1981-1 Trade Cases 63,985
TOSE, Leonard H., Philadelphia Eagles Football Club, Tose,
Inc., Appellants in No. 80-2123,
v.
FIRST PENNSYLVANIA BANK, N.A.; Bunting, John R.; Pemberton,
John C.; Barness, Herbert; Forstater, Sidney; Provident
National Bank, Chase Manhattan Bank, N.C., Girard Bank,
Philadelphia National Bank, and Firestone, John D.
TOSE, Leonard H., Philadelphia Eagles Football Club, Tose, Inc.,
v.
FIRST PENNSYLVANIA BANK, N.A.; Bunting, John R.; Pemberton,
John C.; Barness, Herbert; Forstater, Sidney; Provident
National Bank, Chase Manhattan Bank, N.C., Girard Bank,
Philadelphia National Bank, and Firestone, John D.
Appeal of Sidney FORSTATER in No. 80-2334.
Nos. 80-2123, 80-2334.
United States Court of Appeals,
Third Circuit.
Argued March 19, 1981.
Decided April 30, 1981.
Rehearing and Rehearing In Banc Denied May 27, 1981.
Joseph L. Alioto (argued), Alioto & Alioto, San Francisco, Cal., Susan T. Fletcher (argued), West Chester, Pa., Gerald F. Tietz, Arthur L. Pressman, Abraham, Pressman, Tietz & Seidman, P.C., Philadelphia, Pa., for appellants.
John M. Elliott (argued), Stephen L. Friedman, Thomas J. Elliott, Henry F. Siedzikowski, Dilworth, Paxson, Kalish & Levy, Philadelphia, Pa., for appellee John R. Bunting.
Tom P. Monteverde (argued), Jean C. Hemphill, Monteverde, Hemphill & Maschmeyer, Philadelphia, Pa., for appellees First Pennsylvania Bank, N.A. and John C. Pemberton.
Thomas B. Rutter (argued), Thomas B. Rutter, Ltd., Philadelphia, Pa., for appellee Sidney Forstater.
Tyson W. Coughlin (argued), Michael L. Lehr, Ballard, Spahr, Andrews & Ingersoll, Philadelphia, Pa., for appellee Provident Nat. Bank.
Patrick T. Ryan (argued), Kathleen M. Lynch, Drinker Biddle & Reath, Philadelphia, Pa., Edward J. Reilly, Peter A. Copeland, Milbank, Tweed, Hadley & McCloy, New York City, for appellee Chase Manhattan Bank, N.A.
Arthur E. Newbold, IV (argued), Jean Wegman Burns, Dechert, Price & Rhoads, Philadelphia, Pa., for appellee Girard Bank.
Benjamin W. Quigg, Jr. (argued), James J. Rodgers, Morgan, Lewis & Bockius, Philadelphia, Pa., for appellee Philadelphia National Bank.
Before ALDISERT and HIGGINBOTHAM, Circuit Judges, and MARKEY, Chief Judge.*
OPINION OF THE COURT
ALDISERT, Circuit Judge.
The major question for decision is whether the district court erred in granting summary judgments and directed verdicts in favor of a number of institutional and individual defendants against whom antitrust and other claims had been brought by Leonard Tose, Tose, Inc., and the Philadelphia Eagles Football Club. We also consider issues arising from contractual counterclaims filed by an individual defendant. We find no error in the district court's disposition, and therefore we will affirm.
I.
Appellants filed suit in the district court on May 5, 1978, against appellees First Pennsylvania Bank (FPB), John Bunting, John Pemberton, Sidney Forstater, and Provident, Chase, Girard, and Philadelphia National banks, and against Herbert Barness and John Firestone. An amended complaint was filed by leave of the court on July 2, 1979, setting forth four distinct claims for relief against various defendants: count one, a conspiracy in restraint of trade in violation of § 1 of the Sherman Antitrust Act, 15 U.S.C. § 1, designed to "force Tose to sacrifice his controlling interest in the Eagles at a price substantially below its true market value,"
On May 16 and 28, 1980, the district court ruled on cross motions for summary judgment, Tose v. First Pennsylvania Bank,
Trial on the remaining claims commenced before a jury on June 2, 1980. Appellants presented evidence for fifteen days. At the conclusion of appellants' case in chief the remaining defendants moved for directed verdicts on all counts pursuant to Fed.R.Civ.P. 50. The trial court granted those motions on June 30.
Trial then commenced on a four-count counterclaim filed by appellee Forstater. (Forstater has filed a cross appeal in this court. To avoid confusion, we refer to Forstater as an appellee throughout this opinion, and to Tose, the Eagles, and Tose, Inc. as appellants.) The jury returned a verdict in favor of Forstater on one of the four counts, assessing damages of $69,000 against Tose and the Eagles, and in favor of appellants on all other counts. The district court entered a judgment in accordance with the verdict and subsequently denied Forstater's motions for judgment n.o.v. or a new trial.2
Appellants now argue that the district court erred in granting summary judgments and directed verdicts on the antitrust, Bank Holding Company Act, and pendent claims. Appellants also seek to overturn Forstater's $69,000 judgment, asserting that the court abused its discretion by excluding certain evidence and erred in its instructions to the jury. Forstater cross appeals from the denial of his motion for judgment n.o.v. or a new trial on another count of the counterclaim, arguing that he is entitled to judgment as a matter of law under the Pennsylvania Uniform Written Obligations Act, Pa.Stat.Ann. tit. 33, § 6 (Purdon 1967), and alternatively that there was insufficient evidence to sustain the jury's finding that Tose did not knowingly sign the writing in question.
