George Arnott v. The American Oil Company, a Corporation

HEANEY, Before BRIGHT and STE- PHENSON, Judges. Circuit STEPHENSON, Judge. Circuit Oil Com- Defendant-appellant, American (Amoco), judgment pany appeals from a against entered it the district court1 $100,000 (trebled upon jury verdict $300,- laws to court under the antitrust costs) plus puni- attorney fees and $25,000. damages tive Numerous issues raised, including insufficiency are jury evidence to create submissible issues plaintiff’s on claims. on We affirm condi- Arnott, plaintiff-appellee, George tion that damages file a of all exceeding remittitur $125,000 and costs. plus interest relationship This action involves the be- (often company, Amoco major tween oil a Oil), as Standard referred to in the record Arnott, its service George one of sta- 6, 1973, August tion Amoco dealers. On a Arnott as Oil dealer terminated Standard by terminating evicting his lease and him from the service station. Arnott’s com- plaint alleged, jury and the found in answer special interrogatories accompanying the verdict, (1) general was guilty Amoco representations false and fraudulent in inducing Arnott execute the service sta- agreement;2 (2) tion lease Amoco breached the fiduciary duty by owed to Arnott termi- nating without cause and good by his lease not dealing good with Amott faith dur- ing (3) agreement; the term of the lease guilty price-fixing Amoco of a retail 111., Glover, Chicago, argued R. Maurice combination in violation of the antitrust Woods, Nimick, Fuller, Timothy J. laws; (4) promise its Amoco breached Smith, Falls, D., brief, Shultz & Sioux S. on pay expenses legal certain fees and appellant. by incurred Amott in amount of $393.75 Evans, brought a Pieplow involving Michael F. Edwin E. state a suit court action Evans, Smith, by against Davenport, Hurwitz & Amoco Arnott and former Sioux Falls, D., question.3 for appellee. S. lessee the service station in Nichol, Judge, instructing jury 1. The Honorable Fred J. 3. In stated: Chief the court “This by plaintiff disputed (sic).” United States for the is not District Court District No fur- ther $393.75 South Dakota. reference is made to this item until reply complains Amoco in its brief charge court elected not to during this operation 2. Amott also claimed that judgment issue and agreement misrepresented thus the should be re- of the lease Amoco proceedings versed. Earlier trial Amo- the benefits to be Arnott received from the dispute co’s counsel indicated there was no a installation of carwash. ner. Arnott testified that was his under- I. Facts. it standing long as operated that as he favorably when viewed most The record station and it was a in a reasonable manner verdict for Arnott discloses the profitable venture for himself and Standard op- Arnott was following. In October 1971 Oil, long it as he could have for as erating Minneapo- a Oil station Standard wanted, expe- which was in accord with his lis, Minnesota,4 approached when he was rience as a Standard dealer. manager sales for the Sioux Falls Amoco’s required service station to lease district, Lucas, operating Dick about twenty-four day. remain open hours Standard station at an interstate location in There specific was no that Amo- Falls, Dakota. Arnott de- Sioux South any specified co supply would amount again clined. He was contacted Lucas in gasoline to the station. The lease was later and, result, as a flew to late 1971 Sioux amended time the in certain details. At the projected prof- Lucas showed Arnott Falls. executed, given lease Arnott was figures it on the which were service station written Amo- Policy issued Statement considerably better than those from Ar- dealer-company rela- co set out Minneapolis agreed station. Arnott nott’s tionship. with it as it Arnott was familiar change. to make the He entered into a was read indoctrina- part as a dealer 18, 1972, February agreement dated lease and was tion schools which attended period. was then a one-year for a It stan- prior followed Amoco at Stan- Arnott’s policy only one-year dard issue dard Oil stations. leases, there was also evidence at the but routinely Policy were re- The sever- trial these leases Statement of contained provisions an if the al violated repeatedly newed on annual basis dealer which operated by Policy provi- employees.5 the station in a reasonable man- Amoco just and customers, service to about this item. Under the circumstances we pretermit any courteous and treatment adequate help, further discussion of the same. hire rea- maintain operation keep the sonable hours of and Arnott, attending thereto Prior after a two- premises and condition. in a clean attractive Amoco, training sponsored by week school had oils, SECOND, respect we motor with to Preston, operated Standard at Lake Oil stations expect you and dis- as a minimum to stock Huron, Dakota, Wessington Springs, South and play oils, motorists our most line of since during period He 1960-67. discontinued purchase buy gasolines who towish our also dealership in 1967 to become a life insur- rep- However, Company our no motor oils. again attending In ance salesman. a dealer after bring may any pressure to bear resentative school, training opened Minne- you you some if also choose to handle apolis station. competitive brands. THIRD, batteries, tires, Policy respect and 5. Since the with to Statement of contained sev- accessories, buy representations you complete to eral Arnott have freedom which claims were products in false and fraudulent with these and and made intent to from whomever deceive, by upon quantities you which were relied Arnott whatever pany The Com- choose. harassment, Amoco, coercion, entering agreement into lease with will not tolerate by pressure any which form for his pertinent portions or improper and damages the basis claim for our kind thereof, products. as a result How- sale of salesmen in the these ever, are set out as follows: TBA1 we line of because believe our you unparalleled opportunity offers additional call ucts an for STATEMENTOF POLICY expect leasing profit, began to first we our salesmen Since we service sta- your independent prod- years to attention to the of our tions dealers over merits company try ago, policy you. to sell them this has been committed to a and to FOURTH, respect recognizes products, you that the it with dealers to all independent right your serves are businessmen who have to own resale an absolute set right prices except to have the coercion or run their stations free from in states where Standard improper pressure part products on the to are fair traded. are free You also * * representative. any Company your you display promote products *. and ****** developed see have a wide fit. While we FIRST, variety advertising, promotion respect gasoline, and sales with to our we merchandising programs every believe which we his best believe dealer must use efforts efforts, your you you promote are will assist free sales to to the motorist. We sale will, you reject every provide prompt them if desire. We believe dealer should to rectives, sions which the record discloses were violat- Arnott was threatened with nonre- may ed Amoco be summarized as fol- newal of his lease. (1) lows: independent Arnott would be an addition, In the evidence discloses that businessman right who would have the during the course of agreement the lease run his station free from coercion or pres- Amoco misrepresented the benefits to be part sure on the any company represent- received Arnott for the installation of a ative; (2) company representative no would carwash. persuaded pur- Arnott was bring any pressure to bear on Arnott if he $15,430. chase a carwash from Amoco competitive chose to handle brands of motor turn, 1,1972, In a lease rider effective June oils; tires, (3) respect batteries, was entered Arnott was whereby into accessories, complete Arnott would have monthly receive a rebate. minimum On buy freedom to products these from who- 13, 1972, October cancelled Amoco the car- chose; company mever he would not wash presented rider Arnott coercion, harassment, tolerate or improper with a new substantially lease that in- pressure any kind its salesmen in the gallonage creased the amount of sales nec- products; (4) sale of these Arnott would essary before a could be rebate realized.

