Petition for Writ of Certiorari — Fontana Aviation, Inc. v. Beech Aircraft Corp.

FONTANA AVIATION, INC, A Corroratiex,

ws,

BERCH AIRCRAFT CORPORATION, A gre

ate HARTROG-SCHNECK AVIATION, INC, A Cor-

PORATION,

PETITION FOR WRIT OF ‘RI TO THE

‘POR THE SEVENTH CIRCUIT.

Frances J. McUoxxens,

Joux Borst, Ja.

Ricnarp P. Campuris.

Attorneys for Pctitroner,

_ Pentana Aviation, lnc.

Of Counsel :

MoCorxeu., Cvars, Manoy & Borst,

134 Seuth La Salle Street,

RAndolph 6-9131

Paar

(Ytations To Opinion Below on. 2

EE WUaGee hhh aehebniesstsacssaacbueteun 2

ee ec ci ech bubs csbeeteeckiness inn 2

Statutory Provisions and Rules Invelved............ 3

eee cs ab dcaneebakeantened -

The Antitrust Vielations... 0... 6

The Fact and Amount of Damage.............. 19

The New Votel Quieres 17

Reasons for Granting the Writ. 19

i annchnentnadnasnesedeccksncnccke sail a Setadnds bd)

Appendix A—Statutes Invelwed ... 2.2.2... 8... Al

Appendix BR Memorandam Opinion of District Court A3

Order Dated March 10, 1968........... Al6

Opinion of The Court of Appeals Dated ©

SG GA, wn cccccaccsusscccs Ais

— Judgment Dated September 23, 1970 A33

Appendix (—(irder Dated October 19, 1970. ......... A35

CTTATIONS.

Cases.

A. C. Becken Co. v. Gemex Corporation, 272 F. 2d 1

SEL nv cnctiu suchabh sak hebikmicadeehae 23

Bigelow v. RKO Radic Pictures, 327 U. S. 251 (1946)

‘nbd heaenbssdeceshineviesdaweneanenebanl 6, 17, 19, 21

Continental Ore Co. v: Cen Ca Gap, SSS. 8.

PED 6060050 Eehebasekbescscceubeceuensanel 19, 23

“

Wairment Gtaxe Werks v. Owh Merk Oat O88, O87 UN

474 (TAR) pnd

Wien vo Ameren Five & Unenalty Ov, 29 FF. oa Ves

(ath Or, TA) 22

Moret.” Nationwnde Te. ted Net ou) Mere Te ted,

An S71 BOERS CFTR Oe, E887) Bt)

Porkins Standard (8108. 00) 08.682 (ERD) TR ot

_ Semper v. Unter O81 Oempany, 98 USES CN) Ot 2d

Utah Mie Company v. Unntinental Rakin Company,

ea FM 16t Cfeth Ole, TRS) a“

Witham 1. Rankin Oe. v. Nemartated WUD Vexters, 02 ¥.

Mie cM Ow, fe). ‘7.

Zomth Radke Corperation Harettine Research Vee.

418 Fo) ath Cir, 888), hie ah 24

Zomath Radio Corperation v. Hageltine Reewarch toe.

SC) re ARR

OW. OO GUNG... ..... MR... .. 060. ceensi. 2

Clayton Act: See. 4 (YUL BOL EA. 2

Sherman Act: See. EQUUS SLC. BU, 2, 3, 4,12

Rule Wb) and (c) of The Federal Rates of Civil

SEE 6 sShca dake ebs eRe Asakennes etka AW.

Miacellancous.

A Moore's Fed. Prac., 959.1513] pp. 3903-4......... 22

FPONTANA AVIATION, ING. A Oonronaden,

OR,

BENCH AIRCRAFT CORPORATION, A Conronnms,

axn HARTROG.SCHNNCK AVIATION, EXC, A Con

TURATION,

Respondents.

ie. Alli

PETITION FOR WRIT OF GERTIORARI TO THE

POR THE SBVENTH CIRCUIT.

Petitioner, Fontana Aviation, Inc. prays that a Writ of

Certiorari issue te review the judgment of the United

States Court of Appeals for the Seventh (Circuit entered in

the above entitled cause on September 23, 1970 insofar as

the judgment failed to disturb the District Court's grant of

a new trial based solely on the same legal grounds held

efrgneous by the court below in reversing the District

Court's grant of jedgment N. 0. V__

I]

*

The Wistert Cert’: neenerandem eqinien ix anpah

eho and i printed mm Appendix BR) hereteesfie. pp A

AW. The epinion of the Cwnrt of Agqweats i as vet enpah

the aad is printed in Agqpemdin BL refine. gp. NTR AR.

JeRBICTYON

The jedgwent of the Coert of Appeals wax entered on

September JR, 1870 ( Aqpetetix BR, refine. pp. ABR ARE) A

Vetitien for Rehearing with reapect only te the matter of

taxmmg costs was cranted and the pedement was nredified im

thix regard on Usteber 19. 1970 (Appendix CO) fefre. pp.

ASS AQS). The jartediction of thix Oeert & tnveked ander

2 UL Sc. grad). :

had lost new airplane sales amd profitx it week! have made

o

8

the atmownt of the vendict. The Osert of Apprats never.

thetess dechwed te dicturh the wee trial ender,

The questions preented are:

1. Witter ima private aptitewd ertion Ue’ jary de

termination of the caer of injury anol ite amount, when

Sepperted hy enmpetent and legally cafficient evidenen, i

conceive aml preciedes the trial jige from aserhing ~

the jury's fanetion by setting aside the jury's verdict and

ranting a.wew trial on the premed that the evidewee

trentattich the Fart of damage.

2. Whether reversal of a judgment NO, V. which

jrement was hased entirely ona mistate of law ax te the

nan <attnany f thn damage eet, eaten <i

inmates the hasix for a new trial order based solely on the

came evel aie therefore requires reveal af the we

trial erder ax well, -

“3. Wheater the refusal of the court below te disturb vse

the new trial onder while at the same time holding there

was competent, cobvtantial evidence te support (1) the

jury's verdict and findine of antitrust vielation, (2) the

fact of damaie and (2) the damage amount, constitutes

| an untae invanion of thr right to a jery trial an guaran:

teva Wey the Reweeth Amendment. -

Séction 1 of the Sherman Act, 15 U.S. C. § 1; Section 4

of the -Clavton Act, 15 U.S. C815; a0 Ge DR) ent

(¢) of the Federal Rules of Civil Procedare.

| The foregoing statutes and rules are printed in Appen-

ais 4, fen, op. 20-08.

€ ; sien! =

4

\

Petitioner, Fontana Aviation, Inc. (Fontana) is a former

dealer for Beech Aircraft Corporation (Beech). It is en-

gaged in the business of selling and servicing airplanes, as

well as providing various flight connected services at Ford

_ Airport in Iron Mountain, Michigan. Fontana’s dealership

- was terminated in April, 1966 pursuant to the antitrust

violations found by the jury and as to which the court below

concludes there was substantial evidence.

- Respondent Beech is engaged in the manufacture, distri-

- bution and sale of aircraft under the trade name ‘‘Beech-

craft’’. Beech sells it planes through a nationwide net-

work of twenty-four distributors who in turn sell largely

to retail dealers. Beech also owns and operates four dis-

tributor companies which sell both to independent dealers

and directly to ultimate customers.

Respondent Hartzog-Schneck Aviation, Inc. (Hartzog)

is a.Beech distributor located in Rockford, Illinois. Hart-

zog is the Beech distributor with whom Fontana had a

dealer contract at the time of termination. Hartzog sells

to independent dealers such as Fontana and also sells di-

rectly to consumers through its wholly-owned dealer com-

pany.

Shortly following termination of its dealer contract pe-

titioner brought this antitrust action for damages and in-

junctive relief alleging a combination and conspiracy

among Beech and the Beech distributors in violation of

Section 1 of the Sherman Act and that as a result of the

violations alleged its dealership was terminated. The

court below summarized the pertinent complaint allega-

tion as follo © (App. B, infra, p. A19):

‘‘(The complaint alleged] a conspiracy whereby

the United States was divided into exclusive terri-

Following a five week jury trial, a verdict was returned

in favor of Fontana in the amount of $150,000, on which the

court entered judgment in the trebled amount of $459,000,

together with costs and attorneys’ fees. Thereafter, pur-

_suant to defendants’ motion, the District Court vacated

the treble damage judgment and entered judgment for de- —

- fendants notwithstanding the vérdict. The District Court

‘‘assumed’’ defendants were guilty of antitrust violations

but held that petitioner had failed to prove the fact of

damage. In reaching this conelusion the District Court

rejected the damage proofs on legal grounds held to be

erroneous by the court below. The Distriet Court also,

without any discussion, and on the same grounds, condi-

tionally granted defendants’ motion for a new trial ‘‘ should

this judgment be vacated or reversed.’’

The court below reversed, holding that there was sub-

stantial evidence to support the jury verdict and finding

of antitrust violation and that the. fact of damage was

implicit in the violation found. Apart from the evidence

offered on this issue by petitioner the court said ‘‘[WJe

are in a day and age in which the value of the nationally

%

mivertined franchise is a matter of general recagnition.

If Fontana were deprived of the dealership (or franchise

right) as a result of an illegal conspiracy, seme damage.

woukd appear to be implicit’ (App. BL infra, p. A29).

Further the court pointed out, ‘*Beech'’s Viee President

conceded that Fontana weuld be at a competitive disad-

vantage im attempting te sell new Beech airplanes after

the loxs of it. authorized dealer status’’ (App. B, tefra,

p. AS), Tae court concluded therefore that **|i]nsefar as

the ruling on judgment No OV. was concerned, the fact

that the alleged Wegality put plaintiff at a. competitive

disadvantage in competing for the business of a number

of identified prospects was adequate te make erroneous the

‘ruling on the motion for judgment N. OL VO (App. B,

mfra,p. AQ9).

The court below further stated, “‘lelnece there is suf

ficient evidence of the fact of damage te go to the jury, the

assessment of the amount is largely a matter of the jury's

consideration ef all the evidence. Bigelow v. RKO Radio

Pictures, 327 US. 21, 264 (146). (App. B, ifra, pp.

ASO AST.)

The Ceurt of Appeals declined, however, to distarh the

new trial order notwithstatkding the fact that it was based

entirely on the same legal grounds held to be erroneous -

by the court in reversing the judgement N. OL V. y

The standard Beech distributer and dealer agreements

on their face and without more established an interlocking

network of horizontal agreements among competitors not

to compete in each other's exelusive territory (PX 106,

1OT, A. 1589, 1540).' It was a riolafion of the agreements

for the distributors or their dealers to mivertixe or solicit

y References are to the printed Appendix in the Court of

Appeals.

new plane sales outside the distributor's assigned territory.

When a distributor (or his dealer) -was contacted by an

out-of territery prospect for a price quotation, the dis

tributer was to ‘immediately communicate with the dis

‘tributor in whose territory the prospect belongs for the |

purpose of determining the sales action to be pursued”’

(A. 88-90). The agreements warned. that under no cir

cumstances was the customer or prokpect “to be made

involved inor aware of any controversy or inter-territory

negotiations between distributors’? (A. 90-1).

The distributors, inieluding Hartzog, and high officials

of Beech met together at distributer, council meetings and

agreed to continue to observe the territorial restrictions in

the standard agreements. They did so although aware of

the antitrust ramifications because they wanted the ‘pro

tection” afferded by the agreements (A. 371-2, 1404).

When Beech acquired its own distributorships it) wrote

the other Beech distributer. that it would be bound by

the same ‘‘standard policies and practices’’ contained in

the standard agreements (PX 122, A. 1714; 908-09).

