UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY
August 20, 1976
Martin B. Glauser Dodge Co., Plaintiff,
Chrysler Corp., Chrysler Motors Corp., Chrysler Financial Corp., Chrysler Credit Corp., Chrysler Realty Corp.
Cohen, Sr. J.
The opinion of the court was delivered by: COHEN
On Motions for Judgment Notwithstanding the Verdict or New Trial
COHEN, Sr. J.:
Defendants have moved for judgment notwithstanding the verdict or alternatively a new trial, following an adverse jury verdict in this private antitrust action brought pursuant to section 4 of the Clayton Act, 15 U.S.C. § 15.
The jury found that the defendants entered into a combination or conspiracy in unreasonable restraint of trade or commerce in violation of section 1 of the Sherman Act, 15 U.S.C. § 1,
causing injury to the plaintiff in the amount of 1.3 million dollars. This award was later trebled by the court to 3.9 million dollars. In support of these post-trial motions defendants assert three grounds. First, defendants contend that the plaintiff's theory of liability and method of computation of damages were invalid. Next, it is argued that the evidence insufficient to support a finding that any of the defendants violated section 1 of the Sherman Act. Finally, defendants maintain that trial errors and infirmities in the court's charge warrant a new trial. For the reasons discussed below, the motions will be denied.
The central question presented here is whether and to what extent an automobile manufacturer may subsidize its partially owned dealers without providing similar assistance to independent dealers. More specifically the issue is whether the defendants' implementation of a vertically integrated distribution system had the effect of reducing intrabrand competition so as to violate section 1 of the Sherman Act. On motion for judgment notwithstanding the verdict pursuant to Fed R. Civ. P. 50(b) the court is required to accept the evidence and all reasonable inferences in the light most favorable to the plaintiff. Continental Ore Co. v. Union Carbide, 370 U.S. 690, 696, 8 L. Ed. 2d 777, 82 S. Ct. 1404 (1962); Tennant v. Peoria & P.U. Ry., 321 U.S. 29, 35, 88 L. Ed. 520, 64 S. Ct. 409 (1944); Coleman Motor Co. v. Chrysler Corp., 525 F.2d 1338, 1344 (3rd Cir. 1975); Denneny v. Siegel, 407 F.2d 433, 439 (3rd Cir. 1969). Plaintiff, Martin B. Glauser Dodge Co. (Glauser Dodge) is a family owned New Jersey corporation which operated an automobile dealership in Vineland, New Jersey. Between February, 1964 and July, 1970 Glauser Dodge and its predecessor proprietorship owned by Martin B. Glauser sold and serviced new Dodge automobiles and trucks pursuant to a franchise agreement with Chrysler Motors; and in addition sold used cars.
Chrysler Motors Corporation is a wholly owned subsidiary of Chrysler Corporation engaged in distribution. Chrysler Credit Corporation, which is a wholly owned subsidiary of Chrysler Financial Corporation, extends wholesale credit to and purchases retail installment contracts from Chrysler dealers. Chrysler Financial Corporation, in turn, is a wholly owned subsidiary of Chrysler Corporation and is the source of capital for the entire Chrysler financial operation. Chrysler Realty, also a wholly owned subsidiary of Chrysler Corporation, acquires, develops, and administers property for Chrysler dealer sites.
In an attempt to increase its overall market penetration Chrysler Corporation developed a Dealer Enterprise (DE) program. The major tenets of this marketing program are revealed in what has been identified as the " Quinn Memorandum, "
The program envisioned the resurrection of Chrysler's dealership system through the infusion of venture capital to be provided in large part by Chrysler itself. As the Quinn Memorandum points out, outside investors did not find automobile dealerships in general, and Chrysler Corporation in particular, sufficiently attractive to provide the necessary venture capital. The money provided was to be used in three general areas: capitalization, facilities, and launching costs. The following practices, inter alia, were recommended:
1. Acquisition of existing facilities and leasing to operator;
2. Mortgage on existing facilities;
3. Sponsorship of capital loan program through finance companies whereby finance companies administer and Chrysler Corporation assumes partial financial responsibility;
4. Assumption of lease or guarantee of lease on existing facilities or facilities to be constructed; and
5. Use of contractual start up plan in relation to assumption of operating losses by Chrysler Corporation for a specified period. . . .
