*1 FINEMAN; Industry Elliot Network Inc.,
System, Appellants,
v. INDUSTRIES,
ARMSTRONG WORLD
INC., Appellee.
No. 91-5613. Appeals,
United States Court of
Third Circuit.
Argued March 1992.
Decided Oct. Rehearing Petition
Sur
Nov. *5 Dill, Newark, N.J.,
Stryker, & Tams appellee.
Before: STAPLETON and MANSMANN, Judges, Circuit FULLAM, Judge.* District THE OPINION OF COURT MANSMANN, Judge. Circuit brought In a action civil United District Court for the District of States Jersey, entrepreneur, New Elliot Fine- man, corporation, Industry and his System, (TINS), sought Network Inc. against Armstrong recover World Indus- tries, Inc., prominent manufacturer of covering products, for floor losses sus- tained after TINS folded. Conceived 1988,the concept employed late novel technology produce monthly video vid- eotape magazine for cov- retailers of floor ering products through to be sold distribu- *6 Armstrong, tors. Fineman contended that anticipating launching the own its video- network, pro- tape interfered with TINS’ spective Armstrong with an floor contract covering distributor to distribute the TINS magazine. losing video As a result this contract, cash flow TINS lacked the neces- sary to continue in business and folded. Fineman, consultant, formerly industry allegedly injury reputation suffered to his destroyed consulting his business. Additionally, Fineman and TINS asserted Armstrong, leading manufacturer of coverings, floor its resilient coerced distrib- utors refuse to deal with TINS em- in ploying alleged leverage its the resilient eliminate covering floor market to gain competitive advantage in and the Gibbons, Deo, Crummy, Del Do- John J. videotape magazines. secondary market of Vecchione, Newark, N.J., lan, Griffinger & Having early com- cleared from the field an (argued), Cambridge, H. Tribe Laurence Armstrong petitor, prepared, according to Mass., appellants. for Fineman, magazine videotape to enter the (argued), Randolph J. Wilson Theodore by competition. market unencumbered Voorhees, Jr., Burling, Covington & Wash- D.C., Armstrong ington, (argued), argued Adams Carl defense that TINS’ Arlin M. Schnader, Harrison, Solano, Segal opportunities specifically success were A. & Pa., product, Lewis, Payne, allegedly K. Philadelphia, Edith limited inferior * designation. syivania, sitting by the P. Fullam of United States John Honorable Eastern District of Penn- Court for the District averring plaintiffs engaged that the in civil poor business sales tactics pressure high conspiracy. Armstrong general, implied projections. starting any small risk inherent
that the jurisdiction appellate We exercise over maga- in the heightened further is business grant- final of the the order district court start-up costs and bar- industry, where zine ing judgment the n.o.v. is, competition entry are and low riers interference, tortious Sherman Act section stiff. consequently, claims; Jersey 2 and dis- New antitrust missing monopoly Fineman’s individual Fineman, agreed TINS and The claim, claim, the Act Sherman section on the them tort rendering a verdict for claim, Armstrong’s breach contract claims, including im- and the antitrust counterclaim; alternatively granting damages. The district position punitive trial tort and 2 claims. new on the section strength court, of the part assessing differently, granted judgment not- evidence II. Facts verdict,1 withstanding alter- native, new trial. A. Parties n.o.v., the respect judgment
With into A brief introduction the structure dispute plaintiffs parties scheme, whether covering floor distribution claims, interference proven characteristics, their tortious specific will damages on punitive background entitled are for under- serve useful whether exercises standing claim and issue the discrete conflicts floor power Later, the resilient cover- rele- monopoly here. will detail the facts market, to TINS’ prerequisite legal thorough Sher- issue. A re- ing vant each They also contest is necessary Act section claim. view of the record because man specific. grant appeal court’s of a directed ver- so fact The follow- the district ing undisputed facts or Armstrong on TINS’ section recitation reviews dict for light claim, meeting casts the facts most favorable specifically, whether winners, plaintiffs. required a claim of verdict minds to establish section concerted action under coverings are to retail- Floor distributed requires Fi- Act a shared motive. Sherman through ers from distribu- manufacturers grant of nally, challenges sum- tors, Floor *7 also known as wholesalers. Armstrong to on TINS’ judgment mary “cap- covering may distributors often be claim, Armstrong’s disputing obli- contract manufacturers, carrying tive” to their TINS-Armstrong gations under particular line of one that manufacturer’s Agreement. We will address Settlement frequently product. is the case This trial, n.o.v., new directed ver- judgment its resilient Armstrong’s distributors of summary orders in that judgment dict and to captivity appears This coverings. floor sequence. lines; thus, limited a distribu- product Armstrong’s resilient may carry only tor I. Jurisdiction carpet manufacturer’s line but a different purposes For of this subject line. court mat- or ceramic tile The district exercised “Armstrong de- opinion, distributor” Anti- over the Sherman jurisdiction ter claims, “captive” 2 notes a is U.S.C. and distributor Act Trust §§ may 2), its resilient line but (Counts pendent jurisdiction Armstrong for 1 and and non-Armstrong non-resilient carry law claims: also remaining state over Arm- emphasis that (Count 3); lines. It bears tortious inter- also of contract breach ownership in- strong possess any Jersey New does with contract under ference record, On 4); this (Count Jersey New antitrust claims terest its distributors. law depends Armstrong (Count 5) typical distributor Armstrong’s and counterclaim judgment minology not- subsequent verdict and of directed 1. this trial and all motions Since until prior withstanding in effect to the amendment Rule 50 verdict occurred law, judgment providing for as a matter December employ opinion we will the traditional ter- level, regional At divi- of its resilient divisions. each Armstrong for 95% managers sion maintained its own district of its overall business. but 50% business2 During force. time sales relevant contrast, retailers, from range who By period, Robert Roth served as the New cover- to chain floor pop” outfits “mom and Arm- manager York area district for carry retailers ing to other retailers strong’s resilient division and Robert Guz- furniture, sideline, e.g., covering aas floor insky counterpart in Arm- was Roth’s stores, and hardware, paint wallpaper strong’s carpet ap- These division. men carry various generally lumberyards, contact, pear have little had horizontal covering prod- brands; they purchase floor except, example, when a distributor car- Depend- competing distributors. ucts from rying required both lines some financial specific ing upon the manufacturer counseling respective or advice line, buy may choose to product retailers managers. district within the competing from distributors level, however, At one distributor product Arm- line. manufacturer’s same significant difference between the two promotes example, intrabrand strong, for Armstrong apparent. Arm- divisions by supply- line competition for its resilient strong any number of resilient dis- sells multiple distributors within ing resilient geographic tributors within a defined terri- vig- territory. distributors any given Thus tory, competition keen which fosters compete loyalty, floor orously for retailer among as Armstrong’s own distributors part large because space displays, well as with other manufacturer’s distribu- flexibility pricing they very little division, carpet tors. on vie for sales products. their Distributors hand, grants other exclusive territorial “promotions” by offering “specials” or distributors, rights carpet to each of its items, frequently by the are financed which insulating them from thereby intrabrand addition, In some retailers manufacturers. competition. manufacturers, al- purchase directly from exclusively though deals 2. Elliot Fineman and TINS distributors. through its began Fineman Elliot his career covering industry floor sales- in 1963 Industries, Inc. World carpet man retail for New York area peri- During the 1983-1984 time relevant Benjamin company, During Berman. his Industries, Inc., od, Armstrong man- World Berman, year fourteen tenure at in which carpet floor both and resilient ufactured up position way he worked his in- covering products.3 “Resilient” is the inventory president, developed unique he vinyl man- coverings, name floor dustry 1565-7; system. control 6398-6404. form, sheeting in either tile ufactured Fineman left Berman start *8 commonly and most identified with business, consulting Internal Cost-Free Resilient consti- brand name “linoleum.” (CFIPS), Systems largely premised Profits “hard” many types tutes one of inventory system. on this control As Gail wood, coverings, including ceramic floor Farrer, principal a who followed TINS tile, coverings floor as and natural such explained, from to Fineman Berman CFIPS jargon, industry stone and marble. In profita- aimed to achieve increased CFIPS coverings distinguished floor are “hard” covering bility a floor from inside distribu- familiarly re- coverings, from “soft” floor company by reducing inventory and tor’s carpeting. ferred to maintaining an costs associated Armstrong’s inventory. corporate dual structure amount of J.A. at excessive covering explained products floor Fineman that a distrib- flowed its two 3359-60. pennies on carpet profits twin and resilient utor’s are a matter of and consisted of Armstrong carpet remaining division 5% of its resilient business has since sold its The products might or consist sales adhesive line. and has added a ceramic tile accessory products supplied are other that not by Armstrong. reducing Armstrong the cost of Because typically that distributors dollar so quite profit- employ salespersons more than maintaining inventory could distributors covering products, that of other floor Fineman testified CFIPS TINS es- able. $200,- consulting pecially targeted fee charged average them as its distributors. signing up asserts guaranteed 000 and its client’s satisfaction. TINS Armstrong distributors for critical: in J.A. 1587-90. TINS was addi- being to leading tion a manufacturer of originated In Fineman TINS resilient, Armstrong typically distributors concept, monthly magazine the form of a specialized maintain a in selling sales force covering floor videotape targeted a to re- only Armstrong products. reason, For this conducting tailers. After market studies Armstrong large distributors em- idea, support for he confirming ploy more salespersons than non-Arm- magazine August TINS launched the strong distributors, ensuring TINS access magazine 1983. J.A. at 1646. The TINS greater a through to number of retailers segments: 1) regular jour- included four Armstrong distributors. trends; industry 2) report nalist’s on Fine- expert key successfully signed up man’s of an on busi- two interview Arm- topics; 3) segment strong highlight- prospect ness Farrer’s distributors. When a third ing Armstrong might and its concern tips a successful retailer for voiced success; 4) TINS, “tag,” approve the distributor’s contacted Fineman Arm- Lancaster, strong’s personalized segment Pennsylvania which each distrib- head- quarters 1983, spoke September utor would communicate with retail cus- advantage tag Armstrong’s general lay Humphrey, tomers. The to James offering specials, manager Marketing or discounted for promotions, Sales and Division, typically explain Retailers were Floor the TINS retailer. format distributors, potential supplied by several so that and its for distribu- offering (Humphrey’s pro- those retailers additional tors. See J.A. at 7518 hand- expect reap competitive *9 promised royal- ing among utors were commissions or field” its distributors. involving upon subscriptions Humphrey Arm-
