369 F.3d 732 | 3rd Cir. | 2004
McKEE, Circuit Judge.
terms of the SPR program, Sheraton negotiated large-volume discounts with profiting from providing Workers’ vendors seeking to supply Sheraton- Compensation insurance, permitting managed hotels. Sheraton then required excessive numbers of complimentary the vendors to add a surcharge to the price rooms, and breaching other unspecified billed to the individual hotels for each contractual duties. purchase. However, the surcharge was not
Hancock’s suit proceeded to trial itemized, or even disclosed, on any bills or where a jury found for Sheraton on invoices that vendors sent to individual Hancock’s RICO claim, but found for hotels. Rather, the surcharge was remitted Hancock on its Robinson-Patman Act directly to Sheraton in the form of a claim. The jury also found for Hancock on “rebate.” The Management Agreement several of its state law claims, including provided that Sheraton was entitled to be claims that Sheraton had breached the reimbursed for the costs of providing these Management Agreement with regard to services. Sheraton claimed that these purchasing services, and providing rebates reimbursed it for the centralized Workers Compensation insurance. The purchasing services it provided under the jury further found in favor in Hancock on SPR program as well as associated its breach of fiduciary duty claim. The overhead costs. jury concluded that Sheraton breached an The Management Agreement implied duty of good faith and fair dealing, between Sheraton and Hancock remained and that Sheraton was liable for its in effect until 1993, when differences misrepresentations to Hancock. The jury between the parties led to its termination. awarded damages of $750,000 on the Thereafter, Hancock filed this lawsuit. In Robinson-Patman Act claim (subsequently its complaint, Hancock alleged: violations trebled by the court), a total of of § 2(c) of the Robinson-Patman Act, 15 $10,732,000 on the breach of contract U.S.C. § 13(c); violations of RICO, 18 claims, $1,100,000 on the tort claims, and U.S.C. § 1961; and state law claims of $37,500,000 in punitive damages. The breach of contract, breach of fiduciary district court denied Sheraton’s motion for duty, and breach of the implied duty of judgment as a matter of law but granted a good faith and fair dealing; as well as remittitur thereby reducing the punitive fraud, and intentional or negligent damages to $17,415,000. The district misrepresentation. Hancock also claimed court then entered judgment in favor of that Sheraton failed to properly act as its Hancock in the total amount of agent in operating its reservation system, $31,497,000, but denied Hancock’s motion failing to limit usable denials, [1] improperly for attorneys’ fees and taxation of costs
without prejudice. Sheraton appealed from the judgment, and Hancock cross- purchase of goods, wares, or appealed from the remittitur. [2] For the
merchandise, either to the reasons that follow, we will affirm in part o t h e r p a r t y t o s u c h and reverse in part. transaction or to an agent,
representative, or other
II. DISCUSSION
intermediary therein where A. ROBINSON-PATMAN ACT such intermediary is acting CLAIM in fact for or in behalf, or is
subject to the direct or Hancock’s Antitrust Standing indirect control, of any party Sheraton renews its argument that to such transaction other Hancock lacks antitrust standing to bring a than the person by whom claim under § 2(c) of the Robinson- such compensation is so Patman Act. [3] We must address that issue
granted or paid. before addressing the merits of the appeal or cross-appeal.
