwin G. Sapot,

Appellees,

VS.

RWM Enterprises, Inc., d/b/a Moore Cadillac; and Moore

Automotive Group, Inc., Moore Hyundai,

Appellants. |

Order Denying Petition for Rehearing with

Suggestion for Rehearing En Banc

Appellant’s suggestion for rehearing en banc has been consid-

ered by the court and is denied by reason of the lack of a majority

of the active judges voting to rehear the case en banc.

The petition for rehearing is also ordered denied.

September 3, 1991

Order Entered at the Direction of the Court:

/s/ Michael E. Gans

Clerk, U. S. Court of Appeals, Eighth Circuit.

a. poe

APPENDIX B

United States Court of Appeals

for the Eighth Circuit

No. 90-1760

ES Development, Inc., and Edwin G. Sapot,

Appellees,

Vv.

RWM Enterprises, Inc., d/b/a Moore Cadillac; and, Moore

Automotive Group, Inc., d/b/a Moore Hyundai,

Appellants.

No. 90-1761

ES Development, Inc., and Edwin G. Sapot,

Appellants,

¥.

RWM Enterprises, Inc., d/b/a Moore Cadillac; and, Moore

Automotive Group, Inc., d/b/a Moore Hyundai,

Appellees.

No. 90-2466

ES Development, Inc., and Edwin G. Sapot,

Appellees,

V.

RWM Enterprises, Inc., and Moore Automotive Group, Inc.,

Appellants.

No. 90-2467

ES Development, Inc., and Edwin G. Sapot,

Appellants,

Lae, Bem

V.

RWM Enterprises, Inc., and Moore Automotive Group, Inc.,

Appellees.

Appeals and Cross-Appeals from the United States District

Court for the Eastern District of Missouri.

Submitted: March 11, 1991

Filed: July 18, 199i

Before McMILLIAN, Circuit Judge, BRIGHT, Senior Circuit

Judge, and MAGILL, Circuit Judge.

BRIGHT, Senior Circuit Judge.

Appellants, RWM Enterprises, Inc. and Moore Automotive

Group, Inc. (RWM/Moore), appeal from an order of the district

court,’ issued pursuant to Section 16 of the Clayton Act, 15

U.S.C. § 26 (1988), permanently enjoining them from jointly or

individually communicating their opposition to the proposed

development of an automobile mall by appellees ES Develop-

ment, Inc. (ESD) and Edwin G. Sapot (Sapot). The district court

held that appellants and seven other automobile dealers com-

bined and conspired to attempt to prevent ESD, a prospective

competitor, from entering the automobile retail market in viola-

tion of § 1 of the Sherman Act, 15 U.S.C. § 1 (1988). On appeal,

appellants assert (1) the conclusions of the district court are not

supported by sufficient evidence and (2) the resulting injunction

is illegally overbroad. ESD counterappeals on the issue of

attorney fees and costs, contending that the district court erred in

awarding only 25% of the amount it found to be reasonable. We

affirm the findings and judgment of the district court as amply

supported by the evidence and affirm the fee award. However,

we rernand for modification of the injunction.

'The Honorable Stephen H. Limbaugh, United States District Judge for the

Eastern District of Missouri.

i

__ A-4 —

I. BACKGROUND

ESDisa Missouri real estate development corporation founded

by Sapot, who is its president and sole shareholder. ESD’s sole

pursuit was to develop an automobile mall in St. Louis County,

Missouri. The mall would operate in the manner of a condo-

minium complex. ESD would finance and construct the neces-

sary facilities for multiple auto dealerships to operate. It would

then sell outright to each participating dealer a dealership space

within the mall. All of the participating dealers would share

common ownership of the mall’s service facility and would

share common expenses like advertising.’

ESD accordingly entered into various option contracts to

secure the right to purchase a contiguous ninety acre tract of land

in Chesterfield, Missouri, upon which it planned to develop what

would be known as the Chesterfield Auto Mall (“Mall”). To

date, ESD and Sapot have spent approximately $350,000 in the

development of the Mall. These expenditures include the cost of

purchasing the land options as well as the costs associated with

securing the approval of various state and local governmental

agencies for the development of the project. The associated costs

include engaging the professional services of an engineering

company, an accounting firm, an architectural firm, a construc-

tion company, a media consultant and a project banker.

The ultimate success of the development of course depended

upon the willingness of automobile manufacturers to commit

new dealerships to or relocate 2xisting dealerships in the Mall.

Typically, the decision to award a new franchise rests with the

automobile manufacturers. The manufacturers base their deci-

sions upon market studies addressing the need and the financial

?The parties agree that the automob ‘le mall concept is of recent vintage and

had not yet been attempted in the St. Louis market area.

OE ————

ny ee

prospects for opening a dealership in a particular area, including

the effect a new dealership might have on the profitability of

existing same-line dealerships in the relevant market. ESD,

through Sapot, contacted various autornobile manufacturers, a

number of which expressed initial interest in the project. As part

of his discussions with the manufacturers, Sapot made inquiries

into the prospect of personally acquiring and operating at least

one of the dealerships to be placed in the Mall. Plaintiffs also

separately contacted various local dealerships about the possi-

bility of relocating in the Mall, again receiving favorable initial

reactions. Although the plaintiffs’ inquiries met with a favorable

initial reception, none of the manufacturers or dealers made a

firm commitment to the Mall.

ESD’s activities caught the attention of several dealership

owners within the general market area of the anticipated Mall

site, causing some of them considerable concern. If operating as

planned, the Mall would contain numerous car dealerships at a

single site and thus provide consumers with the convenience of

one-stop shopping. Some dealers therefore feared that the

establishment of a same-line dealership in the Mall could divert

car shoppers from their dealerships and reduce their gross

earnings.

These concerns prompted a proposal that the area dealership

owners meet to discuss the development of the Mall. A group of

eight individuals representing nine automobile dealerships, in-

cluding RWM/Moore,’ most of whom were located in close

proximity to each other about ten miles from the proposed ESD

> Appellants RWM and Moore Automotive are each owned and operated

by Ron Moore (Moore), who attended the meeting in his capacity as president

of both corporations. At least one other dealership owner attended, but

departed upon determining that the group planned to conduct an opposition

campaign.

ae

project site, attended the first meeting which occurred on March

31, 1989. An attorney in attendance at the request of one of the

meeting participants advised the dealers that they must proceed

with caution and be sure to couch their opposition so as to not to

appear to be acting in concert.

Each dealer in attendance operated under separate franchise

agreements which provided procedures for objecting to the

placement of a same-line dealership within their market area and

required manufacturers or franchisors to give due consideration

to any such objections. RWM/Moore’s franchise agreements,

for example, required the respective manufacturers to notify

them of their intention to establish or relocate a same-line

franchise within twenty miles of the RWM/Moore dealerships.

RWM/Moore then had thirty days to submit objections to the

establishment of such a franchise. Franchisees also possessed

the right to appeal manufacturer decisions to place a new

franchise within eight miles of appellants’ dealerships. The full

exercise of these contractual nights had the potential of delaying

a manufacturer’s decision to award a new franchise by several

months.

The dealership owners at the meeting agreed that the should

exercise their contractual rights of protest in connection with

plans for the Mall. However, despite advice counseling against

activities which would create an appearance of concerted action,

the dealers also agreed to jointly retain the attorney in attendance

to represent them in their opposition efforts. Further, with the aid

of counsel, the dealers then proceeded to discuss a possible name

for their group, a proposed statement of purpose, and the value

of jointly commissioning a market study. They concluded the

meeting by instructing their attorney to draft (1) a form letter

protesting the possible placement of a same-line dealership in

the Mall, which each dealer could send to its respective manufac-

turer and (2) a group statement of purpose.

OO

The dealers held a second meeting on April 6, 1989. At this

time, they adopted the name “Dealers Alliance” (Alliance) for

their opposition group and named three of the dealers as group

representatives. They also reviewed and adopted a group state-

ment of purpose which their attorney had drafted. The statement

provided in part:

The purpose of the Dealers Alliance is to explore and

advance areas of common and individual dealer concern

with respect to actions of franchisors/manufacturers at the

proposed Chesterfield Auto Mall, or any similar geo-

graphic location. ... The goal of the dealer Alliance is to

investigate and provide facts and evidence to its members

and to the automobile manufacturers concerning the poten-

tial impact of the foregoing upon existing automobile

dealers. The Dealer Alliance seeks to enable the members

and the manufacturers to make informed decisions regard-

ing potential new or relocated dealerships. The further goal

of the Dealer Alliance is to insure that the legal rights of its

individual members are protected.

