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January 11, 1988

Alan Rosefielde, et al.
Falcon Jet Corporation; Gulfstream III Associates, Inc. v. Falcon Jet Corporation

The opinion of the court was delivered by: LECHNER, JR.


 This case is a consolidation of the two above-mentioned cases (the " Rosefielde " and " Gulfstream " cases). The Rosefielde case was filed in the District of New Jersey in November, 1982. It involves a protracted dispute concerning the imposition of a warranty transfer fee by defendant Falcon Jet Corporation ("Falcon Jet") upon plaintiff Alan Rosefielde. In October, 1983 the Rosefielde complaint was amended to add two antitrust claims. Count sixteen of the Rosefielde Amended Complaint charges Falcon Jet and seven other business jet manufacturers conspired to fix the base price of new business jets in the United States. Count seventeen of the Rosefielde Amended Complaint alleges a conspiracy among Falcon Jet and three other business jet manufacturers to limit the contractual terms of sale of new business jets so as to inhibit their resale.

 The Gulfstream case was originally filed in the Central District of California in June, 1985, but was consolidated with the Rosefielde case by Judge Barry in April, 1986. The Gulfstream case alleges a price-fixing conspiracy, the operative facts of which are identical to those of count sixteen of the Rosefielde Amended Complaint. The Gulfstream case and count sixteen of the Rosefielde Amended Complaint will be referred to collectively as the "price-fixing claims."

 The court is now faced with cross-motions for summary judgment with respect to the price fixing claims, and defendants' motion for summary judgment on count seventeen of the Rosefielde Amended Complaint ("count seventeen"). *fn1" Defendants' motion on the price fixing claims is granted with respect to the existence of an express agreement to fix prices, and is denied in all other respects. Plaintiffs' cross-motion for summary judgment on the price-fixing claims is partially granted and partially denied. Finally, defendants' motion for summary judgment on count seventeen is granted.


 Plaintiff Alan Rosefielde is a former practicing tax attorney who is presently engaged in the business of purchasing, selling and leasing business jet aircraft. (Plaintiff's Memorandum in Opposition to Defendants' Motion for Partial Summary Judgment and in Support of Plaintiffs' Cross-Motion for Summary Judgment, dated September 30, 1986 ("Plaintiffs' Mem.") at page "a", Table I.) *fn2" Mr. Rosefielde organized each of the other plaintiffs, which are closely held corporations or limited partnerships, for the purpose of purchasing Falcon Jet or Gulfstream *fn3" business jets. (Memorandum in Support of Defendants' Motion for Partial Summary Judgment with Respect to the Sixteenth and Seventeenth Counts of the Rosefielde Amended Complaint and for Summary Judgment in Gulfstream III Associates, dated August 1, 1986, ("Defendants' Mem.") at 7.) Mr. Rosefielde conducts all of the business affairs of each of the plaintiffs. (Plaintiffs' Mem. at page "a", Table I.) Typically, Mr. Rosefielde, through one of his corporations, *fn4" purchases new business jets in the United States and then assigns the contract to a subsequent purchaser. (Defendants' Mem. at 9.) During the period between the purchase of the aircraft by the plaintiffs and the assignment to a subsequent purchaser, the planes are managed by Jet Leasing Corporation, of which William F. Handy, a close associate of Mr. Rosefielde, is the president and principal shareholder. (Defendants' Mem. at 8.)

 Defendant Falcon Jet Corporation is the United States subsidiary of defendant Avions Marcel Dassault-Breguet Aviation ("AMD-BA"), a French aircraft manufacturer. AMD-BA manufactures military and civilian aircraft, including the "Falcon" series of business jet aircraft. (Defendants' Mem. at 6-7.) Falcon Jet is responsible for marketing and selling Falcon business jets in the western hemisphere. (Defendants' Mem. at 6.) In most instances Falcon Jet purchases "green" aircraft (i.e., aircraft sold without exterior paint, completed interiors, or permanent avionics packages) from AMD-BA and ships them to the United States for completion according to the specifications of Falcon Jet customers (Defendants' Mem. at 7.)

 The Falcon Jet aircraft which plaintiffs purchased from defendants were "completed" aircraft sold with a standard equipment package for a "base" price. (Defendants' Mem. at 15.) The base price is the price of an aircraft equipped to a standard specification set by the manufacturer before the addition of optional equipment or price escalation. *fn5" (Plaintiffs' Mem. at 13 n. 25.)

