*3 29, mеnced this action on December CELEBREZZE, Before PECK and 1971, in the United States District Court McCREE, Judges. Circuit for the Northern District of Ohio. The complaint charged that Marathon had vi- McCREE, Judge. Circuit olated sections 1 and 2 of the Sherman appeal This from an order granting the Clayton by, Act and section 3 of Act Company’s Marathon Oil motion for alia, upon its “imposing] inter hundreds judgment n. presents questions o. v. two dealing of lessee-dealers exclusive ar- (1) for review: whether rangements required which court erred in holding that reasonable requirements secure their entire dealers minds could not have found that Mara- petroleum products and batter- thon Oil Company violated either section other automobile ies and accessories ex- Act,1 1, 1 of the 15 Sherman U.S.C. or § clusively from the defendant . . . .”3 Act, section 3 of Clayton 15 U.S.C. 14,2 in cancelling appellant’s Nearly later, § service years the case went lease, and, (2) station whether jury, proofs the dis- to trial before a were provides 1. Section I of the Sherman Act complaint in 3. The continues: part: relevant agreements These contracts and are forced Every contract, upon combination in the form of operators service station their otherwise, conspiracy, trust or or in rеstraint by employees desires and are enforced or among of trade or States, agents commerce the several defendant, of the constantly said who nations, foreign or with products is declared to watch the which are sold the deal- illegal. be . . . operator ers. The service station knows that his lease will not be renewed at the end of the provides: 2. Section 3 of the Act one-year-period, should he refuse to follow dic- any person It shall be unlawful for en prices tated dealing or arrangements exclusive commerce, gaged in in the course of such of the defendant. commеrce, to lease or make a sale or con dealers, 7. Marathon has informed its retail wares, merchandise, goods, for tract sale of including plaintiff, are machinery, supplies, commodities, or other buy the T. B. A. brand items handled patented use, unpatented, whether or preference any Marathon in other and that consumption, or resale within the United buy must such T. B. A. items from Mara- any Territory States or thereof or Dis exclusively. requirements thon not These were any possession trict of Columbia or insular writing, commonly reduced to but are place jurisdiction or other under the orally by representatives madе visit who States, price charged United or fix a there inspect the dealers. The for, from, upon, or discount or rebate such competing the dealers’ stations for merchan- condition, price, agreement, on the or under dise and merchandise from distribu- standing purchaser that the lessee or thereof tors other that such be than requiring Marathon —often wares, goods, shall not use or deal in the returned, if found and threaten merchandise, machinery, supplies, or other offending non-renewal of an dealer’s lease. competitor competitors commodities of a or tying arrangements imposed arе as a mat- seller, of the lessor or where the effect of general practice, ter of and therefore affect a lease, sale, such or contract for sale or such substantial volume of T. B. A. sold Mara- condition, agreement, understanding may or thon dealers. substantially competition be to tend to monopoly create line of commerce. 398 lant’s evidence would not a rea- September 24 submitted from until Octo- person sonable to find that allega- these September On
ber
Davis
proved.
tions had been
attempted
pro-
to amend the list of his
spective
already
witnesses that had
been
“Tying arrangements”
have been
by adding
submitted to Marathon
five
“agreements
defined as
under which the
dealers,
witnesses —two Marathon
product
vendor will sell one
only if the
employee,
former
and two Marathon em- purchaser agrees
buy
another product
ployees. Marathon moved to preclude
Systems
as well.” Advance Business
&
of these additional wit- Supply
Corp.,
Co. v.
SCM
F.2d
and,
argument,
nesses
after
the court
denied,
cert.
1969),
(4th
Cir.
397 U.S.
granted the motion. At
the conclusion
(1970).