II.
We review grants of summary judgment and directed verdicts for legal error, testing the record by the same standards as the district court. On summary judgment, we inquire whether the court correctly concluded "that there (was) no genuine issue as to any material fact and that the moving party (was) entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). On review of a directed verdict, we "consider the record as a whole and in the light most favorable to the non-moving party, drawing all reasonable inferences to support its contentions. If no reasonable resolution of the conflicting evidence and inferences therefrom could result in a judgment for the non-moving party," we must affirm. Edward J. Sweeney & Sons, Inc. v. Texaco, Inc.,
(w)hile we recognize the importance of preserving litigants' rights to a trial on their claims, we are not prepared to extend those rights to the point of requiring that anyone who files an antitrust complaint setting forth a valid cause of action be entitled to a full-dress trial notwithstanding the absence of any significant probative evidence tending to support the complaint.
First National Bank of Arizona v. Cities Service Co.,
III.
Our narrative of the facts is based on the entire record, viewed in the light most favorable to appellants. Because the answers to the legal issues presented by this appeal depend on the factual predicate, it is necessary to set forth a lengthy narrative.
A.
Tose purchased the Eagles football club in 1969, using $1.5 million of his own funds, $10.5 million borrowed from appellee FPB, and $4 million contributed by other investors, including Barness and Firestone. He acquired the Eagles' assets in his own name and then transferred them to a limited partnership of which he was general partner. In 1972 Tose borrowed another.$2.7 million from FPB to buy out some of his limited partners. The Eagles Partnership defaulted on an amortization payment of $750,000 due FPB in 1974, and the loan agreement was amended in 1975 to adjust the amortization schedule and to limit Tose to a $60,000 annual salary in unprofitable years. At the end of 1975 the Eagles Partnership consisted of Tose, the sole general partner, with approximately a 60% interest; Barness, 29%; Firestone, 5%; and another limited partner with about 6%. Tose and Barness agreed in June, 1976, to give each other the right of first refusal should either decide to sell his interest in the Eagles.
Relations among the partners became strained in 1976. Barness began openly criticizing Tose's management of the Eagles and demanded access to the club's financial records. Barness wrote to Tose in September, 1976, accusing him of "tak(ing) advantage of me and your other partners" and violating the loan agreement with FPB. He asked that Tose have accountants review the club's books for 1969 through 1976 and suggested that Tose make no withdrawals from the Eagles' account until the reviews were completed.
B.
Barness met with Gerald Hayes, an FPB loan officer, in late 1976 and again early in 1977. On both occasions Barness expressed dissatisfaction with the Eagles' financial management and threatened to go to court to seek appointment of a receiver. Hayes testified that he told Barness the bank was not "prepared to do anything" until it received pending financial statements.
The Comptroller of the Currency reviewed FPB's loan portfolio at the end of 1976 and rated the Eagles loan "substandard." The Eagles' accountants notified the Eagles early in 1977 that they could not complete their financial statements for 1976 unless FPB waived several defaults under the loan agreement. In March, 1977, FPB received draft financial statements from the Eagles, which indicated a loss for the year of $1.15 million. On March 17, Hayes sent a memorandum regarding the Eagles to his superiors at FPB. Appellee Bunting, then Chairman of FPB, asked Hayes on March 21 to prepare a second draft of the memorandum to prepare him for a meeting with Tose. Hayes produced another draft dated March 24, 1977. That document is central to appellants' case.4 It "recommended a meeting with Leonard Tose where the Bank would deliver a list of terms under which we would continue to provide financing to the Eagles."
1. The meeting will be held with (Tose), and our demands will be presented to him.
2. He will take the alternative of replacement financing and we will give him thirty days to accomplish this.
3. Immediately after our meeting with Tose we should meet with Herb Barness and explain our plan, and try to get Barness to talk to Pete Rozelle to explain his position. Our counsel feels that this contact with Rozelle is critical, and will be very important if we have to force the sale of the Club. (Counsel) feels that Pete Rozelle might even put the pressure on Tose if he knew the seriousness of this situation because he doesn't want the Eagles Franchise looking like a World Football League franchise.
4. When Tose can't find financing the Bank should contact Rozelle and indicate that we are going to take action against Tose and the Club.
5. The rest will depend on Rozelle's reaction to the pressure from Barness and the Bank.
Id. 274.
Bunting and FPB initially took a gentler approach than Hayes had recommended. At a meeting on March 25, described by Tose at trial as "cordial,"
This agreement was never implemented. FPB made no more loans to Tose or the Eagles, and it regarded the financial controls that were installed as unsatisfactory. Negotiations between FPB and the Eagles continued through the spring and into the summer of 1977, growing increasingly acrimonious. Edwin Rome, Tose's attorney, met with Bunting and others on April 12 and learned that Bunting had discussed the agreement with Barness despite an express promise on March 25 not to do so.6 Rome told Bunting that he was "shocked" because he "thought it a breach of a fiduciary duty on the part of Mr. Bunting to have talked with Mr. Barness not only contrary to his word to me, but contrary to his obligation owed to a customer of his bank." Id. 2476-77. Rome again met with Bunting and other bank officers on April 25, and he agreed to recommend that Tose retain Forstater as controller for a transitional period, until an outside controller could be chosen and could become familiar with the Eagles' operations. Rome indicated, however, that the Tose-Forstater relationship was "not what it had at one point been" and that "Mr. Tose would want to replace Mr. Forstater as soon as possible." Id. 2482.