ties based and video believed addition, salespersons in equipment strong’s sell- sold.4 Fineman as- distributor’s Armstrong’s tags ing sured that their would TINS would interfere with the distributors maintaining special- generate strong preference increased sales without additional for Third, maga- overhead, yielding sales the TINS thus substantial “incre- ized forces. many products that highlight mental zine would profits.” agreement tributor and received commissions on TINS entered into an with RCA to 4. supply equipment have RCA televisions video cassette these sales. price. at a discounted Both the dis- recorders salesmen, Fourth, part of wholesaler which Armstrong’s. Arm- competed with in- equipment selling over could better utilized strong voiced concern be [Arm- plans time, for a video It had compatibility. At strong products]. the same employ “Beta- Sony that would program our fu- program feel this conflicts with maga- equipment max” whereas prove to plans ture video and would not J.A. at 8735-36. zine used a VHS format. interest. be in our best call, telephone Hum- Subsequent this to organization heard that the sell- We have following memoran- phrey disseminated ing has stated Arm- “TINS” that several District Armstrong’s to Floor Division dum already pur- strong wholesalers Managers September on 1983: system selling chased the will be your possibility is a some whole- There To customers. the best of our their might you regarding salers contact knowledge, Armstrong no Floor Division covering floor new video retail based has committed to the “TINS” wholesaler intro- program being communication system. approached; have been Some program The is duced called “TINS.” however, mer- they agreed haven’t independent being presented to wholesal- system. chandise throughout country ers for sale September memo A 7280. specific territo- covering floor retailers Regional New York objective The is to establish a net- ries. Division, Manager Carpet Robert work of retailers who will utilize various managers Guzinsky, his distributor sales monthly on a ba- programs video based A parroted Humphrey’s memo.5 much of The also allow for system sis. would Armstrong sent to mar- third memorandum presentation, some localized wholesaler keting area produce representatives must local- the Detroit which wholesaler ly- manager, from their district dated October 23, 1983, largely excerpted from Hum- require will program feel the “TINS” We phrey’s J.A. at selling time on memo.6 7591. a considerable amount read, your showing shortly carpet Guzinsky’s pertinent part: Studios and memo satisfy both in this area. feel we can our needs may possibility you is a that some of be There J.A. at 7286. regarding retail contacted a new video based Manager Csrnko wrote: being .District floorcovering program communications program We advised via Lancaster that there "TINS.” The is have been introduced called wholesalers, possibility some of our being presented independent wholesalers all, might regarding if a new not contacted throughout country sale to for floorcover- covering floor communica- video based retail objec- ing specific markets. The retailers in being "TINS.” program introduced called tion who tive is to a network retailers establish being presented indepen- program is This programs based on a will utilize video various throughout country dent wholesalers monthly system allow basis. The would also covering specific ter- sale to floor retailers presentation, for some wholesaler localized objective is to establish a net- ritories. The produce locally. must which wholesaler will various vid- retailers who utilize work of require program We feel the "TINS” will programs monthly eo on a basis. The based selling amount of time on considerable system would also allow some localized salesmen, part your which I wholesaler presentation, the wholesaler which wholesaler you agree, could be better uti- know would locally. produce must [Armstrong products]. selling lized At the program obviously will We feel the “TINS” time, program this conflicts with same we feel selling require time a considerable amount of plans prove mutual and would not our video salesmen, part which of wholesaler best interest. to be our mutual [Armstrong selling utilized could be better selling organization We have heard that the time, products]. At the same we feel Armstrong that several "TINS” has stated plans program video conflicts the future sys- already purchased the wholesalers have prove certainly to be in our would selling it to their customers. tem will be interests. combined best knowledge, no To the best of our selling organization stated "TINS” has sys- wholesaler has committed "TINS” have al- wholesalers that several ready *10 Therefore, you any queries, receive system tem. if and will be sell- purchased you ing will have this information. the best of our their customers. To it to constantly develop logical Armstrong working knowledge, to Floor Division We are no sys- "TINS” systems program you committed to the wholesaler has video such as the will 1983, explained undergo- that Stern was responded, in the fall of hamson Fineman Armstrong difficulty, with anti- threatening ing some financial Fineman re- in a dispute culminated quired only percent payment lawsuit. The a 25 down on trust January Drafted in agreement. 1712, settlement at day, that J.A. which constituted signed agreement was the settlement percent pay- half of the standard 50 down after a “trial March of Fineman ordinarily required at the of the ment time signed up three in which Fineman period” signing of the letter of intent. The balance him- Armstrong and satisfied distributors paid was to be within four six months. Armstrong not continue to self that would testified that he understood Abrahamson In marketing his of TINS. with interfere royalties that the from TINS sales received terms, general agreement the settlement first six would months cover President Dennis required Armstrong Vice $16,000 rights fee. J.A. initial distributor Armstrong’s Draeger notify district dispute at 4290. There is no that Stern objection that it no to TINS managers had marketing would not receive exclusive him a letter a list of required to send and rights territory. TINS its sales for within that no explaining its it had distributors J.A. at 4427. At that time Fineman and distributing the TINS to their objection Abrahamson also discussed CFIPS and addition, re- Fineman could magazine. his in re- Abrahamson indicated interest letter quest Armstrong send similar ceiving proposal Fineman for con- from distributors. prospective TINS sulting work. Company 3. & Stem length, later Abra- As will be detailed Wolfe, informed TINS’ John fol- hamson lawsuit Arm- At the crux of this is an training lowing TINS Stern’s sales change of strong distributor’s heart salesmen, withdrawing Stern 24,May respect magazine. On TINS heavily TINS. TINS relies for from negotiations TINS’ settlement after conspir- tortious interference and antitrust Armstrong, and sales- Fineman TINS on acy Alan claims two communications Wolfe met with Abraham- man John son, Company, Armstrong & and that intervened between Stern’s president of Stern Ken managers: three sales with Stern’s letter of intent and discontinuance Cloud, Fischer, Gray Af- and First, during John Owen. 7th program. TINS June receiving pitch, ter Fineman’s sales Abra- Arm- meeting, at which Abrahamson managers hamson and his sales conferred regional manager resil- strong’s sales agreed to TINS. distribute Abraham- present, Roth TINS was ient Robert were managers were son testified his sales minutes, approximately discussed for 10-15 Fischer, support in their for TINS: divided and Roth told Abrahamson that manager, did not favor the resilient sales would not a lot sense “mak[e] Owen, TINS, manager, carpet slightly Armstrong things” scheme of because TINS; Cloud, the ceramic new favored “overlap Armstrong program.” has an highly TINS. manager, favored J.A. Second, Armstrong execu- J.A. at 4084.7 favored Abrahamson 4286. memo dated Humphrey sent a June tive sign agreed to the letter intent. See 1984, man- all floor division J.A. at managers field agers explaining what Armstrong’s marketing should tell distributors about Fineman assessed distributor $16,000. “participation” After Abra- with TINS: rights for Stern at however, stay approached; I make sure we all wholesaler. want to tem. Some have been agreed sys- they top competitive haven't merchandise of this effort. Therefore, you any inquiries receive tem. regarding if at 7591. "TINS,” try discourage please participation your manager carpet, wholesalers and offer [sic.] local sales suggestions on time could be direct- how their Guzinsky, meeting, reportedly Robert also at important Armstrong ed towards a more [sic.] good like a told Abrahamson that TINS "sounds Additionally, please notify effort. me as sales idea” J.A. at 4048. your as the has been made to soon offer *11 Jersey Pennsylvania, plain- any New and the to offer assistance” “unable would be pendent or J.A. at 7323. tiffs asserted the federal court’s to that distributor. alleged diversity jurisdiction. Count Three withdrawal, TINS a of Stern's As result conduct constituted produce required to the capital lacked the agreement settlement breach already contract. TINS videotapes under Compl. Armstrong. TINS between and opera- forced to dissolve its ultimately was ¶ alleged Five inten- Counts Four and then threatened to sue tions. Fineman contract, Compl. tional interference with of contract and Stern for breach Stern of; ¶ Jersey 37, and a violation New on the to counterclaim basis threatened laws, respectively. Compl. antitrust registration and that TINS had violated the trial, indi- During pressed when Fineman requirements of the Connecticut disclosure had antitrust and tort claims that vidual Act, Opportunity Investment Business clearly as delineated counts not been 36-521, and 36-503 to Conn.Gen.Stat. §§ that the complaint, district court ruled Act barred TINS that the Connecticut fairly individu- complaint stated Fineman’s intent. the letter of enforcing rejected al claim tortious interference but settled their dis- TINS and Stern 8553-55. his individual antitrust claims. 9, 1984, and August on executed a pute 25, 1988, liability. May grant- the district court J.A. at 8557. release On mutual judgment in favor of partial summary ed History B. Procedural con- Armstrong, dismissing the breach of Arm- claim and all claims related to tract Fineman and September A strong Nelson & distributor Smallin. against Armstrong suit World TINS filed jury then ensued and at the lengthy trial Industries, States Dis- Inc. the United case, plaintiffs’ the district court close of Jersey, of New trict for District Court on directed verdict in- had alleging generally claim, concluding Act Sherman section to breach its contract with fluenced Stern law, co-conspirators matter that as a TINS from the TINS an effort drive one could relationship vertical another magazines the floor market video anticompetitive mo- requisite not share covering industry. In a five count com- agreement prohibited sec- tive for an under compensatory, sought plaint, plaintiffs Fine- tion 1. The district court dismissed damages as as punitive, treble well claims, ruling individual antitrust man’s interest, costs, attorneys injunc- fees appealed, permitted not which has been but tive relief. tort jury to decide Fineman’s individual alleged Armstrong had Count One claim, although punitive the court excluded 1 of the Sherman Act violated section damages on that claim. J.A. at 6828-29. persuading] and otherwise “pressur[ing], 19, 1991, April returned On independent distributors influencing] plaintiffs for the on all the remain- verdict with, agree- not and indeed to break to deal ing Specifically, it awarded $19.5 counts. with, plaintiffs, thereby cutting ments to TINS its section 2 antitrust million supply off a of distributors critical $2,275 claims and million to $17.7 Compl. al- plaintiffs.” 25. Count Two If Fineman, individually, on their million to 2 of leged a section the Sher- violation respective tortious interference claims.8 Act, asserting Armstrong pos- man jury also dam- punitive awarded power in the monopoly resilient sessed ages Subsequently, million. $200 covering market which exercised floor judg- district court ordered that when the monopolize a market defined attempt completely after all ment became final “consistpng] maga- sale of video post-trial appeals, TINS would covering in- motions zines to the floor retailers damages under to elect to recover dustry other interested entities].” [and 8; remaining or the causes of Compl. For the either antitrust tort 31-32. ITU counts, Finally, ruling challenged brought pursuant to the laws of action. in a merged claims Sherman Act claims. 8. The court the state law anti- trust with the district
183
plaintiff
separately
Arm-
each
were
court dismissed
addressed
the district
appeal,
trial,
discuss
against
and
we will
each
turn.
strong’s counterclaims
at 89-108.
Fineman. J.A.
1. TINS
20, 1991,
court
the district
On June
court
judg-
The district
reasoned that
judgment
motion for
granted
ment n.o.v. on TINS’
interference
tortious
which
tort and antitrust claims
n.o.v. on the
appropriate
claim was
because TINS had
plaintiffs.
in favor
the
jury'resolved
the
of
prove
failed
the Connecticut Busi-
Indus.,
Armstrong
v.
