| [1] | UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT |
| [2] | No. 75-2764 |
| [3] | 1977.C05.40548 <http://www.versuslaw.com>; 555
F.2d 426 |
| [4] | July 5, 1977 |
| [5] | GOLF CITY, INC., PLAINTIFF-APPELLEE CROSS
APPELLANT, v. WILSON SPORTING GOODS, CO., INC., ET AL., DEFENDANTS-APPELLANTS CROSS APPELLEES |
| [6] | Appeals from the United States District Court for the Eastern District
of Louisiana. |
| [7] | Phillip A. Wittmann, New Orleans, Louisiana, (for Wilson Sporting
Goods), Howard Adler, Jr., Washington, District of Columbia, (for Wilson
Sporting Goods), William P. MacGregor, Washington, District of Columbia,
(for Wilson Sporting Goods). |
| [8] | Peter K. Bleakley, Washington, District of Columbia, (for Pro. Golfers
Assoc), Stephen M. Sacks, Washington, District of Columbia, (for Pro.
Golfers Assoc), Donald W. Doyle, New Orleans, Louisiana, (Pro Golfers),
Howard J. Smith, Jr., New Orleans, Louisiana, (Pro Golfers), for
Appellant. |
| [9] | Henry L. Klein, New Orleans, Louisiana, for Appellee. |
| [10] | Lewis R. Morgan and Fay, Circuit Judges, and Hunter, District Judge.*fn* |
| [11] | Author: Morgan |
| [12] | LEWIS R. MORGAN, Circuit Judge: |
| [13] | Golf City, Inc., a golf specialty retail
store located in New Orleans, Louisiana, brought this antitrust action
more than seven years ago after numerous golf equipment
manufacturers refused to sell to Golf City their prestige
lines, or " pro-lines," of golf equipment.
Golf City alleged that the refusals to deal arose out of a
conspiracy involving the manufacturers and the Professional Golfers'
Association of America (PGA). |
| [14] | The original defendants were PGA and fourteen of the manufacturers.
All but one of the manufacturers, Wilson Sporting Goods Co. (Wilson),
settled with Golf City along the way. After extensive
discovery, the case against Wilson and PGA was tried to the district court
sitting without a jury. In February, 1975, the court issued what it styled
a Memorandum of Reasons, finding that Wilson and PGA had violated section
1 of the Sherman Act.*fn1
Then, in May, 1975, the court issued another Memorandum of Reasons
awarding Golf City treble damages, interest, and attorneys'
fees. |
| [15] | Appellants Wilson and PGA launch a broad attack on the district
court's decision. On the question of liability, they urge that the
district court's findings of fact, required by Rule 52(a) of the Federal
Rules of Civil Procedure, do not give a clear understanding of the basis
of the court's decision. Appellants contend alternatively that the finding
of liability was clearly erroneous in the face of certain uncontradicted
defense evidence. With respect to damages, Wilson and PGA seek to impugn
the adequacy of Golf City's figures. Moreover, appellants
challenge the district court's calculation of net profit as clearly
erroneous and question the district court's complete failure to deal with
the question of mitigation of damages. Finally, Wilson and PGA assert that
the district court made an error of law in its award of interest and
awarded excessive attorneys' fees. PGA, in a separate argument, challenges
an earlier district court decision holding that PGA had transacted
business in the Eastern District of Louisiana within the meaning of the
federal venue statute. |
| [16] | Golf City contends in a cross-appeal that the district
court should have awarded additional damages and attorneys' fees.*fn2 |
| [17] | I. FACTS |
| [18] | A. The Golf Equipment Industry |
| [19] | Golf equipment*fn3
merchandising in the United States is two-tiered. One tier is pro-line
equipment and the other tier is store-line equipment. Some manufacturers
offer only pro-line equipment, and others offer both pro-line and
store-line equipment. The manufacturers generally restrict the sale of
their pro-line equipment. Since 1930,*fn4
for example, appellant Wilson has sold its pro-line equipment "only to pro
shops located at outdoor golf courses or driving ranges."
The pro-line golf equipment is heavily advertised by the
manufacturers in golf magazines and in other publications,
and these advertisements generally state that the equipment is available
only at pro shops. Because pro shops operated by golf
professionals are the common beneficiaries of the manufacturers'
restrictive distribution policies for pro-line equipment, the policies are
referred to as pro only sales policies. |
| [20] | Store-line equipment ordinarily is sold to any retail outlet that
meets certain credit requirements. The manufacturers do very little direct
advertising of their store-line equipment. |
| [21] | B. PGA |
| [22] | PGA is a self-described*fn5
trade association of golf professionals. According to PGA,*fn6
approximately 4,600 PGA members were head professionals at the 10,870
golf clubs or courses in the United States as of September
1, 1974. Thus, PGA members accounted for nearly 50 per cent of the pro
shop outlets in the country as of that date. |
| [23] | C. Golf City |
| [24] | As we have stated, Golf City is a golf
specialty retail establishment located in New Orleans, Louisiana.