15 U.S.C. § 13(c). “Congress enacted Section 2(c) of the Robinson- section 2(c), the Act’s brokerage Patman Act provides: provision, primarily to curb one particular It shall be unlawful for any abuse by large chain store buyers, namely p e r s o n e n g a g e d i n
the use of ‘dummy’ brokerage fees as a commerce, in the course of means of securing price rebates.” such commerce, to pay or Environmental Tectoni cs v . W.S . grant, or to receive or Kirkpatrick, Inc. , 847 F.2d 1052, 1066 (3d accept, anything of value as Cir. 1988) (citation omitted). This concern a commission, brokerage, or arose from large stores using their other compensation, or any economic dominance to force sellers to allowance or discount in pay a fee for doing business. “The large lieu thereof, except for stores required the sellers to pay a s e r v ic e s r e n d e r e d in ‘brokerage’ to persons employed by the connection with the sale or buyers. These persons had rendered no
service, and would simply pay over the commissions to their em ploye rs.” [2] We have jurisdiction under 28 U.S.C. Seaboard Supply Co. v. Congoleum Corp. , § 1291. 770 F.2d 367, 371 (3d Cir. 1985). [3] The Robinson-Patman Act of 1936 However, Hancock’s § 2(c) claim is was enacted as an amendment to the not a dummy brokerage claim. Rather, Clayton Act. Great Atlantic & Pacific Tea Hancock has fashioned its § 2(c) action as Co. v. Federal Trade Commission , 106 F.2d 667, 669 (3d Cir. 1939). a comm ercial bribery claim. [4] Surprisingly, the Supreme Court has never
decided a § 2(c) commercial bribery case. However, in dicta in Federal Trade Commission v. Henry Broch, Inc. , 363 [4] Sheraton insists that the SPR program U.S. 166 (1960), the Court noted that § was not commercial bribery because the 2(c) does encompass commercial bribery. rebates simply served to compensate it for Id. at 169 n.6 (“And although not the costs it incurred in operating the mentioned in the Committee Reports, the program. Nevertheless, it accepts debates on the bill show clearly that § 2(c) Hancock’s characterization of the SPR was intended to proscribe other practices program as commercial bribery for such as the ‘bribing’ of a seller’s broker by purposes of this appeal. the buyer.”) (citation omitted). [5] Similarly, As a general principle, a critical element of commercial bribery is the breach of the duty of fidelity. For
purportedly disinterested example, the Model Penal Code provides: adjudicator or referee. Commercial Bribery and (2) A person who holds Breach of Duty to Act himself out to the public as Disinterestedly. being engaged in the business of making disinterested
(1) A person commits a selection, appraisal, or misdemeanor if he solicits, criticism of commodities or accepts or agrees to accept any s e r v i c e s c o m m i t s a benefit as consideration for misdemeanor if he solicits, knowingly violati ng or accepts or agrees to accept any agreeing to violate a duty of benefit to influence his fidelity to which he is subject selection, appraisal or as: criticism. (a) partner, agent, or employee (3) A person commits a of another; misdemeanor if he confers, or (b) trustee, guardian, or other offers or agrees to confer, any fiduciary; benefit the acceptance of (c) lawyer, physician, which would be criminal accountant, appraiser, or other under this Section. professional adviser or informant;
M ODEL P ENAL C ODE § 224.8. See United (d) officer, director, manager States v Dischner , 960 F.2d 879 (9th Cir. or other participant in the direction of the affairs of an 1992). incorporated or unincorporated [5] In Broch a manufacturer sold apple association; or (e) arbitrator or other concentrate at a price of $1.30 a gallon.
in dicta in California Motor Transport Although we once expressed skepticism Co. v. Trucking Unlimited , 404 U.S. 508, about “whether Congress intended to 513 (1972), the Court again noted that sweep commercial bribery within the “bribery of a public purchasing agent may ambit of § 2(c),” Seaboard Supply , 770 constitute a violation of § 2(c) of the F.2d at 371, we have since agreed that Clayton Act, as amended by the Robinson- “commercial bribery is actionable under Patman Act.” In addition, a number of 2(c).” Environmental Tectonics , 847 F.2d courts of appeals have held that § 2(c) at 1066. encompasses commercial br ib er y. [6]
Nevertheless, although § 2(c) of the Robinson-Patman Act defines certain conduct as illegal, it does not create a
