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Hodges v. WSM, Inc.

United States Court of Appeals, Sixth Circuit
Jun 9, 1994
26 F.3d 36 (6th Cir. 1994)

Summary

affirming dismissal of complaint: "Because plaintiffs did not allege, nor could they, that the illegal antitrust conduct was a necessary predicate of their injury or that defendants could exclude plaintiffs only by engaging in the antitrust violation, it was appropriate to dismiss the case pursuant to [Fed.R.Civ.P.] 12(b)."

Summary of this case from World Wrestling Entertainment v. Jakks Pacific

Opinion

No. 93-5090.

Argued December 7, 1993.

Decided June 9, 1994.

Richard J. Braun (argued and briefed), Richard J. Braun Associates, Nashville, TN, for plaintiffs-appellants.

R. Dale Grimes (argued), Bennett L. Ross (briefed), Bass, Berry Sims, Nashville, TN, for defendants-appellees.

Appeal from the United States District Court, Middle District of Tennessee.

Before: BOGGS and NORRIS, Circuit Judges; and BELL, District Judge.

The Honorable Robert Holmes Bell, United States District Judge for the Western District of Michigan, sitting by designation.


This is an appeal from the district court's dismissal of an antitrust action pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. Plaintiffs brought suit for damages and injunctive relief under §§ 4 and 16 of the Clayton Act, 15 U.S.C. § 15 and 26, for defendants' alleged violation of § 1 of the Sherman Act, 15 U.S.C. § 1. Since the district court rendered judgment at the pleading stage, we must accept as true the facts alleged in the complaint and determine whether plaintiffs undoubtedly can prove no set of facts in support of their claims that would entitle them to relief. Meador v. Cabinet for Human Resources, 902 F.2d 474, 475 (6th Cir.), cert. denied, 498 U.S. 867, 111 S.Ct. 182, 112 L.Ed.2d 145 (1990).

Section 1 of the Sherman Act, 15 U.S.C. § 1, provides in part:
"Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal."
According to § 4 of the Clayton Act, 15 U.S.C. § 15, "any person who shall be injured . . . by reason of anything forbidden in the antitrust laws may sue."
Under § 16 of the Clayton Act, 15 U.S.C. § 26, "[a]ny person . . . shall be entitled to sue for . . . injunctive relief . . . against threatened loss . . . by a violation of the antitrust laws."

I.

Plaintiffs Richard Hodges and Custom Tours, Inc., operated an airport shuttle service and a sightseeing tour service in Nashville, Tennessee, from December 1986 until 1990. In this action, plaintiffs allege that defendants engaged in an unlawful conspiracy that amounted to an unreasonable restraint of trade and commerce in violation of § 1 of the Sherman Act. Defendants WSM, Inc., Grand Ole Opry Tours, Inc., and Opryland USA, Inc., conduct a variety of related businesses in the Nashville area. WSM, Inc., owns the "Grand Ole Opry," a unique country and western music radio show broadcast live in Nashville on WSM's radio station. WSM also owns defendant Grand Ole Opry Tours, Inc., which conducts sightseeing and other tours in Nashville. In addition, WSM operates Opryland USA, Inc., which owns an amusement park, convention center, and hotel in Nashville, and conducts an airport shuttle service between the airport and its hotel and convention center.

Essentially, plaintiffs allege that defendants orchestrated a market division conspiracy, in violation of § 1 of the Sherman Act, when they entered into an agreement with other shuttle service companies that obliged these companies to refrain from transporting passengers between the airport and the Opryland complex, in exchange for defendants hiring vans and buses from these former competitors for Opryland's sightseeing tour business. In addition, defendants allegedly policed the agreement by refusing entry onto Opryland property to all remaining shuttle service companies, including plaintiffs'. According to plaintiffs, the conspiracy deprived them of sales of shuttle services between the airport and Opryland's property, and the opportunity to compete in the airport shuttle transportation market.