Relations between the Eagles and FPB continued to deteriorate. Appellee Pemberton, then vice chairman of FPB, spoke with a lawyer in Rome's firm on June 7 and stated "that the Bank was withdrawing its commitment to advance funds in view of the total failure of cooperation from (Tose), the failure to conform to proposals made by the Bank for limitation of expenses, and the failure to sign the Forstater Employment Agreement."
Hayes met with Forstater on June 17. Hayes testified that he "was trying to develop a series of things that I could use in order to pressure Mr. Tose (into) getting the financial controls that we were trying to establish."
On June 21, FPB's attorney sent Tose's attorneys a formal demand that Tose repay $20,000 to the Eagles and withdraw no additional funds for his personal account. (The loan agreement permitted Tose to draw $60,000 per year, and the letter alleged that he had taken $80,000 in the first six months of 1977.) The letter also advised Tose's attorneys that any checks drawn to cash or for Tose's account would not be honored unless countersigned by Forstater. On July 22, Pemberton wrote Tose to advise that FPB was no longer considering increasing the loans, stating as "principal reasons":
1. Failure to conclude negotiations with present limited partners of the Club.
2. The length of time that these negotiations have dragged on with no visible progress.
3. Failure to implement the cost reduction program which you had verbally agreed to carry out.
The Eagles-FPB controversy finally came to a head at a "showdown" meeting on July 28, 1977. Tose and Rome met at the bank with Bunting, who confronted them with an ultimatum. Bunting announced that he would "call" the Eagles loan as of nine o'clock the next morning7 unless Tose agreed to step down from his management position and install Forstater as chief executive and financial officer of the Eagles.
Immediately after the showdown meeting Tose instructed Rome to agree to the bank's demands. A meeting was held at the Eagles' Veterans Stadium offices the next afternoon, July 29. Pemberton read from a document describing Forstater's duties as chief executive and financial officer of the Eagles. Pemberton also assured Eagles representatives that the bank would not interfere with the Eagles' football program.
C.
Tose quickly began negotiations aimed at securing replacement financing. On August 8 he agreed to terms for a short-term (six months) loan from a Detroit bank, which bought out the FPB loan. Tose immediately discharged Forstater and resumed control of the Eagles' operations. At a press conference on August 10 he criticized Bunting, Forstater, and others for participating in the brief takeover. He spent much of the ensuing months attempting to arrange long-term financing. During that period he negotiated with appellees Provident, Girard, Chase, and Philadelphia National, but none agreed to grant a loan. On March 1, 1978, Tose and the Eagles closed long-term loans with Citibank of New York. Appellants sought to prove at trial that each of the appellee banks joined with FPB in a banking boycott, designed to deny Tose and the Eagles access to the credit market, between July 29, 1977, and March 1, 1978.D.
In early August, before the Detroit bank agreed to a short-term loan, a Citibank officer contacted Hayes of FPB with a credit inquiry. Hayes reported, inter alia, that "(d)ifficulties (had) arisen among the (Eagles) partners, basically concerning Tose's lack of cost consciousness," and that "(u)p until two years ago the franchise was operating quite profitably but due to increased salary costs and the lack of controls over costs, the club has slipped into the red."
E.
Appellee Philadelphia National Bank (PNB) was asked to participate in a syndicated loan to Tose and the Eagles on several occasions between July 29 and March 1. The first inquiry came from a Belgian bank in early August. The Belgian bank contacted PNB through its London subsidiary, requested background information on Tose and the Eagles, and asked PNB to participate in a joint loan. An officer of the London subsidiary passed the request along to PNB Senior Vice President Anthony Newton. Newton discussed the proposal with two other PNB vice presidents who had responsibility for loans. All three "felt very negative about the proposal" because the FPB-Eagles situation had "received a great deal of very negative publicity very recently." Id. at 392. Newton reported to his London associate, who in turn advised the Belgian bank, that PNB was definitely not interested in participating in the loan and that the Belgian bank should "walk very carefully" if it participated.
In December, 1977, or January, 1978, Charles Sullivan, an attorney who represented the National Football League, telephoned PNB Chairman Morris Dorrance to ask whether PNB would consider participating in a loan to the Eagles. Sullivan pointed out that additional television revenues, which could be assigned as collateral for a loan, would soon be made available to the Club by the NFL. Dorrance considered the inquiry but called Sullivan thereafter to decline. Dorrance testified at trial that he made a policy decision not to finance Tose or the Eagles without "look(ing) at (the proposal) to determine if it was sound." Id. 1048. He testified that he objected to the loans because of PNB's philosophy, that a banking institution "ought not to be the focus of controversy in the public light." Id. 1052. He also commented that "Mr. Tose was making some strong accusations about who had done what to whom. And that's not the kind of customer relationship that I am interested in." Id. 1036. Dorrance did concede in his conversations with Sullivan that the NFL's promise to provide additional revenues from television was "a very solid commitment and, therefore, financible." Id. 1049. Dorrance and Newton both testified that they decided to reject the inquiries independently, without communicating with officials of other banks and without specific knowledge of the Eagles' and Tose's applications at any other bank.
