Frank J. Ostrofe v. H. S. Crocker Company, Inc.

BROWNING, Chief Judge: principal presented by ap- issue this peal is whether under the circumstances of manager, resign case sales forced to he an al- participate because refused to leged other employer scheme his bids, prices, rig manufacturers to fix markets, bring a has The court “target” agreement. of that allocate against action not at said, conspiracy was directed private treble “[T]he Clayton 4 of the employer employees anti- Section or other he does. employer, We hold that Act. or even at his competitive sense competitors conspirators

but Any effect lithograph 'label market. in the effect of the upon plaintiff was not an I. but at anti-competitive conduct alleged Ostrofe, marketing Frank J. former di- upon an alleged incidental effect most an Company, rector of H. Crocker S. filed to contin- eventually who refused complaint against seeking Crocker dam- conspiracy.” participation ue in the ages injuries resulting for from a violation noted, however, com- the The court complaint alleged Act. The Sherman among alleged understanding plaint also following: the and other Crocker unnamed label manufacturers Crocker and the other paper lithograph manufacturers of labels who inter- boycott to and others Ostrofe conspired unreasonably combined and to re- activities, fixing and fered with the strain interstate trade and commerce in la- challenge standing to held that Ostrofe had bels in violation of the Act. Section The court “separate” conspiracy. conspiracy continuing The consisted of a with to dismiss therefore denied the motion agreement among and concert of action the prejudice, respect to this claim “without manufacturers to fix and maintain label however, motion properly to a documented prices, bids, rigged submit custom- allocate [boy- summary judgment presenting territories, “boycott per- ers and and those issue.” cott] sons, including plaintiff, who have inter- fered threatened to interfere with their summary judg- Crocker a motion for filed illegal plan.” conspiracy The was effectu- affida- supported by depositions ment Ostrofe, ated in by coercing as Crock- any agree- negating vits the existence bids, manager, rig prices, er’s sales to fix to among ment label manufacturers and allocate markets. When Ostrofe refus- opposition to the mo- employ plaintiff. cooperate co-conspirators ed to Crocker’s tion, supporting offered affidavits Ostrofe complained to executive Crocker’s officers allegations that other label manufactur- his who warned Ostrofe that if he did not about Os- complained ers had to Crocker participate in the scheme he would implement price-fixing trofe’s failure to prevented partici- be from threatened agreement, that Crocker had pating industry in the label in the future. partici- reprisals if he did not Ostrofe repeatedly Ostrofe was told he would not scheme, and that pate price-fixing in the promised compensation receive financial dr resigna- these threats had forced Ostrofe’s greater manage- future share in Crocker’s responded, tion from Crocker. Crocker ment or income stopped unless he interfer- to ac- related part, that Ostrofe’s evidence ing with the unlawful scheme. He was to allegedly prior tivities that had occurred resign posi- forced these threats to “do not resignation, and therefore Ostrofe’s Crocker, boycotted tion with and was but rather relate to the claimed employment industiy. further in the labels as to price fixing conspiracy, alleged standing to com- has no which [Ostrofe] ground Crocker moved to dismiss on the plain.” “standing” Ostrofe lacked to sue for dam- ages judgment Clayton summary 4 of Section Act. While the motion for The granted district court the motion in moved to amend pending, Ostrofe part, holding Ostrofe could not attack allege a unilateral complaint specifically prices to fix because he was not with Ostrofe. by Crocker to deal See United States v. H. S. and United States v. H. S. Crocker Crocker 61,883 (N.D.Cal.1976) 60,615 (N.D.Cal.1975). 1978 1 Trade Cases Trade Cases ¶ ¶ this, plaintiff’s proof: “In such as cases proposed alleged amendment plaintiff given should be full prices fix . . benefit of “conspiracy to . and allocate proof tightly compartmental- without part by markets has effectuated izing components the various factual terminating plaintiff defendant [Crocker] manager paper wiping scrutiny as the slate clean a national sales labels after cooperate in the each. ‘. . . character and when failed effect [T]he conspiracy.” judged by The district court are not to be dismem- aforesaid amend, stating, bering viewing separate parts, the motion “To it and its denied but ” would, proposed looking allow the amendment at it as a whole.’ Conti- effect, to complain be to allow of nental Ore v. Union & Carbon Co. Carbide [Ostrofe] Corp., price-fixing conspiracy, since 8 L.Ed.2d (1962)2 show at required would trial [Ostrofe] conspiracy the existence of such a in order fragmentation The of Ostrofe’s pleading prove to the that unilateral action was un- proof and lead to rulings erroneous on the If we to the lawful. allow amend- dismiss, motions to the complaint, amend ment, granting we would be [Ostrofe] and for summary judgment. complain price-fixing the A. Motion to Dismiss conspiracy, previously which was denied.” The court treated the motion to dismiss granted the The district later mo- for lack of standing as question if the summary judgment opin- tion for without presented were whether a fixing con- ion, and dismissed the action. spiracy could be challenged by an employee discharge

whose was an incidental effect and not object the of that conspiracy. But II. complaint the alleged that Ostrofe was dis- The in deciding district court erred charged and barred from employ- further Crocker’s motions to dismiss and for sum- pursuant ment to a boycott agreement en- mary judgment as if claim consist- Ostrofe’s part tered into aas and in furtherance of separate ed of two unrelated lawsuits— and the price-fixing conspiracy. challenging conspiracy prices one to fix lithograph and allocate As the paper recognized, customers district court boycott the labels, aimed attacking the at Ostrofe other was viola tion of the itself, Sherman Act in employ- terminate bar and Os Ostrofe from trofe had standing under Section 4 to industry. ment in that seek