Under the Dealer Enterprise plan Chrysler supplied up to 75% of the capital needed to finance a new dealership. The 25% owner became manager of the dealership and could ultimately purchase the stock held by Chrysler out of his share of the profits. Until that time, however, Chrysler retained majority control. The program consistently produced net operating losses at the dealer level, but greater market penetration and the resulting increases in production permitted more efficient utilization of manufacturing facilities. Thus, as was explained by plaintiff's expert, Dr. Kuehn, the retail losses were offset by increased profits at the manufacturing level. This pattern of operating losses at the retail level, experienced by DE dealers nationally, was also reflected by the four Camden area Dodge DE dealers which were in competition with the plaintiff.
The essence of plaintiff's antitrust claim is that the Dealer Enterprise marketing program operated in a discriminatory fashion vis-a-vis private capital dealers. There was evidence adduced at trial to show that: (1) Cars were advertised and sold through DE dealers at prices which were lower than private capital dealers, such as the plaintiff, could afford to charge. (2) Superior physical facilities were provided to DE dealers on terms which were not available to competing private capital dealers. (3) DE dealers were permitted to sell retail installment contracts to Chrysler Credit Corporation on a without recourse basis, whereas plaintiff was required to guarantee to repurchase defaulted retail installment contracts of its customers. (4) DE dealers were permitted to operate in an out-of-trust condition when experiencing cash flow problems, whereas plaintiff's credit was immediately revoked when it was out of trust. (5) Restrictions on plaintiff's wholesale lines of credit, as well as its inability to sell its commercial retail paper without recourse, precluded plaintiff from participating in revenue-producing sales contests to the same degree as DE dealers. (6) Plaintiff did not receive the new vehicles it had ordered for its 1969 opening, even though an ample number of such vehicles were delivered to the DE dealers in the Camden area.
The jury returned the following verdict in response to special interrogatories:
1. Did any of the defendants enter into any combination or conspiracy in unreasonable restraint of trade or commerce? Yes or no.
2. If your answer to question 1 is yes, then which defendants did combine or conspire?
Answer: Chrysler Corporation, Chrysler Motors Corporation, Chrysler Financial Corporation, Chrysler Credit Corporation, Chrysler Corporation.
3. If your answer to question number 1 is yes, then was the plaintiff, Glauser Dodge Co. injured as a proximate result of such combination or conspiracy?
4. If your answers to questions 1 and 3 are yes, state the amount of damages?
Answer: 1.3 million dollars.
I. Restraint of Trade
Defendants contend that the evidence at trial was legally insufficient to support a finding that any defendant combined or conspired in unreasonable restraint of trade or commerce in violation of section 1 of the Sherman Act. The plaintiff does not assert that the mere existence of Chrysler's Dealer Enterprise program constituted a violation of the Act. Rather, the "rule of reason," Standard Oil Co. v. U.S., 221 U.S. 1, 55 L. Ed. 619, 31 S. Ct. 502 (1911), must be applied in determining whether the implementation and operation of the Dealer Enterprise program, by the defendants in this case, had the effect of unreasonably discriminating in favor of the factory-controlled dealers to the detriment of competing private capital dealers resulting in an unreasonable restraint of trade or commerce.
A combination or conspiracy is, of course, an essential element of a section 1 violation. Defendants have argued that a corporation cannot combine or conspire with its subsidiaries.
The Supreme Court has made clear, however, that
even commonly owned firms must compete against each other, if they hold themselves out as distinct entities. "The corporate interrelationships of the conspirators . . . are not determinative of the applicability of the Sherman Act."
