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WALDO v. NORTH AMERICAN VAN LINES

September 4, 1987

Francis J. Waldo, Plaintiff,
v.
North American Van Lines, Inc., Defendant



The opinion of the court was delivered by: COHILL

 Presently before us is defendant's motion for summary judgment on all five counts of plaintiff's second amended complaint. Plaintiff, Francis J. Waldo, a former truck driver, brought this action against North American Van Lines, Inc. ("NAVL") for alleged violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 201-1 et seq.; Section 1 of the Sherman Act, 15 U.S.C. § 1; Section 3 of the Clayton Act, 15 U.S.C. § 14; Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45; the Racketeer Influenced and Corrupt Organization Act ("RICO"), 18 U.S.C. §§ 1961 - 1968; and common law fraud.

 Summary Judgment

 When considering a motion for summary judgment, the Court must determine whether the pleadings, depositions, affidavits, answers to interrogatories, and admissions on file, when viewed in the light most favorable to the non-moving party, present a genuine issue as to any material fact. If not, the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). The materiality of a disputed fact is determined by looking to the substantive law of the case. Disputes over facts which will not affect the outcome of the case do not preclude summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, , 106 S. Ct. 2505, 2509, 91 L. Ed. 2d 202, 211 (1986). At the summary judgment stage, "the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Id. at , 106 S. Ct. at 2511, 91 L. Ed. 2d at .

 The moving party bears the burden of proving that no genuine issue exists. Adickes v. Kress & Co., 398 U.S. 144, 26 L. Ed. 2d 142, 90 S. Ct. 1598 (1970). However, this burden can be discharged by merely pointing out the "absence of evidence to support the non-moving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, , 106 S. Ct. 2548, 2554, 91 L. Ed. 2d 265, 275 (1986). Once the moving party has met that burden, it becomes incumbent upon the non-moving party "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." 477 U.S. at , 106 S. Ct. at 2553, 91 L. Ed. 2d at 273. Any doubts must be resolved in favor of the non-moving party. Gans v. Mundy, 762 F.2d 338, 341 (3d Cir. 1985).

 Discussion

 I. Pennsylvania Unfair Trade Practices and Consumer Protection Law

 Count One of plaintiff's amended complaint sets forth several alleged violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law ("CPL"), 73 P.S. § 201-1 et seq. which stem from plaintiff's purchase and lease back of a GMC tractor from defendant, coupled with the purchase of appropriate types of insurance from defendant. The gist of plaintiff's allegations is that the goods purchased did not conform to certain deceptive representations made by NAVL, and that the conduct of NAVL caused plaintiff to be confused and/or to misunderstand the nature of the transaction.

 In support of its motion for summary judgment, defendant contends that a private action brought under the CPL is limited to "consumers of goods and services." Layton v. Liberty Mutual Fire Insurance Co., 530 F. Supp. 285, 286 (E. D. Pa. 1981). Because plaintiff purchased the truck and insurance as part of a business venture, NAVL contends that he cannot bring an action under the CPL.

 Pennsylvania courts have construed the remedial provisions of the CPL liberally. See, e.g., Commonwealth v. Monumental Properties, 459 Pa. 450, 457-60, 329 A.2d 812, 815-17 (1974); Pekular v. Eich, 355 Pa. Super. 276, 286-87, 513 A.2d 427, 432 (1986). However, § 201.9.2(a) of the CPL provides that a private action may only be brought by "any person who purchases or leases goods or services primarily for personal, family or household purposes. . . ." The obvious intent of this language is to restrict claims brought under the CPL to those which are legitimately of a consumer nature. Here, plaintiff bought the tractor and the insurance coverage solely for use in his trucking business and, as such, they cannot qualify as consumer goods (i.e., food, clothes, household items and the like). The fact that plaintiff entered into a purchase and lease back arrangement with NAVL unequivocally establishes that he purchased the goods for a commercial purpose; he did not buy them to consume personally or with his family, but instead, purchased them to operate a business partnership with NAVL.

 While our research has uncovered no Pennsylvania case squarely on point, we note that several cases from the Eastern District of Pennsylvania have limited the application of the CPL to consumer transactions. See Merv Swing Agency, Inc. v. Graham Co., 579 F. Supp. 429 (E. D. Pa. 1983); Zerpol Corp. v. DMP Corp., 561 F. Supp. 404 (E. D. Pa. 1983); Klitzner Industries, Inc. v. H.K. James & Co., 535 F. Supp. 1249 (E. D. Pa. 1982); Permagrain Products, Inc. v. U.S. Mat & Rubber Co., 489 F. Supp. 108 (E. D. Pa. 1980). Plaintiff contends that these cases are inapposite, as they involved claims brought under the CPL by plaintiff-business entities which possessed equal bargaining power with the defendant-business entities and/or were direct competitors in the marketplace. We disagree with plaintiff's argument. Irrespective of any unequal bargaining power between the parties, plaintiff's sole motivation for purchasing the tractor and insurance from NAVL was to operate a business; this is not primarily a "personal, family or household purpose." We do not believe that the legislature intended the CPL to reach garden variety breach of contract or alleged fraud situations such as the one asserted here; neither of these parties is a "consumer" as that term is commonly understood. Thus, we will grant defendant's motion for summary judgment on Count One of plaintiff's amended complaint.