Fineman
World
Opportunity
Act
not
ness
Investment
did
Inc.,
(D.N.J.1991).
F.Supp. 225
In the
774
bar its tort claim
had
and because TINS
alternative,
district court also condition-
produced
wrong-
sufficient
of
not
evidence
ally
a new trial because it found
granted
by Armstrong
ful conduct
nor that
this
weight of
against
that the verdict
proximate
conduct was the
cause of its
trial
plaintiffs’
and that the
evidence
appeal,
injury. On
contends that
prej-
improper
grossly
summation
counsel’s
preserve
failed to
Armstrong
these issues
passions
inflamed the
of
udiced and
The
in its oral motion
directed verdict.
appeal
these fi-
jury.
plaintiffs
The
had pre-
district court concluded that
requesting essentially that we
nal orders
Fineman,
grounds.
774
served these
turn, ini-
jury’s verdict. We
reinstate the
F.Supp. at 230.
n.o.v.,
entry
tially,
judgment
of
then,
part,
which we will reverse
and
preserve
In order to
an issue for
V,
grant
alternative
of a new
Part
to the
n.o.v.,
judgment
moving party
must
trial,
we will affirm.
which
spec
timely move for directed
verdict
grounds for
ify the
that motion. FRCP
III. Tortious Interference
50(a); Bonjorno v. Kaiser Aluminum &
Cir.1984),
(3d
802,
Corp., 752 F.2d
814
section,
Chem.
In
tortious
address the
denied,
908,
477
A,
rt.
U.S.
interference claims.
Part we discuss
ce
3284,
(1986);
Fineman’s individual
B.
TINS-Stern Settlement
Armstrong responds that Fineman
trial.
reaching
Before
the merits of the
tortious inter-
his individual claim for
posed
claim,
tortious interference
we must also
first time after the district
ference for the
briefly
address
contention
individual antitrust
dismissed his
court
plaintiffs’
that the
tort claims are barred
*14
claims,
followed the close
which
the
executed in
TINS-Stern release
Armstrong’s initial
case and
plaintiffs’
fall of 1984. After Fineman threatened to
sup-
verdict.
timely motion for directed
$4,000 unpaid
sue Stern for the additional
Armstrong
port
position,
contends
of this
intent,
deposit, Stern voided the letter of
complaint
pretrial
and the
that both the
report
threatened to
TINS to the Connecti
only
contain
an individual anti-
statement
Banking
failing
cut Commissioner of
for
to
and that Fineman retooled his
trust claim
register
Act,
under the Connecticut
interfer-
individual claim to aver tortious
threatened to counterclaim for the return
after the district court dismissed his
ence
$4,000
4328-30;
deposit.
of
J.A. at
Stern’s
claim. Because the in-
individual antitrust
ultimately
8553-55. TINS and Stern
exe
Arm-
tort claim surfaced after
dividual
arising
cuted a mutual release of all claims
motion,
strong’s initial directed verdict
intent,
the letter
out of
which TINS
Armstrong contends that it could not have
good
received
“and other
and valu
$1.00
objections
that time.
waived its
at
8556-58;
able consideration.” J.A.
8557.
Although Fineman’s individual tort claim This settlement released Stern and its “as
may
inartfully pleaded,9 by April
have been
Armstrong.
signs” without mention of
trial,
1, 1991,
after several months
suggests
par-
Armstrong
that where two
had ruled that it was a viable
district court
a
ties to a contract enter into
settlement
claim,
Armstrong, during its re-
prompting
agreement mutually discharging them
motion for directed verdict at the
newed
contract,
any liability under the
one
evidence,
raise “two main
close of all the
parties may
those
not then seek recov-
(1)
party
grounds”:
Fineman was not a
ery against
party
a third
for tortious inter-
contract,
(2)
and New Jer-
the Stern-TINS
Armstrong
ference with that contract.
has
sey
provide
does not
for a tortious
law
Jersey
provided any
New
caselaw
by non-party.
claim a
J.A. at
interference
we conclude that
support
position
Given the manner which
9057-58.10
Jersey Supreme
Court would not
New
trial,
developed
claim
we cannot fault
bar this action.
having failed to move for
Jersey Supreme
New
Court has evi-
upon this claim until the
directed verdict
preference
permit
injured
the evidence and hold that these
denced its
close of
falling
pretrial
Paragraph
Complaint,
a
In addition the
statement
includes in
28 of the
under
legal
(the
plaintiffs’
issues the fol-
statement of
“Count
section one anti-
section entitled
I”
lowing:
claim)
Fineman is entitled to an
“Plaintiff
provides:
trust
earnings
profits from his con-
award of lost
or
conduct],
Armstrong's
plaintiff
a result
[as
sulting business.”
J.A. at 780. The district
reputation
management
as a
con-
Fineman's
sultant,
Complaint
pretrial
court ruled
both
leading manage-
in fact one of the
adequately
Fineman’s indi-
statement
averred
covering
ment consultants in the floor
indus-
vidual tortious interference claim.
at 6827.
try,
severely damaged. He was thus elim-
assisting
distribu-
inated as a credible force
prefaced this statement
counsel
levels,
inventory
per-
to reduce their
thus
tors
that he had
the issues with an assertion
mitting
"nothing really
to sell to its distributors
add
not in our brief.” A
that’s
actually
inventory
they
than
needed.
It
more
sheet in the district court
search of the docket
extremely damaging
management
con-
was not filed with
reveals that this document
insolvency, given
appear
sultant to have suffered an
office and therefore does not
the Clerk’s
profession.
we have before us
the nature of such a
Confidence
record. For that reason
grounds
person
two
is lost if it is known that the
the oral statement of the
in such
under.
directed verdict.
consultant’s own business went
plaintiffs are not
one We conclude
to settle with
opportunity
plaintiff
settlement from
ability
by the TINS-Stern
jeopardizing its
barred
without
tortfeasor
claims
recovery from an-
interference
bringing their tortious
nonduplieative
seek
Peck, 28 N.J.
Armstrong.
In Breen v.
against
tortfeasor.
other
(1958),involving tortious
146 A.2d
brokerage agreement,
Claims Under
with
Tortious Interference
C.
interference
ruled that
Supreme Court
Jersey
Jersey
New
New
Law
recovery against
seek
could
plaintiff
to the substance
We turn now
settling
after
joint tortfeasor
one
claims, which are
interference
the tortious
En-
rejected the
It
joint tortfeasor.
other
Jersey
Under New
by New
law.
governed
Rule,
settlement
under which
glish Release
law,
a claim of
Jersey
the five elements of
subsequent
precludes
one tortfeasor
prospective
interference with
tortious
tortfeasors,
joint
any other
recovery from
(1)
plaintiff’s
relationship are:
business
shortchanges rule
reasoning that that
of economic benefit
expectation
reasonable
overcharges
person
who
claimant
(2) the defendant’s knowl
advantage,
*15
Adopting a
at
Id.,
A.2d
146
settles.
(3)
defendant’s
expectancy,
edge of that
encouraging fair settle-
attuned to
view
with that
wrongful, intentional interference
a
ruled that
ments,
in Breen
the court
(4)
of interfer
in the absence
expectancy,
non-settling tortfeasors
could sue
plaintiff
ence,
probability that
the reasonable
Id.,
obtained.
full satisfaction
until
anticipat
received the
plaintiff would have
The rationale of
672-73.
A.2d at
146
(5)
benefit,
damages re
ed economic
pursue all
“to
plaintiff
a
entitles
Breen
interference.
sulting
the defendant’s
from
to him
independently liable
are
those who
Sharp
v.
Elec.
Printing Mart-Morristown
is
full satisfaction
until one
for his harm
31,
(N.J.
739, 563 A.2d
37
Corp., 116 N.J.
Turner, 159
v.
McFadden
obtained.”
(2d)
1989);
of Torts
Restatement
see
244,
(1978).
360,
246
A.2d
N.J.Super.
388
766B.
§
received full
that TINS
is no claim
There
however,
suggest,
Armstrong does
release with Stern.
from the
satisfaction
a
competitive
business context
a
against
threatened suit
Whereas
of tortious inter
plaintiff asserting a claim
deposit
$4,000 (the half of Stern’s
Stern
heightened
evidentia
must meet
ference
deferred) and Stern threat
had been
required
proof
$4,000
ry requirement akin to
for the
it had
ened to counterclaim
$4,000
claim.
Matsushita
for an antitrust
See
much more than
sought
paid, TINS
Corp.,
damages for
v. Zenith Radio
consequential
Elec. Indus. Co.
as
profits
in lost
1348,
574, 587-88,
al
1356-
as an
106 S.Ct.
of its business
475 U.S.
the destruction
Armstrong’s
(1986);
interference.