The members of the Alliance also agreed to jointly commis-

sion a market study which each member could use to counter the

market studies conducted by their respective manufacturers and

as evidence in any possible lawsuit against a manufacturer for

breach of good faith in complying with the terms of the franchise

agreement. The attorney for the Alliance also requested that

each member complete a questtonnaire. The questionnaire,

labeled “Privileged and confidential — prepared in anticipation

of litigation,” requested that each dealer provide the attorney

with a copy of his franchise agreement and any information he

possessed regarding, inter alia, market studies performed by his

respective manufacturer, oral representations by his manufac-

turer concerning the establishment of new dealerships in the

area, and the dealers relevant market area.

—aaaIE

— .

Finally, prior to the April 6 meeting, each of the members

received the form letter of protest drafted by the group’s attor-

ney. The form letter stated in part:

A development known as the Chesterfield Auto Mall is

seeking dealers to open new or relocated franchises.... My

concern is focused on your action or potential action with

respect to locating a dealership in this market area at or near

this geographical point. ... As you know, [Manufacturer/

Franchisor] is under legal obligation, imposed by both U.S.

and Missouri law, to deal with me in good faith. I trust that

- [Manufacturer/Franchisor] will not act arbitrarily, capri-

ciously, or in bad faith when presented with a request for a

new or relocaied franchise in connection with the Mall and

will keep my iegitimate franchise interests in mind.

Most, if not all, of the dealers sent letters substantially identical

to the form letter to their respective manufacturers.

Plaintiffs have been unable to conduct further negotiations

with the manufacturers concerning the placement of franchises

in the Mall since the mailing of the letters. For example,

representatives from Ford, who had expressed a strong interest

in placing a franchise in the Mall, terminated discussions regard-

ing both the placement of a new dealership in the Mall and the

possibility of awarding that franchise to Sapot. Representatives

from Oldsmobile and Cadillac also declined to proceed with

negotiations. The Cadillac zone manager expressly aired his

concern that placement of a new dealership in the Mall might

spur litigation with RWM/Moore owner and president Ron

Moore who had already filed an unrelated action against Cadillac

for its awarding of a franchise in another market area. Similarly,

in discussing their decision to terminate negotiations, many of

the withdrawing manufacturers made specific reference to let-

ters they had received from their respective Alliance franchisees.

a sem

ESD and Sapot consequently filed the present action on

October 3, 1989 seeking to enjoin the nine participating Alliance

dealers from continuing their concerted activities in opposition

to the development of the Mall. Plaintiffs asserted that the

activities of the Alliance constituted a violation of § 1 of the

Sherman Act which makes illegal “Every contract, combination

..., Or conspiracy in restraint of trade.” 15 U.S.C. § 1.

Seven of the nine dealers entered into separate settlement

agreements with plaintiffs just prior to the scheduled hearing for

permanent injunction. The seven dealers variously agreed to pay

undisclosed sums of money and agreed not to oppose the

development of the Mall for a period of two years. Moore opted

to defend the case brcught against his two dealerships. After

conducting a hearing on October 23, 1989, the district court

concluded that the Alliance constituted an illegal combination

and conspiracy engaged in a horizontal non-price restraint which

it declared a per se violation of § 1 of the Sherman Act.

The district court consequently granted injunctive relief pur-

suantto § 16 of the Clayton Act, 15 U.S.C. § 26. Inits order dated

December 27, 1989, the district court enjoined appellants from:

(1) engaging in any form of individual activity, joint

activity or coordinated action with any third parties con-

cerning the development, construction or operation of the

Chesterfield Auto Mall;

(2) engaging in any form of joint activity or coordinated

action with any third parties concerning the granting of one

or more automobile franchises to the Chesterfield Auto

Mall;

(3) communicating with or responding to communications

from any automobile franchisor or manufacturers . . .

concerning the Chesterfield Auto Mall, or the award . . . or

the relocation of an automobile franchise or dealership in

the Chesterfield Auto Mall.

— A-10 —

ES Development, Inc.v.RWM Enterprises, Inc., No. 89-1867-C-5

(E.D. Mo. Order of Dec. 27, 1989).

The district court, again pursuant to 15 U.S.C. § 26, also

awarded costs and reasonable attorney’s fees to plaintiffs as

prevailing parties. Plaintiffs accordingly submitted documenta-

tion in support of a request for $52,933.50 in fees. In its order of

April 11, 1990, the district court stated that plaintiffs had

submitted a reasonable figure for the fees generated in the

original suit filed against all nine dealers in the Alliance. The

district court concluded, however, that fairness dictated that the

two remaining defendants, RWM/Moore, not bear the cost of the

Suit against all nine original defendants. It accordingly awarded

plaintiffs 25% of the fees and costs which they requested.

This appeal followed in which RWM/Moore contend that the

activities of the members of the Alliance did not violate the

Sherman Act and that the district court’s order of injunctive

relief is overbroad. Plaintiff’s ESD and Sapot cross appeal on the

issue of the district court’s decision to award 25% of the total fees

and costs incurred in its action below.

Il. DISCUSSION

A. Sherman Act Liability

Appellants contend that the formation and activities of the

Alliance and its members are insufficient to give rise to § 1

Sherman Act liability. The essence of a § 1 Sherman Act

violation is a contract, combination or conspiracy which unduly

restrains trade. Pumps & Power Co. v. Southern States Indus.,

Inc., 787 F.2d 1252, 1256 (8th Cir. 1986); Eastern States Retail

Lumber Dealers Ass'n v. United States, 234 U.S. 600, 609

(1914); 15 U.S.C. § 1. Appellants specifically assert that the

underlying facts do not support the district court’s finding of a

contract, combination, orconspiracy, and that the group’s activi-

ties constituted no more than exercise of the constitutional,

— A-11 —

statutory and contractual rights of each member to express

legitimate self-interested concerns regarding their financial well-

being. We reject these assertions.

1. Combination or Conspiracy

As an initial matter, a finding of a § 1 violation requires a

finding of a contract, combination or conspiracy. /nternational

Travel Arrangers, Inc. v. Western Airlines, Inc., 623 F.2d 1255,

1265 (8th Cir), cert. denied, 449 U.S. 1063 (1980). The simple

fact of a conspiracy or combination will not alone support

Sherman Act liability. The evidence must establish that the

alleged participants combined or conspired to “achieve an un-

lawful objective.” Monsanto Co. v. Spray-Rite Service Corp.,

465 U.S. 752, 764 (1984).

Proof of such a combination or conspiracy does not depend

upon the existence of a formal agreement. Reed Bros., Inc. v.

Monsanto Co., 525 F.2d 486, 495 (8th Cir. 1975), cert. denied,

423 U.S. 1055 (1976). Indeed, it is axiomatic that the typical

conspiracy is “rarely evidenced by explicit agreements,” but

must almost always be proved by “inferences that may be drawn

from the behavior of the alleged conspirators.” H.L. Moore

Drug Exchange v. Eli Lilly & Co., 662 F.2d 935, 941 (2d Cir.

1981) (quoting Michelman v. Clark-Schwibel Fiber Glass Corp.,

534 F.2d 1036, 1043 (2d Cir.), cert. denied, 429 U.S. 885

(1976)), cert. denied, 459 U.S. 880 (1982). Thus, an antitrust

plaintiff may prove the existence of acombination or conspiracy

by providing either direct or circumstantial evidence sufficient

to “warrant a . . . finding that the conspirators had a unity of

purpose or common design and understanding, or a meeting of

the minds in an unlawful arrangement.” American Tobacco Co.

v. United States, 328 U.S. 781, 810 (1946) quoted inH.L. Moore

Drug, 662 F.2d at 941; see also Cheatham’ s Furniture co. v. La-

Z-Boy Chair Co., 728 F. Supp. 569, 571 (E.D. Mo. 1989), aff d,

923 F.2d 858 (8th Cir. 1990); cf. Monsanto Co. v. Spray-Rite

Service Corp., 465 U.S. 752, 764 (1984).

— A-12 —

We agree with the district court that evidence exists to support

the conclusion that the dealers, including appellants, entered into

acombination or conspiracy in restraint of trade. The dealers met

on two occasions for the express purpose of discussing the

possible entry of a competitor who might attract their clientele

and diminish their profitability. At their second meeting, the

dealers agreed to undertake action to frustrate the plans of their

prospective competitor, gave a name to their opposition group,

and agreed to a statement of purpose. The members of the

Alliance further agreed to jointly retain an attorney who pro-

vided advise on legal tactics in presenting objections to their

respective manufacturers. The group’s attorney also drafted a

form letter of objection which most of the Alliance members,

(including appellants), sent to the manufacturers. The members

further agreed to jointly fund a market study to be used as an

offensive tool against the manufacturers in the event of a lawsuit.

Appellants do not contest the fact that they participated in

these activities. However, they do take issue with the district

court’s legal characterization of them. They particularly assert

that the dealers met for the sole purpose of protecting their

individual rights under their respective franchise agreements.