damages for the injuries it allegedly caused It is allegations axiomatic that the him.3 The court cited no authority for de complaint whole, of a must “be nying read as a right, Ostrofe the in pursuing his . broadly liberally.” remedy, and . . viewed to establish the context of larg the Miller, er Wright and 5 Fed.Practice and Pro conspiracy of boycott which the was al cedure, legedly 657. The view same must be taken and from which it drew its tion in Lessig marketing the See also v. Ostrofe’s Tidewater 327 F.2d services in Oil industry. Thus, the 1964); contrary Specialties, Engine to the district conclusion, Ltd., alleged court’s (1st Inc. v. conduct of Bombardier de- coconspirators “injured [plain- fendant and its competitive position tiff’s] in the business engaged.” which he was GAF v. Circle Floor concluding The district court erred in the al- (Empha- leged “conspiracy ... was directed [not] original.) Group sis in boycotts employees anti-compet- or directed at a other single trader per or complaint itive sense.” The se regardless of the boycott economy. overall on conspiracy effect element of the overall Klor’s, Broadway-Hale Inc. specifically Stores, Inc., v. barring directed at Ostrofe from 207, 212-13, employment. necessary 709-10, purpose The ef- S.Ct. L.Ed.2d boycott competi- fect of the was to eliminate agreed- present injured case

purpose. indistinguishable Persons part of a as a Radovich. employed to deal upon refusal monopolize trade conspiracy to restrain B. Denial of Leave to Amend to chal permitted have been and commerce Complaint whole even conspiracy as a lenge the It is a question more difficult whether injuries did not result though their Ostrofe also had to sue Crocker for competition prin that was the restraint on damages under Section 4 on theory object conspiracy. Radovich ciple presented the case proposed Ostrofe’s 445, 77 League, 352 U.S. National Football amendment; is, that Crocker unilater- (1957); Kiefer S.Ct. ally discharged Ostrofe as a means of effec- Sons, Inc., 340 Seagram v. E. & Stewart Co. tuating the scheme to prices fix and allo- 95 L.Ed. 219 cate customers. Records, Solinger v. A. M. injured Parties by unilateral 1978); conduct Spencer Nichols v. furtherance of an unlawful restraint Press, Inc., 371 F.2d 332 International trade have permitted challenge Oil Co. of Calif. Standard overall scheme.5 But argues Crocker that it Moore, 1957).4 Evi would extend liability too far to allow underlying is clear dence of standing to sue for treble ly probative of the existence of a persons Section 4 injured only by a refus- conspiracy. employed in furtherance of al to deal single a conspirator in further- pursu- that plaintiff alleged In Radovich ance of a price-fixing conspiracy. among the defendants ant to an Section 4 limits standing because he in a boycotted private he was and blacklisted antitrust action for treble league professional damages football played for a to a “person injured in his business or league. The competitive property with defendant’s by reason of anything forbidden have been in the anti- boycott was trust professional foot- laws.” The conspiracy monopolize courts have devised vari- violation of ous standing designed in the United “tests” for to sue ball States expansive 2 Act. The limit the liability might 1 and Sherman Sections flow boycott employed interpretation as a means a literal player of the statute.6 league. Plaintiff was destroying utility, the rival While not without these “tests” conspiracy to mo- challenge allowed to have led to inconsistent, and unpredictable part. nopolize was a of which results.7 Although sufficient to resolve clear Co., See also Lee-Moore Oil Co. v. Union Oil amounting unlawful restraint not to a refus- 1979); Hoopes (4th v. Union Cir. al to deal had to sue. Co., 480, Oil (9th 1967); 374 F.2d 485 Cir. Co., Century-Fox Corp., See 6. Steiner v. Hawaii v. 251, Twentieth Film Standard Oil 405 U.S. n.14, 190, 885, Cop- (9th n.14, 263 232 92 F.2d 193 S.Ct. United 891-92 Cir. 31 L.Ed.2d per e.g., (1972). Co., 184 Amalgamated Copper See Securities Reibert v. Co. v. Atlantic Rich- field 727, (2d (10th 1973) 471 (the F.2d 232 F. 574 731 Cir. Cir. injury" test); Corp. “direct Karseal v. Richfield Usually a unilateral to deal has been Corp., Oil 1955) (the 221 F.2d 362 Engine Specialties, supra, involved. See 605 “target test); Mulvey, supra, area” 433 F.2d at Co., supra, Lee-Moore Oil F.2d 599 F.2d at (the “reasonably 1076 test); Mala- forseeable” 1301 -02. See also Albrecht v. Herald Corp., mud v. Sinclair Oil (1968); 88 19 L.Ed.2d 998 1975) (the test); “zone of interest” S., Times-Picayune Publishing Co. v. U. Industries, Inc., Bravman v. Bassett Furn. 594, 625-26, 872, 889-90, 73 S.Ct. 97 L.Ed. 1977) (balance F.2d 99-100 of fac- generally See 2 J. Von Kalinow- test). See also California State Council v. tors ski, Regulation, Antitrust Laws and Trade Ch. Contractors, Associated General 6C, pp. through 6C-31 1980) (dictum approv & n.18 ing Mulvey Productions, approach). zone of Goldwyn interests Samuel 433 pra, Hoopes, 1970) F.2d 1073 su- generally Berger Bernstein, Analyti- plaintiffs this court held injured by cal Standing, Framework for Antitrust unilateral conduct in furtherance of 86 Yale balancing hand, require injurious cases On the other cases, obvious since the less interests, principally policy competing consequences may of antitrust violations enforcement in effective interest through extend of the large economy, areas in avoid- the interest against antitrust grant the unfettered might lia- excessive litigation ing vexatious open litigation” the “floodgates of and “re- bility.8 over-kill, enlargement sult in an due to private weapon to a caliber far ex- hand, private one On treble ac- ceeding contemplated by Congress.” tions under Section constitutes “bul- Enterprises Calderone Corp. v. United Art- wark of antitrust enforcement” by “insur- Circuit, Inc., ists Theatre ing that the private action will be an ever- (2nd The extent which present threat to deter any contemplat- one these and other considerations affect the ing business behavior in violation of the practicality and fairness of suits for treble antitrust laws.” Mufflers, Perma Life Inc. damages aby particular class of plaintiffs v. International Corp., Parts against importance must be balanced may such suits have in the enforcement of (1968).9 Thus Section was “intended not laws. merely to personal redress a injury, but to achieving aid in purposes broader It is unnecessary, and would be con Comment, laws.” “Standing to trary to purposes of Section to erect Sue for Damages Treble Under Section 4 of an arbitrary and bar absolute to treble Clayton Act,” 64 Colum.L.Rev. 571 damage injuries suits for that result from a (1964). The extent to which allowing a conspirator’s implement efforts to the anti- particular class plaintiffs to bring suit competitive aspects of the conspiracy. The for damages will further the enforcement interests counseling private restriction of purpose of important Section 4 is an factor damage treble may actions outweigh the in determining whether plaintiffs such interests of antitrust enforcement in some should be allowed standing. such cases. But the interests of antitrust 31, Handler, supra, (1977); The Shift MDL No.