F.
In November, 1977, Pittsburgh Steelers President Dan Rooney and his attorney contacted Harold Kline, Executive Vice President of appellee Provident, to seek financing for Tose and the Eagles. Kline promised to consider the application on its merits. He met with Tose on December 9 and with Sullivan on December 14, 1977, to discuss the application.8 Sullivan gave Kline a memorandum summarizing the loan proposal, which indicated that the NFL would agree to pay $1.5 million per year in television revenues directly to the bank, and that it would agree to "assume responsibility for selling the Club" to "a purchaser who agrees to satisfy any outstanding partnership and personal indebtedness" in the event of a default.
On December 27, 1977, Louis Goffman, a Philadelphia lawyer and a Provident director, advised Provident Chairman Roger Hillas that his law firm represented Barness in team-related litigation against Tose. Goffman had previously learned through his board membership that the bank was negotiating with Tose and the Eagles. After talking to Hillas, Goffman arranged a meeting between Hillas and Barness on December 29. Hillas testified that Barness exhibited no hostility toward Tose, notwithstanding the litigation. Both testified that Barness encouraged Provident to lend money to the team but was concerned about the possible impact on his interests of a personal loan to Tose secured by the team. Both testified also that the bank did not agree to condition the loans on Barness' approval, and Barness stated that he did not request any commitments from the bank. Tose met with Kline and others on January 26, 1978, to review Tose's personal finances. Kline testified that he stated at the meeting that "all paperwork would have to pass muster" with the bank's attorneys because the bank wanted to avoid litigation, and that the bank might require an amended Eagles partnership agreement to provide Tose with income to meet his personal obligations.
Mr. Kline said to me, after we sat down I think he said, "Everything looks pretty good. You know, it looks all right. But there is something I shouldn't tell you, but I am going to tell you."
I didn't know what to expect. He said, "I want you to know that Mr. Barness had a meeting with our chairman."
I said to myself, and I looked at the other people that were with me, friends and associates, and I said to myself, "Let's get the hell out of here," because he said Barness would have to approve the loan.
G.
Appellee Chase was first asked to participate in a loan to Tose and the Eagles by officials of the Lincoln Bank of Bala Cynwyd, Pennsylvania, in November, 1977. Officials of the two banks met with Tose and other Eagles representatives on December 8 to discuss the loan proposals.9 Chase asked its counsel the same day to review the proposals. On December 9 Chase telephoned FPB with a credit inquiry and was told, "Our bank no longer deals with Mr. Tose. Published information will offer the reasons for our discontinuing our relationship. I can offer no details regarding his affairs."
H.
In September, 1977, a loan officer at appellee Girard was contacted by James Duffy, an accountant employed by the Eagles, to ask whether Girard was interested in financing the Eagles. The loan officer discussed the inquiry with Girard vice president Walton St. Clair, who instructed him to tell Duffy that Girard was not interested. St. Clair testified at deposition that he based his decision on "(t)he general reputation of Leonard Tose."
In October, 1977, the president of a St. Louis bank called Girard president William Eagleson to ask whether Girard would participate in a loan to the Eagles. Eagleson referred the inquiry to St. Clair and instructed him to discuss the matter with a loan officer at the St. Louis bank. St. Clair told the loan officer that Girard had previously declined to discuss a loan to the Eagles because of Tose's reputation, and that it would consider the St. Louis inquiry because it came from a correspondent bank, but that "we really weren't very interested in the transaction." Id. 693. He agreed to await a report from the St. Louis officer concerning discussions with Tose or his representative. He subsequently reconsidered, however, and after discussions with Eagleson he notified the St. Louis bank that Girard was not interested.
Duffy again contacted Girard in late January to ask whether Girard would participate in a loan with a New York bank. St. Clair met with Duffy and others on February 2, 1978.12 After hearing Duffy's presentation St. Clair agreed to meet with officials of the New York bank the following Monday, February 6. He also asked to meet with Tose and stated that if "he was able to convince us that he was a reasonable individual we would probably make the loan." St. Clair deposition at 38. Again, however, St. Clair reconsidered his position, this time after discussing the Duffy proposal with other Girard officers,13 and at the scheduled Monday meeting he told the New York bankers that Girard would not participate.
The foregoing representing what we perceive to have been appellants' best case scenario, we now turn to familiar legal precepts which govern the law of trade restraints.
IV.
Section 1 of the Sherman Act outlaws "(e)very contract, combination , or conspiracy, in restraint of trade " Section 4 of the Clayton Act, 15 U.S.C. § 15, provides a treble damage remedy, plus "the cost of suit, including a reasonable attorney's fee," to "(a)ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws." The question of injury is not before us.14 We consider only whether the district court erred in determining that appellants failed to establish a prima facie case of a § 1 violation by proving the elements of conspiracy and restraint of trade.
It is well established, of course, that the Sherman Act may not be read literally. "(R)estraint is the very essence of every contract; read literally, § 1 would outlaw the entire body of private contract law." National Society of Professional Engineers v. United States,
A.
Appellants urge that "an agreement between Barness, Forstater, Bunting and the First Pennsylvania Bank to force a distress sale in favor of Barness is illegal per se." Brief for Appellants at 26 (citing Cernuto, Inc. v. United Cabinet Corp.,
B.
