Household Goods Carriers' Bureau v. John J. Terrell, John J. Terrell v. Aero Mayflower Transit Company, Inc.

417 F.2d 47, 1969 U.S. App. LEXIS 10821, 1969 Trade Cas. (CCH) 72,913

• Court: Court of Appeals for the Fifth Circuit
• Decided: September 12, 1969
• Docket: 25989_1
• Status: Published

Opinions

CHOATE, Senior District Judge:

This private antitrust action was brought by John J. Terrell against the Household Goods Carriers’ Bureau and ten of its individual members,¹ claiming that the Bureau and certain of its members conspired with Rand McNally and Company² to restrain and monopolize commerce in violation of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 1px solid var(--green-border)">2. A jury found for Terrell and awarded $375,000 in damages (trebled to $1,-125,000). The trial judge granted the individual carriers’ motion for judgment notwithstanding the verdict, but the verdict against the Bureau was allowed to stand. The Bureau appeals from the judgment in favor of Terrell and Terrell appeals from the judgment N.O.V. in favor of the carriers.

The defendant, Household Goods Carriers’ Bureau, organized in 1936, pursuant to the Reed-Bulwinkle and Interstate Commerce Commission Acts, is an organization of about 1,700 members, carriers of household goods, for whom it files a joint tariff with the Interstate Commerce Commission. Each carrier was required to file a tariff with the ICC; to accomplish this, the members executed a power of attorney in favor of the Bureau. The Bureau also publishes for its members a national mileage guide, which is a tariff publication containing maps and charts to determine highway distances between principal points in the United States and from which transportation charges are computed. The instant case involves the marketing of these national mileage guides.

Mileage guides are used for the purpose of determining distances in the computation of transportation charges (e. g., by trucking firms) and travel allowances (e. g., by the government). Prior to Terrell’s entrance on the scene, the Bureau and Rand McNally were the sole distributors of such guides by virtue of the simple fact that there was no competition in the field.³ In 1962 Terrell, who had previously done some work for Rand Mc-Nally, began to attempt to market a national guide in competition with that of the Bureau and Rand McNally.⁴ By using different methods to compute mileages,⁵ Terrell’s guide would frequently reflect shorter distances than the Bureau’s guide and was allegedly better suited to the needs of certain types of users, particularly the military.

Terrell contended at trial that the Bureau, conspiring with various of its members and Rand McNally, illegally prevented him from entering the market.⁶ Terrell relied heavily on three “overt acts” that were said to be in furtherance of the conspiracy. We shall refer to these incidents, as do the parties, as the “Finance Center incident,” the “D.T.M.S. incident,” and the “Wyche letter.”

The “Finance Center Incident”

In 1963, Terrell attempted to sell his guide to the Finance Center of the United States Department of Defense. Until that time the Center had been using the Bureau’s guide to compute distances for military travel allowances. The Center made a thorough comparison of the two guides which resulted in a recommendation to adopt Terrell’s guide. Shortly thereafter, however, pressure was brought to bear through direct contact by the Bureau and Rand McNally and “congressional inquiry” letters from United States senators that were secured through the efforts of the Bureau and Rand McNally. Terrell’s guide was not adopted.

The “D.T.M.S. Incident”

The Defense Traffic Management Service (D.T.M.S.) is a government agency which, pursuant to regulations, awards shipments of military household goods to carriers “who provide high-quality service at the lowest over-all cost.” Prior to Terrell, all carriers quoted similar rates and an “equitable distribution” system was used to award military shipments to eligible carriers. Terrell convinced' one such carrier, Mr. Rocky Ford, to adopt his guide. When Ford quoted a lower rate (because of the shorter distances in Terrell’s guide) D.T.M.S. took the application under advisement. D.T.M.S., after meeting wtih agents from the Bureau (Mr. Wyche) and Rand McNally, decided that the increased administrative expense of checking both the Terrell and Rand McNally guides when an application was made required that the equitable distribution system be maintained.