L.J. 820 35 481 F.2d at 129. Some narrowly, Innovations standing from Substantive to Procedural Conference have construed Twenty-Third Inc., Annual An- Antitrust Suits —The of Studio Unions v. Loew’s 193 F.2d 51 Review, titrust (9th 1951); broadly interpreted 71 Colum.L.Rev. Cir. others encompass plaintiffs who were Enterprises instance, Compare, for Calderone object engaged Circuit, Inc., in the market which was the Corp. v. United Artists Theatre supra, Hoopes, activity. See Congress 1971) the unlawful (2d with 454 F.2d Cir. Steiner, 193; supra, 485; 232 F.2d at at F.2d Building Corp. v. Loew’s Karseal, supra, 221 F.2d at 364-65. Steiner, supra, 1957) 232 F.2d Karseal, compare supra, 221 F.2d at 364-65 Baxter, Billy Inc. v. Coca-Cola (2d 1970). ap- See In re Multi 8. The Third has taken similar Circuit by balancing proach, resolving standing district Air Vehicle Pollution M. D. L. No. vari- by basis. See Mid- ous factors on a n.6 case case contention, Paper Group, Contrary West Products Co. v. Continental to the dissent’s the ra- Bravman, precedent apply- tionale of this circuit’s line 596 F.2d 581-87 supra, ing “taiget area” test has not been clear 552 F.2d at 99. Bernstein, supra, Berger and consistent. See & Compare Mulvey, Yale L.J. 834 n.112. supra, 433 F.2d at 1076 with Contreras v. Vegetable Shipper Mfg. Grower Association Cen- Mining See Minnesota Co. New California, Jersey Finishing tral Wood (1965); Some the notion cases have embraced see Century-Fox Sue, foreseeability, generally Pollock, Standing see Twentieth Remoteness Corp. Goldwyn, Doctrine, Injury, Passing-On Film and the 32 A.T. 1964), seemingly ignored (1967); Berger, supra, while others have L.J. 5 6 L.J. Yale Vehicle Air Pollution See re Multidistrict it. n. 1. by employees may predominate discharged by employers enforcement their others. refusing cooperate This is such a case. encourage will scheme such disclosure. Ab- might argued It balancing be that such a remedy, persons sent such a in Ostrofe’s policy encourage considerations will position have little incentive to resist litigation, courts, burden the produce they they unlawful If take part scheme. essentially results, ad hoc bright- and that a may exposed liability, to criminal but be approach, line though imperfect, is there- unlikely.11 they detection If is refuse to preferable. fore As analysis the brief participate, however, discharge virtually reflects, however, follows significant and, remedy certain absent a under Section few, relatively