57,
Edward J. Swee
party. The plies or are or services which sold of- applied when it the Connecticut court erred purchaser-investor sale for fered matter, defeat, legal TINS’ as a Act to purpose enabling pur- benefit expectation economic reasonable business, chaser-investor start letter of intent.11 in the Stern-TINS represents in which the seller ... [C] only raises two discrete appeal TINS guarantees, condi- seller either application respect to the arguments with tionally unconditionally, pur- or that the therefore, Act; we will consider will derive chaser-investor income issues. those two opportunity the business which exceeds price paid opportuni- for the business Opportu- 1. The Connecticut Business payment by ty; ... or [D] nity Investment Act purchaser-investor a fee sum of or Act, effective in The Connecticut money pursuant which to the terms of misrepresentations to prevent was enacted the contract exceeds one hundred dollars oppor- in business practices and fraudulent seller, provide will seller Woolf, tunity sales. Brian J. investment program marketing program sales Opportunity In- Business Connecticut purchaser-investor which will enable the Regula- Act: An Its vestment Overview of op- to derive income from business tory Requirements and Its Interface paid portunity price exceeds the which Rule En- Trade Commission’s Federal “Busi- opportunity, business ... Requirements Pro- “Disclosure titled opportunity” ness does include the Franchising Concerning hibitions on-going sale of an business where the *17 Ventures”, 54 Opportunity Business owner of that business sells and intends (hereinafter (1980) Bar J. 415 “Over- Conn. opportuni- sell that to one business statute, view”). enacting In the the Con- ty; profit nor the does it include not for sought legislature regulate necticut equipment, of sale sales demonstration may ped- opportunities” that “business supplies, price materials or for a total “high pressure salesmen who flash by dled any five hundred dollars or less to one gone and are in out of motel rooms person. he’s investor knows before an been 36-504(6) (emphasis add- Conn.Gen.Stat. § fleeced,” (quoting at id. Continen- ed). (June No. 10 1 and 2 tal Rev. Franchises register A fails 1979)),by seller who under the requiring “sellers” “busi- selling op- regis- prohibited Act is from business opportunities” ness Connecticut Banking portunities ter the Connecticut Commis- within Connecticut.12 appeal person sale plaintiffs also assert on that the No offer for shall connection with the or The opportunity: (1) resolving of a the issue the sale business district court erred opportunity sell or offer for sale a business application of the Connecticut Act because of this state or from this state unless it has first involving Armstrong’s the error doctrine invited registered been with the Commissioner and proposed We find be- instructions. that by in ac- declared effective cordance the Commissioner consistently Armstrong had contended cause 36-505; (2) provisions the of § any Act Connecticut barred claim for opportunity represent that the business will interference, legal issue was consis- tortious provide earning potential any or income tently preserved. Thus decline to address data kind unless the seller has documented error in this instance. In the invited doctrine earnings of income or substantiate the claims case, any Act is because the Connecticut issue pro- potential and discloses this data to the trial, likely during a new we will ad- to arise spective purchaser-investor at the time such dress it now. made; (5) any representations make are ... advertising pro- specifically provides representation or Act that: claim The protec- holding voidable contracts under the Act in prospective Act also affords relief for retrospective avenues of TINS-Stern letter of intent consti- tion opportu- against of a a contract void as public business tuted purchaser-investor prior time example, specified policy at a enshrined in the Act. nity. For Connecticut opportunity, the acknowledged sale of a business The district court to the specific information gives purchaser op- must disclose Act an seller Connecticut financial including a purchaser-investor tion to void the contract with a seller who 36-506. Conn.Gen.Stat. statement. comply require- failed to with the Act’s § seller requires Act Fineman, addition the F.Supp. ments. at 241. Ac- representations potential any court, document cording to the district “the Connecti- Woolf, Overview, supra, at 427. profits. specifically Act treats a cut contract voided of relief afforded an Retrospective avenues option buyer as a void con- civ- purchaser-investor include both injured by eliminating all claims there- tract based remedies. Id. at 429-30. il and criminal that, lacking Id. Thus it ruled an on.” purchaser-investor Specifically, injured expectation economic as a mat- enforceable damages including recovery of may sue for law, prove requisite ter of TINS did not may bring an action attorneys’ fees or expectation reasonable of business advan- or trust account which against bond tage because Stern voided the letter of registration for certain prerequisite for intent. 36-517(a), (b), sellers. Conn.Gen.Stat. § law, Jersey apply New which we (d). interference, clearly pro- claim tortious the Act If the seller has violated may vides that voidable contracts still af- disclose, perform, byor mak- failing to ford a basis for a tort action when the expressly ing misrepresentations, the Act perfor- defendant interferes with their purchaser-investor’s makes voidable at the Perl, mance. Harris v. N.J. any entered into a seller: option contract (1964). rule, A.2d Given this opportunity seller ... fails If a business against TINS’ tortious interference claim in the man- give proper disclosures simply Armstrong is not defeated because required by 36-506 ... then within ner § the letter of Stern withdrew voided contract, upon date of the year one clearly intent. The facts of this case dem- opportu- written notice to such business rule; onstrate the wisdom of this otherwise seller, may nity purchaser-investor party easily a third could insulate itself and shall be entitled to void the contract liability for its tortious acts. opportunity from such receive business implicitly The Connecticut Act distin- op- paid seller all sums to such business *18 guishes between voidable and void con- portunity seller. It eliminates all claims tracts. sell- 36-517(a) (emphasis add- Conn.Gen.Stat. § er, rather than “all claims” as the district ed). court inferred: 2. The Distinction Void-Voidable in person engaged No who has made or performance any contract in viola- that the
TINS contends
Connecticut
any
chapter or
voidable,
provision
tion of
of this
operates only to make
at the
Act
any regulation
issued
adopted
or order
or
option, a contract
in
purchaser-investor’s
chapter,
acquired
under this
or
has
requirements.
who
violation of the Act’s
TINS
right
improperly
any purported
under such contract
argues that
the district court
knowledge
facts
reason of
negated the distinction between void and
with
material,
necessary
made,
any
presen-
oral sales
state a material fact
in order to
motional
or
tation,
light
solicitation or discussion between the
make the statements
made,
purchaser-investor,
they
prospective
circumstances under which
are
seller and a
act,
(C)
misleading,
engage
any
with the
not
or
which is inconsistent
information
(6)
operates
chapter;
practice
required
or course of business which
to be disclosed
this
device,
(A)
directly
indirectly
any
operate
employ
would
as a fraud or deceit
or
or
any person.
defraud, (B)
any
or artifice to
make
scheme
§
statement of material fact or omit to
Conn.Gen.Stat.
36-510.
untrue
reasonably expected
prove
economic
making
performance
or
its
which
benefit.13
violation,
any cause of action
may base
contract.
on the
Sufficiency of the Evidence of Tortious
E.
36-517(h). While this
Conn.Gen.Stat. §
Interference
precluded TINS from
might have
provision
granted judgment
The district court
Stern,
against
of intent
letter
enforcing the
notwithstanding the
on TINS’ tor
verdict
precluded Stern from
it would
have
claim, reasoning
interference
that the
tious
against
of intent
enforcing the letter
wrong
evidence of
record lacked sufficient
this
Supporting
con-
so wished.
had Stern
by Armstrong
causation.
ful conduct
is section
Act
of the Connecticut
struction
plaintiffs’
less than
evidence is
While
517(i),
provision
declar-
is
sole
which
36—
V.B.,
see
overwhelming,
Part
we
infra
ing a
void:
contract
plaintiffs
produced
find that
have
do
condition,
provision
stipulation or
Any
quantum
minimum
neces
evidence
acquiring any
any
busi-
binding
person
judgment
sary
withstand motion for
compliance
to waive
opportunity
ness
n.o.v.
chapter
any
any provision of this
apply
plenary scope of
We
adopted or issued
regulation or order
doing,
judgment
to a
n.o.v.
In so
review
chapter
void.
under this
is
especially
keep
vigilant
must
fore
we
not void
incipient
If
contract was
but
question
whether
there is suffi
most
option,
then
merely
at Stern’s
voidable
ver
cient evidence of record
sustain the
impossible,
a matter
would not be
Acosta,
jury.
717 F.2d at
dict of the
841-
law,
could have reason-
prove
that TINS
Reviewing
light
the record
most
carry out the con-
ably expected
Stern
non-moving party,
judg
favorable
Although there was evidence
tract.
may not stand “unless the rec
ment n.o.v.
to cancel
independent
reasons
had
Stern
‘critically
is
deficient of that minimum
ord
agreement,
presented
evidence
jury
quantum of evidence from which the
”
disbelieve those
jury
from which
could
Link v.
might reasonably afford relief.’
conclude instead that Stern’s
reasons and
Am., Inc.,
N.
Mercedes-Benz of
788 F.2d
program resulted
of the TINS
cancellation
Cir.1986)
(3d
(citations omitted);
power
pressure. Stern’s
see also Kinnel v. Mid-Atlantic Mausole
liability
legal
contract without
to avoid the
ums, Inc.,
(3d Cir.1988).
850 F.2d
ex-
to TINS’ economic
would be irrelevant
passing judgment
refrain from
We must
if,
might have
con-
pectations
as the
issues;
credibility
our task
to examine
cluded,
independent inten-
any
lacked
Stern
dispassionately
any
the record
evidence
agreement
backing
of its
tion of
out
jury may
from which the
have rendered
TINS.
verdict.
scope
Act
It is
nothing
Connecticut
would
axiomatic
review
As
requires
precluded
enforcing the
draw all reasonable infer-
Stern from
TINS,
non-moving party,
and TINS
ences in favor of the
against
letter
intent
evidence,
plaintiffs.
plaintiffs
if
proffered
be- here the
Because the
has
sufficient
*19
case,
Stern voided the
offer little direct evidence
this
we
by
jury,
lieved
Armstrong’s
upon
tor-
of
are called
evaluate the reasonable-
contract as
result
interference,
may
may
ness of inferences that
be drawn from
Act
tious
Connecticut
Adding
the element of
circumstantial evidence.
to this al-
applied
to defeat
not
task,
ready complex
plaintiffs
expectation of business
seek
TINS’ reasonable
strengthen
largely
Act
circumstantial
the Connecticut
their
advantage. Because
theory
a matter of law of
with a
includes Arm-
deprive
not
TINS as
case
did
strong’s
conspiracy
in a
with Arm-
expectations
gain,
economic
the dis-
counsel
all
of
strong
cover-up
alleged
holding
that TINS failed
and Stern
their
trict court erred
contention,
application
that the Act
of the Connecticut Act
address TINS’ second
13. Because
apply
recovery,
all.
preclude
we
not
does not
at
does
TINS’
need
undercapitalization.
result,
from
plaintiffs
seek not
As a
wrongdoing.14
Armstrong's
credibility of
discredit the
Armstrong’s
department
credit
in Lancas-
theory
defense’s
of
and the
witnesses
ter had listed Stern as a “risk” account
case,
actually to
their case
but
substantiate
1984,
through
from March
November of
credibility
Arm
decimating the
of
by
7519-57,
placed
J.A. at
had
a lien on
situation,
light
of this
strong’s counsel.
inventory
1983,
Stern’s
November of
obligation
our
to ascertain
we realize
7557; 7563-68,
requested
J.A. at
and
of
way
plaintiffs
step of the
whether
each
personal guarantee
Abrahamson a
on all
“affirmative” and
have offered sufficient
materials ordered from March of 1984 on-
judgment
evidence” to defeat
“concrete
undisputed
ward. J.A. at 7559. It is
Liberty Lobby,
n.o.v.
Anderson v.
See
give
personal
Abrahamson did not
this
242, 256,
2505,
Inc., 477
106 S.Ct.
U.S.
guarantee until
sometime
2514,
(1986).
91 L.Ed.2d
“[Discredited
Against
24, 1984,
testimony
backdrop, May
not considered a sufficient ba
this
on
contrary conclusion.”
drawing
sis for
approached
Fineman
Abrahamson to dis-
Corp.