The “Wyche Letter”

Mr. Wyche, executive secretary of the Bureau, received a letter from Rocky Ford Van Lines, a member of the Bureau, requesting that the Bureau adopt Terrell’s guide. The “Wyche letter,” addressed to Mrs. Annie Ford, was written in response. In the letter Wyche made the following comments: (1) he was “amazed that the guide was ever permitted to be filed with the Commission [ICC] because of conflicting information contained therein(2) he felt that the distances used by Terrell in his guide were not independently computed but were obtained from the Bureau guide and then reduced five, ten or fifteen miles; (3) he expressed doubt as to whether the distances used by Terrell could be computed scientifically or confirmed by existing highways routes; (4) he commented on the effect the guide would have on the transportation industry:

“We are quite concerned with respect to a competitive condition arising by, movers particularly, utilizing some other method of mileage determination that we get to a point with the moving industry wherein carriers’ rates, by reducing mileages, will create utter confusion within the industry.”

(5) he announced plans to file a complaint with the ICC and to request an investigation as to the methods used by Terrell, and (6) he urged Rocky Ford to reconsider its decision to change guides.

Although the letter did not initially alter Rocky Ford’s decision, Howard Ford, a part owner of Rocky Ford Van Lines, was concerned. Howard Ford sent a copy of the letter to the Oilfield Hauler’s Association, another tariff agency of which Rocky Ford Van Lines was a member. The Association, which had previously indicated that it would adopt Terrell’s Guide, called upon Terrell to explain those matters mentioned in the Wyche letter. The ultimate result was that neither Rocky Ford Van Lines nor the Oilfield Hauler’s Association used Terrell’s guide.

The Bureau’s primary contention on appeal is that the Sherman Act does not prohibit the Bureau’s role in the Finance Center and D.T.M.S. incidents, even if deemed illegal, and that Terrell’s reliance on the Wyche letter is barred by res judi-cata. The Bureau thus contends that with these three matters excluded from consideration there is scant evidence, if any, to support the verdict. We first turn to the contention that reliance on the Wyche letter is barred by res judi-cata.

Prior to the initiation of the anti-trust suit, Terrell sued the Bureau and certain of its members, alleging that portions of the Wyche letter were libelous (i. e., Wyche’s assertion that Terrell had arbitrarily deducted distances from the Bureau’s guide and that Terrell’s guide could not be “scientifically” substantiated). The anti-trust suit was pending, however, when the libel suit went to trial. After the libel trial, which ended with the jury being unable to reach a verdict regarding the Bureau,⁷ Terrell and the Bureau arrived at a settlement and the libel suit was dismissed with prejudice.

In the anti-trust claim, of course, the letter was not the basis of the “cause of action” but was offered as evidence of one of the elements of the claim. Thus, the prior judgment could operate as an estoppel, insofar as relevant to the antitrust suit, only as to matters actually concluded in previous case. Syms v. McRitchie, 187 F.2d 915, 918 (5 Cir. 1951). In the usual case, the inquiry would focus on the record of the former trial to determine “with certainty that that fact or issue was indeed litigated and decided on its merits. * * Kelliher v. Stone & Webster, 75 F.2d 331, 333 (5 Cir. 1935). Here however, the libel trial itself was abortive and decided nothing; rather, the ease concluded upon the stipulation of the parties. Of course, this stipulated dismissal might have been predicated upon many considerations, including a mere desire to avoid future litigation. But in this suit between the same parties ⁸ the stipulation is conclusive regarding those matters that were necessarily resolved in the former suit. Thus the letter, insofar as it was asserted to be libelous, may not be asserted here as a ground for relief even though the letter has relevance as evidence of the claim here sued on.

