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MCMACKIN v. SCHWINN BICYCLE COMPANY

February 27, 1973

JOHN T. MCMACKIN D/B/A MCMACKIN HARDWARE CO., ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
SCHWINN BICYCLE COMPANY, DEFENDANT.



The opinion of the court was delivered by: McLAREN, District Judge.

MEMORANDUM OPINION AND ORDER

This matter arises upon defendant's motion to vacate the Court's Memorandum Opinion and Order of September 29, 1972, or in the alternative, for an order limiting the class definition, approving its proposed notice to the class, and directing that such notice be mailed at plaintiff's expense.

I.

Defendant argues that its motion to dismiss, which was denied in the previous opinion, should have been treated as a motion for summary judgment because affidavits and other documentary evidence had been submitted. The only relief requested in defendant's motion and briefs was dismissal for failure to state a claim and the Court therefore excluded matters presented outside of the complaint. Defendant cannot now complain of the Court's failure to treat the issue as one under Fed.R.Civ.P. 56, having failed to seek such treatment at the time. Aside from this, summary judgment is rarely justified in antitrust cases. Poller v. Columbia Broadcasting Sys., Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962).*fn1

In the part of the previous opinion entitled "Common Questions Predominating," the Court discussed the various legal and factual issues under Count I, based on § 1 of the Sherman Act, and Count II, based on § 3 of the Clayton Act, 15 U.S.C. § 14. Although this discussion did not constitute a ruling on the merits the parties have construed it in widely divergent ways in their briefs on the instant motion. It thus appears that clarification of the earlier memorandum opinion is needed.

The relationship between the required showings under the two acts was first analyzed by the Supreme Court in Times-Picayune v. United States, 345 U.S. 594, 73 S.Ct. 872, 97 L.Ed. 1277 (1953):

  "From the `tying' cases a perceptible pattern of illegality
  emerges: when the seller enjoys a monopolistic position in the
  market for the `tying' product, or if a substantial volume of
  commerce in the `tied' product is restrained, a tying
  arrangement violates the narrower standards expressed in § 3 of
  the Clayton Act because from either factor the requisite
  potential lessening of competition is inferred. And because for
  even a lawful monopolist it is `unreasonable, per se, to
  foreclose competitors from any substantial market', a tying
  arrangement is banned by § 1 of the Sherman Act whenever both
  conditions are met."

Id. at 608-09, 73 S.Ct. at 880 (emphasis in original) (footnote omitted). The market power requirement has been eroded in § 1 cases over the years to the point where even absent market dominance over the tying product, the requisite power may be inferred from the tying product's desirability to consumers. When the seller has sufficient economic power in the tying product to accomplish the tie-in, and a not insubstantial amount of commerce in the tied product is affected, the arrangement violates both the Sherman Act and the Clayton Act. United States v. Loew's, Inc., 371 U.S. 38, 45, 83 S.Ct. 97, 9 L.Ed.2d 11 (1962); Northern Pac. Ry. v. United States, 356 U.S. 1, 78 S.Ct. 514, 2 L.Ed.2d 545 (1958).

The Court addressed the question of the effect of Fortner on the test of market power under the Clayton Act because, under the Times-Picayune analysis, a sufficient showing of power over the tying product would suffice to prove a violation of § 3, even without proof that a substantial volume of commerce in the tied product had been restrained. The conclusion that sufficient power for a § 3 violation may be inferred from the acceptance of a burdensome tie-in by an appreciable number of buyers in the market for the tying product is compelled by Justice Black's statement in Fortner, supra, 394 U.S. at 504, 89 S.Ct. 1252, and the interpretation it received in Advance Business Sys. & Supply Co. v. SCM Corp., 415 F.2d 55, 67-68 (4th Cir. 1969), cert. denied, 397 U.S. 920, 90 S.Ct. 928, 25 L.Ed.2d 101 (1970).

Of course, the Court's admonition that "plaintiff still must show that paragraph 2e is `burdensome'" (in the sense that he has, in fact, been injured thereby in his business or property) applies regardless of whether he seeks to show a § 3 violation by market power over the alleged tying product or by the volume of commerce in the allegedly tied product which is restrained. 15 U.S.C. § 15.

II.

In its previous opinion, this Court, pursuant to Fed.R.Civ.P. 23(c)(1), determined that this suit may be maintained as a class action, and it ordered plaintiff to submit a proposed form of notice to class members. It has since come to the Court's attention that the Court of Appeals for the Seventh Circuit presently has before it a case which raises several class action issues, some of which are found also in this case. Lupia v. Stella D'Oro Biscuit Co., No. 72-8121 (7th Cir., filed Nov. 15, 1972). Should the court of appeals reach those issues (there is an initial question of the appealability of the district court's dismissal of class action allegations), its guidance would be of considerable value in this action.


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