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MERIT MOTORS, INC. v. CHRYSLER CORP.

June 30, 1976

MERIT MOTORS, INC., et al., Plaintiffs,
v.
CHRYSLER CORPORATION et al., Defendants


Pratt


The opinion of the court was delivered by: PRATT

This is a private antitrust suit for treble damages brought under Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15 and 26. Plaintiffs are two franchise Chrysler dealers located in Yonkers, New York, and Metropolis, Illinois. They sought to litigate this case as a class action, and we conditionally certified the class on July 11, 1972. However, upon reconsideration, we decertified the class and dismissed all class action allegations in the complaint on April 15, 1975. Defendants are Chrysler Corporation and three of its wholly-owned subsidiaries.

 Plaintiffs contend that certain fleet allowance programs introduced by Chrysler in the 1960's to break the dominance of General Motors and Ford in the fleet automobile market are in violation of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2, and Sections 2(a), (d) and (e) of the Clayton Act, 15 U.S.C. §§ 13(a), (d) and (e) [the Robinson-Patman Act amendment]. Chrysler has introduced a variety of such programs, many of which have been amended or terminated, and a detailed description of each fleet program *fn1" is not necessary for the purposes of this opinion. Basically, the programs have involved the payment of allowances (also referred to as subsidies or rebates) to fleet purchasers on new cars they purchase from Chrysler dealers over and above a certain established figure. The significant point is that these programs have operated outside the original price-setting negotiations carried on by the dealers responsible for selling the cars and the fleet purchasers. The purchase price of the cars has always been and remains a matter of negotiation between the dealers and the fleets without any interference by Chrysler. The allowances are merely direct payments made by Chrysler to the fleet purchasers once the price has been agreed to and a purchase consummated between the dealer and the fleet purchaser.

 Plaintiffs allege that these allowances have artificially inflated the fleet market demand for Chrysler cars and, as a consequence, have eventually produced an over supply of late-model used Chrysler cars in the market. They maintain that the presence of such a disproportionate number of used Chrysler cars in the market place has depressed the price for all Chrysler cars, including the new cars which plaintiffs sell. In addition, plaintiffs contend that the cost to Chrysler of underwriting these allowance programs has been covered through an increase in the wholesale price of the cars charged to the dealers. Consequently, plaintiffs claim that the fleet programs have caught them in a squeeze between artificially inflated wholesale costs for the cars they buy from Chrysler and artificially depressed prices for the new Chrysler cars which they sell. They have brought this action under Section 1 of the Sherman Act charging that these programs amount to a combination and conspiracy between Chrysler and its fleet purchasers to fix prices, a Sherman Act Section 1 violation. Plaintiffs also claim that Chrysler and the fleets have been engaging in an unlawful combination and conspiracy to monopolize the sale and lease of Chrysler cars to fleet purchasers in violation of Section 2 of the Sherman Act. Finally, plaintiffs claim that these programs constitute discriminatory pricing in violation of the Robinson-Patman Act.

 The case is now before the Court on plaintiffs' motion for partial summary judgment on their first claim (Section 1 of the Sherman Act) and defendants' cross-motion for summary judgment on all three claims (Sections 1 and 2 of the Sherman Act and Sections 2(a), (d) and (e) of the Clayton Act). For the reasons set forth below, we find that plaintiffs have failed to raise a genuine issue of material fact with regard to any of their claims and that defendants are entitled to judgment as a matter of law. Accordingly, we grant defendants' cross-motion for summary judgment as to all three claims set forth in the complaint.

 I. THE STANDARDS TO BE APPLIED IN RULING UPON MOTIONS FOR SUMMARY JUDGMENT IN ANTITRUST CASES.

 We are well aware of the rule that motions for summary judgment are to be sparingly granted in complex antitrust cases. Poller v. Columbia Broadcasting System, 368 U.S. 464, 7 L. Ed. 2d 458, 82 S. Ct. 486 (1962). However, even in antitrust cases as protracted and complex as this case, plaintiffs are not relieved of their burden under Rule 56(e) of the F.R.Civ.P. to support their allegations with something more than naked assertions and broad generalities. In order to defeat a motion for summary judgment, they must support their allegations by "significant probative evidence." First National Bank of Arizona v. Cities Service, 391 U.S. 253, 290, 20 L. Ed. 2d 569, 88 S. Ct. 1575 (1968). Summary judgment is a valuable instrument for avoiding unnecessary, lengthy and costly trials. See United States v. General Motors Corp., 171 U.S. App. D.C. 27, 518 F.2d 420, 440-42 (D.C. Cir. 1975). Once defendants raise serious questions with regard to the foundation of plaintiffs' allegations, plaintiffs may not rest on those allegations but must offer concrete support for them. Without such support, the allegations must fail and judgment must be entered for the defendants.