The manufacturer sold through a broker private right of action to sue for damages and paid the broker a commission of 5%. resulting from violations of the Act. One buyer would not pay more than $1.25 Rather, the private right of action for a § for the concentrate and the manufacturer 2(c) Robinson-Patman Act claim, as for all refused to lower his price unless the broker private plaintiff antitrust rights of action, is agreed to take a cut in his commission provided by § 4 of the Clayton Act. from 5% to 3%. The broker agreed and Genesco, Inc. v. T. Kakuichi & Co. , 815 the sale was consummated at $1.25 with a F.2d 840, 853 (2d Cir. 1987). Section 4 of lower commission. The Court viewed this
the Clayton Act provides: transaction as identical to one in which the broker received a commission of 5%, the
Any person who shall be normal commission, and then turned over injured in his business or a part of the commission, i.e., 2%, to the property by reason of buyer. That would have been illegal under anything forbidden in the § 2(c) as a payment in lieu of brokerage antitrust laws may sue and, therefore, the Court found that the therefor in any district court reduction in commission in Broch was also of the United States in the a payment in lieu of brokerage. district in which th e defendant resides or is [6] See, e.g., Harris v. Duty Free Shoppers found or has an agent, Ltd. Partnership, 940 F.2d 1272 (9th Cir. without respect to the 1991); Stephen Jay Photography, Ltd. v. amount in controversy, and Olan Mills , 903 F.2d 988 (4th Cir. 1990); shall recover threefold the Larry R. George Sales Co. v. Cool Attic damages by him sustained, Corp. , 587 F.2d 266 (5th Cir. 1979); and the cost of suit, Grace v. E.J. Kozin , 538 F.2d 170 (7th Cir. 1976); Calnetic Corp. v. Volkswagen of America, Inc. , 532 F.2d 674 (9th Cir. 1976); Rangen, Inc. v. Sterling Nelson & v. Kentucky-Tennessee Light & Power Co. , Sons , 351 F.2d 851 (9th Cir. 1965); Fitch 136 F.2d 12 (6th Cir. 1943).
including a reasonable purchased through that program. Hancock attorney’s fee. also argues that the increased cost put it at
a competitive disadvantage with regard to hotels owned by Sheraton.
15 U.S.C. § 15(a). However, in order to However, we do not think that recover treble damages under § 4(a) of the paying inflated purchasing prices to Clayton Act, a private plaintiff must do vendors, without more, is “an injury of the more than simply show “an injury causally type the antitrust laws were intended to linked to” a violation of the antitrust laws. prevent . . . that flows from that which Brunswick Corp. v. Pueblo Bowl-O-M at, makes the defendants’ acts unlawful.” Inc. , 429 U.S. 477, 489 (1977). A plaintiff Brunswick , 429 U.S. at 489. Rather, must also prove “antitrust injury, which is Hancock’s injury was caused by a breach to say injury of the type the antitrust laws of contract and the corruption of the were intended to prevent and that flows principal-agent relationship. We agree from that which makes defendants’ acts that, in an appropriate case, a breach of unlawful.” Id. Thus, the Court pronounced contract or a breach of fiduciary duty in J. Truett Payne Co. v. Chrysler Motors could result in the kind of injury “the Corp. , 451 U.S. 557, 568 (1981), “even if antitrust laws were intended to prevent.” there has been a violation of the Robinson- However, we do not believe that Hancock Patman Act, [a plaintiff] is not excused has established such an injury here. The from its burden of proving antitrust injury absence of such injury is fatal to and damages.” Hancock’s attempt to establish antitrust standing. [7] As noted above, the Supreme Court has not yet defined “antitrust injury,” for purposes of a § 2(c) Robinson-Patman [7] As noted above, Sheraton manages the claim. However, Hancock argues that it Hotel under contract with Hancock. suffered antitrust injury as a result of However, Sheraton also manages hotels Sheraton’s commercial bribery scheme, that it actually owns. Hancock also alleges i.e ., the SPR program. Hancock refers to that the rebate scheme put it at a this program as a “kickback” and claims competitive disadvantage to Sheraton- that Sheraton inflated Hancock’s owned hotels because. According to purchasing costs by adding SPR Hancock, “the rebate scheme impacted the surcharges and then collecting the Hotel differently than it did Sheraton- increased costs in the form of the rebates it owned hotels: The rebate program collected from Hancock’s vendors. increased the costs of