have the right absolute to set his own resale This reducing by had the effect of one-half price respect to all prod- Standard Oil ucts, the monthly paid rental rebate including gasoline, and would be free to display addition, under the promote agreement. all carwash products as he fit; saw (5) Arnott would not the carwash pres- installation necessitated the re- sured participating into advertising, sales moval of a car hoist in one of the service promotions, merchandising programs bays. An representative stated that sponsored by company. a new compatible hoist with the carwash would be installed. The new hoist was nev- On several occasions placed when Arnott received, er capacity and thus the station’s competitive display brands on along with for mechanical work was reduced half. products, Standard Oil he was instructed Amoco to remove the same. On one occa- The difficulties Arnott had Amoco sion purchased Arnott placed display and on over misrepresentations made orally Goodyear tires. highest ranking Amoco’s and those contained in the Statement of representative dealer Dakota, in South Jack Policy and the agreement carwash describ- Reutschler, told Arnott that he should re- ed place during year above took the first turn the Goodyear tires display only and operated Arnott the station. On one occa- (Standard’s Atlas brand) tires if he wanted representative sion a suggested of Amoco to operate continue to the station. Arnott that Arnott move to a new location which Goodyear returned the tires and discontin- was less desirable. Arnott refused to con- selling Furthermore, ued them. Amott’s sider it. purchase of Standard’s motor oil from a signed Arnott a new lease local wholesale distributor was discontinued 8, 1972, December effective February by the Amoco, wholesaler on instructions of 1973, for an one-year additional term. Ar- thereby requiring purchase Arnott to motor nott given was not copy executed directly oil from Amoco. Arnott was also During lease until June 1973. the interim required purchase Stamps, Green which from February through May 1973 $3,000. he Arnott did at a cost of Amoco threat- operated the station without a lease. ened nonrenewal of He his lease if he refused to do so. was advised During operated representatives the time Amoco Arnott station, telephone probation he received was on would not given calls from and be representatives Amoco instructing a lease agreed him to unless he to abide raise or lower his gasoline prices. prices retail set participate Amoco and to When he pricing deviated from Amoco di- their promotional programs. agreed Arnott

course, give you suggestions our and advice business, experience you in the but alone long on all of these matters based on our your must decide own course of action. Bucklin, the Clint told Arnott that if he cooper- to secure cooperative to be order policies, ated with Amoco’s he could keep lease renewal. Bucklin day the station. The next advised However, Amo- problems continued. had apparently Arnott that Bucklin acted twice the station representatives co visited Arnott would be authority without and that handled to matters were not week. If 6,1973. A formal letter to August removed satisfaction, was reminded July that effect dated was mailed to continue at his loca- if he wanted Arnott, who then retained counsel. tion, comply with Amoco’s he would have to Amoco was advised letter its Au- requirements. gust being treated by 6 takeover was Ar- gas shortage The severe nationwide involuntary nott as an cancellation of the of 1973 spring occurred in the August lease. Arnott left the station 1,May brought problems. additional On that date Amoco hand-delivered a On pro- an allocation Amoco established advising letter to Arnott him that his lease gram each Oil dealer. Arnott Standard being September cancelled effective program and limited followed the allocation because of violation of 24-hour Nevertheless, he often sales to customers. Subsequently clause in the lease. Amoco on several daily exceeded his allocations and Sadler, leased the station to J. K. and Ar- gasoline. occasions ran out of inventory nott sold his Standard (cid:127)carwash new lessee. Additional facts to the Dick representative, Eventually Amoco’s by the will be reviewed in disclosed record Lucas, Ar- suggested program whereby of the issues connection with discussion daytime place signs up nott was to appeal. raised Amoco in this gasoline indicating that he was out of evening, then in the when the service sta- II. Fraud and Deceit. close, tions downtown he was to re- would there is no initially contends signs gasoline. pur- move the and sell misrepresentations, much any evidence of pose was to send motorists downtown in the of a misrepresentations less evidence of ma- daytime. Arnott refused because the costs fact; terial no evidence that the statements prohibitive. product His main knowingly false claimed be false were gasoline. open during day- To remain made; when of an intent and no evidence changes grease jobs time for oil was too already contentions have defraud. These costly. of the facts been answered in our discussion During the last two opera- weeks of his elaboration. require above and no further gasoline tion Arnott ran out of most eve- together We of evidence course view the nings eventually closed the station be- drawn with all inferences reasonable profitable cause it was not open. to remain to the light therefrom in the most favorable addition, very customers became irate record, reviewing the jury verdict. After pulling only after station to find into the we are statement agree inclined to with the gasoline unavailable. Amo- denying by made the district court in situation Arnott advised Amoco of his co’s motion verdict: for a directed closing and that he was p. down from 10:00 I must confess that I’m somewhat However, m. to 6:00 a. m. Amoco advised shocked with the manner in which the Arnott that he was in violation of the lease shows that evidence Standard failing operation. to maintain a 24-hour Company negotiate undertook to lease, to, dealings in its frustrated, try and to Arnott July became and on lease, its in connection with the dealer 17,1973, signed agreement a cancellation law, completely frustrate the antitrust voluntarily leave the station. Later it, in and the decisions under the manner day position he reconsidered his and they in which did this. representative called an rescind Amoco all, get days they go his consent to the cancellation. A few First of and this — negotiate They put as an ad- marketing representative, later Amoco this lease. 880 receipt