 II. Federal Trade Commission Act Claim

 While our earlier opinion in Waldo I dealt solely with the issue of class certification, we intimated then, see 102 F.R.D. at 811, and reiterate now, that section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45, does not provide for a private right of action. See, e.g., Holloway v. Bristol-Meyers Corp., 158 U.S. App. D.C. 207, 485 F.2d 986 (D.C. Cir. 1973) (private parties have no right of action to enforce provisions of FTC Act, which vests enforcement authority in administrative agency), Carlson v. Coca-Cola Co., 483 F.2d 279 (9th Cir. 1973); Kaiser v. Dialist Company of Texas, 603 F. Supp. 110, 111 (W. D. Pa. 1984). "A fair reading of the statute and its legislative history evinces a plain intent by Congress to make the administrative program for enforcing the Federal Trade Commission Act an exclusive one." Holloway, 485 F.2d at 1002. Moreover, the language of the FTC Act specifically provides an exception for "common carriers subject to the Acts to regulate commerce." 15 U.S.C. § 45(a)(2) (Supp. 1987). Consequently, defendant's motion for summary judgment relating to plaintiff's failure to state a claim under the FTC Act will be granted.

 III. Antitrust Claims

 Plaintiff has also alleged that NAVL violated the federal antitrust laws in several respects. While the standard for summary judgment does not differ from other cases in the antitrust context, the Supreme Court has cautioned that courts should tread carefully where motive and intent are important issues. Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 7 L. Ed. 2d 458, 82 S. Ct. 486 (1962) ("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.") However, as in other cases, summary judgment will be granted in 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, 20 L. Ed. 2d 569, 88 S. Ct. 1575 (1968). See also Arnold Pontiac-GMC v. General Motors Corp., 786 F.2d 564, 572 (3d Cir. 1986). As we noted earlier, our inquiry is limited to determining whether a genuine issue of material fact exists in the present record. Celotex, supra.

 A. Tying Arrangements

 1. Insurance Tied to Tractor

 In connection with plaintiff's consumer fraud claim at Count One, plaintiff alleges that NAVL illegally tied the purchase of insurance to the purchase of plaintiff's GMC tractor. In Waldo I, we noted that three elements must be proven in all private antitrust claims: "1) a violation of the antitrust laws; 2) direct injury to the plaintiff caused by the violation (often referred to as fact of damage); and 3) damages." 102 F.R.D. at 812. "While tying and exclusive dealing agreements are prohibited by both section 1 of the Sherman Act and section 3 of the Clayton Act, the scope of section 3 is limited to commodities." Id. The term commodity as used in this section denotes some type of tangible property that may be leased or sold. Satellite Television & Associates Resources, Inc. v. Continental Cablevision of Virginia, Inc., 586 F. Supp. 973 (1982), aff'd, 714 F.2d 351 (4th Cir. 1983), cert. denied, 465 U.S. 1027, 79 L. Ed. 2d 688, 104 S. Ct. 1285 (1984). Both the tying and tied item must be "goods, merchandise, machinery, supplies or other commodities" as set forth in 15 U.S.C. § 14. See, e.g., Moore v. Jas. H. Matthews & Co., 550 F.2d 1207, 1214 (9th Cir. 1977). Therefore, plaintiff's claims cannot arise under section 3 of the Clayton Act since insurance is not a tangible "good" or "commodity" as those terms are commonly defined.

 
Three elements are necessary to establish a per se illegal tie-in violation under the Sherman Act: 1) the seller must offer two distinct and separate products together, the tie being established by an agreement conditioning the sale of the tied product to separate purchase of the tying product; 2) a "not insubstantial" amount of commerce must be involved; and 3) the seller must have sufficient market power with respect to the tying product to appreciably restrain free competition in the market for the tied product . . . . (citations omitted).
 
