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Rea v. Ford Motor Co.

argued: May 6, 1977.

EDWARD C. REA AND 22 FORD INC., A CORPORATION, APPELLANTS AND CROSS-APPELLEES
v.
FORD MOTOR COMPANY, A CORPORATION, APPELLEE AND CROSS-APPELLANT



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA Civil No. 67-286.

Seitz, Chief Judge, Gibbons and Hunter, Circuit Judges. Gibbons, Circuit Judge, dissenting.

Author: Hunter; Gibbons

HUNTER, Circuit Judge:

Appellant and cross-appellant between them raise ten issues relating to the measure of damages in a judgment won by Edward C. Rea against Ford Motor Company under the Automobile Dealers' Day in Court Act, 15 U.S.C. §§ 1221-25. After a thorough review of the record, we find merit in only one: the district court erred in deducting from gross damages $160,934.00, an amount that was already part of the assets of Rea's Oldsmobile dealership before Ford's violation of the Act. Hence, we vacate and remand with directions to add that amount to the judgment.

I.

This litigation is more than ten years old. Its tortuous history was set forth in an earlier opinion of the court, Rea v. Ford Motor Co., 497 F.2d 577 (3d Cir.), cert. denied, 419 U.S. 868, 42 L. Ed. 2d 106, 95 S. Ct. 126 (1974). We will briefly summarize the underlying facts.

In February of 1964, Rea was given a franchise for a Ford dealership in Monroeville, Pennsylvania. At that time, he was already principal stockholder of an Oldsmobile dealership in Wilkinsburg, Pennsylvania. Rea told Ford that he would acquire assets to operate the Ford dealership by liquidating the Oldsmobile business, and Ford had him sign a letter committing him to take that step.

Subsequently, Rea suggested to a Ford representative that the Oldsmobile operation might not be closed after all. The Ford representative warned Rea that he might halt the shipment of Ford cars to Rea unless he got out of the Oldsmobile business, explaining that Ford believed those assets necessary to the successful operation of the Ford franchise. Shortly thereafter, Rea resigned the Oldsmobile franchise, kept part of its assets, and sold the rest. The retained assets were used in operating the Ford franchise in Monroeville.

In March, 1967, Rea filed a complaint against Ford in the Western District of Pennsylvania. It alleged breach of contract, violations of the Sherman Act, 15 U.S.C. §§ 1 and 2, and violations of the Automobile Dealers' Day in Court Act. A jury found Ford liable under all of these theories; Ford was ordered to pay some $3,379,683 in damages. On appeal, this Court reversed and remanded. The finding of liability on the contract claim and on some of the Sherman Act claims were reversed. The rest of the Sherman Act claims were sent back for retrial because of a confusion of proofs with the other claims. Liability under the Auto Dealers' Act was upheld, but the case was remanded for a redetermination of damages. On remand, Rea withdrew the antitrust claims, leaving only the question of damages under the Auto Dealers' Act. The district court awarded Rea $136,635.00. Rea appealed from the court's order denying his motion to amend the judgment to include other elements of alleged damage, and Ford cross-appeals.

II.

At the outset, Ford argues that the trial court erred in refusing to allow Ford to introduce evidence tending to establish that: (1) Ford's acts were not the proximate cause of the sale of Rea's Oldsmobile business; (2) Ford's acts were not the proximate cause of any loss in profits by Rea's corporate entities;*fn1 and (3) Rea failed to "mitigate" damages and, therefore, Ford had not caused any real harm. These elements of causation, says Ford, go to damages alone and were not foreclosed by this court's affirmance of the finding of liability under the Automobile Dealers' Day in Court Act.

We do not agree. Causation is an element of liability. Our remand left open only the amount of damages, not the fact of damage. Cf. Response of Carolina, Inc. v. Leasco Response, Inc., 537 F.2d 1307, 1320-21 (5th Cir. 1976) (must be some evidence showing causal link, in order to establish liability in antitrust case, before reaching question of amount of damages); Restatement (Second) of Torts § 430 (1965) (liability for negligence requires finding of causation).

III.

Ford also claims that the court below erred in including Rea's projected salary and bonuses at the last Oldsmobile franchise in the damage calculation. Instead, argues Ford, damages ought to be figured to the corporate entity, with Rea being compensated as that entity's principal stockholder.

Again, we do not agree. The corporate entity that suffered harm was the Oldsmobile franchise, which ceased to exist; the "dealer" for purposes of the action under the Auto Dealers' Act*fn2 was Edward Rea in his capacity as a Ford dealer. Rea, supra at 584. In that capacity, he personally suffered damage not only through loss of income as a shareholder of the Oldsmobile business Ford forced him to close, but also through loss of the salary and bonuses he could have earned in that business. ...


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