dendum to the lease a additionally acknowl- Amoco contends that even if edging that the lessee has copy received a representations claimed to be fraudu policy statement of the Standard fraudulent, they lent were were prior made * * * they proceed Oil. And then lease, to the execution of the renewal practically every single violate one of the 8, 1972, was executed on December for an paragraphs in the policy statement. one-year period, additional and that Arnott knowledge had full falsity of such when he Fraud, fact, like other issues of executed the new lease and the' amend may by be established arising inferences concerning ments thereto the carwash. from all the other facts and circumstances right Thus Arnott waived any to sue for in evidence. Corp., Aschoff v. Mobil Oil 261 alleged such representations; fraudulent (S.D.1977); N.W.2d 124 Funke v. Hol Int'l, Inc., see Taute v. Econo-Car 414 F.2d Co., land Furnace 102 S.D. N.W.2d (9th 1969); Commodity Cir. Credit amply supports The record Corp. v. Rosenberg Bros. & jury finding, implicit in its verdict and (9th Cir.), pertinent interrogatories, answer to the (1957); 78 S.Ct. and L.Ed.2d guilty misrepresenta Amoco was estopped Arnott questioning from fact, tions misrepre of material that the validity of agreement provi the lease sentations were known to be false when Schutterle, sions therein. See made Schutterle and were made with intent to de fraud, (S.D.1977). Moreover, N.W.2d and that Arnott relied thereon in entering entered into an accord and satisfac into a lease with Amo tion with by negotiation co. Amoco agreements execution of the lease rider Amoco further any contends that in acceptance payments thereunder. S.D. event Arnott’s reliance thereon did not Compiled 20-7-1, seq. (1967). Laws et §§ proximately cause the loss of his station or any other loss because the initial lease had fully The district court instructed expired. Arnott, The short answer is that urged on the defenses Amoco of previous based on his experience operating waiver, and satisfac estoppel, and accord Standard representations stations and on proposed by tion. The instructions made prior Amoco’s Dick Lucas to Ar factual is Amoco. Each involved defense leaving nott’s Minneapolis entering into against sues which were determined lease, the first Sioux Falls was led to be amply supports the jury. The record lieve that he entering dealership into a jury’s issues. For exam resolution of these prospects excellent an extended ple, it can record hardly be said on this period of long performed time as as he Arnott, fraud, knowledge with full satisfactorily as a dealer. Under the cir asked for conces and received a material cumstances, could find that Prod. sion from Amoco. United Forest See mere fact that the initial lease had been Baxter, (8th 1971). v.Co. 452 F.2d 11 provide amended to for the carwash instal damages prox The matter of the amount of lation and had later been renewed and deceit imately caused Amoco’sfraud one-year second lease did deprive Ar Damages,” “V. in will be discussed under nott of his anticipated long-term dealer re fra. lationship with Amoco at the new location. Amoco’s contention that the testimo Fiduciary Relationship. III. ny regarding alleged the misrepresentations parol violated the evidence rule is not well Amoco breached the alleged that taken. Such testimony permitted is by when a to Arnott terminat- fiduciary duty owed contract is induced or procured by ing good fraud. cause and not his lease without Sabbagh v. Professional & during Business faith good Men’s dealing with Arnott in Life Ins. 79 S.D. 116 N.W.2d the the lease term. The court instructed (1962). relationship fiduciary that a existed The fact that here asserts plaintiff.6 and the Shell its the defendant between rights as a landlord to terminate a lease does not the evidence Amoco contends inquiry. the It is now is not end fiduciary rela- existence of a support the recognized simply species that a lease is in in- the court erred tionship and that happens to concern real of contract as a relationship existed structing that the estate, and we must determine under Further, argues matter of law. law the construc- principles of contract lease for terminated Arnott’s properly it in a question tion of the in document operation as maintain a 24-hour failure to true with the intent manner consistent set out in the lease.7 expecta- and purpose and the reasonable fiduciary of a re- Although the existence suggested only parties tions of the as but the question, the dealer-oil the of the instrument lationship is close contents relationship that existed be- whole of the subject the company relationship has been * * tween them. *. current litigation, much recent and the Furthermore, apparent it should be authority recognizes that a fran- trend of with a tradi- dealing that we are not here a service relationship chise exists between relationship tional landlord-tenant but company whose station dealer and the oil essentially a form of com- with what Inher- promoting. trademark the dealer is franchise —for the mercial venture —a relationship fiduciary is a ent in a franchise marketing products, in which Shell’s duty. common parties both have a interest and that a fran Jersey A New ruled profit from the activities of the other. between tenant-dealer Mari chise existed premises interest in these is obvi- Shell’s landlord Oil Co. in Shell Oil nello and Shell ously more than the interest of a land- Marinello, N.J.Super. Co. lord, and Marinello’s interest transcends (1972), aff’d, A.2d 253 63 N.J. 307 A.2d that of a tenant —his investment 920, 94 (1973), cert. very remaining depend livelihood on his within the good graces local 5. Ct. 39 L.Ed.2d Shell’s presented, fiduciary cumstances that the defendant’s relation- are instructed that a [Y]ou ship implied supply plaintiff and the existed between the defendant conduct with sufficient that it would relationship plaintiff. fiduciary is one one quantities gasoline A and oth- placed by trust or confidence founded on person person. quires petroleum products plaintiff er to enable the integrity fidelity of another operation, you to maintain a 24-hour may then relation, of such a the law re- Out find also defendant’s failure to party exert undue influ- that neither implied fulfill that condition would excuse other, upon pressure ence or take selfish plaintiffs to maintain a 24-hour failure advantage with the sub- of his trust or deal operation of station. way ject matter of the trust such a as You are instructed that under the laws of prejudice except himself or the other benefit in the exercise of the utmost the State of South Dakota the failure of a party good faith and perform agree- under the terms of an knowledge the full and consent of the party’s perform- ment is excused when the person other involved. prevented ance is party, the act of the other operation of law. court further 7. In this connection the district The district court further instructed the inter alia : instructed as follows plaintiff essential you present- elements which If find that the circumstances during period question must establish: ed the time First, maintaining such that the reason for a 24- the defendant terminated its fulfilled, operation plaintiff good hour you may could not be then lease without cause. deciding consider that fact regard, good In this cause is defined as plaintiff substantially performed whether the his by plaintiff substantially perform failure lease, obligations under the terms of the obligations his terms to the defendant under the notwithstanding failure to maintain a 24- lease; operation. hour Second, proximate re- that as a direct and under the laws of the State of South Dakota that the terms of the contract the conduct (cid:127) You are instructed that sult of the defendant’s termination of the lease, loss; plaintiff suffered a may implied if manifested Third, monetary loss. amount of that Therefore, you parties. if find that under all the facts and cir- should who,

employees as the record here dem- and Amoco’s control over product Amott’s onstrates, exercise final and absolute au- advertising as indicated the forced re- thority over his tenure as a Shell dealer. turn Obviously, Goodyear tires. franchise relationship in which Arnott and (citations omitted). Id. 294 at A.2d See profit Amoco had a common interest and Quinn, Corp. Amerada Hess v. 143 N.J.Su- other, the activities of each and not the per. 237, (1976). 362 A.2d 1258 typical relationship, landlord-tenant existed. recently, Pennsylvania Supreme More in Atlantic Court determined Richfield Co. franchisee, pursu A unlike a tenant Razumic, (1978), v. 480 Pa. 390 A.2d 736 ing interests, goodwill his own builds company that while the dealer and oil his own goodwill business and the tenant, landlord and their lease and busi- franchisor. Atlantic Richfield Co. v. Ra practices ness indicated a franchise relation- zumic, supra, 390 A.2d at 742. This facet of ship. The court defined a franchise as a the relationship recognition has led to the license from the owner of a trademark that relationship imposes franchise permits another to product sell a duty upon franchisors not to act arbitrarily service under the name or mark. Id. 390 in terminating the franchise. 740, quoting A.2d at from Piercing Pagoda, Arco dealer such as Razumic can [A]n Hoffner, Inc. v. 465 Pa. 351 A.2d time, justifiably expect effort, his purchased Razumic fuel and and other promoting investments products other from Arco and resold them goodwill destroyed of Arco will not be under the Arco trademark. Razumic was a result arbitrary of Arco’s decision to required open to have his station twenty- terminate relationship. franchise day, adequate four hours a to maintain Consistent with expecta- these reasonable attendants, efficient and to allow Arco to tions, obligation and Arco’s to deal with inspect the station. its franchisees in good faith and in a performance The course pursuant manner, commercially reasonable Arco parties between the was con- arbitrarily cannot sever its franchise rela- strong sidered a indication of their relation- tionship with contrary Razumic. A con- ship. Id. 390 A.2d at 741 n.6. Because the clusion reap would allow Arco to the ben- facts practice showed the actual of a fran- efits of its pro- franchisees’ efforts in relationship, chise the court did not feel it moting goodwill of its name without significant was the service station regard for the franchisees’ interests. specified lease had not a franchise relation- (footnote omitted). Id. 390 A.2d at 742 See ship. ruling In that a franchise relationship Seegmiller Men, Inc., v. Western 20 Utah 2d existed, the court determined that “it (1968); Oil, 437 P.2d 892 Ashland Inc. clear that Razumic was not pursuing solely Donahue, (W.Va.1976); 223 S.E.2d 433 Rather, his own business interests. Razum- Brown, Franchising Fiduciary Relation- ic prod- conducted business and sold his —A ship, (1970-71). 49 Tex.L.Rev. 650 prescribed ucts in accordance with methods Arco.” Id. 390 A.2d Marinello, Shell supra, Oil Co. v. 262, 263, A.2d at ruled public clear that It is likewise Arnott was policy required a implied term to be pursuing solely his own business inter service station lease that the lessor cannot relationship ests in his with Amoco. Arnott refuse to renew good the lease without products sold Amoco under the Amoco cause. The court stated: trademark, expected open to remain twenty-four day, responsible Surely person no hours would make the kind of subject hiring adequate help, and was investment in money, time and effort as representatives. did inspections from Amoco Marinello without the reasonable ex- pectation examples Further of Amoco’s control are substantially per- if he directives, Shell, pricing require Amoco’s Amoco’s obligations formed his the latter Stamps, ment that purchase Green would in turn continue to renew his lease