the goods and According to Hancock, it suffered antitrust services [Hancock] purchased on behalf injury because it could only purchase of the Hotel, whereas the rebate scheme goods from vendors participating in did not impose a real cost on Sheraton- Sheraton’s SPR program, and it had to pay owned hotels, which simply ‘paid’ the these artificially inflated prices for goods kickback to their corporate parent.” “Antitrust standing and its It is now settled that a § 2(c) terminological cousin, antitrust injury, are plaintiff does not have to prove often confused.” Triple M Roofing Corp. competitive injury to establish a § 2(c) v. Tremco, Inc. , 753 F.2d 242, 247 (2d Cir. violation. In Federal Trade Commission 1985). “Lack of standing and antitrust v. Simplicity Pattern Co. , 360 U.S. 55, 65 injury ofte n have been invoked (1959), the Supreme Court noted, inter interchangeably against a plaintiff even alia , that § 2(c) of the Robinson-Patman though each concept involves a distinct Act makes the business practices described element of the § 4 action.” Greater therein unlawful. Therefore, “the Rockford Energy and Technology Co. v. proscriptions [of § 2(c)] are absolute. . Shell Oil Co. , 998 F.2d 391, 395 (7th Cir. .[and § 2(c) does not] require[], as proof of 1993). Part of this confusion may result a prima facie violation, a showing that the from the ease with which antitrust injury illicit practice has had an injurious or and competitive injury can be conflated destructive effect on competition.” Id . into a single inquiry. [8] Accordingly, “the presence of an anti-
competitive effect is not necessary to prove a violation of section 2(c).” Seaboard Supply Co. v. Congoleum Corp. ,
Hancock’s Br. at 23. 770 F.2d 367, 371 n.3 (3d Cir. 1985). The However, Sheraton argues that anti-competitive effect is the presumed Hancock produced no evidence that result of the illegal conduct. Hancock was put at a competitive disadvantage vis-a-vis Sheraton-owned
However, the successful plaintiff hotels because the evidence established must still prove more than a § 2(c) that there are no Sheraton-owned hotels in violation and the accompanying anti- the Washington, D.C. area where the Hotel
competitive effect to prevail. The plaintiff does business. Sheraton’s Br. at 26. must also establish the requisite antitrust Absent any such competition, Sheraton injury , and this requires more than argues, Hancock could not have been put
establishing the anti-competitive effect at a competitive disadvantage by the that is endemic in the violation. In other surcharge and therefore could not have words, the mere fact that certain conduct sustained a competitive injury because of it.
our powers of reconciliation.” A [8] The difficulty in distinguishing these commentator subsequently noted that the two interrelated concepts was summed up “court could hardly have been faulted, for by the district court in Wilson v. Ringsby the confusion it noted has been endemic to Truck Lines, Inc. , 320 F.Supp. 699, 700 these cases since the creation of the treble- (D. Colo. 1970). There the court candidly damages action.” Daniel Richman, Note, noted, “[w]e must confess at the outset Antitrust Standing, Antitrust Injury, and that we find antitrust standing cases more the Per Se Standard , 93 Yale L. J. 1309 than a little confusing and certainly beyond (1984). their business to non-union contractors. [9] has an anticompetitive effect does not mean that a given plaintiff has suffered an Plaintiffs alleged that the coercion resulted antitrust injury, or that a given plaintiff is in less business for firms employing union the appropriate party to seek recovery carpenters. The Court held that because under the antitrust laws. Accordingly, the carpenters’ unions were “neither a “[e]ven a plaintiff who can show antitrust consumer nor a competitor in the market in injury may lack antitrust standing. . . .” which trade was constrained,” their Barton & Pittinos, Inc., v. Smith Kline injuries were not the type of injury that the Beechum Corp ., 118 F.3d 178, 182 (3rd antitrust laws were designed to prevent. Cir. 1997). The Supreme Court explained Id. at 539. The carpenters’ unions may this in Associated General Contractors of well have had a cause of action under California, Inc. v. California State Council other statutes or common law, and a of Carpenters , 459 U.S. 519 (1983). different plaintiff may have had a cause of There, the Court said: action under the antitrust statues.
