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Gulfstream III Associates, Inc. v. Gulfstream Aerospace Corp.

filed: May 18, 1993.



Before:sloviter, Chief Judge, Greenberg and Seitz, Circuit Judges.

Author: Seitz

Opinion OF THE COURT Except as to Part II(A)(1)(c)

SEITZ, Circuit Judge.

Gulfstream III Associates, Inc. ("plaintiff"), instituted this antitrust action against seven manufacturers of business jet aircraft. It charged a horizontal price-fixing conspiracy among these manufacturers to fix, raise and stabilize the prices of new business jets in the United States, including those plaintiff agreed to purchase.

Six of the manufacturers settled. The seventh, Cessna Aircraft Company ("defendant") resisted the three claims asserted against it. The district court granted summary judgment to defendant on two of the three claims arising out of agreements to purchase aircraft. One of these claims, that of Gulfstream IV Associates, Inc., was abandoned on appeal. The judgments of the district court on plaintiff's two claims form the bases for these appeals. In resolving these issues, with one exception later addressed, neither party raises any objection to the fact that the district court decided all issues on a paper record.


Plaintiff's first claim against defendant arose out of an agreement made on March 25, 1983, under which plaintiff agreed to purchase a Gulfstream Model IV aircraft ("G-IV") from a settling codefendant, Gulfstream Aerospace Corporation ("GAC"), for $13,470,000. Subsequently, plaintiff settled its antitrust claims against GAC. Under the terms of the settlement with GAC, plaintiff transferred all of its rights in the G-IV Purchase Agreement back to GAC. The district court granted summary judgment for defendant after concluding that "plaintiff[] could have suffered no overcharge or consequential damages on a contract which was canceled." (J.A. at 35).

Plaintiff's second claim against defendant arose out of an agreement made in September 1981, under which plaintiff agreed to purchase a Gulfstream Model III aircraft ("G-III") from GAC for $9,975,000, subject to a price escalation clause. After the district court denied defendant's motion for summary judgment on the second claim, the claim went to trial and the jury returned a verdict for plaintiff which, when trebled, amounted to $2,992,500.

Thereafter, defendant moved for a judgment dismissing the second claim or, in the alternative, for a declaration that plaintiff was entitled to no damages. The district court found that plaintiff had received from pretrial settlements with codefendants an aggregate sum greater than treble the amount awarded by the jury in this action. As a result, although it did not dismiss the complaint, it reduced the verdict to zero and entered final judgment for defendant. However, it subsequently granted plaintiff attorneys' fees.

Despite the fact that defendant was the beneficiary of the judgment on the second claim, it filed a notice of appeal from the judgment except to the extent it ordered that plaintiff was entitled to no damages (No. 91-5932). The appeal asserts that its pretrial motion for summary judgment should have been granted. Thus, its appeal is taken to negate the jury verdict and the possible collateral consequence flowing therefrom, viz., the allowance of attorneys' fees. Thereafter, plaintiff filed an appeal attacking the final judgment of the district court as well as the denial of its motion to amend the judgment (No. 91-5965). Both sides later appealed the award of attorneys' fees (No. 92-5263 and No. 92-5273). Those appeals are decided in a separate opinion filed this day.

The district court had jurisdiction over this action under the federal antitrust laws pursuant to 28 U.S.C. § 1337(a) and 15 U.S.C. § 15(a). This court has jurisdiction over the appeals from the final judgment of the district court pursuant to 28 U.S.C. § 1291.


A. Defendant's Appeal

We turn first to defendant's limited appeal of the judgment in its favor on the second claim. We do so because the attacks on plaintiff's standing, if cognizable and meritorious, would result in a determination that defendant should have been granted pretrial judgment, thus vitiating the jury's verdict for plaintiff.

Plaintiff does not assert that defendant lacks standing to appeal the judgment because it was entered in defendant's favor. In any event, we conclude that defendant has such standing because it "retains a stake in the appeal satisfying the requirements of Art. III," viz., the allowance of attorneys' fees. Deposit Guar. Nat'l Bank v. Roper, 445 U.S. 326, 334, 100 S. Ct. 1166, 63 L. Ed. 2d 427 (1980). We turn then to defendant's appeal mindful that these threshold issues were decided against defendant pretrial by the district court.

1. Plaintiff's Antitrust Standing

We understand defendant's appeal on these standing-related issues to be limited to the district court's denial of defendant's motion for summary judgment. Our standard of review is plenary. See Schafer v. Board of Pub. Educ. of Sch. Dist. of Pittsburgh, Pa., 903 F.2d 243, 246 (3d Cir. 1990) ("Our review of the district court's order . . . denying appellant's summary judgment motion is plenary.").