Under the rule of reason we consider
whether the challenged contracts or acts "were unreasonably restrictive of competitive conditions." Unreasonableness under that test could be based either (1) on the nature or character of the (conduct) or (2) on surrounding circumstances giving rise to the inference or presumption that (it was) intended to restrain trade and enhance prices. Under either branch of the test, the inquiry is confined to a consideration of impact on competitive conditions.
Professional Engineers,
Appellants contend that appellees FPB and Forstater conspired with Barness to force Tose to sell his partnership interest in the Eagles. We think appellants' claim against these appellees must fail because they have neither alleged nor proved an unreasonable restraint of trade. Appellants offered no evidence that the purported conspiracy would or was intended to damage competition in any market, choosing to rise or fall on their per se theory. We are unable to discern how appellees' conduct would affect competition, either favorably or harmfully, and we find no evidence of any anticompetitive motive. Clearly the conduct of FPB, Barness, and Forstater make out a strong case that they, individually and collectively, for separate reasons, resisted Tose's efforts to obtain financing on the terms he proposed. And just as clearly the record indicates that officers of FPB are not averse to playing hard ball when the corporate mind is made up to rid themselves of one of their customer debtors. But proof of ruthlessness in the FPB executive suite is not proof of a violation of the federal antitrust statutes. The antitrust laws are simply indifferent to conduct of this nature. No appellee competes with any appellant in any market or line of commerce; and there is no evidence that the professional football team's ability to compete in the spectator sport or entertainment industry in the Philadelphia area, or in any other market, would be either assisted or thwarted by a change of ownership. Tose alleges that he has suffered actual damage as a result of appellees' attempt to force him to sell the Eagles, and for present purposes we must assume the truth of that allegation. See footnote 14, supra. We see nothing, however, to demonstrate that Tose has been damaged as a competitor or as a result of any anticompetitive practice. We cannot hold on this record that those who engage in a struggle for partnership control of one entity are competitors for purposes of the Sherman Act. Cf. United States v. Morgan,
V.
We see no similar obstacles to appellants' claim that the appellee banks and others conspired to deny them access to the credit market. The clear effect of such a conspiracy would be to stifle competition among the participants for a substantial credit transaction, with the further result of hindering the free flow of goods, services, and investment capital as dictated by market forces of supply and demand. We conclude that appellants have successfully alleged an unreasonable restraint of trade in violation of § 1. Therefore, we must review the record to determine whether appellants were entitled to a jury determination of the question of a banking boycott conspiracy involving, variously, Barness, and the First Pennsylvania, Provident, Girard, Chase, and Philadelphia National banks. The banking boycott allegations relate to the period from July 29, 1977, to March 1, 1978. Appellants attempted to prove that Barness and FPB persuaded Provident, Girard, Chase, and PNB to join a conspiracy to deny Tose and the Eagles access to the credit market and thereby to force Tose to sell his interest to Barness.
A.
We begin by determining that FPB was not shown to be a participant in any conspiracy to interfere with the credit market. There is no evidence that any FPB personnel discussed Tose or the Eagles with Barness after July 28, and the only evidence of any contact between FPB and any other appellee bank shows that FPB responded to a telephoned credit inquiry from Chase by stating that FPB "no longer deals with Mr. Tose," referring the caller to "(p)ublished information," and declining to provide any "details regarding his affairs."
Other courts of appeals have previously determined that § 1 does not reach a putative "conspiracy" between a corporation and its employees.18 This simply is not regarded as the requisite "concerted action." The leading decision Nelson Radio & Supply Co., Inc. v. Motorola, Inc.,
Surely discussions among those engaged in the management, direction and control of a corporation concerning the price at which the corporation will sell its goods, the quantity it will produce, the type of customers or market to be served, or the quality of goods to be produced do not result in the corporation being engaged in a conspiracy in unlawful restraint of trade under the Sherman Act The defendant is a corporate person and as such it can act only through its officers and representatives. It has the right as a single manufacturer to select its customers and to refuse to sell its goods to anyone for any or no reason whatsoever. It does not violate the Act when it exercises its rights through its officers and agents, which is the only medium through which it can possibly act.
B.
We turn now to the other appellee banks. We note preliminarily that witnesses representing each of the banks testified that they made their decisions independently, without discussing appellants' applications with officials of any other banking institution. Appellants are not bound by that testimony, of course, and a jury would be free to disregard all such evidence; but "mere disbelief could not rise to the level of positive proof of agreement to sustain (appellants') burden of proving conspiracy." Venzie Corp. v. United States Mineral Products Co.,
1.
With regard to both phases of the alleged conspiracy, appellants make much of the point that appellees and others had opportunities to conspire. See, e. g., Brief for Appellants at 27, 29. We agree that there was ample proof of opportunity to conspire. For example, the record would support a finding that each alleged conspirator had access to a telephone at all relevant times, and a jury could find that members of the Philadelphia banking community belong to an "old boy network" and have numerous social and business relationships. But we must recognize the distinction between opportunity to perform an act and its actual performance. Proof of opportunity to conspire, without more, will not sustain an inference that a conspiracy has taken place. Inferred factual conclusions based on circumstantial evidence are permitted only, and to the extent that, human experience indicates a probability that certain consequences can and do follow from basic facts. Human experience does not support the inference of actual conspiracy from proof of the basic fact of opportunity to conspire.
2.