883 Act, Laws, was, Compiled Franchise ch. 37- of S.D. dealership. He virtue (1977) in rela- position Compiled their 5A in Laws Shell’s dominant 1974. S.D. legal structure tionship 37-5A-66(7) (1977) prohibits unfair or § not agreements whose terms could inequitable conditions in terms or franchise rely upon good to Shell’s vary, compelled prac- agreements inequitable and unfair or these living up expectations. in to faith Although this stat- tices the franchisor. controlling ute is not since the lease at 262. Id. 294 A.2d initiated in 1973. It is rele- was fiduciary nature Further indication posi- in Dakota’s determining vant South relationship is found in the of franchise tion terminations. In regarding franchise general legisla- franchise surge recent Marinello, supra, 294 both Shell Oil Co. v. 1977, 1, legislation May tion. under As of 263, Co. A.2d at Richfield v. and Atlantic prohibited are from ter- which franchisors 743, Razumic, the courts’ supra, 390 A.2d prior to the their minating franchises end of exem- cause, public policy decisions required are to relied on the good without terms though if goodwill plified by franchises payments for the state statutes make controlling not renewed at the end of were because are terminated or statutes term, failing prohibited are from to their had estab- parties enacted after the expiration at the relationships. renew franchises lished their franchise has good adopted cause been terms without reinforcing statutes were viewed as ob- Baird, in and Puerto Rico. twelve states ligations relation- inherent in a franchise Hay Bailey, Regulation Government & ship. The Dakota statute indicates South Franchising, Prop., 112 Real Estate Real inequitable that in unfair or South Dakota 580, (1977). Congress Tr. J. 594 has Prob. & practices by a will not be franchisor tolerat- legislation specifically reg- recently enacted ed. South law therefore Dakota indicates relationship between service ulating the of a that the franchisor and franchisee ser- and their franchisors in the station dealers operation in a vice station are involved fidu- Act, 15 Marketing Practices Petroleum ciary relationship whereby franchise 2801, seq. (1978). “Congress et U.S.C. § parties good should act with faith toward sought led remedy situation which had Nichol, during each other. an infor- Judge complaints franchisees of ‘numerous mal motion for a discussion of Amoco’s di- terminations or non-renewals unfair verdict, it was view rected indicated arbitrary their franchises franchisors for Dakota, enacting the in 1974 South ” reasons.’ v. discriminatory and even Saad Act, what codifying Franchise “was (E.D. F.Supp. 115 Shell Oil 460 Dakota, in South really common law Mich.1978), 95-731 at 17. quoting from S.R. that, opinion anyway.” It court’s was the prohibits The Act the franchisor from ter- light position in dic- superior of Amoco’s failing renew minating or a franchise agreement, tating the the lease terms of specific relationship except under conditions relationship parties was matter grounds. v. Texa- specific Frisard give great weight We of law.8 the dis- co, Inc., (E.D.La. F.Supp. 1097 460 trict court’s view of state law. American 1978). Samson, Motorists Ins. Co. v. (8th Vogel, v. Dakota, 1979); Gatzemeyer Cir. with this accord

South 1976). trend, (8th enacted the Dakota 544 F.2d modern South contends, true, governor did not vetoed become as Amoco that the court’s It is York, Corp. law. The therefore, that New from Mobil v. court concluded instruction was taken Rubenfeld, any fiduciary policy negated 72 Misc.2d had N.Y.S. Civ.Ct.1972), by failing (N.Y.City only enact a case which the de- termination for cause Rubenfeld, fiduciary Corp. relationship the statute. termination that a exist- Mobil Oil (Sup.Ct. company ed the oil A.D.2d N.Y.S.2d between the dealer and however, 1975). distinguishable appeal. reversing, plainly from This reversed on legislature Franchise that the New York had instant case to South Dakota’s court noted due statute, passed but bill was Act. a franchise light undisputed facts iri same on any thereof, In of material violation case, that this it is our view district which it contends occurred when Arnott instructing did not err in that a fidu operate failed to twenty-four said station ciary relationship par week, existed between the day, days specified hours a seven a instructing requires ties and in that the law in the lease. party

that neither exert undue influence or Amoco contends was insuffi- that there pressure upon supra. the other. note 6 See cient evidence to create a submissible any event, on when the instructions disagree. issue price-fixing. on Al- We fiduciary duty breach of are considered as a though there were conflicts testimo- whole, error, any, was if harmless. See ny of other Amoco’s dealers as to whether Supra. note 7 gasoline calls regarding prices retail that evidence We are satisfied were merely suggestions, there was suffi- amply supports jury’s finding that upon cient evidence which a could find “fiduciary” Amoco duty breached its prices that retail by were dictated Amoco. good dealing faith and fair with Arnott in For example, Mrs. Bill testified that Pasco terminating agreement its lease with Ar she operated and her husband a Standard good nott without cause that as and a direct general station in the same during area proximate and result of the termination same period they and that would receive damages. Arnott suffered calls from Amoco representatives stating price posted. added, what should be She “I IV. Violation of the Antitrust Laws. say would it was suggested price.” not a If deviated, charged during they checked, Arnott “we would be and station, my husband, operated time he his service various he would have conversation * * * representatives Amoco instructed him with them. We would take and put gas prices raise or to lower his retail prices our where had stated.” times; specified specified Similarly, White, operated levels at Greg who attempt vary gaso when he did during his retail Standard station in Falls Sioux prices Amoco, line specified by period, representa- from those relevant testified that call, stating “your was threatened with cancellation or non- tives of Amoco would lease; this, cost your selling price renewal of his short-term station is this.” deviated, price-fixing that as a result of At times when he Amoco’s he received calls activities he from profits gasoline representatives: lost on sales Standard “That— lease; during you know, the term of his and that his we should fall in line with other * * * because, lease was among you cancelled other dealers. they’d remind next reasons, February your he failed to follow the pricing coming up.” di lease is representatives, rectives of Amoco thereby Arnott representatives testified that causing him loss of his business and loss of Amoco would call and tell him what profits. future price retail be, was to and when he failed to any Amoco denied that it violated anti- comply, he would receive further calls ad- trust laws attempted infringe or that it vising him compliance; that he was not in upon or restrict free prices trade or fix one-year his second lease was withheld competition restrain By or otherwise. way during February-May and he was defense, of affirmative alleged placed Amoco probation agreed until he to abide judgment Arnott made his regarding by Amoco; own prices that a by set station; operation of the that if there were couple days after in frustration any representations signed made in connection agreement mutual cancellation gasoline Arnott, prices, renewal same, then rescinded the he was advised thereto, his acquiesced lease and riders an representative keep that he could such conduct and cannot now be heard to the station if he cooperated with resale complain; gave and that the lease itself pricing Shortly there- other directives. Amoco the right after, 6, 1973, absolute to terminate the August letter Amo- dated is to raise or to decrease cancelling that it co notified Arnott 5, 1973, prices. for fail- September lease effective