However, the carpenters’ unions had no [a] literal reading of [§ 4 of standing to sue under those laws. The the Clayton Act] is broad Court reached this conclusion even though enough to encompass every the Association’s cond uct had an harm that can be attributed anticompetitive effect. M oreover, firms directly or indirectly to the hiring union carpenters had clearly consequences of an antitrust suffered an anticompetitive injury because violation. Some of our prior the Association’s coercion made it more cases have paraphrased the difficult for those firms to win contracts. statute in an e quall y Yet, notwithstanding the anticompetitive expansive way. But before effect of the conduct in question, the Court we hold that the statute is as concluded that the plaintiff carpenters’ broad as its words suggest, unions had not suffered a sufficient we must consider whether antitrust injury. Congress intended such an open-ended meaning. In arriving at that decision, the
Court read the antitrust statues in light of their common law background and read a
Id. at 529-30 (footnote omitted). “proximate cause element into § 4 Associated General Contractors involved [Clayton Act] actions.” Greater Rockford a number of carpenters’ unions that Energy , 998 F.2d at 394. As a result of alleged that A ssocia ted Ge nera l Associated General Contractors , § 4 of the Contractors, a trade association made up of Clayton Act has been given a narrowed general contractors, had coerced customers and competing contractors to give some of [9] The Association’s customers included landowners who needed construction services.
reading. We have . the antitrust laws were intended to [remedy]”). City of Pittsburgh v. West synthesized the Court’s Penn Power Comp. , 147 F.3d 256, 264 (3d analysis into the following Cir. 1998). “The antitrust standing inquiry formulation of the factors is not a black-letter rule, but rather, [it] is that are relevant in an essentially a balancing test comprised of antitrust standing challenge: many constant and variable factors.” Id ., at (1) the causal connection 264-5 (internal quotation marks omitted). be t w e e n th e a ntitru st violation and the harm to the
Antitrust injury thus becomes but plaintiff and the intent by one element of the inquiry into antitrust the defendant to cause that standing. It is “a necessary but insufficient harm, with neither factor condition of antitrust standing.” Barton & alone conferring standing; Pittinos , 118 F.3d at 182 (citing Lower (2) whether the plaintiff’s Lake Erie Iron Ore Antitrust Litig. , 998 alleged injury is of the type F.2d at 1166). Therefore, as noted above, for which the antitrust laws “[e]ven a plaintiff who can show antitrust were intended to provide injury may lack antitrust standing, because redress; (3) the directness of the remaining [ Associated General the injury, which addressed Contractors ] factors may weigh against the concerns that liberal allowing him or her to sue under the application of standing antitrust laws.” [10] Id . (citing Cargill, Inc. v. principles might produce Monfort of Colorado, Inc. , 479 U.S. 104, speculative claims; (4) the 110 n.5 (1986)). existence of more direct victims of the alleged antitrust violations; and (5) [10] The antitrust injury requirement of the the potential for duplicative
antitrust standing inquiry is analogous to r e c o v e r y o r c o m p l e x the minimum standing requirement of a apportionment of damages. case or controversy within the meaning of Article III, § 2 of the Constitution, while the other Associated General Contractors
Barton & Pittinos, 118 F.3d at 181 (citing factors are analogous to the prudential In re Lower Lake Erie Iron Ore Antitrust limitations on standing. Barton & Pittinos , Litig. , 998 F.2d 1144, 1165-66 (3d Cir. 118 F.3d at 182 n.4; City of Pittsburgh , 1993)). The traditional concept of antitrust 147 F.3d at 264. [ See Trump Hotels & injury continues to be an important part of Casino Resorts, Inc. v. Mirage Resorts antitrust standing under this formulation. It Incorp. , 140 F.3d 478, 484-85 (3d Cir. is subsumed within the second factor of 1998), for a discussion of Article III the 5 prong inquiry (i.e. “whether the standing and the prudential limitations on plaintiff’s alleged injury is . . . the type . . standing.] (4) [13] because there are clearly “more direct “The Associated General test has been regularly and consistently applied as victims” of Sheraton’s alleged commercial the passageway through which antitrust bribery scheme. Vendors who may have plaintiffs must advance.” City of been prevented from selling goods to Pittsburgh , 147 F.3d at 264. Accordingly, Hancock because they refused to even if we assume arguendo that Hancock participate in the SPR program of suffered an antitrust injury because it paid surcharges and rebates are far more direct inflated prices as a result of Sheraton’s victims of Sheraton’s scheme than alleged commercial bribery, that would not Hancock. Moreover, their injury is much necessarily establish Hancock’s antitrust closer to the kind of injury antitrust laws standing. Hancock must still navigate address because the displaced vendors through the course defined by Associated were unable to participate in the market General . Yet, it can not successfully do c r e a te d b y th e S P R p r o g r a m . that on this record because it can not Significantly, Hancock comes close to circumnavigate the barrier posed by conceding as much in its complaint. Associated General factors (1), (3), (4) or Hancock alleges: (5). With regard to factors (1) [11] and (3), [12]
