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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1973
- **Citation:** 409 U.S. 1126

## Text

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

ne

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TOPICAL INDEX

Table of Authorities

OPINION BELOW

JURISDIC TION

QUESTIONS PRESENTED

STATUTORY PROVISIONS INVOLVED

STATEMENT OF THE CASES

REASONS FOR GRANTING THE WRIT

UR

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.

24

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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

i,

34

36

41

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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,

35

37

40

40

36

AEC IEE OTT ITT BET Te Fe TINE FT ON
PER ITEL O ENEREE RIF

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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

Re

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

2.

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

3.

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.

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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

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& 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

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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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* 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

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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.

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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, '

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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

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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. "'

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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

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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.

7/
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.

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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);

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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).

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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

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a

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,

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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.

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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

9/

It was Respondents' position, concurred
in by the district court, that therefore Levy had

no standing.
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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.

t

10 .

18/ It was Respondents' position in the courts
below that Levy had no right to damages under
Section 7.

35.

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a

... 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), }

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

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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.

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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.

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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,

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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.

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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

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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.

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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).

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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 — -
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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

i

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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.”

a

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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.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385606_1628%3A1. Public record. Not legal advice.