APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA (D.C. Civil No. 78-01499)
Before: ALDISERT and HIGGINBOTHAM, Circuit Judges, and MARKEY, Chief Judge .*fn*
ALDISERT, Circuit Judge .
The major question for decision is whether the district court erred in granting summary judgments and directed verdicts in favor of a number of institutional and individual defendants against whom antitrust and other claims had been brought by Leonard Tose, Tose, Inc., and the Philadelphia Eagles Football Club. We also consider issues arising from contractual counterclaims filed by an individual defendant. We find no error in the district court's disposition, and therefore we will affirm.
Appellants filed suit in the district court on May 5, 1978, against appellees First Pennsylvania Bank (FPB), John Bunting, John Pemberton, Sidney Forstater, and Provident, Chase, Girard, and Philadelphia National banks, and against Herbert Barness and John Firestone. An amended complaint was filed by leave of the court on July 2, 1979, setting forth four distinct claims for relief against various defendants: count one, a conspiracy in restraint of trade in violation of § 1 of the Sherman Antitrust Act, 15 U.S.C. § 1, designed to "force Tose to sacrifice his controlling interest in the Eagles at a price substantially below its true market value." 1 App. 30, and implemented in part by a "banking boycott" against appellants, id . 29; count two, a violation by FPB, Bunting, and Pemberton (collectively, FPB appellees) of the Bank Holding Company Act Amendments of 1970, 12 U.S.C. § 1972(3) (now § 1972(1)(C)); count three, malicious interference and conspiracy to interfere with appellants' advantageous contractual relations and business prospects, causing Tose to suffer severe emotional distress, in violation of Pennsylvania common law; and count four, a "conspiracy to fix interest rates in the four counties of Philadelphia, Bucks, Delaware and Montgomery," Pennsylvania, in violation of § 1 of the Sherman Act.*fn1 1 App. 34. Appellants reached an amicable resolution of their disputes with Barness and Firestone before trial. Both limited partners sold their Eagles interests to Tose and the action against them was dismissed by stipulation.
On May 16 and 28, 1980, the district court ruled on cross motions for summary judgment, Tose v. First Pennsylvania Bank, 492 F.Supp. 246 (E.D.Pa. 1980), denying appellants' motion for judgment on count four and entering judgment in favor of all appellees on that claim. It also entered judgment in favor of the FPB appellees on count two, the Bank Holding Company Act claim, and in favor of appellees Chase and Girard on all claims asserted against them.
Trial on the remaining claims commenced before a jury on June 2, 1980. Appellants presented evidence for fifteen days. At the conclusion of appellants' case in chief the remaining defendants moved for directed verdicts on all counts pursuant to Fed. R. Civ. P. 50. The trial court granted those motions on June 30.
Trial then commenced on a four-count counter-claim filed by appellee Forstater. (Forstater has filed a cross appeal in this court. To avoid confusion, we refer to Forstater as an appellee throughout this opinion, and to Tose, the Eagles, and Tose, Inc. as appellants.) The jury returned a verdict in favor of Forstater on one of the four counts, assessing damages of $69,000 against Tose and the Eagles, and in favor of appellants on all other counts. The district court entered a judgment in accordance with the verdict and subsequently denied Forstater's motions for judgment n.o.v. or a new trial.*fn2
Appellants now argue that the district court erred in granting summary judgments and directed verdicts on the antitrust, Bank Holding Company Act, and pendent claims. Appellants also seek to overturn Forstater's $69,000 judgment, asserting that the court abused its discretion by exculding certain evidence and erred in its instructions to the jury. Forstater cross appeals from the denial of his motion for judgment n.o.v. or a new trial on another count of the counterclaim, arguing that he is entitled to judgment as a matter of law under the Pennsylvania Uniform Written Obligations Act, Pa. Stat. Ann. tit. 33, § 6 (Purdon 1967), and alternatively that there was insufficient evidence to sustain the jury's finding that Tose did not knowingly sign the writing in question.