[v]endors unwilling to pay we think it is important to remember that kickbacks to Defendants Sheraton contends that the surcharge and were competitively harmed, rebate aspects of the SPR program was not and by m andating the commercial bribery at all, but simply a Hotel’s participation in way for it to recoup the costs it incurred in na tional a n d r egion al administering the program. Even if contracts negotiated by Sheraton inflated the amount of those [ Sh er ato n], Defendants charges beyond that which was necessary de nie d [H a n cock] t he to recoup its costs, the propriety of o p p o rtunity to o b t a in Hancock maintaining an antitrust action is advantageous prices and still problematic for reasons we will t e r m s f r o m n o n - elaborate upon below. p a r t i c i p a t i n g v e n d o r s . Favored vendors not only Even if we assume Hancock is correct as to factors (1) and (3), it surely drew sales or profits from can not survive an inquiry under factor non-favored vendors, but
the attendant reduction in competition and higher costs resulted in direct antitrust [11] “The causal connection between the injury to [Hancock]. antitrust violation and the harm to the plaintiff and the intent by the defendant to cause that harm[.]” [13] “The existence of more direct victims [12] “The directness of the injury. . . .” of the alleged antitrust violations[.]” Complaint at ¶ 143. reversed because we concluded that the act of state doctrine did not apply. [16] In doing Although Hancock does allege that so, we noted the difficulty of precisely it suffered an anticompetitive injury by defining standing under § 2(c). 847 F.2d being forced to pay higher prices as a at 1066. We also noted that “it is generally result of reduced competition, we think agreed that a direct competitor of a Hancock is in an analogous situation to the company that obtains a contract through carpenters’ unions in Associated General commercial bribery has standing to press a Contractors . There, customers suffered a 2(c) claim against the briber.” Id. more direct and more appropriate antitrust (citations omitted). Admittedly, we did not injury even though the alleged antitrust limit the class of potential § 2(c) violation had an effect on the carpenters’ commercial bribery plaintiffs to disfavored union. There is an analogous situation competitors. However, we mentioned here if we compare the injury of the disfavored competitors having § 2(c) excluded vendors to Hancock’s injury. commercial bribery standing after stating: Unlike the Sherman Act, which “[I]n order to proceed with a claim, a “protects competition , not competitors , . . plaintiff must be able to demonstrate that . the Robinson-Patman Act extends its it is within the class of those injured in protection to competitors.” Monahan’s their business or property, who, based on a Marine, Inc. v. Boston Whaler, Inc. , 866 variety of factors, are best suited to further F.2d 525, 528 (1st Cir. 1989) (emphasis in the purposes of the statute by remedying original). We think our discussion in the violation alleged.” Id . at 1066 (citing Environmental Tectonics is therefore also quite helpful to this analysis. There, a company bribed foreign officials in order
when a United States court appears to sit to receive a contract to supply aircraft in judgment on a foreign state’s regulation equipment to the foreign government’s air of its internal affairs. Under the doctrine, force, and a competitor brought a § 2(c) the courts of this country will refrain from commercial bribery claim. [14] The district judging the validity of a foreign state’s court dismissed the action in its entirety on governmental acts in regard to matters the basis of the act of state doctrine. [15] We within that country’s borders. The party moving for the doctrine’s application has the burden of proving that dismissal is an [14] The suit involved several claims in appropriate response to the circumstances addition to the § 2(c) commercial bribery presented in the case.” Environmental claim. However, the other claims are not Tectonics , 847 F.2d at 1057-58 (citations relevant to the issues here. omitted). [15] “The doctrine is the judiciary’s [16] As noted, we also held that institutional response to the foreign commercial bribery is actionable under § relations tensions that can be generated 2(c). 847 F.2d at 1066. Alberta Gas Chemicals, Ltd. v. E. I. Accordingly, we hold that Hancock DuPont De Nemours and Co. , 826 F.2d does not have antitrust standing to pursue 1235, 1240 (3d Cir. 1987)). Significantly, its § 2(c) Robinson-Patman Act claim. We the portion of the Alberta Gas Chemicals will therefore vacate the award of opinion we cited discusses both Brunswick $750,000 (subsequently trebled by the and Associated General . district court) on that claim.
