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UNIJAX, INC. v. CHAMPION INTL.

May 4, 1981

UNIJAX, INC., Plaintiff,
v.
CHAMPION INTERNATIONAL, INC., Defendant



The opinion of the court was delivered by: CARTER

I

This is an action for treble damages for alleged violations of Section 1 of the Sherman Act and Section 3 of the Clayton Act, 15 U.S.C. §§ 1 and 4 and a common law action for punitive and ordinary damages for tortious contractual interference.

Plaintiff is a Florida corporation with headquarters in Jacksonville, Florida. It is, among other things, engaged in the distribution of fine paper products and owns a chain of distribution outlets in approximately 16 cities in the southeastern part of the United States. For the purposes of this litigation, the southeastern part of the United States encompasses Florida, Alabama, Mississippi, Arkansas, Tennessee, Georgia, South Carolina, North Carolina, Virginia and the District of Columbia.

 Defendant is a New York corporation engaged through a division, Champion Papers, in the manufacture, sale and distribution of fine paper products throughout the southeastern part of the United States and elsewhere. Prior to July, 1975, Unijax installations in Florida were the only distributors of Champion fine paper products in that state.

 In February, 1976, Champion gave notice to Unijax that effective June 1, 1976, it would terminate Unijax outlets in Florida (Miami, Tampa, Tallahassee, Orlando and Jacksonville) and Georgia (Macon and Atlanta) as distributors of Champion paper. In late March, 1976, Walter Moore, President of Unijax and Mark Fuller, Champion Vice President, Sales, met in West Palm Beach and agreed that the June 1, 1976 termination date would be pushed back to July 15, 1976, that Macon and Atlanta would not be terminated and that Unijax would not institute litigation against Champion for terminating the Unijax distribution installations in Florida. Purchases of Pinehurst and other lines of Champion paper increased in 1975 and thereafter.

 Plaintiff claims that it was forced to agree not to purchase the merchandise of any of defendant's competitors and to accept a tying arrangement as a condition for plaintiff to continue to receive a cast coated line of fine paper sold by Champion under the trade name Kromekote, which plaintiff alleges is unique in the industry all in violation of the Sherman and Clayton Acts, 15 U.S.C. §§ 1 and 4. In addition to these antitrust claims, plaintiff charges defendant with wrongfully inducing Franklin Ray to leave plaintiff's employ to work for defendant's wholly owned subsidiary, Nationwide Papers, and wrongfully to cancel a Unijax-Memphis order of Champion products for Holiday Press and fill that order through Nationwide Papers. Punitive damages were sought on these common law claims.

 The case was bifurcated for trial before a jury. The liability phase of the trial began on December 3, 1979. Ten jurors were selected, and the parties agreed that all ten would participate in all the jury deliberations throughout the two phases of the trial, and that if any jurors had to be excused, the trial would continue with the remainder of the panel as long as the number of jurors was not reduced below a total of 6.

 On January 7, 1980, at the conclusion of the liability phase of the proceeding, the jury found that plaintiff had established defendant's liability for tortious interference with an existing contractual agreement and prospective business between Unijax-Memphis and Holiday Press, that it had been coerced by defendant to participate in a tying arrangement, but that plaintiff had failed to establish a coerced exclusive dealership. *fn1" The trial then proceeded immediately to the issue of damages. On January 10, 1980, the jury awarded $ 595,781.06 to the plaintiff on the tortious interference claim, $ 500,000 of which constituted an award for punitive damages and $ 726,742 on the antitrust claims, the latter amount to be tripled for a total of $ 2,180,226.

 Defendant has moved for judgment n. o. v. on the antitrust and common law claims and on the issue of damages. Plaintiff has moved for judgment n. o. v. on the issue of whether a substantial amount of commerce was foreclosed in the tied products as a result of the agreement, which the jury in its special verdict answered in the negative. Plaintiff also seeks judgment n. o. v. on the issue of an agreement not to sue, which the jury in its special verdict found to exist, on the ground that an affirmative defense based on such an agreement is barred by the statute of frauds. Plaintiff also contends that it is entitled to judgment n. o. v. holding that defendant materially breached the agreement not to sue and that the tying agreement constituted an unreasonable restraint of trade in violation of Section 1 of the Sherman Act and that there was a coerced exclusive dealership agreement. In the alternative, both parties move for a new trial.