Unit
Bose
v. Consumers Union
magazine
suggested
tribute the TINS
of
485, 512,
States, Inc.,
466 U.S.
S.Ct.
ed
significant
that Stern could make
additional
(1984);
host of until Wolfe reasons F. Fineman’s Individual Tort Claim winning approximately him over. After hours, meeting two ended Wolfe We must next whether address claim Jersey. may Fineman maintain individual and Donofrio returned New *23 theory “Prospective economic relation” is broad- interference under for tortious alleged of ly destruction New Jersey defined under law: that beyond repair Fineman’s damaged expression, prospective The contractual industry con- covering floor reputation as a relation, is not used in in a this Section judg- granted court The district sultant. strict, technical neces- sense. It is not claim, first, reasoning on this ment n.o.v. sary prospective that the ex- relation be derivatively from the same that it suffered formal, pected binding to reduced to a tor- insufficiency of the evidence as TINS’ may prospective contract. It include alternatively, claim and interference tious quasi-contractual restitutionary or other prove had failed “either that Fineman to conferring rights voluntary or even inference, permissible directly or recognition of commercial benefits of a injure to Armstrong specifically intended obligation. moral capacity when it Fineman in his individual allegedly interfered the Stern/TINS Fineman, F.Supp. at relationship.” 774 pros- Included are interferences with the obtaining employ- of pect employment or Assuming purposes for of this discussion ees, opportunity selling buying claims, produced, has as he Fineman services, any or chattels or oth- land upon to find that sufficient evidence which leading potentially profit- relations er to specifically to drive intended contracts. able business, consulting of the see Fineman out Mart, (quoting Printing A.2d at 39 (Second) of com- Restatement Torts § 766B, (Second) Restatement Torts § a (requiring specific injure intent to pment c). Arguably, pro- comment the relevant Mari, third-party plaintiff); Printing spective economic relation would be Stern’s (noting similarity substantial A.2d at However, of intent with Fine- letter TINS. Restatement’s and New Jer- between the claim man’s rests losses individual tort), sey’s conclude formulation we Be- consulting sustained his business. law that Fineman has failed as a matter of premised upon cause his individual claim is prove additional element of tortious consulting, equally to future it is injury prospective a contractual interference with appropriate require prove Fineman relation, sufficiently concrete namely, consulting prospects for con- sufficient prospective contractual relation. Arm- tracts after the summer of 1984when Mart, a in which the Printing case voiding strong allegedly coerced Stern into Supreme carefully delin Jersey Court New its letter of intent TINS. of a interfer eated the elements tortious critically with re- The record deficient claim, plaintiff clear makes that a ence spect consulting pros- to Fineman’s future eco injury prospective establish must pects. replete Although record was tor nomic relation from the defendant’s reputation with evidence of Fineman’s fine at 38-39.17 tious interference. A.2d consultant, industry devoid of as an accounting for be Even the distinction any objective evidence that Fineman had Printing case and tween that this—in plans consulting work. concrete future
Mart,
plaintiffs
parties to the
were
consulting
solely
Fineman’s
was conducted
(i.e.,
position
than
contract
TINS’
rather
aegis
organization
under the
CFIPS
Fineman’s)
party
conclude that a third
—we
find
on this record we are unable to
contract must also establish with
consulting pros-
certainty
evidence of CFIPS’s future
prospective
econom
reasonable
pects.
shortly after
CFIPS disbanded
ic relation in order
state a claim
life,
part
depar-
Jersey
interference under New
TINS came
due
tortious
consultants,
has
Ron
primary
This Fineman
failed to do.
ture of one of its
law.
Jersey
Assuming
deciding
parties
suggested,
without
New
have not
nor have
find,
claim,
any
Jersey
permit
determine
New
cases address-
such a
we must
been able to
would
brought by
supports
ing
record
individ-
a claim for tortious interference
whether this
Fineman’s
plaintiff
party
who was not
to the contract.
ual claim.
liability. Berg
Mo-
v. Reaction
finding
this liti-
Friedman,
was unrelated' to
which
Div.,
(1962).
tors
rest of the
fact
37 N.J.
A.2d
gation, and
Fineman,
including
staff,
Ferrar
articulated that
the com-
There
court
CFIPS
Arena,
their attention to
redirected
justify
not
mission
a tort will
alone
By
J.A. at 8814-15.
exclusively.
regardless
imposition
punitive damages
admission,
did
CFIPS
own
Fineman’s
grounded
whether the tort be
on strict
after
J.A. at
clients
acquire any new
*24
As
Id.
liability or
181
at 496.
fault.
A.2d
consulting
2614,
services to
nor did it sell
Berg,
a nui-
explained
which involved
2993. Fine-
in 1984. J.A. at
any clients
sance:
TINS’ eventual success
hope
man’s
than
commis-
Something more
the mere
later business for CFIPS
up
would drum
always required for
sion of a tort
is
given
lapse
the
of
speculation
amounts
cir-
punitive damages.
must be
There
consulting
in 1984.
business
the CFIPS
outrage,
aggravation or
cumstances of
demon-
has failed to
Fineman
Because
‘malice,’
fraudulent
spite
such
or a
prospect of
con-
a
future
strate
reasonable
part
the
the defen-
or evil motive on
of
covering
the
indus-
sulting
floor
business
dant, or such a conscious and deliberate
inter-
claim for tortious
try, his individual
disregard
the interests of others that
of
a matter of
contract fails as
ference with
may
or wan-
his conduct
be called wilful
law.
element,
negli-
Lacking
ton.
this
mere
gence,
‘gross,’
generally held
however
is
Damages
Punitive
G.
enough.
not to be
finally to
whether the
We turn
address
Prosser,
(citing
Torts,
(2d
Id.
9-10
ed.
granted judgment
properly
district court
1955)).
“may
prerequisite
The
misconduct
jury’s
punitive dam-
n.o.v. on the
award of
has
upon
showing
satisfied
a
that there
affirming
are
ages. We note that since we
act or
been a deliberate
omission
judgment n.o.v. on Fineman’s individu-
knowledge
high degree
probability
of a
of
claim,
judg-
al
interference
tortious
conse-
of harm and reckless indifference to
punitive damages follows
n.o.v. on his
ment
Id.
quences.”
Nonetheless,
TINS,
respect
suit.
retrial,
may
so we will
issue
arise
this
attending
assessing punitives
When
parties
The
specifically
merits.
address its
intentional,
tort,
negligent
than a
rather
Armstrong’s conduct rises
dispute whether
Jersey Supreme
has
the New
Court
termed
subject
puni-
that level of misconduct
mal-
prerequisite
misconduct as “actual
Although
jury
awarded
damages.
tive
ice,”
“nothing
or less than
defined as
more
punitive damages
amount
$200
wrongdoing
intentional
evil-minded
—an
million,
court
as a matter
the district
found
Goodman,
v.
Belinski
139
act....”
“critically
the record is
devoid
of law that
351,
92,
(1976) (cita-
N.J.Super.
A.2d
354
94
as to the
quantum
of that
evidence
Belinski,
omitted).
tion
which involved
wrongfulness
alleged
of the
conduct under
a bro-
a claim tortious interference with
legal
governing
such
standard
kerage agreement,
the court concluded that
Fineman,
F.Supp.
774
awards.”
demonstrating
defendant’s
evidence
moral
to com-
“low
fibre”
motivation
law, punitive
Jersey
New
Under
mit the
were
to the defen-
tort
relevant
punish
damages “can be awarded to
[a
Id. degree
dant’s
of actual malice.
aggravated misconduct” and
defendants
Pessel,
95;
Di
see also Giovanni v.
A.2d
misconduct in the future.
to deter similar
(the
(1970)
N.J.
260 A.2d
Anschelewitz, Barr, Ansell
Nappe
&
v.
sign
failure
a certifi-
Bonello,
defendant-doctor’s
N.J.
A.2d
notary
omitted).
cate for
re-
(citations
confinement before
Jersey
The New
(1984)
sulting
imprisonment
plain-
puni
false
Supreme
has made clear that
Court
lacked
actual
may only
prerequisite
tiff
damages
be awarded where
tive
equal
malice but
even to
underlying tort liabil
failed
wanton and
wrongful
conduct
disregard).
for
minimum threshold
reckless
ity exceeds the
precarious
po-
of Stern’s
financial
parties
upon whether
because
focus
wrongful in
especially present
Actual malice
sition.
the evidence
agreement
the TINS-Stern
history
dispute;
terference with
this
here becau'se
prove
prerequisite
despite
alone suffices
could
found that
punitive damages. TINS
for
misconduct
agreement, Armstrong flagrant-
settlement
necessary
legal
malice
contends
ly disregarded
continuing obligations
its
liability satisfies the actual
proof
agreement
under the settlement
and delib-
punitive damages;
prerequisite
malice
erately
plan
any
reactivated
to clear out
understandably, Armstrong differentiates
competition for its future video network
We
discern
the two.
cannot
between
plans. Giving
every
TINS the benefit of
Jersey law on
clear rule under New
inference,
possible
jury could find
Indeed,
appears
an unan
point.
to be
the record demonstrates that
A.2d at
question.
Nappe, 477
swered
See
sufficient actual malice to award
harbored
*25
J.,
(“The
(O’Hern,
concurring)
1237 n. 3
punitive damages. Thus we hold that the
fitting
al
especially
‘it is
to
majority says
in granting judgment
court erred
district
as
damage
for actions
punitive
low
[sic]
punitive damage
n.o.v. on TINS’
award.
fraud,
mere
legal
intent rather than
since
”mind’
requisite
state of
negligence is
2
IV. Sherman Act Section
(citation omitted) ... “whether the thresh
damages
punitive
should be identi
old for
of a Leveraging
A. Elements
Claim
damages is
compensatory
cal to that
2
of the Sherman Act makes
Section
question
type
we should
exactly
“[ejvery person
monopo-
unlawful for
[to]
to
and not leave
the discretion
resolve
lize,
attempt monopolize
any part
or
to
...
juries”).
among
of the trade or commerce
the sever-
Nevertheless,
theory
if TINS’
is believed
(West Supp.
al
States ...”
U.S.C.A. §
that TINS
jury,
then we conclude
1992).
presents
monopoly
This case
both
charge
puni-
to a
on
would
entitled
attempted monopoly claims under sec-
and
upon
Giving TINS
damages
tive
retrial.
upon
are called
to evaluate
tion We
inference,
every possible
the full benefit of
granted
properly
whether the district court
finding
a
of actual
supports
the record
n.o.v. for
judgment
TINS’
legal
malice neces-
malice in excess of
Act section 2
that Arm-
Sherman
claims
sary
Because we
for tortious interference.
strong employed monopoly power
not,
record,
reach
need
this factual
“perpetuare]
product market
to
resilient
question
by the New
legal
unanswered
purpose
and
monopoly
said
for the
Court,
Supreme
pre-
decline to
Jersey
monopolize
to
attempting
the effect
Jersey would rule that
dict whether New
magazine]
video
the relevant
[resilient
law,
wrongful
and inten-
as matter
markets_”
¶¶ 31,
Compl. at
necessary
tortious inter-
tional conduct
would,
law, entitle a
ference
as a matter of
monopoly
section
prove
To
claim under
plaintiff
punitive damages.
to
2,
“(1)
possession
show:
TINS must
monopoly power in the
market and
relevant
light
most favorable
Taken
(2)
acquisition
the willful
maintenance
or
TINS,
suggests
ac-
the evidence
sufficient
distinguished
growth
power
tual malice or “an evil-mindedact.” Aware
development
consequence
supe-
as a
of a
precarious
position from
of TINS’
financial
acumen,
product,
rior
business
or historical
during
1983 set-
Fineman’s disclosure
accident.” United
v. Grinnell
States
Armstrong recog-
negotiations,
tlement
570-71,
U.S.
