Legal Analysis: Denny's Marina, Inc. v. Renfro Productions, Inc., Study Guides, Projects, Research of Law

Download Legal Analysis: Denny's Marina, Inc. v. Renfro Productions, Inc. and more Study Guides, Projects, Research Law in PDF only on Docsity! Denny’s Marina, Inc. v. Renfro Productions, Inc. Denny's Marina, Incorporated, Plaintiff-appellant, v. Renfro Productions, Incorporated; Indianapolis Boat, Sportand Travel Show, Incorporated; Maxine J. Renfro,et al., Defendants-appellees United States Court of Appeals, Seventh Circuit. - 8 F.3d 1217 Argued Sept. 9, 1993.Decided Nov. 4, 1993.Rehearing and Suggestion for RehearingIn Banc Denied Dec. 1, 1993 Michael C. Terrell, William C. Barnard (argued), Gayle A. Reindl, Sommer & Barnard, Indianapolis, IN, Jeffrey S. Zipes, James K. Wheeler, Coots, Henke & Wheeler, Carmel, IN, for Denny's Marina, Inc. Terrill D. Albright, Robert K. Stanley (argued), Baker & Daniels, James D. Blythe, II, Butler, Brown & Blythe, Daniel B. Altman, Indianapolis, IN, for Renfro Productions, Inc., Indianapolis Boat, Sport and Travel Show, Inc., Maxine J. Renfro and Kevin Renfro. Timothy L. Wade, Indianapolis, IN, for Central Indiana Marine Dealers Ass'n. Christopher Kirages, John C. Stark, Stark, Doninger & Smith, Indianapolis, IN, for Brownie's Marine Sales, Inc., and James L. Massey. Thomas L. Davis, Locke, Reynolds, Boyd & Weisell, Indianapolis, IN, for Indianapolis Boat Co., Inc. and Jack Hummel. Christopher Kirages, Robert C. Bruner, Stark, Doninger, & Smith, Indianapolis, IN, for G.A. and Group 3, Inc., dba Indianapolis Watersports and Gary A. Story. James N. Scahill, Schnorr, Good & Scahill, Indianapolis, IN, for Just Add Water Boats, Inc. and Timothy L. Meyer. Steven A. Holt, Stephen H. Free, Holt, Fleck, & Free, Noblesville, IN, for Lakeview Marina, Inc. and Jeff Lingenfelter. William P. Wooden (argued), Dale W. Eikenberry, Stephen Akard, Wooden, McLaughlin & Sterner, Indianapolis, IN, for Ted's Aqua Marine, Inc. and Thaddius S. Novicki. Jeffrey S. Zipes, James K. Wheeler, Coots, Henke & Wheeler, Carmel, IN, William C. Barnard, Sommer & Barnard, Indianapolis, IN, for Fredrick W. Decker and Jerry Brian Ludlow. Before CUMMINGS, COFFEY and ROVNER, Circuit Judges. CUMMINGS, Circuit Judge. 1 This is an appeal from summary judgment granted in favor of the defendants below: The "Renfro Defendants" (Renfro Productions, Inc.; Indianapolis Boat, Sport, and Travel Show, Inc.; Maxine J. Renfro; and Kevin Renfro), "CIMDA" (the Central Indiana Marine Dealers Association), and the "Dealer Defendants" (certain members of CIMDA), in an action brought under the Sherman Antitrust Act, 15 U.S.C. § 1 et seq. and the Clayton Act, 15 U.S.C. §§ 15(a), 26. The Court has jurisdiction over the appeal pursuant to 28 U.S.C. § 1291. 2 In December 1991 Denny's Marina, Inc. ("Denny's"), a marine dealer in Peru, Indiana, filed this suit, alleging that the defendants had excluded Denny's from two Indianapolis boat shows. (See note 3 infra.) On defendants' motions for summary judgment the district court held that plaintiff could not invoke the per se rule of illegality under Section 1 of the Sherman Act even if it could demonstrate a horizontal conspiracy to exclude it from the boat shows because it regularly undersold its competitors. Before Denny's could invoke the per se presumption of an unreasonable restraint of trade, the court held, it must "make a sufficient showing of a potential market-wide impact" resulting from the defendants' actions. Because Denny's did not make such a showing, the court granted summary judgment in favor of the defendants.1 We hold that this was error and therefore reverse and remand for trial. 3 Federal Trade Commission v. Superior Court Trial Lawyers Ass'n, 493 U.S. 411, 423- 424, 110 S.Ct. 768, 775-76, 107 L.Ed.2d 851. 10 The conspiracy in this case was horizontal because it was "the product of a horizontal agreement." Business Electronics Corp. v. Sharp Electronics Corp., 485 U.S. 717, 730 n. 4, 108 S.Ct. 1515, 1523 n. 4, 99 L.Ed.2d 808; accord United States v. General Motors Corp., 384 U.S. 127, 140, 86 S.Ct. 1321, 1328, 16 L.Ed.2d 415 passim. It consisted of Denny's competitors and their association. That the conspiracy was joined by the operators of the Fairgrounds boat shows does not transform it into a vertical agreement. See, e.g., Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 767- 768, 104 S.Ct. 1464, 1472-1473, 79 L.Ed.2d 775; General Motors, 384 U.S. at 140, 86 S.Ct. at 1328; Premier Electrical Construction Co. v. National Electrical Contractors Ass'n, 814 F.2d 358, 369 (7th Cir.1987); Valley Liquors, Inc. v. Renfield Importers, Ltd., 678 F.2d 742, 743-744 (7th Cir.1982). 