Golf City's owner is James H. "Buddy" Orange, a former
automobile executive who became a golf enthusiast in the
1960's and who, in 1968, developed an interest in entering the
golf equipment retailing business. |
| [25] | Orange obtained the initial inventory for Golf City from
Burt Dargie, the owner of a golf specialty store in Memphis,
Tennessee. Orange testified that he had modeled Golf City
after Dargie's operation and that the two stores shared such attributes as
special machines for evaluating one's golf swing, large
display areas, and a complete repair facility.*fn7
After Golf City opened in April, 1969, Orange sought to
increase the store's inventory of pro-line merchandise by purchasing some
directly from the manufacturers. Orange was repeatedly rebuffed.*fn8
In December, 1969, Golf City sued. |
| [26] | II. LIABILITY |
| [27] | A. Injury |
| [28] | Golf City brought its action under section 4 of the
Clayton Act,*fn9
which grants a private cause of action for antitrust violations to any
person "injured in his business or property" by the anticompetitive
conduct. Golf City identifies the injury to its business or
property as "the inability to purchase [pro-line equipment] directly from
the manufacturers." Brief for Golf City at 46. |
| [29] | B. Conspiracy |
| [30] | The injury alleged must be caused by an antitrust violation. See
Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 97 S. Ct. 690, 50 L. Ed. 2d
701 (1977). Golf City contends that the refusals
of the manufacturers to deal with it in pro-line merchandise were born of
a conspiracy involving the manufacturers and PGA, a conspiracy "designed
to exclude from the market direct competitors of some members of the
combination", E. A. McQuade Tours, Inc. v. Consolidated Air Tour Manual
Committee, 467 F.2d 178, 186-87 (5th Cir. 1972),
cert. denied, 409 U.S. 1109, 93 S. Ct. 912, 34 L. Ed. 2d 690 (1973), and
therefore a conspiracy unlawful per se under section 1 of the Sherman
Act. |
| [31] | Appellants Wilson and PGA maintain, as they have throughout the course
of the litigation, that the pro only sales policies which dictated the
refusals to deal with Golf City were adopted unilaterally by
each manufacturer and are so maintained. Appellants contend that the pro
only sales policies are in wide use because they are an effective form of
non-price competition - consumers like to purchase prestige
golf equipment available only at pro shops. Appellants'
point, if factually correct, would be a complete defense to the section 1
allegation, because |
| [32] | section 1 . . . is directed only at joint action. [citation omitted]
It does not prohibit independent business actions and decisions. A person
still has the right to refuse to do business with another, provided he
acts independently and not pursuant to an unlawful understanding, tacit or
expressed. |
| [33] | Modern Home Institute, Inc. v. Hartford Accident & Indemnity Co., 513 F.2d 102, 108 (2d Cir. 1975). |
| [34] | The mere fact that substantially all of the manufacturers approached
by Golf City refused to deal does not permit the inference
of conspiracy. We quote again from the Second Circuit's Modern Home
Institute : |
| [35] | Both sides agree that parallel behavior alone is not sufficient
evidence of conspiracy to find a Sherman Act § 1 violation. [citations
omitted] The mere fact that all defendant companies were initially
enthusiastic about plaintiff's proposal and then rejected it, even if they
knew the other defendant companies were doing likewise, is not enough to
defeat the motion for summary judgment. [citation omitted] Such parallel
conduct is consistent with independent competitive decisions or at most
reflects a non-consensual decision not to compete. Additional facts or
circumstances are needed to show that the decisions were interdependent
and thus raise the inference of a tacit agreement to boycott. [citations
omitted] |
| [36] | 513 F.2d at 110. |
| [37] | The "additional facts or circumstances" offered by Golf
City to raise the inference of conspiracy were adduced in a series of
documents designated collectively in the record as exhibit P-76.*fn10
The P-76 documents were obtained from PGA during discovery. They are
chiefly letters and reports and, for the most part, they chronicle PGA's
efforts between 1967 and 1969 to stop golf pros from
participating in what is called the bootleg market in pro-line equipment.
Apparently many pros are willing to sell some of the pro-line equipment
they have bought from the manufacturers to outlets like Golf
City that cannot obtain the goods directly. This bootleg market is also
called leakage. |
| [38] | The main character in the events revealed in the P-76 documents was
William Clarke, who then*fn11
was chairman of a PGA committee called the Manufacturers' Relations
Committee. Another key character was Joe Wolfe, a Wilson executive who
chaired a committee of manufacturers' representatives that was the
industry counterpart of the Clarke Committee. There is no doubt that these
documents show a continuing effort in the late sixties by Clarke and Wolfe
to stop leakage. |
| [39] | This antileakage evidence naturally drew the parties to a 1966 Supreme
Court case, United States v. General Motors Corp., 384 U.S. 127, 86 S. Ct. 1321, 16 L. Ed.