twenty-four hours ny resentatives ure to roborated ployees. The witnesses of the retail in terms of Amoco witness being “one cent keep respect described Arnott’s the station in connection price to coercion higher.” testimony day. gasoline “fixing prices”; open for generally testified Arnott’s testimo- price with the was also cor- Amoco’s former em- operation usually fixing rep- one nation with at omitted). secured acquiescence L.Ed.2d 505 Davis & íd at Court in In Albrecht v. Herald 309-10, 88 S.Ct. by discussing Co., threats of (1960), observed: “The combi- retailers arose because 362 76 S.Ct. ^[869] U.S. United States termination; suggested prices 29, Co., supra, at 940 80 S.Ct. (footnotes Supreme the com- Parke, 503, was 4 whether Any price-fixing, resale bination with wholesalers arose because agreement, per is a se viola combination or cooperated terminating price-cut- Act, 15 tion of section 1 Sherman ting retailers.” Co., In Albrecht v. l.9 Herald 390 U.S.C. § In the instant case is evidence from there 145, 869,19 (1968), 88 L.Ed.2d 998 U.S. S.Ct. jury which the could find that Arnott and “agreements Supreme the noted that Court other means of dealers were forced less than those to prices to fix maximum ‘no tactics to set threats and other coercive cripple the freedom of prices, fix minimum gasoline prices fixed prices retail at ability thereby traders restrain their renew the not to Amoco. Amoco’s threat judg in accordance with their own sell make the deal enough annual lease was ” 152, 873, quoting at 88 at ment.’ Id. S.Ct. sug the ers toe the line. In this context Seagram Co. v. & from Kiefer-Stewart gested required price. price became the 211, 213, 259, Sons, 340 U.S. S.Ct. 26, Corp., See Lehrman v. Gulf Oil Furthermore, (1951). supplier “a L.Ed. 1077, (5th Cir.), 37-41 U.S. its retail outlets to may not use coercion on 687, (1972); Phillips 93 S.Ct. 34 L.Ed.2d * * * maintenance. price achieve resale Corp., v. Crown Central Petroleum not what the coercive device matters [I]t F.Supp. (D.Md.1975). 760-64 Simpson is.” 377 U.S. Union jury The evidence in could find from the 1051,1054,12 L.Ed.2d 98 84 S.Ct. constituted the case that Amoco’s actions Robbins, In United v. McKesson & States combination under either of an unlawful 100 L.Ed. 1209 (1) two theories: That a combination exist- (1956), Supreme emphasized: the Court those ed Amoco and Arnott between require held too often to It has been though unwillingly, complied, times he even fixing is con- price elaboration now that directives; (2) pricing with Amoco’s trary policy competition to the under- with other deal- that Amoco had combined lying the Act and that its ille- Sherman pricing acquiesced ers who in the enforced gality depend showing on a of its does not Co., supra, 390 policy. Albrecht v. Herald unreasonableness, conclusively since it is 869. We are U.S. at 150 n. 88 S.Ct. presumed unreasonable. It makes to be the supports satisfied that the evidence no whether the motives of difference in violation of finding price-fixing evil; whether participants good are or Sherman Act. accomplished by ex- price fixing is urges that Arnott further more subtle Amoco press contract or some between means; connection participants possess failed to show a causal whether the combina control; alleged price-fixing unlawful whether the amount of market lease. We the termination of his large affected is or tion and interstate commerce small; discloses that agree. cannot The evidence or whether the effect contract, among “Every part: the several straint of trade or commerce 9. 15 1 reads in § U.S.C. * * * * * * illegal[.]” conspiracy, States is declared to be in re- combination tax told Arnott nott’s income returns. comput of Amoco After representative $11,886, if keep ing he were more Dr. Johnson he could station difference pricing Amoco’s work agreeable adhering multiplied figure by Amott’s life policies. that other dealers lease It also noted expectancy from date oper- hours of terminated, produc were allowed to reduce their with an allowance shortage. during gasoline ation increase, present its tivity and reduced it to infer failure to adjusted could that Arnott’s $318,622.10 value Johnson used pricing follow Amoco’s directives was the gross making computations. income in his proximate cause of the termination expert’s contends subsequent lease of income as a loss projection speculative of income of loss result thereof. completely erroneous because had a lease which one-year nonrenewable Damages. V. February its expire terms would Initially Amoco contends that Ar 1974; measure further, proper the fact of nott has failed to establish dam damages going value of a is the concern age resulting acts on the from unlawful on Al- destroyed Amoco relies business. part damage arising of Amoco. The fact of Co., 129-31 brecht v. 452 F.2d Herald activities price-fixing from Amoco’s has (8th 1971), that proposition Cir. for the been discussed above. claim for Arnott’s there of future recovery can be no for loss damages arising out of contention his that such; profits may profits such be con- fraudulently Amoco induced him to enter purposes determining only sidered for of into the lease is also based on capital- lost the using value of business wrongful termination of lease. He the tes profit ized of The diffi- method valuation. he tified that sold his home and his business culty analysis with Amoco’s Albrecht Minneapolis acquired and the dealership case is that it overlooks that the the fact representations upon in Sioux Falls the of permitted district Albrecht the jury court in long operated Amoco that as as he the to make an award based on the difference in a service station reasonable manner and between market at the time the fair value profitable it was a for venture himself and received, of sale actual price and the sale Oil, operate he could to Standard continue plus profits. the future Albrecht v. loss of damage the station. The fact of is Arnott’s F.Supp. (E.D.Mo.1970), Herald profitable loss of caused by a business Amo 1971). modified, (8th Cir. In 452 F.2d wrongful co’s termination the lease. of court, court reversing the this held district plaintiff a improper permit that it was Damages. VI. Amount of damaged antitrust violation to recov- by an damages claim for on all three Arnott’s going er both as a the value the business complaints (1) of Amoco’s fraudulent mis damage concern at the time of the representations inducing him to enter future after profits of that the business agreement, (2) into the lease breach of fidu damage. poten- time of the profit Future (3) ciary duty, and violation the antitrust valuing tial is taken into consideration profits. laws is based loss of future In going the business as concern. expert this connection Arnott the offered Johnson, testimony of Dr. Dennis Professor In the instant case it must be ac at University knowledged Economics the sell his South that Arnott cannot Basically computed Dakota. Dr. business fair Johnson for the market value also However, average profits. Amott’s income the recover the rec Standard future during years station 1972-73 and com ord sale of his demonstrates Arnott’s pared same average inventory with Arnott’s in to the new lessee selected come willing buyer-willing without station in and 1974- Amoco was sell figures supervision, 77. The from er were obtained Ar Under Amoco’s transaction. jury’s $100,000. damages

10. The award of actual inventory argues his short-term Arnott sold Standard damages. future lessee, sales- nature of the lease limits a former Standard Oil the new However, ignores the evidence from Chamberlain, Dakota, this Jay man from South properly which the could infer Arnott’s initial investment in Feb- Arnott’s Sadler. long-term on future expectations, based $27,722.14, ruary 1972 was sold profit prior related to him projections $30,638.05. inventory to Sadler lease and custom execution of the first jury could infer from all of the circumstanc- practice renewals known long-term it was a forced sale with no allow- es experience through prior going of a goodwill or the value ance for Amoco. The instructed trial court and therefore that Arnott had not business the terms and condi that it should consider value of his busi- received the fair market testimony tions of other the lease and all ness. say cannot We concerning renewals. Co., supra, 452 F.2d In Albrecht v. Herald finding that support evidence does not 128-29, the court discussed numerous at long-term in Amoco’s actions indicated a profits were allowed cases in which future misrepresentation tention or fraudulent calculating a method of and used as such an intention. in damage to the value of the business concerning dispute There was a factual no other reliable method of volved because of Ar- the duration and the reasonableness valuing presented.11 business expectations. As stated in Lehrman nott’s Corp., 500 F.2d 659 Lehrman v. Gulf Oil Corp., supra, v. Gulf Oil 47: 1974), (5th during period The duration of the (1975), the 43 L.Ed.2d 400 profit plaintiff might expected recognized going concern value and case; vary suscepti- will it is from case to viable alternative profits lost future are formulation, precise ble of no and must damages. measures of antitrust jury in- processes be left to the Clearly, going concern value and lost fu- conflicting formed the presentation of viable alternative profits ture are each course, might court evidence. Of the damages. Future measures of antitrust may jury that it properly instruct profits cannot be condemned as inordi- in its deliberations consider as one factor going nately speculative more than plaintiff had length time which of is a crucial concern value since the former time of the been in business as of the go- component of the latter. In addition actions; but anticompetitive defendant’s ing goodwill may concern or value business, precise like the youth of a problems proof if the present difficult never alone doing-in, will manner of its particular places lessor of a station re- restrictions enough justify severe on the transfer of the strictive conditions damages. The upon the court duration Finally, profits accompa- lease. future may a new trial on remittitur if condition any for decline in asset nied an award jury verdict is strongly it feels fully compensate a values will often more arbitrary and im- excessive. But it is measuring lost businessman earn- proper damages as a matter of to limit ings, just what it is worth to someone not plaintiff’s precise period law to the earnings. else to reach for those the reason for that operations business if (footnotes omitted). Id. at 663-64 See used to either the means limitation is 26, 464 F.2d Corp., Lehrman v. Gulf Oil or plaintiff drive the out of business denied, 1077, (5th Cir.), 409 his business relatively history 43-44 cert. U.S. short 687, (1972). 665 before its demise. 93 S.Ct. 34 L.Ed.2d denied, 843, Lessig (10th 1959), v. Tidewater cert. Cir. U.S. 80 11. Cases 363 discussed were Co., denied, 1608, (1960); (9th Cir.), and Twenti cert. S.Ct. 4 L.Ed.2d 1727 327 F.2d 459 Century Corp. 1920, eth Fox-Film v. Brookside Thea 1046 377 U.S. 84 S.Ct. 12 L.Ed.2d denied, Co., Corp., (8th Cir.), cert. (1964); Sinclair Ref. ter Osborn v. 324 F.2d 194 F.2d 846 Bldg. (4th 1963); 1348 Prod. v. 96 L.Ed. Atlas Co. Cir. Co., (1952). Diamond Block & Gravel 269 F.2d 950 issue, Amoco contends that Dr. Johnson was quires little comment. The thrust of Amo The contention is without merit and re co’scontentions is a rehash of its qualified Finally, testify with respect an expert to the argument witness. damage c. Violation of anti-trust d. a. False and fraudulent b. Breach of representations Action Atty’s. fees in State fiduciary duty Court laws ANSWER ANSWER ANSWER ANSWER (yes) Yes Yes Yes Yes ^[12] (no) that the provided $100,000 fact that the lease The district court trebled the actu- one-year al or controlling compensatory term is and therefore damages in view of the computations jury’s respect finding liability with to loss of future under the anti- trust profits laws. should not have been admitted. Dr. Amoco contends that the verdict is am respect computations

