The opinion of the court was delivered by: NEWCOMER
Plaintiffs, one present and two former delicatessen operators, brought suit in January, 1971 against the defendants named above for alleged violations of the antitrust laws. Plaintiffs alleged that defendants violated Section 1 of the Sherman Act
by tying the purchase of defendants' goods to the extension of credit by defendants to plaintiffs. Plaintiffs also claimed that defendants attempted to monopolize the market for delicatessen goods, a violation of Section 2 of the Sherman Act,
and that the tying arrangements attacked under Section 1 constituted a violation of Section 3 of the Clayton Act.
This Court denied plaintiffs' first motion for summary judgment in December, 1972. 58 F.R.D. 125 (1972). However, in April, 1973, upon a renewed motion for summary judgment by the plaintiffs, this court granted summary judgment on the issue of liability as to two of the three plaintiffs. 358 F. Supp. 253 (1973). This order was in turn vacated by the Court on March 29, 1974, 373 F. Supp. 1035, and the case was set for trial on the issue of liability and damages as to all three plaintiffs. Upon the completion of the plaintiffs' case at trial the Court directed a verdict in favor of defendants under Rule 50(a). This memorandum is submitted in the hopes of explaining the ultimate resting place of this singular chain of decisions.
Defendants did not, in most cases, extend credit directly to the plaintiffs, but, as testified to at trial, arranged the terms of plaintiffs' purchase of their delicatessen stores, and, either by guaranteeing plaintiffs' promissory notes to the sellers or by accepting assignment of those notes from the sellers, provided the security that was necessary to enable plaintiffs to enter into business. In the case of plaintiff Anderson, the purchase of the delicatessen was made directly from defendant Home Style in a transaction where Anderson borrowed the down payment of $3,000 from a commercial bank and delivered Home Style a promissory note in the amount of $15,000. In the cases of plaintiffs Lang and Worthington, the promissory notes of $15,000 and $11,000, respectively, were given to the delicatessens' former owners, who assigned the notes on a recourse basis to Home Style. Home Style then took the notes to a bank and discounted them.
The principal case upon which both plaintiffs and defendant relied in support of their respective positions was Fortner Enterprises v. U.S. Steel Corp., 394 U.S. 495, 22 L. Ed. 2d 495, 89 S. Ct. 1252 (1969). Plaintiffs relied heavily upon Fortner's finding that credit can be a tying product under the antitrust laws and defendants' placed their defense primarily upon Fortner's definition of market power in the tying product. In Fortner the Supreme Court reversed the entry of summary judgment in favor of United States Steel where it was alleged that one of that company's sub-divisions, the Homes Credit Corporation, loaned money to plaintiff on uniquely favorable terms on the condition that plaintiff, a residential developer, bought prefabricated homes from defendant. In finding that such a complaint stated a cause of action for which relief could be granted, the Court set forth the elements necessary to make out a per se illegal tying arrangement. The first requirement for per se liability is that the defendant possess sufficient economic power over the tying product to inhibit competition in the tied product.
In our case, as in Fortner, the tying product is credit. The second requirement is that a not insubstantial amount of commerce in the tied product be affected by the arrangement. The Court pointed out that for the purposes of determining whether the amount of commerce foreclosed was too insubstantial to warrant prohibition of the practice the relevant figure is the total volume of sales tied by the sales policy under challenge, "not the portion of this total accounted for by the particular plaintiff who brings suit." 394 U.S. at 502.
The "sufficient economic power" requirement soon became the focus of the present suit. This Court early in the case found that a not insubstantial amount of commerce had been affected by the tying arrangement policy, 58 F.R.D. at 128. Thus the principle question throughout the pre-trial and trial period, and particularly in the arguments at the close of plaintiffs case became: what evidence of economic power over the tying product is sufficient to allow plaintiffs case to go to the jury on the question of liability?
Plaintiffs argue that Fortner allows a jury to infer sufficient economic power over the tying product from a number of different kinds of evidence. One such kind of evidence would be the number of buyers who had accepted the tying arrangement, in this case the number of individuals whom defendants had enabled to become delicatessen operators on the condition that they bought all their supplies from defendants. In discussing the quantum of proof which was necessary to show sufficient economic power, the Supreme Court in Fortner had stated:
"Accordingly, the proper focus of concern is whether the seller has the power to raise prices, or impose other burdensome terms such as a tie-in, with respect to any appreciable number of buyers within the market". 394 U.S. at 504
Plaintiffs claimed that the number of persons affected by defendants' tying arrangements were appreciable.
Second, plaintiffs contended that Fortner permitted a jury to draw an inference of economic power from the fact that plaintiffs or others in plaintiffs' position had been willing to pay a higher than competitive price for the tied product. As the Court stated in Fortner :
"Since in a freely competitive situation buyers would not accept a tying arrangement obligating them to buy a tied product at a price higher than the going market rate, this substantial price differential with respect to the tied product . . . in itself may suggest that respondents had some special economic power in the credit market." 394 U.S. at 504-5
Third, plaintiffs contended that an inference of economic power can be drawn from the uniqueness or desirability of the tying product, which arose in this case because of plaintiffs' alleged inability to obtain the financing necessary to go into business from any other source except defendants. Plaintiffs claimed at trial that they had presented enough evidence to raise all three of these inferences, and that their case could go to the jury even if the facts necessary to give rise to one or two of the permissible inferences had not been made out. Defendants on the other hand declared that Fortner had established but one test of economic power, the "uniqueness" test. Defendants stated that the uniqueness necessary to make out economic power could not be implied merely from the general unavailability of the product, but must depend upon some legal, physical, or economic inability of defendant's competitors in the tying product market to provide the product on the terms provided by defendant. Defendants based this contention on an opinion of an appellate court subsequent to the Supreme Court's decision in Fortner. Fortner Enterprises, Inc. v. U.S. Steel Corp., 452 F.2d 1095 (6th Cir. 1971). In Fortner II the Sixth Circuit reversed the district court's entry ...