399 tion” or “create a competition.” monopoly pression Standard line of commerce.” Co. of California and Standard States, v. United 337 Stations U.S. THE PROOFS SUBMITTED 1051, 1058, 305-306 S.Ct. [69 AT TRIAL They deny competitors L.Ed. 1371]. the market free access to for the tied For the years five before August 1966, product, party impos- not because Marion Davis was a lessee-operator of tying requirements has a bet- Pure Oil Company service stations in price ter or a lower product but be- Findlay, Ohio. In selling addition to oil power leverage cause of his in an- products, operated a trailer and truck other market. At the same time buy- rental service and a vehicle washing forego ers are forced to their free service, performed motor tune-ups, brake competing products. choice between repair, muffler and tail pipe replace- “tying agreements For these reasons ments, tires, batteries, and sold and re- harshly forbidding fare under the laws placement automobile and parts. truck restraints of trade.” Times-Picayune July 1966, Marathon Oil Company States, Publishing Co. v. United 345 representatives asked Davis to assume U.S. [73 operation of the College Marathon Serv- They are unreasonable in L.Ed. 1277]. ice Findlay. Station in As a condition of party and of themselves whenever a becoming lessee, a Marathon Davis was power has sufficient economic with re- *5 the station invento- spect tying product to appreci- ry that had been ordered but not by sold competition restrain free ably predecessor. his Davis cancelled his product market for the tied and a “not lease with Pure Oil and assumed opera- tion of the Marathon station on August insubstantial” amount of interstate commerce is affected. International leasе, 1966. The Marathon signed States, v. Salt Co. United 332 392 U.S. later, four days was a standard year-to- S.Ct. 92 L.Ed. Cf. United [68 20]. year contract containing the usual 30 Pictures, States v. Paramount 334 U.S. day termination provision that either les- 915, 928-929, 156-159 S.Ct. 92 [68 sor or lessee could exercise. It was re- 1260]; Griffith, L.Ed. United States newed annually in and 1969 92 U.S. L.Ed. [68 until Marathon right exercised its Of course where the seller has 1236]. cancel in 1970. no control or dominance over the From 1966 to Marathon market- product represent so that it does not petroleum ed its products and spon- weapon pressure buy- effectual sored TBA primarily brands in Wiscon- taking ers into the tied re- item sin, Michigan, Illinois, Ohio, Kentucky straint of trade attributable to such and Florida. The Marathon “Ohio Re- tying arrangements obviously would gion” included the entire state Ohio, insignificant be at most. portion of Kentucky, part and a of inter- “1-75,” state highway from Ohio light standards, In of these we con- through Florida. Marathon had over sider whether there was sufficient evi- Ohio, thousand stations in where it presented dence in this case to ranked either second or third in sales of (1) reasonable minds to conclude: gasoline. branded Approximately ninety Marathon violated the Sherman Act percent of Marathon service stations having sufficient economic power ap- wеre owner-operated. preciably restrain free competition and imposing upon its lessee-operators ty- During year the four period ques- tion, ing arrangement that restrained a “not Marathon sold to its dealers at prices insubstantial” volume of interstate wholesale tires, com- certain brands of merce, (2) (TBA). that Marathon violated the batteries and accessories It sold tying agreement Act both “B. F. Goodrich” and “Firestone” “substantially tended to lessen competi- batteries, “Delco” and addition, each year during In which he to its made available dealers accessories station, operated College Marathon normally stocked service stations in- purchases his Marathon were ap- cluding filters, “Fram” air and oil $1,000 less than his blades, proximately purchas- wiper “Anco” windshield “Cham- Ohio Automotive Supply. es from “B. pion” spark plugs, F. Goodrich” fan belts, hoses, absorbers, radiator shock significant There was no difference sealed beam headlamps, and automobile acquisition between Davis’ and sale of light bulbs. acquisition TBA Marathon and his and Distributing Sparton sale Ohio encouraged Marathon its TBA sales by TBA. Sales from Spar- offering special dealers promotions, ton, Distributing, Ohio incentives, other discоunts and including visited station each week to check a bonus rebate from seven percent to ten inventories, needs, to determine his purchases. his total annual TBA prepare goods. orders for Sometimes did not provide its dealers sign Davis did not even the orders be- replacement parts not ordinarily he relied sales representa- cause on the stocked by including, service stations to determine tives his needs. He dis- example, mufflers, tail pipes, water played supplies purchased Spar- pumps, generators, alternators, regula- Ohio Distributing ton and in the same tors, gaskets, wheel bearings, hydraulic as supplies purchased manner parts, shoes, brake and ignition parts. through describing Marathon. how necessary, When a dealer ordered these he ordered his Davis testified that parts from automotive suppliers whose TBA from whomever he primary business was not the sale and wanted. distribution of products. evidence also disclosed that During period question, nine other Marathon station lessees in major equipment were three automotive Findlay purchased batteries and accesso- Findlay Sparton suppliers in area: from both ries Ohio Automotive and *6 Inc., Distributing Company, The Ohio purchased Marathon. Five оf them Supply Company, Automotive and greater dollar amount these items