 The Rosefielde plaintiffs contracted to purchase eight Falcon jets over a period of two years beginning in 1978. (Defendants' Mem. at 19.) Six of these contracts were assigned to subsequent purchasers who accepted legal title to the aircraft prior to the time of delivery. (Id.) Three of those assignees are not parties in this action. (Defendant's Mem. at 10.) In 1981, the Gulfstream plaintiffs contracted to purchase two Gulfstream Aerospace Jets. One of these contracts was cancelled and the other was assigned to a non-plaintiff. (Defendants' Mem. at 11.) In addition, plaintiffs terminated three options to purchase Gulfstream IV aircraft. (Reply Memorandum in Support of Defendants' Motion for Partial Summary Judgment with Respect to the Sixteenth and Seventeenth Counts of the Rosefielde Amended Complaint and for Summary Judgment in Gulfstream III Associates ; Memorandum in Opposition to Plaintiffs' Cross-Motion for Summary Judgment, dated November 12, 1986 ("Defendants' Reply") at 55.)

 In July, 1982, a dispute arose between Mr. Rosefielde and Falcon Jet concerning the imposition of a $ 100,000 assignment fee to transfer the warranty of a Falcon Jet aircraft from Mr. Rosefielde to another customer. (DX-454; Defendant's Mem. at 11.) In November, 1982, the Rosefielde plaintiffs filed a fifteen count complaint in the District of New Jersey. *fn6" The first six counts of the complaint, alleging that the defendants attempted to monopolize the business jet market, were dismissed with prejudice in June of 1985. (Defendants' Mem. at 13.) The remaining nine counts are contract and tort claims based on defendants' warranty transfer policy. (Defendants' Mem. at 11.)

 In October, 1983, plaintiffs amended their complaint to add two additional counts alleging conspiracies in violation of Section One of the Sherman Act, 15 U.S.C. § 1. Count sixteen alleges a horizontal price-fixing conspiracy among defendants and seven international business jet manufacturers. *fn7" (Defendants' Mem. at 11.) Count seventeen alleges a conspiracy among the same manufacturers to fix the contractual terms of sale for the purpose of inhibiting the resale of new business jets. (Defendants Mem. at 11.)

 Defendants have filed several previous motions for summary judgment. The first motion, directed at counts one through six, the monopolization counts of plaintiff's original Complaint, was not adjudicated because plaintiffs dropped these counts shortly before their response was due, and agreed to a dismissal with prejudice. (See Defendants' Mem. at 12; Plaintiffs' Mem. at 20, n. 52.) Defendants then filed a motion for partial summary judgment as to plaintiffs' contract and tort claims in June of 1985. (Defendants' Mem. at 13.) Finally, in August, 1985, defendants filed a motion for partial summary judgment with respect to the sixteenth and seventeenth counts of plaintiffs' Amended Complaint. Defendants also filed motions in limine to exclude certain testimony of plaintiffs' expert witnesses.

 Ruling on defendants' motions, Judge Lacey denied in part and granted in part summary judgment on the contract and tort claims. He also ruled that plaintiffs' expert witnesses would be precluded from testifying unless they filed supplemental reports and submitted to further depositions. He then denied defendants' motion for summary judgment as to counts sixteen and seventeen without prejudice to renewal after plaintiffs' experts submitted to the supplemental discovery orders. *fn8" After plaintiffs' experts complied with Judge Lacey's orders, defendants renewed their summary judgment motion with respect to the price fixing claims and count seventeen of the Rosefielde case. (Defendants' Mem. at 13.) Plaintiffs then filed a cross-motion for summary judgment with respect to liability on the price fixing claims, seeking to leave for trial only the matter of plaintiffs' damages. (Plaintiffs' Mem. at 103.)


 1. The Price Fixing Claims

 Since the early 1970's eight business jet manufacturers which sell their product in the United States have engaged in a regular exchange of price and other information on a reciprocal reciprocal basis. (Plaintiff's Mem. at 13, pages "a" and "b", Table II.) This exchange took place primarily during monthly telephone conversations between the sales engineers of the various manufacturers. (Plaintiffs' Mem. at 15; Defendant's Mem. at 18.) The sales engineers exchanged information relating to the "base" price of the aircraft for the next available delivery. (Plaintiff's Mem. at 13; Defendants' Mem. at 18.) This information was recorded in internal Falcon Jet documents called "price list comparisons." (e.g., PX-147, Defendants' Mem. at 18.) These documents listed the base price, the next available delivery, production rate, price of typical options, and escalated and equipped prices of Falcon Jet and other aircraft. (Defendants' Mem. at 18.)