2d 415 (1966), and the district court made General Motors the
legal centerpiece for its decision on liability. In General Motors, the
big auto maker's Chevrolet dealers in the Los Angeles area complained to
GM that some dealers were reselling their cars to discount houses that
purportedly were offering the Chevrolets to the public at prices below
those of the GM franchisees. The Supreme Court held that the efforts by GM
and its dealers to stop this leakage transgressed section 1 of the Sherman
Act. The Court summarized the key findings of the district
court: |
| [40] | That in the summer of 1960 the Losor Chevrolet Dealers Association,
'through some of its dealer-members,' complained to General Motors
personnel about sales through discounters . . .; that at a Losor meeting
in November 1960 the dealers there present agreed to embark on a
letter-writing campaign directed at enlisting the aid of General Motors .
. .; that in December and January General Motors personnel discussed the
matter with every Chevrolet dealer in the Los Angeles area and elicited
from each a promise not to do business with the discounters . . .; that
representatives of the three associations of Chevrolet dealers met on
December 15, 1960, and created a joint investigating committee . . .; that
the three associations then undertook jointly to police the agreements
obtained from each of the dealers by General Motors; that the associations
supplied information to General Motors for use by it in bringing wayward
dealers into line, and that Chevrolet's O'Connor asked the associations to
do so . . .; that as a result of this collaborative effort, a number of
Chevrolet dealers were induced to repurchase cars they had sold through
discounters and to promise to abjure such sales in future . . .
. |
| [41] | These findings by the trial judge compel the conclusion that a
conspiracy to restrain trade was proved. |
| [42] | 384 U.S. at 140-42, 86 S. Ct. at 1328. |
| [43] | The instant case is not on all-fours with General Motors. As we shall
discuss infra, the Golf City theory of liability does not
seem to include the antileakage efforts themselves as a separate source of
injury to Golf City. Golf City points to the
antileakage evidence only as proof that the lack of direct availability of
pro-line goods from the manufacturers was the product of conspiracy. To
make General Motors analogous, one would have to change its facts as
follows: first, the automobile discounters would be the plaintiffs;
second, their complaint would be that GM refused to sell them Chevrolets
directly; third, their theory of liability would be that the franchise
distribution system used by GM was the product of a conspiracy involving
GM, other automobile manufacturers, and the dealers; and fourth, the proof
of a franchise system conspiracy would be the antileakage evidence
actually adduced in the General Motors case. As our discussion of the
district court's findings infra indicates, we have some difficulty with
this scenario. |
| [44] | C. The District Court's Findings |
| [45] | After noting the uniform refusals to deal with Golf City
by the manufacturers and after setting out a portion of the antileakage
evidence, the district court found that |
| [46] | PGA and manufacturers are working together in a rather tight
conspiracy to restrict the sale of pro line goods to pro shops only, to
police leakage into stores like the plaintiff's. |
| [47] | Appendix, vol. I, at 218. Then later in its Memorandum of Reasons on
liability the court made the general finding that "plaintiff's lack of
pro-line goods causes a loss of business." Id. at 225. |
| [48] | PGA and Wilson attack these findings two ways. First, they argue that
the findings do not give a clear understanding of the basis of the
district court's decision and therefore are inadequate under Rule 52(a) of
the Federal Rules of Civil Procedure. Alternatively, PGA and Wilson
contend that the finding of liability was clearly erroneous. Since we
agree that the findings fail to give a clear understanding of the basis of
the court's decision, we do not reach the clear error issue. |
| [49] | 1. Rule 52(a): General Principles. - Rule 52(a) mandates that in all
civil actions tried without a jury "the court shall find the facts
specially . . . ." One purpose of the rule is to aid the appellate court
by affording it a clear understanding of the ground or basis of the
decision of the trial court. Silberblatt, Inc. v. United States, 353 F.2d 545, 549 (5th Cir. 1965). Another purpose of
the rule, identified forthrightly by Judge Frank, is to engender care on
the part of the trial judge in ascertaining the facts: |
| [50] | It is sometimes said that the requirement that the trial judge file
findings of fact is for the convenience of the upper courts. While it does
serve that end, it has a far more important purpose - that of evoking care
on the part of the trial judge in ascertaining the facts. For, as every
judge knows, to set down in precise words the facts as he finds them is
the best way to avoid carelessness in the discharge of that duty: Often a
strong impression that, on the basis of the evidence, the facts are
thus-and-so gives way when it comes to expressing that impression on
paper. The trial court is the most important agency of the judicial branch
of the government precisely because on it rests the responsibility of
ascertaining the facts. When a federal trial judge sits without a jury,
that responsibility is his. And it is not a light responsibility since,
unless his findings are 'clearly erroneous,' no upper court may disturb
them. To ascertain the facts is not a mechanical act. It is a difficult
art, not a science. It involves skill and judgment. As fact-finding is a
human undertaking, it can, of course, never be perfect and infallible. For
that very reason every effort should be made to render it as adequate as
it humanly can be. |
| [51] | United States v. Forness, 125 F.2d 928, 942-43
(2d Cir.), cert. denied, 316 U.S. 694, 62
S. Ct. 1293, 86 L. Ed. 1764 (1942)
(footnotes omitted). See United States v. Merz, 376 U.S. 192, 199, 84 S. Ct. 639, 11 L.