Automotive, Steele’s Inc. The record Distributing Ohio from than they did that any pur- does not show Davis made Moreover, Marathon. from five dealers he chases Steele’s either while was from testified although they also that bought a Pure dealer Oil or while he was a TBA primarily their from Marathon show, Marathon dealer. It does how- available, when had never been re- ever, purchased he almost by quired purchase Marathon to these nothing Sparton he from when was a exclusively items it. from dealer, Pure pur- he made substantial order to show that Marаthon im- Sparton chases from after he became a upon posed its hundreds service sta- example, Marathon dealer. For from illegal arrangement tion lessees an January through July 1966, pur- Davis sale TBA items to goods Spar- chased worth of from $12.15 of its petroleum products, sale Davis August 1966, ton. From until December primarily upon relied four incidents. College while was operating Davis station, $1,640.79 purchased Marathon he The first incident approxi- occurred mately goods Sparton. worth of from His annu- two months after Davis took over 11, al battery accessory purchases and from the Marathon On station. October $2,447.53 1967, 1966, appellant Sparton in totaled ordered “Delco” bat- $3,439.32 1968, $2,733.03 1969, from Sparton. in in and teries He testified that $5,321.30 eight the first he returned the in months of batteries three days la- battery ter accessory pur- Day, Davis’ and because James the Marathon $2,897 representative, chases from Marathon totaled in sales had instructed him 1967, $3,416 1968, $3,707 Then, so. pursuant in and to do to the Mara- $1,662 order, representative’s thon eight in the first of 1970. on months October The advised attorney Marathon of Davis’ Company shipped F. Goodrich B. bring inclination to an antitrust “Delco” suit 15 identical appellant billed batteries, charging it it had tied average of twо charging gasoline sales of leasing or the of its Sparton’s than battery per less dollars stations to sales of its TBA. Shortly of this significance Whatever price. thereafter, the Marathon district Da- mana- also that event, record discloses ger wrote two memoranda to superi- purchases four additional vis made ors, outlining procedure to be during Sparton from batteries “Delco” in cancelling followed Davis’ lease in ac- month. the same cordance with the terms of the lease four occurred incident second The agreement, and the second listing the Day’s suc- February 1970. later years brands of TBA stocked Davis and the representative, Marathon as the cessor names of the suppliers. TBA, in- Burocker, some ordered Gary filters, On June air of obsolete notified quantity cluding Davis that his lease sig- would be obtaining his cancelled without appellant them, August on date, and on that returned appellant When nature. possession took the same the station station. visited Burocker them, ap- and told about inquire day evidence, This even when con accepted have should that he pellant favorably Davis, strued most does not anything appear It does order. permit finding that Marathon tied its with this connection occurred further petroleum products sales of appellant incident. purchases to his of its or that con incidents relied fourth third and tinuation of his lease was conditioned illegal ty- show an by appellant upon upon of TBA exclusively 1970, when occurred in arrangement from Marathon. There is no evidence in absorbers shock purchased the record that Marathon refused at Buckeye Distrib- Sparton tires from during time year period four sup him Burocker told Company. uting ply Davis’ requirements might be that his lease that time about products. And there is insufficient evi more TBA unless cancelled dence to a determination that Marathon. Davis’ lease was cancelled because he re fused to purchase Marathon-sponsored Davis testified October After TBA in preference to the TBA sold large purchases no he made other suppliers. for sale items offered suppliers of other when he March 1970 until by Marathon Of the four incidents upon relied absorbers, worth of shock purchased $752 *7 appellant to show Marathon’s liability, tires from Sparton and twelve from the first two offer no support for his Company. Distributing Buckeye position. The 1966 incident concerning the “Delco” batteries shows only that month, During the same March the Marathon sаles representative con- purchases that Davis made the from appellant vinced to return 15 batteries Buckeye Sparton, the Marathon dis- which were then reordered from Mara- manager sought permission trict from savings thon at a per of battery. $2 superiors to cancel Davis’ lease for 1970 incident concerned the unordered the stated reasons that for six months he However, air filters. after Burocker’s operating problems, had and volume pique initial appellant when returned the dirty, his station was that he was unwill- unordered and obsolete nothing accept advice from Marathon rep- appears more to have come from the in- resentatives, gasoline that his sales of cident. were declining and that his sales of Mar- The last athon-sponsored TBA were insufficient. incidents concerned Bu- rocker’s complaint When Davis proposed learned of the can- in 1970 about the low volume of appellant’s from Company rep- cellation a Shell Oil TBA sales and Bu- resentative, rocker’s intimation attorney. he contacted an that this could result products, troleum there is no is evidence in lease. This evidence the loss
in
support
record that could
claim that
the conclu-
Marathon’s
consistent
as
general practice
sion that
it was a
neglecting the station
was
Marathon, imposed upon many or all
appellant’s
it is with
as
losing business
arrangement.