We review grants of summary judgment and directed verdicts for legal error, testing the record by the same standards as the district court. On summary judgment, we inquire whether the court correctly concluded "that there [was] no genuine issue as to any material fact and that the moving party [was] entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). On review of a directed verdict, we "consider the record as a whole and in the light most favorable to the non-moving party, drawing all reasonable inferences to support its contentions. If no reasonable resolution of the conflicting evidence and inferences therefrom could result in a judgment for the non-moving party," we must affirm. Edward J. s/weeney & Sons, Inc. v. Texaco, Inc ., 637 F.2d 105, 115 (3d Cir. 1980), petition for cert. filed, 49 U.S.L.W. 3684 (U.S. Feb. 26, 1981) (No. 80-1458); see Columbia Metal Culvert Co., Inc. v. Kaiser Aluminum & Chemical Corp ., 579 F.2d 20, 25 (3d Cir.), cert. denied, 439 U.S. 876 (1978); Patzig v. O'Neil, 577 F.2d 841, 846 (3d Cir. 1978). We recognize, of course, that "summary procedures should be used sparingly in complex antitrust litigation where motive and intent play leading roles, the proof is largely in the hands of the alleged conspirators, and hostile witnesses thicken the plot." Poller v. Columbia Broadcasting System, Inc ., 368 U.S. 464, 473 (1962). On the other hand,
[w]hile we recognize the importance of preserving litigants' rights to a trial on their claims, we are not prepared to extend those rights to the point of requiring that anyone who fles an antitrust complaint setting forth a valid cause of action be entitled to a full-dress trial notwithstanding the absence of any significant probative evidence tending to support the complaint.
First National Bank of Arizona v. Cities Service Co ., 391 U.S. 253, 290 (1968).
Our narrative of the facts is based on the entire record, viewed in the light most favorable to appellants. Because the answers to the legal issues presented by this appeal depend on the factual predicate, it is necessary to set forth a lengthy narrative.
Tose purchased the Eagles football club in 1969, using $1.5 million of his own funds, $10.5 million borrowed from appellee FPB, and $4 million contributed by other investors, including Barness and Firestone. He acquired the Eagles' assets in his own name and then transferred them to a limited partnership of which he was general partner. In 1972 Tose borrowed another $2.7 million from FPB to buy out some of his limited partners. The Eagles Partnership defaulted on an amortization payment of $750,000 due FPB in 1974, and the loan agreement was amended in 1975 to adjust the amortization schedule and to limit Tose to a $60,000 annual salary in unprofitable years. At the end of 1975 the Eagles Partnership consisted of Tose, the sole general partner, with approximately a 60% interest; Barness, 29%; Firestone, 5%; and another limited partner with about 6%. Tose and Barness agreed in June, 1976, to give each other the right of first refusal should either decide to sell his interest in the Eagles.
Relations among the partners became strained in 1976. Barness began openly criticizing Tose's management of the Eagles and demanded access to the club's financial records. Barness wrote to Tose in September, 1976, accusing him of "tak[ing] advantage... of me and your other partners" and violating the loan agreement with FPB. He asked that Tose have accountants review the club's books for 1969 through 1976 and suggested that Tose make no withdrawals from the Eagles' account until the reviews were completed. 13 App. 3288-89. In a conversation with Firestone in October, 1976, Barness suggested "throwing Leonard out as general partner" as a "last option." 9 App. 2376, 2390. Barness' attorney wrote to one of Tose's attorneys on December 2, 1976, indicating that Barness had "agreed to give [Tose] a reasonable period of time to produce a purchaser for his interest provided that [Tose] agree to certain guidelines in operating the term" until a purchaser was found. Among the "guidelines," Barness demanded that appellee Forstater, who was then a part-time consultant to the Eagles,*fn3 be given control of all financial matters and be required to submit monthly reports to Barness. 2 App. 256-58.
Barness met with Gerald Hayes, an FPB loan officer, in late 1976 and again early in 1977. On both occasions Barness expressed dissatisfaction with the Eagles' financial management and threatened to go to court to seek appointment of a receiver. Hayes testified that he told Barness the bank was not "prepared to do anything" until it received pending financial statements. 11 App. 2767. Hayes called Forstater, his "contact" with the Eagles, to discuss his meetings with Barness; and Forstater echoed Barness' criticisms of Tose's management.