 This case was filed nearly six years ago, and since that time a voluminous record has been compiled. Thirty-three depositions have been taken, twenty-three of which were taken by the plaintiffs, covering thousands of pages of transcript. Scores of documents have been made available for inspection by defendants, and numerous exhibits and affidavits have been filed. Hence, plaintiffs have had many years in which to unearth support for their claims. Under these circumstances, we do not see how a trial could afford plaintiffs any greater opportunity to obtain factual support for their allegations. Modern Home Institute, Inc. v. Hartford Acc. & Ind. Co., 513 F.2d 102, 110 (2nd Cir. 1975). It is in light of this ample opportunity plaintiffs have had to unearth evidence to support their allegations and in light of the recognized value of Rule 56 as a means for avoiding unnecessary trials even in complex antitrust cases that we now examine each of plaintiffs' claims seriatim.

 II. PLAINTIFFS' CLAIM UNDER SECTION 1 OF THE SHERMAN ACT.

 Plaintiffs base their claim under Section 1 of the Sherman Act on the allegation that Chrysler's fleet allowance programs amount to a combination or conspiracy between Chrysler and its fleet purchasers to restrain trade by fixing the fleet prices for Chrysler cars. Such a price-fixing agreement, if proved, is a per se violation of Section 1. United States v. Socony Vacuum Oil Co., 310 U.S. 150, 220-23, 60 S. Ct. 811, 84 L. Ed. 1129 (1940). Central to any price-fixing claim is a showing that plaintiffs' pricing independence was somehow restricted. Checker Motors Corp. v. Chrysler Corp., 283 F. Supp. 876, 882 (S.D. N.Y. 1968), aff'd 405 F.2d 319 (2d Cir.), cert. den. 394 U.S. 999, 22 L. Ed. 2d 777, 89 S. Ct. 1595 (1969). We have reviewed the voluminous record compiled in this case, and we have found no evidence that Chrysler and the fleets fixed the price and terms upon which plaintiffs could sell cars to fleet users, or that the fleet allowance programs restricted plaintiffs' pricing independence in any way. On the contrary, the record is replete with evidence of the fact that the dealers continued to negotiate their own prices and terms with the fleets without any interference by Chrysler and entirely outside of the operation of the fleet allowance programs.

 For example, Loren Kirkpatrick, one of the plaintiffs, testified several times during his deposition that he is completely free to set the price at which, and terms upon which, he wishes to sell to fleet customers. *fn2" Similarly, Raphael Cohen, representing Merit Motors, Inc., the other plaintiff, when questioned at length during his deposition about one particular transaction between his dealership and Avis, took pride in explaining the hard bargain he had driven, after rejecting Avis' original offer because the price was too low. During the explanation, Mr. Cohen repeatedly emphasized that he is the only one who sets his prices. *fn3"

 In addition to the plaintiffs' own testimony on this subject, the defendants submitted affidavits of eleven Chrysler dealers throughout the United States who, as the chairmen of Chrysler-Plymouth and Dodge dealer organizations, were the elected spokesmen for Chrysler dealers during the life of the programs at issue and would have been aware of any complaints which the dealers had about those programs. *fn4" Each of the affiants, in his sworn statement, attested to his continuing pricing independence and to the fact that he had never received complaints from any dealers to the effect that Chrysler or Chrysler's fleet program fixed their prices.

 Furthermore, the defendants submitted the affidavits of two other Chrysler dealers, James Kay, Jr. and Richard Green, both referred to by the plaintiffs in connection with their price-fixing allegations. Each dealer testified that the terms and prices at which he dealt were freely negotiated by him, without any intervention from Chrysler. *fn5"

 It is also relevant to point out that the instant case does not represent the first attempt to question the validity of a Chrysler fleet program on grounds of illegal price-fixing. The Court in Checker Motors, supra, thoroughly reviewed a Chrysler Rebate Plan for taxicab purchasers which was virtually identical to the fleet allowance programs challenged in this case, and found that the Rebate ...


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