Before addressing defendant's specific attacks on plaintiff's standing, some exposition of the law of antitrust standing is in order. "The focus of the doctrine of 'antitrust standing' is somewhat different from that of standing as a constitutional doctrine. Harm to the antitrust plaintiff is sufficient to satisfy the constitutional standing requirement of injury in fact, but the court must make a further determination whether the plaintiff is a proper party to bring a private antitrust action." Associated Gen. Contractors v. California State Council of Carpenters, 459 U.S. 519, 535 n.31, 74 L. Ed. 2d 723, 103 S. Ct. 897 (1983) (emphasis added). Whether a plaintiff is the "proper party" involves considerations of "doctrines such as foreseeability and proximate cause, directness of injury, certainty of damages and privity of contract." Id. at 532-33 (footnotes omitted).

In Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 50 L. Ed. 2d 701, 97 S. Ct. 690 (1977), the Supreme Court set forth a two-part test for antitrust standing that has recently been applied by our court. See International Raw Materials, Ltd. v. Stauffer Chem. Co., 978 F.2d 1318, 1327-28 (3d Cir. 1992). To establish antitrust standing a plaintiff must show both: 1) harm of the type the antitrust laws were intended to prevent; and 2) an injury to the plaintiff which flows from that which makes defendant's acts unlawful. Id.

Based on the pretrial record, the first requirement is easily satisfied. The "decreased competition" in the business jet market is "the type of harm targeted by the antitrust laws." Id. at 1328. The second requirement is generally met if the plaintiff is a "competitor []or a consumer in the relevant market." Id. Alternatively, this requirement is fulfilled if there exists a "significant causal connection" such that the harm to the plaintiff can be said to be "inextricably intertwined" with the antitrust conspiracy. Id. (quoting Blue Shield v. McCready, 457 U.S. 465, 484, 73 L. Ed. 2d 149, 102 S. Ct. 2540 (1982)).

As to the second requirement, plaintiff was either a consumer or a competitor, or both, in the relevant market.*fn1 In addition, the harm to plaintiff through lost profits (or increased losses) on the G-III Purchase Agreement was inextricably intertwined with the horizontal price fixing conspiracy. Thus, unless certain other issues raised by defendant negate plaintiff's standing, defendant was not entitled to summary judgment based on lack of standing. We turn to those issues.

a. Proximate Causation

Antitrust standing requires proximate causation between defendant's conduct and the injury to plaintiff. See Associated Gen. Contractors, 459 U.S. at 535-37. Defendant asserts that plaintiff lacks standing to bring the G-III claim because defendant's antitrust violation was not the proximate cause of the injury to plaintiff. It says that, on the contrary, the proximate cause of plaintiff's injury was its inability to find a lessee for the G-III.

The defendant's argument is without merit even though the record shows that plaintiff contemplated taking title to the G-III only if it could find a lessee. Plaintiff's financing for the G-III Purchase Agreement was conditioned by plaintiff's bank upon plaintiff's doing one of two things when the plane was ready for delivery; either : 1) selling the plane/purchase agreement to a third party; or 2) entering into an agreement to lease the plane to a third party and then taking title to the plane. Under either of these options, the defendant's antitrust violation (which caused an overcharge in purchase price) would have been the proximate cause of plaintiff's injury. Under the first option plaintiff would suffer the injury because the amount of the overcharge would reduce plaintiff's profits (or increase plaintiff's losses) from the sale of the plane/purchase agreement. Under the second option, plaintiff would suffer injury because plaintiff would pay the full purchase price (including the overcharge) before taking title to the plane.

In sum, defendant's antitrust violation caused an overcharge in the purchase price of the plane. That overcharge was incorporated into the purchase agreement signed by plaintiff. From the date plaintiff signed that agreement through the date the plane was delivered to a third party, subsequent to an assignment by plaintiff, it is not disputed that plaintiff remained obligated to pay the overcharge upon exercising either option. Thus, defendant's proximate cause argument did not entitle defendant to summary judgment.

b. "Purchase" of the G-III

Defendant next asserts that plaintiff lacks standing to bring the G-III claim because plaintiff assigned the agreement and thus never "purchased" the G-III. Defendant's argument seems to be predicated on the assumption that only a purchaser can have antitrust standing.

Almost fifty years ago, the Supreme Court rejected such an argument. See Mandeville Island Farms, Inc. v. American Crystal Sugar Co., 334 U.S. 219, 236, 92 L. Ed. 1328, 68 S. Ct. 996 (1948) ("The statute does not confine its protection to consumers, or to purchasers , or to competitors, or to sellers. . . . The Act is comprehensive in its terms and coverage, protecting all who are made victims of the forbidden practices by whomever they may be perpetrated." (emphasis added)). On their face, the antitrust laws purport to provide a remedy to "any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws . . . ." 15 U.S.C. § 15. Recent Supreme Court cases have espoused a narrower reading of the statutes' coverage. See, e.g., Associated Gen. Contractors, 459 U.S. at 529 & n.19 (quoting Mandeville ; rejecting argument that "statute is as broad as its words suggest"). Nevertheless, the Supreme Court has never intimated that only purchasers have standing.

