C. COUNT III PENDENT STATE TORT CLAIMS
Count III asserts two pendent state tort claims against the defendants. It is alleged that they have engaged in a malicious interference and conspiracy to interfere with plaintiffs' advantageous contractual relations and with their advantageous business prospects. The factual allegations upon which these claims are based are those set forth in Count I concerning the conspiracy to boycott. Under Pennsylvania law, in order to prevail in a tort action for interference with prospective contractual relations, a plaintiff must show 1) existence of a prospective contractual relation, 2) the purpose or intent to harm plaintiff by preventing the relationship from occurring, 3) the absence of privilege of justification on the part of the actor and 4) the occurrence of actual harm or damage to plaintiff as a result of the actor's conduct. Glenn v. Point Park College, 441 Pa. 474, 272 A.2d 895 (1971).
I have already concluded that plaintiffs have not adduced evidence from which a jury reasonably could infer that defendants Chase Manhattan Bank and Girard Bank have participated in the conspiracy described in Count I, and since plaintiffs have not alleged nor do they have evidence to prove additional facts that would support a finding that Chase and Girard have interfered or conspired to interfere with plaintiffs' contractual or prospective business relations, I will grant summary judgment on Count III in their favor. As to the other defendants, however, I find there is evidence in the present record from which a factfinder could conclude that these defendants did intentionally interfere with the prospective contractual relations of Tose and the Eagles in their efforts to find financing and that plaintiffs suffered harm as a result of this interference. Consequently, since the remaining defendants are not entitled to judgment on Count III as a matter of law, I will deny the motions of FPB, Bunting, Pemberton, Forstater, PNB and Provident for summary judgment on the state law claims.
D. COUNT IV CONSPIRACY TO FIX INTEREST RATES
Count IV of the Amended Complaint charges that since 1969 the defendants, with the exception of Sidney Forstater, in violation of Sections 1 and 2 of the Sherman Act, have conspired to fix interest rates in the four Pennsylvania counties of Philadelphia, Bucks, Delaware and Montgomery. Alleging that no genuine issue as to any material fact exists, both the plaintiffs and the defendants have moved for summary judgment on this count. I agree with their assessment; the evidence on this issue is complete, and no genuine issue of fact remains in dispute.
Plaintiffs' arguments in support of the claim that they are entitled to judgment on the interest fixing claim as a matter of law change somewhat from one brief to the next. Nonetheless, their principal contention appears to be that the evidence shows that the defendant banks have "tampered" with the structure of the prime interest rates of the banking industry in the Philadelphia area and thus have committed a per se violation of the Sherman Act.
To buttress their claim that the defendants have fixed their prime rates and thereby stabilized the rate of all Philadelphia area banks, the plaintiffs point to the following evidence of record: 1) since 1969 the prime interest rates of the defendants have tended to fluctuate in a similar pattern and to remain uniform; 2) the executive officers of the defendant banks have had the opportunity to conspire because they sit on the executive committees of other Pennsylvania financial institutions as well as frequently meet through trade associations; and 3) the defendant banks have participated in some joint loan agreements in which they have agreed that all participating banks in the particular joint venture are to charge the interest rate set by one bank.
Plaintiffs cite United States v. Socony-Vacuum Oil Co. Inc., 310 U.S. 150, 60 S. Ct. 811, 84 L. Ed. 1129 (1940) and United States v. Container Corp., 393 U.S. 333, 89 S. Ct. 510, 21 L. Ed. 2d 526 (1969), two seminal decisions concerning price fixing, as the legal authority controlling the prime rate issue in this case. It is their argument that the joint loan agreements constitute a per se "naked price restraint" within the meaning of the Socony and Container cases, supra. Although they did not have a participation loan from any of the defendant banks during the period relevant to this lawsuit, plaintiffs allege that the existence of the joint loans, with clauses agreeing to charge a single rate, affected the interest rates of all loans granted by banks in the Philadelphia area and therefore had an anticompetitive effect on the entire lending market.