Appellants further assert that the dealers’ meeting was motivated

by concern over merely the placement of same-line dealerships

in the Mall, a matter within the legitimate scope of the individual

franchise agreements.

The evidence supports the district court’s determination that

the dealers’ motivation extended to a concern well beyond the

legitimate scope of the individual contractual rights of protest

provided under the franchise agreements; that is, concern re-

garding the very existence of the Mall, regardless of the type of

automobile lines which might be sold there. The concept behind

the Mall was, in part, to provide automobile consumers with the

convenience of one-stop shopping. Additionally, the Mall

concept apparently would permit participating dealers to lower

— A-13 —

their operating costs and margins by sharing service facilities,

thus allowing them to compete more effectively. These fea-

tures, which would inhere in the Mall itself, rather than in the

placement of any particular type of franchise line in the Mall,

created the potential for reducing floor traffic and thus sales and

profitability of the Alliance members’ dealerships.

Appellants also contend that the members of the Alliance did

no more than independently exercise individual legal rights. It

is true that the Sherman Act does not impart liability for actions

by an individual, regardless of their anticompetitive motive or

effect, unless the individual entity possesses monopoly power.

See, e.g., Pumps & Power Co., 787 F.2d at 1256. The evidence

here, however, compels the inference that the dealers chose to

exercise their individual legal rights in a concerted manner

designed to impair plaintiffs’ ability to procure franchise com-

mitments from various manufacturers.

Furthermore, while we do not question the legality of appel-

lants’ separately filed protests, “[a]cts which may be legal and

innocent in themselves, standing alone, lose that character when

incorporated into a conspiracy to restrain trade.” Kurek v.

Pleasure Driveway & Park Dist., 557 F.2d 580, 587 (7th Cir.

1977), cert. denied, 439 U.S. 1090 (1979); see Poller v. Colum-

bia Broadcasting System, Inc., 368 U.S. 464, 468-69 (1962)

(exercise of individual and legal contract right runs afoul of

Sherman Act where done so as “part and parcel of unlawful

conduct with others or . . . conceived in a purpose to restrain

trade, control a market, or monopolize.”’); Simpson v. Union Oil

* This underlying business rationale was evidence by plaintiffs’ testimony

stating that the project was not feasible without a threshold number of

franchise commitments from manufacturers. Without the requisite number

of commitments, plaintiffs testified that they would not exercise their options

to purchase the land at the proposed Mall site.

a ee

Co., 377 U.S. 13, 21 (1964) (undertaking of otherwise legal

arrangement unlawful when exercised to advance illegal anti-

trust purpose). Thus, the otherwise legal nature of appellants’

activities in furtherance of their conspiracy do not shield them

from antitrust liability.

The present case provides a further example of the antitrust

maxim that “even an otherwise lawful device may be used as a

weapon in restraint of trade.” Schine Chain Theatres, Inc. v.

United States, 334 U.S. 110, 119 (1948). As noted above, the

success of plaintiffs’ project depended upon the acquisition of

multiple manufacturer commitments to place franchises in the

Mall. However, the lawful franchise agreements bound the

manufacturers to consider the objections of same-line dealers

within a certain distance of the Mall. An objection could delay

a manufacturer’s decision for months or longer, particularly in

the event of a lawsuit by a franchisee.

Plaintiffs’ ultimate success, of course, did not hinge upon the

decision of any one manufacturer. However, the concerted

exercise of legal contractual rights by Alliance members simul-

taneously precluded numerous manufacturers from making a

commitment to the Mall during the crucial period when the clock

was running on plaintiffs’ options to purchase the land at the

project site. Beyond any effort to simply exercise their legal

right to bring their franchise placement objections to the atten-

tion of the manufacturers, the concerted exercise of such rights

by the members of the Alliance appears to have been designed to

dissuade plaintiffs from exercising their options on the land, a

result which no dealer could have brought about acting alone.

Moreover, by concertedly exercising their independent con-

tract rights to block plaintiffs’ access to the manufacturers, the

Alliance, in effect, exercised a sort of veto over the entry of anew

competitor to the market. We have previously suggested, albeit

in a different context, that the exercise of veto power over a new

— oe

franchise application by horizontal competitors constitutes a

patently unreasonable restraint of trade. See Quality Mercury,

Inc. v. Ford Motor Co., 542 F.2d 466, 470-71 (8th Cir. 1976),

cert. denied, 433 U.S. 914 (1977).° Again, no dealer would have

been able to bring about such a result acting alone. Furthermore,

although the dealers coordinated merely the simultaneous exer-

cise of legitimate contract rights, their motivations clearly ex-

ceeded the scope of concerns for which the protest provision of

the franchise agreements were designed. In sum, the antitrust

laws do not countenance such a concerted individual exercise of

the otherwise legal rights of the members of a conspiracy to

achieve a combined effect in restraint of trade in excess of that

possible were the conspirators to act alone. See United States v.

General Motors Corp., 384 U.S. 127 (1966).

Appellants also attempt to clothe the actions of the Alliance

and its members in the garb of protected first amendment

commercial speech. However, it is well-established that the

exercise of such rights as an integral part of an illegal conspiracy

will not shield the conspirators from antitrust liability. See, e.g.,

California Motor Transp. Co. v. Trucking Unlimited, 404 U.S.

508, 513-14 (1972). Here, the Alliance members combined and

conspired to concertedly exercise their constitutionally pro-

tected rights of commercial speech to block the entry of a new

> Quality Mercury involved an exclusive franchise agreement between an

automobile manufacturer and a single franchisee which effectively gave the

latter a veto over the manufacturer’s decision to locate a new same-line

franchise in the relevant market. As such, the case involved merely a vertical

agreement in restraint of trade, an arrangement which inspires a significantly

lower level of opprobrium than horizontal agreements. /d. at 470-71 & n.5;

see Business Electronics Corp. v. Sharp Electronics Corp., 485 U.S. 717

(1988). The present case presents us with a stronger basis for condemning an

effective veto over franchise decisions because, unlike Quality Mercury, we

are presented with an agreement among numerous horizontal competitors.

See infra, § A.2.

eh

competitor into their market. Thus, we conclude that the district

court properly rejected appellant’s constitutional arguments.

We therefore affirm the district court’s finding of a combination

or conspiracy in restraint of trade.

2. Unreasonable Restraint of Trade

Because all contracts, combinations, or agreements among

economic actors in some sense restrain trade, National Colle-

giate Athletic Assoc. v. Board of Regents, 468 U.S. 85,98 (1984),

an antitrust plaintiff must demonstrate that the combination or

conspiracy in question resulted in an undue or unreasonable

restraint of trade. See, e.g., Pumps & Power Co., 787 F.2d at

1256. The anutrust plaintiff may establish an unreasonable

restrain of trade by evidence showing that (1) the conspiracy was

of a type that the law finds to be inherently unreasonable (a per

se violation), or (2) that the conspiracy had an anticompetitive

motive or effect (a rule of reason violation). Overseas Motors,

Inc. v. Import Motors Ltd., 375 F. Supp. 499, 531 (E.D. Mich.

1974), aff d, 519 F.2d 119 (6th Cir.), cert. denied, 423 U.S. 987

(1975); Rosebrough Monument Co. v. Memorial Park Cemetery

Assoc., 666 F.2d 1130, 1138 (8th Cir. 1981), cert. denied, 457

U.S. 1111 (1982).

The classic form of a per se § 1 Sherman Act violation is a

combination, conspiracy or agreement between competitors at

the same level of the market to restrain competition; the so-called

“horizontal” restraint of trade. See United States v. Topco

Assocs., Inc., 405 U.S. 596,. 607-08 (1972); Quality Mercury,

Inc. v. Ford Motor Co., 542 F.2d at 470-71 & n.5. We affirm the

district court’s determination that the Alliance constituted a

horizontal restraint of trade and thus warrants condemnation as

a per se violation of the Sherman Act.

Appellants assert that the restraint in question here is not

horizontal, but rather a vertical non-price restraint, consisting

— A-17 —

only of letters sent individually by the dealers to the manufactur-

ers at a higher level in the market structure. If this were so, we

would be constrained to analyze the present case under the rule

of reason standard which is presumed in vertical non-price

restraint cases. Business Electronics Corp. v. Sharp Electronics

Corp., 485 U.S. 717, 726 (1988); Cheatham’ s Furniture, 728 F.

Supp. at 571. However, we reject appellants’ attempt to recast

their activities as part of a vertical non-price restraint.