U.S. v. Citizens and Southern National Bank, 422 U.S. 86, 116-117, 45 L. Ed. 2d 41, 95 S. Ct. 2099, (1975), citing U.S. v. Yellow Cab Co., 332 U.S. 218, 227, 91 L. Ed. 2010, 67 S. Ct. 1560 (1947). See Perma Life Mufflers, Inc. v. Int'l Parts Corp., 392 U.S. 134, 88 S. Ct. 1981, 20 L. Ed. 2d 982 (1968). The Court of Appeals for the Third Circuit has specifically held in Coleman Motor Co. v. Chrysler Corp., 525 F.2d 1338 (3rd Cir. 1975) that "although a party cannot combine or conspire with itself, a parent corporation, such as [Chrysler Corporation], can combine or conspire with its wholly owned subsidiaries." Id. at 1345. In order to show that a Sherman Act conspiracy existed plaintiffs are not required to prove that the defendants entered into an explicit agreement. U.S. v. General Motors Corp., 384 U.S. 127, 132-43, 16 L. Ed. 2d 415, 86 S. Ct. 1321 (1966); U.S. v. Parke-Davis & Co., 362 U.S. 29, 44-45 80 S. Ct. 503, 4 L. Ed. 2d 505 (1960). Circumstantial evidence including the conduct of the parties may be relied upon to prove the existence of the conspiracy or agreement. Coleman, 525 F.2d at 1345. The various acts complained of should be viewed together in determining whether defendants entered into a combination or conspiracy. As the Supreme Court stated in Continental Ore Co. v. Union Carbide, 370 U.S. 690, 8 L. Ed. 2d 777, 82 S. Ct. 1404 (1960):
It is apparent from the foregoing that the Court of Appeals approached Continental's claims as if they were five completely separate and unrelated law suits. We think that this was improper. In cases such as this, plaintiffs should be given the full benefit of their proof without tightly compartmentalizing the various factual components in wiping the slate clean after scrutiny of each. " . . . The character and effect of a conspiracy are not to be judged by dismembering it and viewing its separate parts, but only by looking at it as a whole. United States v. Patten, 226 U.S. 525, 544, [57 L. Ed. 333, 33 S. Ct. 141] . . .; and in a case like the one before us, the duty of the jury was to look at the whole picture and not merely at the individual figures in it." American Tobacco Co. v. United States, 147 F.2d 93, 106 (C.A. 6th Cir.) See Montague & Co. v. Lowry, 193 U.S. 38, 45-46, [48 L. Ed. 608, 24 S. Ct. 307].
370 U.S. at 698-99. Not only was there considerable direct testimony concerning the overall plan to give preferential treatment to DE dealers, but there was also circumstantial evidence that the named defendants were part of a combination or conspiracy. Both Chrysler Credit, which absorbed losses on DE dealers' retail installment paper, and Chrysler Realty, which leased facilities to DE dealers for less than the amount required to amortize the underlying loans for construction of those facilities, received direct contributions from Chrysler Corporation and Chrysler Motors Corporation. Thus sufficient evidence was presented to create a jury question as to whether a combination or conspiracy existed among the named defendants. See Coleman, 525 F.2d at 1345; Mt. Lebanon Motors, Inc. v. Chrysler Corp., 283 F. Supp. 453, 458 (W.D. Pa. 1968), aff'd, 417 F.2d 622 (3rd Cir. 1969).
Defendants further contend that economic activities are not actionable under the antitrust laws unless they cause an injury to the public.