The territorial limitations were enforeed by the dis-

tributors and Beech throughCassessment and collection of

infringement penalties. When out-of-territory sales were

made without prior agreement with the distributor in whose

territory the customer belonged, the infringing distributor

was required to pay a penalty assessed by Beech or for-

feit all dixeounts on future plane purehases (A. 94, 104;5,

153-63, 367). Similar restrictions and penalties were in

posed on salex by dealers outside his distributor's assigned

territory. On one occasion Fontana was threatened with

cancellation of its dealer contract by Hartgog and ‘‘fined”’

$1,000 for selling an airplane to a customer in another

distributor's territory (A. 92-103),

It was admitted that the purpose of the territorial

ee na

s

restrictions and other provisions in the standard agree

ments was to suppress price competition between the Beech

distributors and their dealers (A. 90-1, 101-2). A Beech

vier president testified the purpose was ‘‘to divide the

spoils from the dual effert’’ (A. 861).

The court below held that the foregoing evidence tay>-

ported the jury finding that the factual situation was as

follows (App. B, infra, p. Al9):

Prior to 1966, Beech’s contracts with its distri-

buters, and the contract that Beech distributors had

with their dealers? contained limitations upon the sale

of airplanes outside the distributors’ or dealers’ terri-

tory. There were provisions for inter-territorial finan- -

cial adjustments if such sajex outside the territory took

place. Further these territorial limitations had been the

subject of discussion between Beech and its distribu-

tors. These discussions ordinarily occurred at meetings

of the Beech distributor advisory council which met

and discussed mutual problems. The council ineluded

the president of Hartzog and the meetings were at-

tended by officials of Beech. In February 1964, the

minutes of the council indicated that there had been

— coneern expressed at legal ramifications of the portion

of the contract dealing with the territorial restrie-

tions.’’

The court below further held with respect to this evi-

dence that ‘‘the jury reasonably could have found that

for the purpose of lessening competition a rigid territorial

division had been worked out on a horizontal basis be-

tween the various distributors with the tacit approval of

Beech, which also participated therein a its own

distributor companies’? (App. B, infra, p. A24).

In addition to the territorial restrictions, Beech, by

agreement with the distributors, imposed airplane stoeking

requirements on independent dealers which were intended

to and had the effect of foreclosing competition in the sale

j

9

[3

. E\

of the larger twin engine or corporate class airplanes by

removing them from the economic reach of independent

dealers (PX 21, A. 1313-14).

The Beech sales policy manual which was incorporates

by reference into the standard distributer agreements

required ax a mitmum that the dealer stock in inventory

or as a current model demonstrator the model or class of |

plane sold in order to be entitled to a Class A discount of

20% (PX Gs, 71, A. 1387, 1391). Hartzeg’s. dealer con-

tracts (as well as those of other distributors) which were

expressly approved and countersigned by Beech at all

times contained these minimum requirements (PX 54, 105,

A. 1368, 1577). Dealers who did not satisfy Class A re-

quirements were Class B and received a lessef diseount

percentage, usually only 10%.

As non-stockingsdealers with only a 10% margin, the

independent dealers could not compete in price with the

distributors’ own dealer eompanies which received the

full 20% discount without being required to comply with

the foregoing stocking requirements (A. 83-4, 343, 886-7).

Further, in the case of the new King Air model, Beech

and the distributors agreed that sale of this airplane

would be restricted to the distributor organizations or

the distributors’ own: dealer companies. The standard dis-

tributor agreements provided that ‘‘All King Air firm

‘ orders are to be the result of contractual retail (only) sales

commitments on the part of the King Air distributor order-

ing the airplanes’’ (PX 130, A. 1687). A Beech vice presi-

dent testified ‘‘we do not accept orders from distributors

for King Airs other than demonstrators unless it is the

result of a retail sales commitment on their part’’ (A. 571)

and that this provision precluded distributors from fran-

chising independent dealers to sell the King Air and that

this continued to be Beech’s policy until at least February,

1968 (A. 571), well after termination of Fontana’s dealer-

ee ee

o

siup. As a consequence independent dealers were foreclosed

freee purchasing King Air aireraft for resale or demonstra

tien and were confined to a sales agent's or ‘bird deg’’

rele with ne control ever price in the sale of this air

eraft (PX 21, A. 1303-14).

While the court below im it« opinion did not speritirally

dincuss the evideace with respect to the stocking and King

Air restraints, it observed, **we find adequate supportive

evidence in the overall pattern of operation on which to

base a verdict with regard to the other matters of com.

plaint by Fontana, being the stecking requirement and the

restraint on sale of King Airs. All of these matters could

well have been foul by the jury as having been conceived

as part ofan illegal market control’’ (App. B, fra,

p. AZ).

Fontana’s dealer contract was terminated in early 1966

when it sought a contract precluded by the conspiracy

terms. Fontana sought a contract and terms which would

permit it to compete in the sale of corporate class planes

with Hartzog’s own dealer company. Specifically, Fontana

demanded to be franchised to sell the profitable King Air

as well as other larger airplanes (A. 396-8). Fontana

wanted a 20% discount but objected to stocking the en-

tire line of Beech planes in order to be entitled to it (A. 182,

317). This request was refused by Hartzog and when

Fontana persisted in its demands Hartzog terminated

Fontana’s dealership (A. 183). These conversations oe-

curred while the 1965 distributor agreements were still in

effect (A. 181).

Following notice of termination Fontana contacted two

other nearby Beech distributors in an effort to secure

a dealer contract. At that time the distributor agreements

had been amended to delete the express ‘restrictions on

out of territery airplane sales and the infringement penalty

provisions. However, there were no changes in the ter-

ritorial assignments in the 1966 contracts. What was pre-

* viously the distributor's ‘‘exclusive. territory”’ became his

“area of rexponsibility."’ Appointment of ‘‘authorized’’

dealers was restricted to those lorated within the distribu-

tor’s axnigned territery (1X 99, A. 1536-6; A. 115, 351-2).

Both distributors contacted by Fontana expressed initial

interest. After checking with Beech, however, and finding

that Beech opposed the appointment because of the fact

Fontana would be an out-of-territory dealer, the distribu-

tors declined to appoint Fontana a dealer (A. 406-8, 674-5).

(ime dixt ributor testified that appointment of Fontana would

represent a change in Beech's marketing policy as he under-

stood if and that if he were to appoint Fontana in disregard

of this policy Hartzog was likely to retaliate by appointing

a dealer in his distributor territory because it was a ‘‘two-

way street’? (A. 1116-17, 1124).

The court below held that the evidence was sufficient to

support a jury finding that both the termination and refusal

to appoint were in furtherance of the conspiracy terma,

stating (App. B, infra, p. A20):

... Karly in 1966, when the corporate class plane

market was just beginning to develop, representatives

of Fontana and Hartzog met, at which time Fontana

indicated it wanted a dealer contract which would per-

mit it to sell the relatively new King Air without being

required to purchase and stock the entire line of Beech

planes necessary to obtain a twenty pereent diseount.

Hartzog replied that Fontana should confine its sales

effcr's to single engine and light twin planes only and

that ** would not receive a contract permitting it to sell

King Air. Fontana indicated it would attempt to secure

a direct dealership from Beech. Hartzog replied that

if it did so Hartzog would cancel Fontana’s contract.

iz

Subsequently, Fontana unsuccessfully attempted to

secure a direct dealership frour Beech, which dechned

fo deviate from its established marketing setup through

distributors. Thereafter, Hartzog terminated the Fon

tana dealership contract as of April 15, 1966. Subse

quently, Fontana sought to secure an authorized dealer

ship from two other distributors, one lorated in Pontiac,

Michigan, and one jerated in Rochester, Minnesota.

These dist ributers, after checking with Beech, declingh

te enter into a dealership contract with Fontana.”

The damage claim was divided into two categories: (1)

these damages attributable to the conspiracy restraints

during the period Fontana was a dealer under Hartzog, and ~

(2) those damages attributable to claimed loxs of aircraft

sales during the period after termination to date of trial.

| As to the former, petitioner claimed total damages of

$09,423 consisting of (1) 612000 based on an infringement

penalty assessed against it for making an out-of territory

sale in violation of the territorial restrictions (PX 8 & 9,

A. 1291-1293); (2) 611,750 and $7,365 on two airplane sales

where under the conspiracy terme it was limited to a non-

stocking dealer discount of only wo instemd of the 20% |

discount reeeived by Hartzog’s own dealer company with-

out stecking (PX 1258 & 125, A. 1681); and (3) $49,308

ona King Air sale where under the conspiracy terms it

was limited to a sales agent's commission of $12,500 instead

2,0f the 20% discount received by Hartzog’s own dealer

company (PX 1A, A. 1680).

The court below expressly held that the territorial re-

straints and infringement penalty provisions violated See-

tion 1 and that there was eubstantial evidence to support a

jury finding and verdict based thereon. The court also held

that there was ‘‘adequate supportive evidence’’ from which

the jury could find that the stocking and King Air restraints

were part of the overall conspiracy to withdraw the corpo-

13

rate class plane market from the independent dealers ‘fen.

B, snfra, p. AZ).

Farther, the court below held with respect to the pre-

termination damages that the trial judge erred in examin-

ing each item separately and without regard to the overall

conspiracy or pattern of ‘illegal amet control’? (App.

K, tafra, p. A31).

There in ne suggeetion in the epinies of the court belsw

that the pre termination damage proofs were not competent

proeef of both the fact and amount of damage to the extent

of the $69,000 shown; however, since these damages would

not, standing alone, support the full amount of the jury

verdict of $150,000, the court devoted its diseussion of the

damage issues to the port termination damages.

As to post-termination damages, petitioner offered the

testimony of its offieer that ax a terminated dealer it was

unable to sell new Beech airplanes or pursue qualified pros-

pects who had manifested interest. in purchasing planes

(A. 677-8). After termination, Fontana had no established

xouree of supply, no aeeess to demonstrator aireraft, no

information on current prices, no sales and technical data,

and no vecess to Beech serviee and sales school support and

training for its staff (A. 542-51, 689-99, 720-5). Further,

Reech’s own vier president admitted that°a terminated

dealer trying to sell new-aireraft without a dealer contract

was under a crippling ‘‘competitive disadvantage’’ (A.

51). ;

The court below held that this evidence alone established —

that petitioner had suffered damage as a result of* the

illegal termination of its dealer contract ial B, infra,

p. A29).

Proof of the amount of post-termination damages was

substantially based on the testimony and estimate of Fon-

tana’s officer that with its normal 10% customer discount

\ :

14

(substantially more than that allowed by Hartzog's dealer

company) it would have sold various models of new Beech

planes to seventeen identified prospects who had asiied

Fontana for price quotations. As to these prospects the

court below observed, ‘‘there was supportive evidence that

all of the prospects already owned planes and that they had

business needs for executive aircraft as well as having

seme business connection in the Tron Mountain, Michigan

region. Fontana had previously sold planes to and done”

service work for some of the prospects and a number of —

the prospeyts subsequently did purchase sircraft"’ (App.

RB, infra, p. A27).

Fontana’s officer further testified that Fontana would

have realized a profit of 10% on these sales if completed ;

that other than minimal selling and demonstration expenses

no additional expenses. (over and above existing overhead

burden) would be ineurred in making these sales; and that

even these few expenses would he paid for out of charter

revenues earned on the demonstrator aircraft.

The total claimed lost profits or damages on these sales

wits $209,800.

Regarding the competency and weight to be given to this

testimony, counsel for Beech said (A. 716) : E

+ could certainty have uo objection to the witness

testifying, if. you*had sold prospect A, whom you had

. named, at such and such a price, what would your profit

have heen: .. . The evidence as to their status is in the

record. I suggest that how many of them he would

ae SS eee aa oe among other

things, the jury here to determine . .