Appellants offered no direct evidence of conspiracy, but they argue that concerted action may be inferred from evidence of parallel business behavior. In such a case a plaintiff must establish "two elements generally considered critical in establishing conspiracy from evidence of parallel business behavior: (1) a showing of acts by defendants in contradiction of their own economic interests, and (2) satisfactory demonstration of a motivation to enter an agreement " Venzie,
We assume, without deciding, that appellants introduced sufficient evidence to support a finding that the loan applications were "a sound business proposition with substantial profit potential." Id. at 11. Such a finding would not alone support the further inference that the banks acted in contradiction of their own economic interests. Each appellee bank presented substantial business reasons for its actions, and appellants did not challenge or rebut those explanations. We must consider the record as a whole and we cannot permit a jury to rest its decision on speculation or unreasonable inferences. A business's refusal to enter a transaction, even a transaction with potential for a substantial profit, cannot support an inference that it acted in contradiction of its own economic interests in the face of substantial unrebutted and unimpeached evidence that its refusal was consistent with its own best interests. See, e. g., Venzie,
Even if we were to resolve the first element of the Venzie test in appellants' favor, however, we would hold that they have failed to satisfy the second element, proof of motivation to enter an agreement. Appellants rely on the banks' "many relationships among themselves," which include "participating loans , close ties in the Philadelphia Clearing House , corresponding relationships(,) and personal friendships of long standing." Brief for Appellants at 31. This presentation must be weighed against the business justifications offered by appellees, and against the inherent improbability of an agreement to refuse profitable business for non-economic reasons. Appellants' evidence of motivation is clearly insufficient. The line between a reasonable inference that may permissibly be drawn by a jury from basic facts in evidence and an impermissible speculation is not drawn by judicial idiosyncracies. The line is drawn by the laws of logic. If there is an experience of logical probability that an ultimate fact will follow a stated narrative or historical fact, then the jury is given the opportunity to draw a conclusion because there is a reasonable probability that the conclusion flows from the proven facts. As the Supreme Court has stated, "the essential requirement is that mere speculation be not allowed to do duty for probative facts after making due allowance for all reasonably possible inferences favoring the party whose case is attacked." Galloway v. United States,
3.
We review the evidence relating to appellee Provident separately because it was clearly established that Provident officers discussed Tose and the Eagles with Barness while it was considering the loan applications.19 We assume, again without deciding, that the jury could find that Barness hoped to block any loan to Tose so that Tose would be forced to sell. There is no evidence, however, that he enlisted or attempted to enlist Provident as an ally in that purpose. Moreover, appellants have not explained why Provident would forego a profitable opportunity in order to help Barness take over the Eagles. Absent either direct evidence of a specific conspiracy or circumstantial evidence that would vault parallel business behavior into "concerted action" under the Venzie test, the most damaging reasonable inference is that Barness persuaded Provident to condition its loan on his approval by demonstrating his ability to prevent execution on the collateral. This falls far short of "a conscious commitment to a common scheme designed to achieve an unlawful objective." Sweeney,
4.
We conclude, therefore, that a jury could not reasonably infer from the evidence that any appellee conspired with any other person or entity to deny Tose access to the credit market, and that the district court did not err in granting summary judgments and directed verdicts on count one.
VI.
Count four of the amended complaint charges the appellee banks with conspiring to fix interest rates in the greater Philadelphia four-county area. Appellants' theory is that express written agreements among banks to follow the prime interest rate charged by the lead bank on joint loans have the effect of "tampering" with the prime interest rate charged on single bank loans, and therefore that they are per se violations of § 1. They do not assert that the evidence shows any express agreements to fix the interest rates on single bank loans. See Brief for Appellants at 39. We think the merits of this claim are doubtful,20 but we do not consider the merits because appellants lack standing to assert this claim.
To satisfy "the minimum (standing) requirement of Art. III" a plaintiff must "establish that, in fact, the asserted injury was the consequence of the defendants' actions ...." Warth v. Seldin,
VII.
We now turn to count two, the Bank Holding Company Act claim. Appellants argue that the FPB Appellees violated 12 U.S.C. § 1972(1)(C), which provides: "A bank shall not in any manner extend credit on the condition or requirement (C) that the customer provide some additional credit, property, or service to such bank, other than those related to and usually provided in connection with a loan " Section 1975 authorizes private actions for treble damages for violations of § 1972. Appellants find violations in
(1) the conspiracy to oust Tose in favor of Barness as a condition for financing the Eagles; (2) the insistence that a known disloyal subordinate (Forstater) be installed as chief executive officer over Mr. Tose as a condition either for continuing the $5.3 Million term loan to its stated maturity date in 1979 or for re-lending the Eagles their own pre-season (ticket) money ; and (3) the plan to force Tose to sell to Barness....
Brief for Appellants at 32.
Items (1) and (3) are essentially identical and may be considered together.22 There is no evidence that Tose's ouster in favor of Barness was made a "condition or requirement" of a loan to the Eagles or to Tose. Appellants allege only that Tose's ouster in favor of Barness was the hidden agenda behind the conspiracy charged in count one. This does not satisfy the "condition or requirement" element of § 1972(1)(C). Summary judgment was properly entered on this theory.
Summary judgment also was proper on item (2) of this claim, but for a different reason. Appellees concede that FPB demanded that Tose relinquish financial control of the Eagles to Forstater as a condition to continuing the loan. In the circumstances of this case, however, we hold as a matter of law that this was not a demand for a "service other than those related to and usually provided in connection with a loan." Imposition of financial controls over the Eagles was directly related to maintaining the security of FPB's substantial investment, and the bank's demand cannot be considered unusual in the face of substantial evidence that it had good reasons to be concerned about the loan. As the district court held in Sterling Coal Co., Inc. v. United American Bank in Knoxville,
VIII.