factors are simple, capa- 4, prospects recovery poor.12 for civil are predictable ble of producing results. No prices to fix Allowing persons who are and allocate customers can refusing participate effective without in antitrust viola- the co- operation of responsible employees of each by employers tions to commence treble competitor. Discharge of those who refuse damage actions will advance Section 4’s to participate is essential to success of the purpose to further enforcement of the anti- scheme. Affording discharged employees trust laws in a significant number of re- standing to sue for treble damages contrib- spects. utes to the enforcement of the antitrust The challenged by Ostrofe had by enhancing potential liability for a purpose as its fixing prices and allo- kind of conduct each conspirator business cation of customers in a nationwide market. must engage in perform if it is to its role in grave Such schemes are of concern to anti- the conspiracy. enforcement, trust yet they invariably covert. conspiracies Covert in restraint of Moreover, grant to such may trade go undetected the intended persons may prevent mitigate injury to Exposure victims.10 of such may schemes those who are the objects ultimate depend upon encouraging disclosure in- restraint. timely A suit by Allowing siders. suits for treble discharged for resisting fixing “[T]he detection rate of antitrust violations S.E.2d 270 (W.Va.1978). generally Note, is much lower than that of other crimes be- Protecting At Employees Will Against Wrong- usually cause an antitrust violation ‘is a con- Discharge: ful Duty Only to Terminate rarely cealed crime and there is an identifiable Faith, Good 93 Harv.L.Rev. ” victim who Berger, is aware of the violation.’ supra, (Citation 86 Yale L.J. at 847 n.172. omitted.) argues The dissent wrongful Ostrofe has a discharge cause of action under California law. 10, supra. 11. See N. But minority the California rule. doctrine is a Effective enforcement of federal employees private rights without 12. The depend upon availability cannot be made to arbitrary protection against or re contractual varying of alternate remedies under local laws. e.g., taliatory discharge Phil are tenuous. See Co., Goodyear allowing lips F.2d The dissent’s contention 651 anti- v. Tire & Rubber standing 1051, alleging employee discharged 1981) (former employee trust to an for participate giving discharged to for in an antitrust violation in retaliation he pretermits litiga employer-employee testimony state deposition in antitrust relations truthful “by heavy-handed wrongful law interference dis for tion has no cause of action Platt, specious. overlap law.); federal courts” is charge 386 The is Martin v. under state minimal; holding pertains only employ- Geary our to (Ind.App.1979); v. United N.E.2d 1026 174, 171, ee terminations furtherance of antitrust Corp., vio- 319 A.2d States Steel 456 Pa. discharge 1974); generally lations and not to the of an (Pa.Supreme see 178 79 Court demonstrate, (1970); other Am.Jur.2d, reason. As we in- 43§ Master & Servant 53 fra, Ostrofe’s termination (1975); lies within the core of 51 A.L. Annot. Annot. 62 A.L.R.3d 271 Congressional underlying 742, concern (1957). v. Ameri Adler R.2d 745 47 Cf. laws. Corp., 464 A.2d Md. 432 can Standard Bank, (1981); v. National Harless First quences to consumer may prevent injury might counsel scheme denial of stand- ing under otherwise have 4. who would Section competitor or Avoiding injury to victims. its Employees discharged by their employer particularly itself competitive structure for declining to take in an antitrust competitive destroyed, important; once violation are not so numerous that recogniz- to restore. See may be difficult conditions ing their claims would threaten a flood of Bernstein, Analytical Frame- Berger & litigation,15 impose or a ruinous financial Standing, 86 Yale L.J. Antitrust work for burden on the industry.16 There is no dan- ger of duplicative recovery. The damages to done such an employee are done to him The an employee discharged by harm to alone; damages he sustains are not employer refusing participate to passed on, nor possibly included in the losses effectuating an antitrust flows of others.17 immediately, remotely indirectly, Act; employer’s violation of the it complaint The in this case alleges a delib- is neither incidental to nor derivative from erate and continuing understanding Thus, injuries done to others.13 there is no course of conduct of a long kind and un- proximate might more victim who be better equivocally condemned per as se un- qualified bring suit for the sus- der the Act,18 Sherman and treble damages tained.14 would not constitute an penalty unfair in- flicted unjustifiably upon an unwary de- These enforcement considerations offer fendant.19 strong support for allowing standing per- Suits for damages by persons wrongfully discharged by employer sons for re- common; courts are accus- fusing participate in an antitrust viola- tomed to assessing such damages; they are tion. unduly neither speculative nor difficult hand, On the other allowing persons such calculate, obviating another judi- source of to sue will have negative none conse- cial concern.20 Council, supra, 13. Cf. California State Jeffrey Bell, 16. See v. Southwestern Barrett, 538-39; Martens v. Harrison v. Para compare Engine Special- 1957). Also Pictures, Inc., mount (E.D. F.Supp. ties, supra, 605 F.2d at 17-18. 