In granting defendants' motion to dismiss, the district court relied upon this court's decision in Axis, S.p.A. v. Micafil, Inc., 870 F.2d 1105 (6th Cir.), cert. denied, 493 U.S. 823, 110 S.Ct. 83, 107 L.Ed.2d 49 (1989). In Axis, a European manufacturer of armature winding machines, a type of machine that was manufactured and sold in America by only four firms, brought suit challenging a European competitor's acquisition of two of the American firms, alleging that the acquisitions barred it from the United States market by reducing competition. Two of the American firms held patents on the equipment and they refused both before and after the acquisitions to grant a license to plaintiff to manufacture the equipment in the United States. In dismissing the complaint, we assumed that the acquisitions violated the antitrust laws, but held that plaintiff had not suffered an antitrust injury because its exclusion from the United States market was not caused by the acquisition, but was instead the result of the enforcement of the patents and the refusal by those who controlled them to license Axis.

Based upon the reasoning of our opinion in Axis, the district court concluded that plaintiff's complaint failed to state a claim because it did not allege an antitrust injury. According to the district court:

[I]n Axis, the court found that a close reading of the complaint showed that the injury flowed from the lawful patents blocking entry into the U.S. market. Plaintiff's injury, in this case, was caused by the lawful refusal of Opryland to permit the Plaintiff to enter its property, not by Plaintiff's participation in an alleged illegal market division conspiracy . . . .

. . . .

. . . Plaintiff's injury did not flow from any decrease in competition among the allegedly conspiring shuttle operators, rather it flowed from the Defendants' act of refusing to allow the Plaintiff on their private property. The alleged conspiracy did not prevent Plaintiff from operating a shuttle service from the airport to Opryland. In fact, if the conspiracy existed, it would have benefited Plaintiff by reducing its competition to shuttle passengers from the airport to Opryland. It was Opryland's refusal to allow Plaintiff's vans on its property which caused Plaintiff's injury. If Plaintiff would have suffered the same injury without regard to the allegedly anticompetitive acts of Defendants, Plaintiff has not suffered an antitrust injury. Plaintiff's injury is not causally connected to an antitrust violation because the act of barring the Plaintiff from the Opryland premises does not violate the federal antitrust laws

. . . .

II.

We agree with the district court's analysis.

Under the statutory scheme set out in § 1 of the Sherman Act and §§ 4 and 16 of the Clayton Act, a person who is injured by a combination or conspiracy in restraint of trade or commerce has a private cause of action for damages or injunctive relief. If we assume that the market division conspiracy alleged by plaintiffs amounted to a violation of § 1, the relevant question is whether plaintiffs were "injured" by that violation. Because evolving case law instructs us that the Clayton Act contemplates "antitrust injury," plaintiffs were required to allege antitrust injury in order to survive defendants' motion to dismiss. The requirement of showing antitrust injury was first explained by the Supreme Court in Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977). There, the Court held that plaintiffs seeking to recover damages in a private action against a violator of antitrust laws must demonstrate more than that they are in a worse position than they would have been had the violator not committed the antitrust conduct. Id. at 486, 97 S.Ct. at 696.

[T]hey must prove more than injury causally linked to an illegal presence in the market. Plaintiffs must prove antitrust injury, which is to say injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants' acts unlawful. The injury should reflect the anticompetitive effect either of the violation or of anticompetitive acts made possible by the violation. It should, in short, be "the type of loss that the claimed violations . . . would be likely to cause."

Id. at 489, 97 S.Ct. at 697 (citation omitted).

In Cargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 104, 113, 107 S.Ct. 484, 491, 93 L.Ed.2d 427 (1986), the Supreme Court held that a plaintiff seeking injunctive relief under § 16 of the Clayton Act also must allege a threat of antitrust injury.

In Axis, this court had occasion to apply Brunswick in a context similar to the one at hand. There, the plaintiff contended that illegal acquisitions by a competitor precluded its entry into the market. However, what actually barred the plaintiff's entry was the refusal of the defendant and other competitors who held patents to license the plaintiff's use of the patents. The holders of the patents, of course, were within their rights to deny use of the patents to a potential competitor, even though the result of their conduct was to exclude the competitor from the market. Accordingly, any injuries suffered by the Axis plaintiff did not result from the illegal acquisitions — the presumably anticompetitive act — but from the refusal of the holders of the patents to grant licenses, and would have occurred in the absence of the antitrust conduct.