Moreover, even if we focus on B. BREACH OF THE AGENCY Hancock’s allegation that it had to pay P R O V I S I O N O F T H E inflated prices because it was forced to MANAGEMENT AGREEMENT purchase only from “favored vendors,” and ignore Hancock’s admission that Sufficiency of the Evidence. “[v]endors unwilling to pay kickbacks . . . were competitively harmed[,]” we would
Sheraton claims that there is still conclude that Hancock can not insufficient evidence to sustain the award establish antitrust standing under the fifth of $10,260,000 for breach of the agency factor in the Barton & Pittings analysis. provision of the Management Agreement. That requires us to consider whether an Sheraton maintains that there is no award of antitrust damages would be evidence of harm for that breach that is not duplicative, and Hancock’s antitrust also captured in the itemization of possible recovery is inextricably intertwined with d a m ages se t f orth in the jury its awards on the breach of contract and interrogatories on the verdict form. On breach of fiduciary duty claims. that form, the jury awarded $10,260,000 for breach of the agency provision, and
As noted above, Hancock asserted also separately awarded $250,000 for a number of state law claims arising from purchasing services and $222,000 for the SPR program. The jury found that Workers’ Compensation. It awarded no Hancock suffered $250,000 in damages damages for the other categories listed on related to the purchasing services program the verdict form: the frequent traveler and it also awarded $1,100,00 for program, the reservations system, “usable Sheraton’s breach of fiduciary duty. The denials” practices, complimentary rooms actions supporting those awards constitute
practices, or for any other contractual duty. breach of contract and breach of fiduciary The relevant interrogatory asks jurors: duty. Allowing a separate recovery under “[w]hat damages, if any, do you award to § 2(c) creates insurmountable problems in
plaintiffs for a breach of the Management apportioning damages along with the real possibility of cumulative damages. [17] Contract concerning each of the following.
. . .” Hancock responds by arguing that [17] Indeed, given the nature of Hancock’s claimed damages, duplicative recovery is not only possible, it is exceedingly probable if not inevitable. the evidence of the breach of the agency First, the jury made no finding of provision extended beyond the rebate wilful breach of contract and it was never payments, and suggests several possible instructed on applying principles of bases for the $10,260,000 award. We are disgorgement. Second, the jury verdict not persuaded. For example, Hancock includes a specific finding for breach of relies upon the Workers’ Compensation fiduciary duty and the jury listed an program. However, as noted, the jury amount of $1,100,000 as damages for that separately awarded $222,000 for that breach. Accordingly, we find no support program. Hancock cites the level of for the award of $10,260,000, and will usable denial practices and the frequent therefore vacate that award. travelers program, which were itemized on
C. PUNITIVE DAMAGES
the verdict form. However, the jury Sheraton challenges the punitive awarded no damages for them. Hancock also cites an unexplained and unquantified damage award on several grounds. It item that it refers to as a bogus relocation argues that the award was not supported by expense. However, no such item was clear and convincing evidence, that the listed on the verdict form. Lastly, relevant jury instructions were erroneous, Hancock argues that Sheraton swept and that the award was excessive. certain of its bank accounts and claims that
Sheraton argues on appeal that the also supported an award of damages. District of Columbia standard of proof on However, the sweeping of accounts Hancock’s punitive damages claim applies occurred after termination of the agency and that, under that standard, punitive provision. Thus, none of those damages can be awarded “only if it is e x p l a n a ti o n s s u p p o rt s a w a r d i n g shown by clear and convincing evidence $10,260,000 for breach of the agency that the tort committed by the defendant provision. A lte rn ati ve ly, H a n c o c k was aggravated by egregious conduct and contends that the jury could have awarded a state of mind that justifies punitive damages on the theory that a fiduciary damages.” Johanthan Woodner Co. v. breach entitled Hancock to disgorgement Breeden , 665 