Johnson made biguous speculate and that the must court expectancy Arnott’s work and loss of life meaning; way as to its there is no of deter income and present reduced the same to mining portion lump what sum dam weight given value. The to be thereto was item; ages was allotted to each it cannot be matter. We find no abuse of discre $100,000 properly assumed that attrib tion the trial court in admitting such claim; utable to the antitrust the court testimony might for whatever assistance it award; trebling erred in and therefore give weighing to the the evidence a new trial must Rea v. be ordered. See with respect damages. Holmgren Cf. Co., (3d Cir.), Ford Motor Inc., Massey-Ferguson, (8th 516 F.2d 856 95 S.Ct. U.S. 1975). Furthermore, L.Ed.2d 106 damages awarded treble amount of VII. Instructions. $300,000 punitive damages and allowed Appellant makes the allegation broad $25,000 stand, making thus a total that the court’s instructions basically $325,000. award of treble Punitive and supports allegation erroneous and this damages cannot both be awarded for viola a lengthy alleged enumeration of errors in tion Packing of the antitrust laws. Hansen the instructions themselves and in the Co. v. Armour F.Supp. give court’s failure to proposed instructions. (S.D.N.Y. 1936). effect, appellant merely repeating the argues jury that argument that the evidence offered did not found for him on all three counts13 sub create a submissible case. We deem it suf- mitted to it and that the sole evidence of say ficient to that we have reviewed the damages offered was the same on all three and, instructions in detail when considered counts—loss of profits. future Arnott also whole, as a we are satisfied that the issues points prior out that making the record were properly jury. submitted to the instructions, on Amoco asked for interroga tories on the liability, issues of which were Ambiguity. VIII. Verdict granted, inquired and that the trial court jury general The returned a verdict in Amoco counsel pro whether cared to favor of against Arnott and Amoco in the pose any interrogatories damages, on $100,000 compensatory sum of actual or they did not. We cannot consider the latter damages punitive and exemplary and dam- argument inquiry response because the ages $25,000. jury further answered were However, not made on the record. special interrogatories respect to liabil- concede, counsel for Amoco does and the ity only against Amoco: indicates, record objection that no you

Did find Defendant American Oil made Amoco to the except verdict form Company liable based on: general objection there were no Attorney fees in supra. state court action were con- 13. See n. 12 dispute, ceded not to be in so there will be no supra. further discussion thereof. See n. 3 ages resulting from violation of the the circum anti- submissible issues. Under however, request are, trust any Amoco to laws. We satisfied that stances failure of interrogatories on special instructions or evidence amply supports an award of $100,000 objection gener to the damages compensatory damages or to make actual and (1) al in a waiver of such any form results on false verdict the three counts 51; objections appeal. (2) Fed.R.Civ.P. Mis breach of representations, fraudulent fi- Gravel, City souri Pac. R.R. v. 592 F.2d Star duciary (3) of the duty, and violation anti- (8th 1979); Cir. see Richardson v. Com trust persuaded laws.15 We are also Workers, munications 804-05 the jury’s against award to Arnott and (8th 1973). object Cir. also failed to punitive exemplary damages Amoco of or seek the verdicts were clarification when $25,000 supported by in the sum objection waived rendered14 and therefore record. to the form of the See Tennessee verdict. Upon appellee George condition that Ar- Workers, Consol. Mine Coal Co. v. United nott thirty days file a within remittitur (6th 1969), Cir. F.2d 1200-1201 portion judgment hereof of that $125,000, excess of interest plus and costs L.Ed.2d 256 from the date was entered here- judgment It if it plain is our task to determine in, the judgment Otherwise is affirmed. to instruct error for the court not this cause is remanded for a new trial. respect awarding damages sepa- Affirmed on remittitur condition rately as to each count and not to submit be filed. interrogatories forms as or verdict to the damages amount of found on each count. exception BRIGHT,

