On rehearing of an appeal from a judgment of the United States District Court for the District of Vermont, Albert W. Coffrin, Judge, granting summary judgment for defendants in an action asserting violations of Section 1 of the Sherman Act, 15 U.S.C. § 1 (1976).
Feinberg, Chief Judge, Meskill, Circuit Judge, and Edmund L. Palmieri, District Judge.*fn* Feinberg, Chief Judge, concurring.
Rehearing has been granted. The opinion filed on January 20, 1982, slip op. 883, is withdrawn and the following is substituted therefor.
Shop & Save Food Markets, Inc. (Shop & Save) appeals from a judgment of the United States District Court for the District of Vermont, Albert W. Coffrin, Judge, granting summary judgment for defendants Pneumo Corporation (Pneumo), Abbott Realty Company (Abbott) and P&C Food Markets, Inc. (P&C), in an action asserting violations of Section 1 of the Sherman Act, 15 U.S.C. § 1 (1976).*fn1 For the reasons set forth below, we affirm the judgment of the district court.
Shop & Save, a Vermont corporation, operates retail grocery stores in St. Johnsbury, Derby and Lyndonville, Vermont. Pneumo, a Delaware corporation, owns or controls the other defendants: P&C, a New York corporation which operates a chain of retail grocery stores in New England; and Abbott, a Vermont corporation, which manages property for Pneumo. Pneumo acquired Abbott and Cross Company (Cross), a wholesale grocery distributor, in 1972.
Prior to the events giving rise to this action, Shop & Save purchased virtually all of its groceries from Cross. From 1970 to 1977 Shop & Save subleased from Abbott the property where it operates its Lyndonville grocery store, paying a rental of $20,000 per year. Abbott's assets were transferred to P&C in 1977.
In July 1976, Shop & Save sought from Pneumo a long-term sublease with renewal options for the Lyndonville property. Thereafter, a protracted course of negotiations ensued, dictated in part by the parties' competing business considerations. During this time, Shop & Save began to purchase a portion of its wholesale groceries from a competitor of Cross. Further, correspondence between the parties indicated that P&C would be opening a competing grocery store in Lyndonville.
Initially, Pneumo responded to Shop & Save's request by offering to provide a long-term lease if Shop & Save agreed to continue to buy groceries from Cross. When Shop & Save refused to commit itself to purchases from Cross, Pneumo responded that it would not offer a lengthy sublease at the month-to-month rate because that figure was "far below" current "fair rental values." Pneumo stated that if it had to risk the loss of Shop & Save's wholesale purchases from Cross, it wanted "compensation." Pneumo repeated its offer to provide a long-term least if Shop & Save agreed to continue its purchases from Cross.
On December 16, 1976, Shop & Save reiterated to Pneumo that it was unwilling to commit itself to any wholesale purchases from Cross. Pneumo responded on January 12, 1977, with an offer of a long-term sublease at $31,500 per year plus 1.5 percent of Shop & Save's annual sales above $1,500,000. Thereafter, several offers and counteroffers were considered by the parties. Among these was an offer by Pneumo on January 24, 1977 that rent vary from $20,000 to $31,500 per year depending upon the amount of groceries purchased from Cross.*fn2 Shop & Save found the rental formula acceptable but was not satisfied with the lease term and renewal options. Accordingly, no final agreement was reached on the basis of the January 24 offer. Pneumo ultimately revoked its variable rent offer, and reiterated its flat rent offer, which Shop & Save accepted on May 5, 1977.
On February 21, 1978, Shop & Save filed a complaint charging, inter alia,*fn3 that defendants had violated Section 1 of the Sherman Act, 15 U.S.C. § 1. Defendants moved for summary judgment on September 19, 1978. In opposing this motion, Shop & Save argued that it was forced to pay defendants a "penalty" rent for the Lyndonville property because it refused to purchase its wholesale groceries from Cross, and that defendants' conduct constituted a tying arrangement and a group boycott or concerted refusal to deal, all of which are per se unlawful.
The district court, on July 21, 1980, granted summary judgment for the defendants on Shop & Save's Section 1 Sherman Act claims. Judge Coffrin found that defendants' alleged conduct did not constitute a group boycott or a concerted refusal to deal because the only relevant conduct which Shop & Save "point[ed] to [was] P&C's determination to purchase wholesale groceries from Cross to the exclusion of other distributors. This [conduct] involved no other retailers -- having failed to coerce [Shop & Save] to join -- and we note that the Sherman Act does not prohibit individual companies from dealing exclusively with other individual companies." J.App. at 223. The district court found in the alternative that even if defendants had conspired to coerce Shop & Save to agree not to purchase wholesale groceries from Cross' competitors, Shop & Save had failed to allege an injury that was causally related to a group boycott or concerted refusal to deal. The district court also found that the alleged ...