1953), aff’d, (3d 1954). Pa. standing The Ninth Circuit has denied to em- Illinois, Cf. Illinois Brick Co. v. 431 U.S. ployees, Solinger, supra, 586 F.2d at 1311- (1977); 97 S.Ct. Loeb v. 52 L.Ed.2d 707 per “no-employee- se not because aof Eastman Kodak 183 F. 704 standing-rule” employee injuries but because were found to be incidental to an antitrust Socony-Vacuum S.U. v. 18. Oil 310 U.S. See, e.g., Program Engineering, Inc. violation. 150, 218, 60 S.Ct. L.Ed. Publications, Inc., Triangle (1940); S., Bearing Timken Roller Co. v. U. shortcomings The of a (1951); 71 S.Ct. U. 95 L.Ed. 1199 (i.e. by categorization rule based on Topco Associates, S. “employee,” “distributor,” status as “lessor” 1126, 1133-34, etc.) by Berger, supra have been noted at 830- grant- Fifth and Seventh Circuits Lytle Perdue, Target Antitrust Area employees ed able to show direct Clayton Under Section 4 of the Act: Determi- injury. See, Plan, e.g., Dailey Quality School Standing Light Alleged of nation Anti- Inc., 1967); Nichols, Violation, 795, trust 25 Amer.Univ.L.Rev. 798- supra, 371 F.2d 332. Turner, (1976); 800 P. Areeda & D. 2 Antitrust 333, p. (1978). Law § 162 Areeda, supra, 168; Lytle, p. 14. See at § 334 supra, 801; Page, Anti- 25 Amer.Univ.L.Rev. at Enterprises, supra, 20. See Calderone 454 F.2d Damages Efficiency: trust and Economic generally Areeda, 1295; supra, 333, see p. at § Approach Injury, to Antitrust U.Chi.L.Rev. 335a-335c, pp. 170-176, 337d-337e, §§ §§ (1980). pp. underlying 187-194. Where the facts and Oil, supra, See Hawaii v. Standard U.S. clear, magnitude damages reasonably of 890-91; at 261 Calderone Enter- 92 S.Ct. at danger litigation of meritless vexatious is mini- prises, supra, 454 F.2d 1295. Sherman, Standing: mal. See Antitrust From injury tiffs’ had nothing to do with the a windfall damages Treble would not be potential anticompetitive effects that made refusing to take persons merger unlawful. injury Plaintiff’s re- scheme; anti-competitive sulted preservation from the competition intimately related to directly and injury is rather than from the compe- elimination of violation, remedial and the tition. To allow suit for such injury, recovery three allowing the purpose for said, “would make 4 recovery en- § is satisfied.21 actual losses times tirely fortuitous, and would authorize dam- countervails the limiting factor no Since ages for losses that are of no concern to the standing, favoring compelling reasons antitrust laws.” 429 at at S.Ct. considerations competing policy balance of 697. The damages plaintiffs sought would employees who allowing strongly favors “provide them profits with the they would opposi- in retaliation suffer loss inflicted have competition realized had been re- to main- anti-competitive schemes tion to duced .... It is purpose inimical to the tain suit. this law to award damages for type Bowl-O- Corp. Brunswick v. Pueblo C. injury claimed here.” 429 U.S. at Mat, Inc., 477, 97 429 U.S. S.Ct. S.Ct. at 697. The Court concluded: (1977) quite it is clear respondents if be made of the Particular mention should injured, it “by was not reason of anything decision in Brunswick Supreme Court’s forbidden in the antitrust laws”: while the motion to dismiss relation both to respondents’ loss “by occurred reason of” to amend. the motion the unlawful acquisitions, it did not occur “by reason of” that which made the ac- Brunswick, bowling alleys operators quisitions unlawful. damages allegedly result- brought suit for We therefore hold that for plaintiffs Brunswick Cor- ing acquisition recover treble damages on competed account of poration bowling centers § violations, they prove must more acquisitions were than plaintiffs. The injury causally linked illegal pres- to an Clayton 7 of the claimed to violate Section size, of its must theory Act on the that “because in the market. Plaintiffs ence capacity say to lessen com- injury, had which is to antitrust prove [Brunswick] it had entered petition in the markets laws were type the antitrust competitors out of busi- driving smaller and that flows prevent intended to at at 694. ness.” acts unlaw- makes defendants’ that which theory that injury on the claimed Plaintiffs ful. local acquired had not if Brunswick 488-89, at 697-98. 97 S.Ct. 429 U.S. would competitors then local bowling centers original.) (Emphasis in plaintiffs’ out of business gone suits applies Brunswick Whether Ibid. increased. would have profits 1 and 2 of the Sher- brought under Sections Supreme held that Court Section 4 unclear; too is the distinc- Act is so man . did not authorize suit for for such standing and concepts tion between injury. The pointed plain- Court out that event, the hold- injury.23 In. Malamud, MacMillan, 402-03 with Bosse v. Collier & 51 N.Y.U.L.Rev. Crowell