The Sherman Act was, of course, designed to protect the public from injury, Coleman, 525 F.2d at 1346. Congress determined by legislative fiat, however, that certain classes of restraints of trade were by their "nature or character" injurious to the public. Klor's Inc., v. Broadway-Hale Stores, 359 U.S. 207, 210- 211, 3 L. Ed. 2d 741, 79 S. Ct. 705 (1959); Radovich v. National Football League, 352 U.S. 445, 453-454, 1 L. Ed. 2d 456, 77 S. Ct. 390 (1957); Apex Hosiery Co. v. Leader, 310 U.S. 469, 493, 84 L. Ed. 1311, 60 S. Ct. 982 (1940); Standard Oil Co. v. U.S., 221 U.S. 1, 58, 65, 31 S. Ct. 502, 55 L. Ed. 619 (1911). Where economic activities have a "tendency" to unreasonably restrain trade in light of the congressionally determined criteria of public harm, "it [is] not for the courts to decide whether in an individual case injury [has] actually occurred." Klor's Inc., v. Broadway-Hale Stores, 359 U.S. 207, 211, 3 L. Ed. 2d 741, 79 S. Ct. 705 (1959), citing Standard Oil Co. v. U.S., 221 U.S. 1, 63-68, 55 L. Ed. 619, 31 S. Ct. 502 (1911). See Radovich v. National Football League, 352 U.S. 445, 453-454, 1 L. Ed. 2d 456, 77 S. Ct. 390 (1957); Standard Sanitary Manufacturing Co. v. U.S., 226 U.S. 20, 49, 57 L. Ed. 107, 33 S. Ct. 9 (1912); U.S. v. American Tobacco Co., 221 U.S. 106, 179, 31 S. Ct. 632, 55 L. Ed. 663 (1911). Therefore, in a private antitrust action the plaintiff is not required to prove an injury to the public as a material element in his case. Coleman, 525 F.2d at 1346.
It is essential, however, that plaintiff show that the challenged practices adversely affected "competition in the marketplace." U.S. v. Arnold Schwinn & Co., 388 U.S. 365, 375, 18 L. Ed. 2d 1249, 87 S. Ct. 1856 (1967); White Motor Co. v. U.S., 372 U.S. 253, 262 83 S. Ct. 696, 9 L. Ed. 2d 738 (1963); Coleman, 525 F.2d at 1346; Venzie Corp. v. United States Mineral Products Co., 521 F.2d 1309, 1316 (3rd Cir. 1975). Regardless of the extent of injury suffered by Glauser Dodge there can be no recovery unless the defendants' conduct produced a substantially adverse effect on competition in the relevant market. As the Supreme Court emphasized in Brown Shoe Co. v. U.S., 370 U.S. 294, 8 L. Ed. 2d 510, 82 S. Ct. 1502 (1962), "it is competition, not competitors which the Act protects." Id. at 344.
There was sufficient evidence adduced at trial to permit the jury to infer that as a result of the defendants' preferential treatment of the DE dealers, Glauser Dodge was eventually forced out of business. The court of appeals in Coleman, supra, found that the elimination of an independent Chrysler dealer, as a result of the implementation of Chrysler's Dealer Enterprise program, had an adverse effect on competition in the marketplace. 525 F.2d at 1347. The court reasoned that there was an impact upon the prices charged for new automobiles and the service provided by Chrysler Dealers.
We perceive an anti-competitive effect from the elimination of the Coleman dealership. As long as there are several Dodge dealerships with different owners, they can compete within the narrow range of price jurisdiction for the sales of those persons who want Dodge vehicles. The elimination of an independent dealer diminishes that competition. If all independent dealerships were eliminated, Chrysler could eliminate price competition within the full range of price jurisdiction. Another area of competition between automobile dealers is service. If all independent dealers were eliminated, competition in price of parts and service and in quality of service could also be eliminated. . . . It is common knowledge that quality of service is vital to a successful automobile dealership.
525 F.2d at 1347. (citations omitted).
In Mt. Lebanon Motors, Inc. v. Chrysler Corp., 283 F. Supp. 453 (W.D. Pa. 1968), the plaintiff urged essentially the same arguments as did Glauser Dodge in attacking Chrysler Corporation's implementation of the Dealer Enterprise program. There was evidence offered tending to show that the Chrysler financed dealerships engaged in predatory practices to eliminate independent competitors, and that losses at the retail level were offset by Chrysler's manufacturing profits. The court concluded that a jury question was presented as to whether Chrysler's forward integration resulted in an unreasonable restraint of trade, 283 F. Supp. at 457-460, and the Court of Appeals for the Third Circuit affirmed. 417 F.2d 622 (3rd Cir. 1969). Mt. Lebanon Motors was also cited with approval by the court of appeals in Rea v. Ford Motor Co., 497 F.2d 577, 590 (3rd Cir. 1974).
The district court in Rea v. Ford Motor Co., 355 F. Supp. 842 (W.D. Pa. 1973) also found a violation of the antitrust laws resulting from Ford Motor Company's implementation of its manufacturer-financed dealership program.
