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Tunis Brothers Co. v. Ford Motor Co.

filed: July 15, 1987.

TUNIS BROTHERS COMPANY, INC. DE LA RIGAUDIERE, RICHARD N. AND SMITH, DAVID C., APPELLANTS
v.
FORD MOTOR COMPANY, FORD MOTOR CREDIT COMPANY, WENNER FORD TRACTOR, INC., WENNER, JOHN S. WATSON, JOHN CRAWFORD, DOUGLAS N. FRAHER, EUGENE W. HASEL, E.S. NICKEL, HUGH HARRIS, KENNETH E. AND WENZEL, C.W.



On Remand from the Supreme Court of the United States. Assigned May 12, 1987.

Author: Higginbotham

Before: HUNTER and HIGGINBOTHAM, Circuit Judges, and DEBEVOISE, District Judge,*fn*

Opinion OF THE COURT

A. LEON HIGGINBOTHAM, JR., Circuit Judge.

This matter is before us on remand from the United States Supreme Court. In our first encounter with this appeal, Tunis Bros. Co., Inc. v. Ford Motor Co., 763 F.2d 1482 (3d Cir. 1985) ("Tunis Brothers I"), we reversed the district court's order granting summary judgment in favor of the appellees and remanded this matter for trial on all counts. On April 7, 1986, the United States Supreme Court vacated that judgment, remanding the matter to us for further consideration in light of Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986) ("Matsushita"). Ford Motor Co. v. Tunis Bros. Co., Inc., 475 U.S. 1105, 106 S. Ct. 1509, 89 L. Ed. 2d 909 (1986). After considering supplemental briefs and memoranda filed by the parties,*fn1 we conclude that Matsushita does not require a new result. We will therefore again reverse the district court's order and remand all counts for trial.

I.

Matsushita addresses the standard district court must apply when deciding whether to grant summary judgment in an antitrust conspiracy case. The plaintiff in such a case must produce evidence tending to show a conspiracy in violation of the antitrust laws and, in addition, tending to show injury to the plaintiff resulting from such illegal conduct. In general terms, according to Matsushita, the plaintiffs evidence must create more than "some metaphysical doubt as to the material facts." 475 U.S. at , 106 S. Ct. at 1356. If in the factual context of the case the plaintiffs claim is implausible -- that is, if the plaintiffs "story . . . does not make sense" as a matter of economic theory, 475 U.S. at n.15, 106 S. Ct. at 1359 n.15; accord In re Japanese Elec. Prods. Antitrust Litig., 807 F.2d 44, 47 (3d Cir. 1986) ("the Supreme Court deemed [the conspiracy alleged in Matsushita] economically senseless"), cert. denied sub nom. Zenith Radio Corp. v. Matsushita Elec. Indus. Co., Ltd., 481 U.S. 1029, 107 S. Ct. 1955, 95 L. Ed. 2d 527 (1987); Assam Drug Co., Inc. v. Miller Brewing Co., 798 F.2d 311, 317 (8th Cir. 1986) ("the Matsushita Court noted the relevance of economic realities in evaluating summary judgment motions") -- then the plaintiff "must come forward with more persuasive evidence to support the[] claim than would otherwise be necessary." 475 U.S. at , 106 S. Ct. at 1356.

Of particular relevance to this appeal is the Matsushita Court's statement that, if the antitrust defendant's conduct is consistent both with permissible competition and with illegal conspiracy, evidence of such conduct "does not, standing alone, support an inference of antitrust conspiracy." 475 U.S. at , 106 S. Ct. at 1357. In such a situation, "to survive a motion for summary judgment . . ., a plaintiff seeking damages for a violation of [Sherman Act] ยง 1 must present evidence 'that tends to exclude the possibility' that the alleged conspirators acted independently." Id. (quoting Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 764, 79 L. Ed. 2d 775, 104 S. Ct. 1464 (1984)). In other words, such a plaintiff "must show that the inference of [illegal] conspiracy is reasonable in light of the competing inferences of independent action or collusive action that could not have harmed [the plaintiff]". Id.

II.

Applying Matsushita's summary judgment principles to this record,*fn2 it can -- if one carefully prunes the record to uncover select facts contained therein -- be said that Ford's termination of the Tunis Ford tractor dealership is as consistent with an inference of permissible independent action by Ford Motor Company as it is with an inference of illegal conspiracy involving Ford. The evidence can be interpreted as disclosing a legitimate plan by Ford to rationalize its tractor distributor network by eliminating Tunis, or the evidence can be interpreted as disclosing a vertical conspiracy between Ford and the Wenner Ford dealership to eliminate Tunis as a Wenner Ford competitor. Given this situation, in which the appellees' challenged conduct is as consistent with permissible competition as it is with illegal conspiracy, Matsushita teaches that it is appellant's burden at the summary judgment stage to produce evidence that ends to exclude the possibility that Ford acted independently and thus to show that an inference of illegal conspiracy is reasonable in light of the competing inference of independent action.

The evidence adduced by appellants to satisfy this burden is substantial but not overwhelming; we conclude that it meets Matsushita's requirements. Cf. Marsann Co. v. Brammall, Inc., 788 F.2d 611, 613 n.1 (9th Cir. 1986) ("Matsushita . . . discusses only the amount of evidence required to allow a factfinder to infer the existence of a conspiracy punishable under section 1 of the Sherman Act"). Instead of simply terminating the Tunis dealership pin a straightforward manner in order to streamline its dealership structure, there is substantial evidence from which it can be inferred that Ford, acting with Wenner Ford Tractor, Inc., engaged in trickery and chicanery in order to eliminate Tunis as a competitor of Wenner Ford. The evidence shows that Ford had a substantial financial interest in Wenner Ford. It also shows that two Ford employees, appellees Fraher and Hasel, served as directors and officers of Wenner Ford. In addition, there is evidence form which one may conclude that Ford employees tricked Tunis into resigning and caused de la Rigaudiere's and Smith's application for the Kennett Square Ford tractor dealership to be rejected due to false financial information that Fraher had inserted into their dealership application. When we consider, as e must, the record as a whole, appellants' evidence tends to exclude the possibility that Ford acted independently, and it shows that an inference of illegal conspiracy between Ford and Wenner Ford is reasonable. This is, in other words, a case where the a "antitrust plaintiff[s] raise[] genuine issues of fact as to the existence of a common scheme or commitment, and the unlikelihood of independent action on the part of the defendants[. The issue of whether the defendants unlawfully conspired [therefore] belongs with the jury." Fragale & Sons Beverage Co. v. Dill, 760 F.2d 469, 474 (3d Cir. 1985). The legal analysis of our initial opinion was consistent with the requirements of Matsushita.

III.

For the foregoing reasons, the judgment of the district court as to Counts I, II, III and IV will be reversed. Counts V and VI will be reinstated, and this case ...


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