As we concluded in the previous action, the evidence demon-

strates that the opposition campaign arose from an agreement

among the nine dealers to take parallel actions to frustrate the

entry of anew competitor into retail market. In this respect, the

facial appearance of the Alliance conspiracy is similar to one

which the Supreme Court rejected in United States v. General

Motors Corp., 384 U.S. 127 (1966). Inthat case, General Motors

attempted to enforce order in its Los Angeles area market when

it presumed recalcitrant dealers not to conduct business with

discounters. G.M. took this action in response to individually

filed complaints from other Los Angeles area G.M. dealers who

found that they were being undersold by the discounters.

As in the present case, the individually filed dealer complaints

arose from an agreement among the complaining dealers to

concertedly take simultaneous, parallel action in opposition to

the practices of their more aggressive competitors. Thus, al-

though General Motors’ action on its face seemingly imposed a

vertical restraint in response to vertical activity from individual

dealers, it came as a result of inducements emanating from a

horizontal agreement among the dealers to constrain competi-

tive activity at the same dealer level.

The petitioners in General Motors attempted to characterize

their activities as vertical in nature, however, the Supreme Court

rejected this argument, declared the dealers’ activities to be

horizontal in nature and condemned them as a per se violation of

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§ 1 of the Sherman Act. The Court concluded by stating that

“where businessmen concert their actions in order to deprive

others of access to merchandise which the latter wish to sell to the

public, we need not inquire into the economic motivation of the

underlying conduct.” 384 U.S. at 146 (citation omitted). Simi-

larly, in the present case, appellants and other dealers acted to

frustrate a prospective competitor’s access to same-line products

by means of a concerted campaign of vertical communications

with the manufacturers. The dealers’ actions in the present case

therefore emanated from a horizontal agreement and thus consti-

tute a per se violation of the Sherman Act.

B. Injunctive Relief

Appellants next challenge the propriety of the scope of the

district court’s order of injunctive relief. They contend that the

district court failed to properly balance the equities in fashioning

its injunction. More specifically, appellants assert that the

portions of the injunction enjoining them from “engaging in any

form of individual activity” and individually “communicating

with or responding to communications from” their respective

manufacturers regarding the Mall or the placement of a franchise

in the Mall, are overbroad in that they prohibit them from

exercising their constitutionally protected rights of commercial

speech. We conclude that the district court has the authority to

impose certain restrictions upon the commercial speech of

individual entities who have violated the Sherman Act. How-

ever, we believe that the district court’s failure to limit the

duration of its restraint against appellants’ exercise of their rights

of commercial speech renders the relief overbroad, particularly

in light of its commercial implications.

Upon finding an antitrust defendant guilty of a violation of the

Sherman Act, a district court is “empowered to fashion appropri-

ate restraints on [the defendant’s] future activities both to avoid

a recurrence of the violation and to eliminate its consequences.”

— A-19 —

National Soc. of Professional Engineers v. United States, 435

U.S. 679, 697 (1978). In fashioning a remedy, a district court

should endeavor to ensure that the conspirators “so far as

practicable, [are] denied future benefits from their forbidden

conduct.” United States v. United States Gypsum Co., 340 U.S.

76, 89 (1950). Thus, the district court may consider both the

“continuing effects of past illegal conduct,” Wilk v. American

Medical Ass’n, 671 F. Supp. 1465, 1485 (N.D. Ill. 1987), affd,

895 F 2d 352 (7th Cir.), cert. denied, _ _ U.S. ____, 110 S. Ct.

2621 (1990); In re Multidistrict Vehicle Air Pollution, 538 F.2d

231,236 (9th Cir. 1976), and the possibility of “lingering efforts”

by the conspirators to capitalize on the benefits of their past

illegal conduct. Wilk, 671 F. Supp. at 1484; see International

Salt Co. v. United States, 332 U.S. 392, 400-01 (1947).

In the present case, appellants clearly could continue to reap

the benefits of their past illegal conduct as members of the

Alliance if left free to individually pursue their objections to the

development of, and the placement of franchises in, the Mall.

Appellants object to the injunction as a restraint upon their

constitutional rights of commercial speech. We agree with this

characterization of the impact of the injunction in the present

case,° however, “[i]t is well-settled that First Amendment rights

are not immunized from regulation when they are used as an

* Appellants’ individual communication with their respective manufactur-

ers Clearly is “expression related solely to the economic interests of the

speaker and its audience.” Central Hudson Gas & Elec. Corp. v. Public

Service Comm'n, 447 U.S. 557, 561 (1980). Thus, we agree that the district

court’s order restrains appellants in the exercise of their rights of commercial

speech which are protected under the First Amendment. See Virginia State

Board of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S.

748 (1976).

a eo

integral part of conduct which violates a valid statute.” Califor-

nia Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 508, 513-

14 (1972); see also National Soc. of Professional Engineers, 435

U.S. at697-98. Thus, while we agree that the resulting order may

curtail appellants in the exercise of liberties that they might

otherwise enjoy, we believe that is a “necessary and...

unavoidable consequence of the[ir] violation” of the antitrust

laws. National Soc. of Professional Engineers, 435 U.S. at 697.

Although we affirm the district court’s decision to impose a

form of relief which hinders appellants in the exercise of their

rights of commercial speech, we are constrained to observe that

the district court’s broad equitable powers are not without limit.

Indeed, the district court is limited by the requirement that it

7 This is particularly true in cases involving commercial speech, because

although it is constitutionally privileged, the “Constitution accords a lesser

protection to commercial speech than to other constitutionally guaranteed

expression.” Central Hudson at 562-63 (citing Ohralik v. Ohio State Bar

Ass'n, 436 U.S. 447, 456-57 (1978)).

*In upholding an order restricting the range of expression that a profes-

sional association could make regarding the ethics of competitive bidding, the

Court in National Soc. of Professional Engineers observed that even injunc-

tions against price-fixing, one of the more egregious violations under the

Sherman Act, abridge the freedom of businessmen to communicate with one

another about prices. 435 U.S. at 679. In making this observation, the Court

suggested that even the most basic forms of equitable relief under the

Sherman Act necessarily involve some type of restriction against the First

Amendment protected right of commercial speech. In responding to the

petitioner’s objections to the district court’s injunction on First Amendment

grounds, the Court stated “the First Amendment does not ‘make it. . .

impossible ever to enforce laws against agreements in restraint of trade... .’

“ 435 U.S. at 697 (quoting Giboney v. Empire Storage & Ice Co., 336 US.

490, 502 (1949)). Similarly, in the present case, appellants’ argument proves

too much insofar as it would invalidate much of the antitrust relief upheld by

the Supreme Court over the past century and render effective enforcement of

the antitrust laws all but impossible.

— A-21 —

“model [its] judgment[ ] to fit the exigencies of the particular

case.” International Salt Co. v. United States, 332 U.S. at 400-

Ol. A proper tailoring of relief to the exigencies of a particular

Case is especially important in cases such as the present one, in

which the relief granted necessarily carries constitutional impli-

cations. Moreover, it is well-established that limitations upon

commercial speech must be “narrowly drawn[,] .. . extend[ing]

only as far as the interest it serves.” Central Hudson Gas & Elec.

Corp. v. Public Service Comm'n, 447 U.S. 557, 565 (1980)

(citation omitted).

In the present case, the district court’s order enjoins appellants

from communicating with their respective manufacturers con-

cerning the Mall for the indefinite future. While a limitation

upon such activities is necessary to prevent appellants from both

reaping and perpetuating the benefits of their past illegal con-

duct, the continuing effects of the conspiracy are certain to

recede with time. Thus we believe that the district court’s open-

ended restriction upon appellants’ individual exercise of their

constitutionally protected rights of commercial speech is inap-

propriate under the present circumstances.

The district court noted that the seven original defendants who

chose to settle plaintiffs’ claims against them prior to trial agreed

not to oppose the development of the Mall for a period of two

years. Plaintiffs’ agreement to this term of relief suggests to us

some measure of what plaintiffs themselves deemed reasonable

under the circumstances.’ We therefore remand to the district

curt for the limited purpose of modifying the injunction by

placing a reasonable time limit upon its prohibition against

appellants’ individual exercise of their rights of commercial

speech concerning the Chesterfield Auto Mall. We suggest in

* We recognize that the plaintiffs are not bound to the two-year term of

relief arrived at through compromise and setuement with the other parties.

— A-22 —

light of the record before us that such a limitation probably ought

not toexceed three years, but leave such period subject to further

determinations by the district court.