The Comptroller of the Currency reviewed FPB's loan portfolio at the end of 1976 and rated the Eagles loan "substandard." The Eagles' accountants notified the Eagles early in 1977 that they could not complete their financial statements for 1976 unless FPB waived several defaults under the loan agreement. In March, 1977, FPB received draft financial statements from the Eagles, which indicated a loss for the year of $1,15 million. On March 17, Hayes sent a memorandum regarding the Eagles to his superiors at FPB. Appellee Bunting, then Chairman of FPB, asked Hayes on March 21 to prepare a second draft of the memorandum to prepare him for a meeting with Tose. Hayes produced another draft dated March 24, 1977. That documents is central to appellants' case.*fn4 It "recommended a meeting with Leonard Tose where the Bank would deliver a list of terms under which we would continue to provide financing to the Eagles." 2 App. 272. Hayes stated six reasons for this recommendation, including defaults on terms of the loan agreement, ineffective financial management of the Eagles, the 1976 losses, a projected failure to pay $500,000 due on May 31, 1977, and increasing obligations to players. He recommended that FPB require Tose to relinquish all financial control over the Eagles, give up the power to sign Eagles' checks, and retain a chief executive officer acceptable to the bank who would have complete decisionmaking power over the club's finances.*fn5 He anticipated that Tose would refuse the demands and seek to re-finance the loan at another bank, and he recommended that FPB allow him thirty days to find a new lender "and advise him that we are prepared to make demand on our loan agreement against the Eagles and against Tose personally." Id . 273. The memorandum concluded with a projected sequence of events that would follow implementation of the recommended "plan of action":
1. The meeting will be held with [Tose], and our demands will be presented to him.
2. He will take the alternative of replacement financing and we will give him thirty days to accomplish this.
3. Immediately after our meeting with Tose we should meet with Herb Barness and explain our plan, and try to get Barness to talk to Pete Rozelle to explain his position. Our counsel feels that this contact with Rozelle is critical, and will be very important if we have to force the sale of the Club. [Counsel] feels that Pete Rozelle might even put the pressure on Tose if he knew the seriousness of this situation because he doesn't want the Eagles Franchise looking like a World Football League franchise.
4. When Tose can't find financing the Bank should contact Rozelle and indicate that we are going to take action against Tose and the Club.
5. The rest will depend on Rozelle's reaction to the pressure from Barness and the Bank.
Bunting and FPB initially took a gentler approach than Hayes had recommended. At a meeting on March 25, described by Tose at trial as "cordial," 10 App. 2585, Bunting proposed that Tose either agree to tighter financial controls or consider finding another lender; and Tose responded by indicating he would welcome tighter controls if FPB agreed to additional advances (projected at between $2 million and $5.5 million) to enable him to pay some other loans and to buy out Barness. The meeting ended with an agreement in principle to go forward on a plan for increased financing and tighter financial controls, including appointment of a controller to be recommended by the Eagles' accountants.
This agreement was never implemented. FPB made no more loans to Tose or the Eagles, and it regarded the financial controls that were installed as unsatisfactory. Negotiations between FPB and the Eagles continued through the spring and into the summer of 1977, growing increasingly acrimonious. Edwin Rome, Tose's attorney, met with Bunting and others on April 12 and learned that Bunting had discussed the agreement with Barness despite an express promise on March 25 not to do so.*fn6 Rome told Bunting that he was "shocked" because he "thought it a breach of a fiduciary duty on the part of Mr. Bunting to have talked with Mr. Barness not only contrary to his word to me, but contrary to his obligation owed to a customer of his bank." Id . 2476-77. Rome again met with Bunting and other bank officers on April 25, and he agreed to recommend that Tose retain Forstater as controller for a transitional period, until an outside controller could be chosen and could become familiar with the Eagles' operations. Rome indicated, however, that the Tose-Forstater relationship was "not what it had at one point been" and that "Mr. Tose would want to replace Mr. Forstater as soon as possible." Id . 2482.
Relations between the Eagles and FPB continued to deteriorate. Appellee Pemberton, then vice chairman of FPB, spoke with a lawyer in Rome's firm on June 7 and stated "that the Bank was withdrawing its commitment to advance funds in view of the total failure of cooperation from [Tose], the failure to conform to proposals made by the Bank for limitation of expenses, and the failure to sign the Forstater Employment Agreement." 2 App. 290. After some discussion Pemberton "quieted down... and said that he would be willing to have a meeting although he wanted it understood that [Tose's lawyers] should advise [Tose] of the Bank's intentions." Id . 291.
Hayes met with Forstater on June 17. Hayes testified that he "was trying to develop a series of things that I could use in order to pressure Mr. Tose [into] getting the financial controls that we were trying to establish." 11 App. 2840. He acknowledged that he told Forstater that he was trying to develop a plan to "pressure" Tose, and he stated that Forstater "cooperated and answered all of my questions." Id . 2842.
On June 21, FPB's attorney sent Tose's attorneys a formal demand that Tose repay $20,000 to the Eagles and withdraw no additional funds for his personal account. (The loan agreement permitted Tose to draw $60,000 per year, and the letter alleged that he had taken $80,000 in the first six months of 1977.) The letter also advised Tose's attorneys that any checks drawn to cash or for Tose's account would not be honored unless countersigned by Forstater. On July 22, ...