86 S.Ct.
Corp., 384
re-
opportunity
disrupt
TINS’
nized its
(1966).
Subsequently, selling maga- Step,” techniques “The Next a dis- whereas the strong announced network, provided comprehensive survey of communication zine video tributor 1) covering industry floor with informa- purpose: to increase the with a threefold prod- training competitive for both tion programs about divers effectiveness retailers; 2) improve ucts.20 distributors trial, Armstrong theory finding, have 20. At advanced the In so combed substan-
19. selling transcript sup- its video did not differ from trial and concluded that network tial provided jury’s respect. forms. TINS ports in this Thus we aids in different media verdict videotapes produced from which the to view actual evidence have not needed sufficient may reasonably jury supplied parties. concluded have and video disks
201
testified, however,
Fineman
that video nant share of the relevant market.” Unit
magazines targeted at
covering
floor
retail-
ed States v. E.I. du Pont de Nemours &
Co.,
magazines pro-
377,
ers differed from video
391,
351
994,
U.S.
1005,
76 S.Ct.
duced for other audiences.
at
(1956);
J.A.
1962.
Central to leveraging theory TINS’ prove will not monopoly existence of predicate is the Armstrong’s monop fact of power. Hotel, See Domed Stadium Inc. v. oly power in the resilient Monopo Inns, Inc., 480, (5th market. Holiday 732 F.2d 489 ly power Cir.1984) has been power defined as “the (referring Judge Learned prices competition control or exclude and enough, Hand’s formulation that is 90% may ordinarily predomi- suffice, be inferred from a likely is not is 60% 33% reasonably words); (A1 Wahnon, interchangea- video medium was not publisher 2917 of Floor See, print. e.g., (Fineman News, ble with Covering explained print magazines J.A. at 1633 picture testified breaking" that a is magazines). worth a thousand were “faster than video 202 competition” power) exclude in the resilient mar- monopoly to constitute
insufficient
ket,
omitted).
larger
include:
(citation
significantly
A
percent
been
has
than 55
firms,
market share
strength
competing
of
the size and
'prima
mo-
demonstrate
required to
entry
field, pricing
of
into the
freedom
facie
Tobacco, 328
American
See
power.
nopoly
practices
industry,
trends and
abili-
(“over
797,
at 1133
two-
66 S.Ct.
at
U.S.
comparable
ty of consumers to substitute
ciga-
of
entire domestic field
of the
thirds
the mar-
goods
services
outside
o[r]
rettes,
the field of
... over
of
80%
ket,
A
and consumer demand factors.
“a
cigarettes” constituted
sub-
comparable
or
power
either
itself
aid-
defendant’s
Grinnell, 384 U.S. at
monopoly”);
stantial
must
ed
these other
factors
International
(87%);
571,
at 1704
86 S.Ct.
entry,
price.
enough
supply,
to restrict
or
States, 358 U.S.
United
Boxing Club v.
Sullivan,
the Law
See L.
Handbook of
of
(1959)
245,
L.Ed.2d 270
242, 79
3
S.Ct.
see also Do-
(1977);
Antitrust §§
22-32
Kodak
v.
Eastman
Co.
also
(81%);
see
Ralston,
supra note
at 767.
lan &
— Inc.,
Services,
U.S.
Technical
Image
Weiss,
n.
An evalua-
reported that J.A. at 7446. Assuming arguendo that record
“[producers United States and might support an inference of monopoly rely primarily single-supplier Canada power in the resilient market we find that (captive suppliers) distributors to sell the not, however, TINS has proven a section 2 major portion production. of their Even leverage because, claim, as we discuss be- patent protection, without this distribu- low, (1) there is no evidence of a use of systems quick pen- tion renders [sic] monopoly power in the (2) video market and impossible etration of the market without showing attempt an gain competi- purchasing existing an distribution net- advantage tive in the video market is insuf- work. ficient as a matter of law. Although J.A. Swedish and West German firms overcome this barrier Leveraging B. market, op- to enter the United States leveraging TINS’ claim cannot survive competing tions for in the United States prove its failure to that Armstrong was buying are limited to an established distri- power able to convert in the resilient mar- network, developing bution new distri- ket into either a monopoly dangerous or a network, selling or to bution retail out- probability of monopoly in the video mar- directly price lets at a discounted for the Moreover, ket. we hold as a matter of law do-it-yourself Buying market. established may that TINS not advance a leveraging is difficult networks because few are avail- premised claim under section Arm- able; building one is “a strong’s having slower method that attained a mere competi- advantage tive does not allow an the relevant challenge immediate video mar- ket. producers U.S. across the breadth of the
market,” 745, directing J.A. at sales to the 1. Monopoly Power in The Video Mar-
do-it-yourself market offers limited market ket penetration because of this group’s small preference vinyl tile,
size and rather starting point, recognize As our vinyl sheeting typically than that is need proven requi- sold to have power site assertion of in the video 12 foot rolls. market Id. through from 1984 the time of the trial. costs, Transportation primary non- agree We with the district court that to factor, production cost constitute another period restrict the time to 1984 would arbi- entry by foreign formidable barrier trarily liability insulate from antitrust firms, “resulting in an almost universal defendant may prospective- who have acted advantage producer.” to the closest ... ly to competitor may eliminate a and who adds, however, 7446. The USITC plans have harbored future to overtake a primarily that these costs serve to reduce product relevant market. Thus we have foreign competitors and that combed the trial extensive record search any evidence that has at time [transportation pose approxi- costs monopoly, since 1984 achieved either a mately equal disadvantage for U.S. one, dangerous probability of in the video producers Canadian in most of North market. Also, transportation America. costs is competition less a factor between im- Moreover, accept we also the im ports from Asia and the prod- domestic plicit finding that both TINS’ coast, uct on the west because the ocean targeted videos were freight imports costs for the roughly covering floor retailers. Because retailers equal transportation the inland carry product typically costs various lines and do
204 tenable, entry; legally er to even if Fine- competing distribu- several
business retailer any characterize the in tors, expertise cannot man conceded he lacked one extrapolating from data con- sporting factually goods industry, market thus reject the district We cerning distributors. 1800-01; defeating this contention. J.A. at Armstrong that because conclusion court’s (reserving rights contract see J.A. 8408 percent of 15.5 all constituted distributors equip- to obtain discounted video RCA covering or at most 34 distributors floor sporting goods, in the ment for ventures top covering 50 floor distrib- percent of liquor, apparel beauty aides indus- law, failed, as matter of utors, a then TINS tries).22 The evidence falls short of demon- enough market share large prove a Armstrong any strating that has time Rather, the evidence market. the video power, a captured monopoly since 1984 percent 15 to 34 share suggests that a it, in dangerous probability of the video larger reached a could have distributors market. retailers, given especially evi- portion typically Armstrong distributors dence that than other resil- larger forces
deploy
Competitive Advantage
sales
Vid-
manufacturers.
ient
Market
eo
speculated,
are
Having thus far
we
alternatively posits
a
TINS
that
pre
support to discern
record
left without
leveraging
may
proved
case
monopoly
Armstrong
pen
extensively
has
cisely how
by showing only “competitive advantage”
for retailers.
market
etrated the video
Thus, assuming
secondary
in the
market.
Armstrong
merely
tar
explains
proven
it has
that Arm
arguendo that
replacement
no
and that
geted all retailers
strong
monopoly power over resil
flexed
emerged.
TINS has
magazine for
video
ient,
prevail
suggests
may
many
to show how
is no evidence
There
2
upon
section claim even
absence
actually
brought
has
retailers
Armstrong acquired anything
proof
,,
network, or, alternatively,
its video
into
advantage”
“competitive
than
more
Armstrong prod
sell
many retailers
how
this theo
the video market. TINS derives
prospects to
be viable
ucts and thus would
Photo,
v.
ry
Berkey
from
Inc.
Eastman
join Armstrong’s video network.
263,
(2d Cir.1979),
Co., 603 F.2d
Kodak
Moreover,
if
remains
even
denied,
1061,
cert.
U.S.
video mar-
only supplier in the relevant
(1980),in which the court of
attempted monopoly resulting (1948). from unilat L.Ed. 1236 Griffith, Court broadly eral action. As these distinctions make monop- stated that “... the use of contract, Danny Kresky monopoly proclaims “[e]very involved the use of 24. Section 1 leveraging city competitor ..., in one to exclude a conspiracy, combination or in restraint of promoting concerts in another. Smith- illegal.” trade ... is ... Section 2 declares as monopoly leveraging Kline involved over sales illegal “[e]very person monopolize, who shall or prices cephalosporin of antibiotics to set drug in the attempt monopolize, conspire or combine or cephalosporin drugs market for at a level any person persons, monopo- other competitors leveraged at which market (West Supp.1992). lize. §§ ..15 U.S.C.A. compete. plaintiffs could not proven Because the had traditionally proscribed by conduct Act, implicated Sherman neither case the issue with which are faced. *33 206 — denied, -, Cir.1991), 112 lawfully acquired, cert. U.S. to however
oly power,
(1992). In re
gain competitive
a
.in case, bility telling decide this who’s will the verdict was influ- ably probable’ that the truth. prejudicial statements." Id. by the enced you telling If believe [defense counsel’s] *35 compelled by was at 97. This conclusion truth, plaintiff’s the don’t the then [sic] a rather than a argument as whole penny. a deserve type impropriety. of Id. single instance or telling you If we’re the truth believe caselaw, the district to our In addition justi- then I show that the evidence will Jersey Rule of Profes- applied New court fies an award ... 3.4(e) prescribes which sional Conduct you going to How are determine who’s and Party Counsel” Opposing “Fairness to Well, telling the truth? to me it seems conduct: certain prohibiting lawyers to you that have start with trial, (e) not: allude lawyer A shall ... it, because let’s counsel] [defense face lawyer any that the does not to matter couple very made a direct statements or will reasonably relevant believe is yesterday. judge You have to whether evidence, supported by admissible not be being you to or whether he was truthful knowledge of facts personal assert he wasn’t. testifying a wit- except when as issue Now, up, I night going last counted ness, personal opinion as to the state a or through his wanted statements that he cause, credibility of justness believe, you misrepresenta- to over litigant witness, culpability of a civil I up tions them backed innocence of accused guilt or the or fact. 3.4(e); Conduct Rule of Professional added). (emphasis He demonstrated, J.A. at 6987-88 ex- will be D.N.J.R. 6. As pounded upon “misrepre- record, guess the of his cannot second first point plaintiffs’ tri- sentations” at which defense coun- judgment that district court’s representations” Armstrong "misrepresentations” consisted of Arm- attributed to 27. These strong’s disputed plaintiffs merely facts. A material version "facts” consisted attributed jury listed "[De- aid shown demonstrative disputed two issues. versions factual A Significant Misrepresentations fense Counsel’s] excerpt brief demonstrates: J.A. at 1296-1303. These "mis- In Summation.” TION FACTS MISREPRESENTA continuing By day Friday that there was 12. end the sales staff 12. Donofrio said going quality fully in problem of the June issue in favor forward. with the eyes of the Stern’s sales staff. appoint- go scheduled out on Mon- 14. Sterns admits that no advance Sterns was 14. training. day ments were made. after sales Armstrong’s compete. 15. own documents show Parties do not 15. they competitor. as viewed TINS $8,000 single Armstrong Center sells for has never sold sub- 18. Floor Fashion $1,000 ongoing per year Armstrong's buy scription Video in and includes Network. Armstrong Video Network. competi- reveal that were not own documents 22. TINS prime be a considered TINS to tors. See, example, competitor. Csnrko effort”). ("competitive See memo 10/25/83 ("TINS Guzinsky conflicts memo 9/25/83 spot, things disappear.” district court cautioned objected and the Id. at 96. These sel lawyers repeated in the case are that “the assertions in combination with credibility of the witnesses. The law- improprieties other made it “reasonably opposed not an issue this case as yers is probable” that the verdict was influenced credibility of the witnesses.” J.A. prejudicial statements. Id. at 96-97. 6987-88. improprieties apparent ap- on the cold pellate in Draper sufficiently record were misrep- describing
In the course of egregious require reversal of the district alleg- resentations that the defense counsel made, court’s denial of a new trial even under plaintiffs’ trial our edly which served theme, outlining plaintiffs’ coun- deferential standard of counsel’s review. The dis- suggested that defense counsel either plaintiffs’ sel trict court’s assessment that trial forgot deliberately misrepresented counsel exceeded the propriety bounds of See, (“[Defense e.g., evidence. J.A. at 6993 Draper established in falls with its sound got straight face up here with counsel] exercise of discretion. you, hoping you he said that Furthermore, the district court found him”). believe Plaintiffs’ trial coun- would plaintiffs’ trial counsel improperly also *36 possible provided jury sel also with a provided personal opinion his just- as to the alleged motive for defense counsel’s mis- injected ness his cause and his own fees, representations legal million $1.1— credibility as an issue in the case:
J.A. at and hammered home this repeatedly: theme I have a today certain calmness about me you, that I because of is because trust Well, has earned his [defense counsel] you. I come dollars, it, you to know over really million I couldn’t do I almost three months I couldn’t. J.A. at 7024. and I think know type people you know, what are and I has earned his million [Defense counsel] think, I I hope, just don’t don’t but I give dollars. I it to him. He has earned you’re going right know that to do the it. He has earned his million dollars. thing. that he earn Let it not be said did not it.