The court below, while characterizing the damage esti-

_ mate as *‘weak’’, held that the estimate was competent

evi and secaguiand that the fact that petitioner had

heen ‘ating under the conspiracy restraints and was

terminated just as the corporate airplane market was de-

15

veloping ‘‘did not present the usual situatian’’ so as to

petan: a before and after earnings comparispn. Further

the court said the matter of the weight to be given to the

damage textimony was for che juty and observed ‘‘the jury

- may well not have accepted the Fontand witness’ assertion

ax to some of the alleged prospects and may have reduced

the damage award accordingly. Apparently this is what

happened, for the jury award is substantially less than the

amount plaintiff asserted as its dasmages’’ (App. B, infra,

p. A320):

c ‘ourt in n rejecting the post-termination damage proofs.

First, the District Court had held that & a matter of

Second, the District Court had held: that while there was

evidence that plaintiff would be at a competitive disadvan-

tage in attempting to sell new Beech aircraft as an ‘‘un-

authorized’’ dealer, it had not ‘‘specifically demonstrated’

- ee

16

that this was true in the case of the 17 prospects mentioned

(App. B, infra, p. All). Concerning this ruling the court

below said (App. B, infra, p. A29):

‘*As to the contention by Hartzog and Beech that

plaintiff could have obtained new Beech aircraft from

Beech distributors even without. an authorized dealer

status, problems existed. Beech’s Vice President tacitly

admitted that this theoretical possibility was not a

practical solution when he testified to the many teeb-

nical services that are available only to authorized

Beech dealers and conceded that unauthorized dealers

would be at a competitive disadvantage.

Further there was evidence that the plaintiff did

attempt to compete in this manner on at least two

separate occasions but unsuccessfully so, Fontana was

not bound to make repeatec requests for airplanes from

Beech distributors or to exhaust every possible avenue

to avoid the effects of defendant's alleged illegal ac-

tivity but could maintain an action for an injury

which flows naturally and expectedly from such ac-

tivity. Zenith supra at p. 114 n. 9; Continental Ore Co,

v. Union Carbide & Carbon _ 370 U. 8. 690, 696-

702 (1962).’’

Third, the District Court, while crediting: the damage

testimony, had held that petitioner had a duty to present

the ‘‘best available evidence’’ and thus was required to

depose or call at the trial each of the 17 prospects to estab-

lish through their testimony that they would have purchased

from Fontana had Fontana been a dealer (App. B, infra,

p. Al2). Concerning this ruling, the court below held that

petitioner was not required to depose or call each of the

prospects and its failure to do so went only to the weight

of the evidence and not its competency. The court pointed

out that petitioner’s failure to call the prospects ‘‘ undoubt-

edly weakened plaintiff’s case’’, but that the jury had

apparently taken this factor into account in fixing the

damage award (App. B, infra, p. A30).

a

17

The Court of Appeals coneluded by stating, ‘‘what we

have said is sufficient to indicate the error of the trial court

in finding that the evidence on the fact of damage issue was

overwhelming and conclusively against Fontana. Once

there was sufficient evidence of the fact of damage to go to

the jury, the assessment of the amount is largely a matter

of the jury’s consideration of all the evidence. Bigelow v:

RKO Radio Pictures, 327 U, 8. 251, 264 (1946)’’ (App. B,

infra, pp. A30-A31),

The conditional grant of the new trial was based on the

same ground as the grant of judgment N. O. V., to wit: that

petitioner had failed to prove the fact of damage. The trial

judge mentioned no additional grounds for the new trial

order, Indeed, there is no separate discussion of the new

trial motion at all, The District Court's opinion is devoted

entirely to a discussion of the N. O, V. motion and the legal

reasons assigned for rejecting the damage proofs. In a

formal one sentence compliance with Rule 50(c), the trial

judge, after granting defendants’ motion for judgment

N. O. V., added, ‘‘défendants’ motion for a new trial is

conditionally granted, should this judgment be vacated or

reversed, Rule 50(¢), Fed. RB. Civ, P.’’ (App. B, infra, p.

Al15). The accompanying judgment order merely recites:

‘‘If the aforesaid judgment be vacated or reversed, then

defendants’ motion for a new trial is granted on the

grounds set forth.in the Court’s memorandum opinion"

(A. 65).

It is thus apparent from the fece of the order that in

granting the new trial the court relied on the same grounds

assigned in rejecting the damage proofs and deciding the

N. O. V. motion—grourds which the opinion of the court

below expressly holds to be erroneous as a matter of law

and factually disproven by the record evidence,

Pye FO éShETC

SR pee,

1s

Further, in their brief in the court below, defendants

conceded that the grant of a new trial was solely on the

fact of damage issue and that the District Court did not

purport to hold that ‘defendants should receive a new

trial beeause ... the amount of the verdict was against the

clear weight of the evidence or was such that a miscarriage

of justice would result if it was permitted to stand” (Br.

p. 3)..

Nevertheless, the court below refused to disturb the new

trial order stating, ‘‘since the court in its discretion was

satisfied in the event the judgment notwithstanding the

verdict was not upheld that an adequate basis for a new

trial existed, at least on the question of damages, we will

not disturb that exercise of his diseretion’’ (App. B., infra,

p. A31). In this connection the court apparently misread

this Court's opinion in Zenith Radio Corporation v, Hazel-

tine Research Inc., 395 U.S. 100, 123 (1969) and concluded

that the same deference must be given the trial judge’s

ruling on a new trial motion in a jury case, even though

based on a mixtake of law ax to the legal sufficiency of the

evidence, a» that accorded findings of the trial judge in a

non-jury case (App. B, infra, p. A26).

The court reaches the conclusion that the new trial order

should not be disturbed notwithstanding its own earlier

determinations that the fact of damage was ‘‘implicit’’ in

the violation shown; that the undisputed evidence estab-

. lished that petitioner could not successfully compete as an

‘*unauthorized’’ dealer; that the damage proofs more than

supported the jury’s verdict; and that once the fact of

damage is shown ‘‘the assessment of the amount is largely

a matter of the jury's consideration of all the evidence.”’

19

REASONS FOR GRANTING THE WRIT.

L ra)

The deeision of the Court of Appeals in permitting a

second trial of the damage issues notwithstanding its hold-

ing that the jury’s determination of the cause of injury and

of its amount was supported by competent and legally

xufficient evidence direetly conflicts with the decisions of

this Court in Eastman Kodak Co, v, Southern Photo Ma-

terials Co,, 273 U, 8. 359, 379 (1927), Bigelow v. RKO Radio

Pictures, 327 ', 8, 251, 254-5 (1946), Continental Ore Co. v.

Union Carbide Corp., 370 U. 8. 690, 700-1 (1962) and

Perkins v, Standard Oil Co,, 395 U. 8.-642, 648 (1969).

Petitioner proved a per se violation of the antitrust laws |

and loss of its Beech dealership as a direct consequence —

thereof, As the court below observed, the claimed damage

and injury ‘‘flows naturally and expectedly’’ from defend-

unts’ illegal activity in depriving plaintiff of his authorized

dealer status, The court held that the damage estimate of

lost sales and profits was competent evidence and the weight

to be given it was for the jury.

The court below noted that even the trial judge reeog-

nized that the damage testimony was competent, -stating,

‘‘(T |here is no indication in the record that the court

struck the testimony as being speculative or conjectural or

that the entry of the. judgment N, O, V. was based upon

this premise, The trial judge’s memorandum opinion spe-

cifically stated that it was without regard to issues of

eredibility’’ (App. B, infra, p. A28).

The jury was instructed that it could not award specula-

tive damages, that there had to be some reasonable basis in

the evidence.for the damages awarded (A, 1255) and that it

could consider Joseph M. Fontana’s testimony only if satis-

20

fied it was based on facts which saneneey supported it

(A. 1256).

~ The jury's verdict of $150,000 was not excessive. The

damage proofs would have supported a verdict substan-

tially i in excess of this amount, And the reasonableness of

the verdict reached is indieated by the fact that the trial

judge predicted to counsel that the jury would return a

verdict in this exact amount. 7

There is no suggestion either in the opinion of the court

below or of the District Court that anything occurred dur-

ing the trial which may have resulted in the jury receiving

a distorted, incorrect or incomplete view of the operative

facts. The new trial order was not granted on the ground

that evidence was improperly admitted or rejected, error in

instructions, prejudicial statements or any other ground

allegedly constituting prejudicial error,

The sole ground for the new trial order was that peti-

tioner failed to prove the essential fact of damage. In

reversing, the court below held that not only was there

substantial evidence of the fact of damage but also that

the fact of damage was ‘‘implicit’’ in the violations proven.

Aw this Court has repeatedly held, and even the court

helow acknowledges, once the faci of damage is shown the

- question of amount is for the jury to determine upon con-

sideration of all the evidence, Where there is competent

‘evidence as to the amount of damages and the damage

proofs more than support the jury award and the jury has

heen properly instructed as to the standards to be applied

in determining damages, as here, the jury's determination

is conelusive,

In Eastman Kodak this Court, in affirming the damage

award, held ‘‘the jury was instructed, in effect, that the

amount of damages could not be determined by mere specu-

lation or guess, but must be based on evidence furnishing

21

data from which the amount of probable loss could be

ascertained as a matter of reasonable inference. And the

question of amount of the plaintiff's damages having been

properly submitted to the jury, its determination as to this

matter is conclusive’’ (273 U. 8. at 379).

Similarly in Bigelow this Court said, ‘(T]he jury may

make a just and reasonable estimate of the damage based

on relevant data and render its verdict accordingly .. .

[T |he wrongdoer may not object to the plaintiff’s reason-

uble estimate of the cause of imjury and of its amount

supported by the evidence because not based on more .

accurate data whieh the wrongdoer’s misconduct has ren-

dered unavailable ,. .’’ (327 U. 8, 251, 254-5).

In Perkins, this Court again reiterated, ‘‘[{I]f there is

nufficient evidence in the record to support an inference of

causation, the ultimate conclusion as to what the evidence

proves in for the jury’’ (395 U. 8S, 642 at 648).

See also concurring and dissenting opinion of Mr. Justice

Black in Simpson v, Union Oil Company, 396 U. 8. 13, 17

(1969), ,

In the face of these Pare and its own holding that

onee the fact of damage is shown ‘‘the assessment of the

amount is largely a matter of the jury’s consideration of

_all the evidenee’’ (App. B, infra, pp. A30-A31), the court

helow nevertheless sanctioned the District Court’s usurpa-

tion of the jury’s prime function as the trier of fact by

refusing to reverse the new trial award on the damage

insues,

II,

The anomalous decision of the court below in refusing to

reverse the new trial order based on the same mistake of

law as the grant of judgment N, O. V., which was reversed,

xo far departs from the accepted and usual course of judi-

cial proceedings as to call for an exercise of this Court's

power of supervision. |

Eyre

22

It is fundamental that when a new trial is granted on

mistaken legal groumls, as opposed to dincretionary

grounds, no question of abuse of discretion in involved and

it in only necessary to demonstrate that the legal grounds

assigned are erroneous. If the legal grounds relied upon

by the trial judge are erroneous, as the court below has

held, the new trial order must be reversed as a matter of

law. See Fairmount Glass Works v. Cub Fork Coal Co.,

287 U.S. 474 (1933); Finn v. American Fire d& Casually

Co. 207 F.2d 113 (Sth Cir, 1953); 6A Moore's Fed, Prae.

| LDS] pp. 3903-4.

It is apparent from evenoa cursory reading of the Dis

triet Court’s opinion that the legal grounds assigned are

erroneous and that the court misapprehended ‘the burden

of proof which may be demanded of a treble damage plain.

tiff who seeks recovery for injuries from a partial or total

eseclusion froma market’? Cl UL 8. 123). The court was

of the opinion that petitioner could only prove damages

in one of the following ways: (1) pre conspiracy earnings

experience (before and after comparison); (2) earnings

experience of a comparable but unrestrained enterprise

during the conspiracy period; and (3) expert opinion

based on either (1) or (2). See App. B, infra, p. A12.

