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Unijax Inc. v. Champion International Inc.

decided: June 21, 1982.

UNIJAX, INC., PLAINTIFF-APPELLANT,
v.
CHAMPION INTERNATIONAL, INC., DEFENDANT-APPELLEE



Plaintiff Unijax, Inc. appeals from that portion of a final judgment of the United States District Court for the Southern District of New York, Honorable Robert J. Carter, Judge, granting defendant Champion International, Inc.'s motion for judgment notwithstanding the verdict and dismissing Counts I and III of the complaint, which charged that defendant unlawfully conditioned the sale of its products in violation of 15 U.S.C. § 14 (1976), and Count VI, which charged that defendant maliciously interfered with plaintiff's prospective business advantage in violation of Tennessee law.

Moore and Newman, Circuit Judges; Thomas P. Griesa,*fn* District Judge.

Author: Moore

MOORE, Circuit Judge:

Unijax, Inc. ("Unijax") appeals from a judgment of the United States District Court for the Southern District of New York, 516 F. Supp. 941, Honorable Robert L. Carter, Judge, granting Champion International, Inc.'s ("Champion") motion for judgment notwithstanding the verdict ("judgment n.o.v."). Unijax, a wholesale fine paper distributor,*fn1 charged in its complaint that during 1975, 1976 and 1977, Champion, a manufacturer of fine paper products, violated Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2 (1976), and Section 3 of the Clayton Act, 15 U.S.C. § 14 (1976), by imposing upon certain Unijax branches exclusive dealing agreements and by conditioning the sale of its coated printing paper, known as Kromekote, on the purchase of other Champion commodity uncoated paper.*fn2 Unijax's complaint also alleged that Champion maliciously interfered with an existing contractual agreement and prospective business relations between Unijax and one of its principal customers, in violation of Tennessee law.

The case was bifurcated for trial on the issues of liability and damages and went to trial before a jury from December, 1979 to January, 1980. After a trial on the issue of liability, the jury found that Champion had coerced Unijax to enter into a tying arrangement, in violation of Section 3 of the Clayton Act,*fn3 and had tortiously interfered with an existing contractual agreement and prospective business between Unijax and one of its principal customers, Holiday Press. The jury also found that Unijax failed to establish that Champion forced it to participate in exclusive dealership agreements.*fn4

Champion moved for judgment n.o.v. on the antitrust and common law claims and on the issues of damages. Unijax moved for judgment n.o.v. on the jury's verdict that it failed to demonstrate foreclosure of a not insubstantial amount of commerce in the tied products and on other elements of the jury's liability verdict.

After carefully reviewing the record, which included extensive post-trial briefs in support of, and in opposition to, motions for judgment n.o.v.,*fn5 the district court granted Champion's motion,*fn6 dismissing with prejudice Unijax's antitrust claim and common law tort claim of interference with prospective business advantage.*fn7 Judge Carter concluded that there was no evidence that Champion required or coerced Unijax to purchase other grades of Champion paper as a condition to receiving the Kromekote grade of coated papers,*fn8 or that Champion, motivated by malice, actively sought the business of Holiday Press. Accordingly, Judge Carter set aside the jury's award to Unijax on its antitrust claim and on its claim of tortious interference with prospective business advantage.

On appeal, Unijax contends that the evidence was sufficient to permit reasonable jurors to find that Champion had impermissibly tied sales of a grade of fine coated paper, the Kromekote grade, to the purchase of other Champion coated and uncoated paper grades, in violation of Section 3 of the Clayton Act, and that Champion had tortiously interfered with prospective business between Unijax and one of its principal customers, in violation of Tennessee law. We reject Unijax's contentions and hold that Judge Carter correctly concluded that even when the evidence is viewed in the light most favorable to Unijax, a reasonable juror could not find that these allegations had been proved. Accordingly, we find that the district court did not err in granting Champion's motion for judgment n.o.v., and for the reasons set forth below, we affirm.

FACTS ADDUCED at TRIAL

In light of the trial court's holding that there was no proof of a tying arrangement, a somewhat brief review of the facts is necessary.

Champion is a manufacturer of fine paper products. The company also distributes paper products through its division Nationwide Papers. Unijax is a wholesale fine paper distributor with branches in seventeen cities located primarily in the southeastern region of the United States. Unijax purchases and resells paper products manufactured by Champion and at least ten other companies.

The two companies have maintained a long-standing business relationship. Unijax has distributed Champion papers for over forty years. From 1971 and 1976, however, the relationship between Champion and the Unijax branches in Florida and Georgia steadily deteriorated. Champion became dissatisfied with Unijax's performance in selling Champion products*fn9 and believed that Unijax was either unwilling or unable to improve its performance.

Beginning in January, 1972, Earle Bensing, Champion's Sales Manager for the Atlanta District,*fn10 met with Walter Moore, President and Chief Executive Officer of Unijax, and other Unijax personnel to discuss means of improving Unijax's performance in distributing Champion's products. In April, 1972, executives from the two companies, including Moore and Bensing, met at Champion's offices in Hamilton, Ohio, to discuss the continued deterioration in Unijax's performance and to establish a series of sales goals to assist in increasing Unijax's purchases of Champion products. These goals were never reached.

In September, 1972, an internal memorandum written by John Fox, a Unijax Vice President, indicated that Unijax had not improved its performance. Moore feared that Champion would either appoint additional distributors or terminate some or all of Unijax's branches.

The paper industry experienced a widespread paper shortage in the early months of 1974. Champion found it impossible to keep pace with demand, and was able to sell easily virtually every type of fine paper. In fact, Champion was forced to implement a system of allocations. As a result, its ...


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