Ed. 2d 629 (1964) (more careful consideration of problem
assured if finder of fact required to state not only end result, but also
process by which result reached). |
| [52] | The "facts" that 52(a) admonishes must be found specially are not all
of one kind. They lie along a conceptual line from those termed
"subsidiary" to those labeled "ultimate."*fn12
For example, in the instant case a subsidiary fact might be that appellant
Wilson notified Golf City on a certain date that Wilson
would not sell Golf City pro-line golf
equipment. An ultimate fact might be that PGA and the manufacturers
conspired to prevent Golf City from obtaining pro-line
goods.*fn13
Ultimate facts generally are derived from subsidiary facts through a
cause-effect reasoning process. That is, when subsidiary facts A, B, and C
are shown to exist, then, because of the fact-finder's knowledge of the
way the world works, he is able to conclude that, more likely than not,
ultimate fact X also exists. He infers X from A, B, and C. |
| [53] | Rule 52(a) does not require that the trial court set out findings on
all the myriad factual questions that arise in a case. As we have said:
"Courts need not indulge in exegetics, or parse or declaim every fact and
each nuance and hypothesis." Gulf King Shrimp Co. v. Wirtz, 407
F.2d 508, 516 (5th Cir. 1969). On the other hand, parsimony in
setting out subsidiary facts may run afoul of the rule: |
| [54] | We have concluded that the findings of the district court do not
provide a sufficiently definite predicate for proper appellate review.
Many of the findings are couched in conclusory terms. Some were announced
solely as ultimate findings without support which clearly reflected a
choice between conflicting accounts of events or between alternate legal
interpretations of those events. This court cannot be left to guess. The
findings and conclusions we review must be expressed with sufficient
particularity to allow us to determine rather than speculate that the law
has been correctly applied. |
| [55] | Hydrospace-Challenger, Inc. v. Tracor/MAS, Inc., 520 F.2d
1030, 1034 (5th Cir. 1975). See Lettsome v. United States, 434 F.2d 907, 909 (5th Cir. 1970). Wright and Miller
observe that "ideally findings of fact should be clear, specific, and
complete, without nonrealistic and uninformative generality on the one
hand, and on the other without an unnecessary and unhelpful recital of
nonessential details of evidence." 9 Wright & Miller, Federal Practice
and Procedure § 2579, at 711 (1971). Relating the degree-of-thoroughness
question to the purposes of Rule 52(a), the findings of the trial court
must be sufficiently detailed to give us a clear understanding of the
analytical process by which ultimate findings were reached and to assure
us that the trial court took care in ascertaining the facts. |
| [56] | Compliance with Rule 52(a) is not a jurisdictional requirement for
appeal: |
| [57] | An appellate court may decide the merits of an appeal in the absence
of fact findings in the rare case in which 'a full understanding of the
issues [can] be reached without the aid of findings.' |
| [58] | Davis v. United States, 422 F.2d 1139, 1142 (5th
Cir. 1970). Whether a full understanding is possible goes "not . . . to
jurisdiction but to our discretion . . . ." Gilbert v. Sterrett, 509 F.2d 1389, 1397 (5th Cir.) (Godbold, J.,
dissenting), cert. denied, 423 U.S. 951, 96
S. Ct. 373, 46 L. Ed. 2d 288
(1975). |
| [59] | Rule 52(a) also provides that "findings of fact shall not be set aside
unless clearly erroneous . . . ." Justice Reed's definition of "clearly
erroneous" has proved durable over the years: |
| [60] | A finding is 'clearly erroneous' when although there is evidence to
support it, the reviewing court on the entire evidence is left with the
definite and firm conviction that a mistake has been
committed. |
| [61] | United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S. Ct. 525, 542, 92
L. Ed. 746 (1948). Findings that are sufficiently thorough to
comply with Rule 52(a) must also survive the "clearly erroneous" crucible
if so challenged on appeal. |
| [62] | 2. Rule 52(a): Application Here. - For three reasons, all of them more
or less related to the district court's treatment of the antileakage
evidence, we conclude that the district court's findings on liability do
not provide us with a clear enough understanding of the basis of its
decision to enable us confidently to carry out our task of appellate
review. |
| [63] | First, the findings are susceptible of the interpretation that the
court predicated treble damage liability not only on the manufacturers '
refusals to deal with Golf City, but also on the antileakage
efforts. The interpretation is suggested by the portions of the court's
opinion quoted supra and is strengthened by the following passage from the
opinion: |
| [64] | The law . . . condemns collaborative manufacturers that uniformly
refuse to deal with merchants. And our case goes further. The
manufacturers and the PGA dominated pro shops work together to restrict
pro shop sales to consumers only. The watch word of the golf
industry is 'Don't sell pro line merchandise to stores like the
plaintiff.' In fact, this prohibition in the golf industry
has developed its own nomenclature so that knowledgeable
golf people say 'We must stop leakage.' This attempt by a
manufacturer to control the destiny of its golf clubs after
sold to pro shops is also a violation of the Sherman Act. Even without a
conspiracy a manufacturer's attempt to retain dominion over its products
by controlling to whom the products are sold is illegal. |
| [65] | Appendix, vol. I, at 228. This language is puzzling, because the
district court made no finding that Golf City was denied
free access in any degree to the bootleg market as a result of conspiracy.