J.A. at 7059. ‡ 5jS -Js poor counsel], I ... this [defense I you could show all the documents ... hope already gotten he’s his million dol- [o]r, myself, hopefully, by I said to now lars, hope already I the check has been you enough after three months trust me deposited. you something that if I tell that I’ve not J.A. at 7062. you yet, lied to that I’m not about to long It has been a rule of this court that thought And I I could shor- start now. vituperative opposing references to counsel up great hope deal ten it that In Draper, will not be tolerated. 580 F.2d me, you you will trust .'.. will trust me in a case at we so held that involved enough straight I will be plaintiff’s repeated counsel’s characteriza- you.... why that’s one of the reasons of defense counsel and defendants col- tion yesterday spent I a lot of time on the lectively “gang,” as “his” or “this” credibility people talking were who “ehargepng]” part defense counsel “as here, up myself and [defense counsel]. conspiracy,” implying the same 7085-87; J.A. at 7097. He and their counsel had withheld J.A. see also defendants “every get pledged time we a crucial his own truthfulness: documents: also plans”). testimony Roth
with future video See ("considered ‘overlap’ with TINS to Network”). Video Mannington Armstrong’s mar- 24. Contends market share is chart shows ket share as 49%. 25-30%. J.A. at 1296-1303. all, mean, Judge you plaintiffs assert that their trial coun- as the told
I
after
absolutely right,
regard
not
no
it’s
sel’s summation
this
was
Judge
law-
stronger
the truthfulness
than that warranted
the evi-
just so much
might
you, if I
yers, although I
remind
conspiracy
Armstrong’s
dence of
between
got up
I
here
fewa
may,
They
that when
suggest
witnesses and counsel.
ago,
you I would never lie Anastasio,
months
I told
F.2d
stands for
couldn’t
you.
proposition
counsel]
that a
trial is not warrant-
[Defense
new
single misrepresentation
point out a
questioning
ed on
basis of counsel’s
you over the three
I made to
credibility
In striking
of a witness.
con-
I
one.
didn’t make
months because
case, however,
holding
our
trast
tryI
not how
cases.
That’s
Anastasio rested
the fact that
improper
trial
statement
counsel’s
was
added).
(emphasis
And fur-
J.A. at
proper
isolated one in an
summa-
otherwise
ther:
fact,
tion. Id. at 706. This
combined
trial],
I
you
I
the onset of
said to
[at
the district court’s
curative instruction
you
I
lie
pledge that
not
will
make
that the statements of counsel are
prove everything on this
I will
[de-
evidence,
sufficient to ensure that
board.
monstrative aid]
Id.;
prejudicial impact
no
had occurred.
J.A. at
Salas,
(one
also
the case was
that
tend
the statement was made
7039; 7047;
at
telligence
jury,
of
the
summarizing
context
the evidence
7057,
7048;
opined
that
wit
referring
plaintiffs’
that
trial
counsel
jurors
mistaken the
must have
nesses
evidence,
to record
court found
the district
“just
the boat”. J.A. at 7050.28
people
off
elaborating that counsel had relied
without
recognize
“advocacy”
Although we
that
Fineman, 774
on facts outside the record.
passion,”
not “be
context
need
devoid
F.Supp.
Ay
As
made clear in
270.
we
that the district court did
we are satisfied
Spencer, argument injecting prejudi
v.
ruling
these
oub
not err
that
remarks
proper
evidence constitutes revers
dividing
line
line
from cial extraneous
crossed the
(3d Cir.),
error.
164
cert.
Draper,
See
580 F.2d ible
550 F.2d
improper conduct.
2952,
denied,
907,
432
S.Ct.
53
U.S.
97
him,
capsulizes
quote neatly
plaintiffs’
please,
trial
And
bless
in front of a
One
God
respects.
in these
After
judge
question.
summation
I
counsel's
federal
ask him that
put
recreating
question
witness
jury
got
the
He’s in front of
federal
and he’s
concerning
Draeger
whether Roth’s
Dennis
no,
say,
nerve to
it’s not inconsistent.
just
to Abrahamson
a bla-
"[weren’t]
comments
tant,
got a
of nerve.
God bless him. He’s
lot
blatant,
disregard
you
of what
were
blatant
eye?
you imagine
looking you in the
Can
he’s
do?’’,
argued,
supposed to
he
943,
(1977).29
(3d Cir.),
F.2d
948 n. 11
L.Ed.2d
cert.
denied,
854,
178,
469 U.S.
105 S.Ct.
(1984).
Roebuck,
L.Ed.2d 112
Weight of the Evidence
B.
we man
result,
just
dated
such a
acknowledging
ruling
respect to
court’s
With
permitted
that
the evidence
number
against
weight
the verdict was
supported
inferences which
plaintiff’s
evidence,
caution that the district
we
recognizing
cause of action but also
grant
a new trial on
ought
court
weight
of the evidence fell the other
miscarriage
justice
“a
this basis where
way.
regard
The comment made in
we
if the
were to stand.”
would result
verdict
equally applicable
here:
Corp.,
Rail
v. Consolidated
Williamson
acknowledge
must
We
also
the extraordi-
(3d
Cir.1991).
F.2d
This
nary number of inferences that
jury
power
limit
the district court’s
must have
drawn
order to reach the
grant a new trial seeks to ensure that a
that it
Although
verdict
did.
we believe
“judg
district court does not substitute its
each
the inferences that we have
credibility
ment of
facts and the
of the
individually logically
discussed
are
jury.”
for that of the
Lind v.
witnesses
sound,
recognize
point
that at some
(3d
Inc.,
Schenley
278 F.2d
Indus.
many
specu-
too
inferences become mere
(in
Cir.)
banc),
denied,
cert.
364 U.S.
lation;
plainly
very
this verdict
comes
(1960).
abuse its Armstrong in the relevant video market. new trial. case, plaintiffs’
At
close of the
Summary
orally granted
Verdict and
court
a directed
Directed
district
VI.
on TINS’ section
Judgment Order
verdict
claim, determining that “under no set of
will remand this case
Because we
based on this record could
circumstances
trial
a new
on TINS’
court for
district
reasonably
find that Stern shared
claim,
now address
interference
tortious
eliminating
purpose of
orders of the district
dispositive
two other
competition
magazine
from
in the video
section
verdict on TINS’
the directed
court:
ruling,
market.” J.A.
so
summary judgment
claim
rejected
proposition
district court
TINS’
claim.
of contract
breach
lia
co-conspirators
that section 1
are held
joint
ble for their
commitment to
unlaw
Act Section Claim
Sherman
A. TINS’
ful
purpose whether or
their motives
making
commitment
1 of the Sherman Act
are different.
Section
contract,
that the
court’s novel
We conclude
district
“[e]very
combination
prohibits
approach misplaced
is
as it renders section
...,
of trade or
conspiracy
or
restraint
private litigants
1 claims
unavailable
commerce ...”
U.S.C. §
[interstate]
suffering
injury
antitrust
as a result of
(1982).
judicial gloss
A
of reasonableness
in a
concerted action
vertical matrix. Such
1; to
action
cast over section
has been
recognize
a restrictive rule fails to
the dif
able,
trade must be unreason
a restraint of
objective
ference between motive
Corp. v.
Business Electronics
able. See
dramatically
would
alter
antitrust land
Corp., 485
Sharp
U.S.
Electronics
scape
unjustified
in manner
either
1518-19,
L.Ed.2d
precedent
policy
As we
considerations.
requires proof
A
1 claim thus
section
Sweeney,
set forth
Edward
637 F.2d
J.
concerted action and an
two elements:
partici
emphasis
Only
of trade.
unreasonable restraint
pant’s
“commitment
scheme
[the]
concerns us here.
first element
designed to achieve an unlawful
[which is]
variously formulated the meet-
We have
added) which is
purpose” (emphasis
crucial.
an antitrust con-
ing
requisite
minds
agreement
A rational factfinder could infer
spiracy.
knowledge
objective
with the
the directed verdict thus
propriety
objective
and action calculated
achieve
whether,
regard
turns on
[Arm-
objective despite differing
motives.