The District Court held that Fontana's testimeny as to

lost sales and profits did not satisfy these eriterin because

not based on either ‘historical or comparative data’’ and

further that petitioner was required to produce ‘‘the best

available evidenee’’ in proof of its claimed damages, Thix

required either deposing or calling at the trial each of the:

prospects to establish through their testimony their status

as prospects and willingness to buy.

The court below in reversing held that ‘‘while proof of

loss by the particular method adopted by Fontana doex

not meet the ordinary standards .. . the circumstances

of plaintiff's business and developing corporate airplane

2:5

market did not present the usual situation.’’ The court

held that the damage testimony was competent (see e.g.

A.C. Bechen Co. vy. Gomes Corporation, 272 ¥. 2d 1, 5

(7th Cir, 1959); William HW. Rankin Co. v. Associated

Mill Posters, 42 0. 2d V2, 155 (2d Cir., 1930)) and further

that petitioner was not required to call the prospects as

Wilnennen, stating that the fact it did not went only to the

weight of the damage proof,

The court below also reversed on legal grounds the Din.

trict Court's holding that petitioner could not recover

damages with respect to those prospects who came to

petitioner after filing of the complaint, holding that pe-

litioner’s inability to compete for this business wax due to

the single vet of defendants, occurring before the filing

of the complaint, in depriving plaintiff of his authorized

dealer sfatus.’’ On the basis of this error of law alone

the Distriet Court had held petitioner’s damage claim

should be reduced by $80,300.00,

Finally, the court below rejects as contrary to the evi

dence and legally erroneous the Distriet Court's conten

lion that petitioner could have operated as well without a

dealer contract and could have successfully competed by

purchasing airplanes from other Beech distributors. The

court said that there were problems whieh rendered this

‘theoretical possibility’? not a “practical solution’’ and

that petitioner had attempted ‘to compete in this manner

on at least two separate occasions but unsuccessfully so,"’

The court added that%petitioner was under no legal duty

‘*to exhaust every possible avenue to avoid the effects of

defendants’ alleged illegal activity, but could maintain an

action for an injury which flows naturally and expectedly

from such activity’’, citing this Court's opinions in Ze-

nith (395 U.S. 100, 114) and Continental Ore (370 T.. S.

690, 696-702).

5

PORE I! HAF MN RRM NE ly

he WOR a Sake dee wa

eB Bas

24

Thus, as appears from the opinion of the Court of Ap-

peals, each of the grounds relied on by the Distriet Court

in rejecting the damage proofs and entering judgment

N.O. V. was@rroneous as a matter of law. Since the new

trial order was based on these same grounds, the new trial

order manne aid should have been reversed as well.

The decision of the court below in refusing to dixturb the

new trial order requires petitioner to begin all over again

before a second jury, notwithstanding that there was sub-

stantial evidence to support the jury's finding and deter

mination with respect to the liability and damage issues,

and that nothing occurred during the course of the trial

which may have prevented the jury from reaching a fair -

verdict.

These circumstances, we submit, warrant the exercise of

this Court's supervisory power with respect to conduct

of jury trials in private antitrust actions,

There ix a growing temlency by the lower courts to pay

lip service’ to the antitrust decisions of this Court but

nevertheless deny effeetive relief to plaintiffs in treble

damage actions by sending the case back for a second

and unnecessary trial, See e.g,, Zenith Radio Corporation

v. Hazeltine Research, Inc,, 418 F. 2d 21 (7th Cir. 1969) ;

Utah Pie Company v. Continental Baking Company, 396

F. 2d 16] (10th Cir. 1968); Florist’s Nalionwide Tel, Del.

Net, v. Florist Tel. Del. Ass'n., 371 F. 2d 263. (7th Cir.

1967); Cf. Simpson v, Union Oil Company, 396 U. 8. 13

(1969), dissenting opinion Mr, Justice Black.

Requiring a second and unnecessary trial not only places

an intolerable burden on petitioner (who has been without

a dealership for almost five years) but is the kind of dis-

- position which threatens to’ seriously weaken effective

enforcement of the antitrust laws by private actions.

“=

25 |

“This Court j is well’ aware of the large expense involved

in antitrust litigation. The instant trial took five weeks.

Few litigants can afford the — of one five-week

trial, let alone two,

If an antitrust plaintiff must try and win his case twice

in circumstances like these, the protection of the antitrust

laws will be available only to the corporate giants and the

effectiveness, of private enforcement, the importance of

which this Court has repeatedly recognized, will depend

on the relative length of the litigant’s purse strings.

‘

CONCLUSION.

For the reasons given this Petition for a» Writ of Certi-

* orari should be granted.

> Respectfully submitted,

Francis J. McConweia,

Joun Borst, Ju.,

Ricnarp P, Camppen..

Attorneys for Petitioner,

Fontana Aviation, Inc,”

Of Counsel: ‘

McConxets, Cuirris, Manon & Borst,

134 South La Salle Street,

.Chieago, Ilinois 60603

RAndolph 6-9131

b

Al

APPENDIX A.

The statutory and rule provisions involved are:

Section Lof the Sherman Act, 15 U.S. C. 81, providing

in pertinent part: ‘

**Kivery contract, combination in the form of trust

or otherwise, or conspiracy, in restraint of trade or

commerce among the several States, or with foreign

nations, ix declared to be egal: ...”’

Section 4 of the Clayton Act, 15 U.S. ©. § 15, providing:

“Any person who shall be injured in his business

or property by reason of anything forbidden in the

antitrust laws may sue therefor in any district court

of the United States in the distriet in which the de-

fondant resides or is found or has an agent, without

respect tothe amount in controversy, and shall recover

threefold the damages by him sustained, and the cost of

— auit, ineluding a reasonable attorney’s fee.’’

Rule S20b) of the Federal Rules of Civil Poccedere pro-

Viding in pertinent part:

‘... Not later than 10 days after entry of judgment,

a party who has moved for a directed verdict may move

to have the verdict and any judgment entered thereon

set aside and to have judgment entered in accordance

with his motion. for a directed verdict. ... A motion

for a new trial may be joined with his ‘motion, or a

new trial may be prayed for in the alternative. If a

verdict was returned the court may allow the judg-

ment to stand or may reopen the judgment and either

order a new trial or direct the entry of judgment as

if the requested verdict had been directed. .

Bf ete e ra

Tne Ra «ae ee

A2

Rule 52(¢) of the Federal Rules of Civil Procedure pro-

viding in pertinent part: |

(1) If the motion for judgment notwithstanding

the verdict, provided for in subdivision (b) of this

rule, is granted, the court shall also rule on the motion

for a new trial, if any, by determining whether it

should be granted if the judgment is thereafter vacated

or reversed, and shall specify the grounds for granting

or denying the motion for the new trial, If the motion

for a new trial is thus conditionally granted, the order

thereon does not affect the finality of the judgment,

In case the motion for a new trial has been condi-

tionally granted and the judgment is reversed on ap-

peal, the new trial shall proceed unless the appellate

court has otherwise ordered, ...’’

A3

APPENDIX B. :

In roe Unive States Court or APPEALS

or the Seventh Cireuit,

— —=- ———)

Nos, 17,784 and 17,73,

Monvana Aviation, Ine. a Corporation,

Plaintif{-Appellant,

v8,

Benen Amenarr Convonation, a Corporation, and Hartzou-

Scuxeck Aviation, Ine,, a Corporation,

Defendants-Appellees,

MEMORANDUM OPINION OF DISTRICT COURT,

eee

(Filed Mareh 7, 1969,)

Croxs Motions for Judgment Notwithstanding the Ver-

diets,

Plaintiff, Montana Aviation, Ine, (Fontana), began this

civil antitrust action on May 16, 1966, seeking a treble

damage award and injunctive relief, The first count of

its two count complaint alleged a combination and con-

spiracy in violation of section 1 of the Sherman Act,

HU. S.C. 1, between defendant Beech Aireraft Cor-

poration (Beech), Hartzog-Schneck Aviation, Tne, (Hart-

zo), and certain unnamed co-conspirators, Count TT was

directed against Hartzog and the co-conspirators, charg-

ing them with a combination and conspiraey in violation

of section 1 of the Sherman Act, 15 U. 8, (. 1, Sections

Ad

4and 16 of the Clayton Aet, 1 U8. 01, seen, 1 and 26,

provide for money awards and injunctive relief respec

tively. After a lengthy trial, a jury returned a verdict

in faver of Fontana on count Tan nwardedd Montana

damages to the extent of B1OQ,0000 ‘The jury also re

tured a verdict in faver of Hartveg and against Montana

on defendant’s counterclaim and assessed damages at

$5,000),

Pursuant te Rule OO) (bh), defendant Boeeh Aireraft

Corporation has moved to set aside the verdiet of the

jury with respeet to Count boef the Complaint and: the

judgment entered thereon, and te enter judgment) for

defendants in accordance with the motion for a directed

verdiet as te Count PE tiled by defendants Beech and

Hartzoy at the close of all the evidence. The grounds

for this motion are (a) that exseept as to the matter of

infringements’ there is ne evidenee of record upon whieh

a jury could propertly have found a violation of the anti

trust laws by defendants, and Cb) that plaintil altogether

failed te establish the injury er “impaet’’ from oan anti

trust vielation, or to shew the damages inca measurable

amount, indispensable fo sustaining a private cause of

vetion under the antitrust hows. Bither of these erounds

would independently justify the granting of Beeeh's motion,

Defendant has also moved, pursnant to Rule oO of the

Federal Rules, for a new trink This motion is alternative

to Reech's motion for judgement notwithstanding the ver

diet. Beech prays that if the nooo. v. motion is denied,

the new trial motion be granted, and that if the na. v.

motion is granted the new trial motion be conditionally

eranted in aeeordanee with Rule 50 (e) of the Federal

Rules of Civil Procedure.

The leeal test as to the suMcienev of the evidence on

a motion for indement n. o. v. is the same as that ona

directed verdict motion. Wieloch v, Rogers Cartage Co,,

a

o-

A5

2OO W, Bb 28h, 237 (7th Cir, 1961). In treble damage suits

under the antitrust laws as with other types of actions,

the trial court is:

‘hound to view the evidence in the light most favor-

nble to (the party against whom the motion is made)

and to give it the benefit of all inferences: which the

evidence fairly supports, even though contrary in-

ferences might reasonably be drawn,’”

Continental Ore Co, vy, Union Carbide & Carbon

Corp, 8700S. 690, 696° (1962),

Having so viewed the evidence, however, there in still

nome confusion ax to the amount of evidence which is

required fo xupporta jury verdict, There has developed

‘on great variety of verbal formulations, couched in-gen-

eralities which are not readily applied to a particular set

of facets.’ 2B Barron & Holtzoff, Federal Practice and

Procedure, § 1075, af 300 (1961). The confusion has arisen

in part from linguistic difieulties and in part from con:

coptual uncertainties, Comment, Directed Verdiets and

the Right to Trial by Jury in Federal Courts, 42 Texas 1,

Rev, 10538, 1060 (1964),

In our opinion, the best judicial analysis of the stand-

ards whieh are and should be applied in) determining

whether fo enter judgment n. o. v. is found in Pedrick v,

Peoria & Rastern Railroad Co,, 37 MW, 2d 494 (1967), That

decision rejects the notion that the presence of any or a

seintilla of evidence ix sufficient to sustain a jury verdict,

Td, at 510, We agree, for literally that would prohibit

overturning a jury verdict where the overwhelming weight

of the evidence ix against the verdict, The Illinois Supreme

Court also rejected the notion that if reasonable men could

ever differ on the evidence presented, then the jury verdict

must stand, Cf. 7d, Again we agree, Under this rule, ‘there

in at least a surface incongruity’’ in a trial judge saying

At

reasonable men could never differ when a jury just decided

the innue ofherwine, ‘Mhun, a judge could never property

enter a juelyment oo. v. unten he could say Chat the jury

wis Comprised of unreasonable men,

To our minds, the better rule in one whieh permite the

entry of a judgment na. ov. dn those emsen where all the

eViddenee, taken as a whole and viewed mont favernbly to

thier copeprerment af the mietion, ds se eonelusively ar over

Whelminely on faverof the movant that ne contrary verde

vould or should stand. Gutiege vo Unton Pactic Railroad

Co RP Pre bbe Cc both Cie, MOO): Carroll. Seaboard

Aer Dane Batlroad Can, SFP ab OO, Oe Cath Cie, Paz);

