Richard W. Bosse v. Crowell Collier and MacMillan

565 F.2d 602, 23 U.C.C. Rep. Serv. (West) 830, 1977 U.S. App. LEXIS 5753
CourtCourt of Appeals for the Ninth Circuit
DecidedDecember 6, 1977
Docket75-1298
StatusPublished
Cited by89 cases

This text of 565 F.2d 602 (Richard W. Bosse v. Crowell Collier and MacMillan) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Richard W. Bosse v. Crowell Collier and MacMillan, 565 F.2d 602, 23 U.C.C. Rep. Serv. (West) 830, 1977 U.S. App. LEXIS 5753 (9th Cir. 1977).

Opinions

[605]*605CHAMBERS, Circuit Judge:

This is a certified interlocutory appeal under Fed.R.Civ.P. 54(b) from the district court’s order dismissing seven of plaintiffs’ nine claims for relief alleged in their complaint. Accepting as true the allegations in the complaint, as we must, the relevant facts of record are as follows.

Plaintiffs are former officers, directors and controlling shareholders of Coinart Corporation [Coinart], a manufacturer of musical instruments, mainly saxophones. C. G. Conn, Ltd. [Conn], a manufacturer and retailer of musical instruments, was acquired in 1969 by defendant Crowell Collier and Macmillan [Macmillan], 4 large diversified conglomerate. Through various contractual dealings, which are outlined below, Conn and its parent Macmillan became the primary suppliers, customers and creditors of Coinart. In late 1970, a written contract [Supply-Purchase Contract] was executed by Coinart and Conn, whereunder Coinart agreed to sell and Conn to buy certain saxophone instruments pursuant to specific orders. Payment by Conn to Coinart was to be made within ten days of shipment. The contract also required Conn to furnish specified tooling and a current work-in-progress inventory of “good and usable” saxophone parts, apparently to be used for the production of the instruments by Coin-art. Under this contract, Conn became Coinart’s largest purchaser and supplier. When Coinart began negotiations with oth-, er entities for the possible acquisition of Coinart by the latter, however, Conn, at the direction of Macmillan, allegedly fell behind on its obligations under the Supply-Purchase Contract, to Coinart’s financial detriment.

In June, 1971, plaintiff Richard Bosse, as president of Coinart, began negotiations with Valley National Bank [the Bank] for a loan to finance Coinart’s operations. The Bank lent Coinart a total of approximately $325,000, and Coinart gave the Bank eight promissory notes for that amount, with due dates from November 17 to December 27, 1971 [VNB notes]. Plaintiffs personally guaranteed these loans and pledged to the Bank as security a majority of the Coinart stock. Despite these loans from the Bank, Coinart was unable to adequately finance its operations, and Macmillan then entered the scene.

On October 28,1971, Macmillan and Coin-art (again by Bosse, its president) entered into a written agreement, whereunder Macmillan agreed to lend Coinart up to $300,000 [Loan Agreement]. Macmillan also agreed to purchase from the Bank the $325,000 worth of VNB notes evidencing Coinart’s prior indebtedness to the Bank, and to take by assignment the corresponding security (the controlling shares of Coinart stock).1 Coinart was obligated to pay when due these VNB notes, the schedule for which was appended to the Loan Agreement. The agreement was to take effect upon Macmillan’s purchase of these notes. From October, 1971 through January, 1972, Macmillan lent Coinart $270,000 and, pursuant to the Loan Agreement, Coinart gave Macmillan eight notes for that total amount, with due dates from January 24, 1972 to April 26, 1972 [Coinart notes].

On November 19, 1971, Macmillan formally purchased the VNB notes and also exacted from plaintiffs a letter agreement, wherein plaintiffs agreed that if Coinart defaulted on any of the VNB or Coinart notes, all of the notes would be accelerated and would become due and owing upon five days’ written notice from Macmillan to Coin-art [Acceleration Agreement]. Thereafter, Macmillan extended the time for pay[606]*606ment of the VNB notes to January 81,1972, and the time for payment of the first two Coinart notes to April 22 and 25, 1972. On February 3, 1972, however, Macmillan gave Coinart notice that the latter was in default on the VNB notes and on one of the Coinart notes due February 2, 1972. The notice stated that pursuant to the Acceleration Agreement, all of the remaining notes would also become due and owing if the defaults were not cured within the 5-day grace period. On February 9, 1972, Macmillan demanded payment of all of the VNB and Coinart notes. On March 14, 1972, Macmillan gave plaintiffs written notice that their pledged Coinart stock would be sold by Macmillan at a foreclosure sale in New York on April 3, 1972. Plaintiffs, including Coinart, commenced this action on March 31, 1972 by filing their original 4-count complaint, which later was amended twice. On April 3, 1972, the foreclosure sale was held in New York and Macmillan bought plaintiffs’ Coinart stock for $100. After thus obtaining record ownership of the Coinart stock, Macmillan filed on May 31, 1972, a notice of voluntary dismissal of Coinart from the case under Fed.R.Civ.P. 41(a), thereby removing Coinart as a party to this action.

After extensive discovery, plaintiffs filed a second amended complaint on July 18, 1973, alleging nine separate claims for relief. The district court granted Macmillan’s motion to dismiss for failure to state a claim on five of plaintiffs’ claims for relief, and granted summary judgment for Macmillan on two of plaintiffs’ other claims for relief. The lower court directed entry of judgment under Fed.R.Civ.P. 54(b) as to its dismissal of these seven claims; the propriety of these dismissals is now before us.

Plaintiffs’ first claim for relief in their complaint sought treble damages and divestiture for alleged violations of the federal and Arizona antitrust laws by Macmillan’s impeding Coinart’s negotiations with certain of Macmillan’s competitors for the competitors’ possible acquisition and financial rescue of Coinart. According to plaintiffs, Macmillan responded to these negotiations by directing its subsidiary Conn to breach the Supply-Purchase Contract between Conn and Coinart, thereby jeopardizing Coinart’s financial position, and by exerting undue financial pressure on Coinart through strict enforcement of the Loan Agreement and Acceleration Agreement. These actions by Macmillan allegedly were taken for the purpose of ensuring its ability to gain control of Coinart. Plaintiffs thus claimed that Macmillan attempted to, conspired to, and did monopolize the woodwind instrument industry and unreasonably restrained trade in violation of sections 1 and 2 of the Sherman Act (15 U.S.C. §§ 1, 2), and specifically intended to lessen competition through its acquisition activities, in violation of section 7 of the Clayton Act (15 U.S.C. § 18). Violation of Arizona’s antitrust laws also was alleged.2 On Macmillan’s motion, the district court dismissed this count of the complaint for failure to state a claim and for lack of subject matter jurisdiction. We find this disposition correct since plaintiffs lack standing to sue for these alleged antitrust violations.

This court repeatedly has used the “target area” approach3 to antitrust standing under section 4 of the Clayton Act (15 U.S.C. § 15), requiring “identification of the affected area of the economy and then the ascertainment of whether the claimed injury occurred within that area.”4

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Bluebook (online)
565 F.2d 602, 23 U.C.C. Rep. Serv. (West) 830, 1977 U.S. App. LEXIS 5753, Counsel Stack Legal Research, https://law.counselstack.com/opinion/richard-w-bosse-v-crowell-collier-and-macmillan-ca9-1977.