The defendant banks do not dispute that their prime rates have tended to be uniform; nonetheless, they deny that they have ever agreed with any other lending institution to the establishment of their prime rate. Defendants attribute the uniformity of interest rates to the fact that money is fungible and economic forces usually compel competitors to sell a fungible product at the same price. In addition, defendants assert that joint or participation loans, which are authorized by statute in Pennsylvania,
do not violate the antitrust laws.
The principal arguments advanced by defendants in support of their claims that they are entitled as a matter of law to summary judgment on Count IV are that the evidence does not establish the existence of a conspiracy to fix prime rates and the joint loan is not a per se violation of the antitrust laws because it increases the availability of credit.
After considering the facts of this case as well as the relevant case law, I grant summary judgment in favor of the defendants on Count IV of the Amended Complaint. Plaintiffs concede that there is no direct evidence of an express agreement among the defendant banks to establish a uniform prime rate.
Thus, in order to establish a conspiracy, plaintiffs must rely on the inferences to be drawn from the undisputed facts of similar prime rates, the opportunity to conspire and the existence of certain participation loans which include agreements to charge a single interest rate. The fact that the prime rates of defendant banks have tended to be uniform and the fact that the banks have had the opportunity to meet and conspire is not enough evidence to sustain an inference that a conspiracy existed and plaintiffs apparently concede as much.
Plaintiffs' theory that they are entitled to summary judgment on Count IV is premised on the notion that the joint loan agreements entered into by the defendant banks are per se violations of the Sherman Act. As I noted previously in this memorandum, if a Sherman Act case involves one of those business practices which have been classified by the courts as a per se violation, the plaintiff does not have to prove the challenged conduct has had an anticompetitive effect on the relevant market. In the present case, plaintiffs maintain that the provisions of the joint loan agreements requiring a bank to adopt the prime rate of a competitor constitute price fixing, which is a per se violation.
I cannot accept this characterization of participation loans. Although it is true that price fixing is among those concerted activities that the Supreme Court has found to fall within the per se category, the Court has not labelled every agreement among competitors to set the price of a good or service as price fixing. See United States v. Addyston Pipe & Steel Co., 85 F. 271, 280 (6th Cir. 1898), aff'd, 175 U.S. 211, 20 S. Ct. 96, 44 L. Ed. 136 (1899). In a recent opinion, Broadcast Music, Inc. v. CBS, 441 U.S. 1, 99 S. Ct. 1551, 60 L. Ed. 2d 1 (1979), the Supreme Court expressed its reluctance to characterize a business activity as per se price fixing. In that case, the Court, reversing the decision of the Second Circuit, declined to find the defendants' issuance of a blanket license granting the purchaser a nonexclusive right to perform any of the songs found in their repertoire for a fixed annual fee to be price fixing within the meaning of the Sherman Act. The decision in Broadcast Music was based on two principles: 1) the courts will classify a business relationship as a per se violation only after considerable experience with the practice
and 2) the per se classification only applies to business conduct which is plainly anticompetitive. The Supreme Court stated the following test for determining whether a practice should be categorized as a per se violation:
In characterizing this conduct under the per se rule, our inquiry must focus on whether the effect, and, here because it tends to show effect, the purpose of the practice is to threaten the proper operation of our predominantly free-market economy that is, whether the practice facially appears to be one that would always or almost always tend to restrict competition and decrease output, and in what portion of the market, or instead one designed to "increase economic efficiency and render markets more rather than less, competitive.'
441 U.S. at 19-20, 99 S. Ct. at 1553. (footnotes and citations omitted).
Since the practice of banks entering into a joint or participation loan agreement at a set interest rate is not one which has been scrutinized by the courts, it would not be appropriate to automatically classify the practice as a per se violation of the Sherman Act. Moreover, the participation loan is not plainly anticompetitive. Indeed, it is urged as an acceptable practice which increases the availability of credit because most large loans would not be possible if banks were not able to extend joint credit.
Since plaintiffs have relied solely on a per se violation theory as to Count IV and have not adduced any evidence at this summary judgment stage or suggested they will be able to produce such evidence at trial to support their claim under a rule of reason analysis, I will deny their motion for partial summary judgment and grant summary judgment in favor of all of the defendants. A copy of my order of May 16, 1980 is attached to this memorandum.