In fact, the opinion is silent on whether appellee even attempted to
purchase equipment in the bootleg market. |
| [66] | Wilson and PGA interpret the district court's opinion as predicating
liability on the antileakage efforts as well as the manufacturers'
refusals to deal. They expend much of their briefing space to a contention
that, while Wilson and PGA agreed in principle to cooperate against
leakage, no antileakage effort was implemented to Golf
City's detriment, and Golf City, faced with the contention,
does not really attempt to defend the court's finding. Referring to
appellants' position that no antileakage effort was implemented, the
Golf City brief states: |
| [67] | Such an assertion, however, amounts to nothing more than an effort to
create a 'straw man' which Wilson feels it can knock down. This is a case
of 'refusals to deal', and the 'impact' of concerted action in the basic
decisions not to sell pro-line golf products to
Golf City comes from the lack of direct availability. The
anti-leakage efforts of the PGA, and the 'full cooperation by the
manufacturers' . . . are only corroborative of a basic conspiracy to keep
the 'pro-only' product from the 'stores'. The 'injury' was sustained from
the inability to purchase directly from the manufacturers and the
anti-leakage program is merely 'salt on the wound', and not the wound
itself. |
| [68] | Brief for Golf City at 46. The Golf City
brief suffers from some of the same ambiguity that is the cause of our
confusion about the court's findings, but certainly the passage quoted
cannot be characterized as a vigorous defense of a finding of antileakage
liability. On remand, if the court finds liability, it should clarify the
role of the antileakage evidence in its factual analysis. If the evidence
is used only as urged by Golf City, that is, to infer that
the manufacturers ' refusals to deal were tainted by conspiracy, then the
findings should state that clearly. If, however, the court concludes that
the antileakage efforts themselves injured Golf City, then
the findings must set out the instances of injury. |
| [69] | Second, the district court failed to explain at all its chain of
factual reasoning from the antileakage evidence to the conclusion that the
manufacturers' pro only sales policies were born or maintained in
conspiracy. Sometimes, of course, no such explanation is needed. The court
need only set out the subsidiary facts and the path to the inference is
self-evident. Not so here. We see no intuitive link between the
antileakage evidence and the conclusion that the pro only sales policies
were the product of conspiracy. |
| [70] | Clearly there is a link between the fact of antileakage and the fact
of pro only sales policies. The two share the object of restricting to pro
shops the sale of pro-line golf equipment. We do not
understand, however, the nature of the link between antileakage and the
question of whether the pro only sales policies were born or maintained in
conspiracy. If the inference is based only on the notion that persons who
engage in one conspiracy probably engaged in another, then the inference
is improper. Cf. Theatre Enterprises, Inc. v. Paramount Film Dist. Corp., 346 U.S. 537, 543-44, 74 S. Ct. 257, 98 L. Ed. 273 (1954). We have trouble
understanding why antileakage efforts would not be just as compatible with
the scenario urged by appellants that the pro only sales policies were
formulated unilaterally and were prompted by the utility of the policies
as a form of non-price competition. |
| [71] | Third, we think the court's findings are inadequate because they fail
to deal with uncontradicted, substantial defense evidence tending to show
that the pro only sales policies indeed were formulated unilaterally. In
1967, for example, PGA's Clarke wrote to a PGA member and
stated: |
| [72] | Everyone has talked for some time of a 'pro-only' policy but as you
well know we have none. The manufacturers up to now . . . [have] set their
own policy and in most cases this has varied. |
| [73] | Exhibit P-76, Exhibits, vol. II, at 170. Moreover, appellants point
out that each manufacturer adopted its policy at a different time,
Wilson's policy was inaugurated thirty years before the antileakage
discussions began, and no manufacturer limits pro-line sales to PGA pros.
