Petition for Writ of Certiorari — Danning v. Brunswick Corp.

Supreme Court brief1973

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p IN THE SUPREME COURT

OF THE UNITED STATES

October Term, 1972

No.

CURTIS B. DANNING, as Trustee

in Bankruptcy of Matador Bowl, Inc.,

a California corporation, Bankrupt,

Petitioner,

vs.

BRUNSWICK CORPORATION, a Delaware

corporation, A. B. MALOUF,

Respondents.

EMANUEL LEVY,

ou Petitioner,

vs.

BRUNSWICK CORPORATION, a Delaware

corporation, A. B. MALOUF,

Respondents.

PETITION FOR

WRIT OF CERTIORARI

Bernard Reich

9808 Wilshire Boulevard

Beverly Hills, California 9021

(213) 274-7637

Attorney for Petitioners

COPY PRINTED CLOSE TO ENGE

TOPICAL INDEX

Table of Authorities

OPINION BELOW

JURISDIC TION

QUESTIONS PRESENTED

STATUTORY PROVISIONS INVOLVED

STATEMENT OF THE CASES

REASONS FOR GRANTING THE WRIT

Il.

The Decision Below, Involving

the First Antitrust Acquisition

Controversy in the Bowling

Industry and Not Merely

Questions of Bankruptcy or

Commercial Law, Should Not

Have Been Disposed of by

Summary Judgment. It is in

Conflict With Applicable Decisions

of This Court With Respect to

Summary Judgment in Antitrust

Cases.

The Cases Present an Important

Question That Has Not Been,

But Should Be, Settled By This

Court, Concerning the Impact

of Bankruptcy or Commercial

Law on Antitrust Claims.

ee a te |

III. One of the Cases Presents an

Important Question Concerning

the Rights of a Potential Competitor

Under Section 7 of the Clayton Act,

that Has Not But Should Be Settled

by This Court.

IV. The Decision Below Conflicts

Implicitly With Decisions of

This Court and of Other Courts

of Appeal in a Wide Range of

Antitrust Questions.

CONCLUSION

- Appendix A

Opinion of the Court of Appeal

Appendix B

Applicable Statutes

—

EROS REIS

ME SISECRILE HDL LEE FOE AIRE FOE TR

POMERAT RIS TAPE IEE ITI LOG RIE LEE GP. BT

TABLE OF AUTHORITIES

Cases Page

American Tobacco Co. v. United States,

328 U.S. 781 38

Julius M. Ames Co. v. Bostich, Inc.,

240 F.Supp. 521 35

Bowl America Incorporated v.

Fair Lanes, Inc.,

299 F.Supp. 1080 35

Brown Shoe Co. v. United States,

370 U.S. 294 28, 40

Burkhead v. Phillips Petroleum Co.,

308 F.Supp. 120 35

Bushie v. Stenocord Corp.,

406 F. 2d 116 27, 32

Continental Ore Co. v.

Union Carbide Corp.,

370 U.S. 690 36

Denver Petroleum Corporation v.

Shell Oil Company,

306 F.Supp. 289 35

Feddersen Motors v. Ward,

180 F, 2d 519 27

First National Bank v. Cities Service Co.,

391 U.S. 253 24, 23

ili.

CORY PRPINTOCHR fr1MAce rR CR ee

Fortner Enterprises, Inc. v.

U.S. Steel Corp.,

394 U.S. 495

24,

Gottesman v. General Motors Corporation,

414 Fed, 2d 956

Klor's, Inc. v. Broadway-Hale Stores,

359 U.S. 207

Lessig v. Tidewater Co.,

327 Fed. 2d 459°

27,

Lieberthal v. North Country Lanes,

332 F.2d 269

37,

Martin v. Phillips Petroleum Company,

365 Fed. 2d 629

Moore v. Mead's Fine Bread Co.,

348 U.S. 115

Nash v. United States,

229 U.S. 373

27,

Poller v. Columbia Broadcasting System,

368 U.S. 464

Sunkist Growers, Inc. v.

Winckler & Smith Citrus Prod. Co.,

284 F.2d 1

Times-Picayune Pub. Co. v.

345 U.S. 594

Trowler v. Phillips,

260 F.2d 924

iv.

24, 27,

19,

United States,

AEC IEE OTT ITT BET Te Fe TINE FT ON

PER ITEL O ENEREE RIF

COPY PRINTED CLOSE TO EDGE

United States v. Aluminum Co.

of America,

377 U.S. 271 29

United States v. General Motors Corp.,

384 U.S. 127 39

United States v. Paramount,

334 U.S. 131 40

The White Motor Company v.

United States,

372 U.S. 253 24

Statutes

11 U.S.C. sec. 110 4

15 U.S.C. sec. 1

Sec. 1 of Sherman Act 4, 5

15 U.S.C. sec. 2

Sec. 2 of Sherman Act 4

15 U.S.C. sec. 15

Sec. 4 of Clayton Act 3, 4

26, 34

15 U.S.C. sec. 18

Sec. 7 of Clayton Act 4, 6, 34

18 U.S.C. sec. 152, cl. 5 +

28 U.S.C. sec. 1254(1) 2

28 U.S.C. secs. 1291, 1294(1) 5

Vv.

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1972

No.

CURTIS B, DANNING, as Trustee

in Bankruptcy of Matador Bowl, Inc.,

a California corporation, Bankrupt,

Petitioner,

vs.

BRUNSWICK CORPORATION, a Delaware

corporation, A. B. MALOUF,

Respondents.

EMANUEL LEVvy,

Petitioner,

vs.

BRUNSWICK CORPORATION, a Delaware

corporation, A. B. MALOUF,

Respondents.

PETITION FOR

WRIT OF CERTIORARI

Petitioners respectfully pray that a writ

of certiorari issue to review the judgment of th

CORY PRINTEM CIMmOce rA cA ee

United States Court of Appeals for the Ninth

Circuit entered in these oonsolidated proceed-

ings September 18, 1972.

OPINION BELOW

The Opinion of the Court of Appeals,

not yet reported, appears in Appendix A hereto.

JURISDIC TION

The judgment was entered September 18,

1972. No petition for rehearing was filed and

this petition is filed within 90 days of the last

mentioned date. This Court's jurisdiction is

invoked under 28 U.S.C., sec. 1254(1).

QUESTIONS PRESENTED

1. Whether a controversy involving

the vertical acquisition of a bowling center by

one of the two major manufacturers and sellers

of bowling alley equipment and owner of a chain

of bowling centers, and involving questions of

combination and conspiracy with the lessor of

the subject acquisition, the refusal by both to

trade and deal with a potential competing

ART MR eco ene EE

operator, and the resultant elimination of

competition at a bankruptcy sale, can properly

be disposed of by summary judgment.

2. Whether the antitrust claims,

under the facts postulated above, and expressly

reserved by the trustee in bankruptcy at the

bankruptcy sale in which he announced he was

selling a going business (including good will),

can be defeated merely by the fact that his

tiiue to assume the lease to the bowling center

and the conditiunal sales contracts to the fixed

bowling lanes and equipment had expired.

3. Even if the previous Question

is determined in the affirmative, whether the.

claims in antitrust of the excluded potential

competitor, eminently qualified to purchase

the bowling lanes and equipment, and to lease

and operate the bowling center, are foreclosed.

4. Whether a person, actually

engaged in the operation of bowling centers,

who had the means, intent to lease and purchase

and who negotiated for the lease and property

but who was excluded, has Standing to sue

under Section 4 of the Clayton Act.