Loeb 606-07 Olympia Brewing Lenore & See John Co. Corp. Bowl-O-Mat v. Pueblo Brunswick 21. See see 550 F.2d CAF, Engine supra, also 463 F.2d 759. Cf. L.Ed.2d Specialties, supra, at 12 n.16. Solinger, supra, Compare generally Handler, Changing in Anti- Trends 12-13; supra, Engine Specialties, Supreme Unprecedented 605 F.2d at trust Doctrines: An Oil, supra, and Lee-Moore 599 F.2d at 1302-03 Court 994- Colum.L.Rev. Term — entirely Brunswick are ing simply and rationale of tion. The Court was not concerned injury with a claim upon stemming based according standing to an with consistent from conduct in furtherance of an antitrust interfering with discharged for violation.25 violation, an antitrust the effectuation of limiting as could be read Sec- Brunswick The central theme of Brunswick is that to by damages 4 to suits for caused tion be actionable plaintiff’s under Section particular anti-competitive effect an- of injury should fall within the core of Con- language appears gressional violation. concern underlying titrust Similar the substan- provision tive of the antitrust construed, alleged- opinions.24 So in lower ly outlawing violated.26 In price fixing and arguably prevent by suit Brunswick would customer allocation under the Act, Sherman if his resulted from Ostrofe Congress was concerned with competitive by conduct in further- unilateral Crocker market; conditions in the product hence than rather from the ance competitors perhaps injured consumers marketing in the competition elimination of by the competition elimination of between the marketing services or in of of Ostrofe’s conspiring business concerns of labels. But such a construction Bruns- standing to sue. justified. wick would not be Congress But was also concerned with the language of must be Brunswick read acting conduct of on behalf of individuals light problem to which it was conspiring Congress economic im- entitiés. Brunswick with a claim directed. dealt posed liability upon criminal individuals upon injury from the effect of an based who violate the Act even though Sherman upon competi alleged antitrust violation they act in representative capacity and in (1977); Berger, 86 Yale 835-40; L.J. tage supra, over other manufacturers and contract J. Von Laws Kalinowski, Antitrust installers. As a attempt take (1980); Regulation, Trade pp. Ch. over, defendant its reduced purchases from Page, at 47 U.Chi.L.Rev. 497-500. supra, GAF depressing thereby the market GAF’s stock. The court denied GAF e.g., v. Circle Floor See, GAF Corporation to sue Circle Floor Co. under Section 4. The In re Multidistrict 758; 463 F.2d at Co., supra, court held that the takeover would not have L. No. 31, M. D. supra, Air Pollution Vehicle resulted harm to anticompetitive GAF. Id. Unions, of Studio F.2d at Conference at 759. allege GAF did not its position F.2d at 54. supra, the market was or would affected. Unlike construction, Brunswick Even the instant case and those cited at N.5, supra treble not bar recovery would GAF was not driven out of business, terminat- alleged injuries Ostrofe by sustained ed, or forced to its own economic comply injuries would result direct- since such boycott, expense demands anticompetitive by in the the elimination of competition from ly the defendants. marketing N.3, See su- services. Ostrofe’s regard With to the of Circle Floor reduction pra. GAF, the court held Cir- Co.’s purchases cle Floor Co. had not “refusal Multidistrict Vehi- true of In re The same is to deal” or that it was either concerted had No. 31 and Confer- Air Pollution M. D. L. cle diminished sales or otherwise in- GAF’s total of Studio Unions. ence jured Id. The court did not GAF. at 759. Notwithstanding language in these opin- suggest that an to deal in fur- effective injured ions, this court has held plaintiffs goal therance of an would not anticompetitive restraint an unlawful conduct furtherance have conferred had in fact been GAF have stand- may not its ultimate effect injured thereby. ing to sue. See Mulvey, supra, 480; Steiner, supra, Hoopes, supra, standing un- 26. This court has stated similarly 232 F.2d 190. der Section 4 is available “to those individuals GAF Circle Floor Corp. supra, whose is the fundamental protection purpose 752 relied district court does upon by re laws.” In Multidistrict Vehicle Plaintiff GAF compel contrary result. Air Pollution M. D. 481 F.2d at L. No. supra, Floor manufactured floortile. Defendant Circle 122. See Council, California State supra, was a installed floortile and customer Co. F.2d at 538 also Mid-West Paper n.18. work- acquire Circle Floor GAF. attempted Products, 582-83. supra, gain ing control advan- competitive of GAF to The result of the fragmen- district court’s employment.27 duties of the discharge tation of the scheme asserted loss in Ostrofe’s that Ostrofe’s It cannot be said laws.” complaint the antitrust deny no concern to was to was “of Ostrofe the benefit efforts injured of his was because Ostrofe clearly probative evidence of the exist- the mandate of Sher- comply to ence of a boycott. Act; he an “antitrust man suffered laws were type ... of A conspiracy between business entities to prevent.” intended to agreed-upon adhere to prices and sales ter- only ritories can be effective if the sales Moreover, from' the loss did not result personnel participating of the companies asserted competition, as did the increased Brunswick, conspirator’s prices in but from adhere to the agreed loss and territories pur anticompetitive upon efforts to realize making sales on behalf of their manager of of the con pose. As sales one employers. might Therefore a trier fact cooperation companies, spiring Ostrofe’s reasonably infer from evidence exist- restraint. necessary was to effect ence of such a conspiracy that each of the engage demanded that Ostrofe Crocker participating companies impliedly had also bids, behavior, rig sell anticompetitive agreed that it would secure the adherence with cus agreed-upon and deal prices, personnel of its prices sales to the and terri- n When Ostrofe allocated to Crocker. tomers agreed upon; tories It would also be rea- refused, to the removal was essential sonable to infer an understanding These facts disclose of the scheme. success non-cooperating employee jeopardized who relationship between circum the “intimate implementation would be con wrongdoer’s stances which make removed position from his or her and would resulting which harm duct unlawful and not be rehired. suit,” required by subject Handler, Changing Trends Brunswick. These inferences draw support further Unprecedented Antitrust Doctrines: from the evidence that employees of Crock- 1977, 77 Colum.L. Supreme Court Term — er’s co-conspirators complained to Ostrofe 979,990 Rev. (1977).28 about sales he made in violation of the conspiracy, that “highly placed” executives D. Motion Summary Judgment of the competing manufacturers complained apparently treated the motion to Crocker regarding Ostrofe’s failure to for summary judgment question as if the adhere to prices and agreed territories whether, excluding evidence of an then threatened and that Crocker upon, understanding among the manufacturers to em- him from future and bar fire Ostrofe prices fix allocate customers and of the industry if he refused ployment in the understanding relationship between that cooperate.29 there remained discharge, and Ostrofe’s genuine issue sufficient evidence raise Considering the evidence offered in