C. Attorney Fees

ESD and Sapot counterappeal on the issue of the district

court’s award of fees and costs. They assert error in the fact that

the district court awarded only 25% of what it had expressly

deemed to be reasonable fees and costs for the case. After

reviewing plaintiffs’ documentation, the district court stated that

plaintiffs’ request for $52,933.50 constituted a reasonable figure

for the fees incurred in the original suit filed against all nine

dealers in the Alliance.'° It concluded, however, that fairness

dictated that RWM/Moore not bear the legal expenses of the suit

against all nine original defendants. It accordingly awarded

plaintiffs 25% of the requested fees and costs, roughly appel-

lants’ pro rataresponsibility for the total fees as against all of the

original defendants. Plaintiffs now assert that the district court

failed to properly consider its contention that it would have had

to incur approximately the same fees and costs even if it had

originally filed suit against only the two defendants who pro-

ceeded to trial rather than all nine participants in the conspiracy.

“The district court is vested with significant discretion in

determining areasonable fee.” Paschall v. Kansas City Star Co.,

695 F.2d 322, 337 (8th Cir. 1982) (citing /nternational Travel

Arrangers, Inc. v. Western Airlines, Inc., 623 F.2d 1255, 1274

(8th Cir.), ceri. denied, 449 U.S. 1063 (1980)), rev'd on other

grounds on reh’g, 727 F.2d 692 (8th Cir. 1984); Ohio-Sealy

Mattress Mfg. Co. v. Sealy, Inc., 776 F.2d 645, 650 (7th Cir.

'© It modified plaintiffs’ cost documentation to arrive at a figure of

$3,899.06 in the action as originally filed against all nine members of the

Alliance.

— A-23 —

1985). We review the factual basis for an award of attorney’s

fees in an antitrust action under aclearly erroneous standard and

a district court’s determination of the amount of a fee award

under an abuse of discretion standard. /d., cf. H.J., Inc. v. Flygt

Corp., 925 F.2d 257 (8th Cir. 1991) (same standard of review

applies to fee award for successful antitrust damages claimant);

Hensley v. Eckerhart, 461 U.S. 424, 437 (1983) (same standard

of review applies to fees awarded under 42 U.S.C. § 1988).

The district court was made aware of the fact that the defen-

dants agreed to pay an undisclosed sum of money as part of their

settlement agreements. We note that at oral arguments before

this court plaintiffs were unable to state with certainty whether

they ever informed the district court of the precise amount of

money the settling defendants agreed to pay. Under these

circumstances, we believe that it fell within the discretion of the

district court to decide that fairness dictated that appellants be

held responsible for no more than their approximate pro rata

share of the total fees and costs. We therefore affirm the district

court’s award of 25% fees and costs.

Hl. CONCLUSION

For the foregoing reasons, we affirm the district court’s

finding of Sherman Act liability against appellants and its award

of fees and costs. We remand this case to the district court,

however, for the limited purpose of modifying the injunction by

placing a reasonable time limit upon its restriction against

appellants’ individual exercise of their rights of commercial

speech concerning the Chesterfield Auto Mall.

Appellee is entitled to 50% of its costs on appeal.

A true copy.

Attest:

CLERK, U. §. COURT OF APPEALS,

EIGHTH CIRCUIT.

oo

APPENDIX C

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MISSOURI

EASTERN DIVISION

No. 89-1867-C-5

ES DEVELOPMENT, INC. and EDWIN G. SAPOT,

Plaintiffs,

VS.

RWM ENTERPRISES, INC., d/b/a MOORE CADILLAC

and MOORE AUTOMOTIVE GROUP, INC.,

d/b/a MOORE HYUNDAI,

Defendants.

ORDER

In accordance with the memorandum filed herein this day,

IT IS HEREBY ORDERED that judgment is entered in

favor of plaintiffs and against defendants on the merits of

plaintiffs’ complaint.

IT IS FURTHER ORDERED that plaintiffs are granted the

following permanent injunctive relief pursuant to Section 16 of

the Clayton Act, 15 U.S.C. § 26. Defendants, and their respec-

tive officers, directors, agents, employees, servants, attorneys or

representatives, or any other person or entity acting for or on

behalf of such defendants are ENJOINED from

(1) engaging in any form of individual activity, joint activity

or coordinated action with any third parties concerning the

development, construction or operation of the Chesterfield Auto

Mall;

(2) engaging in any form of joint activity or coordinated

action with any third parties concerning the development, con-

struction or operation of the Chesterfield Auto Mall;

— A-25 —

(3) communicating with or responding to communications

from any automobile franchisor or manufacturer, or any em-

ployee, director, officer, agent, servant, attorneys or representa-

tive of any automobile franchisor or manufacturer, concerning

the Chesterfield Auto Mall, or the award of an automobile

franchise or dealership in the Chesterfield Auto Mall or the

relocation of an automobile franchise or dealership in the Ches-

terfield Auto Mall.

IT IS FINALLY ORDERED that plaintiffs are awarded

costs and reasonable attorney’s fees pursuant to Section 16 of

the Clayton Act, 15 U.S.C. § 26.

Dated this 27th day of December, 1989.

/s/ Stephen Limbaugh

UNITED STATES

DISTRICT JUDGE

— A-26 —

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MISSOURI

EASTERN DIVISION

No. 89-1867-C-5

ES DEVELOPMENT, INC. and EDWIN G. SAPOT,

Plaintiffs,

VS.

RWM ENTERPRISES, INC., d/b/a MOORE CADILLAC

and MOORE AUTOMOTIVE GROUP, INC.,

d/b/a MOORE HYUNDAI,

Defendants.

MEMORANDUM

Plaintiffs filed this action alleging that defendants, which are

two automobile dealerships, entered into a combination or

conspiracy in violation of Section 1 of the Sherman Act, 15

U.S.C. § 1 to prevent a competitor from entering the automobile

retail market. Plaintiffs sought a temporary restraining order,

preliminary injunctive relief and permanent injunctive relief

pursuant to Section 16 of the Clayton Act, 15 U.S.C. § 26.

Plaintiffs originally named nine automobile dealers in west St.

Louis County, Missouri as defendants. Plaintiffs have settled

their dispute with seven defendants and have filed a dismissal as

to each.

In an order dated October 6, 1989 the Court denied at that time

plaintiffs’ motion for a temporary restraining order, and sched-

uled a hearing on October 23, 1989 to consider plaintiff's

request for a temporary restraining order and preliminary in-

junctive relief. On October 23, 1989 the parties decided at the

close of evidence that the Court had before it sufficient evidence

torule on plaintiffs’ request for permanent injunctive relief, and

agreed to submit the matter to the Court for a decision on the

— A-27 —

merits. The Court, having considered the pleadings, testimony of

witnesses, and the documents admitted into evidence, hereby

makes the following findings of fact and conclusions of law as

required by Fed. R. Civ. P. 52.

I. Findings of Fact

Plaintiff Edwin G. Sapot (“Sapot’) is the president and whole

owner of plaintiff ES Development, Inc. (“ESD”). ESD is a

corporation which is in the business of real estate development.

The sole enterprise of ESD is the development of the Chester-

field Auto Mall (“Mall”) on aninety acre tract of land in St. Louis

County, Missouri. Plaintiffs currently have an option to purchase

this tract of land from the owners of the real estate. Although the

option recently expired, plaintiffs purchased an extension for

$7,000 plus an increase in the cost of the land. The extension on

the option contract expires on January 2, 1990.

Plaintiffs have spent approximately $350,000 to date on the

development of the Mall. Approximately half of the total expen-

ditures have paid for the option to purchase the tract of land. The

remaining expenditures have been for securing government

approval of the development and engaging the professional

services of an engineering company, an accounting firm, an

architectural firm, a construction company, a media consultant

firm and a bank.

In February, 1988 plaintiffs began contacting automobile

manufacturers regarding their possible placement of a franchise

in the Mall. Several major manufacturers, including Ford, ex-

pressed an interest in locating or relocating a franchise in the

Mall. As of March 31, 1989, however, plaintiffs had not received

any firm commitments from a manufacturer. Plaintiffs also

engaged in preliminary negotiations with several existing fran-

chisees about placing or relocating a franchise in the Mail. Mr.

Randy Blount, who owns a Chevrolet dealership near the

—

proposed site of the Mall, was interested in relocating his

franchise to the Mall. Thomas Bommarito and Frank Bommarito,

who own several dealerships in the St. Louis Metropolitan area,

expressed an interest in placing a Toyota or Honda franchise in

the Mall.

Plaintiffs intend to set up the Mall in acondominium arrange-

ment. Plaintiffs will finance and then complete all construction

on the Mall except for the interior finish. The franchisees who

obtain franchises in the Mall will purchase the site of their

dealership. There will be a common ownership of a body shop,

and the franchisees will share common expenses such as adver-

tising. Plaintiffs intend tomake a profit from the sale of dealership

sites in the Mall, but will not retain any residual interest in the

Mall once all the sites are sold. Sapot seeks to obtain at least one

franchise inside the Mall, and cites the desire fora Mall franchise

as a primary reason for embarking on this development.