Pedr h vo Poona Raster Rathoad Co. SF A web aM,

EO CPT et. Greene vo Waren, U7 1 tab Ea, U7 Osth

Cur GO) OP course this rule is alse a eeneralization and

lacks certainty, but we believe That it focuses: attention on

the veabissue the suffictoney of the evidenee more een

rately Chan ako the other appranehes,

ir tush, then, is fo determine wliether the overwhelm

ma ce tideonce tn this case is against the pura’s cendict (hart

Montana was iijured the extent of 810,000 by certain ae

tions of the defendants whieh were in violation of the

antitrust laws. As we lave stated previously, defendants

would be entitled to judwment moa. vw. Uf they were net

wuilty of any antitrust violations or, even if guilty of sueh

Violations, no real damages were attributable to their legal

vetions, Defendants acknowledge that their pre l66 ter

ritorial infringement system constituted an antitrust: ¢ie-

lation, but they vieorously deny that they are guilty of any

other antitrust violation charged by the plaintiff. After

the trial had ended, the Supreme Court decided United

Ntoftesv Container Corporation of America, U.S, -

(Jannary 14, 1969), Regarding the exchange of price in-

formation, that decision adopts a very expansive notion of

what constitutes an antitrust violation, Tn this opinion, -

A7

we will ansume, but not decide, that defendants are muilty

of antitrust violations, We do so beeause we believe that

An analyxiK Of the proof offered with rexpeet to the damage

ineusred in wufliciont to dispose of the motion for judgment

no V,

Plaintitt claimed the following damages :

(n) $1,000 on aceount of an infringement payment made

boy it in TEMG,

(bh) $11,970.50 with redpeet to the sale of a Baron to

Inland Steel in 164 on whieh it elaimed that but for the

conspirney if would have received a $25,14F dixeount but

netually: received an $11,570.50 dixeount (Tr, V1).

(¢) $40,024 with respect toa Kingnir sale to Inland Steel

in 100 an to whieh it elaimed that it would have reeeived a

20% discount but for the conspiracy, but in fact reeeived

$12,500 (Mr, 1256),

(dl) $7,865 with respeet toa Travelair sale to Cable Con.

Mfruetors in 166 ax to whieh it elaimed that but for the

conspiracy it would have received a $14,740 diseount but in

Faet received a $7,465 discount (Tr, 1197),

(+) $200,800 with respect to seventeen airplanes that it

would have allegedly sold to seventeen prosxpeets during

the period sinee its termination, breken down to (MeCon-

nell Closing Tr, 58);

$45,000 on two Kingairs

$44,000 on two Queenairs

$34,000 on four Barons

$32,500 on five Travelairs

$12,600 on three Bonanzas

$ 1,700 on one Musketeer

It is obvious that the jury did not feel that the plaintiffs

proved all of their damage claims, because the\ jury

awarded only a little more than half of what was requested.

oo a

A#

Moreover, we have not a little difieully in trying to deter

mine which proofs of damages the jury did believe boeaune

we cannot arrive at a combination of damage elements

which totals the jury award, Consequently, we must look

mt emeh item,

Defendants deo not chatlenge the jury's conclusion that

the territorial infringement system as it existed prior to

14} violuted section foof the Sherman Aet, Nor ce they

content that plamtil made a payment of $1,000 on account

of the provisions of the ayastem, What defendants contend

in that the jury, on ite verdiet for Tartzog on the latter's

counterclaim, found that plainti? actually benefited to the

extent of $5,000 from the system. Fontana reasonably

suggests that defendants cannot have it both ways, that in,

connet recover a counterclaim judgment and also use the

$5,000 payinent asia set off. Hartzog, however, has indi

ented it will waive the counterclaim verdiet, Moreover, this

Income aspect of the damage claim as to whieh the jury ean

be stich to have made a specific determination, 1 has held

that plaintif® did benefit to the extent of $5,000 from the

fofringement system. We tind no overwhelming evidence to

refute that verdict, Consequently, viewing the evidence as

a whole, it cannot be said that Fontana was injured by the

infringement system to the extent of $1,000 or even at all,

The second claim of damages was for $11,570.50 of whieh

plaintitY was allegedly deprived when it) received only a

lor discount, not the regular 200% slixeount on the sale of

a Baron airplane to Inland Steel in 1964, Yet, on cross-

examination, plaintiff's president testified that he received

23,000 or cash equivalent to a 20% diseount for the Baron

amy (Tr. 781). In an answer to one of Hartzog’s interroga-

tories in another case, plaintiff clearly stated that Hartzog

paid €23,141 or 20% of the $115,705 Hat sales price to

Fontana due to the latter's sale of a Baron model plane to

Inland Steel (DX 37). There is no reason to discuss other

AY

fawn in plaintill’s claim of damages arining from the Baron

wale in view of thene conclusive adminnionn by plaintiff that

i netually received full payment for dhe sale,

Minintills also claimed damages of approximately $49,524

on the sale of a Kingair plane to Inland Steel, The amount

Of damages in the difference between the $12,500 commin

non allowed by Hartvoy and a 20% dincount off the lint

price to whieh plaintiff believes it wax entitled, Plaintiff's

theory in that (ijn an open market and absent the eon-

npiracy plaintiff’ woul have been entitled to parity of

treatment with Hartyvog'’s dealer company’ (Plaintiff's

Iriel, wt 41). Yet, there in no evidence to support thin

contention that Hartzog would have allowed phiintiff more

Favorable treatment Vian it was already wetting. Not only

did plaintiff's president testify that Hartsoyg never indi.

ented that it would like to give plaintiff a 20% dixeount on

the Kingair (Tr, 1247), he admitted that Hartzoy ‘ob.

viewnly didn’t want to’? give plaintiff such a discount (Tr.

Pd, ef. Woo). Further, inasmuchas Hartzoyg wax the only

Beoeh lint Fibutor to allow $12,500 on a Kingair commission

(DX 47a-Gin), it iq virtually impossible to infer that plain-

HiT would have been allowed any greater discount in the

absence of Beeeh’s interference,

Minally, plaintiff Aitroduced no evidence that in 1965 it

had the financial capacity to purchase and maintain a

demonstrator so that would qualify for a 20% discount if

one were offered, Plaintiff's president admitted that the

Kirst National Bank of Iron Mountain in Michigan said

that plaintiff's credit wax worthless (Tr. 644). Nor was

plaintiff's financial position moré strong in 1965 (DX 34),

Yet, a down payment on a demonstrator would require

$44,750 (R. 1731), a sum too great for Fontana to meet.

Similarly, we do not believe that plaintiff proved that it

suffered any damages with respect.to Cable Constructors’

Te RSS RIOTS

RAAT DME, marae

rs RY AE eee “2

Ato.

Travelair, Plaintiff's president indicated that in the ab-

sence of deféndants’ interference plaintiff? would not have

received better terms because Hartzog did not want to give

plaintif® the desired 20% diseount (Tr, 1455). - Moreover,

the reason that Hartzog refused to grant the 209% discount

was that plaintifl did not mamtain a-suitable demonstrator,

PlaintitY testified at one point that it could have maintained

such a demonstrator at no net cost (Tr, 1433-35). Uf this is

so, then as defendants suggest, plaintiff had a duty to miti-

gateites supposed damages by maintaining a demonstrator,

merican Can Go, v, Russellville Canning Co;, 191K. 2d 38,

O49 (Sth Cir, 1951), Plaintiffs have not explained why this

was not done with regard to the Inland Baron sale or the

Cable Constructors Travelair sale,

The tinal category of damages to be considered are those

which allegedly acerued because Montana's dealer contract

was cancelled. Plaintiff claims that but for this termination,

it would have sold airplanes to seventeen identified pros-

pects and profited to the extent of $209,800, The prospects

broken down by category of plane were as follows: Kingair

(Cleveland Clitfs; Gus K. Neuberg); Queenair (Kimberly

Clark; W. B. Thompson) ; Baron (Anderson, Patz, M. 'T. U.,

MeGibben); Travelair (Hovie, Rosseau, Ahoanen, Saun-

ders, Hocking); Bonanza (Lynn, Nelson, Kdwards); Mus-

keteer (Kichoff), According to plaintiff, all of the prospects

already owned a plane and had a business need for an |

executive aircraft as well as some business connection in the

Iron Mountain, Michigan, region where plaintiff was lo-

cated. Further, Fontana had previously sold planes to and

done service work for sonie of the prospects, Finally, we

understand aon of these prospects subsequently

purchased ireraft. Thus, plaintiff contends, the fact of

damage ix self-evident.

Pe ans first place, we instructed the jury that plaintiff is

t

permitted to recover damages in this suit on account of

All

any injury caused by any continuation of the alleged con-

xpiracy or the performance of any acts after May, 1966,

When this suit was commenced (Instructions, p. 4%). Lawlor

Vv. Loewe, 285 US. 522, 5386 (1915); A. CL. Becken Co, v.

Cemex Corp, 314 F.2d 839, $43 (7th Cir. 1963); Flintkote

Co. v. Lysfjord, 246 F.2d 368, 394-96 (9th Cir, 1957). We

note that the time between ‘contract termination and the

institution of this action ix very short. Plaintiff has pot

offered any specific evidence that post-termination impact

was felt prior to May, 1966. The best evidence which we

can glean from the record indicates that about half of

plaintiff's alleged prospects (Nelson, MeGibben, Saunders,

Anderson, Lynn, Kichoff, Cleveland, and Block) became

prospects only a relatively short time before trial in 1968 or

in 1967 (Tr. DIS 23, 1927, 1129-381, 1133, 1136-38, 1181,

1265). At least as to these parties, no damages acerued

prior to the institution of this aetion. This alone would

diminish plaintiff's danige claim by approximately $80,300.

Secondly, plaintiff never claimed that any conspiracy

between defendants was aimed at depriving it from obtain-

ing aircraft to sell, but only that there was a conspiracy to

deny authorized status to Fontana (Tr, 857-58). Yet aside

from the general position taken by plaintiff that its status

ax an unauthorized Beecheraft dealer was competitively

‘disadvantageous, plaintiff has not specifically demonstrated

the relevance between such status and the loss of seventeen

potential sales, What plaintiff did claim was that if it eould

have made a bid, then it had an excellent chance of making

a sale (Tr, 322). However, plaintiff admitted that it never

took advantage of a specific offer from at least one Beech

distributor, Aviation Distributors, Inc., based in Pontiac,

Michigan, to sell aircraft to it so that it could make its bids

(Tr. 1322-23). ‘

Thus, we do not agree with plaintiff that the fact of

damage in the relevant post-cancellation period is self-

adie dae

ft

Ee Se ee ee,

Alz

evident, ‘The existence of the injary must be demonstrated

with reasonable certainty, not supported just by xpecula

therne canned = goon Bigelow Vv. RKO Radio Pictures, lne.,

B27 US. Bol, 264 (PMG); Flinthote Co. vy. Lysfjord, 246

yk Sos, 02 (Oth Cir. 1957), cert, denied, 8h US. BD

(17), OF course, once the “causal connection between

defendant's wrongful act and some los of anticipated

revenue!’ in extablinhed, then the jury tay make a reason

able estimate of the damages based-cn all relevant date and

“inferences, Id, However, ofr discussion in.coneernead not

with the reasonableness of the jury's caleulations, but with

the fact, that they thought an injury had been proved,

Reasonable certainty requires that the plaintitt meet its

burden of “furnishing the best available evidence that

the subject matter permits, as to what the impact of Ahe

elainied egal conduet was on its business.’ iiss a Co.

v. Assectation of American Railroads, WO. Supp. 10,

CD. CL 1960), Tn eases claiming loss of profits, three

main types of evidence may be introduced: plaintiff's pre-

conspiracy own records of business, records of comparative

but unrestrained enterprises during the relevant period,

and expert opinion as to these records, — F'lintkole vy.

