TRIXLER BROKERAGE COMPANY, a California corporation, Appellant, v. RALSTON PURINA COMPANY, a corporation, Appellee.
No. 73-1197.
United States Court of Appeals, Ninth Circuit.
Nov. 5, 1974.
505 F.2d 1045
Finally, we note that even were appellant to present his alternative claim to a jury he faces what appears to be an uphill battle. Appellant‘s own apparent negligence would seem to be a formidable obstacle, and a jury would have to be convinced that the alleged violation of the federal regulation was the proximate cause of his injuries.3
Without ruling on the merits of appellant‘s contention, we are persuaded that neither justice nor sound practice justify our departing from the normal rule against entertaining new matters on appeal.
The judgment of the district court is affirmed.
Noble K. Gregory (argued), Pillsbury, Madison & Sutro, San Francisco, Cal., for appellee.
Before MERRILL and KILKENNY, Circuit Judges, and CRARY,* District Judge.
OPINION
KILKENNY, Circuit Judge:
Appellant appeals from an adverse judgment in a non-jury trial, in an action against appellee for alleged violations of Sections 1 and 2 of the Sherman Act (
FACTUAL BACKGROUND
A summary of the facts, stated favorably for appellee, is as follows: In 1952 when Van Camp Sea Food Company, a predecessor of appellant, decided to change its marketing scheme from direct sales to brokerage, J. Thomas Trixler, president of appellant, resigned as an employee of Van Camp and became its broker and a broker for other food processors. Trixler then incorporated his business, and his company was orally appointed by Van Camp as broker for northern California. Later, the appellant company was formed and took over the California operations of its predecessor. Since that time it has been managed by Trixler, its president and principal shareholder.
In 1963, appellee acquired Van Camp, the latter continuing as an administrative division of the former. Trixler continued as broker for the Van Camp tuna products under an arrangement which was not formally expressed, either orally or in writing. From 1953, appellee, in accordance with accepted business practice, conducted regular studies to determine the relative economics of marketing its products through brokers as opposed to direct sales. In the early fifties, it marketed all of its consumer products through a direct sales force. Later, in the mid-fifties, it changed courses and by 1960 all of its consumer products were marketed by brokers. By the use of brokers, appellee was unable to give its junior management personnel sufficient sales experience to enable them effectively to supervise and work with food brokers. Consequently, in 1965, appellee established a direct sales force in St. Louis to provide a training ground for sales management personnel. This force failed to provide a sufficient number of trained personnel, and in 1966 another force for training purposes was established in Los Angeles.
* The Honorable E. Avery Crary, United States District Judge for the Central District of California, sitting by designation.
From at least 1968 until the time appellant ceased representing appellee, appellant was aware of the fact that appellee might consider returning to direct sales in northern California. When the termination decision was made, appellant was offered two months equivalent brokerage.1 The offer of equivalent brokerage was extended to retain the good will of appellant during the change-over period and to provide payment to appellant during the transition. On May 28, 1968, appellant notified appellee that it was ceasing to represent appellee as of June 30, 1968. On July 1, 1968, appellant began representing Carnation, a competitive brand of tuna. Appellant received brokerage through June 30th.
PLEADINGS
On December 24, 1968, appellant filed a complaint charging breach of contract, bad faith and violations of the antitrust laws previously noted. Ralston answered and counter-claimed for brokerage paid by mistake. No jury was requested by either party. On September 8, 1969, appellant moved for a jury trial. The motion was denied as untimely. Then appellant filed a motion for leave to amend the complaint, stating two additional causes of action. The amended complaint was filed, and appellant then filed a demand for a jury trial on its two additional causes. A motion to strike the jury demand was granted. Subsequently, the court denied appellant‘s motion to reconsider the demand for a jury trial, and the case proceeded to trial before the court. After trial, the court rendered its memorandum of decision against appellant and in favor of appellee. The court later signed and filed detailed findings of fact and conclusions of law on which judgment was entered against appellant on its claims and in favor of appellee on its counterclaim for $1,558.78.
CONTENTIONS
Briefly stated, appellant‘s contentions are:
(I) that it was entitled to a jury trial on its sixth and seventh claims;2
(II) that appellee‘s conduct constituted an unreasonable restraint of trade which proximately caused damage to appellant in violation of Section 1 of the Sherman Act;
(III) that the trial court applied an erroneous rule of law in requiring direct evidence of intent to monopolize on a claim of attempted monopoly under Section 2 of the Sherman Act.