lessee-operators,
purchase
tying
a
TBA
about
allegations
receiving
as a condition of
threats to can-
express
no
Significantly,
retaining
products
the salesmen
leases. The
were made
lease
cel the
evidence about the experiences
communication
was no
lessee-operators
or officer. other
of Marathon
employee
was
any other
of five Marathon dealers
importantly,
But more
as the trial
they
who said that
had never been
judge emphasized:
threatened with the loss of their leases if
Although plaintiff testified that
in
purchase
did not
Marathon-spon-
1969 he
buying
started
more TBA
exclusively.
sored TBA
The most that
others,
and this led to the cancel-
can be said for appellant’s proofs is that
lease,
lation of his
the documentary
Day
show that
and Burocker were
evidence
plaintiff
showed that in fact
aggressive salesmen who were interested
had increased his TBA purchases from
increasing
in
their sales of Marathon
defendant in 1969.
TBA.
The defendant’s evidence showed We hold that Davis clearly failed to
lease,
of his
year
plain-
that in the last
present sufficient evidence to permit a
devoting
tiff was
much of his time to determination that the “total volume of
had;
other business interests which he
sales tied
policy
sales
under chal-
gasoline
sales at the station had lenge” was not “insubstantial.” Fortner
markedly;
fallen off
the house- Enterprises, Inc. v. United States Steel
keeping
very poor;
at the station was
Corp.,
394 U.S.
plaintiff
and that the
up the 1258, 22
(1969).
L.Ed.2d 495
Likewise
bays
by doing
service
at
station
there was no evidence permitting a de-
work of the
heavy repair
type which is termination
that Marathon’s actions
appropriаte
for a
gaso-
full-service
tended to “create monopoly”
or “sub-
line station. Plaintiff was warned stantially
competition.”
Accord-
findings,
about these
but seeks to ex-
ingly, there was no evidence that re-
them,
cuse or minimize
and to convert quired submission to the jury, and the
warnings
into threats that would district court did not err
granting
be in violation of the antitrust
laws. motion for judgment
See,
n. o. v.
g.,
e.
However, even if
Atlantic Refining
Davis had shown
C.,
Co. v. F. T.
that Marathon
pur-
had
him to
U.S.
85 S.Ct.
Finally, we consider whether five new one of whom was in employee. its discretion his former court abused the “eleventh hour” refusing to court, district The in precluding the because their names testify to witnesses witnesses, calling the of observed that supplemental in an furnished had been Davis’ case had pending been for nearly only interrogatories days three to swers years, two and its expressed concern that A begin. was scheduled trial before primary purpоse the of the liberalized its has discretion in court broad trial rules, discovery prevention civil the of comply for failure to sanctions choice of to one’s surprise opponent, would be un- and, in discovery appropriate orders with dermined if permit- these witnesses were circumstances, even the may it dismiss testify. ted to prop trial court hold that the We case. We also observe that there was no here. its discretion erly exercised support credible for Davis’ contention just that he had “discovered” these wit- in- Marathon served January nesses. diligence Reasonable would have apрellant requesting on the terrogatories disclosed the additional witnesses far in with the persons acquainted all names of advance of trial. One was a former em- September this case. On facts of ployee, lessees, were Marathon period provided well after the time of whom was a Davis, friend of and the F.R.Civ.P., 33(a) filed in Rule other two were Marathon employees interrogatories. answer these working in the Findlay area during the Then, September only Friday, on pendency of Davis’ suit. No reason is trial was days before the scheduled three offered and appears why none they could Monday, Seрtember ap- begin on not have been found sooner than three list- pellant supplemental filed answers days before trial.5 representatives purchased competing executed Tidewater’s merchandise hid were purchase dealer he was to it. the told Tidewater en- offered Tidewater Evidence was requirements of contracts, con- dealer into leases and tered products and of those TBA items which it described, taining provisions to those similar representa- sponsored or Tidewater’s sold. 2,700 operators station service about with accompanied sponsored salesmen of tives practices eight Some western states. the latter secured orders while merchandise from dealers. inspected merchandise, admittedly followed with re- were described spect appeared Tidewater’s dealers, others and the to all Tidewater competing dealers’ stations general application. quite returned, to be of required that it be Thus, jury conclude that the re- could offending threatened nonrenewal and dealer’s sored dealer practices provisions and affected nonspon- strictive substantial dealers card sales lease. Credit portion its Tidewater’s sales to charged merchandise were back gallons gaso- of about 310 million pay. failed to