The general definition of a tying arrangement has remained unchanged for many years. It is "an agreement by a party to sell one product but only on the condition that the buyer also purchase a different (or tied) product, or at least agrees that he will not purchase that product from another supplier." Northern Pac. Ry. v. United States, 356 U.S. 1, 5-6, 78 S. Ct. 514, 518-519, 2 L. Ed. 2d 545 (1958). "Where the buyer is free to take either product by itself there is no tying problem even though the seller may also offer the two items as a unit at a single price." Jefferson Parish Hospital Dist. No. 2 v. Hyde, 466 U.S. 2, 12 n. 17, 104 S. Ct. 1551, 1558 n. 17, 80 L. Ed. 2d 2, 12 n. 17 (1984). See also Levicoff v. General Motors Corp., 551 F. Supp. 98, 102 (W. D. Pa. 1982), aff'd, 722 F.2d 732 (3d Cir. 1983). The Supreme Court in Jefferson Parish, supra, emphasized that the essential characteristic of an invalid tying arrangement lies in the seller's exploitation of its control over the tying product to force the buyer into the purchase of a tied product that the buyer either did not want at all, or might have preferred to purchase elsewhere on different terms. U.S. at , 104 S. Ct. at 1558, 80 L. Ed. 2d at 12.

 Waldo I, 102 F.R.D. at 812-13.

 Proof of a tying arrangement can be established either by reference to an express contractual provision or by showing that the plaintiff was coerced into accepting the tied item. SmithKline Corp. v. Eli Lilly & Co., 427 F. Supp. 1089, 1112 (E. D. Pa. 1976), aff'd, 575 F.2d 1056 (3d Cir. 1978), cert. denied, 439 U.S. 838, 58 L. Ed. 2d 134, 99 S. Ct. 123 (1978). Here, there is nothing in the Truckman's Agreement or the Contractor Operating Agreement which directly or indirectly requires owner/operators to purchase insurance specifically and solely through NAVL. As we noted in our earlier Opinion denying class certification, "the contracts state that the operator must obtain insurance, and unless the operator secures insurance elsewhere and provides proof to the company of purchase, that the insurance would be provided by the Company. See Truckman's Agreement, para. 16, Contractor Operating Agreement, para. 16." Id. at 813. Thus, the agreements, standing alone, do not establish an illegal tying arrangement.

 In Ungar v. Dunkin' Donuts of America, Inc., 531 F.2d 1211, 1224 (3d Cir. 1976), cert. denied, 429 U.S. 823, 97 S. Ct. 74, 50 L. Ed. 2d 84 (1976), Judge Aldisert set forth the elements of proof necessary to establish an illegal tying arrangement in the absence of a formal agreement or contract provision doing so:

 
. . . a plaintiff must establish in some other way that a tie-in was involved and not merely the sale of two products by a single seller. This can be done by proof that purchase of one product, the tied product, was not voluntary, i.e. by proof of coercion.
 
. . . proof of a tie-in must focus on the buyer, because a voluntary purchase of two products is simply not a tie-in. 531 F.2d at 1224.

 Judge Aldisert went on to set forth the evidence needed to establish coercion:

 
We understand the argument that proof of acceptance of a burdensome or uneconomic offer of a secondary ("tied") product is some evidence of coercion. We cannot, however, accept the proposition that such proof, alone, would suffice to establish, prima facie, the coercion element of an illegal tie-in claim. Establishing that buyers purchase products A and B from the seller does not establish that the seller ties the sale of product A to the purchase of product B. It merely establishes that buyers purchase products A and B from the seller.

 Id. at 1225.

 NAVL contends that applying these principles to the instant dispute mandates a finding that it did not tie the sale of insurance to the sale of tractors. In response to plaintiff's claims of coercion, NAVL explains that it merely provided a convenient alternative for plaintiff, who freely chose to purchase insurance from NAVL rather than from another source.

 In support of its position, defendant refers to plaintiff's deposition testimony where he stated that he purchased various types of insurance from NAVL, including bobtail, trailer and tractor coverage. Plaintiff's Deposition at 92. Plaintiff further testified that such insurance was mandatory. Id. at 92, 98. Plaintiff testified that he subsequently checked around and discovered that International Harvester offered a cheaper rate on the tractor and bobtail insurance. Id. at 93. When asked by defense counsel why he did not switch coverage, plaintiff stated:

 
Q. Why didn't you do it?
 
A: I didn't have no money. North American had all my money.
 
Q: Any other reason why you wouldn't switch to the cheaper insurance?
 
A: I didn't have --
 
Q: Was . . . there any other reason?
 
A: No. If I would have had -- well, not. If I would have had the money, I would have, but I didn't have it at the time.
 
Q: So did anything further come of that?
 
A: No.
 
Q: Did you ever investigate any other insurance?
 
A: I did on one. It was a local. It was higher than what -- not higher, but about the same ...

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