11 Likewise, the conspiracy was to fix prices. Price-fixing agreements need not include "explicit agreement on prices to be charged or that one party have the right to be consulted about the other's prices." Palmer v. BRG of Georgia, Inc., 498 U.S. 46, 48, 111 S.Ct. 401, 402, 112 L.Ed.2d 349; accord United States v. Capitol Service, Inc., 756 F.2d 502, 506 (7th Cir.1985), certiorari denied sub nom. United Artists Communications, Inc. v. United States, 474 U.S. 945, 106 S.Ct. 311, 88 L.Ed.2d 288; Premier Electrical, 814 F.2d at 368. "Under the Sherman Act a combination formed for the purpose and with the effect of raising, depressing, fixing, pegging, or stabilizing the price of a commodity in interstate or foreign commerce is illegal per se." Socony-Vacuum Oil, 310 U.S. at 223, 60 S.Ct. at 844. Concerted action by dealers to protect themselves from price competition by discounters constitutes horizontal price-fixing. General Motors, 384 U.S. at 147, 86 S.Ct. at 1332; Valley Liquors, 678 F.2d at 743-744. Hence the actions of the Dealer Defendants and CIMDA, joined by the Renfro Defendants, to prevent Denny's from participating in the Boat Shows constitutes a horizontal price-fixing conspiracy notwithstanding the apparent lack of an explicit agreement to set prices.5 12 So far, the position of this Court is similar to that of the court below. Nevertheless, having essentially found that plaintiff had adduced sufficient evidence of a horizontal price-fixing conspiracy to withstand a motion for summary judgment, the court below refused to apply the per se rule that would allow it to conclude that there had been an unreasonable restraint of trade in the relevant market. Instead, before it would apply the per se rule the court required plaintiff to demonstrate a substantial potential for impact on competition in the central Indiana market as a whole.6 Such an exception to the per se rule against price-fixing is unwarranted by cited precedent apart from a district court case discussed below. As plaintiff explains, it "simply cannot afford the elaborate market analysis and expert witnesses required to make such a showing."7 13 As far back as 1940, it has been clear that horizontal price-fixing is illegal per se without requiring a showing of actual or likely impact on a market. Socony-Vacuum Oil, 310 U.S. at 223-224, 60 S.Ct. at 844-845, and its progeny; Areeda & Haverkamp, Antitrust Law (1986) § 1510 at 415, 418-419. This is because joint action by competitors to suppress price-cutting has the requisite "substantial potential for impact on competition," Superior Court Trial Lawyers Ass'n, 493 U.S. at 433, 110 S.Ct. at 780 (quoting Jefferson Parish Hospital District No. 2 v. Hyde, 466 U.S. 2, 16, 104 S.Ct. 1551, 1560, 80 L.Ed.2d 2 (1984)) to warrant per se treatment. The district court would require plaintiff in this case to demonstrate a particular potential for impact on the market, when one of the purposes of the per se rule is that in cases like this such a potential is so well- established as not to require individualized showings. Catalano, Inc. v. Target Sales, Inc., 446 U.S. 643, 646-647, 100 S.Ct. 1925, 1927-1928, 64 L.Ed.2d 580 (1980); Broadcast Music, Inc. v. Columbia Broadcasting Systems, Inc., 441 U.S. 1, 7-8, 99 S.Ct. 1551, 1556, 60 L.Ed.2d 1. The pernicious effects are conclusively presumed. Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1108 (7th Cir.1984), certiorari denied, 470 U.S. 1054, 105 S.Ct. 1758, 84 L.Ed.2d 821. (1985). 14 In support of its holding that Denny's needed to show that the restraint here had a substantial potential for impact on competition in the market as a whole, the district court relied on Family Boating Center, Inc. v. Washington Area Marine Dealers Association, 1982-1 Trade Cas. (CCH) p 64,592, 1982 WL 1815 (D.D.C.1982). In that case, the court refused to apply the per se rule to a case in which the plaintiff's competitors had engaged in concerted action to exclude it from exhibiting at a boat show. The facts in the opinion are sketchy, but the concerted action is characterized as a group boycott, apparently because the defendants--themselves also competitors of plaintiff Family Boating Centers--were the ones who refused to sell it exhibition space. The Family Boating Centers court required the plaintiff to demonstrate likely anti- competitive effects before it would apply the per se rule to the boycott. The reasoning of that opinion is contrary to all other authority brought to our attention and therefore will not be followed here. 15 Since Denny's presented enough evidence for a court and jury to conclude that the defendants engaged in a horizontal conspiracy to suppress price competition at boat shows, their conduct is a per se violation of Section 1 of the Sherman Act. Maricopa Medical Society, 457 U.S. at 338, 102 S.Ct. at 2470. The district court's grant of summary judgment to defendants is reversed and the case is remanded for trial. The dismissal of the Renfro Defendants' counterclaim is likewise reversed and remanded for further consideration. 1 The Renfro Defendants had filed a state law counterclaim against Denny's over which the district court had supplemental jurisdiction. 28 U.S.C. § 1367. Having dismissed all of the federal claims with prejudice, the district court declined to retain jurisdiction over the state law claims, dismissing them without prejudice. Plaintiff agrees that the counterclaim should be reinstated if the antitrust claim is remanded. Reply Brief at 37 2