[Note: There are other questions which,

while not dealt with by the Opinion below, were

disposed of adversely to Petitioners by the

district court in extensive findings of fact and

on a es mug

conclusions of law and implicitly affirmed by

the Court of Appeals, and which this Court may

wish to consider. They are discussed in

Reason IV for issuance of the writ, infra. ]

STATUTORY PROVISIONS INVOLVED

The statutes involved are Sections 1

and 2 of the Sherman Act, 15 U.S.C. §§1, 2;

Sections 4 and 7 of the Clayton Act, 15 U.S.C.

§§15, 18; 11 U.S.C. §110; and 18 U.S.C.

§152, cl. 5. They appear in Appendix B hereto.

STATEMENT OF THE CASES

eB Jurisdiction of the Courts

Below.

The jurisdiction of the district court

was invoked because of questions which arise

under Sections 1 and 2 of the Sherman Act and

Section 7 of the Clayton Act. The cases (in

which jury trials were demanded) were con-

solidated in the district court.

Petitioner Danning, a trustee in bank

ruptcy, sued for treble damages when

Respondent Brunswick, one of the two major

manufacturers and sellers of bowling equi

ment and owner of a chain of bowling centers,

allegedly combined and conspired with Respo:

dent Malouf, the lessor of a bankrupt bowling

center, to acquire the bowling business at

the bankruptcy sale without competitive bidding.

Petitioner Levy, an eminently qualified

bowling center operator, sued for treble damages

and divestiture when he was refused the lease

and equipment and was in effect excluded from

bidding at the bankruptcy sale.

Petitioner Danning appealed to the

Court of Appeals, in accordance with 28 U.S.C.

secs. 1291, 1294(1), from an adverse summary

judgment entered May 16, 1969.

Petitioner Levy, on the same record,

appealed from an adverse summary judgment

entered several months later, November 24,

1969.

The consolidated record on appeal

consisted, in addition to the Clerk's Transcript,

of 1) Depositions of Respondents; 2) Reporter's

Transcripts of argument had on May 5 and

November 17, 1969; and 3) Reporter's Tran-

script in the bankruptcy proceedings.

hl onal

_—

The facts recited here are taken from

this record without page references, since the

record is not yet before the Court.

Essentially, the actions charge the

respondent Brunswick, one of the two major

interstate manufacturers and sellers of bowling

equipment and operator of a large chain of

bowling centers, with violations of Sections 1

and 2 of the Sherman Act and Section 7 of the

Clayton Act, and respondent Malouf with viola-

tion of Section 1 of the Sherman Act.

2. Brunswick Corporation and

the Bowling Industry

These are the first actions which chal-

lenge Brunswick's policy of acquiring bowling

centers.

The advent of the automatic pinsetter

revolutionized the sport of bowling and changed

what was a local sport conducted in shabby

surroundings to a national sport conducted in

modern, attractive centers.

There are approximately 33 million

persons bowling in %, 000 establishments

throughout the country. Petitioner Levy

averred that Brunswick and American Machine

) oho

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COPY PRINTED CLOSE TO EDGE

& Foundry Company, Inc., for all practical

purposes, manufacture, sell, and distribute

almost 100% of all automatic pinsetters and

bowling equipment.

Brunswick admits to the following

Statistics:

It manufactures, sells and supplies

between 35 and 40 percent of all the bowling

equipment sold in the United States and that

between 30 and 35 percent is manufactured

and sold by American Machine & Foundry

Company. The remainder of the market in

the United States for bowling equipment is

shared by a number of smaller companies.

During the years 1965 and 1966,

Brunswick shipped its bowling equipment

into every state in the United States. Its

sales volume for bowling equipment in the

United States in those years was approximately

$63, 000, 000 and $48, 000, 000, respectively,

of which about ten percent was allocable to

the State of California. Of the approximately

9, 000 bowling centers in the United States,

Brunswick sells its equipment to more than

6, 000 of them, including about half of the

bowling centers in the State of California.

During the years 1965, 1966, 1967

and 1968, Brunswick operated bowling centers

inthe United States and in the State of California

Pere tins dD

evs

as follows:

Year United States California

1965 131 13

1966 178 22

1967 184 26

1968 163 23

During the same years, Brunswick

operated 11 bowling centers in Los Angeles

County including Matador Bowl in the San

Fernando Valley, involved herein.

The following is also undisputed.

Matador Bowl competes with a number

of independent bowling centers in the San

Fernando Valley, a suburb of Los Angeles.

Brunswick's other bowling centers compete

with independents in the Los Angeles metro-

politan area,

There follows the names and addresses

of bowling centers within a five mile radius

of Brunswick's Matador Bowl, the subject of

the controversy. The asterisk means that

the center is a Brunswick equipped and supplied

house,

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COPY PRINTED CLOSE TO EDGE

* Bowlerland - 32 lanes

7501 Van Nuys Boulevard, Van Nuys

Canoga Park Bowl - 32 lanes

20122 Van Owen, Canoga Park

* Granada Lanes - 48 lanes

10823 Zelzah, Granada Hills

Panorama Bowl - 48 lanes

8750 Van Nuys Boulevard, Van Nuys

Reseda Bowl - 32 lanes

6642 Reseda Avenue, Reseda

*Ronnell Bowl - 32 lanes

12385 San Fernando Road, San Fernando

Van Nuys Bowl - 10 lanes

14540 Friar Street, Van Nuys

Victory Bowling Center - 24 lanes

6300 Sepulveda Boulevard, Van Nuys

In addition, Brunswick's Hollywood

Legion Bowl in Hollywood, California, is less

than four miles from La Cienega Lanes, owned

by a corporation of which Petitioner Levy is a

principal stockholder.

Petitioner Levy averred, without

contradiction, that five miles is the area of

competition, that on a five mile basis,

Brunswick owns [and operates] 11% of the

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—_

bowling centers and on a two mile basis, 33%.

[The record does not disclose how much

the other major power in the industry, American

Machine & Foundry, has of the "retail'’ market,

but Petitioners, if given the opportunity, intended

to show that the acquisitions by both Brunswick

and AMF, have threatened the existence of the

independent bowling center operator. ]

As noted in the Opinion below (ftn. 2),

[during the 1960's] a large number of centers

became financially unsuccessful, and Brunswick,

as one of the two major manufacturers, would

frequently repossess centers and operate them

aS so-called distressed situations.

It should be noted, however that: (i)

(unnoted in the opinion of the Court below) in

1965, Respondent Brunswick's announced policy

to the industry was that it was not going into

the business of operating bowling lanes or centers

except to protect its investment; and (ii) (also

unnoted below) Matador Bowl, the subject of the

controversy, was not a distressed situation in

which Brunswick acted to safeguard its invest-

ment. Indeed, early in February, 1966,

Petitioner Levy was told by Respondent

Brunswick that he could buy Matador Bowl for

$330,000, being more than $100, 000 above

what was owed it; and when he questioned the

price, he was told that Matador Bowl was one

of the better centers and that Brunswick wanted

10.

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COPY PRINTED CLOSE TO EDGE

to make up for some of the unsuccessful ones

it had acquired.

An officer of Brunswick, who had priced

out Matador at $300, 000 to $400, 000 and had

worked quickly and secretly to acquire it for

Respondent, deposed:

That while Respondent Brunswick's general

policy is to keep its customer operating, it

frequently cannot do this and must move in to

Salvage its investment. In the case of Matador

Bowl, it was not seriously delinquent to

Brunswick who preferred to operate rather than

remove the equipment.