Appellant concedes that it failed to file a timely motion for a jury trial on its first five claims. It asserts, however, that a timely demand was made for a jury trial on the issues created by the sixth and seventh claims set forth in the amended complaint. The answer lies in whether the sixth and seventh claims created new issues within the meaning of
In addition to incorporating by reference all of the allegations in the previous four claims charging Sherman Act violations, the fifth claim of appellant‘s original complaint—on which appellant failed to ask for a jury trial—alleged that in May, 1968, the appellee and another surreptitiously attempted to induce salesmen and other employees of appellant to breach and terminate their employment contracts with appellant and to accept employment with appellee. The claim then went on to charge that this conduct and ” . . . the termination of Trixler‘s brokerage agreements, . . . were performed [by appellee] in bad faith and in violation of [appellee‘s] obligation to act in good faith and to deal fairly with . . . ” appellant. [Emphasis supplied.]
The appellee, not surprisingly, sought additional information with reference to the charges of bad faith and unfair dealings set forth in the fifth claim. On discovery, in answer to an interrogatory as to the facts on which it based its bad faith charges in that claim, the appellant‘s response was vague and indefinite. Being dissatisfied with this response, appellee sought additional details on the nature of the bad faith charges. In answer to this request for clarification, the appellant expanded on its previous statement of the bad faith charges in the fifth claim and stated:
“Over a period of several years, commencing in or about 1965 and continuing through April 1968, Ralston Purina represented to Trixler that there was no possibility in the foreseeable future of Ralston Purina substituting a direct sales force for brokers in Northern California, or in any area other than in St. Louis (in April 1965) and in Los Angeles (in August 1966), and that such a substitution was not the subject of consideration or study by Ralston Purina. Said representations were made by Ralston Purina to Trixler on at least the following occasions, by and to the following named individuals:
(a) In or about August 1965, R. H. Dean so represented to J. Thomas Trixler;
(b) In or about January 1966, R. H. Dean so represented to J. Thomas Trixler;
(c) In or about May 1966, Glenn Copeland so represented to J. Thomas Trixler;
(d) In or about November 1967, R. L. Siler, Guy Dougherty and Bob McMath so represented to J. Thomas Trixler and John T. O‘Leary.”
It will be observed that each allegation in the supplemental response amounts to a charge of bad faith and a violation of “appellee‘s obligation to act in good faith and to deal fairly with” the appellant, as alleged in the fifth claim.
Particularly significant is the fact that appellant‘s alleged sixth and seventh claims use substantially the same language employed by appellant in its supplemental response to appellee‘s inquiry into the basis of the bad faith charges in the fifth claim. Clearly, the allegations of bad faith in the fifth claim are sufficiently broad to permit evidence
Although designated as the sixth and seventh causes of action, they are in fact neither causes of action nor claims. At most, they clarify the charges already made in the fifth claim. The sixth and seventh claims, by elaborating on the charges of bad faith in the fifth claim, did not create new issues. By any reasonable analysis, the identical issue of bad faith is charged in each one of the claims. We need not further clutter the legal publications by citing authority to support the statement that pleadings under
Cataldo v. E. I. DuPont De Nemours & Co., 253 F.Supp. 235 (S.D.N.Y.1966), upon which appellant relies, would be a fragile foundation on which to rest our decision. First of all, the case is not binding on us. Next, we question if in the circumstances of this case appellant‘s sixth and seventh claims introduced new theories of recovery. Bad faith is the underlying theory of all. Finally, we hold that the presentation of a new theory does not constitute the presentation of a new issue on which a jury trial should be granted under
Manifestly, the issue contemplated by the Rule is one of fact. When read in context, the word issue must have been intended by the Supreme Court to mean nothing other than an issue of fact. Obviously, appellant would not be demanding a jury trial on an issue of law. A theory of recovery, as distinguished from an issue of fact, in normal parlance presents a question of law. Even a casual reading of the applicable subdivision of the Rule makes it clear that the issue on which demand may be made for a jury trial is not created until service of the “last pleading directed to such issue.” The theory of a case relates to the ultimate basis of liability, rather than to an issue created by the pleadings. An issue of fact does not exist unless there is an allegation and a responsive denial. A theory of recovery exists from the outset, irrespective of a responsive pleading. A word, such as issue, with a fixed legal meaning is presumed to have been used in that sense. Bradley v. United States, 410 U.S. 605, 609, 93 S.Ct. 1151, 35 L.Ed.2d 528 (1973); Barber v. Gonzales, 347 U.S. 637, 74 S.Ct. 822, 98 L.Ed. 1009 (1954). Moreover, the use of the word issue, in these circumstances, would imply the exclusion of the word theory. Matheson v. Armbrust, 365 U.S. 870, 81 S.Ct. 904, 5 L.Ed.2d 860 (1961); Arley v. United Pacific Ins. Co., 379 F.2d 183 (CA9 1967), cert. denied, 390 U.S. 950, 88 S.Ct. 1039, 19 L.Ed.2d 1140 (1968). We decline to follow Cataldo.