Lusfierd, 246 BF. 2d 868, 892 (9th © ir, 1997), cert. denied,

855 U.S. 885 (1957) ef. Roseland v. Pluster Mfg. Co., V25

FE. 2d 417, 420 (7th Cir, 1942).

WaintitY did not present evidence based on its or a com

petitors business records, Rather, it contends that Joseph

M. Fontana's estimate of lost sales and profits with regard

to the seventeen named prospects was competent proof,

similar to that approved in A. C. Becken Co, ¥. Gemer |

Corp., 272 F. 24.1, 5 (7th Cir, 1959) and William IH, Rankin

Cy. v, Associated Bill Posters, 42 F. 2d 152, 155 (2d Cir.

19230). In the latter case, however, plaintiff presented

testimony as to pre-conspiracy profits. Its estimate of its

lost profits ‘‘was proof of a kind as definite and certain

Al3

as the subject matter admitted.’’ 42 F.2d at 155. In the

former case, plaintiff's estimate, which was supported by

actual salen and profit data, wax also considered to be the

bent available, 272 i. 2d. | , |

That plaintiff did not present such historical Or com

parative date in not surprising when one considers that

during 163-1965, Fontana sold only two airplanes to

only one customer (DX 37) and, at the end of 1965, had

w retained earnings defieit of $52,471.62 (19X 34). Further,

defendant’ Hartzoy, whieh operated ino an nnfettered and.

open market, actually lost money since it began doing

business if 1961 and specifically during the period from

Januery, 1966, to June 1968 (Tr, 441-2). Plaintiff iv

undoubtedly correet inowaying that the corporate aircraft

. . . y

market did not fully develop until after ite-dealer con.

tract was cancelled, Yet, this just means that appropriate

evidence of business trends should have been introduced

ux well, In any case, a change in the business climate

does notvexcuse plaintiffs from presenting evidence of the

business experience of another plane dealer nor does it

explain how Fontana would have profited in this area

when Hartzog, which averaged five sales a month, was-

operating at a loss,

Finally, in contrast to those cases where estimates and

projections of business trends in- the areas of sales or

production are the best evidence available, plaintiff could

have presented quite specific information concerning each —

of the seventeen potential sales for which it claims dam-

ages. Plaintiff could have deposed or called each prospect.

Now plaintiff suggests that defendant could and should

have interviewed. or called these persons as well, but it

was plaintiff and not the defendant which had the duty

to prove its case. Further, and contrary to plaintiff’s sug-

gestion, it Was in no way precluded by any of the defend-

ants actions from showing with particularity that it stood

et ee

Al4

a chance of successfully dealing with some or all of the

seventeen prospects, ‘The failure of plaintill to introduce

the testimony of those parties who could best say whether

or not Fontana had a real opportunity to sell them an

airplane

‘ix itself pursuasive that their testimony, if given,

would have been unfavorable to (plaintiff), Phe pro-

duction of weak evidence when strong ix available can

lead only to the conclusion that the strong would have

boon adverse, (Citation omitted.) Silence then becomes

evidence of the most convincing character, (Citations

omitted.) Tnferstate Circuit’ vy. United) States, 306

US. 208, 226 (1989), ¢

We turn now go a consideration of Fontana’s motion,

as counterdetendant, for judgment notwithstanding the

verdiet as to Hartzog's counterclaim alternatively for a

new trial Hartzog, ax counterplaintiff, complained that

it was damaged beenuse it made $5,000 infringement pay

ment to Fontana. The jury awarded Hartzog $5,000 in

damages. Fontana, as counterdefendant, argues that such

a verdiet is not sustained by the evidence or by law and

that any loss suffered by Tartzog was the direet and

proximate result of its own conduct,

The thrust of Fontana’s position in this motion is not

that it failed to receive a payment from Hartzog, but that

such payment did not really injure Hartyog. Given that

Fontana did receive this payment, it is clear that Fontana

benefited from the infringement system. The converse in

not Necessarily true, That is, simply because Hartzog made

a payment to Fontana does not mean that Hartzog was in-

jured, for as counterdefendant suggests, Hartzog may have

hoon a mere conduit. Indeed, it appears that this was the

ease, that both Fontana and THartzog benefited from the

infringement system, and that Gopher Aviation was the

party who. suffered an injury because it was required to

Alb

pay the infringement fee, In addition, ax we have noted

earlier, we find it somewhat inconsistent to offset Fon-

tana’s $1,000 loss with and its $5,000 gain under the in-

fringement system, and then enforce a counterclaim based

on that $5,000 gain,

In conclusion, with respect to count one, we have re-

viewed the evidence relative to each element of claimed

damages, We have found that the overwhelming weight of

the evidence, without regard to issues of credibility, indi-

cates that plaintiff! was not damages in the twenty-one in

tances discussed and, therefore, that the jury's verdict

was in-error, Defendants’ motion for judgment notwith-

standing the verdict is granted, Defendants’ motion for na

new trial is conditionally granted, should this, judgment be

vacated or reversed, Rule 50 (¢), Fed, R, Civ, PL For the

reasons stated in the opinion, the motion of plaintiff for

Judgment noo. v. as to the counterclaim is also granted,

and its alternative motion for a new trial is also condi.

tionally granted,

Enter:

/*/ Awnanam TL. Manovers,

Date; March 7, 1969,

Al6

ORDER.

(Filed Mareh 10, 1{4im, )

This matter coming on to be heared on (1) motion of

defendants, Beech Aireraft) Corporation wed Phat veg

Sehneck Aviation, Ine. pursiant fo Rule ad cb) of the

Moderal Rules of Civil Procedure to set aside the verdict

of the jury with respeet to Count Poof the complaint and

the judgment entered thereon, and to enter judgment for

defendants, Beech Aireraft) Corporation woe Thartvog

Sehneck Aviation, Ine, and) the alternative motion of

defendants pursuant to Rule of of the Mederal Rules of

Civil Procedure for a new trial if their motion under

Rule d0 ¢b) be denied or, if their motion under Rule 0

cb) be granted, that a new trint be conditionally granted

pursiant te Rule a0 (e) of the Federal Rules of Civil Pre

cedures amd (2) motion ef plaintitY, Montana Aviation,

Ine, pursuant te Rule 50 (bh) of the Federal Rules of Civil

Procedure to set aside the verdict of the jury with respect

to the counterclaim of defendant, Hartzog Sehneck Avia

tion, Tre, ated the juckement entered thereon, and to enter

judgment for plaintiff, Montany Avintion, Ine. and, al

ternatively, for a new trial, the Court having filed amen

orandum opinion en Mareh 7, 1960 with respeet to the

disposition of said motions, It Is Ordered;

1 That the motion of defendants, Beech Aireraft: Cor

poration and Thartzog Schneck Aviation, Ine, fo set aside

the verdiet of the jury with respeet to Count 1 of the com

plaint and the judgment entered thereon is granted, and

said defendants’ motion for judgment notwithstanding

caid verdiet is granted, and it is, therefore, Ordered that

the Clerk enter Judgment that the plaintif? take nothing,

that the action be dismissed on the merits,

A\7

SOP the aforesaid: judgment be vacated or reversed,

then defendantn’ motion fora new trials granted on the

grounds set forth ino the Court's memorandum opinion

filed herein on Mareh 7, 100,

(Phe motion of plantil, Montana Aviation, Tne, to

nef oaside the verdiet of the jury with respeet to the eoun

fevelwim of clefemdant, Tlartzog Sehneck Aviation, tne.,

wield the judpaent entered thereon is granted, and ite me

tion to enter judgment fom plamtill with respect to the

eauaterelaim ois allowed and itis, therefore, Ordered

that the Clerk enter Judgment that defendant, Martzoy

Schnecek Aviation, Tne, take nothing with respeet to maid

counterclaim, Chat said counterclaim be dismissed on the

merits,

4.1 the aforesaid judgient be vacated or reversed,

Hhen polamtitls’ motion for a new triad is granted on the

grounds set forth on the Court’s memorandum opinion

filed herein on Mareh 7, 1969,

Mater: Ald. Manoverz,

Judge.

Dated: Mareh 10, 1969, !

Als

OPINION OF CTH COURT OF APPEALS,

September 23, 1970,

Before Winey, Mamentio and Prony Corneal Judges,

Peo, Corewt Judge. Montana, appellant hereim, is a

Michigan corporation operating at an airport in tren

Mountain, Michigan, and engaged in the business of selling

and oservieige Hirphines, as well as’ providing various

Hight connected serviees, Appellee, Beeeh, is a Deleware

Corporation with its principal place of business ta Navas,

It is engaged in the iiaanufaeture, distribution and sate

of aireraft under the trade name ' Beeeheralt.’ Beek

sell its planes through a nationwide network of twenty

four distributors who in turn sell largely to retail dealers

although Beeeh at all material times invelved owned ane

operated somecdistributor companios, whieh not only sold

to Independent dealers but also to the ultimate consumers,

The appellee, Tlartveg, isan Elineis corporation located

in Roektord, Tineis, Tt has been a Beecheralt distributor

singe IGT and cits territory ineluded not only portions

of Hiinois but of several adjoining states ineluding the

upper peninsulaof Michigan, in whieh Montana was located,

While Hartzog sold to independent dealers, it alse sold

directly to consumers through its wholly owned dealer

COULPINY,

Fontana had been a Beecheratt dealer sinee 146, Kol-

lowing Tlartzog’s becoming. a Beecheraft: distributor in

il, Fontana purchased airplanes sold by it from Tlart-

gog until the termination of the dealership by Hartzog

in April 1966,

: _A19

Subsequent to the termination, Montana filed an anti

Trust aetion against Beech and THartzog alleging a con-

xpiracy whereby the United States was divided into ex

clisive ferritorion with each distributor having a separate

lerritory and with distributors being restricted from com

peting in-each other's territory; prices were fixed on the

resale of new Beech aireraft; legal demonstrator and

stocking requirements were imposed on independent dealers

and restriction was made on the sale of a new? model

vireralt known as the King Air Model to distributor

organizations or their wholly owned dealer companies,

Montana claimed that its dealer contract was cancelled

by Tlartzog pursuant to the alleged conspiracy when

Montana refused to aequiesee in territorial, stocking: and

virpline model restrictions and that Montana, subsequently,

Was Unable to secure a dealership from other distributors.

While there was some dispute between the parties on

this appeal as to various evidentiary matters, there was

lextimony adduced in the distriet court fo support a jury

finnlinge that the factual situation is the following.

Prior to 1966, Beech’s contracts with its distributors,

and the contract that) Beech distributors had with their

dealers, contained limitations upotl the sale of airplanes

outside the distributors’ or dealers’ “territory? There

were provigions for interterritorial financial adjustments

if such sales outside the territory took place. Further,

these ferritorial limitations had been the subject of dis-

cussion between Beech and its distributors. “These dis-

cussions ordinarily occurred at meetings of the Beech

distributor advisory council which met and discussed mutual

problems, The council ineluded the president of Hartzog

and the meetings were attended by officials of Beech.