The trial judge, in handling this rather tricky situation, did not exclude the letter or any part of it from the jury’s consideration. Rather, the jury, at the close of all the evidence, was merely instructed that no damages could be awarded “for any injury or damage which was caused, or alleged to have been caused, by any statement in the [Wyche] letter which you may regard as being false.” Examination of the record reveals that this procedure did not adequately protect those rights created by the dismissal of the libel case.

Terrell has been paid for any harm attributable to the “false” portions of the Wyche letter. Concurrently, Terrell is forever barred from again asserting those matters as a right to relief. Thus, while the letter was admissible evidence in the antitrust suit, there was present the inherent danger that the antitrust suit would include what, in substance, was a re-trial of the libel case. In the instant case, the danger became reality; the “false” portions of the Wyche letter were directly and vigorously asserted as a ground for relief in the anti-trust suit to such a degree that it cannot be said that the rights created by the dismissal of the libel case were not materially prejudiced.

Terrell’s counsel's closing argument to the jury serves as illustration. After stating that “the Court is going to tell you that you can’t consider the untruthfulness of these accusations [contained in the letter]”, counsel proceeded to argue as follows:

“ * * * and now, although they attempted, when this case started, to defend [the statements] as being true, they have given up all hope of that, and will even admit that they are not true.

******

Now, this letter was vicious, it was untrue, and it was calculated * * *

* * * * * *

[Wyche] admits that he knew when he wrote this letter that the Rand Mc-Nally guide had twenty-seven thousand errors in it; he admits that he knew that this statement he made about all the distances being shorter in Mr. Terrell’s guide was untrue, because there had been a check, and this was known by that check to be untrue at the time he wrote it. He knew that there was absolutely no pattern of mileages being arbitrarily deducted by five, ten or fifteen miles, which he claimed in that letter, in Mr. Terrell’s guide. He knew all of these facts.

* -X- * * # *

I don’t believe anybody who heard Mr. Terrell testify can doubt his sincerity or his honesty. Mr. Terrell is a man who has been wronged and who seeks redress, more than being restored for the money he has lost and the opportunity he has lost. Mr. Terrell wants and he deserves, vindication for himself and his pride and his product.”

The trial court’s admonition to the jury to award no damages for any injury caused by any statement in the letter “which you may regard as being false” was plainly inadequate. Terrell has had his day in court on that score and the Bureau’s objection to the admission of the “false” parts of the letter should have been sustained. While a new trial is required for the reason stated, the issues raised by the admission into evidence of the Finance Center and D.T.M.S. incidents, as well as the issues concerning damages, are deserving of comment.

By pre-trial order, reference to the Finance Center and D.T.M.S. episodes during the course of the trial was prohibited unless the court’s permission had first been obtained. This ruling, we assume, was based on United Mine Workers of America v. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965), wherein the Court stated that

Joint efforts to influence public officials do not violate the anti-trust laws even though intended to eliminate competition. Such conduct is not illegal, either standing alone or as part of a broader scheme itself violative of the Sherman Act. 381 U.S. 657, 670, 85 S.Ct. 1585, 1593, 14 L.Ed.2d 626.

As a qualification to this broad rule, the Court noted that

It would of course still be within ‘the province of the trial judge to admit this evidence, if he deemed it probative and not unduly prejudicial, under the ‘established judicial rule of evidence that testimony of prior or subsequent transactions, which for some reason are barred from forming the basis of a suit, may nevertheless be introduced if it tends reasonably to show the purpose and character of the particular transactions under scrutiny.’ 381 U.S. 657, 670-671, note 3, 85 S.Ct. 1585, 1593-1594, 14 L.Ed.2d 626.

On the second day of trial the plaintiff was allowed to introduce evidence regarding the government agencies. Ultimately, both parties’ attempts to influence these government agencies, through political pressures and otherwise, were the subject of a rather significant portion of the evidence. The Bureau, noting that these events are not actionable in and of themselves, primarily objects to the scope and the extent of the examination into these occurrences.