Much more in point, although factually distinguishable, are Alcoa S. S. Co. v. Ryan, 211 F.2d 576 (CA2 1954); Railex Corp. v. Joseph Guss & Sons, Inc., 40 F.R.D. 119 (D.D.C.1966), aff‘d, 127 U.S.App.D.C. 230, 382 F.2d 179 (1967), and Reeves v. Pennsylvania R. Co., 9 F.R.D. 487 (D.Del.1949). All of the evidence which might be introduced under the specific allegations set forth in claims six and seven was, in fact, received by the trial court under the allegations of the fifth claim. Specific findings against appellant were made on all of these charges. In finding against appellant on its allegations in the fifth claim, the lower court necessarily disposed of appellant‘s contentions as set forth in its alleged sixth and seventh claims.
RESTRAINT OF TRADE
Despite appellant‘s forceful arguments to the contrary, we agree with the district court‘s findings that appellee did not violate Section 1 of the Sherman Act,
Under the doctrine stated in Bushie v. Stenocord Corp., 460 F.2d 116
Appellant‘s contention that there was an oral brokerage contract between appellant and appellee to last as long as appellant ably performed its responsibility, and that appellee breached that contract, presents a question of fact. Appellant is here faced with the adverse finding of the trial court that no such oral contract existed and that there was no fixed term of duration, either explicit or implicit, or that appellant would continue to have appellee‘s account as long as appellant “continue to do a good job.” These findings are not clearly erroneous.
Nor do we find substance in appellant‘s claim that appellee‘s qualified offer of 60 days’ “equivalent” brokerage constituted an unreasonable restraint of trade. Again, on this issue, the lower court made specific findings against the appellant and, additionally found that appellant was not “otherwise entitled” to equivalent brokerage. These findings are supported by the record and are controlling on the issue.
ATTEMPTED MONOPOLIZATION
Finally, appellant urges that the trial court applied an erroneous rule of law in requiring direct evidence of intent to monopolize on a claim of attempted monopolization under Section 2 of the Sherman Act.
At the outset, we must recognize that a manufacturer, such as appellee, has a natural monopoly over its own products, especially when the products are sold under trademark. Industrial Bldg. Materials, Inc. v. Interchemical Corp., 437 F.2d 1336, 1344 (CA9 1970). Under such circumstances, there is no violation of the antitrust laws unless the manufacturer uses his natural monopoly to gain control of the relevant market in which his products compete.
Appellant‘s argument that the establishment of his claim in restraint of trade under Section 1, creates a prima facie case of attempting to monopolize under Section 2, falls of its own weight. Since we have already held against appellant on its Section 1 claim, that claim cannot be used to create a prima facie case for a Section 2 claim of attempting to monopolize.
Utilizing language in Lessig v. Tidewater Oil Co., 327 F.2d 459, 474 (CA9 1964), cert. denied, 377 U.S. 993, 84 S.Ct. 1920, 12 L.Ed.2d 1046, and Industrial Bldg. Materials, Inc. v. Interchemical
Appellant challenges the lower court‘s conclusion that: “To prove a violation of section 2 of the Sherman Act, the plaintiff must show a specific intent to monopolize and sufficient market power to establish a ‘dangerous probability’ of success.” [Emphasis Supplied.] Even conceding that the relevant market is not in issue where the charge is attempt to monopolize, rather than monopolization, Industrial Bldg. Materials, Inc., supra, 437 F.2d at 1344, nonetheless, the district court‘s finding that appellee had no intent to monopolize the tuna business and did not make such an attempt, is controlling. The conclusion of the court on appellant‘s burden with reference to the relevant market is surplusage and in no way prejudiced the appellant. The court‘s finding of a lack of intent5 is sufficient, in itself, to destroy appellant‘s attempted monopolization claim.
CONCLUSION
Without going into further detail, we hold the there is ample evidence to support the findings of fact of the lower court, that the court correctly applied the law to the facts before it, and that none of its findings is clearly erroneous.
We have not discussed in detail each of appellant‘s contentions. However, we have considered them and feel that a more detailed discussion would unduly lengthen this opinion, without enlightenment to the bench or bar, and without change in the ultimate result.
Affirmed.
MERRILL, Circuit Judge (concurring):
I concur in Judge Kilkenny‘s opinion.
In addition to the facts recited by him I would note that the offer of equivalent brokerage was conditioned upon appellant not representing products which appellee considered “competitive” with its tuna products; that the offer further provided that appellant would be free to begin representing competitive brands at any time and would nevertheless be entitled to receive equivalent brokerage for such time during the two-month period as it did not represent competitive brands.
I understand Judge Kilkenny to hold that the basic issue here presented under § 1 of the Sherman Act is whether, in light of the course of dealing between the parties, this offer of equivalent brokerage conditioned on this covenant not to compete was, as matter of law, reasonable or unreasonable. On this I agree with Judge Kilkenny that as matter of law it was reasonable.