Invoking the pendent jurisdiction of the district court, Tose asserts claims for intentional interference with "present contractual relations" and "prospective advantageous business relations." These claims are recognized as compensable torts under the law of Pennsylvania. See Thompson Coal Co. v. Pike Coal Co.,
Even if we did not affirm on this basis, however, we would hold that Tose failed to establish a prima facie case of liability. His ownership interest in the Eagles is not a present contractual relationship protected by Pennsylvania common law, and if it were he has not established any interference with that relationship. His claim for interference with prospective business relationships with the appellee banks also fails for two reasons: first, he did not introduce "adequate proof" of a "reasonable likelihood or probability" that he would receive loans from any bank absent the alleged interference. See Thompson Coal,
IX.
A.
Forstater recovered $69,000 on a counterclaim based on an oral contract of employment between himself and appellants. The district court asked the jury to determine whether Forstater was "a disloyal employee who agreed with First Pennsylvania Bank to attempt to force Mr. Tose to sell his share of the Eagles," Joint App. at 370, presumably on the theory that Forstater's disloyalty would constitute a breach of the contract and justify his discharge. The jury answered this interrogatory in Forstater's favor. Id.
Appellants raise two objections on appeal. First, they argue that the district court abused its discretion in directing the jury to disregard certain evidence presented at the trial on appellants' claims. Brief for Appellants at 34. This argument misrepresents the record. The district court did not direct the jury to disregard any evidence, but began its charge by specifically instructing the jury to consider evidence "offered in the original case brought by Mr. Tose." Joint App. at 311; see also id. at 315-16. Appellants cite
Second, appellants contend that the trial court erred in instructing the jury that if Forstater told the truth he could not be "disloyal," without discussing the scope of his authority or whether he would have injured his employer if he exceeded his authority. Brief for Appellants at 35-36. Again, however, appellants mischaracterize the record. The court actually told the jury that "if Mr. Forstater was obliged, as a part of his duties for the Eagles and Mr. Tose," to answer FPB's questions on behalf of Tose and the Eagles, "the answering of the questions truthfully could not lead to an inference of disloyalty." Joint App. at 351 (emphasis added). The court continued its charge by telling the jury to base its "disloyalty" decision on its "evaluation of all the evidence," id., and then discussed evidence favorable to appellants. Id. at 352-53. We see no error in the instruction. In addition, the record fails to demonstrate that appellants objected to these instructions before the jury retired to consider its verdict, as required by Fed.R.Civ.P. 51, so they are precluded from raising the issue on appeal.
B.
Forstater's cross appeal assigns error to the district court's refusal to grant judgment n.o.v. or a new trial on a counterclaim based on a written promise by Tose to pay him $159,000. His appeal depends on a letter to Forstater signed by Tose and on § 1 of the Pennsylvania Uniform Written Obligations Act, Pa.Stat.Ann. tit. 33, § 6 (Purdon 1967). That statute provides: "A written release or promise, hereafter made and signed by the person releasing or promising, shall not be invalid or unenforceable for lack of consideration, if the writing also contains an additional express statement, in any form of language, that the signer intends to be legally bound." The letter on which Forstater relies is worded as a proposal, but the parties have construed it as a promise to pay the money. The letter concludes as follows:
Intending to be legally bound, I am
Sincerely,
/s/ Leonard H. Tose
Leonard H. Tose
Joint App. at 39.
Forstater argues on appeal that the district court erred in permitting the jury to consider whether Tose signed the letter "knowingly," and he argues alternatively that there was insufficient evidence to sustain the jury's finding that Tose did not sign knowingly.
Forstater would have us hold that under Pennsylvania law a promise containing language of intention to be legally bound is enforceable as a matter of law, without regard to any defenses available to the promisor, and therefore that the district court erred in denying his motion for judgment n.o.v. We cannot agree. The statute provides only that a promise in proper form "shall not be invalid or unenforceable for lack of consideration." It does not purport to do away with any other defense to enforceability, and we construe it according to its terms. Our position is supported by Rose v. Rose,
We agree that the district court's instruction, that a lack of knowledge would relieve Tose of liability, was erroneous. Ignorance of the contents of a document or failure to read before signing is no defense to a contractual obligation under Pennsylvania law. See, e. g., Estate of Brant,
Forstater's alternative argument is entirely without merit. Tose testified that it was not his habit to read documents that Forstater presented for his signature "word for word," and that he did not read the letter at issue before he signed it. Joint App. at 303. Forstater attacks this testimony as "perjury" and "lies." Brief for Appellant Forstater at 33. He offers no other argument. This is inadequate. Issues of credibility are properly left to the jury, and the jury answered this issue in favor of Tose.
X.
The judgments appealed from will be affirmed in all respects. Costs taxed against appellants and cross-appellants.