Ford Motor Company, by operating factory stores and dealer development stores which were under its domination, was in competition with its own dealers. Therefore, when it adopted a course of action in combination with such stores to drive any of these independent dealers out of business or to dominate the market, it was certainly engaged in combination or conspiracy or restraint of trade under the Sherman Act. See United States v. McKesson and Robbins, Inc., 351 U.S. 305, 100 L. Ed. 1209, 76 S. Ct. 937 (1956).
355 F. Supp. at 865. The court of appeals reversed on other grounds, discussed infra, but did not disturb the above analysis, stating that their "decision . . . in no way undermines the proposition that automobile manufacturers are subject to the strictures of the antitrust laws in the operation of their wholly owned outlets." Rea v. Ford Motor Co., 497 F.2d 577, 590 (3rd Cir. 1974). Moreover, it has been held that the elimination of competitors from any substantial market constitutes a restraint of trade, regardless of whether there is a discernable impact upon the national economy. Klor's Inc., v. Broadway-Hale Stores, 359 U.S. 207, 213, 3 L. Ed. 2d 741, 79 S. Ct. 705 (1959); International Salt Co. v. U.S., 332 U.S. 392, 395-396, 92 L. Ed. 20, 68 S. Ct. 12 (1947); Mt. Lebanon Motors, 283 F. Supp. at 459.
It must also be shown, of course, that the defendants' actions which resulted in a restraint of trade were unreasonable. In determining whether or not a particular combination or conspiracy restrained trade unreasonably, one of the factors the jury must consider is the business or economic rationale which motivated the defendants' conduct. U.S. v. Arnold Schwinn & Co., 388 U.S. 365, 375, 18 L. Ed. 2d 1249, 87 S. Ct. 1856 (1967); Chicago Board of Trade v. U.S., 246 U.S. 231, 238, 62 L. Ed. 683, 38 S. Ct. 242 (1918). The defendants point out that it is not unlawful for an automobile manufacturer to create new retail outlets and to provide financial assistance to them. They argue that it was necessary to fill gaps in their retail distribution system in order to compete effectively against General Motors Corporation and Ford Motor Company. Any adverse effect upon intrabrand competition, defendants contend, would be justified by the enhancement of interbrand competition. The Supreme Court has made clear, however, that legitimate business motives do not immunize otherwise objectionable conduct. U.S. v. Arnold Schwinn & Co., 388 U.S. 365, 375, 18 L. Ed. 2d 1249, 87 S. Ct. 1856 (1967); Delaware Valley Marine Supply Co. v. The American Tobacco Co., 184 F. Supp. 440 (E.D. Pa. 1960), aff'd, 297 F.2d 199 (3rd Cir.), cert. denied 369 U.S. 839, 7 L. Ed. 2d 843, 82 S. Ct. 867 (1962). The defendants' business reasons are relevant only "because knowledge of intent may help the Court to interpret facts and to predict the consequences." Chicago Board of Trade v. U.S., 246 U.S. 231, 238, 62 L. Ed. 683, 38 S. Ct. 242 (1918). Rather, the court's inquiry must focus upon effect, not intent. Coleman, 525 F.2d at 1345, n. 10.