Stern],
circum-
"...
strong and
outset,
recognize
At the
is critical to
*39
as to warrant
trier
stances are such
[the
conspirators
judice are verti-
that the
sub
finding
[alleged]
that the
con-
of
in
fact]
aligned;
conspiracy
of
cally
their
consists
unity
purpose or a
spirators had a
of
by
upon
pressure brought
a manufacturer
design
understanding or
a
common
driving competi-
its
to aid in
a
distributor
in
minds
an unlawful ar-
meeting of
a typical
tor out of business.
vertical
rangement.”
context,
alleged competitor
an
to the manu-
v.Co. Kaiser Al
Metal Culvert
Columbia
perceived
facturer will not be
same
20,
Corp., 579 F.2d
33
& Chem.
uminum
light by
manufacturer’s downstream
denied,
876,
Cir.),
439
(3d
U.S.
Rather,
cert.
a
any interest
distributor.
(1978) (citations
L.Ed.2d 190
might
eliminating
S.Ct.
in
this
distributor
harbor
omitted).
have described
concerted
We
be
competitor from market would
deriv-
a section 1 claim as re
action element of
ative of its manufacturer. As demonstrat-
case,
pose
of a “conscious commitment
a
quiring proof
ed
this
did not
direct
Stern;
designed
scheme
competitive
a common
achieve
threat
Stern lacked
objective.”
any independent
Edward
Swee
motive to drive TINS
unlawful
J.
here al
market. Because Stern
ney,
Viewing the
against
suppliers
its
and one of its
non-moving
former
plaintiffs as
the
favorable
employees
conspiring
destroy
former
these factors were
that
find
parties, we
business, differs from the
before
case
in
Although the
in this case.
established
respects.
in a number of salient
us
broad,
“overlap”
Roth’s
statem
ference is
to dem
ent,31
been understood
could have
First,
role,
in obvious contrast to Stern’s
recognized a
that Abrahamson
onstrate
employee, Kennedy,
the role
the former
Armstrong’s and TINS’
conflict between
employ
leaving
limited to
was
Columbia’s
Armstrong’s
videotapes
recognized
and
open
competition
a
business
with Co-
Second, Armstrong
anticompetitive goal.
Although Kennedy
suppli-
lumbia.
and the
eliminating
from
TINS’
clearly benefitted
on several occasions to discuss Ken-
er met
Stern
video market and
competition
nedy’s
plans, Kennedy’s relationship
future
appeasing
supplier
from
benefitted
a
supplier
give
did not
rise to
with
Third,
dependent.
it
upon whom was so
Kennedy
reasonable inference that
was
Armstrong execu
that
given the evidence
strategy
of his
and
aware
co-defendant’s
financial
precarious
of TINS’
knew
tives
it.
knowingly
had
associated himself with
Arm
agreement between
position,
of evidence that
record
devoid
“[T]he
[was]
central
strong
Stern would have been
and
supplier’s]
Kennedy
privy
to [the
Thus we conclude
to the demise of TINS.
machinations ...
knew that
broader
[or]
factfinder could draw the
that a rational
supplier’s]
ac-
probable
effect
[the
Armstrong
to elimi
inference that
wanted
tions would be to eliminate Columbia.”
that
from the video market so
nate TINS
Culvert,
promises
exclusively_ Of
...
to deal
plenary.
ment is
course,
the vice of these vertical re-
straints,
one,
if there is
is not that the
Complaint,
plain-
At Count 3 of their
buyer,
example, agrees
coerced
tiffs averred that
conduct—
demands,
seller’s
that the seller has
but
“improperly pressur[ing]”
allegedly
Stern
power
market
and uses it to restrain
to withdraw from TINS—constituted
competition.
of the settlement reached between
breach
2 Kintner: Federal Antitrust
Id. Accord
Armstrong
early
In
TINS and
(unanimity
of action is
Law 9.18
41-43
§
granting summary judgment,
the district
co-conspirator’s partic
required and the
agreement
court ruled that the settlement
ipation
only promote
need
his own anticom-
any continuing duty Arm-
place
did “not
self-interest);
Loew’s,
petitive
Milgram v.
strong
representatives not to
to instruct its
(3d Cir.1951),
Inc., 192 F.2d
cert.
program
discuss the TINS
denied,
96 L.Ed.
U.S.
appeal,
wholesalers.” J.A. at 70.
this
(1952)(conspiracy is
three
based
plaintiffs
contend that
the district
1) knowledge that concerted ac
elements:
legally unsound and
court’s construction is
2)
contemplated;
tion in the scheme is
uni
agreement
useless
renders
settlement
3)
participation;
pursuance
form
TINS, “eliminating any
conceivable rea-
apparent
contradiction of the
scheme
might
sign
had
it.”33
son Fineman
competitive
participants).
interests of
interpret the
task must be to
Valley
Supply
Delaware
Marine
Our
See also
Co.,
agreement
language
Barent, Pa.Super.
the
rea-
must
one which indicates
most
glean
guidance
be
(1988).
further
We
parties
conduct of the
Pennsylvania:
sonable and natural
of
Court
Supreme
the
of the con-
based
the intended result
meaning
the
of
determine
order to
In
Id.,
With
posed
continuing obligation
adequate
stand because TINS received
triggering
strong only
response to a
paragraph
(providing
quid pro quo
request.
Armstrong
upon request).
letter
We
because,
plaintiffs’
persuasive
reject
ar
this contention
read as a
more
whole,
continuing
agreement provided
gument pertains
alleged
to an
the settlement
paragraph
Appellant’s
prophylactic
against prospec-
measures
obligation under
two
1)
the enunci-
Reply
Paragraph
Brief at 17.
of the
tive
interference:
Armstrong’s
headquar-
agreement provides:
ation
Lancaster
settlement
(para-
position
ters of a neutral
on TINS
in-
Armstrong represents that
has
4);
2)
posi-
graph
confirmation of
structed all of its floor division district
of a letter
upon request
tion
the form
pro-
managers not to discuss the TINS
measure,
3).
(paragraph
The first
insofar
and to
gram with
wholesalers
silence of
as it dictated the
any inquiries from wholesalers to
refer
expect-
managers, by its terms was
district
Lancaster,
management
senior sales
specific request.
operate
ed to
without
Armstrong has
Pennsylvania.
further
combination,
all
provisions
the two
cover
its floor division district man-
instructed
paragraph
the bases. We conclude that
representa-
field
agers to inform their
impose
did
agreement
the settlement
personnel of said instruction.
tives and
continuing obligation upon Armstrong.
language
susceptible
If
were
reason,
grant
we will vacate the
For this
interpretation
it im-
court’s
district
this claim
summary judgment and remand
obligation upon Arm-
posed
a one-time
question
of whether
for trial on
TINS,
according
spirit
strong,
obligation was breached.
re-
agreement
is undermined and TINS
ex-
inadequate consideration. For
ceived
Remedies
VII. Election of
construction,
ample, under this restrictive
this matter for a
Because we will remand
a subse-
Armstrong could have delivered
interference,
tortious
still
trial
TINS’
contradictory instruction and
new
quent
of con-
Act section 1 and breach
compliance
the Sherman
deemed in
have been
claims,
may again
presented
single
loss
future
district court
tract
*44
profits
jury. Simply
to the
TINS
of an election of dam-
because
the issue
confront
verdict,
wrap
the
the district was able to
that
loss into several
ages. Pursuant to
recovery does
legal
TINS on the
different
theories of
judgment for
court entered
$58,500,-
the
recoup
of
not entitle it to
twice. Thus
in the amount
antitrust claims
may
by
appropriately
court
award
000, trebling the
million awarded
district
$19.5
election, $217,700,000
compensatory damage figure,
single
which
at TINS’
jury,
the
or
upon
punitive
might,
represent
jury
retrial
damages,
and
the
compensatory
arising from
of contract
interest.
J.A. at 89.36 award
the breach
plus prejudgment
claim, compensatory
damages,
the
is
to recover
tort
or
that it
entitled
TINS claims
prior
damages.
damages
trebling.37
antitrust
of
Since we have
both sums
claim,
will also
we
reinstated
contract
principle applies
The
same
that count.
address
awards;
punitive damage
TINS
alternate
accurately
recovering
elect
either
court
noted must
between
under
The district
any punitive damages
its
law with
or un
had
antitrust
tort
premised
that TINS
both
upon
loss of
der its antitrust claim with its treble dam
damages
future
and its tort
recovery
presume
ages.
that
the breach of
TINS reasons that
profits; we
predicated
punitive damages
anti
damages would
both
and trebled
contract
be
damages
“dou
upon
purposes
For
of com
trust
would not constitute
that same loss.
then,
recovery,” citing differing purposes al
damages,
the district court
ble
pensatory
by punitive and
single
legedly
to a
re
served
trebled dam
appropriately limited TINS
unpersuad
punitive dam
ages.
are
Whereas traditional
covery
profits.
for lost
We
wrongful
and
plaintiff
ages
case concerns a
serve to deter
conduct
ed
whose
that
tortfeasor,
(Armstrong’s
punish
argues
in
Con
single
conduct
that
course of
prospec gress
TINS’
that
additional remedi
and
envisioned
an
terference
Stern’s
relationship)
single
purpose
by
and a
al
be served
anti
tive
would
trebled
contractual
namely
(TINS’
profits)
damages,
encouragement
trust
lost future
should
injury
damages
private
or thrice over of
actions.
Bruns
profits
those
twice
See
recover
10,
Corp.,
legal theory advanced
favor of
ty’s bring incentive claim. prevails upon event that TINS
In the retrial, than one cause of action
more may proper- that the court
we hold district require it to elect either tort antitrust
ly only may and that recover
recovery damages. compensatory once America, Appellee, UNITED STATES of VIII. Conclusion v. of the will affirm those orders dis- We BARNHART, Appellant. Charles granting judgment n.o.v. to trict court No. 92-3142. Act Armstrong on Sherman section individual tort claim. claim and Fineman’s Appeals, Court of United States will reverse the order district We Third Circuit. on granting judgment n.o.v. TINS’ court of a grant and affirm the new Argued tort claim Oct. will vacate the
trial on claim. We Nov. Decided Act verdict on section directed the Sherman judgment summary and the claim of contract claim. breach
Finally, we will remand matter trial on
the district court for a new TINS’ rehearing.
* Judge panel voted as to Fullam motions notes outlining could written of conversation According Fineman, advantage. tag naming TINS format and distributors con- tacted). also reduced overhead costs associated Fineman testified that at this time promotions Armstrong’s plans because enabled distrib- he was unaware of later efficiently utors reach their retailers and enter video market but he learned simultaneously, years and eliminated need for was several behind retail of a video development individual visits to each customer. TINS net- work. at 1898-1901. corporation, Industry Fineman’s (TINS), Humphrey concerns System Network marketed its voiced four about Draeger, monthly magazine covering superior, to floor to his Dennis video president of floor through retailers their distributors. TINS vice cover- First, training ing operations. each offers of conducted sales TINS’ ex- distribu- might prior “launching” territory tor an intensive four clusive to distributors con- Armstrong’s policy effort flict with of not favor- six-week sales distribu- geo- exchange ing any single within a paying tor’s sales force. distributor TINS, area, maintaining “level marketing rights graphic play- fee to these distrib- Second,