The decision whether to place a franchise in an area is

typically made by the manufacturer, who then selects a franchi-

see from among those who have applied for a franchise. The

decision to award a new franchise may either be prompted by a

market study which reveals the need for a dealership in an area,

or an application from a potential franchisee. Prior to awarding

a franchise, however, the manufacturers must consider the

interests of existing same-line franchises whose profitability

may be affected by the new franchise.

Defendants have rights under their franchise agreements with

Pontiac Motor Division and Cadillac Motor Division to have

their objections considered before a same-line franchise is

established near one of their dealerships. Pontiac Motor Divi-

sion and Cadillac Motor Division must notify defendants of their

intention to establish or relocate same-line franchise within

twenty miles of one of defendants’ franchises. Within thirty days

of such notice defendants may voice their objections to the

—

proposed franchise. Any existing franchise which is located

within eight miles of proposed franchise, or has its “primary

trade area” within eight miles of the proposed franchise, may

seek a review of the decision under the Dealer Appeal Process.

Although defendants do not have any rights approaching veto

power when the manufacturer seeks to award a same-line

franchise near one of defendants’ existing franchises, the

manufacturer must hear the objections of defendants before

awarding a same-line franchise. Defendants may delay a com-

mitment to the proposed franchisee for several months while the

fairness of the decision is being deliberated.

The original defendants in this suit were nine automobile

dealers which owned automobile dealerships near the proposed

site of the Mall.’ Eight of the nine dealerships are located on a

strip of Manchester Road in St. Louis County, within approxi-

mately ten miles from the site of the proposed Mall. The dealers

heard about the proposed Mall from the media, the dealers’

grapevine, and Sapot, who contacted several of the original

defendants to ascertain if they were interested in obtaining a

franchise in the Mall. The dealers were naturally concerned

about the profitability of their existing dealerships if their

respective manufacturers would establish a same-line franchise

in the Mall. Also, the dealers were concerned that the Mall would

divert consumers from the strip on Manchester Road in St. Louis

County.

It is unclear who first proposed that dealers with dealerships

near the proposed Mall meet to discuss the development of the

' The nine dealers named in the complaint are: Frank Bommarito Oldsmobile

Inc.; Beuckman Ford Inc.; Stivers Lincoln-Mercury Inc.; Scott Auto Sales

and Finance Co, d/b/a Chrysler Plymouth West; Reuther’s Investment Co.,

d/b/a Reuther’s Jeep Eagle; Royal Gate Dodge; Stephen Vincel Honda;

RWM Enterprises Inc., d/b/a Moore Cadillac; Moore Automotive Group,

Inc., d/b/a Moore Hyundai.

— A-30 —

Mall. After the idea was proposed, the dealers called around to

other dealers they thought might be interested with an invitation

to the first meeting. The first meeting of the dealers occurred on

March 31, 1989 in a conference room at the offices of Harold

Arbeitman. Harold Arbeitman owns Royal Gate Dodge, a party

originally named as a defendant in this suit. The second meeting

occurred on April 6, 1989 at the same location. Although the

identity of the persons who attended the meetings and the topics

discussed at the meetings are somewhat in dispute, the Court

considers the following facts concerning what occurred at the

two dealers’ meetings to be proven with sufficient evidence.

The sole reason why the dealers met on March 31, 1989 and

April 6, 1989 was to discuss the development of the Mall. Each

meeting of the dealers was attended by approximately ten

persons, consisting of one or two attorneys and eight or nine

dealers who were competitors in the new and used automobile

sales market. Mr. Arbeitman invited his attorney, Mr. Michael

Kaemmerer of Buechner, McCarthy, Leonard, Kaemmerer,

Owen, & Laderman to attend the first meeting. Mr. Kaemmerer

also attended the second meeting. Mr. Laderman, who is a

partner of Mr. Kaemmerer, attended at least one of the meetings

and possibly both. Defendant Thomas Moore (“Moore”), who

owns both dealerships which remain defendants in this suit,

attended both meetings. Each of the original defendants in the

lawsuit attended at least one of the two meetings.

At the March 31, 1989 meeting the dealers agreed to jointly

retain Mr. Kaemmerer to represent them in their opposition to the

Mall. Each dealer had the right in his franchise agreement to

object to the proposed placement of a same-line franchise within

a certain distance from his franchise. Between the first and

second meetings, Mr. Kaemmerer drafted for the dealers a form

letter of objection. The dealers were told to mail theirs to their

respective manufacturers to object to the possible placement of

a same-line franchise in the Mall. The form letter provided in

part:

— A-$1 —

A development known as the Chesterfield Auto Mall is

seeking dealers to open new or relocated franchises. ***

My concern is focused on your action or potential action

with respect to locating a dealership in this market area at

or near this geographical point. *** As you know, [Manu-

facturer/Franchisor] is under a legal obligation, imposed

by both U.S. and Missouri law, to deal with me in good

faith. I trust that [Manufacturer/Franchisor] will not act

arbitrarily, capriciously, or in bad faith when presented

with a request for a new or relocated franchise in connec-

tion with the Mail and will keep my legitimate franchise

interests in mind.

Most, if not all, of the dealers sent letters to their respective

manufacturers which were identical in body to the letter drafted

by Mr. Kaemmerer. Prior to the March 31, 1989 meeting Moore

had a similar letter of objection drafted by another attorney.

Moore, however, sent the letter of objection drafted by Mr.

Kaemmerer to Pontiac Motor Division and Cadillac Motor

Division.”

Mr. Randy Blount was present at the first meeting on March

31, 1989. At that time Mr. Blount was interested in relocating his

dealership to the Mail. Mr. Blount left the meeting after learning

that the purpose of the meeting was to prepare an opposition to

the development of the Mall.

At the April 6, 1989 meeting the dealers accepted the name

“Dealers Alliance” to describe the dealers who had met in

opposition to the Mall on March 31, 1989 and April 6, 1989.

Also, the dealers reviewed and adopted a “statement of purpose”

*Mr. Moore did not send a letter of objection to Jaguar, Sterling, or

Hyundai because he felt that it was highly unlikely that these manufacturers

would consider establishing a dealership in the Mall.

— A-32 —

for the Dealers Alliance. The statement of purpose provided in

part:

The purpose of the Dealers Alliance is to explore and

advance areas of common and individual dealer concern

with respect to actions of franchisors/manufacturers at the

proposed Chesterfield Auto Mall, or any similar geo-

graphic location. *** The goal of the Dealer Alliance is to

investigate and provide facts and evidence to its members

and to the automobile manufacturers concerning the poten-

tial impact of the foregoing upon existing automobile

dealers. The Dealer Alliance seeks to enable the members

and the manufacturers to make informed decisions regard-

ing potential new or relocated dealerships. The further goal

of the Dealer Alliance is to insure thatthe legal nights of its

individual members are protected.

At the April 6, 1989 meeting the dealers selected three persons:

Thomas Bommarito, Harold Arbeitman, and Steven Vincel, as

group representatives of the Dealers Alliance.

Also at the April 6, 1989 meeting the dealers agreed to jointly

commission a market study to be performed by Dr. Steven

Miller, an expert affiliated with St. Louis University. The deal-

ers could use the results of the market study to counter the results

of a market study performed by the manufacturers. Also, the

results of the market study could be used by adealer as evidence

in a lawsuit filed against a manufacturer for its failure to act in

good faith in complying with the terms of the franchise agree-

ment At the time of the April 6, 1989 Moore already had a suit

pending against Cadillac Motor Division in which he alleged

that Cadillac Motor Division had breached its duty to deal with

him in good faith.

Mr. Kaemmerer requested that each dealer complete a ques-

tionnaire. At the top of the questionnaire was typed: “Privileged

and confidential — prepared in anticipation of litigation.” The

_

questionnaire requested each dealer to furnish Mr. Kaemmerer

with a copy of his franchise agreement. The questionnaire also

sought any information the dealer knew about, inter alia, market

studies performed by his respective manufacturer, oral repre-

sentations by his manufacturer concerning the establishment of

new dealerships in the area, and the dealers’ relevant market

area.

After the letters of objection were sent by the dealers, plain-

tiffs have been unable to further negotiations with the manufac-

turers concerning the placement of a franchise in the Mall.

Representatives from Ford, who had expressed a strong interest

in placing a franchise in the Mall, ceased discussions concerning

the placement of a franchise and the possibility that plainuff

would be awarded that franchise. Representatives from

Oldsmobile and Cadillac have also declined to proceed with

negotiations.

The seven original defendants who have settled agreed to pay

plaintiffs an undisclosed sum of money and agreed not to oppose

the development of the Mall for a period of two years. Moore,

who owns franchises which sell the major lines of Pontiac and

Cadillac, and the lesser lines of Hyundai, Sterling, and Jaguar,

has notagreed abandon his opposition to the development of the

Mall.