The district court applied correctly the Axis reasoning to dismiss the complaint. Here, defendants were accused of orchestrating with former competitors a combination designed to free defendants of competition. This violation of the antitrust laws, a market division conspiracy to restrain competition, was not the cause of plaintiffs' exclusion from the shuttle service market between the airport and Opryland. In Axis, the plaintiff was injured by the lawful refusal of the defendant and others to share their patents; here, plaintiffs' injury resulted from defendants' lawful refusal to grant plaintiffs access to their private property. Accordingly, plaintiffs were not harmed by the kind of evil contemplated by § 1 of the Sherman Act. Their injury was not an "antitrust injury" because it did not result from any decrease in competition among shuttle operators.

Because plaintiffs did not allege, nor could they, that the illegal antitrust conduct was a necessary predicate to their injury or that defendants could exclude plaintiffs only by engaging in the antitrust violation, it was appropriate to dismiss the case pursuant to Federal Rule of Civil Procedure 12(b)(6).

III.

The judgment of the district court is affirmed.


Summaries of

Hodges v. WSM, Inc.

United States Court of Appeals, Sixth Circuit
Jun 9, 1994
26 F.3d 36 (6th Cir. 1994)

affirming dismissal of complaint: "Because plaintiffs did not allege, nor could they, that the illegal antitrust conduct was a necessary predicate of their injury or that defendants could exclude plaintiffs only by engaging in the antitrust violation, it was appropriate to dismiss the case pursuant to [Fed.R.Civ.P.] 12(b)."

Summary of this case from World Wrestling Entertainment v. Jakks Pacific

In Hodges, 26 F.3d 39, the plaintiff was an airport shuttle and tour bus operator who wanted to participate in the market for shuttle services from the Nashville airport to Opryland, an amusement park, hotel and convention center.

Summary of this case from Louisiana Wholesale Drug Co. v. Hoechst Marion Roussel, Inc.

In Hodges, the antitrust violation was not the "necessary predicate" because the plaintiff's alleged injury — its exclusion from competing in the shuttle services from the airport to the Opryland site owned by defendants — actually flowed not from the anticompetitive effects of an allegedly unlawful market division agreement, but from the defendants' "lawful refusal to grant plaintiffs access to their private property."

Summary of this case from Louisiana Wholesale Drug Co. v. Hoechst Marion Roussel, Inc.

In Hodges, the Sixth Circuit Court affirmed the district court's dismissal for failure to allege an antitrust injury and stated: "[b]ecause plaintiffs did not allege, nor could they, that the illegal antitrust conduct was a necessary predicate to their antitrust injury or that defendants could exclude plaintiffs only by engaging in the antitrust violation, it was appropriate to dismiss the case pursuant to Federal Rule of Civil Procedure 12(b)(6)."

Summary of this case from Kroger Co. v. Sanofi-Aventis

In Hodges, the plaintiffs, who operated an airport shuttle and tour service in Nashville, sued companies that owned and operated the Grand Ole Opry music radio program; the amusement park and hotel and convention center known as Opryland; and a sightseeing and tour company called Grand Ole Opry Tours, Inc. The plaintiffs alleged that these defendants violated § 1 of the Sherman Act when they unlawfully conspired with competitors in the Nashville airport shuttle and tour market.

Summary of this case from In re Cardizem CD Antitrust Litigation

In Hodges v. WSM, Inc., 26 F.3d 36 (6th Cir. 1994), a case that was relied upon and discussed in Valley Products, supra. the plaintiffs alleged that the defendants had engaged in a conspiracy to restrain trade, in violation of § 1 of the Sherman Act.

Summary of this case from Baseball at Trotwood v. Dayton Prof. Baseball Club

discussing Axis

Summary of this case from Valley Products Co., Inc. v. Landmark
Case details for

Hodges v. WSM, Inc.

Case Details

Full title:RICHARD HODGES; AND CUSTOM TOURS, INC., PLAINTIFFS-APPELLANTS, v. WSM,…

Court:United States Court of Appeals, Sixth Circuit

Date published: Jun 9, 1994

Citations

26 F.3d 36 (6th Cir. 1994)

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