This case demonstrates that unsound ideas cannot be turned into a profit through frivolous antitrust claims and costly litigation. National Auto Brokers Corporation (Nabcor) and several of its affiliates
The action was commenced in 1970 against some 63 defendants, including GM and various other major auto manufacturers, banks, auto dealers, Better Business Bureaus, and individuals, by the filing of a 93-page complaint charging a conspiracy in violation of the antitrust laws, including § 1 of the Sherman Act, to hamper Nabcor's efforts to obtain new automobiles for resale, and to restrain its competition in the sale of such cars.
The case arises out of the unsuccessful efforts of Nabcor, beginning in 1966, to compete with manufacturer-franchised automobile dealers in the sale of new cars by itself franchising individual "brokers" to sell cars to the public. The brokers were to solicit new car orders and forward them to Nabcor. Nabcor, headed by appellants Frank and Anthony Maiorana, was to provide administrative services and cars needed by the brokers to fill their orders.
The scheme proved a complete failure. Although Nabcor franchised approximately 145 brokers, from whom it received substantial cash payments, they failed to generate any significant number of new car orders. In four years the brokers submitted only 677 orders for GM cars. On December 10, 1970, this suit was instituted, seeking to shift the blame for appellants' failure to the defendants on antitrust law grounds.
Appellants first contend that beginning in 1966 GM conspired with its independent franchised dealers to impede Nabcor's efforts to obtain from the dealers GM cars for its brokers; the parties have referred to this aspect of the case as the "blacklist theory." Second, they assert that GM maintained an illegal "whitelist" under which it made quantities of cars—so-called "fleet allotments"—available to some favored high-volume customers (i. e., purchasers of 10, 20, or more cars for their own use, such as car leasing and rental companies) but not to Nabcor. The remaining individual appellants, the Maioranas and several brokers, seek damages allegedly resulting from the "blacklist" and "whitelist"—including compensation for their efforts in promoting Nabcor's operations and lost profits.
Upon this review, since the case is before us on appeal from a directed verdict, F.R.Civ.P. 50(a), all issues of credibility must be resolved in favor of appellants, Brady v. Southern Ry. Co., 320 U.S. 476, 479-80, 64 S.Ct. 232, 88 L.Ed. 239 (1943). At the same time, we need not overlook uncontradicted evidence unfavorable to appellants.
Turning first to appellants' boycott claim, the record, which includes Nabcor's books, publications and the testimony of its president, reveals clearly that Nabcor received substantially all of the GM automobiles it ordered during the relevant period (from December 1966 to December 1970) and that it had no unusual difficulty in obtaining GM automobiles for delivery to its brokers. Of approximately 553 GM cars ordered by Nabcor from GM dealers during this period, from which some 81 may be deductible for cancellations and a certain Cadillac order claimed to have been placed in 1966, it received a minimum of 435 and a maximum of 503 cars. Indeed, during the last 3 1/2 years of the relevant period it failed to receive only two GM vehicles, neither of which failure appears to be relied upon by appellants as proof of the alleged conspiracy.
Turning to Nabcor's contention that GM refused to permit dealers to sell cars to Nabcor out of their fleet allotments, there likewise is no substantial supporting proof. Although the details of the "fleet allotment" system varied somewhat among GM's various divisions, each appears to have made an effort to allocate its production among the many independent GM dealers in order to assure that if shortages in new cars should ever develop, the supply would be spread equitably. With regard to sales to the general public, each GM dealer was assured access to a certain minimum number of cars for retail sales. At the same time, GM set aside some percentage of its production —the "fleet allotments"—for sale to large purchasers of cars for their own use (e. g., car rental companies). By securing a fleet allotment for a large order of cars, a dealer could avoid having to satisfy a bulk purchaser from stocks earmarked for individual consumers.
Since Nabcor was purchasing cars for resale rather than for its own use, it may not have qualified for access to fleet allotments. But regardless of whether it qualified, the record is barren of any evidence that Nabcor was unable to obtain any GM cars because of any dealer's inability to secure a fleet allotment for it from GM or that Nabcor experienced any unusual patterns of delay in obtaining delivery of cars, much less that any delays were attributable to fleet allotment problems. Thus, GM's fleet allotments turned out to be immaterial, primarily because of the absence of any shortage in supply of GM automobiles.
After five weeks of trial and at a point when the inadequacy of the plaintiffs' proof was rapidly becoming apparent, plaintiffs orally moved for a mistrial and to disqualify Judge Griesa, who under the individual assignment system had by that time been in
On December 6, 1976, after hearing five days of oral argument, Judge Griesa granted the defendants' motion for a directed verdict, rendering a lengthy oral opinion from the bench. Judgment dismissing the complaint as to appellees was entered on December 16, 1976.
