Southern Card & Novelty, Inc. v. Lawson Mardon Label, Inc.

138 F.3d 869, 1998 U.S. App. LEXIS 6825, 1998 WL 158490
CourtCourt of Appeals for the Eleventh Circuit
DecidedApril 7, 1998
Docket96-3682
StatusPublished
Cited by17 cases

This text of 138 F.3d 869 (Southern Card & Novelty, Inc. v. Lawson Mardon Label, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Southern Card & Novelty, Inc. v. Lawson Mardon Label, Inc., 138 F.3d 869, 1998 U.S. App. LEXIS 6825, 1998 WL 158490 (11th Cir. 1998).

Opinion

HATCHETT, Chief Judge:

The appellant, Southern Card & Novelty, Inc. (Southern Card), a postcard distributor, challenges the district court’s grant of summary judgment for the appellees, Lawson Mardon Label, Inc. (Lawson), a manufacturer of postcards and related products, and Daniel Saunders, the vice-president in charge of Lawson’s postcard business, on its federal and state antitrust tying claims. We affirm.

I. FACTS

Lawson manufactures postcards and sells them to distributors throughout North America. 1 Those distributors then sell the postcards to retail outlets, which in turn sell them to consumers. Over a decade ago, Lawson’s predecessor-in-interest, H.S. Crocker Company, Inc. (H.S.Crocker), secured a license agreement with the Walt Disney Company (Disney Company) that permits Lawson to manufacture postcards bearing the copyrighted images of Disney characters such as Mickey Mouse. Although the license agreement is “non-exclusive,” the Disney Company has not granted similar rights to any other postcard manufacturer. Thus, Lawson is the sole producer of postcards bearing Disney images. Lawson also makes “local view” postcards, ie., postcards depicting nonlicensed local images. In Florida, these postcards might present, for example, pictures of beaches, palm trees or alligators. Local view postcards comprise over ninety percent of Lawson’s total postcard *872 production and accounted for over sixty percent of its sales in Florida in 1995. The parties do not dispute that at least six other postcard manufacturers produce postcards specific to areas in Florida.

Southern Card, located in Daytona Beach, distributes postcards to retailers — primarily “chain stores” — situated in central and northern Florida. Southern Card purchases its postcards from large commercial printers such as Lawson, and acts as a rack jobber in the stores it services. 2 From 1986 — the year Southern Card commenced business dealings with H.S. Crocker — to 1991, Southern Card retained complete control over the quantity and types of postcards that it purchased from the manufacturer. 3 During the late 1980s and early 1990s, Southern Card bought a percentage of its local view postcard stock from Lawson’s competitors, finding their products superior in terms of price and quality. 4

In late 1991, Lawson introduced a “Disney Product Plan” in Florida. In a letter dated December 12, 1991, Saunders put forth the terms of the agreement he hoped to reach with Southern Card pursuant to this plan:

d) Distributor will purchase Local View and General Florida post cards and allied products from [Lawson] equal to his purchases from [Lawson] of Disney products. [For example,] if distributor purchases $100,000 . in 1992 of Disney product from [Lawson], distributor agrees to purchase a minimum of $100,000 in 1992 of Local View or General Florida product from [Lawson].
e) Failure to meet the minimum requirement agreed to in d) above, may result in [Lawson’s] decision to not sell any product to distributor in following year. '

Because Southern Card feared losing its lone source of Disney postcards, it began buying Lawson’s local view postcards in amounts equal to its purchases of Disney postcards.

In October 1993, Saunders wrote to Ny-berg expressing his concern that Southern Card continued to buy a significant quantity of postcards from Lawson’s competitors. The next month, Saunders wrote to Nyberg asking that Southern Card commit to having Lawson postcards comprise one hundred percent of Southern Card’s business in the Orlando area. Southern Card refused, asserting that Lawson already received about seventy-five to eighty percent of its total business, and that it never committed to purchasing one hundred percent of its requirements from Lawson.

A few months later, in February 1994, Lawson began recruiting Southern Card’s competitors to sell Lawson postcards to chain stores. The next month, Lawson limited Southern Card’s purchases of Disney postcards to those that Southern Card had bought in 1993. 5 In the meantime, Lawson sold a number of Disney postcards that had *873 been developed in 1994 to those distributors that bought only Lawson local view postcards. The district court found, and Southern Card does not dispute, that as a result of these developments, Southern Card “has faced new competition” in retail stores in the Orlando area.

II. PROCEDURAL HISTORY

Southern Card instituted this lawsuit in February 1995, and its amended complaint asserted federal and state claims of (1) illegal tying pursuant to section 1 of the Sherman Act, 15 U.S.C. § 1, section .3 of the Clayton Act, 15 U.S.C. § 14, and Florida Statutes section 542.18; and (2) monopolization and attempted monopolization under section 2 of the Sherman Act, 15 U.S.C. § 2, and Florida Statutes section 542.19. In outlining its tying claims, Southern Card stated that (1) Disney postcards constituted the “tying” product, and local view postcards were the “tied” product; (2) the “greater Orlando area” constituted the relevant geographic market or sub-market; and (3) the sale of local view postcards to distributors comprised the relevant product market. The crux of the tying claims was that Lawson “illegally compelled and coerced Southern Card and others to agree to purchase [local view postcards] from Lawson ... as a condition of obtaining and retaining access to Disney Cards.” Southern Card sought treble damages, injunctive relief and attorneys’ fees. 6

After the parties conducted extensive discovery, Lawson filed a motion for summary judgment that Southern Card vigorously opposed. In November 1996, the district court granted Lawson’s motion. As to Southern Card’s federal tying claims, the court first considered whether to deem Lawson’s practices unlawful per se or subject to evaluation under the rule of reason. The court found that Lawson’s practices were “unlike traditional tying arrangements” “because Southern Card does not allege that the ultimate consumer must buy the tied product (a local view postcard) to buy the tying product (a Disney postcard).” The court- thus considered the challenged conduct to represent “ ‘full’ or ‘representative’ line forcing,” that is, a vertical nonprice restraint “undeserving of per se treatment.” Applying the rule of reason, the court held that Southern Card failed to demonstrate that Lawson had unreasonably restrained competition in the local view postcard market.

Notwithstanding its conclusion regarding the applicability of the rule of reason, the district court also went on to hold that even if it “were tó use a per se

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Bluebook (online)
138 F.3d 869, 1998 U.S. App. LEXIS 6825, 1998 WL 158490, Counsel Stack Legal Research, https://law.counselstack.com/opinion/southern-card-novelty-inc-v-lawson-mardon-label-inc-ca11-1998.