That whether Respondent Brunswick

would permit a responsible party to operate

after making Brunswick whole, that party

could have bought the equipment directly from

the lessee and Brunswick would have transferred

the indebtedness. Not so in the case of

Matador Bowl, because the equipment went

into "its inventory''and Respondent Brunswick

had "'firm selling prices." By its inventory was

meant that Brunswick had title. [Note:

Brunswick did not have title at the time of

Petitioner Levy's meeting in February, 1966,

when it offered to sell him Matador Bowl at

a price which would vield it more than

$100, 000 profit. |

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3. Malouf.

Respondent Malouf was the owner of the

real property and improvements located in

Northridge, Los Angeles County, California,

at which his lessee, Matador Bowl, Inc.,

operated a bowling center with lanes, pin-

setters and equipment sold to it on conditional

sales contracts by the Respondent Brunswick.

When first contacted by Levy after

Matador's bankruptcy, Malouf was encouraging

about the prospects of accepting Levy as a tenant

in place of Matador. Later, he refused Levy a

lease, referring him to Brunswick, to which he

had already leased the bowling center within a

month after the adjudication of bankruptcy.

4. The Bankruptcy and

Negotiations for Matador

Bowl.

On December 29, 1965, Matador Bowl

filed a voluntary petition in bankruptcy. At

that point Matador Bowl owed Respondent

Brunswick a balance of some $176, 000 on the

conditional sales contracts, although it was not

seriously delinquent in its monthly payments.

12.

COPY PRINTED CLOSE TO EDGE

—

Respondent Brunswick under agreement

with Petitioner Danning, as Trustee, immediately

went into possession of the premises, retained

the books, records and contracts, and operated

Matador as agent for the Trustee,

On January 27, 1966, without the knowledge

of Petitioner Danning, and approximately only

a month after the adjudication of bankruptcy,

Respondents executed a lease between them,

conditioned on the rejection by the Trustee of

the existing Matador lease.

After the Matador adjudication, Petitioner

Levy, an eminently qualified independent operator,

attempted to negotiate with all parties, Brunswick,

Malouf, and Danning, to take over the lease,

conditional sales contracts, and was prepared

to bid at the bankruptcy sale for the remaining

assets as a going business.

Early in February, 1966, in C hicago,

Petitioner Levy met with officers of Respondent

Brunswick. He was told that he could buy

Matador for $330, 000, being more by at Icast

$100, 000 than was owed to Brunswick, that the

price was intended to make up for some of

Brunswick's losses elsewhere, and that he

Should not bid at the sale because “we have

already tied up the premises with a lease, '

1%.

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COPY PRINTED CLOSE TO EDGE

Petitioner Levy's attorney had written

two letters to Respondent Brunswick. in one

Respondent Brunswick was told of Levy's

interest in purchasing the business of the

bankrupt and requesting pertinent information.

The letter also referred to Respondent

Brunswick's announced policy to acquire

bowling centers only to protect its investment.

No answer was received to this letter.

Subsequently counsel wrote again, referring

to Levy's conversation in Chicago, and claim-

ing that Respondent Brunswick's conduct was

improper. Respondent Brunswick's answer

was completely negative, although there was

no denial of Petitioner Levy's version of the

Chicago conversations.

About the same time, Petitioner Levy's

counsel was in communication with Respondent

Malouf 's counsel. First, there was a telephone

conversation, confirmed by a letter from

Petitioner Levy's counsel, that Respondent

Malouf would entertain an offer from Peti-

tioner Levy for a lease. Then, there was

silence from Respondent Malouf's counsel! in

that he failed to answer telephone calls. Next,

there was a letter from Petitioner Levy's counsel

questioning this behavior as sinister. Finally,

there was a response: “Again, as | indicated

to you (evidently over the telephone on the very

first occasion), Mr. Malouf has no particular

preference as between financially responsible

parties who may want to lease this property. "

And then what was not indicated before:

14,

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COPY PRINTED CLOSE TO EDGE

"Under the circumstances, however, it would

seem that your client must either obtain an

assignment of the lease from Brunswick or an

offer on its part to cancel the new lease, before

Mr. Malouf could enter into a new lease with

your client, "

Petitioner Danning, the Trustee in

Bankruptcy, did not know that Respondent

Brunswick had tied down the lease or that it

would not turn over its equipment under

conditional sales contracts until Petitioner

Levy returned from his Chicago meeting with

Respondent Brunswick officials and reported

its demands.

5. The Bankruptcy Sale.

The bankruptcy sale was held April 28,

1966, before a referee in bankruptcy. The

following is taken from the transcript which is

a part of the record below.

"MR. RASKOFF (attorney

for Trustee): Before offering the

property for sale, I would like to

State on the record something which

Brunswick has already been advised

of, but I don't want there to be any

misunderstanding as to the position

of the estate. They have made some

15.

COPY PRINTED CLOSE TO EDGE

kind of arrangement with the landlord

here which, in effect, knocks any

other bidder out of the box, because

they have control of the premises.

They have been advised by their

attorneys that they were acting within

their rights, and perhaps they were,

but | want to state this on the record:

That in offering this for sale, if

Brunswick should be the high bidder,

we are doing so without waiving any

rights for any cause of action that

this estate may have with respect to

Brunswick's conduct in eliminating the

interest of one high] ualified bidder,

so, to the extent that that may be

actionable, we are reserving our rights

and we intend to investigate it and do

whatever may be appropriate. "1/

(Emphasis supplied. )

"THE REFEREE:

Mr. Raskoff, do you think this is a

matter I should refer to the FBI for

investigation under Section 152,

Title 81 [Sic]?

"MR. RASKOFF: Not at this

time. I know what the facts are,

your Honor. This is a problem we

~ Despite the above, the Court of Appeals

in footnote 4 to its Opinion commented: "We

note that the trustee took no steps to set aside

the sale in the Bankruptcy Court."

16.

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| *

COPY PRINTED CLOSE TO EDGE

have in all bankruptcies, your Honor,

where you have items in place that

have value only in place. The smart

business man has almost invariably

gone to the landlord to tie up the

premises so that no one else can bid

anywhere near the fair value, because

the premises are locked up. Our

problem is with someone occupying the

place in the industry that Brunswick

does, Brunswick has a very significant

percentage of the bowling business in

the United States, Iam sure. Idon't

know that to be a fact, but I would

wager on it. I think we have a situa-

tion where there may possibly be a

cause of action. I know we face this

in all bankruptcies. I know that,

because a landlord generally has an

advantage over other bidders, but

in this case the landlord indicated that

he would be delighted to lease the

premises to anyone who was financially

qualified, and we thought we had produced

such a man, but he couldn't get a lease

because Brunswick had tied it up, so

this is the right I want to preserve.

"THE REFEREE: It seems

to me this would come under Sub-

division 5 of Section 152, and I want

you to give that a lot of careful

consideration. "

"MR. RASKOFF: I would do

that, your Honor.

17.

een 71 AGE TO EDGE

"MR. CATLIN (attorney for

Brunswick) :

'". . . [Brunswick] is a sub-

stantial creditor of this estate, with

secured accounts running approximately

$200, 000. 00 and its unsecured account

is about five thousand. Talks, as I

said, were begun with the bankrupt and

its attorneys and the landlord, and

ultimately a lease was taken from the

landlord, because without a lease

Brunswick's position was that it couldn't

very well bid for these assets without

a place to keepthem. Actually, there

is always someone in a bankruptcy that

has a certain advantage, and the land-

lord in a business that has fixtures

such as this restaurant and bar equip-

ment has an advantage, and with a lease

Brunswick has that same advantage,

and there is a lease.

"THE REFEREE: Well, I

urge you to read Subdivision 5 of

Section 152, Title 18, of the United

States Code. It seems to me, just

from your own statement, there has

been a violation of that section,

counsel." 2/

The complaints in both cases herein,

in the course of alleging violations of the

(continued bottom of following page)

18.