II. Conclusions of Law

In their complaint plaintiffs allege that defendants entered intoa

combination or conspiracy for the purposes of hindering, frustrat-

ing, delaying, and preventing the development of the Mall in

violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. Section

1 of the Sherman Act provides in part:

Every contract, combination ..., or conspiracy, in restraint

of trade or commerce among the several States, or with

foreign nations, is declared to be illegal...

— <n

15 U.S.C. § 1. There are two essential elements of any Section

1 offense: (1) a contract, combination, or conspiracy, resulting

in (2) an unreasonable restraint of trade. Pumps & Power Co. v.

Southern States Industries , 787 F.2d 1252, 1256 (8th Cir. 1986);

Overseas Motors. Inc. v. Import Motors Limited. Inc., 375 F.

Supp. 499, 531 (E.D. Mich. 1974), aff d 519 F.2d 119 (6th Cir.)

cert. denied 423 U.S. 987, 96 S.Ct. 395, 46 L.Ed.2d 304 (1975).

A. Proof of Combination or Conspiracy

To find a violation of Section 1, the Court must first find the

existence of a contract, combination, or conspiracy. /nterna-

tional Travel. Arrangers. Inc. v. Western Airlines, 623 F.2d

1255, 1265 (8th Cir.), cert. denied 499 U.S. 1063, 101 S.Ct. 787,

66 L.Ed.2d 605 (1980). In the field of Sherman Act violations a

conspiracy, as in other proscribed conspiracies, imports a plu-

rality of persons acting in concert to attain a common goal or

purpose. White v. Hearst Corp., 669 F.2d 14, 18 (Ist Cir. 1982).

The Sherman Act is not concerned with the actions of an

individual entity, no matter how anticompetitive the motive or

effect, unless that individual entity possesses monopoly power.

Pumps & Power Co. v. Southern States Industries, 787 F.2d

1252 (8th Cir. 1986).

Proof of a conspiracy may be by direct or circumstantial

evidence. Conspiracies are rarely evidenced by direct evidence

such as explicit agreements, but must almost always be proved

by “inferences that may fairly be drawn from the behavior of the

alleged conspirators.” H.L. Moore Drug Exchange v. Eli Lilly

and Co., 662 F.2d 935, 941 (2d Cir. 1981), cert. denied 459 U.S.

880, 103 S.Ct. 176, 74 L.Ed.2d 144 (1982) (quoting Michelman

v. Clark-Schwebel Fiver Glass Corp., 534 F.2d 1036, 1042 (2d

Cir.), cert. denied, 429 U.S. 885, 97 S.Ct. 236, 50 L.Ed.2d 166

(1976). Itis permissible for a court to infer a conspiracy from the

actions taken by the alleged co-conspirators. The circumstances

surrounding a particular course of conduct may justify an infer-

—

ence of collusion even though there is no evidence of the acts by

which the conspiracy was formed. Overseas Motors. Inc. v.

Import Motors Limited. Inc., supra, 375 F. Supp. at 531.

In determining whether a conspiracy exists the Court consid-

ers whether the evidence, direct or circumstantial, “reasonably

tends to prove that the [alleged conspirators] ‘had a conscious

commitment to a common scheme designed to achieve an

unlawful objective.”’ Monsanto Co. v. Spray-Rite Service

Corp., 465 U.S. 752, 764, 104S.Ct. 1464, 1471, 79 L.Ed.2d 775

(1984) (citations omitted). “Circumstantial evidence must re-

veal ‘a unity of purpose or a common design and understanding,

or a meeting of minds in an unlawful arrangement.”” Id, (citation

omitted). Finally, although items of evidence considered sepa-

rately may notjustify an inference of conspiracy or combination,

the items may be sufficient when viewed together as part of a

mosaic. H.L. Moore Drug Exchange v. Eli Lilly and Co., supra,

662 F.2d at 945-46 (citing Continental Ore Co. v. Union

Carbide & Carbon Corp., 370 U.S. 690, 698-99, 82 S.Ct. 1404,

1409-10, 8 L.Ed.2d 777 (1962).

In the instant matter there is overwhelming evidence that the

dealers present at the aforementioned meetings on March 31,

1989 and April 6, 1989 entered into a conspiracy .to prevent the

development of the Mall. There is also sufficient evidence that

Moore was a part of that conspiracy. The dealers, who were all

competitors in the markets for new and used automobiles, met on

two occasions to discuss the birth of anew competitor that could

draw consumers away from their dealerships and impose a

substantial threat to their profitability. Also, the dealers who met

on April 6, 1989 accepted the name “Dealers Alliance,” and

adopted a statement of purpose which committed them, in part,

“to explore and advance areas of common and individual dealer

concern with respect to actions of franchisors/manufacturers at

the proposed Chesterfield Auto Mall....” The facts that dealers

who are ordinarily competitors met to discuss the Mall, and then

— A-36 —

adopted a name and common purpose regarding the Mall is

substantial evidence on which the Court could justify the

inference of a conspiracy. The dealers, however, took further

steps toward their goal of preventing the development of the

Mall.

The dealers agreed to jointly retain Mr. Michael Kaemmerer,

an attorney invited to the first meeting by Harold Arbeitman, to

advise them of their legal rights against their respective manu-

facturers. Mr. Kaemmerer drafted a form letter of objection

concerning the Mall which most, if not all, the dealers sent to

their respective manufacturers. The letters sent to the various

manufacturers were identical with only minor changes to iden-

tify the proper sender and recipient. The dealers agreed to jointly

fund a market study which could be used by each dealer in his

opposition to the manufacturers decision to establish a dealership

in the Mall, or in possible litigation against the manufacturer for

failure to deal with the dealer in good faith under 15 U.S.C. §§

1221-1225. Finally, the dealers completed a questionnaire and

furnished Mr. Kaemmerer with a copy of their franchise agree-

ment “in anticipation of litigation” against the dealers’ respec-

tive manufacturers/franchisors.

Moore’s attendance and actions at the dealers’ meetihgs place

him inside the conspiracy. Unlike Mr. Blount, who left after he

discovered the purpose of the meetings, Moore attended both the

March 31, 1989 and April 6, 1989 meetings. Also, Moore sent

the letter drafted by Mr. Kaemmerer to two of his manufacturers

even though he already had a similar letter of objection drafted

by another attorney.

Defendants argue that it is notreasonable for the Court to infer

a conspiracy because the sole concern of each dealer at the

meetings was the protection of his individual rights under his

franchise agreement. Each dealer could have contacted his

individual attorney if his sole concern was the protection of his

a

individual rights under his franchise agreement. Although the

Court believes the dealers’ primary concern with regard to the

Mall may have been the threat of a same-line franchise placed

in the Mall, the Court believes that the motivating factor in

having the dealers meet and engage in parallel protests was to

eliminate the threat of the Mall entirely, regardless of which

automobile lines were sold there.

Eight of the nine original defendants in this suitown dealerships

on a strip of Manchester Road in Saint Louis County, Missouri.

If the Mall was completed, consumers who would ordinarily do

their automobile shopping on this strip of Manchester Road

might be diverted to the Mall instead. The completion of the

Mall, though, depends largely on whether plaintiffs will exercise

their option to purchase the real estate. Plaintiffs will not exer-

cise that option if they do not believe they can interest a

sufficient number of manufacturers in placing a franchise in the

Mall. Under the terms of the dealers’ franchise agreements,

manufacturers cannot make a commitment to establish a fran-

chise in the Mall until the manufacturers have considered the

interests of existing franchises within a certain distance of the

proposed Mall site. Therefore, if dealers which represent the

major automobile lines all file their objections with their

manufacturers or file lawsuits against their manufacturers, the

manufacturers will be prevented from making a commitment to

plaintiffs until the dealer appeal process has ended. Plaintiffs,

which are unwilling to proceed with the development of the Mall

without a sufficient showing of commitment from manufactur-

ers, will not exercise their option to purchase the real estate and

the threat posed by the Mall disappears. The Court believes that

the motive behind the dealers’ meetings and the parallel actions

of the dealers in objecting to their respective manufacturers was

designed to dissuade plaintiffs from exercising their option to

purchase the real estate.

— A-38 —

B. Unreasonable Restraint of Trade

The second element of a violation of Section 1 of the Sherman

Actis that the conspiracy mustresult in an unreasonable restraint

of trade. The second element may be established by proof that the

conspiracy was of a type that the law finds to be inherently

unregsonable (a per se violation), or it may rest on a showing of

anticompetitive motive or effect in the particular case (a rule of

reason violation). Overseas Motor. Inc. v. Import Motors Lim-

ited, Inc., supra, 375 F. Supp. at 531.