Under Pennington, the evidence was admissible, if at all, to show the “purpose and character of the particular transactions under scrutiny.” Here, there were only two relevant matters which the government evidence might amplify; one, the relationship of the Bureau and Rand McNally as alleged conspirators and two, the motive and object of the communications with Rocky Ford and the Oilfield Hauler’s Association. In other words there was, in essence, only one actionable occurrence which was alleged to have resulted from a joint effort to maintain a monopoly position. Viewed in this light, the scope of the “purpose and character” evidence becomes more critical and any evidence not having a direct bearing on those issues could be most prejudicial. Recognizing that the admission of this evidence rests initially within the sound discretion of the trial judge, we take this opportunity only to point out that this discretion is limited by the circumstances of this case. This is not a situation where the evidence might be regarded as cumulative; ⁹ quite the contrary, the danger here is that the “purpose and character” evidence will receive such force and weight so as to preclude a fair verdict on the substantive basis of the claim.¹⁰ On re-trial, the evidence regarding efforts to influence public officials can be limited in such a way as to vitiate this possibility.

The Bureau also complains of plaintiff’s theory of damages and the evidence adduced to support it. Noting that the Oilfield Hauler’s Association was the only customer claimed to have been lost as a direct result of the Wyche letter, the Bureau emphasizes Terrell’s concession that he could not have made a profit on their business alone. Thus, the Bureau first contends that there was no evidence whatever that Terrell was damaged since Terrell could not demonstrate a loss of profits by virtue of the asserted antitrust violation.

Terrell’s theory was to the effect that with one firm customer, numerous others would fall in line; that the market was not completely developed; and that his guide had certain features that would persuade certain types of carriers to use two guides. Assuming evidentiary support, plaintiff’s theory is not unsound. Plaintiff would not be foreclosed from recovery merely because he could not demonstrate a precise and ascertainable loss of profits from a particular customer. See North Texas Producers Asso. v. Young, 308 F.2d 235 at 242-243 (5 Cir. 1962).

The Bureau nevertheless objects to plaintiff’s method of proving loss of profit. At trial, plaintiff introduced a projection of profits premised on hypothetical sales of 22,500 of his guides at $15 each, with a new guide being issued in 1962, 1964, 1966, and 1968. The projected profits, on this basis, totalled $888,402.14. The assumed figure of 22,-500 sales per issue was premised on the Bureau’s 1962 guaranty of minimum purchases from Rand McNally. Plaintiff asserts, on the basis of Cherokee Laboratories, Inc. v. Rotary Drilling Services, Inc., 383 F.2d 97 (5 Cir. 1967), that defendant cannot complain of the fact that plaintiff based its hypothetical volume of sales on defendant’s figures.

In Cherokee the plaintiff had initially developed the market regarding the product in question. In time, however, the defendant replaced the plaintiff as sole distributor of the product. Thus, the Court held that plaintiff was justified in relying on “the only figures available,” i. e., those of the defendant after it had replaced plaintiff as sole distributor. The assumption was that, but for the anti-trust violation by defendant, the plaintiff’s and defendant’s roles would have been reversed.

Such was not the case here. We recognize that once the fact of injury has been established, the “plaintiff is not required to prove its damages with absolute mathematical certainty and that the plaintiff is not to be denied damages simply because they cannot be computed with exactness.” Volasco Products Co. v. Lloyd A. Fry Roofing Co., 308 F.2d 383 (6 Cir. 1962). Further, defendant has little room to complain about a lack of evidence for which he is responsible (i. e., lost profits), “if the method [of proof] allowed by the trial court is reasonable under the facts and in the circumstances of the case.” North Texas Producers Asso. v. Young, 308 F.2d at 245. We merely hold that Cherokee does not authorize plaintiff to assume defendant’s sales figures without other evidentiary support for such a proposition. “There must be some evidentiary basis to support an inference as to loss of net profits. A damage verdict may not be based upon speculation and guess work alone.” Siegfried v. Kansas City Star Co., 298 F.2d 1 (8 Cir. 1962).¹¹ Here, it is apparent that the jury was persuaded to surmise that plaintiff, if unmolested, would take over a substantial portion of defendant's business of long standing. Such an inference must have evidentiary support.