TNT TR BERT ASHES 8

pr SBE RT IIE

Ts pai ahd mee

werrayer

wen CLOSE TO EDGE

"MR, RASKOFF: If the Court

please, I am not convinced at the moment

that there is a deal with the landlord,

That wasn't made until after the bank-

ruptcy. We were requested by Mr.

Quittner, counsel for the bankrupt in

this case, to consent to a termination

of the master lease. I had advised

Mr. Quittner that we would do that

provided the termination would not be

effective until after the sale of these

assets, since we wanted to preserve

the possibility of competitive bidding. 3/

Mr. Quittner said that that was fine and

2/ (Continued from preceding page)

antitrust laws, refer to this asserted violation

of the criminal law. Please see discussion of

the so-called "plus elements" in antitrust cases

in Sunkist Growers, Inc. y. Winckler & Smith

Citrus Prod. Co., 284 F. 2d 1, 16-17 (‘CA 9,

1960).

This points up conflict between bank -

ruptey rules and antitrust laws which the Court

below failed to appreciate. (See ftn. 6 of

Opinion. )

oe anne ee

COPY PRINTED CLOSE TO EDGE

that I could hold the termination

until there was a sale. Subsequent

to that time we were advised, for the

first time, by the landlord, after we

had introduced a perfectly qualified

bidder to the landlord, who had just

a few days prior said he would make

a lease with anv qualified person, that

in the two days preceding a lease had

been signed with Brunswick, so I

asked to see a copy of the lease, and

1 got it from the landlord's attorney,

along with a letter that its effectiveness

was conditioned upon not the usual

words, subject to their being able to

buy the assets, but it was conditioned

upon the termination of the prior

lease between the bankrupt's principals,

not the bankrupt, and the lessor, and

1 don't know whether that has been

terminated or not, but the voluntary

termination | am satisfied can be

Stopped, because we wouldn't agree

Oh. «sé es 92

"MR. DANNING: I would

like to inquire if there is anvone

besides Brunswick Corporation who

is prepared to bid for this business as

a going business? 4/ There being no

The Trustee had advertised "FOR SALE

AS A GOING BUSINESS MATADOR BOWL.”

Brunswick responded to the offer by buving

{continued bottom of following page)

~~ ~~ a

COPY PRINTED CLOSE TO EDGE

response -- (Emphasis added).

"MR. MAURICE PELON:

I would, except this seems to be a

tied-up situation. It is sort of a locked-

in situation, and it is pretty hard to

go out on a limb and bid and not know

where you end up.

"MR. DANNING: I take it

that means you are not prepared at

this time to bid for it as a goi

business?" (Emphasis added. )

"MR. PELON: If the lease

is gone, there is no way I can.

"MR. DANNING: Does that

mean you are not prepared to bid?

"MR. PELON: Yes, it does.

"MR, DANNING: Apparently,

your Honor, there will only be a single

bidder for this business as a going

business.

4/ (Continued from preceding page)

the going business. Yet the Court below

(Opinion, page 4) held that "The basic defect

in their contentions [i.e., violations of the

antitrust laws], briefly stated, lies in the

fact that the trustee had no business to sell. "

21.

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COPY PRINTED CLOSE TO EDGE

"MR. RASKOFF: Mr. Danning,

may I inquire of Mr. Catlin, because

the last time I talked to Mr. Catlin and

the attorney for the landlord the lease

that they had was conditional. Is the

lease now unconditional ?

"MR. CATLIN: As far as I

know, it is still conditional in the same

respects that it was."

[Petitioner Levy, who was the "perfectly

qualified bidder'’ mentioned by Petitioner Danning'

attorney, averred that he did not bid at the bank-

ruptcy sale because, as stated by another potentia

bidder at the sale (Pelon), the situation had been

"tied-up" -- Respondent Brunswick had the lease

and the equipment would have to ke removed,

making it worth considerably less than in place. ]

"THE REFEREE: .. . Is

anyone else interested in bidding on

all of the items as a going business ?

(Emphasis added. )

"MR, PELON: I will again

State to your Honor if this wasn't

complicated with this lease situation

I would be definitely interested in

bidding.

"MR. DANNING: Apparently

there are no other bidders, and, under

the circumstances, I would recommend

22.

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confirmation.

"THE REFEREE: Very well.

The sale will be confirmed to the

Brunswick Corporation for $21,500. 00,

plus the wholesale cost On the liquor

and other supplies, "

The result of the sale was that Brunswick

acquired not a "distressed Situation," but a going

business including good will, without competitive

bidding, and at a price of about $266, 000, 5/

some $100, 000 less than it offered it to Levy or

the value put on the property by Brunswick,

before the bankruptcy sale and the expiration of

the trustee's time to assume the lease and the

conditional sales contracts -- some $100, 000

which otherwise would have redounded to the

benefit of the bankruptcy estate,

‘The approximate total of the balances on

the two conditional Sales contracts with Brunswick

one with a supplier of kitchen equipment, and

what Brunswick paid at the bankruptcy sale,

23,

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REASONS FOR

GRANTING THE WRIT

I. The Decision Below, Involv-

ing the First Antitrust

Acquisition Controversy in the

Bowling Industry and Not Merely

Questions of Bankruptcy or

Commercial Law, Should Not

Have Been Disposed of by

Summary Judgment. It Is in

Conflict With Applicable Decisions

of This Court With Respect to

Summary Judgment in Antitrust

Cases.

The decisions below dispose of the

controversy on the basis of language used by

this Court in First National Bank v. Cities

Service Co., infra, a case, Petitioners submit,

wholly unlike theirs, when it should have denied

Summary judgment on the criteria enunciated

in Poller v. Columbia Broadcasting System,

368 U.S. 464 (1962) and The White Motor

Company v. United States, 372 U.S. 253

(1963). Cf. Fortner Enterprises, Inc. v.

U.S. Steel Corp., 394 U.S. 495, 505-506

(1969).

The applicable Cases hold that summary

judgment in antitrust cases is disfavored and

should rarely be granted; it is inappropriate

where motive, intent and acquisitions are

24,

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OSE TO EDGE

- _ Sse 2

1 ae A

involved, and where the issues are not

clear-cut, simple, but are of far-flung

import,

Petitioners are not just anyone who

have filed an antitrust complaint without

Significant probative evidence tending to

Support their complaint, as suggested by the

Opinion below, citing language®/ in First

National Bank v. Cities Service Co., 391 U.S.

253, 290 (1968).

Petitioners for themselves and for the

public are able to make and did make a showing

which makes the First National Bank case

dictum cited below inapplicable to them.

Petitioner Danning is a Trustee in

Bankruptcy who was compelled to sell a truly

viable business to Respondent Brunswick at

a price in effect at least $100,000 less than

6 /

"While we recognize the importance

of preserving litigants' rights to a trial on their

claims, we are not prepared to extend those

rights to the point of requiring that anyone who

files an antitrust complaint setting forth a

valid cause of action be entitled to a full-dress

trial notwithstanding the absence of any

significant probative evidence tending to sup-

port the complaint. "'

25.

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Respondent Brunswick was willing to sell it

to Petitioner Levy -- because Respondent

Brunswick combined with Respondent Malouf

in restraint of trade or unilaterally and

illegally refused to deal.

Petitioner Levy is an eminently

qualified independent operator who was for all

intents and purposes prevented from bidding

at the bankruptcy sale by the same combination

and conspiracy, or illegal unilateral refusal.