Any plain Judge, to Fed.R.Civ.P. concurring error Circuit “ exceptional 51 is dissenting: ‘confined to case seriously where the affected the error has I concur in the reached result fairness, integrity, public reputation of majority, but I believe only because ” judicial proceedings.’ Barron and Holt- substantial supports the record evidence in zoff, Federal Practice and Procedure 475 the jury claim of fraud and verdict on the (1961 ed.), quoted Horace v. St. Louis payment because I believe that R.R., (8th Southwestern F.2d constitute suggested remittitur would 1974). I litigation.1 this reasonable resolution of that, law, that the fail do not a matter of persuaded We are believe ure of the between the fiduciary relationship trial court submit verdict existed parties I believe interrogatories theory case, forms or on each that the this nor do recovery prevented trebling it from evidence a violation of the demonstrates $100,000 damages majority’s actual awarded in the antitrust laws. Because rea- general purely soning appears be to me specu verdict. It would on those issues to be general may lative to the entire in error case be re- assume that and because this $100,000 tried, verdict of awarded as I my was dam- set forth views dissent. present appellant’s objection proof 1. Counsel for Amoco when the The that the of 14. jury requested damages appellee specula- returned its and in fact verdicts offered juror individually polled merit, appear that each be on each tive has but it does not every interrogatory appellant objected and verdict. some the evidence now questioned. Moreover, jury quite obviously Although parties, sug- not raised we accept plaintiffs 15. did not expert. the calculations of occurs, gest prac- that if a new trial the better circumstances, agree Under these I jury any tice is to omit from the instructions majority may with the that the award trebling damages reference to the tion with the in connec- appellee accepts stand if the the remittitur. recovery damages under the Blackmar, antitrust laws. See Devitt & 3 Fed- (3d eral Practice and Instructions 90.39 ed. § 1977). The Dakota Between the Parties. South franchise law contains Relationship 1. The registration public detailed disclosure twice instructed the The district court provisions akin to those found in the Securi- law, that, fiduciary a as a matter of 1933, Act ties 15 U.S.C. 77a-77aa §§ relationship Arnott and existed between regulation This scheme of franchise Amoco, to act for itself requiring Amoco departure represents doubtless a substantial and the full only good with utmost faith from the law Dakota. common of South Arnott. These knowledge and consent of But even if the franchise statute reflected strictures, in the case of though appropriate existing applicable common law standards trustee, applied to a com- should not be here, to the challenged lease the district Rather, mercial the lessor should be lessor. unjusti- court’s instructions would remain governing contracts in held to the rules fied. unfair or merely enjoins The statute might general. a franchisor It is true that inequitable Compiled practices. Laws S.D. only if the evidence have other duties. But 37-5A-66(7). Ann. 37-5A-51 It §§ relationship lessor and les- shows between does fiduciary relationship not establish a extending into other areas significantly see between franchisor and franchisee or im- necessary to characterize is it or desirable pose good faith. standard of utmost arrangement as a franchise. Even majority go The cases cited no which of the full then one must determine further than the Dakota statute. South gamut fiduciary responsibilities should Marinello, N.J.Super. Shell Oil Co. v. Eaton, required of the franchisor. See 357, (1972), aff’d, 294 A.2d 253 63 N.J. Towne, Yale & Inc. v. Sherman Industrial (1973), 307 A.2d 598 Equip. F.Supp. (E.D. Mo. (1974), 39 L.Ed.2d 475 1970). my In the district view both nowhere concept mentions the of a fiduci majority deciding and the erred in this mat- ary Rather, relationship. the court there ter; fact, Dakota law does not South simply granted prayer dealer Marinello’s justify they the conclusion reach. inferring for contract a con reformation majority acknowledges (ante, The at tractual term that could refuse Shell 8) Judge instruction 883 n. Nichol’s (comprising renew his a lease franchise both fiduciary duties was based on a New only and a agreement) multifaceted dealer York case that was later reversed. good cause. Co. v. Atlantic Richfield however, majority maintains, the in- Razumic, A.2d 480 Pa. properly struction reflected South Dakota (1978), only is to the same effect. Not do subsequent law because of the enactment general principle these cases fail to state a statute, comprehensive there of a franchise duty, readily also fiduciary but are Compiled Laws Ann. ch. S.D. 37-5A. The distinguishable on their facts from case majority quotes Judge expressly Nichol.as. at hand. Here Arnott breached terms construing that franchise statute as a codi- of agreement by failing stay his lease fication of the common law of open South Dako- twenty-four day; hours a in terminat Ante, lease, ta. ing 883-884. I do not so proceeding read Amoco was under the record.2 permitting a clause for cause.3 termination passage majority, ing really relied on what was the law in South Dakota plaintiffs anyway.” attempting explain (Emphasis added.) counsel was coun Plaintiff’s Jersey Superior interpretation responded, exactly the New sel Court’s “That’s what the New Jersey of that Court state’s franchise statute in Shell said.” Oil Co. Marinello, N.J.Super. 294 A.2d 253 aff'd, (1972), 402, (1973), purpose statutory 63 N.J. 307 A.2d 598 3. The evident * * * denied, 920, 307, requirements cert. 415 U.S. 94 S.Ct. 39 common law termination (1974). Judge interrupted protection L.Ed.2d 475 Nichol is the of franchisees who have observe, words, codify conscientiously carry to “In other striven to out their obli- ing gations agreement. They the common law.” Plaintiffs counsel re under the franchise plied, exactly right.” Judge prevent “That’s Nichol were not intended to the severance said, maybe deliberately disregard then “Just as South Dakota did those who reasona- Act, requirements adopted codify when it ble the Franchise contained in their contract

891 case; conspiracy in this a contract be into this case entered parties in The fiduciary rela- admittedly Arnott and Amoco was relationship, not tween business interests of party served tionship. reading Each of the record is My innocuous. properly other, quite also each but observation at Judge Nichol’s supported by court The district interests. sought its own “I case: don’t see plaintiff’s the close of terms of find the unwilling to or combination conspiracy any evidence of ” * * * Oil Cf. Shell unconscionable. Judge in this case Unlike [.] at 602-03 Marinello, A.2d supra, 307 v. Co. implicit finding of Nichol, this I believe provision disputed termination (striking the Arnott’s anti activity unilateral vitiates public contrary to as unconscionable Quality Mercury, Inc. v. trust claim. See unnecessary it was policy). I think 466, Co., (8th 469 Ford Motor conclusion, I believe the go this beyond 914, 1976), 97 433 U.S. S.Ct. when, the facts of error on committed 2986, 53 466 L.Ed.2d jury that a strict case, it instructed this The in this case reflects that Ar- record Ar- relationship existed between fiduciary posted gasoline prices his retail usually nott and Amoco.4 nott penny suggested or two above those II. The Antitrust Claim. to “coffee” Amoco. deviations led Such representatives, change. but no Amoco com- majority concludes that The regarding prices only In the direct incident per se viola- prices, vertical to fix bined employees, Dick recalled Arnott or his Act, 15 1 of the tion of section Sherman Amoco, Lucas, re- manager sales field Having reviewed (1976).5 1 U.S.C. § from Arnott day purchase gas fused one record, insufficient I believe that there is expensive. thought because he it was too Specif- this conclusion. support evidence prices or Amott let his stand.6 proof of a combination ically, I find no sales, maintaining Corp. the volume of Amott’s in Hess in part the franchisor. [Amerada 1258, 237, payments N.J.Super. Quinn, because his lease were based 362 A.2d V., solely gallonage. (1976).] T. on fuel See Continental Inc., 36, 24, Sylvania 433 U.S. 56 n. Inc. v. GTE by the not made harmless 4. This error was 2549, (1977). Amoco 97 S.Ct. 53 L.Ed.2d 568 occurred, majority it as the context in which important pricing also had an interest Ante, disputed suggests. The instruc- at 884. generally. reputation Success in of its stations repeated by benefit the court without tion was restraining prices have ad- Amott’s would when, of delibera- after two hours of context and Ar- vanced the interests of both Amoco tions, question, returned with the customers, replicating at the same time nott’s fiduciary duty.” “Define Amott) consequences (with respect of a fully gasoline competitive retail market. See provides pertinent part: “Ev- in § 5. 15 U.S.C. 169, Co., 145, U.S. Albrecht v. Herald * * * contract, ery conspir- combination J„ 869, (1968) (Stewart, S.Ct. 19 L.Ed.2d 998 among acy, trade or commerce in restraint of dissenting). * * * States, hereby declared the several has, however, Supreme displaced Court illegal!.]” to be the rule of this reason in cases such as making agreements to fix only or combinations writing slate with 6. If I were on a clean per illegal. prices maximum se Kiefer-Stewart guidance, see Standard the rule of reason for 211, Sons, Seagram States, 340 U.S. Co. v. & 31 S.Ct. Co. v. United (1951); (1911), 95 L.Ed. 219 Albrecht v. I would be hard 55 L.Ed. 619 supra, pressed Herald 390 U.S. at 88 S.Ct. find unlawful an actual combination V., Sylvania keeping But cf. Continental T. Inc. v. GTE Amott’s in down succeeded Inc., supra was, all, (restoring exploiting cases prices. . the rule of reason in Amott after nonprice addressing legality monopoly pricing power re- of vertical modicum of strictions). Notwithstanding enjoyed by caveat an inter- virtue of his location on distinguishing price highway. from T. V. state Continental restrictions, nonprice 51 n. that, effect, U.S. at many of his Amott testified reasoning in that case charged the Court’s ignorant prices S.Ct. suggests customers were adopted per approach se that may off-highway competitors. He therefore his See survive reexamination. prices; Albrecht advantageous his de- it to raise found Inc., V., Sylvania greatly T. Inc. v. GTE gas Continental reduced. was not mand for 69-70, (White, hand, supra, Amoco, 97 S.Ct. 2549 433 U.S. at a direct interest the other had 892 support majority’s under does not character two theories majority suggests