of fact as to the existence of opposition summary judg to the motion for among the manufacturers Os- might ment and the inferences that trofe. Wise, 27. U. S. v. tional Distillers Corp., Chemical L.Ed.2d 1974) and similar cases. As- suming law, this to be the summary judgment Engine would Specialties, still supra, have been inappropriate. 605 F.2d at There 13, 18; disputed was a Oil, supra, Lee-Moore issue fact as to whether a demand would have been futile. See Hanover Shoe, Inc. v. United Machinery Shoe Corp., argues 29. Crocker that evidence of a demand 1967), employment, admittedly here, aff’d in lacking part, rev’d required to make out a cause of action for L.Ed.2d deal, concerted citing Cleary v. Na-

1389 Clayton Act are light most favorable to 4 of the it in the tions under section drawn competitors the evidence as in Ostrofe,30 persons injured conclude that we limited a area of the issue as to or in discrete to create factual a defined market sufficient this pur- does not mandate economy. Brunswick had whether Ostrofe words, many construction in so but it is the understanding among implied suant to an case; interpretation logical fair and The mo- conspiring manufacturers. label thought, today, had and I at least until this should have summary judgment tion interpretation of Brunswick was established weighing the evidence without been denied Solinger in v. A doctrine this circuit. See contrary.31 to the Records, Inc., 1304, 1310, M 586 F.2d 1311 REVERSED. (citing propositions Brunswick for that “in- jury caused the violation must be one KENNEDY, Judge, dissenting: Circuit designed protect the antitrust laws were against”; plaintiff and must be within area arguments bounced policy Where economy of de- freewheeling manner in the about signed protect); John Co. v. Lenore & that either no sign it is a majority opinion, 495, Olympia Brewing 550 F.2d 498-500 us, guide or that exist- exists to precedent (9th 1977) (discussing applying Cir. In this precedent being ignored. is ing analysis).1 Brunswick latter, case, any event the it is the but in departure from here is a rule announced In In re Multidistrict Vehicle Air Pollu my I state re- principles. antitrust sound 31, tion D. (9th Cir.), M. L. No. 481 122 F.2d spectful dissent. denied, 1045, 551, cert. 94 S.Ct. U.S. starting for the case appropriate point (1973), L.Ed.2d 336 emphatically we re-em Supreme decision in Bruns- target theory is the Court’s braced the area for antitrust Inc., Bowl-O-Mat, Corp. standing wick v. Pueblo set first out Conference of Stu 690, Inc., 51, dio 97 S.Ct. 50 L.Ed.2d Unions v. U.S. Loew’s 193 F.2d 54- (9th denied, proposi- 1951), stands for the Cir. cert. I submit Brunswick pro- at tion that antitrust laws are aimed (1952), 96 L.Ed. 687 and we plaintiff allege injury antitrust ac- tecting competition, and that that must held Diebold, Inc., 30. United States v. that, It should be noted light as modified in 82 S.Ct. Brunswick, the Sixth Circuit’s zone of interests test differs from target this circuit’s area test Attorney General, Scharf v. U. S. 597 F.2d only in the former inject “does not an' (9th Cir. Robert Johnson proximate element of cause into the Grain Interchange Co. Chemical inquiry,” but rather reserves the issue of “di- 1976). 210-11 rectness” as one upon to be resolved a factual showing. 643 F.2d at 1235-36. Under Carpen- 1. Dictum in California State Council of new “zone of interests” test of the Sixth Cir- Cal., ters Associated Gen. Contractors cuit, plaintiff standing, here would not have 1980), 648 F.2d 538 n.18 cert. because he has injury,” - “antitrust granted, -, improper but rather employee discharge, a tort (1982), L.Ed.2d 292 approvingly referred to a type injury. contract adopted by “zone of interests” test the Sixth It should be noted also that the Third Circuit Circuit, and Third Circuits. Even the Sixth adopt did not test, a “zone of interests” but however, expressed has modified its views applying factors, rather test a number of Corp., Malamud v. Sinclair Oil 521 F.2d 1142 including injury target direct area consider- 1975), which was cited in California ations, to each factual matrix. Cromar Co. v. Carpenters. Chrysler Corp. State Council of Equipment Corp., Nuclear Materials & 543 F.2d Corp., 1981), v. Fedders (3d That circuit also has “clearly the court held that Brunswick estab- injury require- included Brunswick’s antitrust injury plead lishes that a must ment the factors be considered in deter- type remedy § 4 was intended to before his mining standing. Paper Mid-West Products heard,” will case id. at and the court Group, Inc., Co. v. Continental imposed requirement plaintiff plead its addition to zone inter- standard, ests id. at 1234-35. economy “in in which the the area of This sound, circuit’s line precedent competition elimination of occurred.” yet the majority simply erroneously continually We have reaf- ignores Here, it. main al- See, e.g., firmed the rule in this circuit. leged the premise as of liability was not one Records, Inc., Solinger v. A & M employees. harm It was one to prices fix Crowell, MacMil- Bosse v. Collier & and allocate customers in the nationwide lan, 1977); (9th John 606 paper market for Appellant labels. was not Brewing Olympia Lenore & 550 Co. in the area the economy endangered by 499; Blankenship v. Hearst F.2d at conditions; the breakdown competitive (9th Although is, that injured he was by the labels opinion dicta in a footnote in our recent industry breakdown “the antitrust Carpenters California State Council of prevent,” Brunswick, intended to Associated Contractors of Califor- General at true, U.S. nia, Inc., 1980), may S.Ct. at 697. It cert. 648 F.2d 527 - granted, appellant’s -, theory, that in a strict S.Ct. L.Ed.2d (1982), indicated some discom- causation employee’s sense the termination doctrine, again fort with the we acknowl- resulted from the conspiracy, but collateral circuit, legal edged that causation “[i]n damages persons competitive outside the traditionally judged under the so- has been area aggrandized by antitrust defendants ‘target called area’ test.” Id. at 537. are inconsistent orderly with the adminis- tration of the antitrust laws. See Illinois The target area test is not restricted to Illinois, Brick Co. v. 431 U.S. 97 S.Ct. resolving only cases, clear majority as the The congres- suggests, 1382-83, supra, but rather was sional concern underlying the substantive adopted carefully “logical as a and flexible provisions of the compe- laws was superior tool” far to the crude direct tition, not employee discharge. coercion or test, which engaged in a “mere search for Appellant’s intimate relation with the labels,” and relied on “certain talismanic sufficient; scheme is not he must be inti- rubrics” to determine standing. In re mately related to its anticompetitive effect. Multidistrict Vehicle Air Pollution M. D. L. target

No. 481 F.2d at 127-28. The The majority opinion argues also that area test balancing embodies this circuit’s appellant should have been permitted to competing policy interests to determine challenge and establish the context of the whether a particular claimant falls within conspiracy as a whole in connection with an persons the class of intended pro- to be alleged boycott of his services and his em- by tected the antitrust- laws. The test ployer’s alleged unilateral to deal implicitly enforces requirement Brunswick’s with him in conspiracy. furtherance of the that a must allege proposition cases cited for the injury “that persons permitted flows challenge from that which makes defendants’ conspiracies though acts unlawful.” as a whole even 429 U.S. at 97 S.Ct. at injuries 697. resulted not principal ob- explicit precedent acknowledgment In an Conference of Studio Un own, contrary points to its to a conclusion ions v. Loew's 193 F.2d 51 majority read as writes: “Brunswick could be point, At an majority earlier writes that limiting caused 4 to suits for section “[t]he courts have devised various ‘tests’ for particular by anticompetitive sue,” effect of the majority opinion at 1382. appears language Again, antitrust violation. Similar string cite in footnote is a case opinion opinions.24” Majority setting in lower court forth target this circuit’s area test. I Study signal reveals of the footnote concept doubt of the law of the circuit string properly in which citation of three cases could be treated in such cavalier fash opinions advocate, the second and third cases listed ion even majority and for a on contrary court, squarely panel to the of our own of this to do so is cause for theory majority surprise dismay. of the here. In re Multidistrict 31, 481 F.2d Vehicle Air Pollution M. D. L. No. ject subsidiary but from a strain competition); Hoopes v. Oil Union boycott are authorities such as Radovich v. Company California, League, Football National 1967) (plaintiff service station owner 390, 1 (1957), L.Ed.2d 456 and Kiefer- supplier sought claimed competi- to restrain Sons, v. Seagram Stewart Co. by restricting outlets, tion retail including L.Ed. plaintiff’s, to sale of supplier’s gas). The quite here, Those cases are inappropriate plaintiff in the instant case was not in the they involved boycotts that were the target area of either fixing con- as, type part of, same and a larger spiracy or a unilateral discharge in direct conspiracy. Radovich, example, furtherance competi- elimination of plaintiff challenged boycott tion, and his motion properly to amend was his services the N.F.L. in connection denied. league which he alleged subsidiary boy- for the Finally, as