Moreover, the Court of Appeals in effect ig-

nored his rights which were independent of the

Trustee's and were based on his own standing

under Section 4 of the Clayton Act, and not

upon what the Trustee did or did not do with

respect to affirming the lease or conditional

sales contracts.

The Opinion below states (p. 5):

"After the trustee had rejected

the lease and conditional sales

contracts, Malouf and Brunswick

were free to deal with each other

or with anvone else, or not to deal

at all, so long as their refusal to

deal with I.evv did not restrain

trade,"

But Respondent Brunswick was not an

ordinary trader. Because of its dominance,

even alone it could not with impunity misuse or

26.

—_ ——-

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abuse 7/ its position and refuse to trade

[Poller v. Columbia Broadcasti System,

368 U.S. 464, 469 (1962)}; it could not in

concert with Malouf refuse to trade [cf.

Klor's, Inc. v. Broadway-Hale Stores,

359 U.S. 207, 212 (1959)}, and even though

Malouf was not a trader [Nash v. United

States, 229 U.S. 373, 379 (1913)}.

In referring to the so-called rejected

lease and conditional sales contracts and to its

own decision in Bushie v. Stenocord Corp. ,

460 F.2d 116 (CA 9, 1972), a case involving

termination of a distributorship contract where

there was no showing of monopoly power in

the single manufacturer (460 F.2d at p. 121),

the Court below in effect held that in the cases

at bar there was only a private quarrel, just

as there was in other distributorship cases,

including Feddersen Motors v. Ward, 180 F.

2d 519 (CA 10, 1950), the premise of which,

Petitioners submit, was repudiated in Klor's,

Inc. v. Broadway-Hale Stores, Inc., supra.

Petitioners claimed below that Responden

Brunswick was not just another competitor for

the lease and what it did in tying up the lease

was not legitimate in the circumstances.

27.

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Angeles area,"

The Opinion below also States:

". « « None of the facts appearing in

this record permit an inference that

Malouf and Brunswick conspired to

restrain trade, or that Brunswick's

operation of a bowling center at the

Matador site would affect competition

in the relevant market in the Los

Angeles area?/." (Emphasis added. )

But footnote 7 in part reads:

"Brunswick, during the period of

the events under consideration,

operated 22 bowling centers,

approximately two percent of the

total number of centers, in the

State of California. " (Emphasis

added. )

Thus, while the text refers to "the Los

the footnote widens the relevant

area to the State of California.

Whatever the area, the decision below

overlooks the fact that Brunswick is a mono-

polist in manufacturing throughout the United

States,

looks the law that in this setting, the

of the market foreclosed by

with the power to fix prices, and over-

percentage

the vertical arrange

ment is not decisive. [Cf. Brown Shoe Co. v.

United States, 370 U.S. 294, 329 (1962);

28.

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United States y. Aluminum Co. of America,

377 U.S. 271, 280 (1964), ]

This Court has stated:

". . . In any event, a narrow

focus on the volume of commerce

foreclosed by the particular contract

or contracts in suit would not

be appropriate in this context. As

the special provision awarding treble

damages to successful plaintiffs

illustrates, Congress has encouraged

private antitrust litigation not mercly

to compensate those who have been

directly injured but also to vindicate

the important public interest in free

competition" [Fortner Enterprises,

Inc. v. U.S. Steel Corp., 394 U.S,

495, 502 (1969)}.

True, this was stated in the context of

tying arrangements; but it would appear to be

sound dicta applicable here [cf. United States

v. Aluminum Co. of America, Supra].

Moreover, Fortner, following Poller,

held that Summary judgment was inappropriate

On the issue of "the possibility of market power"

(394 U.S. at p. 506).

—- wes

hore

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The Court of Appeals should have concluded

as it once did in Sunkist Growers, Inc. v. Winckler

& Smith Citrus Prod. Co., 284 F.2d 1, 17(CA9,

1960), that

“the question as to whether there

had been a concerted refusal to sell...

or an illegal unilateral refusal to sell,

were questions of fact for the jury."

As will be demonstrated under other head-

ings, these cases present important questions

which have not been, but should be, settled by

this Court, and are the first to arise by reason

of vertical integration by one of the two major

powers in the bowling industry. The public

interest requires review of a decision which

summarily disposes of these important questions. .

ii. The Cases Present an Important

Question That Has Not Been,

But Should Be, Settled By

This Court, Concerning the Impact

of Bankruptcv or Commercial Law

on Antitrust Claims.

Petitioners assert that the controversy

involves an acquisition by one of two dominant

powers in the bowling industry in combination,

if not conspiracy, with a lessor, to the exclusion

for all practical purposes of an independent

buyer who was ready, able, and willing to bid

30.

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in open competition; and that their claims

cannot be defeated by a mechanical application

of bankruptcy or commercial law.

The Court of Appeals holds:

"The basic defect in these

contentions (antitrust violations),

briefly stated, lies in the fact that

at the time of the sale the trustee

had no business to sell. He had

not seen fit nor taken the steps neces-

Sary to preserve the business as an

integral unit, but had allowed the

major components to revert to the

creditor-owners. Thus, neither

Malouf nor Brunswick were obliged

to accede to the trustee's demands. "'

(Opinion, p. 4.)

And:

"Nor do the antitrust laws

make unlawful either Malouf's choice

of tenant for his property, or Brunswick's

refusal to allow Itevy to take over the

purchase contracts on which Matador

had defaulted. After the trustee had

rejected the lease and conditional sales

contracts, Malouf and Brunswick were

free to deal with each other or with

anyone else, or not to deal at all, so

long as their refusal to deal with Levy

did not restrain trade." (Opinion, p. 5.)

31,

PT Ah

1983, ON Ry PY

ee, ee ee ar

The court below thus decided disputed

questions of fact: 1) whether the Trustee was

selling a going business, 2) whether there were

not estopping circumstances to the failure not

to assume the lease and conditional sales

_ contracts (see The Bankruptcy Sale, supra,

p. 15, et seq.), and 3) what constitutes "major

components'' of the transaction; and in doing so,

the court raised technical application of bank-

ruptcy or commercial law above overriding

application of the antitrust laws.

Petitioners submit that in any event,

the relevancy of such disputed findings in the

circumstances of these cases is dubious, since

they beg the question as to the legitimacy of the

entire transaction as being in restraint of trade.

The controversy here does not involve

what the opinion below makes it seem to involve,

a technical question of bankruptcy or com-

mercial law; nor does it involve, as also

suggested, the mere exercise by a corporation

of business acumen to obtain a good deal for

itself,

Nor, does it involve, as again the

opinion below make it appear, the right of

an ordinary producer or trader not to deal

32.

ene Te

rt PALA AR Pht

whet. ot

_ em oe Oe TO EOGe

iy re ee es

NRTA 0.) tonal

with a distributor or customer. 8/

These cases should have been treated

as ones in antitrust, giving due consideration

to the obligation of the monopolist to trade and

deal, which overrides the merely technical

and mechanical application of bankruptcy or

commercial law.

What of the rights of Petitioner Levy?

Even if the Trustee is foreclosed because

he did not assume the lease and conditional

sales agreements, Levy's right to compete

against the combination of the monopolist,

Brunswick, and the lessor, Malouf, have been

violated, without a decision of any other court

to support it.

In both cases, the strong public policy

of enforcing the antitrust laws should override

these other considerations or at least proscribe

summary judgment.

8 /

Citing its own very recent decision in

Bushie v. Stenocord Corp., 460 F. 2d 116

“(CA 9, 1972),

33,

ene or

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The decision below affirms summary

disposition of cases which challenge for the

first time acquisitions in the bowling industry

and which raise legal questions which will

arise over and over again. The importance

to the public requires this Court to review it.

lll, The Case Presents an Important

Question Concerning the Rights

of a Potential Competitor Under

Section 7 of the Clayton Act, that

Has Not But Should Be Settled

by This Court.