The “acqui or find a combination ization of the could dealers’ behavior as first, that Amoco conspiracy policy.” in this case: pricing enforced [an] es[ence] Ante, when the latter un- and Arnott combined at frag 885. In contrast to the “pricing willingly complied with Amoco’s testimony quoted by ments of Mrs. Pascoe’s directives”; second, com- that Amoco ante, 885, witnesses nine majority, “acquiesced in with other dealers who bined lessees past present who were Ante, at pricing policy.” the enforced White) (including Greg testified that retail these theories are derived Both of Amoco, gas prices only suggested were Co., Herald 390 dicta in v. from Albrecht authority to possessed that the dealers final 869, 145, 6, 19 L.Ed.2d 150 n. 88 S.Ct. U.S. authority was fre prices, set and that this (1968). applicable one is here. 998 Neither independently. More quently exercised First, support provides over, no the evidence that his lease had not one testified complied with notion that Arnott for the in retalia been threatened or terminated “Directives” “pricing Amoco’s directives.” pricing. Cf. independence tion for suggested merely Amoco’s cannot mean F.2d Company, 512 Umphres v. Shell Oil alone, standing prices: suggestions, such 420, (5th Cir.), 423 U.S. 422 cert. clearly v. Car permissible. Susser (1975) 929, 278, 257 96 46 L.Ed.2d S.Ct. 505, (2d 510 Corporation, vel of vertical (holding comparable evidence 885, Cir.), 85 S.Ct. granted, cert. insubstantial). price clearly fixing to be 158, (1964), cert. dismissed as 13 L.Ed.2d 91 Even if a with other dealers combination 125, 85 improvidently granted, 381 U.S. exist, were shown to I would be loath (1965). 284 The ma 14 L.Ed.2d S.Ct. statutory require- hold that it satisfies the jority referring particularly more must be * * * ment in re- “combination over coffee that Arnott the conversations fact, any straint of trade.” such combi representatives had with Amoco when he wholly nation would be irrelevant to the suggested prices. But deviated from alleged restraint of trade here. Al See changed that Arnott there is no evidence Co., supra, brecht v. Herald 390 U.S. at conversations, prices his as a result of these J., (Harlan, dissenting). The closely or that he thereafter hewed more other dealers in the Falls area had Sioux suggested prices. The cited inci Amoco’s affairs. To little or no interest in Arnott’s with Dick Lucas likewise resulted in dent interest, it was extent that had an change; price no continued to inde Arnott likelihood, the not that of Amoco: in all e., pendently (i. generally higher than Amo keep preferred other dealers period suggested prices) throughout co’s price higher suggested, than as such a Hence, in this case no combi of his lease. more custom might bring them policy well fixing prices nation existed and no actual Friedman, Kroger ers. Cf. Inc. v. Harold Quinn Company, occurred. Cf. Mobil Oil 1978) (finding (3d 581 F.2d 1068 (1st Cir.), dismissed, 375 F.2d 273 involving the similarly dealings collateral (1967) U.S. 88 S.Ct. L.Ed.2d evidence of defendant to be insufficient (affirming antitrust com dismissal an activity). concerted plaint facts). on similar theories, majority’s Under either of the panel’s theory inappli- The second is also “contract, Having Arnott failed to establish to the facts of this case. cable record, conspiracy” combination or essential to his I find no substantial reviewed the Hence, the Act claim. cases evidence of a combination between Amoco Sherman simply finding an antitrust majority upon and its other dealers. The record relies Reason, J., Posner, turn to the Rule of concurring); The Rule of Reason 33 U.Miami L.Rev. Sylvania Approach: (1978); Pitofsky, and the Economic Reflections on 266-68 Analysis Decision, Sylvania Case: Antitrust of Non-Price Vertical U.Chic.L.Rev. Restrictions, Developments in the Law of (1977); Koches, 16 n. 59 Colum.L.Rev. Nonprice Vertical Restrictions: A Welcome Re-

893 controlling Simp sum, violation are not here. In In I believe that the majority’s Co., 13, fiduciary son v. Union Oil treatment of U.S. 84 S.Ct. duties and the anti 1051, trust claims in this case is in (1964), error. I plaintiffs 12 L.Ed.2d 98 chal fear approach their will have also unfortu lenged retail service station leases that nate consequences practice. Arnott “consignment” were tied to agreements ex pressly empowering selling price. fixing (1919); its enforcement made the “consign cerning pricing, hand there indeed, U.S. ment” trade. absolute ^[*] Simpson from Co., ^[*] 250 U.S. at ^[*] »7 term, agreements Simpson 24, right was no such 300, only to set United States S.Ct. 1051. v. Union Oil Court Arnott was 39 S.Ct. contracts in restraint of written presence [his] found, supplier price-fixing own resale 465, Co., promised of this distinguished v. Colgate 63 L.Ed. 992 the case at supra, to set the prices price- term; con “an & 26, 97 increased concentration in the retail market restricted. approach power of termination in circumstances such suppliers lease dom as these (putting aside the issue of clearly utors with GTE Sylvania gasoline dissatisfied of action agreement. uphold breached the S.Ct. 2549.8 taken company replace See Continental T. Inc., a dubious will be lessee, related To limit the majority their lessees and distrib supra, employees whose free express That considerably antitrust claim invites wholesale products. 433 U.S. unduly is terms of his encourages V., say, Amoco’s at 57 n. fraud), Inc. v. I con more Parke, Co., United States v. Davis & 362 sider this to be unwarranted and unfortu 29, 503, (1960), U.S. L.Ed.2d 505 nate. inapposite.

also In that drug ease a manu-

facturer was found to have combined not

only acquiescing retailers but also with

its wholesalers in order to terminate those prices. Similarly,

retailers cut in Al- Co.,

brecht v. Herald supra, 390 U.S. 149-150, 88 S.Ct. the defendant news- America, Appellee, UNITED STATES of paper publisher was found to have com- bined with persons, including two other GIPSON, Appellant. Curtis Allen carrier, rival plaintiff to force to charge No. 79-1670. only the price advertised retail for his news- papers. hand, contrast, In the case at United Appeals, States Court of unilaterally Amoco acted terminating Eighth Circuit. Arnott’s lease. The other Amoco dealers Submitted Nov. 1979. cannot be position said to stand in the Decided Nov. 1979. Parke, the wholesalers in Davis or the rival carrier in Albrecht because had no

power over Arnott. Amoco therefore could

not and employ did not the other dealers as

a weapon dispute in its with Arnott. sure, alleged agreement. 7. To be simply that Amoco Theirs was not a con- promise. breached this But the breach of tract in restraint of trade. contract term contract, does not transform the Examples process may of this be found in so promised, that what it once it now forbids. Carl, Corp., (4th Call Inc. v. BP Oil 554 F.2d 623 argued Nor can it price fixing was a Cir.), denied, cert. 434 U.S. 98 S.Ct. implied term in an replaced contract (1977); Review, Daily L.Ed.2d 280 Inc., Knutson v. fraudulently agreement; induced lease as noted (9th 1976), 548 F.2d 795 above, agreed Arnott never to such a term. If 97 S.Ct. 53 L.Ed.2d 1094 sought Amoco spite of, prices, to fix Amott’s (1977); it did so in and McGuire v. Times Mirror of, not in furtherance F.Supp. (C.D.Cal.1975). terms of

Case Details

Case Name: George Arnott v. The American Oil Company, a Corporation

Court Name: Court of Appeals for the Eighth Circuit

Date Published: Nov 29, 1979

Citation: 609 F.2d 873

Docket Number: 79-1150

Court Abbreviation: 8th Cir.