While there is nothing inherently unlawful in attempting to increase profits at the manufacturing level by operating retail outlets at a loss or break-even basis, Mt. Lebanon Motors, 283 F. Supp. at 458, citing U.S. v. Aluminum Co. of America, 233 F. Supp. 718, 727-728 (E.D. Mo. 1964) and Reynolds Metals Co. v. FTC, 114 U.S. App. D.C. 2, 309 F.2d 223, 229 (1962), a violation of the Sherman Act results if competition in the marketplace is adversely affected in the process. The court of appeals explained in Coleman, supra, that although a totally vertically integrated distribution structure may be permissible, "it is at least subject to the qualification that a lawful end achieved by unlawful means is not protected from the antitrust laws." 525 F.2d at 1347. While the Sherman Act, to be sure, is aimed at preserving competitive activity, there is no justification for violating the Act in one particular market in order to further competition in a larger, more important market. In U.S. v. Topco Associates Inc., 405 U.S. 596, 31 L. Ed. 2d 515, 92 S. Ct. 1126 (1972) the Supreme Court stated that:
antitrust laws in general, and the Sherman Act in particular, are the Magna Carta of free enterprise. They are as important to the preservation of economic freedom and our free-enterprise system as the Bill of Rights is to the protection of our fundamental personal freedoms. And the freedom guaranteed each and every business, no matter how small, is the freedom to compete - to assert with vigor, imagination, devotion, and ingenuity whatever economic muscle it can muster. Implicit in such freedom is the notion that it cannot be foreclosed with respect to one sector of the economy because certain private citizens or groups believe that such foreclosure might promote greater competition in a more important sector of the economy. Cf. U.S. v. Philadelphia National Bank, 374 U.S. 321, 371, [10 L. Ed. 2d 915, 83 S. Ct. 1715] (1963).
405 U.S. at 610. In any event, defendants' desire to increase Chrysler's competitiveness on the interbrand level does not explain the reasonableness of their conduct. Indeed, this goal could have been more effectively pursued had the financial and other assistance, which the defendants provided DE dealers, been extended to independent dealers as well. The court concludes that sufficient evidence was adduced at trial to support a finding that the defendants violated section I of the Sherman Act.
II. Theory of Damages
Recovery under section 4 of the Clayton Act, 15 U.S.C. § 15 is not warranted merely by proof that the defendants have violated the antitrust laws. In addition, it must be demonstrated that the defendants' conduct caused injury to the plaintiff's "business or property." The plaintiff must then show the amount of damages which have been suffered, using a reasonable method of computation.
The fact of injury may be shown by circumstantial evidence. Due to the practical difficulty of marshalling evidence in private antitrust actions, the Supreme Court has stated that the fact of injury should not be subject to a rigorous standard of proof. Zenith Corp. v. Hazeltine, 395 U.S. 100, 23 L. Ed. 2d 129, 89 S. Ct. 1562 (1969):
Trial and appellate courts alike must . . . observe the practical limits of the burden of proof which may be demanded of a treble-damage plaintiff who seeks recovery for injuries from a partial or total exclusion from a market; damage issues in these cases are rarely susceptible of the kind of concrete detailed proof of injury which is available in other contexts. The Court has repeatedly held that in the absence of more precise proof, the fact finder may "conclude as a matter of just and reasonable inference from the proof of defendants wrongful acts and their tendency to injure plaintiff's business, and from the evidence of the decline in prices, profits and values, not shown to be attributable to other causes, that defendants wrongful acts had caused damage to the plaintiffs."
Id. at 123-124, citing Bigelow v. RKO Pictures, Inc., 327 U.S. 251, 264 66 S. Ct. 574, 90 L. Ed. 652 (1946). The fact finder may draw a reasonable inference from the evidence presented at trial to conclude that a causal relationship existed between the defendants' conduct and the injuries complained of:
The jury may make a just and reasonable estimate of the damage based on relevant data, and render its verdict accordingly. In such circumstances "juries are allowed to act upon probable and inferential, as well as direct and positive proof." Story Parchment Co. v. Paterson Co., 282 U.S. 555, 561-564, [75 L. Ed. 544, 51 S. Ct. 248] (1931), Eastman Kodak Company v. Southern Photo Co., 273 U.S. 359, 377-379, [71 L. Ed. 684, 47 S. Ct. 400] (1927).
Bigelow v. RKO Pictures, Inc., 327 U.S. 251, 264-265, 90 L. Ed. 652, 66 S. Ct. 574 (1946). The court must determine, then, whether sufficient evidence was produced for the jury to find a "reasonable probability," Flintkote Co. v. Lysfjord, 246 F.2d 368, 392 (9th Cir. 1957), that the defendant's conduct was a "material cause of some injury to [plaintiff's] business or property." Rea v. Ford Motor Co., 497 F.2d 577, 589 (3rd Cir. 1974).
Although the theory of the section I violation of this case is based upon the elimination of the plaintiff from the marketplace, recovery is not limited to the value of Glauser Dodge as a going concern when it was forced out of business.