if the customer New gas- annually (about per five cent of the line required to from out- were dealers area), through and dealers inventory sold only oline going dealers TBA. five million dollars worth of four Tidewater. jury could con- this evidence From disproportionate record disclosed the The petroleum prod- sold Tidewater strength parties.17 clude ucts economic of the and size upon TBA to dealers and country’s major Tidewater is one understandings express and conditions — companies. It does oil businеss in 32 tacit, not deal oral and written—that states, $800 assets exceed million. competitors of Tide- sold commodities gasoline It sold about of the total sold 6.5% question is whether serious water. eight in the western states. jury con- that these could also conclude imposed There was evidence Tidewater understandings might ditions competition tying arrangements dealing and exclusive substantially or tend to create provide against the dealers’ wishes to Tide- commerce, monopoly as in line of noncompetitive access to the water by the Act. portion of market which dealers’ sta- represented. prеcluded proffer Dealers tions they testified that A was made that the wit- following buy competing nesses would feared brands of oil have testified *9 proffered effect: testimony The re- TBA items even when and quested of Charles: Trautwein, employee though Davis even at the Col- customers and less, lege Marathon 1969 and would dealers was and that when station in cost to testimony afforded, was to time York refused In the short Pennsylvania Newsum v. way pre- for Marathon to witnesses. virtually no (S.D.N.Y.1951). Co., F.Supp. 500 adequately respond to to the testi- pare Ry. surprise witnesses. Unfair mony of the reasons, judg- the' foregoing For the contrary is to the of this sort surрrise court will be af- of the district ment rules, the federal which sanc- policy of firmed. discovery. If tion extensive interrogatory refused to answer had Marathon could have obtain- question, ON PETITION FOR REHEARING requiring appellant to an-
ed an order ORDER Then, 37(a). appel- if swer under Rule answer, refused to or answered lant still Upon consideration peti 37(b) that provides Rule incompletely, rehearing, tion for the court concludes could issue order . the court “[a]n although petitioner is correct in his that . . . disobedient prohibiting [the proffered contention that witness Poston introducing designated mat- party] from was not a friend of Davis as stаted in .” ters in evidence . . . Since Mar- opinion,1 require our this error does not original athon did not know that the an- change in our decision. The resolution incomplete, swer was it did not move for of this issue turned on Davis’ failure to 37(b) compel ap- to an order under Rule diligence due in discovering exercise wit pellant complete though it. Even nesses before the eve of trial. At a min 37(b) directly applicable, Rule is not we imum he would have been expected to exer- judge properly hold that the trial contact other Marathon lessee-dealers in surprise regard cised witnesses, to the discretion area, the Findlay which in our view is and that other decision policy narrowly not as circumscribed for this contrary of Rule would be purpose as Davis would restrict it. situation, a similar 37. Accordingly, court for the Southern District of New petition is denied. Objectives” believed that ed document entitled “Goals and that Trautwein have shown service, apparently suggested operated poor that TBA unless a certain Marathon purchased encouraged buy from other lessee Davis to TBA a new dealer he representa- Finally, Poston, suppliers, sales would be found. the Marathon Robert an- salesman, lessee, expected testify aggressive Da- other Marathon and that was was an tive purchased nearly items of TBA that he all of certain his TBA re- vis continued Smith, quirements a Marathon from Marathon Dennis because he from Marathon. be- expected expected lieved it was was of him and that a in Ohio since Mara- lessee representative testify invento- thon sales told he him that if a it, buy Marathon, ry already dealer did not he leased TBA from at his station when dealer, purchased any find a new TBA for four would and that dealers who had not buy years despite pressure did not Marathon TBA from Marathon sales would not receive gasoline, while dealers who did told one of would receive and that he was company including “extras” from the month before trial that he “would be extra them a gasoline. program participating TBA in the Marathon year.” expected the end of the Smith was also proffered testify that he was told that he would that Poston Smith, was a lease for a second station friend of receive a Marathon Dennis who was in- award it to a volved Marathon had decided to in a because suit Marathon similar program brought by person participated the one in its TBA who Davis. His suit involved furtively Company’s gasoline searched the briefcase of “Marathon and that he allocation representative practices.” discover- sales business a Marathon