 II

 Determination

 The controlling principle that guides trial courts in this circuit to decision on motions for directed verdicts and judgments n. o. v. is "whether the evidence is such that without weighing the credibility of the witnesses or otherwise considering the weight of the evidence, there can be but one conclusion as to the verdict that reasonable men could have reached." Simblest v. Maynard, 427 F.2d 1, 4 (2d Cir. 1970). In considering a motion for judgment n. o. v., the evidence must be viewed in the light most favorable to the non-moving party and "will be granted only if (1) there is a complete absence of probative evidence to support the verdict for the non-movant or (2) the evidence is so strongly and overwhelmingly in favor of the movant that reasonable and fair-minded men in the exercise of impartial judgment could not arrive at a verdict against him." (citations omitted) Armstrong v. Commerce Tankers Corp., 423 F.2d 957, 959 (2d Cir.), cert. denied, 400 U.S. 833, 91 S. Ct. 67, 27 L. Ed. 2d 65 (1970); Noonan v. Midland Capital Corp., 453 F.2d 459, 461 (2d Cir.), cert. denied, 406 U.S. 945, 92 S. Ct. 2044, 32 L. Ed. 2d 333 (1972). Most recently in Mattivi v. South African Marine Corp., "Huguenot", 618 F.2d 163, 167 (2d Cir. 1980), the above principle was reaffirmed as the controlling yardstick to be utilized in making directed verdict or judgment n. o. v. determinations.

 In a civil antitrust action the plaintiff has the burden of proving every element of the claimed violations. See e.g., Janich Brothers, Inc. v. American Distilling Co., 570 F.2d 848, 853 (9th Cir. 1977), cert. denied, 439 U.S. 829, 99 S. Ct. 103, 58 L. Ed. 2d 122 (1978); Martin B. Glauser Dodge Co. v. Chrysler Corp., 570 F.2d 72, 81 (3d Cir. 1977), cert. denied, 436 U.S. 913, 98 S. Ct. 2253, 56 L. Ed. 2d 413 (1978). Accordingly, Unijax had the burden of introducing evidence from which the jury might reasonably infer that Champion had coerced plaintiff into joining a conspiracy to restrain trade, M.C. Manufacturing Co. v. Texas Foundries, 517 F.2d 1059 (5th Cir. 1975), cert. denied, 424 U.S. 968, 96 S. Ct. 1466, 47 L. Ed. 2d 736 (1976), by forcing on plaintiff an exclusive dealership and an illegal tying arrangement, Kentucky Fried Chicken Corp. v. Diversified Packaging Corp., 549 F.2d 368, 377-79 (5th Cir. 1977), and that plaintiff suffered injuries proximately attributable to these antitrust violations. M.C. Manufacturing Co. v. Texas Foundries, supra; Kentucky Fried Chicken v. Diversified Packaging Corp., supra; Cinema-Tex Enterprises, Inc. v. Santikos Theaters, Inc., 535 F.2d 932 (5th Cir. 1976); Reading Industries v. Kennecott Copper Corp., 477 F. Supp. 1150 (S.D.N.Y.1979) (Lasker, J.), aff'd, 631 F.2d 10 (2d Cir. 1980). It is not defendant's burden to prove the lack of a conspiracy, or the absence of an exclusive dealership or that no tying arrangement existed. Karlinsky v. New York Racing Assn., Inc., 517 F.2d 1010 (2d Cir. 1975).

 The jury found that plaintiff had failed to establish that it was coerced into buying fine paper exclusively from defendant and in refusing to buy the products of defendant's competitors. The jury's verdict must be sustained on this issue because no proof was presented to establish that claim. Indeed, the evidence appears to negate exclusivity. The proof shows that plaintiff did in fact do substantial business with at least two companies which were manufacturers largely of ...


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