The Opinion below refers to Levy as a

sharcholder in another Los Angeles bowling

center, as if he were asserting his antitrust

rights on that fact alone.9/

The fact is that Petitioner Levy has

Standing to sue pursuant to Section 4 of the

Clayton Act by reason of the acts of the

Respondents forbidden by the antitrust laws.

Section 4 draws no distinction between the

rights of persons who are kept out of business

and the rights of persons who are put out of

It was Respondents' position, concurred

in by the district court, that therefore Levy had

no standing.

34.

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» —E———————————E7™”™-eo*~”_

business by reason of acts forbidden by the

antitrust laws, so long as they have the intent

and means and have taken affirmative steps

toward entry -- as had the Petitioner Levy.

[See Martin v. Phillips Petroleum Com ny,

365 F.2d 629, 633 (CA 5, 1966); Bowl America

Incorporated v. Fair Lanes, Inc., 299 F. Supp.

1080, 1095 (D.C. Md. 1969); Denver Petroleum

Corporation v. Shell Oil Company, 306 F. Supp.

289, 306-308 (D.C. Colo. 1969). ]

Moreover, the Court of Appeals for the

Second Circuit has held that Section 7 of the

Clayton Act gives rise to a claim for money

damages [Gottesman v. General Motors —ospora-

tion, 414 F.2d 956, 960-961 (CA 2, 1969)}. -¥

Finally, if Petitioner Levy's claim is

SuStained, he would be entitled to a decree of

divestiture, so as to enable him and others to

bid. [Julius M. Ames Co. v. Bostich, Inc.,

240 F.Supp. 521, 526 (D.C. N.Y. 1965);

but cf. Burkhead v. Phillips Petroleum Co.,

308 F.Supp. 120, 125 (D.C. Cal. 1970). }

None of these questions has been settled

by this Court, but in the public interest, should

be.

10 .

18/ It was Respondents' position in the courts

below that Levy had no right to damages under

Section 7.

35.

vo ede Mae ABA we

tl» Men

ar =

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... and conclusions -- in Danning 32 pages, in Levy,

ee eee ae et a eel

IV. The Decision Below Conflicts

Implicitly With Decisions of

This Court and of Other Courts

of Appeal ina Wide Range of

Antitrust Questions.

The district court made extensive findings

* 35 pages 1l/ -- as if after trial, which upheld

11/

as In Trowler v. Phillips, 260 F. 2d 924,

926 (CA 9, 1958), the court stated:

. . « (A)1l too often a set of

unnecessary findings of fact is the tell-

tale flag that points the way to a discovery

that summary judgment should not have

been granted."

By making this point, Petitioners do not

mean to disparage the district court. Although

Petitioners submit he was in error, the learned

trial judge did decide the controversy as one in

antitrust.

Petitioners perceive the district court's

basic error to have been that it segregated,

compartmentalized, fragmented, and dismembere

the violations, and wiped the slate clean after

analysis of each component, whereas its duty was

to look at the whole picture. [Continental Ore Co

v. Union Carbide Corp., 370 U.S. 690, 698-699

(1962); Lessig v. Tidewater Oil Co., 327 F. 2d

459, 466 (CA 9, 1964), }

36.

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a eer

seionee Cel ee a Se a GO PL As Ra a Se te

—_—

Respondents' every position, and which the Court

of Appeals ignored for the most part, although

they are important to the controversy once

bankruptcy or commercial law is put aside,

The decisions below are in conflict with

the many legal guidelines which this Court and

the courts of appeal have established to govern

controversies such as this one. 12/

1. The subject of a federal anti-

trust suit may involve a local operation.

In Moore v. Mead's Fine Bread Co.,

348 U.S. 115, 119-120 (1954), this Court stated:

"The victim, to be sure, is only a

local merchant; and no interstate

transactions are used to destroy

him. But the beneficiary is an

interstate business. .. ."'

Respondents argued below, in Support of

their parochial view of these cases, that

Lieberthal v. North Country Lanes, 332 F. 2d

269 (CA 2, 1964), was dispositive and all that

12/

The Court may wish to have all or

some of these questions briefed.

37.

1 enbiiae nies Laie Raps siisi abt

COPY PRINTED CLOSE TO EDGE

eae LTE I 0

is involved in this controversy is a local

bowling operation.

It is true, as they quoted, that ''The

operation of bowling alleys, without more, must

be held to be a wholly intrastate activity. '' Add

to that, Lieberthal was a landlord-owner of

a bowling center and defendant was a bowling

chain and not a producer or Supplier such as

Brunswick, and we have a different bow] game.

CS -@

Here, Brunswick is a national producer

or supplier and a national bowling chain, in an

integrated monopoly position on a wholesale

and retail level, which combined and conspired

with a lessor to exclude bidders and competitors

on a retail level in interstate commerce.

The fact that the cornerstone of the

combination in restraint of trade was a local

lease 13/ does not vitiate the wrong. As was stated

in American Tobacco Co. v. United States, 328

U.S. 781, 809 (1946):

"It is not the form of the

combination or the particular means

used but the result to be achieved that

13/

Note that the Court of Appeals decided

that the lease was a major component of the busines

38.

PIs Ee: (Ne Ee RED VIE

AEE SBOE AES A AEE OR OORT ALONE Tit AD CNET, 4

ade. ve Grd

let tae ke BAT as the REA ila

SAEED HTS ODM

eo en

the statute condemns. It is not of

importance whether the means used

to accomplish the unlawful objective

are in themselves lawful or unlawful.

Acts done to give effect to the conspiracy

may be in themselves wholly innocent

acts. Yet, if they are part of the sum

of the acts which are relied upon to

effectuate the conspiracy which the

statute forbids, they come within its

prohibition. "'

2. Elimination of a single competitor

by joint action is a per se violation [Klors, Inc.

v. Broadway-Hale Stores, 359 U.S. 207, 213

(1959)}]. It is not even necessary that it affect

price or supply [cf. United States v. General

Motors Corp., 384 U.S. 127, 145-146 (1966)],

although in the instant cases, the violation did

affect price and supply, in that Brunswick admit-

ted it had a firm policy regarding equipment

returned to inventory and that it refused to sell

to Levy except for a price above what it was

owed on the equipment.

The fact, urged by Respondents and

accepted by the district court, that there are

thousands of independent operators, is entirely

beside the point, since the elimination of one

competitor is actionable under the antitrust

laws [Klor's v. Broadway-Hale Stores, supra

(Summary judgment reversed)].

39,

Se | ae”! Cg Tt) EDGE

3. Respondent Malouf's acquiescence

in Respondent Brunswick's conduct is actionable

[cf. United States v. Paramount, 334 U.S. 131,

161 (1948)], even as a non-trader. [Nash v.

United States, 229 U.S. 373, 379 (1913). ]

4. Even if Respondent Brunswick's

retail market is relatively small, its conduct

here is actionable. Section 1 restraints are

banned irrespective of the amount of commerce

involved. [Times-Picayune Pub. Co. v. United

States, 345 U.S. 594, 611 (1953)]; and the per -

centage of the market foreclosed by the vertical

arrangement is not itself decisive. [Brown Shoe

Co. v. United States, 370 U.S. 294, 329 (1962). ]

Thus, the controversy here does not

involve what the decision below makes it seem

to involve, a technica! question of bankruptcy or

commercial law, where a corporation exercises

business acumen to obtain a sharp deal for itself.