 The price list comparisons were widely circulated among sales representatives as well as executives of Falcon Jet. (Defendants' Mem. at 19; Plaintiff's Mem. at 5, 46.) Plaintiffs allege Falcon Jet executives used this information to set the prices of their aircraft. (Plaintiffs' Mem. at 5, 26, page "c", Table III.) Defendants claim, to the contrary, the information exchange was not authorized by executives of Falcon Jet, but the practice merely evolved over time among sales engineers, who had or have no pricing authority. (Defendants' Mem. at 18.) It is contended this information exchange was meant to assist the sales engineers in their efforts to sell Falcon aircraft -- not to set prices.

 Since 1980 Falcon Jet was responsible for publishing the Business Jet Activity Report ("BJAR") which reported detailed order and delivery information including the names of individual purchasers. *fn9" (Plaintiffs' Mem. at 16. *fn10" ) The BJAR was distributed monthly to all of the aircraft manufacturers who contributed information to it. (Plaintiffs' Mem. at 17-18.) Plaintiffs also claim representatives of the various aircraft manufacturers exchanged information following the annual convention of the National Business Aircraft Association. (Plaintiffs' Mem. at 16.)

 Defendants concede there "is no question that sales engineers for aircraft companies routinely exchanged information relating to the published list price and performance characteristics of aircraft." (Defendants' Mem. at 18.) However, the defendants disagree with the inferences plaintiffs draw from these facts.

 In opposition to the plaintiffs' allegation of conspiracy, defendants have offered sworn statements of the senior executives of all the business jet manufacturers denying the existence of any agreement or understanding among them with respect to price fixing. (Defendants' Mem. at 30.) In addition, plaintiffs' economic expert, Richard Barber, has consistently stated he is unaware of any evidence which suggests the alleged co-conspirators set prices pursuant to an express agreement to fix or adhere to the prices exchanged. (Barber Tr. 501-502, 8/14/87 Tr. 69-70, 84-85.)

 Defendants argue to infer the existence of any agreement, whether express or tacit, is implausible because there was a high level of competition among business jet manufacturers throughout the relevant period of the lawsuit. *fn11" For example, the defendants have produced scores of advertisements relating to the price competitiveness of various aircraft. (Defendants' Reply at 47-48.) Additionally, two government reports have stated that the general aviation industry is highly competitive. (Defendants' Mem. at 4, 17, 28-29; cf. Plaintiffs' Mem. at 12 n. 22, 17 n. 42.) Intense rivalry is especially apparent between domestic and foreign business jet manufacturers. Defendants have introduced a mailing campaign initiated by American business jet manufacturers in an attempt to discredit and draw business away from foreign manufacturers including Falcon Jet. (Defendants' Mem. at 28 (citing DX-1600).) Defendants also have shown the market shares of the alleged co-conspirators fluctuated widely during the period in which the alleged conspiracy existed. (Defendants' Mem. at 31; Report of Defendants' Economic Expert, M.A. Adelman ("Adelman Report") at Figure 1, Table 1, Figure 6, Table 6.)

 Plaintiffs have argued that the information exchange was a per se violation of the antitrust laws because, as they claim, the exchange of price information had the anticompetitive effect of raising or stablizing business jet prices. (Plaintiffs' Mem. at 57.) As evidence of this anticompetitive effect, the plaintiffs have introduced the reports of their expert witnesses Richard Barber and Seymor Laskow. The Barber Report examines the prices recorded in the price list comparisons and concludes that new business jet prices rose or remained stable from 1979 to 1983 while the demand for business jets dropped by over 80%. Plaintiffs claim this fact is highly probative of the existence of a conspiracy to fix prices within the business jet aircraft industry. (Plaintiffs' Mem. at 34, 77.) The Laskow Report supports Mr. Barber's conclusion by showing that the majority of sales by Falcon Jet during this period were at or above the Falcon Jet prices as reported in the price list comparisons. (Plaintiffs' Mem. at 61.)