In February 1964, the minutes of the council indicated

that there had been concern expressed at legal ramifications

Av

of the portion of the contract dealing with the territorial

restrietions,

During the period of IGE (o> 1966, Fontana had onde

one payment of $1000 to a distributor for an out of ter

ritory sale and had received through TRartzog one hall,

or $0000, of the amount paad by another distributor fora

silo within the Tlartzog Montana territory,

In TSM, Beoeh's standard distributer contract was

amended. ‘The provision pertaining fo finaneial adjust

ments Following outof territory sales was eliminated,

There was a provision that the distributor agreed) to

appotmt and establish ‘an its aren of responsibility’? the

mini mumber oof authorized Beecheraft) dealers re

quired fo secure adequate penetration. Tt appears that

under the TOG ayreements a distributor could neotoap

port aoaeater in anether distributor's area of respons

bility. Marly in 1966, when the corporate elass plane

market Was just beginning to develop, representatives

of Fontana and tlartzeg met, at whieh time Montana

Indicated i wanted a dealer contract whieh would permit

it to sell The relatively new King Air without, being re

quired to purchase and stock the entire dine of Beech

planes necessary to obtain al twenty pereent discount,

Hartvoy replied that) Fontana should) contine its sales

efforts to single engine and light twin’ planes only and

that it would not reeeive a contract permitting it to sell

King Air. Fontana indicated it would attempt to secure

a direct dealership trom Beech. Hlartzog replied that if

it did so Hartzog would cancel Fontana'’s contract, Sub-

sequently, Fontana unsuecessfully attempted to secure a

direct dealership from Beech, whieh declined to deviate

from its established marketing setup through distributors,

Thereafter, Hartzog terminated the Fontana dealership

contract as of April 15, 1966. Subsequently, Fontana

6

t

acetone

A2l

hough fo secure an authorized dealership from two other

distributors, one located in’ Pontine, Michigan, and one

located in Rochester, Minnesota, hese dist ributors, after

checking with Beech, declined to enter inte a dealership

contract with Montana,

Montana claimed that after cancellation it had seventeen

excellent prospects for purchase of Beech aireraft. During

the trial of the cause below, Fontana, after objections

by the defendants, was limited in’ its damage estimate,

Insofar as post-cancellation damages were concerned, to

the seventeen nanied prospects,

In addition to the post cancellation damages, Fontana

Claimed damages resulting. from three precancellation

siftiations, One was that it reeeived only a fen percent

dealer discount on sales of Baron and Travel Air Plane

sitles Instead of the twenty pereent discount beeause of its

not stocking certain Beoeh aireraft required by the dealer

contract, Secondly, Montana contended it) was improperly

confined fo oa sales agent commission of $12,500 on a

King Air sale originated by it) instead of the twenty

percent discount it would have received in the absence

of the restrietions contained ino the Hartzog contract.

Thirdly, Fontana contended it was entitled to reimburse-

ment of a $1,000 penalty paid by it toa Ke ‘ntucky distribu-

for for an out-of-territory sale,

Ax may be needed in the development of this opinion,

further speeifie reference to the factual situation appear-

ing in the evidence will be brought out in connection with

the examination of the applicable law.

Following a five week jury trial, a verdict was returned

in favor of Fontana in the amount of $150,000, on whieh

the court: entered judgment in the trebled amount. of

$450,000, together with costs and attorneys’ fees, There-

after, pursuant to defendants’ motion, the district court

Age

vacated the treble damage judgment ane entered juckgment

for the defendants notwithstanding the verdiet. The eourt

in addition conditionally granted anew trial should: this

Judgment be vacated or reversed.’ Hontana tistituted: the

present appeal from the eourt's aetion,

Diving the course of the proceedings, Hartzog had filed

a ocounterechlai for $5,000 beeause of the $5,000 territorial

nf rowement patent mide ta lontana during the course

ofits dealership. "Phe jury awarded Thartzog $5,000 on the

counterclaim. "Phe distriet court alse entered) judgment,

notwithstanding the verdiet, on the counterelaim: and dis

Missed the counterelaim on the merits. Thartzog likewise

filed an appeal,

The distriet court fudge cin an apparent partial relianee

on the then recently deeded) ease wal United States v,

Confarmer Corporation of Amertea, JW VS. Bahk Ome),

stated an tis memorandum opinion, > Wee will assume,

lat not deede, that defendants are guilty of antitrust

Violations "Phe distriet court in’ part alse apparently

rested us decision on its ultimate determination that there

Washo taetof damage shown by Fontana, thereby enabling

the court te dispase of the motion for judgment notwith

standing the verdiet without regard to a determination

of the antitrust issue. The granting of the new trial con

diponally was predieated on the same grounds supporting

the granting ef the motion for judgment mow. presumably

that there was no facet of damage. ‘Phere is no indication

iy the eourt’s memorandum opinion er order that the new

trial was conditionally granted because of a failure to prove

an antitrust case.

The result which we will reach in this opinion is: that

the Qudgment notwithstanding the verdict was erroneous.

However, We will also, as we may do, review the condi-

tonal order of the trial court, made pursuant to Rule

A238

O0(b), FREP, granting a new trial 3 Barron & Holfvoff.

Wright, Federal Practice and Procedure § 1302.1, p. 346

(195%),

Inasmuch as the distriet court did not reach a final

decision on whether a judgment notwithstanding the ver-

diet should have been granted insofar as antitrust issues

were concerned, and inasmuch as further proceedings in

the court below following the remand may involve econ-

sideration of whether to grant a motion for a judgment

notwithstanding the verdiet, on the antitrust Issue, We

deem it necessary fo turn to that issue as a threshold

question,

In so doing, we are not deciding whether the weight of

the evidence does or does not support an antitrust violation.

We are not weighing the evidence but only inquiring as to

whether there is any substantial evidence which would KUp-

porta verdict, for if there was then a motion for judgment

notwithstanding the verdict insofar as the antitrust issue

was concerned should have been overruled. 2B Barron &

Holtzoff- Wright, Federal Practice & Procedure © 1075, pp.

S84-85 (1961).

There was evidence at the trial below supportive of a con-

spiracy in violation of the Sherman Act. Tests for determi-

nation of such a violation were laid down in American

Tobacco Cov. United States, 828 U.S. 781 (1946), in which

the court stated the following (at 809-10) :

“It is not the form of the combination of the partien-

lar means used but the result to be achieved that the

statute condemns. It is not of importance whether the

means used to accomplish the unlawful objective are in

themselves lawful or unlawful... . No formal agree-

ment is necessary to constitute an unlawful conspiracy

..++ The essential combination-or conspiracy in viola-

tion of the Sherman Act may be found in a course of

dealing or other circumstances as well as in an ex-

A24

change of words... . Where the circumstances are

such as to warrant a jury in finding that the con-

spirators had a unity of purpose or a common design

and understanding, or a meeting of minds in an unlaw-

ful arrangement, the conclusion that a conspiracy is

established is justified.”’

There was evidence in the ease before us on which the

jury reasonably could have found that for the purpose of

lessening competition a rigid territorial division had been

worked out on a horizontal basis between the various dis-

tributers with the taeit approval of Beech, whieh also par-

tivipated therein through its own distributor companies,

There was evidence from which the jury could have found

that this arrangement continued up to the 1966. standard

“agreement coming into effect. If Beech, in good faith, had

eliminated unlawful antitrust aspects of its marketing

arrangements by the 1966 contract then, of course, the

conspiracy violative of the Sherman Act would have also

coased and the company should not be penalized for its

efforts to set its house in order. On the other hand, window

dressings and changes of words in contracts are not con-

trolling. The matter is one of substance and not form.

Agreements or arrangements providing for an aggrega-

tion of trade restraints are violative of the act; nor can the

restraints of trade be justified as reasonable steps taken to _

implement a valid trademark licensing system. Timken

Roller Bearing Co, v. United States, 341 U.S. 598, 998

(1951). |

The defendants contend that a manufacturer is free to

agree with his vendee in a particular geographic area that

he will sell to no others in that area.’ The Supreme Court,

although not deciding the difference in impact, did in White

Mator Co. v. United States, 372 U.S. 253 (1963), reeognize

a possible distinction between territorial restrictions aris-

Pa

A25

ing out of a vertical arrangement as opposed to one of a

horizontal nature, Nevertheless, Mr. Justice Brennan in

concurring stated at p. 267:

‘If it were clear that the territorial restrictions in-

volved in this case had been induced solely or even

primarily by appellant’s dealers and distributors, it

would make no difference to their legality that the

restrictions were formally imposed by the manufac-

turer rather than through inter-dealer agreement.”’

While the case before us would scarcely seem to be that

of the tail wagging the dog, such as apparently was involved

in United States v. Sealy, Inc., 388 U.S. 350 (1967), there

was sufficient evidence for the jury’s consideration of con-

certed horizontal action, participated in by Beech.

United States v. Arnold, Schwinn & Co., 388 U. S. 365

(1967), held that territorial limitations on resales by dis-

tributors, where the distributors own the goods were viola-

tive of the antitrust laws. In the case before us, the com-

parable situation existed in which the practical effect was

that only one distributor could enter into an authorized

dealership arrangement with Fontana.

While the law recognizes that a manufacturer, in the

batile for business, has a right to sell to whom he pleases,

this right is neither absolute nor exempt from. regulation.

If it is accompanied by unlawful conduct or agreement, or

conceived in monopolistic purpose or market control, the

right is deemed to have transgressed the act. A. C. Becken

Co. v. Gemex Corp., 272 F. 2d 1 (7th Cir. 1959).

While we have here primarily concerned ourselves with

the restraint on out-of-territory dealer appointments, we

find adequate supportive evidence in the overall pattern of

operation on which to base a verdict with regard to the

other matters of complaint by Fontana, being the stocking

requirement and the restraint on sale of King Airs. All of

ead

&

these matters could well have been found by the jury as hav.

ing been conceived axa part of an illegal market control,

Upon the basin of the foregoing, we bok! therefore that

the district court sheald ret have granted a judgment rot

withstanding the verdict on the antitrust issue, However,

unlike the motion fer jadgment n.o.v.. the matter of grant-

ing a new trial is to be determined in the sound discretion

of the trial court. GA Moore, Federal Practice J 53.08 (5),

p. 3816 (1986). Deference mast be given to decisions of the

trier of the fact who is usually in a superior position to

appraise and weigh the evidence, Zenith Redio Corp. v.

Haseltine Research, lac., 395 U. 8. 100, 123 (1969), which is

a deference which should also be accorded to the trial jadge—

in a jury case, he having heard and lived with the evidence

during a lengthy trial, On remand, the district court should

determine prior to a new trial whether the antitrust issue

should again be presented ‘te the jury or whether a new

irial should be confined te the issue of damages.

As préviously indicated herein, the district judge in

gronting judgayat was. did co on the basin of tact of

proof of the fact of damage. The damage question in pri-

vate antitrust suits is composed of two components: the

fact of damage—injury to plaintiff’s business resulting

from the alleged illegal conapiracy—and the amount of

damages. Once the fact is established, uncertainty concern-

ing the exact amount of less will not preclude recovery.

‘The rule which precludes the recovery of uncertain

damages applies to such as are not the certain result

of the wrong, not to those damages which are definitely

attributable to the wrong and only uncertain in respect

of their amount.”’ Story Parchment Co. v. Paterees

Co., 282 U. 8. 555, 562 (1981).

Ag

In Zewith Radin Corp. v. Hacettin: Research, lee. supra

at p. 114 #8, the Supreme Ooert charecteriaed plaintiff’.

harden on the critical fact of damage ixeur an follows

tron of its status ax a Beech authorized dealer. ey

+ , Fontana contended that there was supportive evidence

that all of the prospects already owned planes and that

they had business needs for executive aircraft as well

_ as having some business connection in the Iron Mountain,

Michigan region.