Nor, does it involve, as again the decision below

would make it appear, a private quarrel and the

right of an ordinary producer or trader not to

deal.

Petitioners submit that the Opinion below

glosses over essential antitrust principles which

should be considered by this Court in the public

interest.

40.

aw ew 4

non - Ww

‘

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CONC LUSION

This controversy is the first to involve

acquisitions in the bowling industry. Its

importance to the public cannot be exaggerated.

If indeed the bowling industry is sick,

Petitioners should be given an opportunity to show

that Brunswick's methods of acquisition are no

cure; and if it and AMF are allowed to acquire

more and more bowling centers, there will be

less and less room for the independent operator,

less and less competition, and more and more

public injury.

A writ of certiorari to the Court of Appeals

for the Ninth Circuit should issue.

Respectfully submitted,

BERNARD REICTI

Attorney for Petitioners

41.

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COP

ALE OD ae ce” 28 Rn tia actiwe he 2

ai Se A te ORNs oars ab!

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Curtis B. DANNING, as Trustee in Benkraptey |

of Matador Bowl, Inc., a California corpora-

tion, Bankrupt, — -

Plaintiff-A ppellant,

VS. No. 26,448

BRUNSWICK (CORPORATION, a Delaware corpora-

tion, A. B. Matour,

Defendants-A ppellees. >

EMANUEL Levy,

Plaintiff-Appellant,

vs.

No. 26,449

BRUNSWICK CORPORATION, a Delaware corpora-

tion, A. B. Matour,

Defendants-A ppellees. 7

| September 18, 1972]

Appeal from the United States District Court

for the Central District of California

Before: KOELSCIL and DUNIWAY, Circuit ‘ludges. and

ANDERSON,*® District Judge.

KOELSCH, Cirenit Judge:

Plaintiffs appeal from summary judgments entered in. these

two consolidated antitrust actions in favor of the defendants

Brunswiek Corporation and A. B. Malouf.

*Honorable J. Blaine Anderson, United States District Judge, Boise,

Idaho, sitting by designation.

ai iehieinae die RE OI ELON Oe OE —

LRRD NCAP MBIEY SAH

a... Sper ET

Bie DEN eye NaNTe VPI CTT

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2 Curtis B. Danning, ctc., ct al. vs.

In 1960 Malouf granted a 25 year lease of improved real prop-

erty in Los Angeles, California, to Richard Dow and wife on a

rental payable in monthly installments. The Dows immediately

assigned the lease to Matador Bowl, Ine., a corporation which

they had organized to conduct a bowling alley and restaurant on

the premises. To that end Matador then purchased from Bruns-

wick, on conditional sales contracts, the necessary bowling alleys,

pinsetters, ecte., and apparently purchased from third parties

restaurant and bar equipment.

The business failed to prosper. On December 29, 1965, Matador

was adjudged a bankrupt, and Curtis B. Danning, the plaintiff

in No. 26,448, was appointed and qualified as trustee to admin-

ister the estate. At that time Matador was heavily in arrears in

its installment payments on the lease and a substantial balance

remained owing on the conditional sales contracts. The interven-

tion of bankruptey prevented Malouf and Brunswick from retak-

ing their property, at least until Matador’s trustee had been

afforded the opportunity provided hy Seetion 70(b) of the Bank-

ruptey Act to either continue the contracts in force or to relin-

quish them;! but both were naturally anxious to salvage as much

as they could from the venture and to protect their respective

investments. So it was that Brunswick approached Malouf with a

proposition that if Danning, the trustee, did not assert the right

111 U.S.C. §110(b) provides, in part:

“Within sixty days after the adjudication, the trustee shall assume

or reject any executory contract, including unexpired leases of real

property: Provided, however, That the court may for cause shown

extend or reduee such period of time. Any such contract. or lease

not assumed or rejected within such time ... shal? be deemed to be

rejected. * * *”

Seetion 70(h) is ealenlated to protect the interests of the bankrupt

estate, by empowering the trustee to avoid such executory contracts as

he deems burdensome or to assume those economically advantageous.

Silverstein, Rejection of Exeeutory Contracts in Bankruptey and Reor-

ganization, 31 U.Ci.L.Rev. 467, 472 (1964). An assumption, of

course, carries with it both the benefits (e.¢., the right to continue in pos-

session of leased premises) and the burdens (¢.g., the obligation to pay

beth past due and future rents) of the contract. Tf, on the other hand,

he rejects the contract, the estate is relieved of any future burdens im-

posed by the contraet, but it may no longer avail itse!f of the contract's

henefits (one of which. on the faets of this case, would be the inerecased

value of the remaining assets of the estate).

ie aia Co. om “ae

Tt ii ii lai A la Mle

COPY PRINTED CLOSE TO EDGE

Brunswick Corporation, etc., ef al. :

to assume the lease and conditional sales contracts that Bruns-

wick would lease Malout’s property. Thus, Malouf would be

assured of a solvent tenant and Brunswick would not have to

remove its equipment and could and would continue the opera-

tion on the premises.2 Malouf agreed and, on January 27, 1966,

approximately a month after Matador’s adjudication, he executed

a lease to Brunswick. This lease, however, was not to be effeetive

unless the trustee rejected the existing lease between Malouf and

Matador’s assignors.

Emanuel Levy, the plaintiff in 26,449, was a sharcholder in

another Los Angeles bowling center. Shortly after Matador’s

adjudication, and within the 60 day period allowed by s70(b),

Levy sought to negotiate with Brunswick for the bowling equip-

ment. The details of the diseussions are in dispute but it is clear

from the record that Brunswick rejected all of Levy's proposals:

although Levy also made inquiries of the trustee about. the

matter, if is equally clear that he made no attempt to deal with

the trustee for either the lease or the bowling equipment.

The trustee did nothing to assume the lease or the contracts

and in April 1966, more than 60 days following Matador’s adjn-

dication, conducted a sale of the bankrupt’s remaining assets.

These, of course, did not inelude the lease or the howling equip-

ment, because the trustee, by his nonaction, was deemed to have

rejected the contracts and lease and to have relinquished what-

ever interest the estate had in those properties.

However, immediately before the sale was commenced. Levy

and the trustee nevertheless demanded that Brunswick turn over

both the leased premises and the bowling fixtures to the person

making the highest bid for the property that was being sold.

“Due to overdevelopment in the howling center industry, a large

number of ecnters were financially unsuccessful. Brunswick, as one of

the two major manufacturers and sellers of bowling alley equipment, fre-

quently had to repossess the equipment and faeed a depressed resale

market. To offset its losses resulting from the repossessions, Brunswick

wonld sometimes take over the operation of centers which might he sue-

cessfully revitalized until sueh time as a suitable huver for the center

could be found; this was done to, in effeet, ereate a market. for the re-

possessed equipment.

*This latter property consisted of restaurant equipment, a liquor

license and an teventery of food and liquor,

ays OCI ee 2 enecg — -

SPER NRE IR AR ER EE

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4 Curlis B. Danning, ctc., ct al. vs.

Brunswick refused. The sale proceeded, Brunswick was the sole

bidder, and the sale was thereafter confirmed by the referee.