 The defendants object to both these reports. They claim that not only are the conclusions reached by Barber and Laskow fallacious, but the methods which they employed to reach these conclusions are deceptive. (See, e.g., Defendants' Mem. at 17-25.) Defendants further offer the reports of their own economic experts, Morris Adelman and Bruce Stangle which show that discounts from list price occurred during periods of slackened demand, and prices in the industry actually dropped during the 1979 to 1983 period. (Defendants' Mem. at 18.)

 The parties also debate a number of factual issues including whether the prices exchanged were actual prices charged to customers or merely list prices, whether the price information was publicly available, and whether the manufacturers exchanged "secret" pricing information. Both parties can support their factual assertions with cites to the voluminous record of documents and depositions which accompanies these motions, however the resolution of these issues is not material to the outcome of the parties' motions for summary judgment. Therefore, they are not considered at length in this opinion.

 2. Count Seventeen

 Plaintiffs' second antitrust claim alleges that four business jet manufacturers -- Falcon Jet, British Aerospace, Gates Learjet Corporation and Cessna Aircraft Company -- engaged in a conspiracy to deter the resale of new business jets by including in their contracts clauses which impede contract assignment and warranty transfers. This claim is based upon evidence that the four business jet manufacturers each had policies of deterring resales, that representatives of various aircraft manufacturers discussed the effect of business jet resales at "forecasting meetings," and that executives from Falcon Jet and British Aerospace contacted executives of other business jet manufacturers on two separate occasions to discuss their policies on deterring resales and the number of jets each manufacturer had up for resale. These facts will be considered in greater detail in the section of this memorandum granting defendants' motion for summary judgment on count seventeen.

 Summary Judgment

 Under the Federal Rules of Civil Procedure, summary judgment should be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. Rule 56(c). Accordingly, to defeat a motion for summary judgment, the non-moving party must respond by setting forth "specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. Rule 56(e).

 Summary judgment is an appropriate means of disposing of complex cases where factual contentions lack support in the record. See, Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corporation, 475 U.S. 574, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986) (antitrust action); Anderson, supra (libel action); Celotex Corp. v. Catrett, 477 U.S. 317, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986) (wrongful death action). Granting summary judgment is appropriate against "a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp., 106 S. Ct. at 2552. Similarly, a summary judgment motion in an antitrust case should be granted if the plaintiff's allegations are unsupported or "if defendant has introduced probative evidence rebutting the antitrust allegations in the complaint, and plaintiff fails to come forward with factual support for his allegations." 10A Wright, Miller & Kane, Federal Practice & Procedure, § 2732.1, p. 328.

 The Third Circuit has determined that the elements of a cause of action under section one of the Sherman Act *fn12" are:

(1) that the defendants contracted, combined or conspired among each other [or with other co-conspirators]; (2) that the combination or conspiracy produced adverse, anti-competitive effects, within relevant product and geographic markets; (3) that the objects of and the conduct pursuant to that contract or conspiracy were illegal; and (4) that the plaintiff was injured as a proximate result of that conspiracy.

 Martin B. Glauser Dodge v. Chrysler Corp., 570 F.2d 72, 81 (3d Cir. 1977), cert. denied, 436 U.S. 913, 56 L. Ed. 2d 413, 98 S. Ct. 2253 (1978); Arnold Pontiac-GMC, Inc. v. General Motors Corp., 786 F.2d 564, 572 (3d Cir. 1986). Thus, concerted action is an essential element of a Section One claim. Link v. Mercedes Benz of North America, Inc., 788 F.2d 918, 922 (3d Cir. 1986). Unilateral or independent action, irrespective of its intent, does not violate Section 1. Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 761, 79 L. Ed. 2d 775, 104 S. Ct. 1464 (1984); Hudson's Bay Co. v. American Legend Co-op., 651 F. Supp. 819, 838 (D.N.J. 1986).

 Because direct evidence of a conspiracy is often difficult to show, a conspiracy may be inferred from circumstantial evidence. However, the extent to which such inferences can be made is limited. Matsushita, 106 S. Ct. at 1360. For example, plaintiff has not provided evidence of the existence of a conspiracy if he has merely shown the existence of an opportunity to conspire, Fragale & Sons, 760 F.2d at 473, or consciously parallel business behavior, Schoenkopf v. Brown & Williamson Tobacco Corp., 637 F.2d 205, 208 (3d Cir. 1980). In order for an antitrust plaintiff to carry his burden of proof upon a claim of concerted price fixing, he must provide evidence that ...

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