Reply Brief for PGA at 3. Finally, there is no finding on whether pro only
policies are of a nature that no one manufacturer can maintain one unless
all the other manufacturers go along. If it would be in any manufacturer's
competitive self-interest not to have a pro-only distribution policy, then
the continued use of the policies by nearly all the manufacturers would be
suspicious: |
| [74] | Actions against the apparent individual economic self-interest of the
alleged conspirators may raise an inference of interdependent action . . .
[and] actions . . . only in one's self-interest if done in concert with
others may also provide the basis for an inference of illegal
conspiracy. |
| [75] | Modern Home Institute, supra, 513 F.2d at 111
(citations omitted). |
| [76] | While it is true, as we have noted, that the court need not deal with
every piece of evidence or every argument raised, it is equally true
that |
| [77] | the reviewing court deserves the assurance that the trial court has
come to grips with apparently irreconcilable conflicts in the evidence . .
. and has distilled therefrom true facts in the crucible of his
conscience. |
| [78] | Keystone Plastics, Inc. v. C & P Plastics, Inc., 506
F.2d 960, 962 (5th Cir. 1975). We do not hold that the
inference of a conspiratorial taint to the refusals to deal with
Golf City was clearly erroneous. We decide only that, in (1)
failing to provide us with the reasoning chain by which it made the
inference and (2) failing to deal with crucial defense evidence, the
district court has not given us a clear understanding of the basis of its
decision. It may be that the antileakage evidence, either alone or coupled
with other evidence in the record, will support a finding of conspiracy
with respect to the pro only sales policies. If such a theoretical matrix
exists, then the parties should have the opportunity to argue it to the
district court, and the district court should make explicit its reasoning
in setting out findings of fact. We must be able to understand why the
ultimate fact of liability, if liability is again found, follows from the
subsidiary facts decided. |
| [79] | III. DAMAGES |
| [80] | A. Net Profit Calculation |
| [81] | The district court awarded lost profit damages to Golf
City because of Golf City's inability to obtain pro-line
golf equipment. In computing the lost profit, the court
calculated that Golf City could have generated additional
sales of more than $260,000 for $6,000 in additional rent, salaries and
other operating expenses. Appellants suggest that the district court used
the $6,000 after plaintiff's counsel proposed at oral argument that the
record would support it. Appellants point to the testimony of
Golf City's proprietor, Mr. Orange, as showing the $6,000
calculation to be incredibly low. |
| [82] | On cross-examination, Orange testified that he would have needed (1)
one additional sales person at about $5,000 per year, (2) no more than
$1,500 to $2,000 in additional advertising, and (3) one additional
assistant in the repair department at about $5,000 per year. These
additional expenses would equal "an additional 12,000 per year" over a
period of "five years less two months," totalling "slightly lower" than
$60,000.*fn14
Orange later adjusted his estimates slightly,*fn15
but the figure remained well over the $6,000 used by the district court.*fn16
We hold that the district court's finding on incremental operating cost is
clearly erroneous. |
| [83] | B. Duty to Mitigate Damages |
| [84] | An antitrust plaintiff has a duty to mitigate damages.*fn17
Here, Golf City might have mitigated its damages in either
of two ways: (1) It might have purchased "leaked" pro line equipment from
pro shops. (2) It might have attempted to increase its volume of
store-line merchandise to compensate for the inability to obtain pro-lines
goods. |
| [85] | The district court made absolutely no findings about mitigation of
damages. Golf City contends that the bootleg market in
leaked goods was not dependable and that leaked goods cost more. Moreover,
Golf City claims there is little cross-elasticity of demand between
store-line and pro-line merchandise. Certainly these points would bear on
the amount of mitigation Golf City could be expected to
accomplish. They do not, however, absolve Golf City of its
duty to mitigate. Because the district court failed to make findings about
mitigation, we have no clear understanding of how the court reached the
conclusion it did on quantum. |
| [86] | IV. VENUE |
| [87] | Section 12 of the Clayton Act*fn18
allows an antitrust action against a corporation to be brought in any
judicial district where the corporation (1) is an inhabitant, (2) may be
found, or (3) transacts business. The district court held that PGA could
be sued in the Eastern District of Louisiana because it had transacted
business there. The court based this conclusion on the following factors:
(a) There are 55 PGA members in the State of Louisiana, along with an
undetermined number of dues-paying apprentices who are working toward full
membership in the PGA. (b) A golf magazine, circulating in