Fontana had previously seld planes to and done service

work for some of the prospects and a number of the pros-_ >

pects subsequently did purchase aircraft. _

Fontana’s evidence upon damages was based almost

solely upon opinion testimony of its 26 year old Board

ASS

Uhatrman, The testimony was cach that if we were weigh

veg the evidence we wowkl fed thix rather weak, bat ax we

have already stated we are wet here weighing the evidence.

The fact ix that, ever objection, the officer of Montana was

permitted te testify and te give his epinion regarding the

toss of sales to the seventeen prospects, There ix ne indies

tien in the record that the court struck the testimeny as

being speculative er conjectural or that the entry of the

jedement nov. was based apen this premise. The trial

Jeter Ss memoranda epinion specifically stated that it was

without regard te issues ef credibility.

While proof of lexx by the particular method achopterl by

‘ontana dees net meet the endinary standards, sec Pliel

hote Compang v. Lastrord, 246 F.2d QHS, 382 (9th Cir.),

vert, den, 335 US. S88) (1907), the circumstances of plain

tif'’s busitiesks and the developing cerperate aieplane mar

ket did net present the usual situation. Actually, the

testimetiy showed that plaintiff's business prier te the ter-

mination of the Recokeraft contract had been operating at

a deficit. Apparently in thix rexpect Fontana would have

been limided to showing that the deficit was even greater

after the loss of the Beechcraft dealership. Nevertheless,

the evidence was in, and remained in, and while its weight

may. be extremely questionable, we cannot say new that, for

the purpese of considering the correctness of the ruling on

ee it should have

been disregarded.

Om the retrial of this cause the court may well desire to

determine the admissibility of this type of evidence.

(wer and above this aspect of the matter, we are in a day

and age in which the value of the nationally advertised

franchise is a matter of general recognition. If Fontana

were deprived of the dealership (or franchise right) as a

result of an illegal conspiracy, some damage would appear

>

Aw

te be implicit, Beeeh’s View President conceded that Fon-

tana wouk!d be at a competitive dinadvantage im attempting

to ell cow Bauch qgiaies etter Ge tues af Se eae

theater statan

tewefar as the reline on the sateen 2O.V. Wax con

corwed, the fact that the alleged legality pat plaintiff

al a competitive disadvantage in competing fer the busi

wess of a number of tdentified prospects was adequate

te make errencons the ruling on the motion for jpedement

fren. UF there were other posible causes of plaintiffs

inatality te sell wew Reech airplanes te the apparently

sented prepects, i woukd appear that the defendant. were

veer obligation te @e ferward with evidence te that

effect and Pentana ‘was wet required in the first instance

te -preve the -absence of all other conceivable causex<.”’

Amerwan Cooperative Seram Ass'n v. Anchor Scream Co. —

Tht FL ed GOT, 912 (7th Cir. 1966).

Ax to the contention by Harizog and Beech that plain

uf copki have obtaimed new Beech aircraft: from Beech

distributers even without an authorized dealer status,

problems existed. Beech’s Vice President tacitly admitted

that thix theoretical poxsibility was net a practical solu-

tien when he testified to the many technical services

that are available only to authorized Beeck dealers and

conceded that an unauthorized dealer would be at a com.

petitive disadvantage.

Further there was evidence that the plaintiff did attempt

to compete in thix manner on at least two separate oceations

but unsuccessfully so. Fontana was not bound to make

repeated requests for airplanes from Beech distributors |

or to exhaust every possible avenue to avoid the effect~

of defendant's alleged illegal activity but could maintain

an action for an injury which flows naturgily and expectedly

from such activity. Zenith, supra, at p. 114 n. 9; Continental

Ore Co. v. Union Carbide & Carbon Caip., 70 UB. GR,

Gee. CIR).

te the district court’: memweorendem eapinien was

stated that about hall the progpects came te plaimtif only

after the fling ef this action amd damage. related te them

were net recoverable, The determination of the (rial court

in this respect is erreneens even on the amount of damage

ixewe, Hix clear that some poet fling damages may be

recovered im antitrust saits. Where the allated damage

are the result of acts eccerring prier te the Ming of the

complaint, there can be ne dewht that they may be re

covered even theagh they may have accreed following

such Gling. Leerlor.v. Leews, DO UL S. 522, SR CNB)

and Bechon Co. v. Gemer Corp. 314 FP. A RR, 842 48

(iy (ir, 1963). In the instant case the alleged damages

resulted from plaintiff's inability te compete. The cause

of that inability te ampete was the singke act of defend

ants, eccurring befere the Aling of the complaint, in de-

priving plaintiAt bis authorined dester stator.

The trial court's decixien and defendant<’ argument

alxe rely heavily en the fact that plaintiff did net call

anv of the prespects te testify. Indeed, ene prospect was

called by the defendants and negatived the textimeny of

Fentana’s Beard Chairman. Thix undeubtedly weakened

plaintiff's case and the jury may well net have accepted

the Fontana witness" asxertion as to seme of the alleged

prospects and may hate reduced the damage award ac.

cordingly. Apparently this ix what happened, for the jury

award is substantially lexx than the amount plaintiff as-

serted as its damages. é

What we have said ix sufficient to indicate the error

of the trial court in finding that the evidence on the fact

of damage issue was overwhelmingly and conclusively

against Fontana. Once there ix sufficient evidence of the

ef

AM

fart of damage te ge te the jury, the axseeanent of the

awrewnt ix laneely a matter of the jury's consideration

its wemerandem apinien the district court dealt

‘chien Cenk with cork of piniti®l’s civard ites

and conceded that the ovrdence <apperted wen

of them. (f thik appraach, the Supreme Oourt has sar:

“We think thik was impraper. In cases cach ae

this, plaintiff. srenkd be given the fall benefit: of

after serutiny ef each. ‘2. 2 2 [Tyke character and

effect of a compirary are net te be jodged by div

menbering it and viewing it« -eparate parts, but only

by leoking at it as a whole, Uelied States v. Patten,

2R UL S. OB, 544... : ed im a ener bike the one

beferve ws, the duty of the jury was te look at the

whele picture and net merely at the individual figure-

im 1.” Amerricen Tebarre Co. vo United States, 147

F.2d 93, 166 (0) A. Gth Cir). See Montager d Co. v.

Lewis, 192 U.S. 8, 66-46." Continental Ore Co. v.

Ueon Cartide d Carbon Corp. 270 U.S. G90, G9*-99,

(1962).

We need net step to deal with cach of the damage

claims and the court's treatment of them. In earch case,

the court apparently felt that plaintiff had introduced

competent evidence in -uppert of the claim but found

~ that other evidence defeated the claim. Since the court

im its discretion was satixfied in the event the judgment

notwithstanding the verdict was not upheld that an ade-

quate basis for a new trial existed, at least on the question

of damages, we will wot disturb that exercise of his dis-

cretion. The evidence under proper rules of admissibility

will go to the jury and the jury will be in a position

— ——— ee

* . Am

te exercise its prerogative te weigh the evidence in fixing

the amount of plaintifl’s damages.

We affirm the action of the trial court im granting

Judgment notwithstanding the vertict insofar as the 6,000

jrdament on’ the counterclaim of Harteng is comrerned.

If there was any injury reselting froma violation of the

.. Sherman Act invelved in the particular transaction, it was

another. distributer which suffered the injury, not Harteng.

Fer the reasons herein set forth, judement of the trial ¢

court in granting a jedgment notwithstanding the verdict

is reversed and this cause ix remanded to the district court

for further proceedings net inconsistent: herewith.

Revensen, °

o

AR

Unive Sraves OCovrr of Arras

For the Seventh Circuit

Wednesday, September 23, 1970

Before

- Mon. Roo J. Kina: Cirenit Judge

Hox. Tomas B. Parveen, Circuit Jedge

Hox. Waaen F. Va. Ja. Civentt Judge

ee ee ee

Foxtana Aviation, Inc. a

Plats Apprtiant

No, 17734 wR,

Beeen Armcrset Corroratiox, a

Corporation, and Hagan.

Scuxeck Aviariex, Inc. a Cor-

poration,

Me fendants-Appelices,

Hartracn-Scunxeck Aviariox, Ina,

: Conanter-Clarmant. Appellant,

No. 17735 vs. |

Fontana Aviation, Ixc.,

t ‘ounter-Defendant-Appeltec.

Appeals from the

United States Dis.

trict Court for the

Nerthern District

of Mineois, Eastern

Ttvision.

This couse came on to be heard on the teansevipt of the

record from ¢he United States District Court for the

Mestheen Gtatelet of Wincis, Gastere Division, and was

argued by counscl.

?

“¢

£

AM

Un consideration witrreal, it in endrred and adjudged by

thes court that the action of the sand Ut ret Cowart

pagent neteithstamiing the venbet inefar as the @)000

SD She CEE <p CN Se eeTEET

amd the samme ix hereby, Arwen.

Ut as further entered and adjmdged by this Court that the

nedement of the sand Ustriet Court granting & jement

motwithstamdiog the verdict be, amd the same ix hereby,

<Revenen, and that this came be, amd itis hereby, Rem anne

te the sated Uietriet Cowart for further preceeding: net in

consistent with dhe apinion of thix Court filed this day.

it ix farther endered amd adjudged by this Court that

the costs in these appeals be taved in faver of Montana

Aviation, Ine. and against Beech Aiverall Corporation and

Hartree Schnewk Aviation, tne,

®

AMS

APPENDIX C.

Univ Staves Oover w Aevene

Por the Seventh Cirewit

Ueteher 19, 1970

Hon, Rew J. Kinav, Cireuit Judge —

Hox. Tromwas BK. Parecnia, Civrenit Jedge

Hox. Waark FL Pro, de, Cireuit Judge

ra

Ponrana Aviation, —

Corporation, Ste

Plaintiff Appetit,

No, 17734 PR,

Beeen’ Amorart Corporation, a

Corporation, and Hanraos-

”

No. 17735 > ws.

_Fortana Aviatios, Ixc., a

Scu neck Aviation, Inc, a Cor-.] Appeals from the

poration, ' United States Dis-~

Defendants. Appetices. trict Court for the

- Nerthern District

: of Minois, Eastern

Hanta0c-Scuxeck Aviarven, Ina, Division.

a Corporation, ~~ ' ;

Counter-Clarmant-A ppeliant, |

Counter Defendent-Appeliee.) _

“

meee? mamas

Defendants, Beech Aircraft Corporation and Hartzog

Sehneck, loc.. have moved this court fer a rehearing and

reconsideration of eur judgment in) Appeals Nos. 17734

and 17725 insefar as it taxed alf costs of the appeals t

them. :

Plaintiff, Fontana Aviation, Inc., prevailed in Nos, 17734

and 17725 as to the trial court's grant of Judgments

N.O.V. Beech prevailed in No. 17754 as to the trial court '»

conditional grant of a new trial.

Having considered the petition for rehearing, the re

sponse and the reply, we now dispose of the issue so rained

by amending the judgment in appeals Nos. 17734 and 17735

on the matter of costs only as follows:

It is hereby ordered and adjudged that the costs of the

appendix be taxed 80° to Beech Aircraft Corp. and Hart

zog-Sehneck, lnc. and 20°. to Fontana Aviation, Ine. with

credit to be allowed on the payment of said costs for the

payment heretofore made by Beech Aircraft Corp. on said

appendix. Each of the parties shall otherwise bear its -

own costs of appeal including the costs of briefs.

Such an assessment reflects, in our opinion, the relative

importance in these appeals of the issues on which each

party prevailed. Further, we are not unmindful of the

difficulties of successfully appealing the granting of a mo-

tion for a new trial and do not know, if this had been ali

that was involved, that Fontana would have appealed.

Ir Is So Ornperen.