Notes
Honorable Howard T. Markey, of the United States Court of Customs and Patent Appeals, sitting by designation
Counts one and four alleged violations of both § 1 and § 2 of the Sherman Act. Appellants do not press the § 2 claim on appeal, and we find no evidence in the record to support a finding of monopolization
Forstater's motions were filed on July 16 and denied on August 8, 1980. Appellants filed their notice of appeal on July 24, 1980. Appellees have moved to dismiss the appeal for want of jurisdiction, contending that the appeal is barred by F.R.A.P. 4(a)(4), which provides that "the time for appeal for all parties shall run from the entry of the order denying a new trial or granting or denying" a motion for judgment n.o.v. The 1979 amendments to Rule 4(a) provide that "(a) notice of appeal filed before the disposition of any of the above motions shall have no effect."
Appellants plainly failed to satisfy the demands of Rule 4(a). We are reluctant to treat the default as jurisdictional, however, in light of the substantial forfeiture that would result and the absence of any prejudice to appellees resulting from the premature filing. As Judge Van Dusen wrote for the court in Hodge v. Hodge,
Forstater, a certified public accountant since 1950, had been a full-time employee of Tose and his various enterprises from 1966 to 1976. He left that position sometime in 1976 to "go into the consulting business."
Appellants describe the March 24 memorandum as "one of the most remarkable documents in the history of antitrust litigation." Brief for Appellants at 4. Appellee Pemberton, who first saw the memorandum on April 6, 1977, testified that he was "surprised" and "appalled." He stated that "in my mind it appeared to be an effort to be too tough on the borrower and it appeared as if the only way that he could comply with what I consider to be the demands would be to sell the club."
Hayes' March 17 memorandum recommended that Forstater be designated for this position, but Bunting instructed Hayes not to name Forstater in his second draft because he thought Forstater "was working with Tose and (was) his best friend."
Rome explained at trial that he did not want Barness to learn that FPB was planning to lend Tose money to purchase Barness' interest because he was concerned that Barness would then "increase his demand as to a purchase price."
Bunting also stated that he intended to ignore a written commitment to lend to the Eagles $1.25 million in receipts from advance ticket sales, which had been paid to the bank to reduce the principal of the loan and thereby to reduce interest payments. The bank had agreed to relend the ticket money for the Eagles' operating expenses. See
Kline testified that on December 9 Tose indicated that he "had a commitment at that time for refinancing," and that he wished Tose well and stated that "if for any reason he should want to come back to Provident" the bank would be willing to reopen discussions.
Appellants contend that at the end of the meeting a Chase vice-president "said they had a deal, shook hands with Tose, among others, and toasted the agreement with champagne." Brief for Appellants at 14, citing
The principal obstacles identified by Chase's attorneys related to Barness' right of first refusal to acquire Tose's interest in the Eagles, which would inhibit the marketability of Tose's interest if the bank had to foreclose, and ambiguities in the partnership agreement regarding transfer of the general partnership interest and appointment of a successor general partner. Counsel also referred to lawsuits filed against Tose by Barness and Firestone, the necessity for Interstate Commerce Commission approval of a promissory note to be given by Tose, Inc. (a trucking company), the requirement that the City of Philadelphia consent to assignment of the Eagles' stadium lease as security for the loan, the fact that the NFL's television contracts which were to be assigned as security were not yet in existence, and Tose's wife's dower interest in real property which was to be mortgaged as part of the loan package. See
This announcement followed a private conference of the Chase representatives. One Chase officer "wanted to go ahead and try to make it work" but another wanted the application to "die" because it was "causing too much trouble."
St. Clair testified that he could not recall why he agreed to discuss the application with Duffy after twice refusing to consider Eagles' applications.
St. Clair met informally with three Girard officers on Friday, February 3, shortly before he departed for New York, and at least two advised him "not to make the loan because it wasn't worthwhile all the aggravation that would occur."
The district court scheduled a trifurcated trial, liability, damages and counterclaims, but omitted the trial on damages after granting judgment to defendants on all of appellants' claims
Count four alleges a conspiracy to fix prices interest rates charged on bank loans in violation of § 1. We deal with count four separately, in Part VI. of this opinion
Reiter v. Sonotone Corp.,
Our cases make clear that proof of anticompetitive impact or intent is a necessary element of a prima facie case under the rule of reason. See, e. g., Franklin Music Co. v. American Broadcasting Co., Inc.,
Barness also contacted Chase about the loans, but not until after Chase had rejected the applications and communicated its decision to Tose. Thus, the Barness contact adds nothing to the case against Chase
Not every pricing agreement between businesses is subject to the per se rule of illegality established in United States v. Socony-Vacuum Oil Co.,
See, e. g., Weit v. Continental Illinois National Bank,
Conspiracy is not an element of a § 1972(1)(C) violation
We affirm the judgment in favor of Bunting and Pemberton for an additional reason. Section 1972(1) provides that "(a) bank shall not" engage in certain conduct, but it does not forbid individual conduct. The term "bank" is defined in § 1971, incorporating the definition found in § 1841(c) of the same title, as an "institution ...." Further, § 1972(2)(F) expressly forbids certain individual conduct, which leads us to infer that Congress deliberately limited § 1972(1) to banks. Therefore, Bunting and Pemberton could not in any event be held liable for a violation of § 1972(1)(C)
The Supreme Court of Pennsylvania has frequently adopted sections of the Restatement (Second) of Torts as Pennsylvania common law when its "common-law precedents varied from the Restatement or when the Pennsylvania common law provided no answer." Gilbert v. Korvette's, Inc.,
We note that Tose requested the court to instruct the jury regarding the existence and effect of a confidential relationship between the parties. See generally Young v. Kaye,