the State of Louisiana and presented to the court, was shown to have
carried, albeit without charge to the PGA, institutional advertising as to
the service performed by golf professionals and containing
in it the name "The Professional Golfer's Association of America," and the
PGA emblem. (c) The PGA makes available in Louisiana the necessary
applications and forms for membership in PGA by professional golfers, and
by those seeking to become professional golfers. (d) The PGA recently has
conducted in Baton Rouge, Louisiana, a five day "business school" for its
members and apprentices in connection with the business of the
administration of golf shops. (e) PGA regularly acknowledges
golf feats by amateurs in the State of Louisiana by awarding
them "membership" in the PGA "Hole-In-One-Club," such "membership" being
given exclusively to those who score "holes-in-one" at golf
clubs and courses served by PGA golf professionals. (f) A
separate legal entity, the PGA Tournament Players Division Corporation,
sponsors golf tournaments in various parts of the country,
including Louisiana. |
| [88] | We address the last of these factors first. Certainly the conducting
of a golf tournament by a corporation in a particular
judicial district would constitute the transaction of business in that
district within the meaning of the Clayton Act. The Supreme Court has
stated that the test is whether "in fact, in the ordinary and usual sense,
[the corporation] 'transacts business' [in the district] of any
substantial character." Eastman Kodak Co. v. Southern Photo Materials Co.,
273 U.S. 359, 372-73, 47 S. Ct. 400, 403, 71 L. Ed. 684 (1927); see United
States v. Scophony Corp., 333 U.S. 795, 807, 68 S. Ct. 855, 92 L. Ed. 1091
(1948). A golf tournament would clearly be transaction of
business of a substantial character. |
| [89] | The district court conceded, however, that the Tournament Players
Division was a separate legal entity, and we conclude for that reason that
the contacts of that entity cannot be attributed to PGA for the purpose of
fixing venue. The district court sought to connect the two corporations on
the bases that (1) three of the ten members of the Tournament Players
Division governing board are officers of PGA and (2) the PGA logo appears
on membership applications for the Tournament Players Division. Those
links are not sufficient. In San Antonio Telephone Co. v. American
Telephone and Telegraph Co., 499 F.2d 349 (5th Cir.
1974), we rejected the contention that, because venue was proper for
AT&T in a particular judicial district, it was proper also for certain
telephone operating companies associated with AT&T. We
said: |
| [90] | While it is true that venue may be established through a relationship
between corporations when they in effect comprise a single entity . . .
the evidence in this case does not demonstrate such a total disregard for
the separate corporate entities. Rather it appears that, while AT&T
may dictate general policies of the operating companies, the daily
business affairs are the responsibility of the different
companies. |
| [91] | 499 F.2d at 352 (citations omitted). The district court
certainly did not find a "total disregard for the separate corporate
entities" in the relationship between PGA and the Tournament Players
Division. Thus, the Louisiana golf tournaments
conducted by the Tournament Players Division cannot be added to the PGA
venue brew. |
| [92] | We are left, then, with the findings we have designated a through e,
and we hold these "too tenuous a connection . . . to constitute
transacting business in the ordinary and usual sense." San Antonio
Telephone Co. v. AT&T, supra, 499 F.2d at 351
(footnote omitted). First, a professional association does not "transact
business" in a judicial district merely because some of its members reside
in the district and receive the association's publications there. Friends
of Animals, Inc. v. American Veterinary Medical Ass'n, 310 F.
Supp. 620, 624 (S.D.N.Y.1970); Midwest Fur Producers Ass'n v.
Mutation Mink Breeders Ass'n, 102 F. Supp. 649, 652
(D.Minn.1951). Second, free advertising of the PGA in a golf
magazine distributed in Louisiana is the most attenuated of contacts with
the district. See San Antonio Telephone Co. v. AT&T, supra,
499 F.2d at 351 n.5. Third, the availability of PGA
membership applications in the district adds only minutely to the PGA's
contact with the district. Fourth, the conducting of a single five day
business school in Baton Rouge, which is not within the Eastern District
of Louisiana,*fn19
cannot be more, and seems less, than an occasional sporadic contact with
the Eastern District. Finally, we cannot believe that PGA's granting of
"Hole-In-One-Club" memberships in the district so enhances the quality of
PGA's contact with the district to render it amenable to suit there under
the section 12 standard. |
| [93] | We have dealt with the contacts seriatim and have found them wanting.
The harder task remains. Do the contacts, taken together, constitute the
transaction of business in the district in the ordinary and usual sense?