Plaintiffs’ claims, as reflected in the complaints, are essentially

similar; cach is rested upon Sections 1 and 2 of the Sherman Act

and Section 7 of the Clayton Act. In substance the trustee and

Levy contend that Malouf and Brunswick, by their lease, con-

spired to foreclose acquisition of the Matador business at. the

trustee’s sale by anyone but Brunswick and enhaneed Bruns-

wick’s monopoly in the bowling business.>

The basic defect in these contentions, briefly stated, lies in the

fact that at the time of the sale the trustee had no business to

sell. He had not seen fit nor taken the steps necessary to pre-

serve the business as an integral unit, but had allowed the major

components to revert to the creditor-owners.6 Thus, neither

4We note that the trustce took no steps to set aside the sale in the

Bankruptcy Court,

5The relevant allegation appearing in Levy's complaint is that:

“Defendants, each well knowing and aequiescing in the actions of

the others, did in 1965 and 1966 contract, combine and conspire to

and did unreasonably restrain and monopolize trade in violation of

Sections ] and 2 of the Sherman Act... by effectively eliminating

plaintiff, a responsible bidder, from bidding competitively in the

bankruptey sale for all the assets of the Bankrupt, which assets were

acquired by Brunswick in violation of Section 7 of the Clayton Act

instead of to plaintiff; the effect of such acquisition substantially

lessened competition and tended to and did enhance Brunswick's

monopoly in the relevant market... .”

Danning’s allegations are substantially similar, exeept as to the effect

of the asserted antitrust violations; in that respeet Danning alleged that

jrunswick, by exeluding competitive bidding at the trustee's sale, di-

minished the value of the bankrupt estate.

‘In an affidavit filed in the District Court, Danning explained his

failure to assume the exceutory contraets as follows:

“Tt would have been foolhardy for me as the trustee to have affirmed

leases and conditional sales agreements without an operator, and it

was defendants’ conduct which in effect prevented me from obtain-

ing an operator such as plaintiff Levy who was eminently qualified

in every respect.”

This is “cirenlar reasoning with a vengeance,” Stevenson v. Diebold, Ine.,

422 F.2d 1228, 1233 (9th Cir. 1970), cert. denied, 400 U.S. 832, revealing

a basie misconception about the powers of a bankruptey trustee. The

lease between detendants was conditional both in terms and in law;

executed, as noted earlier, within the 60 day period of the trustee's

SLT TS LT IS EE IE PME

AEE AT HE

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a —— poe

Brunswick Corporation, etc., et al. D

Malouf nor Brunswick were obliged to aceede to the trustee’s

demands.

Nor do the antitrust laws make unlawful either Malouf’s choice

of tenant for his property, or Brunswick's refusal to allow Levy

to take over the purehase contram.. on which Matador had

defaulted, After the trustee had rejeeted the lease and eondi-

tional sales contraets, Malouf and Brunswick were free to deal

with each other or with anyone else, or not to deal at all, so

Jong as their refusal to deal with Levy did not restrain trade.

Compare Bushic v. Stenocord Corp. 460 F.2d 116 (9th Cir.

1972), Riechetti v. Meister Brau, Inc., 431 F.2d 1211 (9th Cir.

1970), cert. denied, 401 U.S, 939, and Jos. E. Seagram & Sous,

Tne. v. Wawaitian Oke & Taquors, Ltd., 416 F.2d 71 (9th Cir,

1969), cert. denied, 396 U.S. 1962, reh. denied, 397 U.S. 1003,

with Poller v. Columbia Broadcasting System, Inc., 868 U.S. 464

(1962), United States v. Parke, Davis & Co., 362 US, 29 (1960),

and Lessig v. Tidewater Oil Co., 327 F.2d 459 (9th Cir, 1964),

cert. denied, 377 U.S. 993. None of the facts appearing in this

record permit an inference that Malouf and Brunswick con-

spired to restrain trade, or that Brunswick's operation of a bowl-

ine center at the Matador site would affect competition in the

relevant market in the Los Angeles area.*

“While we recognize the importance of preserving litigants’

rights to a trial on their claims, we are not prepared to extend

those rights to the point of requiring that anyone who files an

antitrust complaint setting forth a valid cause of action be

option, it would have been rendered useless to the defendants and unen-

foreeable had the trustee elected to assume the bankrupt's lease with

Malouf, which was a prior lease. Thus, if the trustee had found his

prospective operator (Levy), he could have exercised his option to

assume the lease, and put Levy in possession of the premises. Neither

defendant eould have prevented him, by a lease or otherwise, from doing

so.

7Brunswick, during the period of the events under consideration, oper-

ated 22 howling centers, approximately two pereent of the total number

of centers, in the State of California, Nearly all of them were vequired

after the previous owners had defanited on their contracts to purchase

howling fixtures and equipment, and after Brunswick bad repossessed

the equipment.

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6 Curtis B. Danning, etc., ct al. vs.

entitled to a full-dress trial notwithstanding the absence of any

significant probative evidence tending to support the complaint.”

First National Rank v. Cities Service Co. 391 U.S. 253, 2

(1968). We conclude that the summary judgments were properly

granted.

The judgments are affirmed.

PEENAU-WALSH PRINTING CO., SAN FRANCISCO 9-19-T2—380

5. wtite

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APPENDIX B

APPLICABLE STATUTES

1. Title 15 U.S.C. Section 1 (Section 1 of the

Sherman Act), so far as here pertinent states:

“Every 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, is declared to

be illegal... ."

2. Title 15 U.S.C. Section 2 (Section 2 of the

Sherman Act) provides:

"Every person who shall

monopolize, or attempt to monopolize,

or combine or conspire with any other

person or persons, or monopolize any

part of the trade or commerce among

the several States, or with foreign

nations, shall be deemed guilty of a

misdemeanor, and, on conviction

thereof, shall be punished by fine not

exceeding fifty thousand dollars, or by

imprisonment not exceeding one year,

or by both said punishments, in the

discretion of the court.”

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Se eee OM

a we

otra. es

3. Title 15 U.S.C. Section 15 (Section 4 of

the Clayton Act) provides:

"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 district

in which the defendant resides or is

found or has an agent, without respect

to the amount in controversy, and shall

recover three-fold the damages by

him sustained, and the cost of suit,

including a reasonable attorney's fee."

4, Title 15 U.S.C. Section 18 (Section 7 of the

Clayton Act), states so far as pertinent:

"No corporation engaged in

commerce shall acquire, directly or

indirectly, the whole or any part of

the stock or other share capital and

no corporation subject to the jurisdic-

tion of the Federal Trade Commission

shall acquire the whole or any part

of the assets of another corporation

engaged also in commerce, where in

any line of commerce in any section

of the country, the effect of such

acquisition may be substantially to

lessen competition or to tend to

create a monopoly.

AI cnet teioeit

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"No corporation shall acquire,

directly or indirectly, the whole or

any part of the stock or other share

capital and no corporation subject

to the jurisdiction of the Federal

Trade Commission shall acquire the

whole or any part of the assets of one

or more corporations engaged in

commerce, where in any line of com-

merce in any section of the country,

the effect of such acquisition, of such

stocks or assets, or of the use of such

stock by the voting or granting of proxies

otherwise, may be substantially to

lessen competition, or to tend to

create a monopoly. "'

5. Title 11 U.S.C. Section 110 (Section 70(b)

of the Bankruptcy Act) states, so far as pertinent

"(b) The trustee [in bankruptcy]

Shall assume or reject an executory

contract, including an unexpired lease

of real property, within sixty days

after the adjudication or within thirty

days after the qualification of the

trustee, whichever is later, but the

court may for cause shown extend or

reduce the time. Any such contract

or lease not assumed or rejected within

that time shall be deemed to be rejected

‘

. . . .

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6. Title 18 U.S.C. Section 151, clause 5

states, so far as pertinent:

"Whoever knowingly and

fraudulently gives, offers, receives

or attempts to obtain any money or

property, remuneration, compensa-

tion, reward, advantage, or promise

thereof, for acting or forbearing to

act in any bankruptcy proceeding. . .

shall be fined not more than $5, 000

or imprisoned not more than five

years, or both. "'

10.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.