Turning first to appellants' claim that Judge Griesa should have disqualified himself, their motion and affidavit were not only untimely but insufficient. The prior representation of a party by a judge or his firm with regard to a matter unrelated to litigation before him does not automatically require recusal, 28 U.S.C. § 455 (1970);
The mere filing of an affidavit of prejudice does not require a judge to recuse himself. On the contrary, we have held that a judge has an affirmative duty to inquire into the legal sufficiency of such an affidavit and not to disqualify himself unnecessarily, particularly "where the request for disqualification was not made at the threshold of the litigation and the judge has acquired a valuable background of experience." Rosen v. Sugarman, 357 F.2d 794, 797-98 (2d Cir. 1966). Here, the fact is that
Turning to the merits, in order to make out a prima facie per se violation of § 1 of the Sherman Act, appellants assumed the burden of first introducing evidence from which a jury might reasonably infer that appellees had conspired to restrain sales to Nabcor, with resulting damage to it. See United States v. General Motors, 384 U.S. 127, 86 S.Ct. 1321, 16 L.Ed.2d 415 (1966); Klor's Inc. v. Broadway-Hale Stores, 359 U.S. 207, 79 S.Ct. 705, 3 L.Ed.2d 741 (1959). But there is an absence of any substantial evidence, direct or circumstantial, supporting these elements of appellants' claim. Appellants' own uncontradicted proof establishes that at all times, despite some refusals, there were many GM dealers willing to deal with Nabcor and that Nabcor was able to obtain from one dealer or another almost all of the GM cars it wanted. Moreover, there is no showing that it experienced delivery delays that were unusual in the automobile industry or indicative of a boycott or concerted refusal to deal. In light of these circumstances, the limited number of refusals by some dealers to fill Nabcor orders are insufficient to permit an inference of concerted action on the part of the appellees, the essential predicate of an antitrust conspiracy. See Michelman v. Clark-Schwebel Fiber Glass Corp., 534 F.2d 1036, 1042-43 (2d Cir. 1976), cert. denied, 429 U.S. 855, 97 S.Ct. 236, 50 L.Ed.2d 166 (1976) ("At a minimum, [defendants'] actions, to support a finding of conspiracy, must suggest a commitment to a common end."). There is simply no basis for inferring that these few refusals were the result of any agreement or understanding with GM or other GM dealers, since the evidence is too consistent with independence of action to permit such an inference. On such a record a jury would not be entitled to find a conspiracy in violation of the antitrust laws.
Indeed, there were several good reasons why each dealer might have independently decided not to do business with Nabcor, as was the dealer's right, United States v. Colgate, 250 U.S. 300, 39 S.Ct. 465, 63 L.Ed. 992 (1919). In the first place, Nabcor was seeking to purchase cars at such a small markup over the dealer's cost that the dealer might well conclude independently that sales to Nabcor would not be worthwhile from the dealer's own standpoint. Secondly, the dealer might also independently conclude that since Nabcor's purpose was to undercut the dealer in selling to the public, sales by the dealer to Nabcor would adversely affect the dealer's own more profitable retail sales. There were sufficient grounds for concern over Nabcor's solvency, reputation and responsibility. Lastly, a dealer might become apprehensive that the respectability of the market for new GM cars would suffer in the public's eyes as a result of Nabcor's practice of selling GM cars without providing service. As we pointed out in Modern Home Institute, Inc. v. Hartford Accident & Indemnity Co., 513 F.2d 102, 110 (2d Cir. 1975), discussing similar facts,
By neglecting to present "additional facts or circumstances" tending to show that the actions of the GM dealers were interdependent or somehow concerted, appellants failed to raise their proof of a few individual refusals to deal to the level of a prima facie case of conspiracy.
The wide void in the circumstantial proof of conspiracy is not filled by the Maioranas' hearsay testimony regarding statements unfavorable to Nabcor that were attributed to GM employees. No GM employee is quoted as ever having admitted participation
In short, appellants' proof of conspiracy was so utterly insubstantial as to preclude any jury from reasonably finding that any of the appellees had combined or agreed to prevent Nabcor from obtaining GM automobiles. Moreover, to the extent that appellants' case is based on a GM "whitelist" allotment theory it is defective for failure to show that the fleet allotment system violated the rule of reason, as required by the Supreme Court's recent decision in Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 97 S.Ct. 2549, 53 L.Ed.2d 568 (1977),
Thus appellants' claims were properly dismissed for failure to adduce evidence that would permit a jury to find a combination of conspiracy between any of the appellees, that appellants were injured by the alleged boycott or GM distribution system, or that the fleet allotment system was an unreasonable restraint in violation of the Sherman Act.
The decision of the court below is affirmed.
Nabcor contended that in the fall of 1966 it received orders for forty-five 1967 Cadillacs, and placed forty-three of the orders with Colonial Cadillac of Trenton, N. J. Two witnesses from Colonial Cadillac denied any knowledge of the orders and its records show no such orders. Nabcor, moreover, had no record of any such orders.
First, Frank Maiorana testified that officials of appellee Paragon Oldsmobile told him that GM employees had instructed Paragon not to sell to Nabcor. However, even if Paragon's acquiescence in such an order was sufficient to make the dealer a conspirator, there was no evidence that Nabcor was injured as a result; uncontradicted evidence indicates that it never had difficulty obtaining Oldsmobiles from some source.
Second, regarding the Buffalo area, representatives of a Nabcor master broker, General Auto Sales & Leasing Co., recounted hearsay statements suggesting that GM personnel and dealers were communicating their hostility to the Nabcor system to one another. In addition, an organization of Buffalo-area dealers, then known as the Buffalo Automobile Dealers Association, distributed a bulletin describing Nabcor in unfavorable terms and implying that dealers should not get involved with it. But Nabcor's success in purchasing cars in the Buffalo area would have precluded any reasonable jury from finding liability based on a dealer conspiracy. Moreover, General Auto Sales & Leasing has stipulated to the dismissal of its appeal from the judgment below and the remaining appellants have failed to show any injury resulting from these events.
An amendment of § 455 applicable to cases filed on December 5, 1974 or thereafter, see Act of Dec. 5, 1974, Pub.L. 93-512, § 3, 88 Stat. 1610, makes it clear that disqualification is not required unless "in private practice [the judge] served as lawyer in the matter in controversy, or a lawyer with whom he previously practiced law served during such association as a lawyer concerning the matter . . . ." 28 U.S.C. § 455(b)(2) (Supp. V, 1975) (emphasis added). Even under the more stringent requirements of the current statute, therefore, the prior representations of GM by Davis Polk and Judge Griesa as to unrelated matters would not require him to recuse himself.