In addition, even if this court accepted the view that standing should generally be limited to purchasers, defendant's argument seeks to exalt form over substance. Admittedly, plaintiff assigned its rights in the plane and purchase agreement and never took title to the G-III. Thus, plaintiff was not a purchaser in the ordinary sense of that word. Nevertheless, plaintiff executed a purchase agreement and remained contractually bound to pay the G-III's total purchase price up to and including the date of delivery. We believe in these circumstances that plaintiff's continuing contractual obligation nullifies this objection to its standing and, thus, summary judgment was properly denied.

c. Assignment of the G-III Purchase Agreement

Defendant next argues that plaintiff lacks standing to bring this action because it unconditionally assigned its antitrust rights in January of 1984 when it transferred its interest in the G-III and purchase agreement to JB&A Aircraft, Inc. Under the terms of that assignment, plaintiff "[sold], assigned, transferred and set over . . . all of its rights, title and interest in and to the [G-III] and the Purchase Agreement . . . ." (J.A. at 356). This action was commenced against defendant in June of 1985, eighteen months after the assignment.

In a pretrial ruling, the district court recognized that antitrust claims are assignable, but rejected the argument that plaintiff had assigned its antitrust claim in this case. It contrasted this case with one previously decided by our court which involved, in part, an express assignment of antitrust rights and noted that no "language in plaintiff's assignment . . . so much as alluded to rights under the antitrust laws." (J.A. at 58). The court stated: "On this record, the Court will not infer an assignment of plaintiff's Clayton Act rights." The defendant takes issue with that ruling.

Under controlling federal law, as the district court recognized, antitrust claims are assignable. In re Fine Paper Litig., 632 F.2d 1081, 1090 (3rd Cir. 1980). The critical question is whether the general assignment here encompassed plaintiff's federal antitrust claim despite the fact that it is not specifically identified in the assignment that transferred all of plaintiff's interest in the G-III and the purchase agreement.

In its separate opinion, the majority of this court holds that federal rather than state law controls the issue as to whether there has been an assignment of an antitrust claim and that such law requires specific reference thereto in the assignment to transfer such claim. The author of this opinion is dubitante as to the majority determination because he believes that the case for the application of state law rather than federal "common law" may be more compelling and thus dictate a contrary Conclusion. However, since the vote of the majority constitutes the holding of this court, it follows that there is no merit to defendant's argument that, because of the general assignment here, plaintiff lacked standing to maintain this antitrust action.

2. Refusal to Compel Production of Settlement Documents

In its brief on its cross appeal, defendant argues in a footnote that the "district court's refusal to permit Cessna access to the settlement agreements relied upon by the court in its summary judgment holding is reversible error."

The defendant's argument is not clearly discernible. We will therefore first interpret it to be an attack on the court's pretrial denial of defendant's motion for summary judgment. We understand such an argument to be premised on defendant's contention that the amount of the setoffs exceeded any reasonable potential verdict.

Even if one assumes that summary judgment would be appropriate in such a case, the short answer to this contention is that we cannot find in the record any application for the production of the settlement documents before the argument and decision on the summary judgment motion. Thus, given the record, defendant cannot rely on any such refusal as the basis for holding that the court's ruling constituted error entitling it to a pretrial judgment. Nor is our Conclusion changed because the court had in camera access to the settlement agreements.

Alternatively, if defendant's footnote can be read to attack the denial by the court of defendant's later formal pretrial motion for production of the settlement agreements, the answer is that had they been produced they would not, without more, have entitled defendant to summary judgment even assuming that the motion was timely. This is so because further evidentiary proceedings would have been necessary, at least with respect to the Falcon Jet settlement, before the court could possibly have determined that the settlement proceeds exceeded any potential verdict.*fn2 Thus, defendant did not show that it was entitled to pretrial judgment.*fn3

3. Exclusion of Certain Defense Evidence

Finally, defendant contends that the district court erred in its pretrial ruling on plaintiff's motion-in-limine that excluded evidence at trial tending to show that plaintiff resold the G-III Purchase Agreement. The district court ruled that such evidence was "irrelevant and inadmissible for the purpose of showing that plaintiff did not suffer the full amount of the alleged overcharge." (J.A. at 65). We review the district court's ruling under an abuse of discretion standard. See Pfeiffer v. Marion Ctr. Area Sch. Dist, Bd. of Sch. Directors, 917 F.2d 779, 781 (3d Cir. 1990) ("Relevance decisions are discretionary and reviewable only for abuse of discretion.").

We have affirmed the district court's Conclusion that plaintiff had antitrust standing. We also agree with the district court that, because plaintiff was the proper party to bring this action, it had "a right to recover all damages for [the] overcharge, regardless of how much of the overcharge it actually absorbed . . . ." (J.A. at 63). Accord Illinois Brick Co. v. Illinois, 431 U.S. 720, 746, 52 L. Ed. 2d 707, 97 S. Ct. 2061 (1977). Thus, there was no abuse of discretion in excluding this ...

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