Defendants are also liable for causing injuries to the plaintiff while it was still in business if those injuries contributed to its ultimate elimination from the marketplace. See Brown Shoe Co. v. U.S., 370 U.S. 294, 346, 8 L. Ed. 2d 510, 82 S. Ct. 1502 (1962); Klor's Inc., v. Broadway-Hale Stores, 359 U.S. 207, 213-214, 3 L. Ed. 2d 741, 79 S. Ct. 705 (1959); Times-Picayune v. U.S., 345 U.S. 594, 622-623, 97 L. Ed. 1277, 73 S. Ct. 872 (1953); International Salt Company v. U.S., 332 U.S. 392, 396, 92 L. Ed. 20, 68 S. Ct. 12 (1947); NBO Industries Treadway Companies v. Brunswick Corp., 523 F.2d 262, 272 (3rd Cir. 1975).
Once the fact of injury has been established, the plaintiff must then show the amount of damages suffered by a reasonable method of computation without resorting to speculation or guess work. Bigelow v. RKO Pictures, 327 U.S. 251, 264, 90 L. Ed. 652, 66 S. Ct. 574 (1946). As with the fact of injury, however, courts have not insisted upon unduly rigorous proof of the quantum of plaintiff's injury. Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 123-124, 23 L. Ed. 2d 129, 89 S. Ct. 1562 (1969); Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 563-564, 75 L. Ed. 544, 51 S. Ct. 248 (1931); Coleman, 525 F.2d at 1352-1353. The liberal standard for computation of damages in private antitrust actions has been adopted not only because of practical limits of the burden of proof, but also in view of the public function served by such actions.
Thus, both the fact of injury and the quantum of damages must be analyzed for each element of damages sought by the plaintiff. The first claim for recovery is based upon the defendants' subsidy of the Camden area DE dealers' operating losses. The theory of the operating loss subsidy was explained by the plaintiff's expert witness, Dr. Kuehn, as follows: The Camden area DE dealers sold new automobiles at a minimal markup resulting in overall operating losses which were subsidized by Chrysler. Since the prices Glauser Dodge could charge for new automobiles were, in effect, controlled by these competitors, Glauser suffered a direct injury from this discriminatory treatment. Dr. Kuehn computed the amount by which the DE dealers' return on investment fell short of a projected 14 per cent "normal" pre-tax profit. He then determined the average loss-per-car absorbed by the DE dealers and multiplied that figure by the number of units sold each year by the plaintiff. Although there was conflicting testimony at trial, sufficient evidence was presented for the jury to conclude that the DE dealers' overlapping sales territory and advertising practices forced Glauser Dodge to sell new automobiles at approximately the same low markups. In contrast to Rea v. Ford Motor Co., 497 F.2d 577 (3rd Cir. 1974), the plaintiff here has demonstrated the fact of injury resulting from the defendants' discriminatory conduct. The plaintiff in Rea employed a subsidy approach, but failed to demonstrate any direct injury to his business or property. The independent dealer produced no evidence that the Ford-owned outlets engaged in predatory price cutting, or that it had been compelled to lower prices. The plaintiff made no attempt to show that it had incurred greater operating expenses or had lost any profit as a result of the operation of the company-owned outlet. The court of appeals observed that the attorney for the independent dealer expressly disavowed any such claims:
What our position is in this case is what 22 Ford did or did not do is not relevant because we are not asserting in our case that 22 Ford sustained a loss of profits . . . We haven't put any evidence in the record to indicate any particular loss sustained by 22 Ford.
497 F.2d at 589.
Plaintiff asserts that since its prices were controlled by the DE dealers, the measure of damages is, therefore, a proportional amount of the discriminatory subsidies provided by Chrysler. Glauser's profit margin was decreased to the extent its competitors were illegally favored. n9 This method of computing damages is a reasonable estimate of those profits lost by Glauser Dodge which can be traced to illegal conduct by the defendants. The computed subsidies for operating losses-per-car of the Camden area DE dealers are as follows:
1964 $ 187.50
© 1992-2004 VersusLaw Inc.