The Bureau’s other assignments of error relate to asserted trial errors that may well not recur. The judgment against the Bureau is vacated and the case is remanded for a new trial consistent with this opinion.

In the companion appeal, Terrell asserts that the trial court erred in granting a judgment notwithstanding the verdict in favor of the ten individual carriers.

During the period from 1961 (when Terrell first published his national mileage guide) until 1964, representatives from each carrier served with the Bureau in some capacity, either as an officer, on the Board of Directors, Rates and Tariff Committee,' or Mileage Guide Subcommittee. Through a series of reports, activities of the Bureau were relayed to the carriers. There was some evidence that a few of the carriers’ representatives met with Wyche after Rocky Ford Van Lines requested the transfer to the Oilfield Haulers guide and shortly before the “Wyche letter” was sent. Finally, the President of one of the carriers expressed some concern about the possibility of a competing guide.

However, after a careful reading of the record, we are convinced that there was no evidence which tied the carriers in with the arrangement between the Bureau and Rand McNally concerning the mileage guide, that any representatives of the carriers were involved in the Finance Center and D.T.M.S. incidents, or that the carriers knowingly participated in any conspiracy to restrain trade or monopolize the sale of mileage guides. The mere fact of their membership in the Bureau was insufficient to sustain a finding that they violated Sections 1 and 2 of the Sherman Act.

The judgment notwithstanding the verdict entered for the carriers is therefore affirmed.

1 . Aero Mayflower Transit, Allied Van Lines, Inc., Bekins Van Lines, Inc., Central Forwarding, Inc., Global Van Lines, Inc., Lyon Van Lines, Inc., National Van Lines, Inc., North American Van Lines, Ine., United Van Lines, Inc., Wheaton Van Lines, Inc.

2 . Band McNally was not made a party to this litigation.

3 . Terrell in his pleadings and by brief, characterizes the relationship between the Bureau and Rand McNally as a “monopoly by combination.” The Bureau would purchase guides from Band McNally and resell them to its members. Although Band McNally sold guides to rate and tariff agencies other than the Bureau it did so at prices subject to the Bureau’s approval and on the stipulation that it would credit the Bureau with these independent sales toward the Bureau’s guarantee of a minimum number of purchases from Band McNally. There was evidence that the Bureau exercised a degree of control over the methods by which Band McNally would compute distances.

4 . Terrell had previously published a guide that was used in Texas by the state government and intrastate carriers.

6 . There is no doubt that Terrell was ultimately unsuccessful in marketing his guide.

7 . A directed verdict was entered in favor of the individual members.

8 . Compare Seaboard Air-Line RR Co. v. George F. McCourt Trucking Inc., 277 F.2d 593 (5 Cir. 1960).

9 . See United States v. Johns-Manville Corp., 259 F.Supp. 440, 453 (E.D.Pa. 1966).

10 . We note that the jury was instructed, as it was regarding the “false” portions of the ■ Wyche letter, to award no damages for any harm arising out of the government episodes. Thus, with the Rocky Ford-Oilfield Hauler’s Association occurrence left as the only actionable event (and this was largely restricted to the “truthful” part of the Wyche letter wherein Wyche threatened to file a complaint with the ICO), the size of the jury’s verdict is indication that the instructions were not heeded.

11 . We should note that plaintiff’s cost figures as used in the projection, was based on his actual experience with his Texas guide. On the other hand, even assuming evidentiary support for the projected sales volume and frequency of issue, the projection would have still presented an improper premise to the jury for it assumed sales in the year 1962, while the Wyche letter, alleged to have been the causative factor in the loss, was not written until February, 1964.