belonged monopoly furtherance of a of himself, although appellant cott aimed professional football, all the of which anti employee an al- generally challenge can Here, trust laws were designed prevent. to employ- of his services in leged boycott the discharge Ostrofe’s employ was a matter of put industry, ment market he must apart ee coercion from the main fix boy- to demonstrate the forward evidence ing scheme that the antitrust laws de apart any conspiracy. cott other signed to deter. See Conference Studio boycott inference is not unsupported of a Loew’s, Unions v. 193 F.2d at 54. He can boycott Ostrofe’s claim was sufficient. challenge the larger conspiracy the upon alleged solely based communications guise establishing for the “context” him, during em- superiors from his to his boycott alleged against him. company’s competitors ployment, complaining about failure to Ostrofe’s Similarly, parties injured by unilateral voluntarily Appellant resigned cooperate. conduct in furtherance of an unlawful re company despite request for straint trade permitted have been to attempt stay, him to and he did not challenge the overall scheme when the industry any with other employment obtain of, unilateral conduct was and created employer. Appellant failed to offer type as, of injury same the main unlaw coer- evidence whatsoever of ostracism See, ful conspiracy. restraint e.g., Albrecht place to have taken since alleged cion Herald, v. company. The district resignation from (1968) (plaintiff L.Ed.2d 998 claimed his dis granted summary judgment properly court tributorship by publisher was cancelled be come on the claim for failure cause he refused to publisher’s adhere to support with evidence to forward imposed maximum price); Engine retail Foods, Blair Inc. v. Ranchers charge. See Specialties, Limited, Inc. v. Bombardier Oil, F.2d Cotton (1st 1979) (terminated plain F.2d Manage- v. Putnam Mutual Fund Investors challenge tiff-distributor could his manu Co., ment facturer’s manu another facturer to divide territorially market for The majority unsupportedly because “ineluctable result”

minicycles extends reach was ter of the antitrust beyond and division of markets laws estab- allocation precedent Bruns lished mination, beyond so the intent of existed); Congress. Union should suppose nearly wick Lee-Moore Oil Co. I that on every 1301-02 occasion when a federal an- Oil alleged expansion 1979) (jobber by supplier terminated nounces an to a federal law new among major producers previously unregulated oil area of conduct, jobbers and re- it can invoke drive out such maverick deterrence as the n argu- rationale. The short answer to the device of the antitrust laws. Although the Congress design ment here is that did not California doctrine has adopted only reach employee-em- jurisdictions, laws to some the number increasing, is ployer Phillips Goodyear relations as an enforcement mecha- see Tire & Rubber Congress nism. participation has made in 651 F.2d 1981); Note, offense, anticompetitive a conduct criminal Protecting At Employees Will Against proper Wrongful and this is more direct and deter- Discharge: The Duty to Termi- provide rent damage than a treble wind- Only Faith, nate in Good 93 Harv.L.Rev. fall employees. (1980) “public (discussing pol- icy” exception growth), and its and the sub- accepting argument theory Even rights stantive recovery for such conduct necessity for deterrence rightfully employee should occur in the dis- ground stretching antitrust actions be- context, charge rather than under the anti- boundaries, yond previously recognized trust product laws competition. aimed argument deterrence is weak one This sensitive development in the law of employee discharge case. The employer-employee relations should not be already here has considerable remedies pretermitted by heavy-handed interference causes of action to deter conduct of the sort from the federal courts in the name of complaint. in the Since Petermann enforcing designed only for protecting Teamsters, v. International Brotherhood of the nation’s competitive system. economic Cal.App.2d (1959), 344 P.2d 25 Cali- recognized right fornia has the of an at-will federalism destined to I do believe employee discharged perform for refusal to fail, necessari- neither is its continuance but an act for wrongful unlawful to sue dis- it disappear, will be ly assured. If it does charge on a theory. breach contract with en- charged those primarily because recently, Most in a case involving facts resist the forcement of federal cannot here, strikingly presented similar to those jurisdiction temptation expand the Supreme California Court the held that logic, even limits of abstract outermost employee also has a cause of action based history sense tell us the where and common upon tort wrongful discharge, sub- systems of our independent processes state jecting employer compensatory dam- pro- sufficiently vital to afford all ages, distress, damages for emotional evils. The against needed certain tection punitive damages. Tameny v. Atlantic here illustrates decision Company, Richfield 27 Cal.3d 610 P.2d opinion and failing, I dissent Cal.Rptr. (1980), the Califor- judgment. nia Supreme wrongful Court dis- allowed charge brought tort action to be

employee against employer his where the that,

allegation was while retail sales

representative, dis-

charged refusing participate gasoline scheme to fix retail

prices of defendant’s franchisees. that,

Ostrofe therefore has facts true, if are the basis a weighty cause of law on state employer against

action tort punitive compensatory

grounds for will Such actions damages.

and contract

provide sought substantial deterrence majority through the achieved

Case Details

Case Name: Frank J. Ostrofe v. H. S. Crocker Company, Inc.

Court Name: Court of Appeals for the Ninth Circuit

Date Published: Mar 8, 1982

Citation: 670 F.2d 1378

Docket Number: 77-3985

Court Abbreviation: 9th Cir.