This aspect of the inquiry is most responsible for the observation that
"the only rule of law which is uniformly applicable to all cases involving
venue [is that] the decision depends entirely upon the particular facts
involved." Courtesy Chevrolet, Inc. v. Tennessee Walking Horse Breeders'
& Exhibitors' Ass'n of America, 344 F.2d 860, 863
(9th Cir. 1965). We hold that, on the particular facts of this case as
found by the district court in its venue opinion, the contacts as a whole
are too tenuous to subject PGA to suit in the Eastern District of
Louisiana pursuant to section 12 of the Clayton Act. |
| [94] | V. OTHER ISSUES |
| [95] | A. Price-Fixing |
| [96] | In one section of its opinion, the district court concludes that the
actions of the appellants were motivated by a purpose to fix prices. We
find it unnecessary to reach this point. If the district court on remand
finds that the refusals to deal with Golf City were dictated
by a conspiracy to prevent such stores from obtaining pro-line equipment,
then liability will be established irrespective of any price-fixing
question. Moreover, Golf City makes no argument that damages
would be affected in the least by a price-fixing finding. |
| [97] | B. Interest |
| [98] | The district court awarded interest "on the untrebled portion of the
judgment" from the date of judicial demand. Appendix, vol. I, at 233. By
statute, 28 U.S.C. § 1961, interest runs on a judgment not from
the date of judicial demand, but from the date of the
judgment. |
| [99] | C. Cross-Appeal |
| [100] | Golf City's cross-appeal contentions about damages and
attorneys' fees may be presented to the district court on remand, if the
district court finds liability. Appellants' remaining contentions with
respect to damages also may be presented to the district
court. |
| [101] | VI. CONCLUSION |
| [102] | The judgment of the district court is reversed in part, vacated in
part, and remanded for proceedings consistent with this opinion.*fn20 |
|
| |
| Judges Footnotes | |
|
| |
| [103] | *fn*
Senior District Judge of the Western District of Louisiana sitting by
designation. |
|
| |
| Opinion Footnotes | |
|
| |
| [104] | *fn1
15 U.S.C. § 1. Golf City also alleged other
violations of the antitrust laws, but the district court based its holding
only on section 1. Golf City does not quarrel with the
district court's failure to treat the remaining theories of
liability. |
| [105] | *fn2
In its statement of issues, the Golf City brief also raises
the point that the district court should have issued a mandatory
injunction directing Wilson to deal with Golf City. This
contention is mentioned nowhere in the brief's argument section, no
reasons are given for the contention, and no authorities are cited. This
issue is not before us. Fed. R. App. P. 28; see
Simpson v. Union Oil Co., 411 F.2d 897 (9th Cir.),
rev'd on other grounds, 396 U.S. 13, 90 S.
Ct. 30, 24 L. Ed. 2d 13
(1969). |
| [106] | *fn3
The term golf equipment embraces golf clubs,
balls, bags, and sundries such as shoes, head covers, gloves, tees, and
golf wearing apparel. Brief for PGA at 2. |
| [107] | *fn4
Memorandum of Reasons on liability. Appendix, vol. I, at
211. |
| [108] | *fn5
Brief for PGA at 3. |
| [109] | *fn6
Id. |
| [110] | *fn7
Record, vol. IX, at 2737-39, 2775-76. |
| [111] | *fn8
Memorandum of Reasons on liability. Appendix, vol. I, at
209-10. |
| [112] | *fn9
15 U.S.C. § 15. |
| [113] | *fn10
Exhibits, vol. II, at 163-248. |
| [114] | *fn11
Clarke later became president of PGA. Record, vol. XIX, at
5774. |
| [115] | *fn12
See 9 Wright & Miller, Federal Practice and Procedure § 2579 (1971)
(and cases cited). |
| [116] | *fn13
We use this only to illustrate the point and not to express a view of the
merits. |
| [117] | *fn14
Record, vol. XIII, at 3590-93. |
| [118] | *fn15
Id. at 3598-99. |
| [119] | *fn16
Golf City does not attempt in its brief to defend the $6,000
figure. |
| [120] | *fn17
See Triebwasser & Katz v. American Telephone & Telegraph Co., 535 F.2d 1356, 1360 (2d Cir. 1976); Lehrman v. Gulf
Oil Corp., 464 F.2d 26, 46-47 (5th Cir.), cert.
denied, 409 U.S. 1077, 93 S. Ct. 687, 34 L. Ed. 2d 665 (1972); Sun Cosmetic
Shoppe, Inc. v. Elizabeth Arden Sales Corp., 178 F.2d 150, 153 (2d Cir. 1949). |
| [121] | *fn18
15 U.S.C. § 22. |
| [122] | *fn19
Baton Rouge is in the Middle District of Louisiana. 28 U.S.C. § 98. |
| [123] | *fn20
The district judge who tried the case has resigned from the bench. The
judge to whom the case is assigned on remand may be able to make new
findings of fact and conclusions of law on the existing record. The record
may be supplemented at his discretion. Rewis v. United States,
445 F.2d 1303, 1306 (5th Cir. 1971). Moreover, if he
is satisfied that he cannot perform the duties we have given him because
he did not preside at the trial or for any other reason, the judge may in
his discretion grant a new trial. Fed.R.Civ.Pro.
63. |