A.2d 929, 938 (D.C. 1995). of the fees it paid to Sheraton over the life Hancock argues otherwise and claims that of the Management Agreement. Hancock Delaware law governs the standard of claims that the award of $10,260,000 proof and, under that standard, the represents 15% of the $68,400,000 preponderance of evidence standard Hancock paid. Citing the Restatement applies to punitive damages. See Cloroben (Second) of Agency, § 469, Hancock Chem. Corp. v. Comegys , 464 A.2d 887, suggests that Sheraton lost its right to 891 (Del. 1983). compensation because it wilfully breached The district court instructed the jury its contractual obligations and that disgorgement is an appropriate remedy for that it must find the elements of punitive fiduciary breach. We disagree. damages by a preponderance of the
evidence. Sheraton did not object to that instruction. We have held that this type of determined that punitive damages should error is fundamental error entitling a be one and one-half times the relevant defendant to a new trial; it is not subject to compensatory damages. We adopt that waiver. Beardshall v. Minuteman Press ratio for the purpose of calculating the Int’l, Inc. , 664 F.2d 23 (3d Cir. 1981). judgment on remand for several reasons. However, Sheraton submitted proposed
We review a grant of remittitur for jury instructions that did not include an abuse of discretion. Gumbs v. Pueblo instruction that entitlement to punitive Int’l , 823 F.2d 768, 771 (3d Cir. 1987). damages must be established by clear and We also afford the district court’s convincing evidence. Therefore, assuming assessment of punitive damages a degree that the instruction was wrong, it was of deference since that court is familiar tantamount to invited error. U.S. v. West with the evidence. See Keenan v. City of Indies Transport, Inc. , 127 F.3d 299, 306 Philadelphia , 983 F.2d 456, 472 (3d Cir. (3d Cir. 1997) (holding that error in 1992) . Moreover, although Hancock has challenged jury instruction was invited, cross-appealed from the grant of the and thus did not provide basis for reversal, remittitur, neither party has taken issue when defendants failed to request ratio. 1 9 with the district court’s instruction that they asserted on appeal and Accordingly we will reduce the punitive their proposed instruction was remarkably damage award to $2,025,000. similar to that actually given).
IV. CONCLUSION
In ruling on Sheraton’s post-trial For the reasons stated above, we motion, the district court determined the amount of the punitive damages to be will vacate the award of $750,000 for $11,610,000. That included the award of violation of the Robinson-Patman Act, as subsequently trebled by the trial court to $10,260,000 for breach of the agency agreement. Since we are vacating the $2,250,000; as well as the award of award for breach of the agency agreement, $250,000 for purchasing services, and the we must concomitantly reduce the punitive $10,260,000 award for breach of the damage award so that it only reflects the agency agreement. We will affirm the surviving damages – $250,000 for awards of $222,000 for W orkers’ purchasing activities, and $1,100,000 for Compensation; and $1,100,000 for breach common law damages, or $1,350,000. [18] In of fiduciary duty, breach of the implied granting the remittitur, the district court [19] See State Farm Mut. Automobile Ins. duty of good faith and fair dealing, and intentional or negligent misrepresentation. We will reduce punitive damages to $2,025,000, for reasons already stated. We remand to the district court with direction to enter judgment consistent with this opinion and for further appropriate proceedings. [20]
NOTES
[1] According to Sheraton, a usable denial occurs when a potential guest is denied a a v a i la b l e . S h e r a t o n ’ s B r . a s reservation when a room is actually appellant/cross-appellee, at 13.
[18] The district court noted that plaintiffs Co. v. Campbell, U.S.Sup.Ct. No. 01-1289 did not specify an amount for breach of (April 7, 2003) (stating that “in practice, W orkers’ Com pe nsa tion in their few awards exceeding a single-digit ratio computation of relevant compensatory between punitive and compensatory damages, and it therefore did not include damages, to a significant degree, will that amount in its calculation. satisfy due process.”).
[20] We have considered the remaining contentions of the parties and conclude that we can affirm the district court’s rulings on those issues without further discussion.