The Court must first characterize the nature of the restraint

found in the instant matter. “Restraints imposed by agreement

between competitors have traditionally been denominated as

horizontal restraints, and those imposed by agreement between

firms at different levels of distribution as vertical restraints.”

Business Electronics v. Sharp Electronics, 485 U.S. 717, 108

S.Ct. 1515, 99 L.Ed.2d 808 (1988). Defendants argue that the

restraint in question here, which they assert consists of the letters

of objection sent to the manufacturers by the dealers, is a non-

price vertical restraint and should be analyzed as such. Defen-

dants, however, mistake which restraint is the source of the

alleged antitrust violation. The subject of this lawsuit is the

agreement among the dealers, who were all competitors in the

retail automobile market, to take the parallel actions of filing

letters of objection and pursuing other avenues to dissuade their

manufacturers from placing a franchise in the Mall. This type of

agreement among competitors is clearly a horizontal non-price

restraint.

There is persuasive authority which considered an agreement

among competitors as a per se unreasonable restraint of trade.

In Davis-Watkins Co. v. Service Merchandise, 686 F.2d 1190

(6th Cir. 1982), the Court stated: “[RJestrictive agreements

among independent business entities at the same level of the

market, so called ‘horizontal agreements’, are found to have a

— A-39 —

pernicious effect upon competition and to lack redeeming

virtue, so that analysis proceeds under a per se illegalrule. See

also Quality Mercury.Inc. v. Ford Motor Co., 542 F.2d 466, 471

n.5 (8th Cir. 1976), cert. denied 433 U.S. 914, 97 S.Ct. 2986, 53

L.Ed.2d 1100 (1977); Plueckhahn v. Farmers Insurance Ex-

change, 749 F.2d 241 (Sth Cir.), cert. denied 473 U.S. 905, 105

S.Ct. 3527, 87 L.Ed.2d 652 (1985).

Although there is support for the argument that defendants’

restraint constitutes a per se violation of the Sherman Act, the

Court will also analyze the restraint under the rule of reason.

Under the rule of reason the primary considerations of the Court

in determining whether a restraint of trade is unreasonable are

whether the intent of the restraint is anticompetitive and whether

the restraint itself has significant anticompetitive effects.

Rosebrough Monument Co. v. Memorial Park Cemetery, supra,

666 F.2d at 1138.

In the instant matter the intent of the restraint, which was to

prevent a competitor from entering the market, was certainly

anticompetitive. On one level the dealers sought to prevent their

respective manufacturers from placing a same-line franchise at

the Mall to compete directly with their established franchise

several miles away. On a second level, however, the dealers

sought to prevent the development of the Mall which, regardless

of whether a same-line franchise was placed in it, would divert

consumers away from the automobile retail strip on Manchester

where most of the original defendants own franchises.

The effect of the restraint was also anticompetitive. Since the

dealers sell automobile lines which represent the major automo-

bile lines sold in the United States, the organized opposition of

the dealers would either prevent or frustrate very important

manufacturers from making acommitment to the Mall. If plain-

tiffs could not get manufacturers for the major automobile lines

in the United States to even negotiate as the expiration for the

+ §al

option neared, the real estate deal would likely fall apart and the

threat of a nearby Mall would disappear. Therefore, the

anticompetitive purpose of the restraint and the anticompetitive

effects of the restraint clearly indicate that the restraint consti-

tuted an unreasonable restraint of trade.

Defendants assert that there exists a conspiracy among Edwin

_. Sapot, Michael Kaemmerer, and Harold Arbeitman. As has been

discussed, supra, the attorney Michael Kaemmerer was present

at the dealers’ meetings on March 31, 1989 and April 6, 1989 and

was jointly retained by the dealers to represent their interests in

opposition to the Mall. Mr. Kaemmerer represented Mr.

Arbeitman prior to the meeting on March 31, 1989, and was

invited to the meeting by Mr. Arbeitman.

Mr. Arbeitman and Mr. Sapot are brothers-in-law who have

jointly owned and operated an automobile dealership. In 1985,

Mr. Arbeitman sold his share to Mr. Sapot. Since 1985 Mr.

Arbeitman and Mr. Sapot have neither maintained a business nor

a social relationship. Mr. Kaemmerer has represented Mr. Sapot

for several legal problems concerning labor law. In 1985 Mr.

Kaemmerer represented plaintiff in an action before the Na-

tional Labor Relations Board which is still pending. In 1988 Mr.

Kaemmerer helped Mr. Sapot with labor problems in connection

with plaintiff’s potential purchase of an automobile dealership.

After the first dealers ‘ meeting on March 31, 1989 Mr. Sapot

spoke with Mr. Kaemmerer about legal matters which are

unrelated to this suit. Although Mr. Sapot was aware that Mr.

Kaemmerer had attended the March 31, 1989 meeting, Mr.

Sapot asserts that at his meeting with Mr. Kaemmerer neither he

nor Mr. Kaemmerer mentioned the March 31, 1989 dealers’

meeting.

There is no evidence of a conspiracy between Mr. Sapot, Mr.

Kaemmerer, and Mr. Arbeitman, and their relationships with

each other do not have any bearing on the antitrust violations of

ay Eee

defendants. Mr. Kaemmerer, however, may have violated his

ethical duties concerning the representation of conflicting inter-

ests if the allegations of defendants are true.

III. Remedies

A. Injunctive Relief

Plaintiff filed this action pursuant to Section 16 of the Clayton

Act, 15 U.S.C. § 26 seeking a temporary restraining order,

preliminary injunctive relief and permanent injunctive relief.

After a hearing on October 23, 1989 to consider plaintiffs’

requests for a temporary restraining order and preliminary in-

junctive relief, the parties agreed to submit the matter to the

Court fora final decision on the merits. Therefore, the only relief

currently sought by plaintiffs is permanent injunctive relief

pursuant to Section 16 of the Clayton Act, 15 U.S.C. § 26.

“The standard for the granting of permanent injunctive relief

under Section 16 of the Clayton Act is somewhat different from

the standard for the award of damages. In the injunction context,

once a determination has been made that the defendant has

violated the antitrust laws, a plaintiff need only demonstrate a

‘threatened loss of damage’ growing out of the violation, 15

U.S.C. § 26. Injunctive relief, therefore, is ‘available even

though plaintiff has not yet suffered [or proved] actual injury;

[the plaintiff] need only demonstrate a significant threat of injury

from an impending violation of the antitrust laws or from a

contemporary violation likely tocontinue orrecur.”” Rosebrough

Monument Co. v. Memorial Park Cemetery, 666 F.2d 1130,

1147 (8th Cir. 1981), cert. denied, 457 U.S. 1111, 102 S.Ct.

2915, 73 L.Ed.2d 1321 (1981) (quoting, Zenith Radio Corp. v.

Hazeltine Research. Inc., 395 U.S. 100, 130, 89 S.Ct. 1562,

1580, 23 L.Ed.2d 129 (1969).

In the instant matter there has been a violation of the antitrust

laws. Due to the nature of the violation and the circumstances

=

surrounding the development of the Mall, the Court concludes

that defendants continued opposition constitutes a threatened

loss of damages and therefore permanent injunctive relief is

appropriate. Defendants have filed objections with Pontiac

Motor Division and Cadillac Motor Division, manufacturers

which represent two major American automobile lines. Defen-

dants also own franchises for Hyundai, Jaguar, and Sterling, but

have not yet filed an objection concerning the Mall with these

manufacturers. Through the exercise of their rights under their

franchise agreements, United States law, and Missouri law

defendants may prevent these manufacturers from placing a

franchise in the Mall. By filing an objection defendants will

delay these manufacturers from making a commitment to

plaintiffs. Since the completion and ultimate success of the Mall

depends in part on the number and variety of manufacturers who

place franchises in the Mall, defendants continued opposition,

which will affect the manufacturer’s decision, represents a

threatened loss of damages to plaintiffs. Therefore, the Court

concludes that permanent injunctive relief is appropriate.

B. Costs and Attorney’s Fees

The Court concludes that plaintiffs have substantially pre-

vailed in this suit against defendants, and are therefore entitled

to costs and reasonable attorney’s fees pursuant to Section 16 of

the Clayton Act, 15 U.S.C. § 26. Since plaintiffs originally

brought this suit against nine defendants, seven of which settled

after a substantial amount of work by plaintiffs’ counsel had

been completed, the Court is not inclined to award plaintiff the

total amount of costs and attorney’s fees authorized under this

statute. Instead, the Court will review the documentation sub-

mitted by plaintiff concerning costs and attorney’s fees and

determine a fair portion of costs and attorney’s fees for which

defendants are liable.

Dated this 27th day of December, 1989

Lovie oai>

/s/ Stephen Limbaugh

UNITED STATES

DISTRICT JUDGE